Labor’s Budget Made Simple

31 Jan

Twitter follower @cr0atz recently brought to my attention an interesting picture of the US budget made simple. He asked me to make an Aussie version.


Click to enlarge

Now don’t let anyone tell you that debt and deficits don’t matter.

Or, that government and household budgets are “different”.

Just remember, dear reader.

Those spruiking such claims – their ideological Articles of Faith – are the same “experts” who didn’t see the GFC coming.

And now, can’t fix it either.

#JAFA’s, in other words.

Barnaby is right:

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

21 Responses to “Labor’s Budget Made Simple”

  1. misterq January 31, 2012 at 5:47 pm #

    And of course, the Goose (aka Swan) will tell us, that the bench mark is the trillion dollar GDP. Nope, Wayne, that’s what everyone else is earning, not your household.

    Economic Vandalism – the only way to describe it.

    • The Blissful Ignoramus January 31, 2012 at 6:18 pm #

      Fascinating timing with your comment, misterq … I just “enjoyed” discussion with self-styled “expert” on Twitter, arguing the usual “% of GDP” tosh. Apparently, Revenue and Spending figures are “meaningless”. I feel so enlightened now /sarc

  2. Tomorrows Serf January 31, 2012 at 7:28 pm #

    Just ask the Greeks, the Spanish, the Italians,the Portugese, the Irish, the Hungarians,the Icelanders or the 50 million Yanks on Food stamps if DEFICITS AND DEBT don’t matter.

    They don’t matter UNTIL…… they matter!!!

    And then, the SHTF… big time.

    Welcome back BI!!

    2012 looks like being one of those years that will be talked about for all of time…

    • The Blissful Ignoramus January 31, 2012 at 8:14 pm #

      Thanks TS … I’m guessing you’ll appreciate my latest Twitter avatar; my sardonic way of highlighting Aussies’ apathy:

      • Tomorrows Serf January 31, 2012 at 8:56 pm #


  3. Jazza January 31, 2012 at 7:32 pm #

    Brilliant post! Thank you!

  4. kelly liddle February 1, 2012 at 1:54 am #

    Hey Blissful you are a Queenslander aren’t you? You have only covered about half of our shared debt. Look at our numbers

    “Non-financial Public Sector borrowings of $62.352 billion are projected at 30 June 2012,
    $2.736 billion less than the 2011-12 Budget estimate. By 2014-15, gross borrowings are
    expected to reach $85.378 billion.” From MYFER QLD Budget, 11/12

    • The Blissful Ignoramus February 1, 2012 at 5:34 am #

      Hi Kelly,

      You are quite correct – I’ve not included State Gov debts underpinned by the Fed Govt. Although very relevant, I thought it would complicate the issue in terms of Fed Budget. Plus, (conveniently), these are not included in the Fed Budget.

      A comprehensive breakdown would, in my view, also include the massive liabilities of our banking system, which the government has implicitly (and in the case of wholesale debt obligations, explicitly), underpinned as well.

  5. Richo February 1, 2012 at 2:03 pm #

    Good to see you back Blissful. Adding to your above post, I think the factors taken into consideration when determining net debt.

    For example, I know for fact student loans (e.g. HELP debts) are classified are “accounts receivable” for the purpose of calculating net debt.

    While student loans have to be repaid, do Treasury factor in students dying or permanently relocating overseas?

    The other thing is that money owing under HELP cannot exactly be “called in” at the drop of a hat by the government. There is also the fact the every time a student pays off their debt another 2 start a loan payment. In fact there will always be money owing in that account because there will always be students studying overpriced degrees.
    The government has to pay the degree upfront and they MIGHT get the money back in say 10 years if they are lucky.
    To use the household budget analogy it would be like expecting to pay off the nursing home fees when the kids pay back their loan for the overseas trip.
    Penny for your thoughts.

    • The Blissful Ignoramus February 1, 2012 at 7:21 pm #

      I think you are hitting a nail on the head Richo, re how Net debt is calculated. If I understand you correctly, then what you are outlining viz student loans fits with my broad viewpoint on the dodginess of sitting govt’s always choosing to reference Net rather than Gross debts; to wit, to make the public perception of their accrued debts less damning, they ass-ume that monies owed to the government will indeed be paid, and so take these off their Gross debt figure. As a basic principle, I consider this dodgy accounting, for base political purposes. As we have all seen viz the banking dramas through the GFC, ass-uming that your debtors can and will pay up, and thus claiming/reporting that your actual (Gross) debts are effectively less than they actually are, is IMHO arrogant, irrational (espec. in light of historical precedent), and thus, blatantly misleading and deceptive.

      In this post, I’ve really kept it super simple, and made no attempt whatsoever to deconstruct the as-reported numbers in the budget’s Government Sector Balance Sheet.

      • Richo February 2, 2012 at 9:58 am #

        Super simple is good, particulalry for those like me who have just recently “taken the red pill”.

        The link below provides more information on what’s in and what’s out when calculating net debt.

        Click to access 01_Debt.pdf

        Page 3 is the most relevant.

  6. Twodogs February 2, 2012 at 12:38 am #

    Oh, very good. Once you go down the rabbit hole, it becomes apparent how apathetic and oblivious most Australians are to their fate.

    Of course, nobody worries about where their next meal is coming from until they don’t know where it’s coming from. When I look at overseas blogs, I see a world far far worse, and still a majority apathetic to the fate which has almost past them.

    It’s time for a plan. It’s time for a movement. Time to get on board while it’s still legal. British councils have already asserted right of veto over freedom of speech through licensing of pamphlet distribution and right of censorship. At least Britain is a bellwether for what we can expect here. Bob Brown’s One World government dream is closer than we thought. Time to shatter his dream, methinks.

    • Tomorrows Serf February 2, 2012 at 4:13 pm #

      Couln’t agree more, Twodogs…where do I sign up???

      Richo, do you ever wish you hadn’t popped that damned Red pill?

      Life was so much simpler.

      • Richo February 3, 2012 at 11:40 am #

        Tommorrows Serf,

        The truth hurts I’m afraid, but I was always taught “no pain, no gain”.

  7. JMD February 2, 2012 at 6:30 pm #

    Speaking of sovereign debt, have a listen to this interview;

  8. bingbing February 3, 2012 at 12:38 pm #

    Can I use that table on my blog, mate? All linked and credited, of course.

    • The Blissful Ignoramus February 3, 2012 at 2:13 pm #

      Yes mate, no prob 🙂

      • bingbing February 3, 2012 at 5:11 pm #

        Ta. I noted on my blog that Europe has done what Gillard is doing but on far grander scale, and look how that’s turned out.

        BTW, it wasn’t so long ago – a few months? – we were talking about $220 bil and now it’s at $260.


        • The Blissful Ignoramus February 3, 2012 at 5:15 pm #

          Be careful not to read too much into that mate – the $260b came from the Nov ’11 MYEFO Gov Sector Balance Sheet; it includes more than just the $220b-odd Government Securities on Issue at present, the number which is available at the AOFM and is commonly bandied around. What is of interest, is that the AOFM started T-note and T-bond auctions for 2012 this week following their Xmas/NY holidays – $2.4b worth this week, and announced $3b more for next week. Making up for their break.


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