The Australian Reserve Bank’s decision to raise interest rates this month was “finely balanced” and, combined with previous hikes, amounted to a material change that gave it more flexibility in the future.

Released on yesterday the Minutes of the December meeting, showed the Reserve Bank of Australia’s (RBA) board agreed that interest rates would still need to be raised further over time should the economy continue to improve as they expected.

The board considered whether to pause in December and wait for its February meeting before moving again, noting that a rise could hurt confidence given uncertainty abroad and the high level of the Australian dollar.

Yet they chose to lift the cash rate by 25 basis points to 3.75 per cent, this is the third rise in as many months, due to the expected strength in demand for housing and infrastructure in coming years while the Asian-driven resources boom continues.

“Board members saw the arguments as finely balanced, but concluded a hike was best to maintain some balance as the unexpected strength of the domestic economy continued with growth.

“Members saw this adjustment, together with those in the preceding two meetings, as materially shifting the stance of monetary policy to a less accommodative setting and, therefore, as increasing the flexibility available to the board at future meetings,” the minutes showed.

The board agreed that rates were too low for an economy that had begun to grow again with a smaller amount of spare capacity than earlier expected.

Even taking into account a widening in the spread between the cash rate and borrowing rates, “most lending rates were noticeably below normal”, the minutes showed.

“Members agreed that, if developments unfolded as currently expected, monetary policy would need to be adjusted further over time to lessen the degree of stimulus,” the minutes showed. “That adjustment would not be intended to slow demand compared with the current forecast path, but aimed simply at keeping the stance of policy appropriate for improving economic conditions.”

The RBA was clearly upbeat on the outlook for the Australian economy, noting 2009 had turned out to be materially stronger than expected.

It saw good prospects for sustained growth in private demand over the medium term, particularly given the boom in resources investment currently underway. While underlying inflation was likely to moderate further, it would not fall as far as first expected.

Credit for housing was rising solidly and board members noted house prices continued to expand at a robust pace in October. “Members also discussed the particular challenges posed by high levels of resources sector investment, including supply problems and high housing prices that were already presenting challenges in some regions,” the minutes showed.

The RBA was also upbeat on the outlook for Asia, noting China export volumes were rising and growth in India had been very strong.

The assumption of rising interest rates has been factored into the RBA’s forecasts for most of this year.

The content of the minutes will most likely lower expectations of a rate increase at the February 2 board meeting.

Housing Finance September 2008

Source: ABS Cat No 5609.0

On a seasonally adjusted basis the national value of housing loan commitments (owner occupation) in September was $11.891 billion,

down by 1.9% on August.

On a state basis, the respective statistics were:

NSW $3.809 billion (-3.6%)

Victoria, $2.752b (-0.8%),

Qld, $2.523b(+1.6%),

SA, $0.803b (-4.3%),

WA ,$1.533b (-1.9%),

Tas, $167m (-1.2%),

NT, $87m(+4.8%),

ACT, $194m (+4.9%).

Investment Housing – Total

Source: ABS Cat No. 5609.0

The value of investment housing loan commitments

($5.317billion, seasonally adjusted)

fell by 1.1% on August.

The drivers of this result were a fall in the

construction of dwellings for rent or resale (-26.4%),

a rise in the purchase of dwellings

for rent or resale by individuals (+1.4%)

and by others (+5.2%)

The total value of housing finance commitments

- $17.209b fell by 1.6% on August.

Sometimes to balance that serious aspect of love (loving our work, loving our clients, loving ourselves) we should look directly at nature, and notice the perfection of a flower just its color and being a flower, or an old gum tree, twisted without symmetry but still perfect being a tree.

Sometimes it is useful to push something to the absurd so that we can laugh at it, see how ridiculous it is, the laugh reduces the tension or annoyance that the situation or experience had created in the first place, and so joy and sanity returns to our life.

One of the great copy writers of today is Gary Bencivenga who publishes a monthly (sometimes) newsletter called “Bullets”, subscribe by going to:  http://bencivengabullets.com/default.asp, nothing for sale.

However back to the story, catching up on a past Bullet that I had missed I noted this excellent article with a checklist of 15 successfully used proven offer ideas – Bullet #21 if you want to check it out.

Using the word “Free” related to a talent test, the article continues:

For many years, the Art Instruction Institute ran ads on matchbook covers, featuring a sketch of a pirate along with this challenge…

Are You an Artist?
Draw the Pirate
This matchbook ad promised that if you take this simple aptitude test (tracing the pirate not permitted), the Institute’s instructors would review it and let you know if you have the talent to be an artist. I understand that Peanuts creator Charles Schulz was accepted and later graduated from this program with honors.

To my dismay, I could not draw the pirate.

Would you like a good laugh right now? Check out this underground film short (just seven minutes) that anyone in direct marketing should find hilarious. It spoofs the famous matchbook ad, “Draw the Pirate.” Go to this link now and you’ll be LOL, I promise…

www.undergroundfilm.org/films/viewer.tcl?oftype=lar&reso=2&wid=1028027

Laughter is the best cure for disappointment, although sometimes revenge………?

William MacLean

Financial Strategist and Wealth Coach

http://www.macleanfinance.com 

One of my favourite weekly email newsletters in “Burning Pants”.

It always some interesting or unusual angle to present on the Finance Market and what is happening therein.

Todays edition was no different, but raises an interesting question, as to how well in the gerneral public informed.

I will leave it to you to make up your own mind, regardless that I may think the underlying demand for housing in Victoria is such that we are still approx 2,000 homes short of current demand, and it is not being built at the moment.

What do you think?

Question: How will the end of cheap global debt affect the national housing market?

This was how “burning pants” saw the response: 

Six out of ten Australians believe the domestic housing market is set for a tumble – with one in three anticipating a more than 10 per cent drop in residential property prices as a result of the so-called US triggered credit crunch.

The findings either reflect a typical mass knee-jerk reaction to choppy markets or signal tough times ahead for Australian residential property.

The insight stems from a new CoreData/The Australian newspaper poll that ran over the weekend and involved more than 2,500 people.

31.9% of people expected house prices to tumble more than 10% as non-bank lenders face a tougher financing environment and RBA Governor Glen Stevens continues to reinforce the central bank’s concern over inflationary rather than deflationary forces on the economy.

More than 1 in 5 people expected to see no change in national property prices. The poll did not split responses by the likely pricing changes of residential property within individual states – but responses themselves were split by states.

It could be inferred that people in Tasmania and South Australia were the least pessimistic about the impact of the global credit crunch of property, with only 23.3% and 27.9% respectively of residents of these two states anticipating a knock-on affecting more than 10 per cent drop in property prices.

The most negative state was Victoria, where 34.6% of respondents there anticipated a more than 10% drop in residential property prices as the cost of borrowing rises.

Elsewhere, Western Australia saw 33.7% of people there respond the same, while ACT has 33.6% of individuals believing the global credit crunch will push prices down in residential real estate by more than 10%.

In capacity constrained NSW, a lesser 30.3%, felt prices would fall by more than 10% – however responses were in relation to the national outlook rather than state by state movement.

In terms of sex, females were less pessimistic than males. 33.0% of men expected the knock-on effect of the turmoil in the credit market to drive property prices down by more than 10% compared to only 25.6% of females.

Source: minipoll/The Australian n= 2,535

To Subscribe to Burning Pants an excellent weekly email newsletter on Financial issues, go to:

http://www.burning-pants.com/wp-admin/email/index.php Tell me what you think, will Victoria’s current housing shortage avoid a drop in prices or not?

William MacLean

The benchmark for having achieved “Wealth” or being known as “Rich” has traditionally been having a million dollars in net worth. So it is a reasonable expectation to aim for this when you are setting out to become “Wealthy”.

Ofcourse we all know that owning property or shares in not the only form of richness, that personal qualities of richness have a lot to do with the attractiveness of an individual as well  the money they have in the Bank.

Each of us would have different personal qualities that we would list, and would be likely to have a different order of importance as well also. 

Understanding, Tolerance, Gentleness, Openness, Loving, Equitable and Wise would be high on many people’s list. I am sure you would have many others to add.

Having just spent the week in Sydney listening to Jay Abraham, at his Ultimate Business Building Bootcamp, and then a day listening to Stephen Pierce on Web Marketing to top it off, I am mindful of the fact that all of want to at least “Advance our Interests” either as a better person or with more fiscal wealth.

What I wanted to share with you was the most remarkable feature of the conference/bootcamp was the paper Jay presented called “Advanced Strategy of Preeminence”.

Jay’s transcript set out Strategies for Creating Greater Success, Income and Wealth in a manner that shows why he is still the Number #1 Marketer in the World today. 

After pointing out that “People inherently don’t trust the system”. We have all been let down by big companies and big governments, and small minded individuals who handle their, and our affairs. No one likes to be treated like a commodity.

Each of us needs to ask, “How can we do what we’re doing for others better?” The concept of never ending improvement.

As our emotions are always involved in our decision making, we also want to feel good about the advice and guidance or goods we are receiving, before we will use them.

Jay delivered his crunch point by saying, “Most people fall in love with their product or their company instead of falling in love with their client”

“Falling In Love With Your Client” 

Jay continued, “If you can’t , honest to God, fall in love with your client, you’re in the wrong business, or you don’t appreciate your business, or you don’t appreciate your own worth” and further, “You should be asking ‘What do I have to give? What benefit do I have to render?’ “, rather than how do I get people to buy.

“See yourself as becoming an agent of change. a creator of value. a value contributor.”

Jay concludes his article by pointing out most people do not want to be treated like commodities and each of us wants some directional assistance in our next decision, whatever it maybe. 

I have summarised a 2500 word presentation into a few brief words, I am sure though you have gained the main drift.

The same point is also made in Jim Collin’s “Good to Great” but I will leave that to another day.

So to show my love for my readers, clients, and friends, I am going to offer you a free copy of “Making Your First Million – A Practical Guide to Principle-Centered Prosperity”.

 Within the next 2 weeks I will have a new web page up offering this 173 page valuable guide to assist those who are seeking to advance their position.

Keep your eye out for it!

William MacLean

Financial Strategist and Wealth Coach

http://www.macleanfinance.com

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