Australian Politics Forum - Hit The Bank With The Big Stick

macman

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Re: Hit The Bank With The Big Stick
Reply #15 - Oct 14^th, 2019 at 5:11pm

crocodile wrote on Oct 14^th, 2019 at 8:09am:

The dumbos on this board and our illustrious gummint and opposition just don't realise that a cut to the funding rate and the lending rate of the same amount doesn't maintain equal difference. Idiots.

I'll tell you what the dumbos on this board realise.... that these parasites are charging up to 25% on credit cards and paying depositors as low as 0.1% on savings.....and you are pushing their barrow? More on!

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Bobby.

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Re: Hit The Bank With The Big Stick
Reply #16 - Oct 14^th, 2019 at 5:39pm

macman wrote on Oct 14^th, 2019 at 5:11pm:

crocodile wrote on Oct 14^th, 2019 at 8:09am:

The dumbos on this board and our illustrious gummint and opposition just don't realise that a cut to the funding rate and the lending rate of the same amount doesn't maintain equal difference. Idiots.

I'll tell you what the dumbos on this board realise.... that these parasites are charging up to 25% on credit cards and paying depositors as low as 0.1% on savings.....and you are pushing their barrow? More on!

Croc is an apologist for banking thieves.

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crocodile

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Re: Hit The Bank With The Big Stick
Reply #17 - Oct 14^th, 2019 at 5:43pm

macman wrote on Oct 14^th, 2019 at 5:11pm:

crocodile wrote on Oct 14^th, 2019 at 8:09am:

The dumbos on this board and our illustrious gummint and opposition just don't realise that a cut to the funding rate and the lending rate of the same amount doesn't maintain equal difference. Idiots.

I'll tell you what the dumbos on this board realise.... that these parasites are charging up to 25% on credit cards and paying depositors as low as 0.1% on savings.....and you are pushing their barrow? More on!

Christ you're a fukkwit. Don't you understand risk.

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Very funny Scotty, now beam down my clothes.

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crocodile

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Re: Hit The Bank With The Big Stick
Reply #18 - Oct 14^th, 2019 at 5:45pm

Bobby. wrote on Oct 14^th, 2019 at 5:39pm:

macman wrote on Oct 14^th, 2019 at 5:11pm:

crocodile wrote on Oct 14^th, 2019 at 8:09am:

The dumbos on this board and our illustrious gummint and opposition just don't realise that a cut to the funding rate and the lending rate of the same amount doesn't maintain equal difference. Idiots.

I'll tell you what the dumbos on this board realise.... that these parasites are charging up to 25% on credit cards and paying depositors as low as 0.1% on savings.....and you are pushing their barrow? More on!

Croc is an apologist for banking thieves.

How did you work that one out. There's no apology anywhere. Plain simple fact is that the rate decrease 1 for 1 results in less profit. Operating cost and wages don't go down in sympathy with a rate cut.

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Very funny Scotty, now beam down my clothes.

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Bobby.

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Re: Hit The Bank With The Big Stick
Reply #19 - Oct 14^th, 2019 at 6:14pm

crocodile wrote on Oct 14^th, 2019 at 5:45pm:

Bobby. wrote on Oct 14^th, 2019 at 5:39pm:

macman wrote on Oct 14^th, 2019 at 5:11pm:

crocodile wrote on Oct 14^th, 2019 at 8:09am:

The dumbos on this board and our illustrious gummint and opposition just don't realise that a cut to the funding rate and the lending rate of the same amount doesn't maintain equal difference. Idiots.

I'll tell you what the dumbos on this board realise.... that these parasites are charging up to 25% on credit cards and paying depositors as low as 0.1% on savings.....and you are pushing their barrow? More on!

Croc is an apologist for banking thieves.

How did you work that one out. There's no apology anywhere. Plain simple fact is that the rate decrease 1 for 1 results in less profit. Operating cost and wages don't go down in sympathy with a rate cut.

Either you're with us or you're with the banks.

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juliar Gold Member Offline Australian Politics Posts: 22966	Re: Hit The Bank With The Big Stick Reply #20 - Oct 14^th, 2019 at 6:40pm Whack!!!
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crocodile

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Re: Hit The Bank With The Big Stick
Reply #21 - Oct 14^th, 2019 at 6:46pm

Bobby. wrote on Oct 14^th, 2019 at 6:14pm:

crocodile wrote on Oct 14^th, 2019 at 5:45pm:

Bobby. wrote on Oct 14^th, 2019 at 5:39pm:

macman wrote on Oct 14^th, 2019 at 5:11pm:

crocodile wrote on Oct 14^th, 2019 at 8:09am:

The dumbos on this board and our illustrious gummint and opposition just don't realise that a cut to the funding rate and the lending rate of the same amount doesn't maintain equal difference. Idiots.

I'll tell you what the dumbos on this board realise.... that these parasites are charging up to 25% on credit cards and paying depositors as low as 0.1% on savings.....and you are pushing their barrow? More on!

Croc is an apologist for banking thieves.

How did you work that one out. There's no apology anywhere. Plain simple fact is that the rate decrease 1 for 1 results in less profit. Operating cost and wages don't go down in sympathy with a rate cut.

Either you're with us or you're with the banks.

I'm not with anybody. It's just a simple observation that reducing the loan interest rate by the same rate as the borrowed rate reduces the profit margin. It doesn't get any simpler except the simpletons around here don't quite understand it even though it is a pretty straightforward concept.

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Very funny Scotty, now beam down my clothes.

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Bobby.

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Re: Hit The Bank With The Big Stick
Reply #22 - Oct 14^th, 2019 at 6:53pm

crocodile wrote on Oct 14^th, 2019 at 6:46pm:

Bobby. wrote on Oct 14^th, 2019 at 6:14pm:

crocodile wrote on Oct 14^th, 2019 at 5:45pm:

Bobby. wrote on Oct 14^th, 2019 at 5:39pm:

macman wrote on Oct 14^th, 2019 at 5:11pm:

crocodile wrote on Oct 14^th, 2019 at 8:09am:

The dumbos on this board and our illustrious gummint and opposition just don't realise that a cut to the funding rate and the lending rate of the same amount doesn't maintain equal difference. Idiots.

I'll tell you what the dumbos on this board realise.... that these parasites are charging up to 25% on credit cards and paying depositors as low as 0.1% on savings.....and you are pushing their barrow? More on!

Croc is an apologist for banking thieves.

How did you work that one out. There's no apology anywhere. Plain simple fact is that the rate decrease 1 for 1 results in less profit. Operating cost and wages don't go down in sympathy with a rate cut.

Either you're with us or you're with the banks.

I'm not with anybody. It's just a simple observation that reducing the loan interest rate by the same rate as the borrowed rate reduces the profit margin. It doesn't get any simpler except the simpletons around here don't quite understand it even though it is a pretty straightforward concept.

Rubbish -
if the banks were getting money for 2% at lending it at 5%
they would be making 3% on the deal.

If they were getting money at 1% and lending it at 4%
they would still be making 3% on the deal.

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juliar Gold Member Offline Australian Politics Posts: 22966	Re: Hit The Bank With The Big Stick Reply #23 - Oct 14^th, 2019 at 6:54pm Croc I know you understand this much better than I or these sad and sorry Lefties but can you elaborate on just what is the funding rate and the lending rate. I thought it was simply a matter of the banks reducing their interest rate on home loans etc.
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crocodile

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Re: Hit The Bank With The Big Stick
Reply #24 - Oct 14^th, 2019 at 7:03pm

Bobby. wrote on Oct 14^th, 2019 at 6:53pm:

crocodile wrote on Oct 14^th, 2019 at 6:46pm:

Bobby. wrote on Oct 14^th, 2019 at 6:14pm:

crocodile wrote on Oct 14^th, 2019 at 5:45pm:

Bobby. wrote on Oct 14^th, 2019 at 5:39pm:

macman wrote on Oct 14^th, 2019 at 5:11pm:

crocodile wrote on Oct 14^th, 2019 at 8:09am:

The dumbos on this board and our illustrious gummint and opposition just don't realise that a cut to the funding rate and the lending rate of the same amount doesn't maintain equal difference. Idiots.

I'll tell you what the dumbos on this board realise.... that these parasites are charging up to 25% on credit cards and paying depositors as low as 0.1% on savings.....and you are pushing their barrow? More on!

Croc is an apologist for banking thieves.

How did you work that one out. There's no apology anywhere. Plain simple fact is that the rate decrease 1 for 1 results in less profit. Operating cost and wages don't go down in sympathy with a rate cut.

Either you're with us or you're with the banks.

I'm not with anybody. It's just a simple observation that reducing the loan interest rate by the same rate as the borrowed rate reduces the profit margin. It doesn't get any simpler except the simpletons around here don't quite understand it even though it is a pretty straightforward concept.

Rubbish -
if the banks were getting money for 2% at lending it at 5%
they would be making 3% on the deal.

If they were getting money at 1% and lending it at 4%
they would still be making 3% on the deal.

Why don't you try doing a compound interest calculation using the spreads you've just shown and see why you are wrong.

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Very funny Scotty, now beam down my clothes.

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juliar

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Re: Hit The Bank With The Big Stick
Reply #25 - Oct 14^th, 2019 at 7:20pm

I think Croc has pulled the rug out from under Bobby. Croc is correct as a compound interest calculation will show a larger amount goes up a lot quicker.

A good explanation of what croc is talking about.

Developments in Banks' Funding Costs and Lending Rates
Susan Black and Dmitry Titkov 21 March 2019

Abstract
Banks’ funding costs increased a little over 2018, driven by a rise in the cost of wholesale funding linked to money market rates, but with some offset from reductions in the cost of retail deposits. Most lenders passed the increase in funding costs through to their lending rates, including for mortgages. Nevertheless, funding costs and lending rates remain low by historical standards.

Funding costs typically influence lending rates
The rates that banks offer on loans to households and businesses are partly driven by the cost of their funding. Banks also take into account the risks inherent in lending, such as the credit risk associated with loans and the liquidity risk involved in funding long-term assets with short-term liabilities. Competition in the financial sector, banks’ growth strategies and the rate of return desired by equity holders also affect their lending rates.

The level of the cash rate is an important determinant of banks’ funding costs (Graph 1). This is because the cash rate acts as an anchor for the broader interest rate structure of the domestic financial system. The pass-through from the cash rate to funding costs and lending rates is an important channel of monetary policy transmission (Brassil, Cheshire and Muscatello 2018). Nevertheless, there are other factors that influence funding costs, such as changes in the level of compensation required by investors for holding bank debt. The full effect of such changes can take some time to flow through to funding costs and lending rates. This article updates previous Reserve Bank research, focusing on developments in major banks’ funding costs and lending rates over 2018 (McKinnon 2018).

Read on to learn the FACTS here

https://www.rba.gov.au/publications/bulletin/2019/mar/developments-in-banks-fund...

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crocodile

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Re: Hit The Bank With The Big Stick
Reply #26 - Oct 14^th, 2019 at 7:21pm

juliar wrote on Oct 14^th, 2019 at 6:54pm:

Croc I know you understand this much better than I or these sad and sorry Lefties but can you elaborate on just what is the funding rate and the lending rate.

I thought it was simply a matter of the banks reducing their interest rate on home loans etc.

The interest rate is targeted by the RBA by controlling the money supply and therefore the inflation rate. That is not what Bobby is trying to argue but for a general rundown on open market operations and how the RBA sets the interest rate, have a read.
https://en.wikipedia.org/wiki/Open_market_operation

Bobby thinks that as long as the spread is the same ( difference between funding and lending rate ) the profit will remain the same regardless of the actual rates. Best explained with a little example.

Suppose I borrow $1,000,000 from the bank of Bobby at 5% over 25 years. So that's a total repayment of:
$1,000,000 * 1.05^25 = $3,386,355
Say Bobby has a funding cost of 4% so his cost is:
$1,000,000 *1.04^25 = $2,665,836
Bobby's profit = $720,519

Now the RBA cuts Bobby's funding rate to 3% his funding cost is now:
$2,093,778
He charges me 4% which will be:
$1,000,000 *1.04^25 = $2,665,836
Bobby's profit is now:
$572,058
A difference of:
$148,461

This is the reason that the full cut is not passed on. It really isn't that difficult. Nothing more than an uncomplicated compound interest situation that most around here would have learnt in high school. Must have been asleep in that lesson.

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Very funny Scotty, now beam down my clothes.

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Bobby.

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Re: Hit The Bank With The Big Stick
Reply #27 - Oct 14^th, 2019 at 7:26pm

crocodile wrote on Oct 14^th, 2019 at 7:21pm:

juliar wrote on Oct 14^th, 2019 at 6:54pm:

Croc I know you understand this much better than I or these sad and sorry Lefties but can you elaborate on just what is the funding rate and the lending rate.

I thought it was simply a matter of the banks reducing their interest rate on home loans etc.

The interest rate is targeted by the RBA by controlling the money supply and therefore the inflation rate. That is not what Bobby is trying to argue but for a general rundown on open market operations and how the RBA sets the interest rate, have a read.
https://en.wikipedia.org/wiki/Open_market_operation

Bobby thinks that as long as the spread is the same ( difference between funding and lending rate ) the profit will remain the same regardless of the actual rates. Best explained with a little example.

Suppose I borrow $1,000,000 from the bank of Bobby at 5% over 25 years. So that's a total repayment of:
$1,000,000 * 1.05^25 = $3,386,355
Say Bobby has a funding cost of 4% so his cost is:
$1,000,000 *1.04^25 = $2,665,836
Bobby's profit = $720,519

Now the RBA cuts Bobby's funding rate to 3% his funding cost is now:
$2,093,778
He charges me 4% which will be:
$1,000,000 *1.04^25 = $2,665,836
Bobby's profit is now:
$572,058
A difference of:
$148,461

This is the reason that the full cut is not passed on. It really isn't that difficult. Nothing more than an uncomplicated compound interest situation that most around here would have learnt in high school. Must have been asleep in that lesson.

You haven't used my example figures -

Quote:

if the banks were getting money for 2% at lending it at 5%
they would be making 3% on the deal.

If they were getting money at 1% and lending it at 4%
they would still be making 3% on the deal.

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juliar Gold Member Offline Australian Politics Posts: 22966	Re: Hit The Bank With The Big Stick Reply #28 - Oct 14^th, 2019 at 8:00pm Bobby give up, you have been creamed by the master the CROC.
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Bobby. Gold Member Online Australian Politics Posts: 102931 Melbourne Gender:	Re: Hit The Bank With The Big Stick Reply #29 - Oct 14^th, 2019 at 8:11pm juliar wrote on Oct 14^th, 2019 at 8:00pm: Bobby give up, you have been creamed by the master the CROC. No - he's an idiot. he hasn't used my figures of 4% and 5% and he hasn't taken the borrowing cost into account.
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