Tag Archives: budget 2013-14

Another $4.9 Billion In Usury Expenses, $300 Billion Debt Ceiling Hit This Year

2 Aug

103772144-377460

You can read all about the $33 billion budget black hole elsewhere.

Here, we are interested in the interest bill.

In less than 3 months since the May budget, the “Total Interest Expense” bill has blown out by another $4.9 billion “over the forward estimates”.

Compare, if you please.

May Budget:

Budget 2013-14, Budget Paper No. 1, Statement No. 9, Note 10 (click to enlarge)

Budget 2013-14, Budget Paper No. 1, Statement No. 9, Note 10 (click to enlarge)

August Economic Statement:

August Economic Statement, Table A1, page 48 (click to enlarge)

August Economic Statement, Table A1, page 48 (click to enlarge)

Yes, we are now talking about $15 – $16 billion every year, in Interest expenses.

That’s before any of the debt principal starts getting repaid.

Our present $300 billion debt ceiling?

Forecast to be hit in December this year … and blowing through $350 billion in April 2015, then $370 billion in April 2016:

August Economic Statement, Table 11, page 46 (click to enlarge)

August Economic Statement, Table 11, page 46 (click to enlarge)

And we know how reliable Treasury “forecasts” and “projections” are.

Don’t blame the government.

They’re victims, just like the rest of us.

Self-serving, conniving, complicit victims, yes.

But victims, nonetheless.

Our economic problems are not the politicians’ fault.

They’re OUR fault.

Because we all continue to go along with a fundamentally corrupt, parasitic “money” system.

UPDATE:

$15 billion a year in interest costs, is $1,285.53 per employed person (ABS: 6202.0 – Labour Force, June 2013).

Just so you know how much extra tax you will be paying, because our politicians are too under-the-thumb of the international bankster class to reclaim our national sovereignty, and simply order Treasury to “print” the money we need, interest-free.

Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget

10 Jul
page 134, Portfolio Budget Statements, Australian Prudential Regulation Authority, Australian Government Budget 2013-14. CLICK TO ENLARGE

page 134, Portfolio Budget Statements, Australian Prudential Regulation Authority, Australian Government Budget 2013-14.

I found it.

As predicted. Apologies it took so long.

Unsurprisingly, the evidence was fairly well buried. Naturally, the government does not want you to know what they are doing.

Just like the Canadian government did in March, and just as Europe, the USA and the UK have now done, the Australian government too is now beginning to make good on its 2010 G20 commitment to implement the Goldman Sachs-chaired, internationalist Financial Stability Board’s new regime for bailing out the banks using depositors’ money.

On page 134 of the Australian Government Budget 2013-14 Portfolio Budget Statements, under the section for the Australian Prudential Regulation Authority, we find the first of APRA’s main strategic objectives for 2013-14.  It can be effectively summarised as “business as usual”.

Their second strategic objective for 2013-14, is to:

  • consolidate the prudential framework by enhancing prudential standards where appropriate, in line with the global reform initiatives endorsed by the G20 and overseen by the Financial Stability Board; [see image at top of this post]

Those “global reform initiatives endorsed by the G20” include the FSB plan to “bail-in” insolvent banks:

Click to enlarge

FSB: ‘Key Attributes of Effective Resolution Regimes for Financial Institutions’, Annex III (click to enlarge)

In the waffle that follows, we find further that:

APRA will focus on implementing the new global bank liquidity framework in Australia…

page 134, Portfolio Budget Statements, APRA, Australian Government Budget 2013-14

page 134, Portfolio Budget Statements, Australian Prudential Regulation Authority, Australian Government Budget 2013-14.

This is likely referring in particular to the Basel III International Framework For Liquidity Risk Measurement, Standards, and Monitoring.

When published in combination with the previously mentioned strategic objective to “consolidate the prudential framework… in line with the global reform initiatives endorsed by the G20 and overseen by the Financial Stability Board”, the implication is crystal clear.

“Global bank liquidity framework” is really just technocrat-ese for “global bankster plan to prop up insolvent banks using other people’s money, and so instantly impoverish everyone who still has any savings left”.

For further proof that what this all means is the Australian government planning to steal your money to “bail-in” so-called “systemically-important financial institutions” (SIFI’s) — under the orders of an unelected international body (of bankers and bureaucrats) you’ve never heard of; a body funded by the Bank for International Settlements (BIS), and chaired consecutively by Goldman Sachs alumni — then please study the detailed primary source evidence in this blog’s original breaking story published on April 1st –

G20 Governments All Agreed to Cyprus-Style Theft Of Bank Deposits … In 2010

That’s something else to thank our recently-deposed PM Julia Gillard for doing, without our knowledge or permission.

 

Clairvoyants Revelling In A Financial Kama Sutra

17 May

Barnaby Joyce writes for the Canberra Times (my emphasis added):

Budget bottom line? Theatricality trumps actuality

The Budget is defining for politicians. They preen and pose and the building fills up with tribal acolytes. But it is after all, theatre. It is not actual it is a budget.

Everyone has an opinion, and you can as well, as it is an amorphous interpretation that you can get as wildly wrong as you like without any ramifications to you personally.

Actuals, as opposed to budgets, they are real. CEOs, accountants, shareholders live and die on actuals. If you “fudge” as an accountant and the partner finds out, you are out. If you cannot get the account to reconcile, say so, stay back and get help, but do not fudge it as it is the cardinal sin of accounting.

Budgets are more wishful thinking, sometimes pure romance. So accountants – dour, colourless characters that we are – get joy out of actuals, but budgets are more the indolent afterthought.

Anyone can play budgets and many positions are possible with clairvoyants revelling in a financial Karma Sutra, but in actuals only one position is right.

Well by the time you read this, which I am writing on Tuesday night, the Budget will basically be an item of ridicule and all will be waiting for the election this time with a fear to match the frustration.

The forward face value of our debt is in excess of $370 billion and that is from a Government Treasury whose claim to fame in the past is that they are consistently and miserably wrong, underestimating the problem, leaving the Treasurer with the time to gloat over an undeliverable promise. The unethical issue of getting the forecast wrong is that the alleviating action is put off and massive debt hurts those who never caused the problem. How on earth do we pay this money back, what is for sale, whose job is safe?

On the big picture, the Baby Bonus is gone and we have no real idea what the National Disability Insurance Scheme is going to cost, nor what Gonski really means in detail as far as cost is concerned.

On things you probably may not hear, big business will be forced to go monthly on PAYG. This will move the cost down to suppliers who will be under the pump to pay sooner. If you want to get someone on a 457 visa, the application charge will now be more than double, at $900. Why? No real reason for this apart from the fact they are running out of money.

There is confusion as to what on earth the message is, saving while spending in unnecessary areas and getting further into debt. What is the big plan that can stand in the here and now without relying on heroic projections? The levy for NDIS is projected near $3 billion for a cost which some have estimated at near $20 billion a year. Our terms of trade will have to be on the optimistic side to say the least as commodity prices are currently weakening.

I have to admit New England got a few promises more than most electorates, making my job harder there, but the question is how does one deliver a promise in either opposition or more pertinently when we have no money. Promises should not be confused with delivery. This is a question that I do not believe sections of the media will delve into with much intent, preferring the colour of the announcement over the complexity of the delivery.

Complexity is hard to distil down to a line but a very good indicator always is the debt. For Canberra, as I have stated so many times, debt is the canary in the coal mine and Canberra should be more observant of this issue than any other city in Australia. Departments know the problems for them are directly correlated to the size of the debt for the incoming government. When the Greens, Labor and independents decided that prudence should be put aside, then with it goes stability and security for the city of Canberra.

The final analogy I would say about this budget is the overwhelming feeling in the building of irrelevance in the Government’s papers and following discussions. It was an anticlimax that happened in the corner without any of the gravitas or attention of previous budgets. Australia does finally get to the TV to switch off the politics; they have done that.

Hear hear!

“In A Few Years Time We Will Be Like Ireland”

15 May

$5.2 Billion Budget Blowout

15 May

Let’s hear a caustic cheer for all the “experts” who insist that Australia’s public debt is “small”, and does not matter.

Interest on debt forecast, Budget 2012-13:

Screen shot 2013-05-15 at 9.48.48 AM

Interest on debt forecast, Budget 2013-14:

Screen shot 2013-05-14 at 7.50.25 PM

That’s a blowout of $699 million in 2012-13. $937 million in 2013-14. $1.594 billion in 2014-15. And $1.982 billion in 2015-16.

For a grand total blowout — just the blowout, not the total — of $5.2 billion “over the forward estimates.”

Now remember — all this is based on the forecast assumption of 5% per annum nominal GDP growth in the next two years. Even if that were to happen, the forecast is for another deficit (ie, more borrowing, at interest) of $18 billion in 2013-14, and $10.9 billion in 2014-15.

So, what do you think is going to happen to the forecast budget deficits — and the forecast interest on debt — if when that GDP forecast turns out to be highly optimistic … again?

Dear reader, I invite you to ponder, if you will, just how much productive investment could be made, if the economy were not loaded down with the ever-increasing burden of repaying a forecast $14 billion every year to (mostly foreign) bondholders, just for Interest on the Federal government’s debt?

A Poke In The Eyes For Treasury’s Panglossian View

15 May

stooges_01

Here is the excellent Leith van Onselen, chief economist at the equally excellent macrobusiness.com.au, giving the Treasury department’s panglossian view a most excellent poke in the eyes.

His affirming the substance of my slightly error-prone critique of last night only makes it the more enjoyable reading for your humble blogger (emphasis added):

To say that I am sceptical of the Budget forecasts is an understatement. Despite the Kouk’s bizarro reading, I see a number of potential problems with the Treasury’s forecasts, which appear to be based on unrealistic underlying assumptions and mis-reading of the stiff headwinds facing the economy.

First of all, consider the Treasury’s assumed growth in nominal GDP, which is forecast to expand from 3.25% in 2012-13 to 5.0% in both 2013-14 and 2014-15…

For the uninitiated, nominal GDP is the dollar value of what’s produced and earned across the economy. It’s also the measure that drives taxation revenue. Nominal GDP grew by just 2.0% in the year to December, far below real GDP growth of 3.1%, which is the quantity of goods and services produced. While the fall in nominal GDP below real GDP is unusual, having happened only a handful of times since the late-1950s, it has happened twice under the current Labor Government’s watch – during the GFC and currently – on both occasions driven by sharp falls in commodity prices (reducing the dollar value of Australia’s exports) and the terms-of-trade…

The terms of trade forecasts are very aggressive. they assume significant uplift for the March and June quarters for this year. An almost non-existent fall next year and 2% in 2014/15. These figures do not come terms with a China adjustment at all.

In light of the ongoing slump in the terms-of-trade, the Treasury’s nominal GDP forecasts appear highly optimistic. According to the Budget papers, a 1% change in the value of goods and services generates a $2.8 billion shift in the budget bottom line in the first year and a $7 billion shift in the second. Therefore, by assuming stronger growth in nominal GDP, the Treasury has likely overestimated Budget revenues and the path back to surplus.

The other area of concern with the Treasury’s outlook relates to the upcoming peak and then decline of mining capital expenditures (capex). Treasury remains of the view that mining capex will unwind in an orderly manner and that overall jobs growth will improve as the non-mining economy picks-up steam…

Given that around 10% of the Australian economy are employed in mining-related activities, mostly in areas unrelated to actual extraction (e.g. construction workers, engineers, and mining services), and that mining capex will soon go into an as yet ill-defined but likely sharp decline, Treasury’s steady-as-she-goes employment projections also appear overly optimistic.

Read the entire article here.

One RBA Chart Debunks Wayne’s Entire Budget

14 May

I am so glad that Wayne Swan is such an imbecile.

It means that, despite being sick, I can debunk his entire budget with about as much ease as taking candy from a baby.

Or a Baby Bonus from a “working family”.

All of the “estimates” and “projections” in Wayne’s 2013-14 budget are based on a critical assumption – 5% annual growth in GDP in the next two years:

Screen shot 2013-05-14 at 8.21.19 PM

Budget 2013-14 Overview, Appendix H

Really Wayne?

5% a year?

Let’s see what the RBA’s Chart Pack has to say about actual, not “forecast” GDP –

4tl-gdpgrwth

Er…

Anyone else get a sense of deja vu about this?

With good reason. In last year’s budget, Wayne forecast 5% GDP growth for the current year…

Screen shot 2013-05-14 at 8.33.33 PM

Budget 2012-13 Overview, Appendix H

… and since then, has been forced by that little thing called “REALITY” to revise it down, to 3.25% (see 1st chart).

Remember, this 35% downward revision for “GDP” growth in the current year has come during a period when, according to none other than Wayne himself, we have been enjoying the benefits of a “strong economy, low unemployment, low interest rates, and a huge (mining) investment pipeline.”

Not to mention record-high Terms of Trade.

That “huge” mining investment pipeline is rapidly closing down.

And the record-high Terms of Trade are collapsing too:

Source: macrobusiness.com.au

Source: macrobusiness.com.au

5% GDP growth next year, and the year after?

Sorry.

I don’t buy it.

Neither should you.

And since all of Wayne’s latest revenue estimates, and spending estimates, and budget deficit/surplus estimates, are based on that critical GDP growth ass-umption, I think it only fair to say that we can write off this entire budget as a(nother) very, very bad joke.

Problem is, the joke’s on all of us.

UPDATE:

A number of my Twitter followers have kindly informed me that I have made an error. Apparently, the RBA chart for GDP that I’ve referred to above is “Real” (ie, inflation adjusted) GDP, and the budget forecast I’ve referred to is “nominal” GDP.

No matter.

Given the falling Terms of Trade, the closing of that “huge” mining investment pipeline, and a likely incoming Coalition government purportedly looking to slash spending and public service jobs, I reckon even a forecast 2.75 (2013-14) and 3% (2014-15) “Real” GDP is highly unlikely:

Screen shot 2013-05-14 at 9.26.32 PM

4tl-gdpgrwth

UPDATE 2:

Thanks to Twitter follower @gregfranksimmo (EDIT: who got it from Greg Jericho, aka @GrogsGamut), the following chart of both “nominal” and “real” GDP clearly shows that nominal GDP has been declining since December 2010, and has actually been below “real” GDP for the past two quarters, while “real” GDP growth is presently barely managing 3% … despite all those wonderful (and temporary) economic “strengths” Wayne has been boasting about –

BKOYpNmCcAI780O

UPDATE 3:

Business Spectator and unabashed ALP apologist Stephen Koukoulas – he of the recent 8 – 12% house price rise prediction – tells us why the nominal GDP forecast is so important for the budget figures:

The forecasts that matter more for revenue, nominal GDP growth, are similarly understated at 3.25 per cent and 5 per cent growth respectively.

Er…

“Nominal” GDP in the Sep ’12 and Dec ’12 quarters was running below “Real” GDP, at less than 2% per annum.

5% “nominal” GDP in each of the next two years?

Chances of that are, I reckon, somewhere roughly between Buckley’s and none.

Meaning, the government’s revenue forecasts have roughly the same chances of coming to pass.

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