Wednesday, August 02, 2006

Not everybody hates interest rates going up

"Nobody likes interest rates going up"

- PM John Howard, 2 August 2006 and 3 June 2002

Unlike four years ago, today’s Howard quote* came without any caveats, to the effect that higher interest rates are actually good for some Australians, such as self-funded retirees (as Alan Jones prompted the PM in 2002) (same URL).

I’ve previously suggested that there is also quite another cohort – numerically sizeable, but electorally invisible, seemingly – for whom higher interest rates are unequivocally good: those currently locked out of the property market (who are mostly Xers).

From now on, each mortgagee auction of a McMansion will warm the cockles of my heart, as both a marker and a further enabler of property prices ticking steadily down towards something rational – i.e. a half-to-two-thirds fall.

Such feel-good thoughts are not only about property prices falling, though. Alone, such is still not going to allow me to buy a place. Rather, the necessary adjustment will force Australia to get a real economy, rather than the fools-gold one of the last two decades. Economic “growth” driven almost solely by consumption of imports, which are in turn financed by ever-higher house- and mineral prices, neither of which trends are rationally sustainable?

The ugliness of such “growth” has been compounded by the decimation, over the same time of my chosen vocation/employment sector: universities. In the fools-gold economy, tertiary education has suffered a double-whammy: the nude emperor has needed protection from the comments of wiser onlookers, and building up a real, sustainable (= export and knowledge-driven) economy has been deemed irrelevant, at best.

So Western Sydney’s highly-geared Howard-lovers may now like to befriend an educated Xer or two, so as to quickly learn the art of eating crow. When their energy-pig edifices are unceremoniously torn down to free up the land underneath for agriculture (it’s too long a long bike-ride to the station to commute, and owning a car will be so-o-o 2006 when petrol’s $5/litre), the McMansionites might finally get a glimmer of what they – and all of us, this time – have truly lost.

* Which Google ascribes to him uniquely, BTW

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