(03) 9020 2905If anybody thinks that the Melbourne Cup is actually about horses and jockeys and trainers … I’m here to tell you, you’re dreamin’.
It’s about money. Obscenely large amounts of it. If Australian horse racing were an independent economy, I’m thinking it would be bigger than Tasmania.
Just on Cup Day itself, tens of millions of dollars are punted by people who have no earthly idea what they’re doing. Like Mrs DebtMan. Some of that is returned to a knowledgeable/lucky few. Like Mrs DebtMan. Who then get to claim they’re a genius. Like Mrs DebtMan.
Sure, it’s the race that stops a nation. Office stop-works, small gatherings and monster parties are held nationally. But the money spent by most on Cup Day parties pales into insignificance compared to the invoices typed up for corporate hospitality and schmoozing in tents.
It’s in those trackside tents/marquees/small-metropolises-with-their-own-postcodes that business people brush alongside celebrities, hangers-on and handbags (that’d be me). It was as Mrs DebtMan’s appendage a few years ago that I got to walk away from Flemington saying “Holy toledo! I just danced with Jennifer Hawkins!” Even Mrs DebtMan was impressed with the sight. She was less impressed with how much courage I’d consumed for it to happen.
Legends are made on the track (for those who care about horses) while tales of daring, and stupidity, are born off it.
At the well-heeled carpark parties and on the lawns of Flemington (and dozens of other tracks around the nation), willing gents make their real plays at the end of the day, armed with nothing more than a cheap bottle of bubbles and a sunny disposition. They couldn’t pick a winner all day. But now’s their chance to get lucky.
But, potential gratuitous pic of jockey on mount attached to this column aside, this column ain’t about Bart Cummings.
For us geeks of the finance variety, Melbourne Cup Day is about one number only. It’s a pretty small number. Some would argue boringly small. It usually doesn’t move much. Mostly, it doesn’t move at all.
But it’s a number that, for most of us, will have a far bigger impact on our lives than successfully picking a longshot to come home on Tuesday, even if you also placed it in a winning trifecta.
Yup, the Reserve Bank meets again on Tuesday morning.
A few hours later, at 2.30pm, they’ll announce something. You might be getting a cut in the cost of the home over your head. You might get squat.
Given we’ve been paying the RBA directors whatever for the last 360-odd days to do nothing, you’ve got to wonder whether they remember how to make a decision.
The last rate movement (which was up) was about 2.30pm on Cup Day last year, about the time that Mrs DebtMan strolled up to the TAB and placed a trifecta that came home well enough to pay for a whole day of babysitting, that RBA Governor Glenn Stevens announced that our Christmases were going to be that little bit less jolly. He raised rates by 0.25 per cent to 4.75 per cent.
And since then … “all quiet on the Western Front, Sir”.
Depending on which economist you believe – and don’t forget economists were invented to make meteorologists look good – we’re a chance to get a rate cut on Tuesday.
“Cool! Less interest equals more party money.”
And that’s understandable. But seriously misguided.
A rate cut, certainly from this RBA board, is a bad thing, or more accurately a sign of bad things to come. It means they’re worried. About you. About your job. About your state of mind. About what’s coming up on the horizon.
And how it might crush you, your spirit, your prospects and your will.
When interest rates are this low (and 4.75 per cent is low), you really don’t want further cuts.
Interest rate cuts are designed to inject money into your pocket because you’re going to need it. Conversely, interest rate rises are supposed to rip money out of your pockets, because you’ve been partying too hard (like it’s 1999).
DebtMan’s Melbourne Cup tip? Don’t bet. Save your money. If the RBA cuts just before the big race, you might need your $20 to put a pud on your Christmas dinner table.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser. bruce@debtman.com.au .