With economists like this, Australia's economic behaviour makes much more sense.
"I, for one, am choosing to ring out 2022 with a committed YOLO (“You only live once”) mindset. That’s despite the rather worrying prospect of my home loan interest rate roughly tripling mid-next year, which is set to whisk away my entire current cash flow surplus each month.
I am not alone.
An extraordinary number of Australians are about to suffer severe “mortgage shock” in 2023 as they roll off ultra-low fixed interest rate loans, often secured at sub-2 per cent rates during the height of the pandemic...
...The risk for the RBA is that those of us who fixed are acting as if we are much more immune to the message the bank is trying to send, namely to stop spending so much and adding to inflation.
We are perhaps acting more like our American cousins, of whom about 90 per cent are on fixed interest loans at terms of 30 years – making them far more sanguine about the US Fed’s aggressive rate hike campaign.
Unlike our American friends, however, Aussie borrowers will soon be hit with a giant “fiscal cliff” as fixed terms end. Around two-thirds of existing fixed-rate loans are set to expire over the course of 2023 (with a lucky third having fixed until 2024 or beyond)."
The Australian peoples spending behaviour is sending the message that people think these interest hikes are just a temporary speedbump. There appears to be no recognition that the days of tradies driving $80,000 ute's and $20,000 trailers to tow their tools to work, or couples eating out every weekend, or spending top dollar on entertainment, holidays and household gadgets is quickly coming to an end.
Australians have become addicted to an easy lifestyle and an ever increasing economic prosperity that has seen people live far above their means for sometime now. People think there will always be economic growth and increasing wealth. And they are not hearing the message: those days are over.
Maybe they are not fully over, maybe this is just a temporary lull. Who can predict the future right? But the RBA doesn't hike rates so quickly to such a high rate for no reason, the Covid stimulus created a bubble, and they are desperately seeking to retract it before it pops suddenly. Because if, and I think when, it pops, it's going to hit big debt spenders hard.
But with economists who say in the face of this: YOLO, it's no wonder Australians can't stop living large. Even the experts are living life like the good times will never end. And implying other Aussies should too.
I find this fascinating. I think Australians are in for a rude shock soon. Fixed interest rates are about to expire, immigration is being ramped up, giving Aussie wealth to more foreigners and driving costs of living up further, and war is building on the horizon. But the economic experts are just saying, screw it, enjoy it while you can, YOLO. The wonder.
Hard times are ahead, prepare.