h/t Twitter users _AshleyPriest, Prronto, and LyndsayFarlow (click to enlarge):
Tag Archives: sovereign debt
Another $2.2bn In Debt This Week
5 MayYesterday, 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).
How Gillard’s Use Of The Credit Card Makes Rudd’s GFC Spending Spree Look A Model Of Financial Prudence
5 MayA few days ago I wrote an article titled “The Real Reason Why Gillard’s A Spinster“. It ruffled feathers. Not for the intended reason, unfortunately.
Humourless critics were so rankled by my [insert self-righteous PC perjorative] that they did not see the point.
So here’s a follow up. Without the creative literary device/s for decoration.
The following chart is an updated and extended version of the one used in the previous article. This shows Treasury Note auctions from 2000 through to end April 2011 (the previous chart began at March 2009).
The other difference, is that the previous chart listed each individual auction separately. It escaped my notice that there has been as many as 3 auctions p.w. in recent times. So this new chart sums the total of all auctions of Treasury Notes in a given week into a single bar on the chart (click to enlarge):
Source: Australian Office of Financial Management (AOFM)
Some key points to note.
Firstly, there’s clearly quite a difference between how much the Howard Government relied on short-term debt (Treasury Notes), compared with the subsequent Labor Government. The period when the largest block of Howard-era short term debt auctions occurred was through the year 2002 – coinciding with the 2002-03 global recession, which Australia largely avoided.
Secondly, for four (4) full years between October 2003 and the Rudd election win in November 2007, the Howard Government raised no short-term debt. Not one cent.
Neither did Kevin07. For 16 months. Until the GFC.
Thirdly, you can see clearly the period from March 2009 through around September 2009, during which the Rudd Government was regularly raising around $800m to $1,500m a week from short-term debt auctions. I assume that this reflects (at least in part) the government’s urgent need for cash to fund their “stimulus” response to the GFC. Stimulus 1 – $10.4 billion in cash handouts in late 2008 (goodbye 50% of Howard surplus). Stimulus 2 – another $42 billion in cash handouts and “nation-building”, beginning in … February/March 2009.
You remember. “Swift and decisive”. Rushed and bungled. $900 cheques to dead people. Electrifying foil insulation. Blazing pink batts. Rorted “green” schemes. Overpriced school halls. Literally billions more, to investigate and repair these Rudd-made disasters.
Finally, note the significant jump in both the frequency and the totals of short-term debt auctions, coinciding exactly with Ms Gillard’s rise to power. The fact is, she has presided over a $10.1bn (31.5%) increase in issuances of short-term debt in just 10 months, compared to the previous 12 months of the Rudd Government.
The big unanswered question that I have is this: WHY would a Gillard-led government suddenly need to bash the nation’s short-term credit card 31.5% harder than even the profligate Kevin Rudd did? After all, he had a GFC “stimulus” package or two to finance.
What is Ms Gillard’s excuse?
According to the government’s own budget records, we-the-taxpayers are already wearing an Interest-on-debt bill of more than $10 Billion per year:
MYEFO 2010-11, Appendix B, Note 10: Interest Expense
According to the AOFM, short-term Treasury debt is supposed to be used for financing “within-year”, daily cashflow requirements of the Government. And then there’s this official prediction:
Treasury Notes are not expected to make a major contribution to overall funding for the 2010-11 financial year as a whole.
Why has the Gillard-led government apparently been so incapable of planning their week-to-week expenses, that since that statement was published they have resorted to bashing the national credit card more than 31.5% harder than Kevin Rudd “needed” to?
The data supports the increasingly widespread view that the Gillard minority government is a shambles. They have no financial plan – even over the short-term. And so, from Day 1, have had to pull out the national credit card 31.5% more than Kevin Rudd, just to manage the week-to-week cashflow requirements of government.
One can only wonder just how much Interest-on-debt we will end up paying in total over the coming years.
While Gillard and Co comfortably retire. On mega-buck, index-linked, taxpayer-funded pensions.
Goose’s $2Bn Shock ‘N Awe Intervention
28 AprJust 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)
Friday On My Mind – Another $700m In Debt
27 AprWhile most everyone else is obsessing about this Friday’s royal wedding, I’m thinking about another kind of “marriage” contract.
You see, $189.84 Billion in debt is not a big enough ball-and-chain for the Goose. Come this Friday, he’s signing us up to another $700 Million in the red contract.
Noone with two brain cells to rub together could still believe this government’s line that they will produce a surplus budget for the year (just 1 year, mind) in 2012-13. Their ongoing dalliance with debt is all the evidence needed. They are addicts, who will never go a single year without borrowing-and-spending far more than they take from us in taxes.
The simple fact is, we’ll all be paying for Goose’s indiscretions. For decades to come. Our creditors must be paid.
So tell us Wayne … who’s buying now? Who Really Owns 73% Of Our Debt?
Barnaby Is Right 
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