Trump’s Tariff Economic Shock 3 Apr 5:36 PM (14 days ago)
If the USA imposed large tariffs on most countries globally, the result would be a major economic shock with widespread consequences:
In the USA
Consumer Prices Rise (Inflation): Higher tariffs would increase the cost of imported goods, pushing up consumer prices, especially for electronics, clothing, and other goods reliant on global supply chains.
Producer Costs Increase: U.S. manufacturers dependent on foreign components would face higher input costs, potentially reducing output and profitability.
Interest Rate Dilemma: The Federal Reserve may be forced to raise interest rates to combat inflation, risking slower growth or even recession.
Retaliation and Export Decline: Other countries would likely retaliate with their own tariffs, hurting U.S. exports and weakening industries like agriculture and manufacturing.
Market Volatility: Stock markets could tumble due to uncertainty and reduced earnings expectations.
Globally
Reduced Trade Volumes: Global trade would contract, especially for countries heavily reliant on exports to the U.S., such as China, Germany, and Mexico.
Deflationary Pressures: Many export-driven economies could face falling prices due to reduced demand, layoffs, and factory slowdowns.
Global Growth Slowdown: The shock could trigger a global economic slowdown or recession, especially in developing countries with fragile economies.
Shift in Trade Alliances: Countries may seek to strengthen regional trade agreements to offset the loss of access to U.S. markets.
Summary
U.S. tariffs would cause short-term inflation domestically and potential deflation abroad, while disrupting global trade flows, heightening geopolitical tensions, and risking a worldwide economic downturn.
What impacts would there be for Australia?
The ripple effects of 54% tariffs would significantly impact China’s economy — and by extension, Australia’s economy, which is closely tied to China through resource exports.
Here’s how:
1. Reduced Chinese Export Competitiveness
A 54% tariff would sharply reduce Chinese exports to the U.S.
Slower export growth or contraction would drag on China’s GDP, dampening industrial output and investment.
2. Lower Demand for Australian Exports
Australia supplies China with key commodities (iron ore, coal, LNG, lithium).
If China’s economy slows, its demand for these raw materials would likely fall, hurting Australian exporters.
Prices for commodities could also drop globally, reducing Australia’s export earnings.
3. Broader Economic Impact on Australia
GDP Growth: A slowdown in Chinese demand could shave off growth from Australia’s GDP, particularly affecting resource-rich states like Western Australia.
Australian Dollar (AUD): The AUD might weaken due to lower export revenue and commodity prices, increasing import costs and possibly contributing to domestic inflation.
Investment and Jobs: Sectors tied to mining and export logistics could see reduced investment and job losses.
4. Potential Offsets or Opportunities
If Chinese firms reorient toward regional trade partners, Australia could benefit from increased trade in non-resource sectors (e.g., food, services, tourism, education).
However, this depends on whether China can shift its economic focus quickly enough to offset losses from the U.S. market.
Summary
A 54% U.S. tariff on Chinese goods would likely slow China’s economy, weakening demand for Australian exports and lowering commodity prices. This would negatively affect Australia’s trade balance, economic growth, and currency — especially in the short to medium term.
SPIVA Australia Scorecard 2023 Results – Active vs Passive Report Card 3 Mar 2024 12:41 AM (last year)
If you don’t know what the SPIVA Australia Scorecard is then let me tell you. It’s an eye opening nugget of critical information for those that invest into managed funds.
It shows that the vast majority of managed funds…. wait for it….. do NOT outperform the index they are measured against.
The results do vary by asset category but the results are essentially the same. And the longer the time period generally the worse active managers perform.
Now there’s quite a few contributing factors which have been debated by the various camps but being educated about these results will help you choose better for your portfolio. Now you know you need to verify they are worth the money they charge by doing some simple comparisons.
Managed Fund Research – Comparison of Returns
To help you find out how find out what active managers are worth the money they charge, you can do the research at the following websites:
RBA punishes consumers to fight inflation caused by external factors 6 Nov 2022 10:03 PM (2 years ago)
Domestic demand is being targeted by the RBA in an attempt to rein in price increases caused by external issues.
“Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role.”
RBA Media Release
It seems unfair to pick on consumers when consumer demand is normal.
Consumers aren’t going crazy buying non-essential goods.
Consumers are being hit in the wallet from many directions including their mortgage repayments (thanks to the RBA), from energy price increases (petrol and electricity) due to places like Germany putting their supply in the hands of a mad man (thanks Angela) and lingering supply chain issues with spoilt brat trading partners.
It’s easy to blame the RBA when they have only a few levers to play with.
The federal government needs to step up and fast.
It can ease employment labour shortages by providing work visas to our South Pacific neighbours and for skilled workers.
It can do more with incentivised training and more targeted reductions in HELP debt or course fees.
The government can also target the extraordinary profits energy suppliers with higher levies and policies to ensure local supply is prioritised before exports.
And those tax cuts for the richer end of society, are they really needed? This is one of those times when a case for breaking election promises can most easily be made.
These are extraordinary times and extraordinary commercial profits should be shared with the commonwealth who can then look after those that can’t afford heating for instance. There also doesn’t need to be a cash hand out if local prices are low.
Although with the GFC still in recent memory, even for a Gen Z, you have to question the wisdom of the RBA reducing interest rates to levels, that saw 1.99% mortgages, that created massive repayment risks and fuelled house prices. So much so that now some are facing the double nightmare of triple the mortgage repayments and quite possibly massive house devaluations like we saw in the early 1990’s.
Is the Government stealing Your Superannuation? 29 May 2013 5:01 AM (11 years ago)
On the 5th of April 2013, the government announced that it would now take superannuation accounts with balances up to $2,500, if they were deemed “lost” from 31 May 2013.
If and when you get around to claiming these funds, they will reward you by applying an interest rate equivalent to the Consumer Price Index or basically the inflation rate (currently 2.5% pa). Now this is the bare minimum return and is basically a gift from you to the federal government coffers. In comparison they government sells bonds to the public at a rate very much higher. In comparison you can get a better rate at any bank. In comparison many Australian share based superannuation funds had returns over 20% over the last 12 months. Just a 1% per annum difference in returns over your working life can make a massive difference.
However the major issue is that when these funds are stolen, I mean claimed, by the government, any associated insurance will be lost.
This means that if you die your dependants will get nothing and if you are totally and permanently disabled you will be reliant on Centrelink.
Your superannuation might be classified as lost if a letter from your superannuation fund is returned.
Here’s what you can do to stop this theft.
1. make sure all of your superannuation accounts have your latest address.
2. when you leave a job, take your superannuation with you to the next job (tell your new employer where to pay your superannuation contributions).
2. consider amalgamating all your superannuation funds into one single fund (this could be more cost effective as you will be paying one set of account fees, if in doubt check).
3. make sure you have sufficient insurance (life, TPD and income protection) in place with your current superannuation fund (if in doubt get advice – a financial planner can help).
4. reclaim your funds as soon as possible by searching the ATO’s SuperSeeker program – it takes very little time and it’s so easy your grandma could do it!
Typically it is the younger generations that have multiple superannuation accounts and are most likely not to care (it’s a long time to retirement when you’re only in your 20’s right?).
However, taking the time now when you are young to look after your superannuation, is likely to be rewarded when you retire due to the magic of compound interest.
Take action now and don’t let the government steal your superannuation!
Mortgage Switch Calculator 9 Dec 2010 3:59 PM (14 years ago)
The Australian Securities and Investments Commission (ASIC) have released a calculator that helps you compare your current home loan situation with taking out a new home loan.
Please visit the ASIC Mortgage Switch Calculator for more information.
One of the main costs associated with mortgages is Lenders Mortgage Insurance. The ASIC calculator does take this into account but you need to find out what it will be. You should discuss this further with your mortgage adviser.
Lenders Mortgage Insurance (LMI) is an added cost where the size of the loan is greater than 80% of the value of the property against which the loan is being taken out. If the loan is greater than 80%, LMI will be an added cost which is usually added to the home loan amount.
The problem is if your loan is still greater than the 80% level new LMI will be needed for the new loan. To complicate things further a new valuation will be needed by the new lender and this may also cause further issues for consideration.
Warning: Switching your home loan or mortgage can lead to financial loss. You should get advice from a professional mortgage adviser before taking any action.
SMSF Savings Account Interest Rate Update 17 Nov 2010 6:49 AM (14 years ago)
Usually the banks pass on interest rate rises to their various savings accounts within a few days of the RBA rate rise. However, due to the turbulence created by the CBA increasing their home loan rates by 0.45% compared to the 0.25% increase by the RBA, most of the other banks have tried to avoid any associated bad publicity by holding back their own rate increases. Finally all the rate rises are in.
The following table shows the rate increases for Australian banks whom have an indentifiable high interest savings account suitable for Self Managed Super Funds (DIY Super).
| SMSF Savings Account Product Name | Old Promotional Rate | New Promotional Rate |
|---|---|---|
| Bankwest Business TeleNet Saver | 5.00% | 5.20% |
| Citibank Ultimate Business Saver | 5.50% | 5.50% |
| ING Direct DIY Super | 6.15% | 6.15% |
| RaboDirect DIY Super High Interest Savings Account | 6.40% | 6.40% |
| RaboPlus DIY Super PremiumSaver | 6.00% | 6.00% |
| St George DIY Super Direct Saver Account | 4.60% | 4.85% |
| UBank USaver SMSF | 6.16% | 6.16% |
| Westpac Self Super Online | 4.55% | 4.80% |
Compare DIY Super savings accounts
Warning: Product features such as interest rates and fees can change without notice. Please check all details with the product provider prior to taking any action.
High Interest Savings Account November Update 16 Nov 2010 10:56 PM (14 years ago)
When the Reserve Bank of Australia (RBA) increased cash rates by 0.25% on 2 November 2010, the the major banks duly increased their savings accounts by the same amount. However they raised home loans by a substantially different amount. Here are the interest rate increases for the major banks. This latest rate rise is the first for a very long time whereby the more competitive banks have not raised their savings account rates. The rush for market share by the smaller institutions appears to be mellowing since the arrival of the ultimate anti status quo disrupter Virgin Money.
| Product | Savings rate rise | Home Loan rate rise | Current interest rate |
|---|---|---|---|
| ANZ Online Saver | 0.25% | 0.39% | 4.75% |
| CBA NetBank Saver | 0.25% | 0.45% | 6.25% |
| NAB iSaver | 0.25% | 0.43% | 6.25% |
| Westpac eSaver | 0.25% | 0.35% | 5.25% |
Here are some other banks that offer quite a bit more on their savings accounts than the big four banks.
| Product | Current interest rate |
|---|---|
| Citibank Online Saver | 6.45% |
| ING Direct Savings Maximiser | 6.25% |
| RaboDirect High Interest Savings Account | 6.40% |
| UBank USaver | 6.51% |
| Virgin Money Virgin Saver | 6.75% |
Warning: Product features such as fees and interest rates applicable change without notice. Please confirm all details with the relevant product provider before taking any action which may lead to financial loss.
Home Loan Interest Rate Rises 16 Nov 2010 6:24 AM (14 years ago)
When the Reserve Bank of Australia increased cash rates by 0.25% on Melbourne Cup Day 2 November the Commonwealth Bank immediately responded by increasing its standard loan rates by 0.45% to the fury of Australians everywhere. ING Direct also responded by offering $1,000 to anyone who refinanced their mortgage through them before 30 June 2011 if you registered by 30 November 2010. The remaining banks waited for the furore to die down before announcing that they too were increasing rates by greater than the RBA 0.25%. Here are the rate increases by the Big Four Banks and ING Direct.
Latest Big Four Bank Mortgage Rate Increases
| Bank | Interest Rate Rise |
|---|---|
| Reserve Bank of Australia | 0.25% |
| ANZ | 0.39% |
| Commonwealth Bank | 0.45% |
| NAB | 0.43% |
| Westpac | 0.35% |
These rate increases have now been passed on by all the big four banks to their products as shown below:
| Home Loan Product | Interest Rate | Comparison Rate |
|---|---|---|
| ANZ Simplicity Plus (Basic) | 7.10% | 7.15% |
| ANZ Variable Rate (Standard) | 7.80% | 7.90% |
| CBA Economiser Base Variable Rate | 7.30% | 7.43% |
| Commonwealth Bank Standard Variable Rate | 7.81% | 7.94% |
| NAB Base Variable Rate Home Loan | 7.17% | 7.21% |
| NAB Tailored Home Loan | 7.67% | 7.80% |
| Westpac Flexi First Option Home Loan | 7.16% | 7.21% |
| Westapc Rocket Repay Home Loan | 7.86% | 7.99% |
| ING Direct Orange Advantage (< $300k) | 7.34% | 7.51% |
| ING Direct Orange Advantage (> $300k) | 7.09% | 7.26% |
| ING Direct Mortgage Simplifier | 7.12% | 7.12% |
Exit Fees in the Spotlight
ANZ whilst increasing its rates by 0.39% also indicated that it would be abolishing the Deferred Establishment Fee (an exit fee) for mortgages and providing the following incentives for new and existing customers:
Waiving the loan approval fee of $600 and a subsidy of up to $1,000 to offset exit fees from other lenders for those switching. BUT ONLY IF YOU SWITCH TO A 3 YEAR FIXED RATE HOME LOAN.
ASIC in a media release on 10 November signalled their intention to prevent banks charging unreasonable exit fees.
Mr D’Aloisio said that ASIC’s initial focus will be on the highest fees in the market as they create the biggest barriers to switching. We will challenge lenders who charge high fees to justify how their fee reflects actual losses caused by early termination. Where an exit fee cannot be justified by the lender, ASIC will take compliance or enforcement action.
Home Loan Switching Tips
Switch to a basic home loan product. Every major bank has two types of variable home loans, a basic product and a “standard†product. There is typically very little real difference in features between these products but the interest rate difference across the Big Four Banks ranges from 0.50% to 0.70% pa. On a $300,000 loan this works out to be $136.33 pm or 1,636 pa. If this was applied to your loan it would result in paying off your loan up to 4 years and 7 months earlier.
Hang on – What are the Exit Fees and Application Fees
Before you rush off to switch, ask your current loan provider what the exit cost are. Make sure any recent interest rate increases are accounted for in the calculations. If the costs are significant it may pay to wait 12 or more months as exit fees are typically much higher in the first 5 years. Each product is different and you need to find out these details from your bank.
You also need to take into account all costs associated with the new loan. If your loan to equity ratio is high there may be more costs involved.
The easiest way to switch home loans is to consult a professional mortgage broker. They are required by law to take into account your situation before making a recommendation. A good mortgage broker will also be familiar with most products on the market and be able to answer any questions.
Warning: Home loans have exit fees. Please consult your current lender to find out what they are before considering switching to another product. Itâ€
s strongly recommended that you consult a reputable licensed lending adviser before taking any action as large financial losses may result from imprudent decisions.
ASIC Exit Fee Summary
ASIC have compiled a summary table of exit fees to help the public understand what you might face when you switch home loans.
Summary
| Key issue |  Summary of ASIC guidance |
| What is an early exit fee? | Any fee payable on early termination of a residential loan, generally including deferred establishment fees. |
| Types of costs and losses which may be able to be included in an exit fee |
|
| Types of costs and losses which may not be included in an exit fee |
|
| The limited circumstances in which a lender may vary an exit fees |
|
| How lenders can explain their early exit fees transparently |
|
| Break fees on fixed rate mortgages | The break fee must reflect the cost incurred by the lender because the loan was terminated early. |
Note: the following table is reproduced from the ASIC website for your benefit in accordance with ASIC’s linking policy. Please note this site is not affiliated in any way with ASIC and the reproduction of ASIC material should in no way infer that this site is endorsed by ASIC.
ING Direct $1,000 Home Loan Offer 9 Nov 2010 4:46 PM (14 years ago)
In response to the big four banks being a little less competitive than they might otherwise be, ING Direct have responded by making an offer that seems too good to be true. We dig a little further to see what you may need to consider before taking up this offer to refinance your current home loan with ING Direct.
Details of the ING Direct $1,000 offer
Refinance your existing home loan to ING DIRECT and open an Orange Everyday by 30 June 2011, and as our way of saying thanks and to help you with switching banks we’ll credit your Orange Everyday with $1,000! (from ING Direct website)
You must register here before 30 November 2010.
Issues to consider
What are exit fee costs of our current mortgage?
In the first few years of a mortgage exit fees can run to tens of thousands of dollars. You need to ask your bank for the details based on the current interest rate. Be aware that if there is another interest rate rise between when you ask to switch and when the switch takes place the exit fee could be much higher.
Compare ING Direct Interest Rates
As you would expect ING Direct have a suite of competitive home loan products.
| Name | Interest Rate | Comparison Rate |
|---|---|---|
| Orange Advantage (<$300k) | 6.96% | 7.13% |
| Orange Advantage (>$300k) | 6.71% | 6.88% |
| Mortgage Simplifier | 6.74% | 6.74% |
| Commonwealth Bank Standard Variable Rate | 7.81% | 7.94% |
At the time of writing, the only the Commonwealth Bank has raised rates of their home loan products in response to the Reserve Bank of Australia (RBA), increasing cash rates by 0.25% on 2 November. The Commonwealth Bank citing increased costs associated with borrowing wholesale funds, increased their home loans by 0.45%. The remainder of the big four banks have remained silent waiting for consumer anger to pass.
Be aware when making comparisons, that expected increases to ANZ, NAB and Westpac home loan products has not yet been passed on. It is expected that these increases will be at least 0.25% and up to 0.45%.
Costs of Switching Home Loans
Whenever you consider changing products you should make yourself aware of any costs that may apply. This includes costs from your current product provider and the provider you are considering switching to. Even though the new product may have a lower interest rate and repayment schedule, the cost of exiting your current product may mean that it is not financially beneficial to switch. Exit fees for some home loans in the first few years can run into tens of thousands. You should also be aware that any quoted exit costs will probably change if there is a rate rise between when you ask to switch and when the switch actually occurs. If there has been a interest rate change initiated by the RBA, be very careful.
Pro’s and Con’s of ING
ING Direct follows a direct banking model which is heavily reliant on internet and phone banking to service your needs. They do not operate typical bank branches and a limited physical presence allows them to have lower running costs and hence the ability to offer more competitive products. They are owned by the international Dutch banking group ING Group, the third largest savings bank in the world. They currently have approximately 1.4 million Australian customers and are Australia’s fifth largest bank.
Warning: Never take any action regarding your loans without first working out what the costs are of switching. Very large exit fees may be applicable. Consult your current provider before taking any action. And while you are at it, ask them to match any offer you may have. It is highly recommend that you should consult a qualified finance professional.
Top 10 Ways to Screw the Big 4 Banks 3 Nov 2010 10:23 PM (14 years ago)
The big 4 Australian banks despite other banks around the world doing it tough due to the GFC, are claiming the cost of wholesale borrowings are getting more expensive and they need to pass this on. According to the Federal Treasurer and the opposition shadow Treasurer this is not true.
Despite these extra costs they are making record profits. Does this seem fair?
You are paying for the Big 4 Bank Profits.
“ANZ Banking Group Ltd says its third quarter net profit was up 37 per cent“
“THE Commonwealth Bank has delivered a record $5.66 billion profit, fuelling claims of profit-gouging“
“The National Australia Bank has reported a 63-per cent jump in full-year profits to $4.2 billion“
“Westpac profit soars 84% to record $6.4bn“
Here’s what you can do to beat them at their own game.
Get out of your comfort zone!
Most Australian’s bank with the big 4 (ANZ, Commonwealth Bank, NAB and Westpac) and most people have, bank transaction accounts, savings accounts, credit cards, car or personal loans and a mortgage or home loan. If you take a little time to compare whatâ€s available, get out of your comfort zone and actually move your custom to the better alternatives you will save money and force the big banks to compete.
Did you know three of the big 4 actually have smaller subsidiaries.
- Commonwealth Bank owns Bankwest.
- NAB owns UBank.
- Westpac owns St George Bank.
These subsidiaries typically allow the big banks to engage in more competitive practices to combat the lesser known players (in Australia) such as ING Direct, Rabo Australia, Citibank and HSBC. You will typically find that the interest rates offered by these subsidiaries and lesser knowns banks are more competitive than the big 4.
Now note the last banks mentioned. These are not small banks but some of the largest banks in the world whom have an Australian presence. If you are worried about having your money or loans with banks smaller than the big 4 then this is not a reason to discount these banks.
You have to be prepared to widen your view past your childhood school bank account if you want to save.
You don’t have to have all your eggs or bank products in one basket because managing multiple accounts with internet banking is easy.
One bank might have the best home loan rate whilst another might have the best savings account interest rate. Using the net makes it easy to transfer money between banks and you can ask your bank not to send you hard copy statements to cut paperwork.
Kick them where it hurts. Show them what loyalty means. Don’t get mad, get even.
Top 10 Ways to Screw the Big 4 Banks
1. Transfer all surplus cash to a high interest savings account. Compare high interest savings accounts.
2. Transfer your mortgage to a lower interest rate home loan. Use a reputable mortgage broker to save time.
3. Open a no monthly fee transaction account and arrange for your wages to be deposited into it.
4. Pay down or pay out outstanding credit card balances and close the card or transfer to a no annual fee credit card.
5. Balance transfer large credit card debts to a low interest credit card.
6. Don’t get sucked in by credit card rewards programs that you fund with higher fees. Transfer to a low interest or no annual fee credit card.
7. Debt consolidation. Amalgamate high interest loans (personal loans, car loans, credit cards) into your home loan and keep making repayments at the old level.
8. Check out the more competitive subsidiaries – CBA/BankWest, Westpac/St George, NAB/UBank.
9. Play them off. Tell your bank you are going to leave for a lower cost competitor and ask them to match it. Check exit fees payable before taking any action.
10.Get the best banking product wherever you can. With internet banking you don’t need to have all your products with the same provider.
Compare, move and save or they will treat you as they do now.
Warning: The majority of bank loan products (home loans and personal loans) and some other bank products will have exit or early repayment fees that may be applicable. You must find out what these are before taking any action. Any decision to change products must take these factors into account. Please seek advice from an appropriate professional adviser before taking any action.