Money's Too Tight To Mention

Can someone please help me wrap my head around our flailing economy?

Mad Mick Hucknall knew…

I must preface this dribble by saying I’m not an economist's arsehole and that this blog is more of a question than a statement where hopefully one of you highly intelligent readers can help me to understand what the fuck is going on with our economy.

I’m happy to be wrong about anything I say. In fact, I’m hoping that I am and someone can explain a few things to me because, as it stands, it’s difficult to make sense of it all.

I hate money. I hate talking about it. I hate that some people gauge the value of others by how much of the shit they have. But with all the interest rate hikes over the last ten or so months and the budget being delivered on Tuesday night, mentally, I can’t seem to escape it.

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Background

We moved to the coast last July. At the time, the best thing to do was rent out or house in Canberra and use the equity from that house as a deposit to buy a second house here at The South Coast. Before this, We had never even entertained the idea of owning an investment property. We’d just done so well out of the Canberra house, and given the desperate state of the rental market, this seemed to be the best option at the time. Plus, it provided us with a fallback plan in case things didn’t work out down here.

My partner took 12 months of maternity leave at the end of July, around the time interest rates started increasing. She is very successful in her career and gets some pretty handy maternity leave benefits. So at the time, we were confident that we would be ok.

We recently went to the accountant to get all of our ducks in a row before EOFY. Given we run an Airbnb on the bottom level of our house and are now “landlords”, it was safe to say lodging our tax returns this year would be a little more complex than in previous years. The news from the accountant was great, and I felt a massive sense of relief walking out of that office. Again, I felt confident we were going to be ok.

I don’t want to be seen to be complaining, though. We are very fortunate. We did really well out of our first home, and it provided us with this amazing opportunity to invest in our future by buying a second house. But the timing couldn’t have been worse. When you drop back down to 75% of your usual combined income at the same time the first of many consecutive interest rates hits, it can be a little bit stressful. Because you know, being new parents in a new town wasn’t stressful enough.

We are now paying around 60% more in mortgages than we were in July last year when we purchased the second house. I don’t want or need sympathy. Just stating a (loose) fact.

My partner will take annual leave for the last eight weeks of maternity leave which will combine with a nice little tax return to bring some much-needed relief. So barring disaster, we are going to be just fine. But millions of Australians either already aren’t fine or are on the brink of losing everything.

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My (Limited) Understanding

I understand that our economy may have crashed if not for the government putting so much money into the economy during the pandemic. I think it’s good that so much was done in such a desperate time to keep families housed and fed and to keep small businesses operating. But did we go overboard? Did we release too much money? When you combine all that money released with everyone going back to work and unemployment being at a record low, there is/was too much money floating around in the economy, causing inflation. Because there is only so much “stuff” out there to buy, and now we have too much money for the amount of stuff we have, we’re willing to pay more for that stuff, so the price of stuff inflates? Does that make sense?

So now, the government/reserve bank needs to rope in some of that cash that’s floating around because otherwise, the cost of living won’t get any better, an almost impenetrable housing market will get even harder to break into, and we will see levels of the wealth divide as we’ve never known before in this country? This is why interest rates are raised, essentially drawing some of that floating cash out of circulation and back into the RBA’s neta little hidey-hole. Almost like they opened the door, and a gust of wind came along and blew a little bit too much cash out the door, and now they have to scramble around to pick up as much of it as they can and tuck it back away because things are too volatile with that much cash floating round and it’s easier to achieve order when it’s neatly back in its spot.

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What I Don’t Understand/Pisses Me Off

I don’t understand why the language on the news is all about “us” and “we” being in this position when it feels like that’s not the case. Sure, raising interest rates is probably the easiest and quickest way to kerb inflation, but surely there are other ways? I’m not suggesting interest rates don’t go up at all, but surely there are other things that can be done to reduce inflation along with raising interest rates to help share the burden around a little.

I don’t understand how, if we are all in this together, massive corporations like Woolworths can report a 14% increase in profits in the half-yearly report but only a 9% increase in revenue. They say they have made some changes to their business model, and that’s how they have been more profitable, but what’s stopping these huge companies who have monopolised their industry from increasing their markup on products and justifying it because of the war in Ukraine impact on the price of fuel. Fuel prices went up, and the cost of food went up accordingly. The fuel prices went back down, and the food cost stayed the same. It makes me wonder, are these corporations such soulless assholes that they will use a war on the other side of the world or the constant reporting of inflation and cost of living to raise their prices unjustifiably?

Oil company Shell doubled their profits in 2022 off the back of the war in Ukraine.

Interest rates are rising, and the banks are quick to pass them on, yet they, too, are all recording record profits.

Maybe I’m jumping at ghosts, but I think it’s pretty fucked up that when we’re in such a shitty economic position as a nation, and we’re now at a point where people are struggling to pay rent and buy food, that places like Woolworths are reporting such massive profits.

I understand that it’s important for places like Woolworths to be making profits of some sort. Sadly, we need places like Woolworths. We don’t have the local butchers, bakers and candlest… I’m not doing that, and fruit and veg shops that we used to. Many can’t afford to buy organic fruit and veg from the farmers’ markets or don’t have access to them geographically. So we need places like Woolworths to be economically viable so that they can maintain that buying power, employ thousands of people and continue to provide us with food. I just think maybe we’re bending over too much for these massive corporations and not making them do any of the heavy lifting themselves.

I guess what pisses me off is that it always seems like the everyday person that has to do the hard work. These big corporations get rich off the back of the working class. The Australian economy was built on agriculture, initially. Then once we discovered how many minerals we had lying around, mining took over from that. The drought came, and we couldn’t look after those people who helped to put the country in such a strong financial position earlier on. Mining magnates get rich off the back of the hard work of everyday Australians too.

I understand that we get paid for what we do. We choose to go off to work each day and work in our specific industry. People in the mines get paid well, and deservedly so. But the way I see it, the middle class always seems to have to dig us out of the shit. The same hard-working middle class that has been helping the mega-rich line their pockets for decades. Is a windfall tax for these global corporations such a terrible idea or are we too scared of upsetting them?

Oh, and to all the entitled fucking arseholes online saying shit like, “You shouldn’t have borrowed as much as you did if you can’t pay it off”, fuck off! Even if you were right, after four or five rate rises, even if you have a point, is it that important to you to be right that has to be a fucking arsehole to people who have enough shit on their plate right now? If you’re not being empathetic or helpful, just shut the fuck up. Stop with unnecessary shit.

Again, I understand these corporations provide employment for millions of people. They need to be financially viable, but record profits in a time where so many are struggling so badly just don’t feel right.

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Summary

I know, I sound like a spoilt, entitled wanker from the internet whinging because things are getting a little bit hard. I’m well aware of how fortunate I am to be in my position.

I understand that if not for that injection of cash into the economy during the pandemic, house prices wouldn’t have gone up, and we potentially wouldn’t have had the opportunity to move to the coast and buy a second home and that I am grateful for. I get that these things go in swings and roundabouts; like it or not, sometimes we just have to ride the wave.

I guess I’m just empathetic to the people who are genuinely doing it so tough. There are people who work full-time hours and more, people who work two jobs, contribute to society and pay their taxes who are struggling. We shouldn’t be a country where working 40+ hours a week is no longer enough to just get by.

As I said at the top, I’m not an economist’s arsehole, and I’m sure this is much more nuanced than my stupid roadworker brain can comprehend. Hopefully, someone in the comments is kind enough to explain some things to me. People are seeking some surety, even a rough estimate of when things might get a little easier. Things are much easier when you can see the finish line. I know it’s difficult to predict and that there are countless contributing factors, but I think most of all, people just want to feel safe and secure.

For now, we have each other. We have family and community. I guarantee you people you know will be struggling more than they’re willing to, let alone right now. You might wish you could help them financially but aren’t in a position to do so. But you are in a position to ask them how they are going. Listen intently, encourage them to keep talking, and be a friend. I’m worried about how all this shit is affecting people’s mental health.

Cheers Wankers.

X.

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