Tag Archives: government bonds

CIA: The ALP Are Donut Punchers

14 May

While our lamestream media continue to look the other way, the CIA says that our Labor government is right up there with the Greeks at punching donuts:

There is no doubt Australia is one of the most heavily indebted countries. A list compiled by the American Central Intelligence Agency puts us at No. 14 on the foreign debt scale with about $1.2 trillion owing to offshore lenders.

When you consider our relatively small population, and our strong but comparatively tiny economy, that means we are punching well above our weight in the spendthrift stakes. In fact, total foreign debt easily outstrips national income. The CIA reckons we owe the rest of the world 132 per cent of our annual gross domestic product.

That’s not too far behind Greece which, at 165 per cent, finally appears to have tipped the balance and is heading towards bankruptcy (more politely expressed these days as a debt refinancing).

Yes, the ALP are good at punching O’s.

As are our “safe as houses” Big Four banks.

Bend over Australia, and grab your ankles.

This won’t hurt a bit.

Trust us.

Labor’s BAD: Getting Worse Every Week

14 May

Labor’s  “Building the Australia Devolution” continues apace.

Two weeks ago – $2.2bn more debt.

Last week – $2.4bn more debt.

Next week – $2.75bn more debt.

At this pace, they could shatter the glass of their newly revised $250 Billion debt ceiling by around the 3rd week of August.

That’s about a fortnight after Aug 2nd, when the US Treasury reckons the US could default on its debts.

Swan Raises Govt Borrowing Limit By Another $50bn – And Don’t Ask Questions

12 May

But but but … we’ll have a surplus budget in 2013. Honest we will:

The Government has blamed Australia’s summer of disasters for its move to raise the cap on government debt by $50 billion.

As Treasurer Wayne Swan was congratulated by colleagues after Tuesday’s budget speech, Assistant Treasurer Bill Shorten introduced draft laws allowing the government to increase the amount it can borrow from $200 billion to $250 billion.

And what’s more:

The proposed legislation would also remove a requirement that the Treasurer explain why the extra money is needed.

Barnaby is right.

Leading Australian Stock-Picker: Barnaby Was Right

11 May

Southern Cross Equities’ Charlie Aitken tells his clients to get out of the stockmarket and into cash:

Aitken says anyone looking closely at the markets at the moment has to entertain the possibility of something they have not seen before. “[Nationals senator] Barnaby Joyce was ridiculed last year for saying this, but I’m prepared to say that some sort of US debt default is now on the table as a risk for investors. I never thought I would say that. You would have to say that is the biggest black swan of them all.”

The term black swan refers to a completely unexpected, utterly improbable event. In the investment market sense, a black swan is a scary prospect, with its connotations of a sudden market fall. The origin of the term is in the astonishment of the Dutch explorers who arrived at the Swan River in the 17th century and discovered that swans could be black, when to all European experience they were only white.

Aitken joins ANZ chief Mike Smith, Toscafund’s global currency expert Savvas Savouri, ABC’s Inside Business and Business Spectator‘s Alan Kohler, credit rating agency Standard and Poors, CNBC TV “First in business worldwide”, Deutsche Bank, and Barack Obama, in conceding that Barnaby Was Right about the risk of US debt default.

Barnaby forewarned of the dangers to the global economy – and Australia – back in late 2009 through early 2010.

The “experts” are slowly, and finally catching up with the only politician in the country who is always on the ball.

More from Charlie Aitken – and independent derivatives expert Satyajit Das – in this must-read article.

Labor’s $2.4 Billion Budget Spray

6 May

Thought $2.2 billion more debt this week was impressive?

The Labor party’s just getting started.

The AOFM has just announced next week’s Australian sovereign debt auctions.

A $600 million T-bond auction on Wednesday – to celebrate the myth-making record-deficit Budget Speech the night before, no doubt.

$1.2 billion (2 x $600 million) in T-note auctions on Thursday.

And another $600 million T-bond auction on Friday.

Labor’s $2.4 Billion Budget Spray.

How much more Interest-on-debt must we pay?

And how much will the “Estimates” and “Projections” for Interest-on-debt made in last year’s Budget be .. revised .. in this year’s Budget?

MYEFO 2010-11, Appendix B, Note 10: Interest Expense

According to their own “Estimate” just for this year 2010-11, we’re paying $1,201,712 ($1.2 million) per hour in Interest-on-debt.

Another $2.2bn In Debt This Week

5 May

Yesterday, the AOFM auctioned another $600 million in Treasury Bonds. Lumping the taxpayer with a (weighted-average) interest-burden of 5.35%.

Today, the AOFM will auction another $1 Billion in Treasury Notes.

Tomorrow, the AOFM will auction another $600 million in Treasury Bonds.

How much will this week’s national credit card binge add to last year’s “Estimates” and “Projections” of Interest-on-debt?

MYEFO 2010-11, Appendix B, Note 10: Interest Expense

According to their own “Estimate” just for this year 2010-11, we’re paying $1,201,712 per hour in Interest-on-debt.

UPDATE:

Today’s $1 Billion Treasury Notes auction completed.

Slug to taxpayers? 4.73% interest rate (weighted average yield).

Goose’s $2Bn Shock ‘N Awe Intervention

28 Apr

Just checking the AOFM website to confirm any changes to tomorrow’s scheduled $700M Treasury bond auction, and found this bombshell announcement:

(click to enlarge)

So, another $2 billion (that’s $2,000,000,000) in short-dated Treasury debt was auctioned off today.

Did anyone see that coming?  And why the shock ‘n awe of a previously-unannounced auction, to the tune of $2 billion?

Could it be that the rapidly rising Aussie dollar, combined with fast-growing inflationary pressures, has forced this incompetent government into a “necessary” money markets intervention – (ie) selling extra AUD-denominated government debt, in an attempt to keep a lid on the AUD?

Yahoo! Finance - Charts - AUD/USD (click to enlarge)

If so, then when (if ever) will Goose and his fellow incompetents be held to account for driving those inflationary pressures in the first place, with their hundreds-of-billions in reckless and wasteful spending on overpriced school halls, ceiling insulation, the NBN, etc etc?

UPDATE:

If this was an intervention in money markets to cap the rapidly rising AUD, it seems to have worked. For now –

(click to enlarge)

For interest, here’s how the AOFM describes its Cash Management program:

Short-term funding needs can be met by increasing the volume of Treasury Notes on issue…

And here’s how they describe the Issuance Program for auctions of Treasury notes (as distinct from Treasury bonds):

Treasury Notes are short-term debt securities used primarily to meet within-year funding flows. Issuance decisions are made weekly and depend on the Government’s projected daily cash position for the weeks ahead. Treasury Notes are not expected to make a major contribution to overall funding for the 2010-11 financial year as a whole…

Tenders for the issue of Treasury Notes will be held on Thursdays, with details of the tenors (sic) and amounts to be offered announced at noon on the Friday of the preceding week.

Unless I missed something, the AOFM did not pre-announce today’s $2bn T-note auction at noon last Friday.  Granted, it was Good Friday. But I did not spot an announcement at any time during this week either.

Given the obvious immediate effect on the AUD this afternoon (see charts), and particularly in consideration of the media storm in recent days that followed the shock inflation figures, I smell a money market intervention – for pure political expediency.

With the public already concerned about rising cost of living, a growing revolt against the carbon tax, and plummeting polls for Labor, the last thing this government needs right now is the public spooked even further by the spectre of further rises in interest rates to hold back inflation.

So could it be that this government is going from bad, to worse, to calamitous, on fiscal management?  Could it be true that they are now compounding their first error of creating inflationary pressures by wanton borrowing-and-spending, by engaging in an ad hoc currency intervention – one that throws us into yet another $2bn of debt – solely in order to cap the rising AUD and calm inflation fears, a few days before the RBA meets to decide on interest rates, and, less than a fortnight out from the Budget?

UPDATE 2:

April 29, 9.14am –

From FXStreet:

AUD/USD Closing In On Yesterday’s High

Well now, that went well, didn’t it Wayne?  $2bn more debt just to save face before the Budget .. and the effect lasts less than 12 hours.

(click to enlarge)

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