23 Oct 2007, Comments Off on Who do you trust to keep interest rates low?

Who do you trust to keep interest rates low?

Author: Helen

Why, J-Ho, of course! He and Peter Costello have been going on and on and … on about how interest rates are lower than they were under Paul Keating and even if interest rates are going up, well, they’re still lower than they would be in some, well, parallel universe where Labor is governing, and, well, did you know that interest rates are lower than they were under Paul Keating?

I’d got used to this as a kind of background noise while I got on with living, blogging and Howard hating, and it’s such a familiar cornerstone of the whole Liberal edifice, that reading this in the AGE made my brain go sproing:

The HIA-Commonwealth Bank Affordability report shows with house prices surging in the September quarter and higher interest rates, affordability fell by 2.1 per cent, and 8.3 per cent over the year.

First home buyers nationally are now spending 31.7 per cent of their income on mortgage repayments, the highest on record, and Melburnians are spending 30.7 per cent.

But Prime Minister John Howard said the affordability problem had eventuated because the cost of housing had risen sharply in recent years “and it’s risen very sharply because we’ve had very low interest rates and … people have been able to borrow a lot more and buy more expensive houses”.

Wh… whaaaa?… You wha…

So, let me get this straight. The proportion of our incomes going to house repayments is due to … those very same low interest rates you’ve been doing such a great job with?

So, in the Liberalverse, one can simulataneously harp on about the virtues of maintaining low interest rates (although everyone must know by now that the government doesn’t control interest rates any more) and blame the housing affordability crisis on those selfsame interest rates?

This is the same Liberalverse where we need to downgrade our wages (and therefore living standards) to third world levels to “become competitive” with third world economies, so we can, er… maintain our status as a first world country…and where all we need to do to develop our economy is to dig up and cut down more stuff, educate as few people as possible and make as few things as possible. All while foreign debt burgeons and everyone’s in it up to their eyeballs, but apparently that’s not a problem.

Do you see why I have trouble accepting this crowd as the party of responsible economic management?

Crossposted at Road to Surfdom

Comments (0)

  • Mark says:

    The libs have been running that line about how interests rates were so high under Paul Keating and that families really hurt under him that it has become a given.

    Then, I read Andrew Chaplan’s debunking of the lib’s myths about interest rates and their economic management, and I was amazed to read that while interests rates were higher in the time of Keating, the amount of household monthly interest repayments was actually lower – because people hadn’t borrowed so much so didn’t owe so much. In all, it took less out of their household weekly budgets.

    Then again, it is important to remember that things weren’t all rosy under Keating – it’s important to remember how clothing, textile, leather, steel and other manufacturing workers lost their incomes under the tariff slashes and deregulation.

    So many are putting great stock in Rudd delivering us from Howard, but I’m wondering when we will all wake up and remember how we hated the economic rationalists (remember that term?) who controlled the ALP – and government – in the ’85-’96 era and wondered how the government could be so mean while the people lost their jobs, their savings, their self-respect, etc.

    The only flicker of light for me is Rudd’s throw-away line that he didn’t want to be prime minister of a country that didn’t make anything any more (uttered when one of the car companies was planning to close a factory).

    I certainly hope he means what he says and supports manufacturing again, as making phone calls for a living sure ain’t much fun.

    oo. Apologies, helen, I’ve realised my comment turned into a rant which I should have just posted in my own blog. sorry.

  • Mark says:

    I forgot the link to Andrew Charlton’s (sorry, its not Chaplan!) essay on the Lib’s economic policy for The Monthly. It’s not all online, but well worth getting it in print to read.


  • Jon says:

    Wayne Swan has enunciated this several times in the Parliament but usually Howard and Costello just shout him down quoting the headline rate, rather than the more painful truths.

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