"Westpac chief returns fire on rates"
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From: B J Foster on 17 Dec 2009 15:08 David Clayton wrote: > On Thu, 17 Dec 2009 13:17:24 +1100, Mr.T wrote: > >> "David Clayton" <dcstar(a)NOSPAM.myrealbox.com> wrote in message >> news:pan.2009.12.16.21.17.02.542639(a)NOSPAM.myrealbox.com... >>> On Thu, 17 Dec 2009 07:30:42 +1100, B J Foster wrote: >>>> chief executive Gail Kelly fired back: "We're paying much more for >> raising >>>> wholesale rates - about 10 times what we were paying before the >>>> crisis", she said. >>>> >>>> "In fact, our average wholesale term funding costs are around 80 per >> cent >>>> higher than they were a year ago". >>>> >> http://www.abc.net.au/news/stories/2009/12/16/2773898.htm?section=business >>>> Goodness gracious, that's the first time I ever saw a banker assert >>>> that 1.8 == 10. >>> Well, the problem is that both statements refer to two totally different >>> time frames, "a year ago" <> "before the crisis". No, the problem is that it is a lie on several levels. If the wholesale rate was (say) 0.5% (on a zero % treasury rate) and is now 5% (i.e. "ten times") then a 2% margin (i.e. retail 2.5% and 7% respectively) would make no difference whatsoever to Westpac's overall gross margin on the same volume of loans. Apart from the fact that it was never "ten times" and that the *relative* margin is utterly irrelevant, you have to worry when one of the nations top bankers seems to be unaware that the artificially low rates were the *cause* of the financial crisis. No-one in their right mind would expect US TBs to be at zero for long. >> >> Similar time frame actually, 12-18 months, although I admit "before the >> crisis" could mean 1,000 years ago when a banker or politician is making >> the statement. Even then I don't believe there is an point in banking >> history they were paying 1/10th of what they are paying now. Proof is >> required, not something a banker would be familiar with though I guess! >> > No, 12 months ago was right in the middle of the panic. Conditions were > nothing like before the GFC. > > You have to realise that any sort of statement from these people is > structured in such a manner that they always have a get-out, and they rely > on people not fully understanding or paying close attention to them. > > It obviously works, as the original post demonstrates. > The two numbers were linked, implying that they were in the same timeframe. "We're paying much more for raising wholesale rates - about 10 times what we were paying before the crisis. In fact, our average wholesale term funding costs are around 80 per cent higher than they were a year ago". If you have an interest in Westpac, here's some advice for free: Saving face will cost the company customers. Ditching the ego and apologising to the public for the patronising BS may be more productive.
From: Mr.T on 17 Dec 2009 22:02
"David Clayton" <dcstar(a)NOSPAM.myrealbox.com> wrote in message news:pan.2009.12.17.03.26.52.897696(a)NOSPAM.myrealbox.com... > >> > chief executive Gail Kelly fired back: "We're paying much more for > > raising > >> > wholesale rates - about 10 times what we were paying before the > >> > crisis", she said. > >> > > >> > "In fact, our average wholesale term funding costs are around 80 per > > cent > >> > higher than they were a year ago". > >> > > > http://www.abc.net.au/news/stories/2009/12/16/2773898.htm?section=business > >> > > >> > Goodness gracious, that's the first time I ever saw a banker assert > >> > that 1.8 == 10. > >> > >> Well, the problem is that both statements refer to two totally different > >> time frames, "a year ago" <> "before the crisis". > > > > > > Similar time frame actually, 12-18 months, although I admit "before the > > crisis" could mean 1,000 years ago when a banker or politician is making > > the statement. Even then I don't believe there is an point in banking > > history they were paying 1/10th of what they are paying now. Proof is > > required, not something a banker would be familiar with though I guess! > > > No, 12 months ago was right in the middle of the panic. Conditions were > nothing like before the GFC. And nothing like she describes either. > You have to realise that any sort of statement from these people is > structured in such a manner that they always have a get-out, and they rely > on people not fully understanding or paying close attention to them. > > It obviously works, as the original post demonstrates. No it doesn't, since nobody believes her! MrT. |