Tag Archives: household debt

Swan Tells Parliament 5 Lies In 2 Short Sentences

19 Aug

Wayne “OOPS! I did it again” Swan has been “talking up” the economy lately.

But remind me, dear reader … aren’t there rules against lying to Parliament?

Consider this, from Swan’s Ministerial Statement on the Economy, from Hansard, Tuesday 16 August 2011:

MR SWAN:  As these global events buffet global markets we should bear two things in mind. First, we should remember that 2011 is not 2008. Households are not as highly leveraged

Lie #1.

The RBA Statistics, B21 Household Finances – Selected Ratios, shows that the ratio of Household Debt to Assets @ March 2011 was 19.3 (versus 19.3 @ September 2008).  And the ratio of Household Total Debt to Disposable Income @ March 2011 was 155.2 (versus 154.4 @ September 2008).

Households are more highly leveraged now, than at the peak of GFC1.

our banks’ balance sheets are stronger

Lie #2.

The RBA Statistics, B2 Banks – Assets, shows that our banks had $2.72 Trillion in Total Assets @ June 2011 (versus $2.46 Trillion @ September 2008). Importantly, it also shows that our banks’ total “assets” comprise 38.3% Residential Loans @ June 2011 (versus 30.5% @ September 2008), and that total Resident Loans (ie, Residential + Personal + Commercial loans) comprise 65.3% of their Total Assets @ June 2011 (versus 62.4% @ September 2008).  It also shows that the banks’ growth in total “assets” from September 2008 to June 2011 ($260.7 Billion), is comprised of a $291 Billion increase in housing loans, offset by decreases in Personal and Commercial loans.

In other words, (a) the so-called “assets” on our banks’ balance sheets are mostly loans, (b) their entire “asset” growth since GFC1 is 100% loans, and (c) they are now even more heavily leveraged to Residential Loans (ie, to our last-to-pop housing bubble) than at the peak of GFC1.

B5 Banks – Consolidated Group Impaired Assets, shows that our banks had $10.55 Billion in Specific Provisions For Bad And Doubtful Debts @ March 2011 (versus $4.1 Billion @ September 2008); $10.54 Billion in General Provisions For Bad And Doubtful Debts @ March 2011 (versus $7.4 Billion @ September 2008); and $30.1 Billion in Total Impaired Assets @ March 2011 (versus $13.2 Billion @ September 2008).

In other words, our banks now have 83% more Bad And Doubtful Debts, and 128% more Impaired Assets lurking on their balance sheets, than at the peak of GFC1.

B3 Banks – Liabilities, shows that our banks had $2.54 Trillion in Total Liabilities @ June 2011 (versus $2.33 Trillion @ September 2008).

In other words, our banks now have $210 Billion more in Liabilities, than at the peak of GFC1.

… and the emerging economies of Asia are still doing quite well.

Lie #3.

The latest RBA Chart Pack shows quite clearly that our “emerging economy” ASEAN economic partners (not including China, India, and Japan) all have sharply falling economic growth, currently at the levels of 5 years ago (2006):

Source: RBA Chart Pack, August 2011

And while global confidence and global markets have taken a battering in recent weeks, overall, global growth remains reasonably firm

Lie #4.

The latest RBA Chart Pack shows quite clearly that World economic growth is falling sharply, with global growth (and especially that of our major trading partners) currently at levels of 6 years ago (2005):

Source: RBA Chart Pack, August 2011

… supported by continuing strong growth in China and good growth elsewhere in our region.

Lie #5.

The latest RBA Chart Pack shows quite clearly that China’s economic growth is falling, and is now below the levels of six years ago (2005), while India’s economic growth is now at levels of 5 years ago (2006):

Source: RBA Chart Pack, August 2011

Could this be a new record for Treasurer Swan?

Five lies, in two short sentences.

Why do we all stand by and permit such criminal dishonesty, from the Treasurer of our taxes?

Any Financial Officer for a public corporation who performed their duties in this way, would receive a very long sentence.

The deceived shareholders would insist on it.

Swan Lies About Mortgage Payments

4 May

Proof below.

Too disgusted to comment.

From the Sydney Morning Herald:

The Reserve Bank’s decision to leave its cash rate unchanged is good news for households and businesses doing it tough in Australia’s current patchwork economy, Treasurer Wayne Swan says.

“Following today’s decision, an average family with a $300,000 mortgage is still paying nearly $160 less each month in repayments than they were when we came to government,” Mr Swan said in a brief statement.

“That’s a saving in the order of $1,880 a year – extra money that’s particularly important given the cost of living pressures many families are facing.”

From the Reserve Bank of Australia Statistics (click to enlarge):

Howard Government – March 1996

Rudd Government – November 2007

UPDATE:

Thanks Wayne. You super little economic manager you:

Household Finances Deteriorate

20 Mar

From the Sydney Morning Herald:

The Australian economy is set to grow further in 2010, but household financial conditions are deteriorating to the extent the nation could experience a W shaped economic recovery, a report shows.

Melbourne Institute bulletin of economic trends shows the domestic economy is set to grow by 0.8 per cent in the March quarter and by 0.6 per cent in the June, September and December quarters.

But the report’s household financial conditions index fell 16.6 per cent to 28.8 index points in the March quarter of 2010.

It was the first fall in the index after four consecutive quarters of improvement.

More than half of the 14.4 per cent households who consider themselves to be financially stressed, are employed while employed people with a household income of over $80,000 are the most financially stressed out of all income groups.

The report said part of the deterioration in financial conditions was due to the increased need to service household debt, in particular mortgage debt.

This report indirectly highlights the very real danger of Australia’s unprecedented level of private debt. And in particular, mortgage debt.

Economist Steve Keen, who predicted the GFC in 2005, is Australia’s leading proponent of the argument warning against high private debt levels, and against government policies which have dangerously inflated Australia’s private debt, such as the First Home Owers Boost.

Visit Professor Keen’s ‘Debtwatch‘ website to learn more.

Special Note:

On April 15th through 23rd, I will be joining Professor Keen in his 230km “Keenwalk” from Parliament House to Mount Kosciuszko, in protest against Australia’s property (and debt) mania that has been driven directly by Federal Government and RBA policies.

Please consider joining us, for the whole trek or even just for an afternoon section of the walk.

If you’d care to assist a genuinely worthy cause, then please consider sponsoring Professor Keen, or indeed myself. Funds raised will support the wonderful charity Swags For Homeless.

Thanks!

Deeper In Debt

25 Feb

Associate Professor Steve Keen has been warning about Australia’s rising debt burden for some years:

Australians have an unsustainable debt addiction, which will be hard to kick, and painful to recover from. A new report by CPD fellow Steve Keen has found that in just 18 months time we may be spending as much of the national income on interest payments as we were in 1990 – when interest rates were at 17 per cent.

That was in 2007.

Things are far worse now, since the Labor Government has so dramatically increased public debt, while encouraging even greater levels of private debt thanks to its recently wound down “First Home Buyers Boost”.

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