Letter from Oz

CURRENT headlines are focused on the Reserve Bank of Australia and its decision to cut interest rates yet again for the fourth time in as many months.

Peter Gladwell

CURRENT headlines are focused on the Reserve Bank of Australia and its decision to cut interest rates yet again for the fourth time in as many months.

The one percentage point reduction did not have the effect on the Australian stock market some analysts predicted. Instead the ASX fell by 4% at close.

Much has been influenced by the dramatic drop in Wall Street the previous night by nearly 700 points. Shares on the ASX have suffered particularly those in the resources and major banking sector.


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The Federal Treasurer Lindsay Tanner said it is hoped that the banks will pass the full interest rate cut to consumers and thus far the Australian National Bank and Commonwealth Banks have done just that that but the ANZ has only passed on 0.85% and the Westpac 0.83%.

The banks continue to remain the focus of much discussion and criticism owing to their continual arrogance over the interest rates charged to credit cards.

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People are strongly advised to shop around to find the best interest rates and change to those banks or other institutions offering the best deals.

The Federal Government has decided to downgrade its original forecast for growth next year and has adjusted its figures to a more realistic 1.2%.

But since this prediction was released resources, banking and retail figures have tumbled further and Prime Minister Kevin Rudd has started to talk about the economy going into negative territory and that maybe his government will need to spend more money from the surplus and even go into deficit to prevent the economy from going deeper into a recession resulting in higher unemployment.

Following the plight of the American auto industry General Motors Holden, based in Port Elizabeth near Adelaide, has announced that employees will be put on reduced working hours and pay over the forthcoming Christmas holiday period because of falling sales for flagship models.

The plant will be closed soon for a period of one month and possibly longer if sales do not increase. The Ford Motor Company have made similar decisions with lay offs at their Melbourne Cambellfield plant but have decided to keep their Geelong engine plant going despite falling world demand for their products.

To many this is simply putting off the inevitable because the company continues to manufacture the six-seater Falcon with its straight six cylinder engine not known for its fuel economy.

Australians have been caught up in the recent turmoil in Mumbai, India, with two lives being lost in the terrorist attacks on the Taj Mahal and Oberoi hotels and Leopold Café last week.

The Federal Government and Qantas have joined forces and have ferried a number of injured business people and holiday makers back to Australia.

Meantime another rescue mission has been implemented by joint Federal Government and Qantas intervention to the Bangkok crisis to bring home a number of Australian tourists trapped in Bangkok International Airport for days while the country is absorbed in political confrontation over the rights of the elected Prime Minister and his government to govern.

In the State of Victoria November was a much better month for rainfall compared with October with an average of 100mm being recorded in most areas.

Despite this the Melbourne reserves only rose by 0.3% to 33%. Where I live our gauge registered a total of 150.5 mm compared with 86mm last year and an overall total so far in 2008 of 724mm compared with 921mm for the same period last year, a shortfall of 197mm or nearly eight inches.

The State Government has predicted that Melbourne will require a further expansion to cater for the new homes needed over the next 20 years.

None of us need to be scholars to ask where all the water is going to come from to service these new homes when our annual rain fall and water reserves continue to diminish year after year.

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