For those worried about the current account deficit & dependency on foreign borrowing

Yes, but after all he is really saying not to worry about your $20K credit card bill because your neighbour owes $50K.

Wait till we have to start paying it back - or at least paying the interest each year on top of everything else!!
Marg
 
Yes, but after all he is really saying not to worry about your $20K credit card bill because your neighbour owes $50K.

Wait till we have to start paying it back - or at least paying the interest each year on top of everything else!!
Marg

Savings from Asia have to go somewhere. If Australia becomes more attractive than the US for foreign capital, that is a very good thing for us.

Paying it back? That's what the previous government did. Did anybody feel any pain? :confused:

Cheers,
 
Paying it back? That's what the previous government did. Did anybody feel any pain?

Not much, because they used the profits of a 10 year boom. You can't count on that happening every decade.

And who knows what wonderful things could have been done with that windfall if they did NOT have to repay billions in debt? Better hospitals and schools? Lower taxes? Better roads? Public transport that is frequent and cheap?

The list is endless.
Marg
 
Haven't got time to look much into Henry speach as gittins quote:
The reason the Yanks are getting a hard time and we aren't is that they're judged to be saving too little (which is the same as saying they're spending too much of their income on consumption), whereas we're seen as having a reasonably adequate rate of saving but an outsized rate of investment spending.

Henry says that our rate of gross national saving each year has averaged about 20 per cent of GDP over the past two decades - which is near the average for the developed countries - and has risen to 24 per cent over the past four years. This is way higher than the Americans' rate, which is now down to about 12 per cent.

(If you'd gained the impression we were saving very little, that's probably because you were focusing on the saving done by households. But our companies have been saving a lot through retained earnings and, until lately, our governments have been running budget surpluses and under-investing in infrastructure.)
anyway, suchs a bit this data about saving from businesses. Companies and businesses growth was very strong in the last 20+ years in australia (because of resource booms, population increase etc.) but as the capital they hold increased their debt also increased. once their market value increase or decrease their capital (or savings) will change with it.
anyway, the saving chart of household from RBA is here (and much in worse shape then other major countries)
 
Very easy to say after the horse has bolted!, do you think Aussies savings would look any better if our economy and property values declined, it is all relative.
The real problem is people generally owe so much on their homes, and accessing equity or leveraging is becoming the norm, of course all looks fine when property values are ticking along nicely, especially for as long as they have.
When banks stop lending money that is when the real widespread slowburning issues begin to surface over the coming few years, if there is little or no appreciation in property many will hit the wall very fast, if property continues to appreciate all will be well and good for those who have a mortgage or rental properties, but there are many blinkered investors who should be at least a little nervous at this point in time when all is taken into consideration, if you are not then you really need to put back on your helmet and pack up your crayons at this point.
As we all know banks have started to tighten lending, but if foreclosures did start to mount getting a loan for anything may become almost impossible which generally amounts to fire sales galore, unlike the US we can`t just hand over the property and the debt, it won`t take much especially given interest rates are rising fast.
If banks cannot even provide people with their savings at any given time how on earth would they cope with mass foreclosures, damn lucky they are looking so good right now.
Like all investment when "how to become a millionaire with no risk strategies" become common knowledge it is time to bail out.
Not saying it will happen but at least try and be prepared for the downside.
 
If banks cannot even provide people with their savings at any given time how on earth would they cope with mass foreclosures, damn lucky they are looking so good right now.
Like all investment when "how to become a millionaire with no risk strategies" become common knowledge it is time to bail out.
Not saying it will happen but at least try and be prepared for the downside.

maybe you should have a chat to Lawrence (grossreal) about which banks were trading insolvent prior to the govt guarantee....

no-one wants an Indymac.
 
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