Tag Archives: debt and deficit

David Murray Shows The Greens And MSM Are Clueless. Again.

18 Apr

Former chairman of the Future Fund, David Murray, ruffled lots of establishment feathers during his tenure, particularly for his scathing criticism of the Warmageddonist movement.

Now, he has shown up the Greens – and, the entire lamestream economics and political media contingent – with his astute comments about the real reason why the government must balance the nation’s books.

From the Australian (emphasis added):

FORMER Future Fund chairman David Murray has accused the Greens of making “ill-advised” demands on the federal budget, declaring the priority should be to protect the government’s credit rating as the global financial system remains under strain…

Mr Murray, former chairman of the nation’s $73 billion sovereign wealth fund and a former Commonwealth Bank chief executive, said he was concerned about the Greens’ suggestions that curbing government spending was not important, given the woes in the global economy and the size of the blow-out in the budget at the peak of the global financial crisis.

“What’s at risk here is that with very significant offshore borrowings and a shaky world for raising capital, if the commonwealth in particular can’t hold its ratings, that will affect the ratings of the banks, that will affect the cost of debt, and it also means that the commonwealth is not there in the same measure as a backstop if things go wrong again and the banking system can’t fund itself offshore,” Mr Murray told The Australian.

“That’s the higher risk that has to be managed at the moment. We don’t control what happens in the rest of the world. You need the commonwealth rating as a backstop because of what’s going on elsewhere in the world. You can’t put that at risk. To do that you have to achieve a budget that is cash-neutral at least, so that the debt stabilises and within that cash neutral position you can pay interest.”

Exactly right.

As we have seen here at barnabyisright.com for many months now, the government (and the economy) are now trapped by the errors and abject stupidity of the past.

The credit ratings agencies have put our government on notice that the credit rating of the government – and more importantly, of the banking system – is contingent on the government showing a credible path back to balanced budgets. Why? Because in the GFC, the government explicitly and implicitly guaranteed our hugely overleveraged, foreign-debt dependent, housing market exposed banking system, using the sovereign balance sheet.  If the government can not promptly curb its ever-rising debt and deficits, then the government guarantee propping up the banks will lose credibility.

On the other hand, if the government does attempt to achieve an actual surplus in 2012-13, and not just a forecast for one on May 8th, that spells disaster for the economy too.

How so?

See for yourself – Labor’s Inbred, Debt-Fed Chickens Coming Home To Roost.

We are Ireland Mk 2.

“One Day You’ll All Wake Up And Realise ‘Hey, He Was Right After All’”

17 Apr

From Catallaxy Files:

Click to enlarge

Indeed.

Especially when it comes to debt and deficits ….

Barnaby is right.

Barnaby Media Statement On Baby Bonus

15 Apr

Media Release – Senator Barnaby Joyce, 15 April 2012:

Baby Bonus

I have never contacted Tony Abbott to push for a doubling of the Baby Bonus.

With a strong on the ground experience of the problems that large lump sum social security payments can create, I don’t think I ever will support a policy that would exacerbate these issues.

Before the last election gross debt was to peak at $220 billion but it is now forecast to peak in excess of $270 billion so unfortunately, like the nation, our aspirations are affected by Labor’s debt.

The Nationals believe that the Baby Bonus should be made in interval payments over a longer term to avoid the social problems of lump sum payments being made that, in some instances, do not go toward the baby but go to alcohol or other items that are actually at odds to the welfare of the child.

More information: Matthew Canavan 0458 709 433

Barnaby: Government Ignores Debt At Its Peril

12 Apr

True to his word, Senator Joyce has not relented in drawing attention to the dangers of ever-rising debt.

From the Canberra Times (my emphasis added):

A couple of years ago I was apparently a financial hayseed from the wild west of Queensland when I mentioned the debt.

Canberra is the canary in the coal mine for debt and the canary hasn’t been chirping lately. Mr Wayne Maxwell Swan has lost control and the cuts to spending and jobs are imminent.

I was startled at the trajectory of the debt when it was at $100 billion, and to be honest most ignored me. It wasn’t the size but the speed of the increase that worried me. Our gross debt is now $238 billion.

Last year Thomas Sargent won the Nobel prize for economics partly because of his work on government debt.

He noted that if you choose not to debase your currency, which can be the precursor to social collapse, government debt must be repaid through running budget surpluses at some point in the future equivalent to the size of our debt.

Debasing your currency is what the USA, UK, and EU are all doing, by “printing” money. In our Orwellian world of doublespeak, that is now euphemistically called “Quantitative Easing”. Their currency debasement is the key reason why (a) Switzerland’s central bank pegged their currency to the “QE’d” Euro, to protect their economy, (b) Norway’s central bank acted to weaken the Kroner, after all the “hot money” that was going to Switzerland went looking for a new “home” threatening to damage their economy, and (c) why the Aussie Dollar is way overvalued, wiping out whole industry sectors here, with only Bob Katter (and now, Paul Howes) arguing that something should be done.

Mr Swan believes, and this is just not going to happen, that we will have a surplus of $1.5 billion next year. Well, by then our gross debt will be about $270 billion and the custom of late means that it will be vastly more than that.

When Labor came to office, you owed $56 billion, so to get the debt back down to this level, Mr Swan will have to run budget surpluses of $1.5 billion for 142 years.

That’s the important point. A surplus does not mean that the debt is repaid, it just means you have a little bit of money to start paying off the debt.

So what are our other options?

Before our debt gets to $270 billion it has to pass through our current debt limit of $250 billion.

What would happen to Canberra if the limit on the nation’s credit card was not extended? A rather large train runs into a rather large boulder in a few months’ time.

If you choose not to do that you have to instead extend your overdraft again to your fourth debt limit in four years. Now we have an incredibly fast train going off the edge of a very large cliff in a year or so. So which one do you want?

Or do you just close your eyes and say a quick prayer to the Lord that it will all go away? Dear Jesus please pay our credit card off.

My humble suggestion is that you do everything possible for the cogs of the economy to turn in the most efficient way to make us as much money as possible.

This should start by getting rid of the carbon tax.

In my portfolio of water, I would recollect that between 2000 BC and 4000 BC the great civilisations of the world managed to create an economy from the development of irrigated agriculture. The Tigris and Euphrates, the Indus Valley in what is now Pakistan and the Yellow and Yangtze in China.

If you do not have the capacity to create excess commodities, you do not have a surplus-generating economy. Yes it must be environmentally sustainable but it must exist.

This week I have been travelling around the Northern Territory looking at options for expanded agriculture. The people up here were hit hard last year when Four Corners ran the country for a month and exports of live cattle to Indonesia were banned. They are still recovering.

I have just been to a meeting where it has become apparent that when the government doesn’t know the answer they just invoke the word ”environment” and then they are miraculously endowed with omnipotent qualities that preclude your right to question them.

There is one other way we can pay back the debt. We can just tax people to within an inch of their life and vainly hope that they are motivated to remain in the legal economy.

On a scale of one year, you only started working for yourself in the last week. From January 1 to April 3 you have been working for the government.

How much longer do you want to work to pay for the NBN? How much longer do we all have to wait before common sense takes over in a big white big building on a hill in Canberra?

More wisdom and commonsense in his little finger, than in the rest of Parliament House combined.

Barnaby is right.

Labor Threatens Super Funds To Prop Up The Banks

5 Apr

Illustration by Zeg | Click to enlarge

I accept that some readers may not see the red flag that I see waving all over the following story.

So be it.

In my view, what we have here is a clear preliminary step down the path to government “intervention”, to “save your super” from the risks of the “volatile” sharemarkets.

First by “encouraging”, later forcing, your super fund to invest where the government dictates is a “safe” place for your retirement savings.

That could be the “safety” of government bonds.

Or perhaps, as strongly hinted at by this story, it could be the “safety” of bonds issued by our banking system … who just happen to be “overleveraged” according to the ratings agencies, and recently pitched threatened the government to help them with additional sources of funding in order to “save the mining boom”.

The ‘softening up’ process, the art of steadily planting seeds in the public mind and preparing them for a future event, is called “perception management”.

Here is Business Spectator’s Stephen Bartholomuesz making the argument for the government … prompted by a speech from the former Finance Minister Lindsay Tanner, in which he clearly threatened “government intervention” to force super funds to invest where the government wants them to (more on Tanner’s threat below):

Former federal finance minister Lindsay Tanner may have been overstating the risk of government intervention to correct a perceived bias towards equities within superannuation fund portfolios yesterday but the issue he was highlighting is worthy of further discussion because it contributes to the debate about the need for a developed corporate bond market in Australia.

In a speech to the Ownership Matters conference in Melbourne yesterday Tanner actually approached the issue of the overexposure of super funds to equities from that starting point – the absence of a developed domestic corporate bond market.

The disproportionately high levels of exposure to equities in most balanced fund portfolios is only one strand of the explanation for the absence of a functioning domestic bond market, albeit a material one.

During the great decades-long bull market in equities leading up to the global financial crisis, the bias towards equities in most super funds generated returns that, from a long-run perspective, were aberrational. The GFC reminded investors, and super fund members, that while equities might deliver higher returns relative to most other asset classes over the long term they do so because they carry greater latent risk.

As the population ages, the tolerance for risk will decline. Indeed, with the GFC as a wake-up call, it has already declined. Hence the deluge of funds that has poured into term deposits and other fixed interest securities as investors and super funds have been introduced, painfullly, to the concept of risk-adjusted returns.

Translation: For decades, everyone’s super went into the sharemarket; thanks to the GFC everyone has lost a fortune; now, everyone is more risk averse, and so their money is going into lower risk investments like term deposits.

For the foreseeable future the environment for equity markets is likely to be quite different to that which prevailed before the GFC.

That would suggest that, particularly for the demographic bulge moving towards retirement, the appetite for equities will diminish and therefore the proportion of equities within fund portfolios will trend and remain lower than it was pre-GFC.

As I was saying.

And now – for those with eyes to see – the red “danger!” flag appears (emphasis added):

We’ve already seen a flurry of listed corporate bond issues earlier this year as companies have capitalised on the risk aversion and desire for yield of investors, particularly the rapidly-growing self-managed fund sector.

If the major banks were to issue listed bonds, and the federal government ever delivers on its promise to facilitate the listing of Commonwealth government securities – which would provide a pricing benchmark for all other issues – a properly functioning, liquid corporate bond market that can be accessed by retail investors and SMSFs could be developed, one which might also encourage the large super funds to become bigger players.

As regular readers know, this clearly hints at exactly what I have long argued is the inevitable fate of Aussies’ super.  Our all-knowing, all-caring Big Brother government – whether Labor or Liberal matters not – will decide to “help” you, by creating mechanisms to redirect some (and eventually, all) of your super into “investments” that the government deems to be “safer” than the share market, and/or “investments” that are “in the national interest”.

They already tried last year, by “encouraging” super funds to invest in their “nation building” infrastructure programs like the NBN. Fortunately, the super funds were smart enough to resist.

But when push comes to shove, you can be sure that the government will move on from “encouraging”, to enforcing.

For your own good, of course.

Back to Batholomuesz:

Given the post-GFC environment for the major banks – they are holding a lot more capital, more and more expensive liquidity, experiencing higher funding costs and face the imposition of a simple leverage ceiling within an economy where households and businesses are deleveraging and demand for credit is therefore very weak by historical standards – it is unlikely that they will return to intermediating mid-teens credit growth any time soon.

Indeed, having had a nasty experience during the GFC, when their own overexposure to wholesale funding markets highlighted their own vulnerabilities, it is likely that the banks will manage their balance sheets far more conservatively in future than they have in the past, with an acute focus on the stability of their funding.

One of the reasons the major banks built up their reliance on offshore wholesale funding was the increasing diversion of Australian savings from bank accounts to super – and a majority of it into equities – as the super system grew over the past quarter of a century.

Bartholomuesz clearly argues that the banks are overreliant on offshore funding because you and I preferred to have our super in the stock market. The thinly-veiled implication is that the banks’ current problems are really our fault, you see. And the unstated implication being, that it makes sense for our super to fix that problem now, by redirecting it into bonds issued by those “safe as houses” banks.

More of those funds within the super system will, if fund members and their trustees shift to a more balanced and defensive posture and (thanks to the GFC) have a better understanding of risk-adjusted returns, become available to both the banks and corporate borrowers.

And there you have it.

We all just need to “have a better understanding of risk-adjusted returns”, and everything will be rosy … we will want to have our super invested in bonds issued by the big banks.

Even if it is just a “relatively modest” amount of our super:

Given the size and growth rate of the super system, relatively modest re-weightings of fund portfolios away from equities to fixed interest securities could have very significant impacts and could – indeed, should – occur without any need for government intervention.

That red flag is waving a little more strongly now.

And if we still don’t want to have our super propping up the banks?

Bartholomuesz’ final sentence rings out like the death knell I believe this article signals:

There probably aren’t too many super fund members who’d be enthusiastic about the prospect of Wayne Swan dictating how their savings were deployed.

Indeed.

Won’t stop him though.

Take the carbon tax CO2 derivatives scam as a case in point.

And if we consider closely what Lindsay Tanner wrote in the Australian Financial Review yesterday, then I think it is crystal clear what the government has in mind:

As the vast sums involved here are compulsorily directed to a particular form of saving which enjoys preferential tax treatment, those managing the funds can hardly go on about the sanctity of the free market. As concerns about corporate funding rise, and worries about risk in our super system mount, the only guaranteed way to avoid government intervention is for the major players to deal with the issues themselves.

For those with eyes to see and ears to hear, that is a clear threat to super fund managers.

Redirect Aussies’ super into propping up the banks.

Or the government will make you.

Our Media In $140 Billion Lie For Wayne

4 Apr

What hope is there, dear reader?

If it is not Wayne Swan himself telling lie after lie about the economy, and the government’s financial record, then it is the mainstream media telling lies for him.

Here’s a classic example:

Last Thursday Wayne Swan said tax revenue had fallen $140 billion since the GFC, $90 billion of which has been due to lower company tax.

That was Alan Kohler in Business Spectator. Who we already picked up for inaccurate parroting of Wayne’s lies yesterday.

Here’s Sky News whistling the same false tune:

… having come through such tremendous global turbulence, one of the after-effects has been the revenue impact, with some $140 billion lost over five years.

Thanks to news wire service AAP, this lie was repeated across the mainstream media over recent days.

And the truth?

The truth is that Wayne did not actually say this in his speech last Thursday. What he did say, was that there was a write-down of $140 billion in revenue:

The bulk of the tax receipts write-down post GFC can be explained by write-downs in company tax. Out of a total write-down of $140 billion, company taxes contributed around $90 billion over the five years to 2012-13.

And what that really means, in simple truth, is that the Treasury “experts” over-estimated likely revenues by $140 billion in their original budget estimates. And then, they later had to “write-down” the amount they did not actually get. Which the media then lazily reported in the form of a tacit excuse for this government’s massive budget deficits. As though money you only hoped to get, and then didn’t, is somehow a “loss”.

But can we really blame the media entirely?

After all, here’s Wayne today – after the media had been dutifully reporting the $140 billion writedown as a “loss” for days now – himself repeating their $140 billion lie in a formal statement:

…the global financial crisis and the revenue challenges it brought to state and federal budgets meant it was unrealistic for any treasurer to pretend a drop in revenue was unique to their state.

‘Nor is it realistic to suggest state revenue losses are anywhere near the $140 billion the federal government has lost due to the global crisis,’ Mr Swan told AAP in a statement.

As we saw yesterday (“Wayne’s ‘Per Cent Of GDP’ Lies Debunked”),  the real truth, hidden behind a smokescreen of half-truths, cleverly worded misleading and deceptive statements, accounting tricks, and outright lies, is that the government is not making a “loss” on tax revenues at all. Indeed, they are pulling in tens of billions more Total Revenue now, than they were in the 2007-08 year, pre-GFC.

The real reason why the budget is in such a parlous state, and why our sovereign AAA rating is now in jeopardy, is because the ALP’s rarely-mentioned spending is still totally out-of-control. As I reported yesterday:

According to Wayne’s Treasury’s most recent published figures, in 2011-12 this government will rake in $37.41 billion more revenue than in 2007-08, pre-GFC.

But they will spend $91.64 billion more than in 2007-08, pre-GFC.

I have not seen a single journalist or economic commentator in the land actually report the simple, plain truth about this government’s actual budget position.

Instead, they lazily report repeat the Government’s lies. Or, lazily report lies all by themselves.

It is inexcusable.

It does not matter what the government says, in speeches or press releases. Indeed, this government is so adept at twisting words, glossing over facts, and using misleading and deceptive statements, the smartest thing to do is to assume that everything they say is a half-truth, misdirection, or blatant lie, and go check the data for yourself.

Every time.

Anyone can go to the government’s Budget website, look up the Past Budgets information, compare the basic Revenue and Expenditure figures, and see the simple truth. In mere minutes.

The low calibre of our supposed “experts” and intellectual “betters”, whether they be in politics, or the commentariat, truly causes me to despair for our country.

Labor’s Inbred, Debt-Fed Chickens Coming Home To Roost

3 Apr

As long predicted by your humble blogger, Labor’s economic chickens are coming home to roost.

It looks like the first chicken entering the coop as our long economic night begins to fall, is the sovereign AAA credit rating.

All the other inbred, debt-fed chickens mentioned here over the past two years, will be following close behind.

Houses and Holes at MacroBusiness has the story (my emphasis added, in quoted story):

From S&P and Fitch via the AFR this morning comes the hard, cold truth about the trap in which the Australian economy is caught:

Federal Treasurer Wayne Swan has been put on notice by ratings agencies to deliver a tough budget next month to protect Australia’s coveted AAA credit standing.

Australia is one of only 14 countries in the world with a top ranking from each of the three major agencies but analysts at Standard & Poor’s and Fitch Ratings are concerned about the banking system’s reliance on overseas funding.

“The AAA rating is pinned on the strength of the government’s fiscal position and if it doesn’t have that, we have less cause to see it as a AAA-rated sovereign, given how weak the banking system is in terms of its external liquidity,” said S&P credit analyst Kyran Curry.

“To be consistent with maintaining a AAA rating . . the government would really need to stabilise its fiscal position as soon as possible.”

Mr Curry said the external liquidity of Australia’s banking system was“quite weak” and the industry was overleveraged.

Exactly what your humble blogger has been arguing, ever since launching this blog over 2 years ago. Our real economic weakness, is the fundamentally immoral, fraudulent, parasitical, house-of-cards banking system, whose continued existence and blood-sucking profits has been guaranteed by the government (meaning, by you, the taxpayer). Just like it has in the rest of the now-slowly-collapsing Western world.

“If there is stress in the banking system like in Europe, [its] liabilities could migrate on to the government’s balance sheet,” he said.

Fitch Hong Kong-based director Art Woo said banking sector liabilities were always a “potential concern”.

…“The reality is that, if they don’t bring the budget back into surplus, we have to judge why,” Mr Woo said. “Is it because they haven’t put the right measures in place or because you get a cyclical downturn and the revenues don’t come through?”

…“This budget is very important to us,” Mr Curry said. “We will be looking more broadly for the government to demonstrate that it can remain committed to stabilising its debt dynamics over the medium term. This government needs to have a strong balance sheet to offset some of the weaknesses that we see for the sovereign,” he said.

“The main issue is the importance of maintaining a strong balance sheet and running surpluses over the cycle to give the government the sort of flexibility it had pre-2009 to respond should the external environment weaken and present a problem for the banking system, which is highly leveraged.”

…“It’s important that the government stabilises its fiscal position as soon as conditions allow,” Mr Curry said. “We are not necessarily looking for a return of the balance to surplus this year but we would be looking for a continued path to stabilise its fiscal position.”

Through galactic incompetence, pathological self-interest, rampant self-deception, and mindless obeisance to the “bozos” (h/t Alan Kohler) in the Treasury department, the Labor government has now firmly wedged itself.

And the nation.

If Labor does actually (ie, not just on paper, in the budget ‘forecast’) cut government spending by the enormous amount necessary to achieve a budget outcome (not ‘forecast’) that would keep the ratings agencies happy, Australia is absolutely assured of a recession. Why? Because the private sector economy is too weak already to cope with a huge cut in government spending. Meaning … unemployment up => government revenues (income tax) down => government expenses (unemployment benefits) up => government budget deficit worse => credit rating cut more, PLUS mortgage arrears up => defaults up => bank “asset” values down => bank wholesale funding costs up => mortgage interest rates up => more arrears & defaults => bank/s collapse => government bailout/s => sovereign credit rating cut more => economic death spiral, a la Ireland.

If Labor does not actually cut government spending by the enormous amount necessary to achieve a budget outcome (not ‘forecast’) that would keep the ratings agencies happy, Australia is also absolutely assured of a recession. Why? Because as seen above, the ratings agencies will slash the sovereign credit rating. Meaning … bank wholesale funding costs up => mortgage interest rates up => mortgage arrears up => defaults up => bank “asset” values down => bank wholesale funding costs up => mortgage interest rates up => more arrears & defaults => bank/s collapse => government bailout/s => sovereign credit rating cut more => economic death spiral, a la Ireland.

It is all over bar the loud squawking and fighting for an elevated perch and shitting ourselves everywhere, folks.

We are stuffed.

Now, more than ever, it is just a matter of time.

Barnaby was right:

“If you do not manage debt, debt manages you” – Feb 2010

What a terrible shame for each and every one of us, that all the “experts” in politics, Treasury, the RBA, the Canberra Press Gallery, and the leftarded twittering armchair commentariat, poured torrents of rabid scorn and ridicule on the unpolished, plain speaking, “little old bush accountant” from St George way back in late 2009 and early 2010.

If only we had all listened to Barnaby then – when the total Gross Debt was $117 billion, versus $237.5 billion today – then perhaps, just perhaps, we would have had a slim chance of getting out of the enormous hole that Kevin and Julia and Wayne and Lindsay and the Treasury department #JAFA’s have collectively dug for us.

Big Banks Call For Government To Raid Your Super To Give To Them To “Save The Mining Boom”

31 Mar

Well, no. That’s not exactly what they said.

But if you have the ability to look beyond the end of your nose; if you have seen that governments across the “developed” world have been stealing their citizens’ super to prop up their own and their banks’ finances; if you have seen the dire state of the Federal budget; and if you have seen the sneaky policy quietly introduced by the Liberal Party, and now implemented by the Labor Party, then the unstated implication is clear.

Some day soon, a tapped out Australian Government – whether Labor or Liberal – will “borrow” your super to give to the banks.

In our “national economic interest”.

In the opinion of your humble blogger, this is as clear and as inevitable as the rising of the sun on a crisp cloudless morning.

The rays illuminating this truth have been faintly flickering over the horizon, ever more brightly, for well over a year.

Now, it is dawning.

The only question is this – Who is awake early to see it?

From the Australian (emphasis added):

Funding shortfall threatens resources projects

THE economy’s ability to reap the full benefits of the once in a generation resources boom is in jeopardy, with major projects facing a funding gap as more foreign banks leave the Australian market and local lenders struggle with ongoing turmoil in financial markets.

The big four banks all warn that a record pipeline of hundreds of billions of dollars worth of resources-related projects cannot be met by the banking sector alone while it is being crunched by current economic instability and is being forced to raise its capital levels to comply with new global banking rules.

A range of submissions from the major banks to a Productivity Commission inquiry into the future of the Export Finance and Insurance Corporation (EFIC) show the banks are worried the funding shortfall is set to worsen.

There are fears that a funding gap will exacerbate the “hollow nation” notion that Australia is not capitalising on the boom.

Oh dear! Where to begin?

On the one hand, there are many (including your humble blogger) who have cogently argued that both the Treasury Secretary’s and RBA Governor’s economic policy settings are deliberately geared to hollowing out the rest of the economy to “make room” for the mining boom. Both Treasury and the RBA have openly admitted this. Their deliberate high AUD policy is the most disastrous example. But now, the new claim is that the Big Banks need an extra source of funding, or else the nation will be hollowed out by not maximising a mining boom?! Orwell would be proud.

The biggest bank, the Commonwealth, predicts that the number of banks lending in the Australian market will shrink further.

Translation: We know that Wayne has made “increased bank competition” a mantra, hoping to placate voters’ anger; what better way to pitch for government “help” than to warn (threaten) of a future with reduced competition.

National Australia Bank’s group executive of wholesale banking, Rick Sawers, said there was a risk that funding to the resources sector could become constrained, which would ultimately hold back the sector’s growth.

“As project capital costs have increased, particularly in the infrastructure and natural resources sectors, maximum individual bank exposure amounts are being tested,” Mr Sawers said.

He said “additional sources of capital” were required.

Mr Sawers said Australia needed to ensure that international sovereign wealth funds were encouraged to invest in the local market.

The banks argued that there was a role for EFIC to provide funding to ensure export-oriented projects could be developed.

So if it is true that the big banks are going to have difficulty accessing enough money from overseas to finance Wayne’s oft-touted “massive investment pipeline” in mining, where do you think the extra money is going to come from?

If investment by international sovereign wealth funds in Australia’s mining boom was such an obvious winner for them, there would be no problem, and no need to “encourage” them, now would there?

There is another “sovereign wealth fund”, that could more easily be “encouraged” by government to “invest” in the Big Banks.

Consider: What is by far the biggest pool of “savings” that could be quickly and easily tapped, by a tapped out Federal Government?

Why, the fourth largest retirement savings pool in the world, of course! The $1.3 Trillion in Aussies’ combined superannuation savings. The pool of funds described by Minister for Superannuation and PM-in-waiting, Bill Shorten, as “our” “sovereign wealth fund”, a “significant national asset” that “strengthens our financial sector“:

Superannuation is our sovereign wealth fund

This week marks 12 months exactly since the government announced plans to take compulsory superannuation from 9 per cent to 12 per cent.

… our superannuation savings place Australia fourth in the world. Its $1.3 trillion in funds under management through superannuation significantly boosts national savings and provides greater retirement security for millions of Australians. Superannuation is also a significant national asset because it strengthens our financial sector.

It is the same pool of funds that Gillard has already tried “encouraging” to invest in government “infrastructure projects”, like the NBN -

The Gillard government’s 2011-12 budget has proposed a raft of initiatives aimed at encouraging superannuation fund and private investment in infrastructure projects.

Drip.

Drip.

Drip.

Back to the Big Banks’ veiled threat:

Westpac warned that the major Australian banks were already facing “considerable pressure” because of large resource-related projects and the ongoing squeeze in global financial markets, while other funding sources “cannot meet the demand for funding created by the historically strong project pipeline in Australia at present”.

…

ANZ said an estimated $109bn in debt would be needed to finance projects this year and Germany’s Deutsche Bank said the impact of the global financial crisis was still being felt four years on as banks were forced to restrict their lending.

…

The banks’ warnings are contained in new submissions to Julia Gillard’s chief micro-economic adviser in a bid to convince it to reverse a recommendation that EFIC be cut back.

The Productivity Commission has accused EFIC, the government’s export credit agency, of handing out damaging subsidies to big exporters.

Now do you understand why the ALP government has passed legislation to increase the compulsory superannuation levy on employers by 33.3% – from 9% to 12% – and is using the blatant lie that the mining tax will pay for the increase to smear over the truth, that it is small business who will wear the extra cost, even though the Treasury and RBA’s policy settings are already sending small businesses bankrupt in record numbers?

Now do you understand why Tony Abbott claims that he does not support the superannuation increase, but has refused to repeal it on becoming PM?

Make no mistake, dear reader.

That is the new dawn coming over the horizon.

What has already happened in countries like the USA, UK, France, Ireland, Portugal, Poland, Hungary, Argentina, and many more, will happen here too.

It is just a matter of time.

For more, here is a selection of previous articles, in reverse chronological order:

Grand Theft Super – A Very Subtle Form Of Theft

Another Government Raid On Citizens’ Super

It Has Begun – Labor Steals Liberal’s Idea To Steal Your Super

“And Now They’re Coming For Your F***ing Retirement Money”

Stealing Our Super – I DARE You To Ignore This Now

Money Morning Agrees – Your Retirement Savings Under Threat

Now The UK Government Is Stealing Super Too

US Treasury “Borrowing” Of Federal Pensions Brings Theft Of Private Pensions One Step Closer

Liberal Party’s Sneaky Plan To Steal Your Super To Pay Labor’s Debt

No Super For You!!

$12.5 Billion And Then It’s “Credit Transaction Declined”

31 Mar

From the Australian Office of Financial Management (AOFM), 30 March 2012:

Debt ceiling?

$250 billion.

Typical weekly borrowings?

Around $2 billion.

With any luck, the government will just make it to the May budget before hitting the debt ceiling.

Again.

So you can be certain that, just like last year, there will be a little piece of legislation quietly slipped into the May budget, to raise the debt ceiling.

Again.

For the fourth time in five years.

Looks like I was right:

2 November 2011 – “Australia On Target To Hit Debt Ceiling By Mid-2012″

13 March 2012 – “Australia Debt Ceiling Hit By June”

Oh yes … did I forget to mention that on latest RBA figures, around 84% of our debt is owed to “non-residents”?

UPDATE:

Thanks to Kelly in comments who correctly notes that the title should read “$17.15″ billion till credit transaction declined, as the actual amount issued subject to the Commonwealth Inscribed Stock Act 1911 is $232.85 billion, as noted in the fine print in the last line of the screenshot above. Of course, this begs the question “what kind of debt instrument have they issued to the value of $4.59 billion, that is not subject to the Act”? My first guess would be bonds used to finance the NBN, which I seem to recall reading will be listed Off Balance Sheet in the Budget (to achieve that “surplus”, you see).

Wayne’s Half-Year Earnings Report: $30 Billion Loss

1 Mar

Remember the Labor Government’s record $51.5 billion deficit in 2010-11?

They are on track to do it again this year too.

According to the RBA, Labor has racked up a $30.26 billion loss for the first half of 2011-12:

Source: RBA Statistics - E1 Australian Government Budget - Monthly | Click to enlarge

That’s just $3 billion less than the record deficit they racked up for the first half of 2010-11:

Budget Surplus/Deficit Compared - First half 2010-11 vs 2011-12 | Click to enlarge

Now, it is worth recalling that in the November MYEFO budget update, Wayne had to revise his original May budget “estimate” for a $22.6 billion deficit this year. He told us it would blow out to $37.1 billion.

Just four weeks after that new claim from the World’s Greatest Treasurer, RBA records show that he had already managed to achieve a $30 billion headline loss for the first half of this financial year.

But he is going to deliver a $1.5 billion surplus next financial year.

Honest he is.

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