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so lets look at this closely: Banks - banks make more money when rates are higher, as they can get a bigger spread between what they offer savers and borrows.

by Khaine 4y ago

so lets look at this closely: Banks - banks make more money when rates are higher, as they can get a bigger spread between what they offer savers and borrows. CBA, Australia's largest bank has a net interest margin of 2.1%. This means that the difference between the cost of interest paid to savers, and that borrows pay is 2.1%. This 2.1% covers all of the expenses and profit the bank makes. Banks make obscene amounts of money due to the volume and value of the loans. Amazingly, banks want to maintain their NIM, to ensure they can fund all of the compliance costs, risk management, and technology costs. If you looked at the Investor Presentation you would have seen that in the last quarter the NIM for CBA dropped which is why the share has been sold off. Due to strong competition in the banking sector Qantas announced record profit because demand for flights is really, really high, but flight volumes have not returned to pre-covid levels. This is why flights are still very expensive. Again, inflation is on the demand side, to counter the increase in demand, Qantas has raised prices to ensure the flight demand meets what it can supply. You will note, Qantas is also actively trying to build out more flight capacity to cater to the excess demand. Supermarkets, I already spoke to, down thread. This is a reversion driven by reduced costs from COVID. 'Mr Kierath said it was important to note the companies' profits fell in the last six months of 2021, so these results were rebounding off an unusually low base.' Ergo, they look good because they were depressed in the prior reporting season. Ergo, it's just corporations bashing, because people are mad inflation is going up. If you look at Woolworth's profits over time, it would look to be going back to normal levels[1] after a dip due to COVID. [1] https://www.statista.com/statistics/1116200/australia-net-pr https://www.statista.com/statistics/1116200/australia-net-pr...

naasking 4y ago
> Qantas has raised prices to ensure the flight demand meets what it can supply. This is weasly language for "price gouging". There's literally no problem with Qantas just selling the seats they had at reasonable prices and then saying, "sorry, no more seats available". Instead, you're trying to portray it as totally natural and just that they take advantage of any circumstances to squeeze as much out of their customers as possible. Market-think has perverted your worldview. The people tolerate markets because they generally serve the common good via innovation, competition and self organization. When the market deviates from that objective, like by price gouging to enrich a few at the expense of the public, it is right to criticize and correct it, not try to justify that the market is right and the common good is wrong.
- Khaine 4y ago
  That's what markets do, they co-ordinate supply and demand. If you can't raise prices to ease demand, what do you do? That extra money they are making, is then used to invest in more planes, and crew to staff more flights to serve more customers/ You can't have capitalism, without both sides of that coin. That's how markets work.
  - naasking 4y ago
    > That extra money they are making, is then used to invest in more planes No, they're spent on stock buybacks to enrich shareholders, instead of invested back into their workforce or expanding capacity: https://www.youtube.com/watch?v=udITRL9-t08 https://www.youtube.com/watch?v=udITRL9-t08 I don't know why people keep believing in this myth, this reinvestment only happens when there's sufficient competition and no coordination, which is not the world we live in.
- monero-xmr 4y ago
  If there is 1000 units of something but demand for 5000 units, you increase the price until demand equals 1000 units. There is no conspiracy. This is fundamental economics. “Market-think” is about freedom. The alternative is “authoritarian-think” and that always ends in tears. Just start setting prices by government decree and see what happens.
  - jay_kyburz 4y ago
    In the case where products can be profitably produced at a cheaper price, the people should band together, put aside the market system, and produce all 5000 units. More people are served. If its costs $100 to fly somebody from Sydney to Melbourne and Qantas is selling tickets for $1000, Australians should run an airline and sell tickets for $200. Governments should get into the business of keeping markets competitive.
    - makomk 4y ago
      Even in an ideal world where there's no fundamental difference in the cost of producing 1000 units or 5000, companies aren't going to be able to sell 5000 at the same price as they could 1000 when doing so exceeds their current capacity. Expanding that capacity means more staff and equipment, which costs money that has to be paid for somehow. It also takes time, which means that it cannot act as an immediate solution to the cost problem and also that there's substantial risk involved - by the time the extra capacity is there, the demand may not be. In order to justify taking on this risk there needs to be the expectation of substantially higher profits. Also, commercial airlines in particular are an industry with a history of over-optimistic expansion followed by cut-throat competition on pricing and then bankrupcy, and I'm pretty sure everyone in the industry knows this by now which is why there's not a huge rush to expand massively.
mattwilsonn888 4y ago
Appreciate you taking the time to write this.
ssss11 4y ago
Well it isn’t wages fuelling the inflation. Wages aren’t rising but our mortgage repayments certainly are!

by Khaine 4y ago

naasking 4y ago

> Qantas has raised prices to ensure the flight demand meets what it can supply. This is weasly language for "price gouging". There's literally no problem with Qantas just selling the seats they had at reasonable prices and then saying, "sorry, no more seats available". Instead, you're trying to portray it as totally natural and just that they take advantage of any circumstances to squeeze as much out of their customers as possible. Market-think has perverted your worldview. The people tolerate markets because they generally serve the common good via innovation, competition and self organization. When the market deviates from that objective, like by price gouging to enrich a few at the expense of the public, it is right to criticize and correct it, not try to justify that the market is right and the common good is wrong.

Khaine 4y ago
That's what markets do, they co-ordinate supply and demand. If you can't raise prices to ease demand, what do you do? That extra money they are making, is then used to invest in more planes, and crew to staff more flights to serve more customers/ You can't have capitalism, without both sides of that coin. That's how markets work.
- naasking 4y ago
  > That extra money they are making, is then used to invest in more planes No, they're spent on stock buybacks to enrich shareholders, instead of invested back into their workforce or expanding capacity: https://www.youtube.com/watch?v=udITRL9-t08 https://www.youtube.com/watch?v=udITRL9-t08 I don't know why people keep believing in this myth, this reinvestment only happens when there's sufficient competition and no coordination, which is not the world we live in.
monero-xmr 4y ago
If there is 1000 units of something but demand for 5000 units, you increase the price until demand equals 1000 units. There is no conspiracy. This is fundamental economics. “Market-think” is about freedom. The alternative is “authoritarian-think” and that always ends in tears. Just start setting prices by government decree and see what happens.
- jay_kyburz 4y ago
  In the case where products can be profitably produced at a cheaper price, the people should band together, put aside the market system, and produce all 5000 units. More people are served. If its costs $100 to fly somebody from Sydney to Melbourne and Qantas is selling tickets for $1000, Australians should run an airline and sell tickets for $200. Governments should get into the business of keeping markets competitive.
  - makomk 4y ago
    Even in an ideal world where there's no fundamental difference in the cost of producing 1000 units or 5000, companies aren't going to be able to sell 5000 at the same price as they could 1000 when doing so exceeds their current capacity. Expanding that capacity means more staff and equipment, which costs money that has to be paid for somehow. It also takes time, which means that it cannot act as an immediate solution to the cost problem and also that there's substantial risk involved - by the time the extra capacity is there, the demand may not be. In order to justify taking on this risk there needs to be the expectation of substantially higher profits. Also, commercial airlines in particular are an industry with a history of over-optimistic expansion followed by cut-throat competition on pricing and then bankrupcy, and I'm pretty sure everyone in the industry knows this by now which is why there's not a huge rush to expand massively.

mattwilsonn888 4y ago

Appreciate you taking the time to write this.

ssss11 4y ago

Well it isn’t wages fuelling the inflation. Wages aren’t rising but our mortgage repayments certainly are!