It would be an interesting short term investing strategy.... if Labor win (or you are 99% sure they win), then you should pick up shares in companies that want to dump the franking credits. Just like there likely will be an uptick in prices (or not much falling) in investor targeted real estate (to get the negative gearing grandfathered).
This then ties into the question of the Fed's 2% interest rates. That is the new HIGH water mark. Over the next 40 years lows will be 0%. The highs will be 2%. And debt (new monetary theory) will be not a problem. Govts will do as they did in the last 10 years - it worked. They printed money. The Feds buy assets as needed. That is, deflation is combated by inflation. And they just balance. (and the working class are in the deflation - so never have wage increases... but the inflation applies to upper class assets)
So, have a guess what it means for Aussie banks. Well, it means the Aussie Fed will do as required to prevent a crash. Interest rates will fall. They will print money if required. That will just be to keep the status quo. That is, deeply, deeply indebted working class slaves. This will be good for Aussie banks. Wages will be earned and the first part will be taxes. The next part will be repaying the mortgage. And the payer can never wiggle out.
So I am back to where I started a year or two ago. The banks will be wonderfully protected and helped as much as possible by govts. Now, they cannot grow though. As the indebted, worker slaves are so indebted they cannot really afford MORE mortgage - well, unless you end up with three or four in a marriage, then you can have four people wages buying a house.
Now back to the interest rates... as the indebtedness is at max (personally) they can never go up. And as the debt increases to infinity by govts they will not want to raise rates (it looks like infinity comes to fast) - mind you, they can just print infinity money to pay for infinity interest rates.
So, welcome to the new reality
- interest rates will never go above 2% again
- personal debt will be encouraged forever to allow the person to have a happy-ish life as a slave
- Modern Monetary Theory will take hold and govts will stay on the road to infinite debt (mind you, they told us they were not on the road... remember rates would come back to normal (4-5%) and Feds would do quantitative tightening); it is so much easier to just admit they ARE on that road
- the last 10 years will continue forever.... HIGH END asset price increases forever; wages will never increase; interest received by normal savers will always be near zero
My belief is govt and Feds will err on the side of over compensating for deflation. So there is a possibility an over compensation will create inflation even down to the normal house and wages.
So, Aussie banks.... cannot crash, our govt will not allow it. And if inflation goes crazy, then Aussie banks will do very well.
(I might be all wrong
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(20min delay)
