Comments on: Pinching Debt Data

By: stubbornmule

stubbornmule — Thu, 17 Sep 2009 22:12:30 +0000

Samuel: That is a good point about asset sales being a significant factor in the starting point for Australian public debt coming into the financial crisis. While I would also agree that the merits of some of these asset sales can be debated (after all, the Government still feels it has to mess around with Telstra), I don't think that it will have an impact on the Government's ability to repay debt in the future. This is because Australia has non-redeemable "fiat" money so the Government never has to be revenue constrained, a point I touch on it a later post, Park the Debt Truck. The same post also has a chart showing private sector debt. As you rightly point out, it drawfs the size of public debt. In fact, that is no coincidence as the net income flow of Government + Domestic Private Sector + Foreign Sector have to net to zero. So, while Australia was running budget surpluses and a current account deficit, it is a simply matter of accounting that domestic private sector debt had to increase. This is another reason why a bit of Government deficit spending right now is a good thing: not only does it help stimulate the economy, it helps to allow the domestic private sector to reduce debt.

By: Samuel Dance

Samuel Dance — Thu, 17 Sep 2009 15:04:30 +0000

I have always been interested in the fiscal matters. Yes our national debt is very small in comparison to other countries, yet other countries had a large amount to begin with, whereas Australia had a 20 billion dollar surplus. In comparison to the past Australia is doing rather well, however I would like to point out that the sale of Commonwealth Bank, Telstra, Airports, Qantas and so on contributed to reducing the debt, they also however reduced Australia’s potential GDP and we have nothing left to sell of to aid in paying our growing deficit.
Lastly, as a lover of graphs myself, I would ask you to have a look at and post the Private sector debt, you will find that it is in stark contrast to that of the public Australian sector debt. In addition to this the private debt is not Business related but caused through personal “home loans” so it does not generate any further GDP or job based growth. Thanks for posting these, I look forward to the others if possible.

Cheers

By: Deleveraging and Australian Property Prices | A Stubborn Mule's Perspective

Deleveraging and Australian Property Prices | A Stubborn Mule's Perspective — Mon, 31 Aug 2009 00:07:35 +0000

[...] (UK) and the FDIC. Since these bodies do not appear to make the data readily available, I have pinched the data from the chart and uploaded it to Swivel. It paints a very similar picture to the chart [...]

By: stubbornmule

stubbornmule — Thu, 16 Jul 2009 12:10:27 +0000

Here's an update. Danny, you'll be pleased to know I consider private debt this time as well!

By: Park the Debt Truck! | A Stubborn Mule's Perspective

Park the Debt Truck! | A Stubborn Mule's Perspective — Thu, 16 Jul 2009 11:54:00 +0000

[...] two months ago, I tried to bring some perspective to concerns about growing government debt in Australia. Last week the opposition has rolled out the [...]

By: stubbornmule

stubbornmule — Sat, 20 Jun 2009 22:45:30 +0000

@earl: I’d agree that we’re not out of the woods yet. There’s plenty on the economic front here and around the world to be concerned about. Since you and Danny has both mentioned consumer debt in one form or another, perhaps it’s time for a post looking at that data.

By: earl

earl — Sat, 20 Jun 2009 07:54:56 +0000

I went on a course this week and the instructor was a self funded retiree who has had to come back to work as his income has reduced. Even in the AFR this morning CIF annual dividend will be 20c down from 34c, other institutions cutting dividend. So the wave of less coming in is still building and will is still to roll in over investors. I note the RBA figures of bank fee increase is due to more usage rather than higher fees. How much you wanna bet the more usage is really (desperate) people taking out new credit cards to jack up existing credit card debt. We are about to enter a new phase of banks being awash with money looking to “give it” away.
Cheers

By: stubbornmule

stubbornmule — Sat, 20 Jun 2009 03:55:58 +0000

@earl: certainly economic weakness in our major trading partners if bad news for Australia (although the G7 is not particular representative of these: Italy and Canada are not particularly important for Australian trade, while China and Korea are). Nevertheless, these Government debt forecasts are, in themselves, not necessarily clear indicators that our trade will collapse. After all, gross Japanese Government debt has exceeded 100% of GDP for over ten years and net debt has been over 80% for the last five years. @Danny: I agree that looking at Government debt is not a particularly useful way to assess the severity of the financial crisis, except to the extent that the forecast increases reflect a combination of low prospective tax revenues and significant stimulus packages, both consequences of the crisis. The point of this post was more to counter the sometimes hysterical commentary about supposedly burgeoning Government debt in Australia by putting it in a global perspective. Another question, which I didn't touch on here, is whether or not high levels of Government debt should be scary at all anyway. Some commentators would argue no.

By: Danny Yee

Danny Yee — Sat, 20 Jun 2009 01:29:59 +0000

> the global financial crisis is still not looking quite so scary for Australia

To see how scary the financial crisis is, don’t we need to consider private debt as well as government debt?

By: earl

earl — Fri, 05 Jun 2009 22:26:40 +0000

Ok so we have 8 lifeboats afloat (using the graph above) and the one that all the Australians are in doesnt have as many people as the others and the Japanese boat is currently the most over crowded. Worse still the Japanese boat is starting to sink while all the others (including ours) have leaks of varying degrees. When the Japanese boat sinks all the other boats will be affected as the Japanese passengers will want to be taken onboard by them. I dont think there is much comfort in lounging back in your lifeboat thinking that your in a better position than the other lifeboats around you. We are still very much reliant on ALL the other lifeboats staying afloat………