Are You Prepared for the Next Meltdown?

Well it looks like we’ll all be paying off the federal government’s past largesse for longer.

No surprises there.

Just like Aussie households and companies, our government has spent many years living beyond its means. Making big promises it can’t quite afford to keep.

And just like most households and businesses, the government has a propensity to be overly optimistic in its future earnings forecasts. That’s true for Labor and Liberal alike. God only knows how the Greens would fund their dream budget.

If you believed the election hoopla, you’d be forgiven for thinking the government would be operating a clean balance sheet by 2030. Not surprisingly, that again turned out to be rather optimistic.

Treasurer Josh Frydenberg now embraces a more ambiguous date to pay off the federal debt. Erm…specifically ‘after the medium term’.

While the government hasn’t been able to stoke inflation to devalue its mountainous debt, it has managed to save billions from the RBA’s rate cutting binge. The official cash rate stands at a record low 0.75%. That, according to budget papers, has brought the government’s borrowing costs down to 1.1%.

Record low rates will see the government shell out $13.5 billion less in interest payments over the next four years. Now if only they can keep a lid on spending…

In other…ahem…’good’ news, record low rates have also refuelled the great Aussie housing bubble.

According to data from CoreLogic, Sydney dwelling prices leapt 6.2% in the three months to 30 November. Melbourne prices grew even faster, at 6.4%.

And all this with record levels of debt. And no wage growth in sight.

It’s all part of why The Rum Rebellion editor, Vern Gowdie writes that ‘Australia’s miracle economy is a farce’.

You can find out why…and what you can do about it…in Vern’s free special report. Just click here.

Regards,

Bernd Struben,
For The Rum Rebellion

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