Tag Archives: AAA rating

Leading Social Democrat Answers Rudd’s Question On AAA Rating

5 Aug

titanic-7

Kevin Rudd has made much of his being — according to him — a Social Democrat.

He has also made much of Australia’s AAA credit rating.

Interestingly, another leading light of the so-called “Left”, who also sees himself as a Social Democrat, has a rather different view about Australia’s AAA rating.

Indeed, Professor John Quiggin — someone with whom I agree on many topics — says that he agrees with Shadow Finance minister Andrew Robb’s recent observation; one that was much ridiculed by Labor, and its many Cyclopsian supporters:

Which politician, holding a senior frontbench economic position, made the following sensible observation

“I remind you that Lehman Brothers, the collapse of Lehman Brothers, which started this global financial crisis, on that very day, they still had a AAA credit rating. What does a AAA credit rating really amount to? What I’m saying is you can’t place enormous store in the rating agencies. They do get things very badly wrong, and they totally missed those major firms and economies that were driving and the reason for the GFC.”

The answer to Kevin Rudd’s arrogant challenge on why Australia still has a AAA credit rating “from all 3 ratings agencies” is, ironically, the very same argument that Labor has been using to proclaim how great a job they’ve done managing the economy.

Relativism.

Relative to the other basket-case economies in the Western world, Australia’s ability to service the $16 billion a year interest payments on its public debt, is still considered “AAA”.

For now.

As always, the truly important point is what the politician does not tell you.

That the ratings agencies have issued several stark warnings about our AAA rating.

If the Federal government cannot demonstrate a credible “path to surplus”, then our AAA rating is in jeopardy.

One look at Labor’s revised Economic Statement released on Friday, is sufficient to tell anyone with half a clue that Labor does not have a credible path to surplus.

Far from it, in fact.

The “major economic parameters” for the newly revised “projections” in that $33 billion black hole Economic Statement, have holes you could drive a truck through.

That is, if you could afford the fuel, after Rudd includes transport fuels for heavy on road vehicles in his CO2 trading scheme from 1 July next year.

And Labor’s sole idea for how to “manage the economic transition” from a collapsing mining boom — one they predicted would give us a period of “unprecedented prosperity” “stretching to 2050” — is to copy Cyprus and Iceland.

By turning Australia into a “financial services centre to the region”.

Brilliant. We know how well that grand plan panned out for the Icelanders and the Cypriots.

As your humble blogger observed on Twitter last evening:

Australia’s AAA rating simply means this:

We are 1st class passengers on the Titanic.

#gfc #lasttodrown

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Barnaby: Debt One Day, High Taxes The Next

4 Feb

Senator Joyce writes for the Canberra Times:

The Queensland Labor Government has been ahead of its time. It lost our AAA credit rating long before many others, before the United States, before France and before Australia. In 10 years, Labor has increased Queensland’s public debt by $45 billion. That is $10,000 of extra debt for every Queenslander.

Remember when Peter Beattie said we would be the ”smart state”. Well it doesn’t seem too smart to be racing towards $85 billion in debt. We have seen what too much debt can do to other countries and we would be mad to replicate that approach here. The fact always remains the same; if you can’t manage debt, debt will manage you.

What has Queensland seen for this reckless spending? The traffic is worse, housing is less available and we are paying more for essential services such as electricity and water. A lot more. Electricity prices are up 38 per cent and water prices are up 46 per cent in just four years. Labor spent $10 billion on a water plan to take infrastructure from local councils and is now giving some of those assets back.

It spent billions on a desalination plant that was beset by cost overruns and so many delays that while we were waiting for it, it rained. The plant has barely been used but Queenslanders are paying for it through their water bills.

Now Premier Anna Bligh thinks Queenslanders aren’t paying enough for basic services and supports the Gillard Government’s moves to introduce a carbon tax. Under the carbon tax, households will pay an extra 10 per cent for their electricity and businesses will pay up to 20 per cent more.

Nowhere will be hit harder by a carbon tax than Queensland. Even the Labor government’s own modelling finds that under a carbon tax there will be 41,000 fewer jobs in Queensland over time. The worst hit areas form an arc from Mackay to Gladstone, where so many of the state’s mining industry resides. Hundreds more jobs based in Brisbane and elsewhere are linked to the mining boom.

Labor has simply stopped standing up for Queensland. Anna Bligh promised to ”put Queensland first” when assessing whether to support the carbon tax, but she gave her support anyway despite achieving no concessions from her federal Labor counterparts. No Queensland government that stood up for Queensland would support a tax that cost Queenslanders jobs.

Over the past four years Queensland’s unemployment rate has increased from 3.4 per cent to 5.4 per cent and 60,000 more Queenslanders have joined the unemployed queue. Lucky we are winning the State of Origin because we are getting the wooden spoon on economic performance despite the mining boom. Queensland was once the engine room of the Australian economy. We were also the low tax state.

Now we seem to better other states at nothing except bureaucracy. Sometimes it seems like this is a government driving via the rear vision mirror. They are constantly reacting to events. By their own admission they failed to invest in infrastructure for years. They can’t pay nurses on time, coordinate the labyrinth of water departments and agencies they created or stop a claimed Tahitian prince from ripping off millions of dollars from Queensland taxpayers.

This is a soap opera of a government and for the benefit of Queensland it has to stop. Many Queenslanders are young enough to remember the last Coalition government, a government that balanced the books, electrified the rail lines, built the Gold Coast, constructed dams and the international airport in Cairns. Queensland can have that economic management again but it’s going to get more of the same from more spending and more debt from Labor.

Australia’s AAA Ponzi Rating: What Wayne Forgot To Mention

24 Dec

Everything’s fine.

Nothing to see here folks.

Move along now.

Back to your consumer spending.

Here, have another credit debt card:

Acting Prime Minister Wayne Swan says the reaffirmation of Australia’s triple-A credit rating by ratings agency Moody’s proves the economy is strong and the federal opposition is wrong to talk it down.

The treasurer on Thursday also labelled as “complete rubbish” media reports suggesting the country was on the brink of an unemployment catastrophe.

Moody’s said overnight that Australia’s AAA credit rating was “supported by the very low level of public debt and the country’s strong financial system”…

Uh … Wayne.

What else did Moody’s say?

The government’s debt rating of Aaa takes into account the aim of maintaining a balanced budget, on average, over the business cycle.

Oops.

As shadow treasurer Joe Hockey rightly (for a change) points out:

Without further detail, the government’s projection to reduce net debt to zero by 2020-21 is hardly believable, coming from a Treasurer who this year will chalk up his fourth huge deficit out of four budgets. It would require six consecutive annual reductions in net debt of $22bn. That is six consecutive surpluses larger in dollar terms than has been achieved previously (the largest underlying surplus was the $19.7bn achieved by the Coalition in 2007-08) or very solid growth in financial assets, which seems problematic given the likely continued financial and market volatility across the medium term.

Not. Gonna. Happen.

Even if the Green-Labor government succumb to Joe’s empty threat … which they won’t:

Default threat as Liberals issue debt warning

The Coalition has threatened to block any effort by the government to raise the $250 billion limit on public sector borrowing, potentially forcing the government to run out of money.

“Whilst the Coalition has supported this in the past, the government should not expect a rubber stamp this time,” Mr Hockey says in his article.

The Coalition demands could include scrapping the carbon tax and the mining tax, along with the benefits they are intended to finance, such as personal tax cuts and increased superannuation.

Does anyone seriously believe that the Opposition would force a government shutdown, and default on our public debt obligations, rather than increase the debt ceiling?

Not. Gonna. Happen.

What else did Moody’s say, that Wayne conveniently forgot to mention:

The stable ratings outlook is premised on the expectations that the government will maintain its low debt levels and macroeconomic conditions will continue to support fiscal consolidation.

Any trend or event that caused a long-term shift in budget balances to significant deficits and an increasing public debt burden might put downward pressure on the rating.

In other words, hope like hell that global macroeconomic conditions don’t continue over the cliff, and get back to annual budget surpluses pronto so that you can actually start paying down that “low” (but ever-rising) public debt level … or you can kiss your AAA rating goodbye.

Not. Gonna. Happen.

Mr Swan on Thursday also slammed a newspaper report that suggested the country was on the verge of a jobs crisis.

Sydney’s Daily Telegraph reported Australia was set to lose 100,000 jobs in the months after Christmas.

Not so, according to the treasurer.

“Our economy has strong fundamentals, we have low unemployment, we have strong public finances, we have trend economic growth and we have a huge investment pipeline.

We have “trend economic growth”, do we Wayne?

You’d better hope not.

Because if we do, then your budget surplus soothsaying is in very deep doo doo.

“The Liberals have been talking our economy down. But we have also got the Daily Telegraph today running a story which is simply exaggerated nonsense.”

Mr Swan said neither advertisers or their customers would appreciate the economy being talked down just before Christmas.

Why so much concern about “talking it down”?

You see, dear reader, the simple truth is this.

The word “economy” … in the modern, bankster-debt-driven sense … is exactly synonymous with the word “Ponzi”.

Both need continuous growth.

Generated by lots of fools at the bottom … whose money flows to the scum at the top.

Running a Ponzi is all about con-fidence.

You always have to be “talking it up”.

You can’t have anyone “talking it down”.

Because the moment that participants in the system begin to lose con-fidence … growth slows, then stops.

Horror of horrors … it goes backwards. The Ponzi begins to implode.

And the parasitic scum at the top begin to lose their sole source of sustenance.

You.

Likewise, a bankster-debt-driven “economy”.

Which is why the scum at the top are always so keen to … talk it up.

Australia has a AAA-rated economy Ponzi.

One of the last remaining AAA-rated Ponzi’s in the Western world.

More fool us.

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