Abbott/Liberal Govt Watch

[Q.]

Then you would have to be against exploiting these countries for resources and labour if you wish to be self sufficient.
We aren't bacteria colony.

1. Against "exploiting" yes, but I support helping them develop their resources and technology through shared enterprise.

2. The principles of crowding and resource depletion work much the same in all species. Bacteria are simply a basic example not complicated by consciousness and acts of violence. In more advanced species with consciousness the increased crowding leads to increased violence - most of those studies have been done with rats, which as a species seems to behave much like humans, but which tolerate crowding somewhat better than we do.

(That's why I also oppose "high density living" being touted by developers and their politician mates.)

We're capable of innovation and adaptation unlike bacteria. We also have a conscience.

Rats are very capable of innovation and adaptation, possibly more so than us in pure survival terms.
How they compare with us in the conscience department is up in the air because we don't really know what degree of self-awareness they have.
Some humans, like those who run up these debts we can't pay without going on borrowing , to buy power from gullible voters, obviously either lack awareness or lack conscience...

Last time I checked, rats weren't capable of large scale agriculture.

[tipper]

We're capable of innovation and adaptation unlike bacteria. We also have a conscience.

not all of us

[Psyber]

Last time I checked, rats weren't capable of large scale agriculture.

True -so far their environment and population pressure (and their dietary habits) have not required that evolutionary step of them...

[stan]

Now that we have discussed rats and evolution back to politics.

Mid year budget review happened the other day. Looks like the race to surplus is not as close as the libs would like. However not all is lost I think the country has made some in roads and perhaps this may show that while debt is not good a balanced approach is required.

Lets be honest the latest economic figures are not great.

[bennymacca]

Still don't really get the fascination with getting back to surplus. Most of us here would have a mortgage, I don't all of a sudden decide I want to pay it off in a year and slash and burn to do it. It was a political choice made by the government whilst in opposition but it's not really helpful. Of course we don't want it to get out of control but my opinion is that it never was out of control, even though plenty of scare mongerers would have liked it to be, including joe hockey and his "budget emergency" which magically disappeared when they got into government.

Fact is we are very much beholden to external factors such as commodity prices and that is a much much bigger driver than trying to cut spending as the government is now finding out

[Q.]

I'd rather see a gst increase instead of them gutting everything.

[Psyber]

Still don't really get the fascination with getting back to surplus. Most of us here would have a mortgage, I don't all of a sudden decide I want to pay it off in a year and slash and burn to do it. It was a political choice made by the government whilst in opposition but it's not really helpful. Of course we don't want it to get out of control but my opinion is that it never was out of control, even though plenty of scare mongerers would have liked it to be, including joe hockey and his "budget emergency" which magically disappeared when they got into government.

Fact is we are very much beholden to external factors such as commodity prices and that is a much much bigger driver than trying to cut spending as the government is now finding out

There is a difference.

With your mortgage, you are not allowed under current federal legislation to be lent more than your income indicates you can afford to repay without further borrowing or without taking into account your every day living expenses. You also have a saleable asset which in a crisis you can sell to clear the debt.

The government debts in both SA and the federal environment are more than we can repay within our income and we are borrowing more all the time to fund the interest payments. So the debt keeps growing over time rather than diminishing like your mortgage. We also don't have an acquired saleable asset from this borrowing that can be expected to raise enough to pay off the debt in an emergency, and so we have in the past been forced to sell other assets to clear unaffordable debt. Now we have a bigger problem as we have been through this cycle several times and most of our other saleable assets have already been sold to clear up past episodes of excessive debt.

Get it?

[bennymacca]

What about government bonds? That's a saleable asset.

And our debt is at 11% of GDP. That is hardly "more than we can repay", so please don't try and patronise me.

[Psyber]

What about government bonds? That's a saleable asset.

And our debt is at 11% of GDP. That is hardly "more than we can repay", so please don't try and patronise me.

Only if you can persuade people with money the bonds are worth buying.
I wouldn't invest in a product "guaranteed" by an organisation which has gotten itself into more debt than it has a viable plan to repay. That is a high risk investment - if they can't pay the existing debt what is the worth of lending them your money by buying bonds as they may not be able to pay what they promised on them either?

We obviously can't pay the interest on our 11% of GDP debt at present or we wouldn't be continuing to have to borrow more to fund the interest. Yes we can fund it if we make cuts in expenditure elsewhere, but we are having trouble finding a way to do that that is acceptable to the community and all political parties. In a sensible world our previous federal government would have worked out where to make other cuts, if the economy took a downturn, before borrowing rather than gamble on the boom continuing.

As for "patronising" - your post I commented on indicated that you didn't seem to grasp the link between a mortgage to buy property and the saleability of that property, nor the restriction on how much the banks are allowed to lend you taking your existing living costs into account.

[bennymacca]

We obviously can't pay the interest on our 11% of GDP debt at present

I wouldn't invest in a product "guaranteed" by an organisation which has gotten itself into more debt than it has a viable plan to repay.

you take this as some kind of accepted truth - care to share any links?

and the government bonds have clearly been a great investment of the past few years - it is part of the reason the australian dollar has been so high (as well as commodity prices) - because of our high interest rates and it being perceived as a secure investment overseas investors have been buying bonds left right and centre.

As for "patronising" - your post I commented on indicated that you didn't seem to grasp the link between a mortgage to buy property and the saleability of that property, nor the restriction on how much the banks are allowed to lend you taking your existing living costs into account.

and you don't seem to grasp that 11% debt to gdp represents ample ability to pay off that debt

[Psyber]

If we could pay the 11% of GDP debt we would not be borrowing more to fund the interest, nor looking for cuts to reduce the debt?
Do you really believe the Liberals are deliberately running with a high risk of losing the next election for no reason by doing unpopular things now without there being genuine concern? (The issue of whether they are making the right choices to save expenditure is another matter.)

The cynical and politically safe thing to do would be to buy votes with generosity and let the next generations worry about paying for it.

Can you offer links to prove the present debt is a viable level of debt in our present circumstances with falling productivity, falling commodity prices and falling AU$? Most "expert" articles favouring our present debt that I have read seem to be opinion pieces rather than applied accountancy - to be valid they would need to demonstrate how the debt can be repaid in reasonable time rather than become the inheritance of the next several generations.

The Bonds - I said I wouldn't take the risk - others will. I agree Bonds did well before the reversal of productivity and commodity prices. The real test of good judgement is working out when to get out of any one type of investment before it falls over rather than believing that because something has done well in the past it will go on doing so forever.

Taking an extreme example, who would now buy Bonds guaranteed by the Greek government?

In the end I accept we won't agree because our positions are matters of financial philosophy and faith. However, I felt there was a need to point out that your equating an unsecured debt with the secured, by acquired assets, debt that a property mortgage requires was not valid.

[bennymacca]

That is exactly my point. Greece is at 158% and that was in 2012 so it is probably higher now. Japan Portugal Italy Ireland and Lebanon also over 100%, with the USA, France, Belgium and the UK in the 80% range.

Those countries are in serious economic trouble. To compare is with Greece is ridiculousness.

And I believe there are ideological forces at play here - the right always would prefer individuals to pay for everything themselves and have a smaller government and let market forces dictate, even in extremely important things like education and healthcare, whereas I believe they should be government functions on the main.

They also painted themselves into a corner by declaring a budget emergency when there was none.

I simply just don't accept our level of debt has been a problem at any stage in the last decade, which is saying something given the events of the GFC etc

[heater31]

We should be realising that we have issues before we get to that point! No point sticking our heads in the sand saying there is no problem. Close the gate before the ******* horse bolts.....

[Psyber]

But Greece wasn't always at 158%, nor were the others always where they are now.
They got there gradually over many years of not restraining debt growth before it got past viability.

The philosophical question is at what point do you act?
My view is that you act when you reach that point where you can't fund the interest without increasing your borrowings...
(And you don't gamble on a boom continuing with the public's money, but make a contingency plan for when the tide inevitably starts to turn.)

[Jimmy_041]

Gee Psyber, as a physician, you should know better than throwing the truth in your patients face.
Always amazes me how socialists throw other peoples money around & think you never have to repay debt.

[Q.]

They've got to look at policies to increase tax receipts. They are void of ideas in this area at the moment.

A properly constructed resource profits tax would be a start.

[bennymacca]

But Greece wasn't always at 158%, nor were the others always where they are now.
They got there gradually over many years of not restraining debt growth before it got past viability.

The philosophical question is at what point do you act?
My view is that you act when you reach that point where you can't fund the interest without increasing your borrowings...
(And you don't gamble on a boom continuing with the public's money, but make a contingency plan for when the tide inevitably starts to turn.)

Yep I agree with this.

So why were the Libs so dead against a MRRT and ETS or an increase in company tax instead of a decrease? All would have meant the government could have handled our debt much better.

And one of the main reasons Greece is in the shitter is basically nobody pays tax

[stan]

If we could pay the 11% of GDP debt we would not be borrowing more to fund the interest, nor looking for cuts to reduce the debt?
Do you really believe the Liberals are deliberately running with a high risk of losing the next election for no reason by doing unpopular things now without there being genuine concern? (The issue of whether they are making the right choices to save expenditure is another matter.)

The cynical and politically safe thing to do would be to buy votes with generosity and let the next generations worry about paying for it.

Can you offer links to prove the present debt is a viable level of debt in our present circumstances with falling productivity, falling commodity prices and falling AU$? Most "expert" articles favouring our present debt that I have read seem to be opinion pieces rather than applied accountancy - to be valid they would need to demonstrate how the debt can be repaid in reasonable time rather than become the inheritance of the next several generations.

The Bonds - I said I wouldn't take the risk - others will. I agree Bonds did well before the reversal of productivity and commodity prices. The real test of good judgement is working out when to get out of any one type of investment before it falls over rather than believing that because something has done well in the past it will go on doing so forever.

Taking an extreme example, who would now buy Bonds guaranteed by the Greek government?

In the end I accept we won't agree because our positions are matters of financial philosophy and faith. However, I felt there was a need to point out that your equating an unsecured debt with the secured, by acquired assets, debt that a property mortgage requires was not valid.

As I have stated a few times. This first budget was always going to be fire and brimstone for us. It is part of the greater plan from the Libs for next election. I have stated this a few times on how it is going to work. And that surpluss they are chasing will be here by the next election. Regardless of what has been said, the next budget might be the broker for it. So some serious pain is on the way soon for us all.

I have also said I agree debt is bad but balance is required to keep he economy strong. We dont need an austerity budget. Yes we need cuts but as I said with balance.

[bennymacca]

apparently the MYFEO or whatever it is called has stated the budget won't be back to surplus until 2019

[stan]

apparently the MYFEO or whatever it is called has stated the budget won't be back to surplus until 2019

The libs election campaign will have to change and I dont believe they intend to. I still think they will one way or the other.