Interest Rate rise slammed by Banks

[Imported from Whale Oil Beef Hooked on Blogger]

Contrary to Liar-bours oft stated election rantings that their policies wouldn’t rasie interest rate the Reserve Bank Governor today raised interest to 7 percent.

Business leaders have come out today criticizing the move;

Roger Kerr: “Raising interest rates now at this point in the business or eceonomic cycle is going to have no impact on the current inflation rate he has a problem with, and it is certainly, in our view, going to have no impact on the future inflation rate.”

Cameron Brewer of the Newmarket Business Association: “Mr Bollard should first be trying to curb Government spending that, along with petrol prices has driven inflation to 3.4 per cent.

“Instead, there will be a rise in the OCR for the eighth time in as many quarters. This will immediately hit many businesses in the productive sector reliant on floating loans, with interest soon to near 10 per cent.”

Upon analysis you kind of have to agree with them, sure the Housing market has driven some inflation but the majority of contributors to this are in fact rampant government spending and fuel prices both of which a re unable to be controlled by hiking the interest rates.

Banal left wing commentators tend to say stupid things like;

I know that over the past six months I have dramatically slowed down spending and started saving, and it seems that once again I am part of a minority…

What will it take for people to borrow less?”

Where does this lead Jordan if we all follow along the pink path to socialism?….spending less, therefore constraining business, therefore they spend less and so on and so on until whammo recession…..We should actually all be spending more and until there is some incentive to save I think I’ll pass on that and continue to spend my money on more income generating assets like businesses and buildings and rental properties.

Pray tell what is wrong with borrowing? Borrowing is how business get plant, they don’t have a savings plan and put aside a little till they want to buy the new machine. Plant lasts for years that is why it is prudent to have it now, pay for it over it’s useful life and enjoy the increased productivity and profitablity from having the plant now not in 10 years time. Borrowing is how home owners can generate additional income by buying rental properties and making sure the rent covers the outgoings, they grow their net worth, increase their income, can reduce their tax exposure and provide much needed housing for those less fortunate than themselves, thereby enabling them to better themselves.

Self serving banal statements like that above do nothing. Only people who are wage takers rather than risk takers make these sort stupid statements.


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