How’s that borrow-our-country-into-endless-servitude-to-foreign-lenders caper going, Wayne?
Four weeks ago – $2.2bn more debt.
Three weeks ago – $2.4bn more debt.
Last week – $2.75bn more debt.
This week – $2.5bn more debt.
Next week – $2bn more debt.
Wayne’s well on track to shatter the glass of Labor’s newly revised $250 Billion debt ceiling by around the 3rd week of August.
That’s just after Aug 2nd, when the US Treasury reckons the US could default on its debts.
Tags: AOFM, budget, Commonwealth securities, debt and deficit, government bonds, sovereign debt, wayne swan
Senator Joyce writes for the Canberra Times:
Keep your eye on the prize
For all those budding double agents now is your time. Budget Estimates is on and the heads of all the public service departments are making their way through security with their minions, servants and sycophants. Just the thought: you can square the account with merely a call to my office and the appropriate question will be asked, whilst you watch the whole episode on APAC. “So Mr Head of Department Type Person did you on the 1st of the 4th let your government car be driven by your mistress to a family function at Nimbin?”
As a more noble gesture you may have a serious concern about an issue that really does have national implications. Serious problems cause serious expenditure of serious money. If that is the case we will then have to borrow serious money which has to be seriously repaid. Say nothing or speak up?
The management that has given us the debt is reflected in the government’s need to increase by $50 billion the extension on our credit card. Before this budget the Parliament had approved the government to borrow $200 billion. After this budget, the limit will be a quarter of a trillion dollars. That’s what the Treasurer calls ‘back in the black.’
If we do not get on top of the type of management that has given us the debt the so called efficiency dividend will mean permanent and ongoing closure and contraction in vital activities in Canberra.
So this is what the first harbinger of debt looks like to the Nation’s capital; cuts over the forward estimates, that is the next 4 years, of $2.133 million for The National Library, $1.762 million for The National Museum, $1.099 million for The National Film and Sound Archive, $1.373 million to The National Gallery and $1.632 million to The Australian War Memorial. There are others as well but I see most of you have just said well I am right, keep dancing.
Canberra should have an extensive interest in the Australian Office of Financial Management website noting Commonwealth Government Securities outstanding and whether you have a job in the future. Canberra more than anywhere else should be the most diligent in insisting that prudence is the order of the day and debt is to be repaid. The public service is the canary in the coal mine for excessive government debt.
In budget estimates, in the higher elevation of Parliament House, department after department talks about “tight fiscal times”. Maybe you work or own the restaurant that is a service to a city dependent on, in a substantial way, the public service. Maybe you build the house for the person who works in the restaurant that services the clientele for the public service.
Let us not beat around the bush if you live in Canberra you do not have to be convinced of the importance of the income of those who are employed by the taxpayer. It does not require a major leap in understanding that if you borrow a quarter of a trillion you are some day going to have to pay it back. This time of reckoning will have major implications in the way business is conducted in Canberra.
Canberra needs Australia to be a well oiled and profitable income earning entity. Canberra can not afford well meaning but quite foolish ideas such as recalibrating the nation’s economy on a colourless odourless gas tax.
The decision to go on that frolic has to be assessed against our current position. Australia makes money, over half its export dollars, by exporting carbon in the form of coal and gas. Likewise iron ore needs coal to make steel, I know I did not need to tell you that, and cattle produce methane, but white ants in Australia produce far more.
Where is that tax revenue going to come from to keep Canberra in a job noting we have major debts to finance? Wind farms supplying overpriced power to people who can barely afford it, is no substitute for hard currency earned from export dollars. If you look around your room now and realise how many of the items that are fundamental to your standard of living are imported then you have to acknowledge that we need to do all in our power to put product on the boat to pay for it.
Tags: barnaby joyce, budget, canberra times, debt and deficit, media release, senate estimates
Uh-oh.
Haven’t we already had enough worrying announcements over this past week?
To top things off, Fitch’s ratings agency has reclassified 54 tranches of Australian residential mortgage-backed securities (RMBS) from ratings watch “stable”, to “negative”:
Cash-strapped borrowers and tight-fisted mortgage insurers are a greater threat to Australian banks than previously thought, says a major ratings agency.
New information shows that Australian mortgage insurers, which secure loans for banks and other lenders, do not always pay the full outstanding amount of mortgages when they fall over which can leave banks out of pocket, according to ratings agency Fitch.
Based on its findings, Fitch moved 54 tranches of residential mortgage backed securities (RMBS) from ratings watch “stable” to “negative”. Mortgage backed securities are home loans which are bundled together and sold to institutional investors by banks and mortgage lenders.
Banks fund mortgages through issuing RMBS, which are rated by credit ratings agencies like Fitch, Moody’s and Standard & Poor’s for their quality and likelihood of being repaid. RMBS lay at the heart of the subprime crisis in the US, when major banks and investors poured billions of dollars into mortgage debt which turned out to be lower quality than thought.
The new ratings account for about half of Australia’s national securitised mortgage market. Each transaction is made up of multiple tranches that attract a different rating based on their underlying credit quality.
“Rating watches indicate that there is a heightened probability of a rating change and the likely direction of such a change,” according to data from Fitch’s website, with “negative” denoting a potential downgrade.
…
Commonwealth Bank chief executive Ralph Norris recently noted a 11 per cent increased in delayed payments on mortgages in the March quarter following the big rise in lending for first home buyers around the time of the financial crisis. ANZ Bank and Westpac have reported similar upticks.
We have been covering the other, even greater risks to Australia’s banks in recent posts (here, here, and here).
What concerns most about this announcement, is the implications for the $20 Billion worth of RMBS’ that the Labor government has purchased, and continues to purchase, in their efforts to keep propping up our housing bubble.
It’s been quite a week.
Tags: budget, FHOG, Fitch ratings agency, housing bubble, mortgage debt, RMBS
Labor’s “Building the Australia Devolution” continues.
Three weeks ago – $2.2bn more debt.
Two weeks ago – $2.4bn more debt.
Last week – $2.75bn more debt.
Next week – $2.5bn more debt.
Labor seem determined to shatter the glass of their newly revised $250 Billion debt ceiling. At this pace, possibly by around the 3rd week of August.
That’s just after Aug 2nd, when the US Treasury reckons the US could default on its debts.
Tags: AOFM, barnaby joyce, budget, debt and deficit, government bonds
Senator Joyce rips into the government’s economic “plan” this morning:
Opposition frontbencher Barnaby Joyce has taken a swipe at the Gillard government’s approach to the economy, saying it had an unbounded belief in Asia’s demand for Australia’s resources.
“God help you when the prices go down,” he told reporters in Canberra on Wednesday.
The government’s approach to economics was “a clever ability to charge people to dig up red and black rocks“.
“They (government) have an unbounded belief that the people in South-East Asia will have an eternal gratitude to pay an excessive price for red rocks and black rocks.”
Tags: barnaby joyce, budget, China bubble, China Miracle, mining boom
Well done Michael Stutchbury.
But you’re not forgiven until you retract the smear. And join the chorus now recognising that Barnaby was right about the risk of US debt default.
From The Australian:
The confused reaction to Wayne Swan’s budget stems from its refusal to properly spell out the risks of relying on Australia’s China-fuelled terms of trade remaining close to their 60-year or even 140-year highs.
This commodity price bonanza has delivered eight years of tax cuts, a big expansion in middle-class welfare, billions of dollars of wasteful spending – and this year’s $50 billion budget deficit.
Yet all our previous commodity export price spikes have swiftly reversed, typically ending in double-digit inflation and recession.
A must read.
Tags: barnaby joyce, budget, China bubble, China Miracle, debt and deficit, michael stutchbury, mining boom, stimulus spending, us debt default
John Roskam explains:
According to the Treasurer the flood tax is now officially a ‘saving’. We’ve told you about this scam before (twice actually). Here it is from the government’s own budget papers.
(How do Treasury bureaucrats sleep at night? Following their logic all “taxes” are “savings”!)
Orwell would be proud.
Orwell's 'Ministry of Truth'
Here’s The Herald Sun, The Age, The Canberra Times and The Brisbane Times all swallowing this doublespeak.
Tags: 1984, budget, doublespeak, george orwell, john roskam, ministry of truth
I’m Barnaby from Queensland, and I’m here to help:
The Government says he [Abbott] should have detailed his own budget, but Barnaby Joyce disagrees.
BARNABY JOYCE: This is what they keep asking us: what would you do if you were us? Well if we were as stupid as you we’d probably drown ourselves. We don’t have to propose an alternative to their stuff up, we just have to get rid of them.
Tags: barnaby joyce, budget
Bloomberg savages the hypocrisy and incompetence of Labor’s budget:
All in.
That’s essentially the message Treasurer Wayne Swan is sending about Australia’s odds-defying bet on Chinese growth. The government’s latest budget pledges to deliver the quickest improvement in the nation’s finances on record — without specifics about how that will happen.
The absence of such detail is telling and can be boiled down to one thing: an even bigger gamble on China’s 10 percent growth and its voracious appetite for Australia’s resources. It’s risky to so fully hitch the hopes of 23 million people to a single nation that’s still developing.
Hypocrisy was in the room last month when Australia rejected a Singaporean offer for its stock exchange. Swan called slapping down Singapore Exchange Ltd. (SGX)’s $8.8 billion bid for ASX Ltd. a “no brainer.” The whole shareholders-come-first vibe that pervaded before the global crisis lost its oomph among voters.
The debate distracted attention from a far bigger takeover happening by stealth: China’s designs on all things down under. Down under the ground, that is.
Tags: Bloomberg, budget, China bubble, China Miracle, mining boom, wayne swan
Barnaby writes for The Punch (emphasis added):
Let us first consider what Wayne Maxwell Swan said on the 10th of March 2009. He stated that “the emerging economies of China and India are now expected to slow markedly”. Because of this, Wayne Maxwell Swan stated “it will be necessary to increase Government borrowing”.
The result was Wayne Maxwell Swan increased by $125 billion the amount able to be borrowed by reason of the Commonwealth Inscribed Stock Act 1911 and the Loans and Securities Act 1919. This resulted in the nation’s credit card having a $200 billion limit.
Now as we know, China did not go into recession so neither did we, in fact China hardly missed a beat but Australia has now gained the ignominy clearly spelt out by Dr Ken Rogoff of Harvard when he noted the countries with the greatest cumulative increase in real public debt since 2007.
The order of infamy is as follows: Iceland is first, Ireland is second and Australia is third. Spain, Greece, Portugal and the US all experienced lower increases in their debt. I know that these other countries are already in crisis, so we start from a lower base but at this rate that will be a fleeting grace.
On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.
Now that is in billons ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.
The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.
Of course, the public servants will not be happy when we use their retirement savings, put aside in the Future Fund, to pay off some of Labor’s massive debt. But that is what you must agree to if you believe in net debt. Likewise, you have to believe that you can track down all the students to pay all their HECS back immediately if you believe in net debt. Good luck patrolling the creeks and streams of Northern NSW looking for them.
So we are on the road and racing to serious problems. It is there in the figures. Debt ceiling issues in the US have now started visiting us in their primal form in Australia. I have been banging on about this, trying my best to warn about this, and generally vilified because of it and believe me, vindication is not what I was seeking.
We must realise what is happening or our nation will be like a bad accountancy client oblivious to the mechanism of their financial demise and the associated immense humiliation and hurt that comes because of it.
People generally do not understand the deficit and surplus concept, often believing that a surplus means all the debt has been paid. The surplus or deficit is broadly the profit or loss of the operation or the business of government.
Like a shop on the skids, the last three years profit and loss statements from 2010 have shown a $54 billion loss then a $49 billion loss which will be followed by another $22 billion loss. This was achieved while receiving record prices for our main sale items of coal and iron ore. How long will a shop like that be around for, and if you doubt the figures check their overdraft.
Where did the money go? What on earth have they done with it? How on earth will they pay it back? The answer to the last question is they will not, you the taxpayer will.
You will just have to spend more of your life working not for you but for the government. Instead of working Monday and half of Tuesday stacking bricks, shearing sheep, working behind a desk or on a checkout to pay your tax, you will have to spend more time through late Tuesday and Wednesday glancing at the clock saying more of my life is slavery for their incompetence.
Barnaby is right.
He has been warning of this since 2009. He quickly lost his job as Shadow Finance Spokesman, because he dared to say what most do not want to hear.
Now, more and more “experts” are slowly emerging from the woodwork to agree that Barnaby Was Right.
Tags: barnaby joyce, budget, debt and deficit, national debt, sovereign debt, wayne swan
Barnaby Is Right
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