Your Investment Property forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Obsession with national debt hypocritical, says analyst

Notify me of new replies via email
Your Investment Property | 04 Jun 2013, 09:00 AM Agree 0
A top researcher says current attempts at an economic surplus are ‘inappropriate’, saying the RBA’s May decision to lower the cash rate is a ‘warning sign’ of what’s coming
  • Shirley SOS | 04 Jun 2013, 01:42 PM Agree 0
    Um, the interest on debt has to be paid out of the public purse...which means it can't be used to look after its citizens. Businesses balance debt off against profits, something government can't do. All of the running costs of a big debt must come directly out of taxes. Surely this analyst realises, as has Greece etc, that there comes a time that the interest payments are crippling the ability to run the country.
  • Olice | 04 Jun 2013, 02:10 PM Agree 0
    I think the point this guy is trying to make is not that debt should be ignored, but that there are worse things in the world. Australia can live with it, in the short term. Right now is not a good time to be mungling over the debt issue, when the country needs new infrastructure and a new source of job creation!
  • Simon | 04 Jun 2013, 11:28 PM Agree 0
    Government debt is used to pay for services that, generally, do not make the government money. This is bad debt in investment terms and should be avoided in the long term or in any excess as it builds on itself and the only ways to repay it are to either make it less attractive for those who would work or produce to do so as they must be more heavily taxed or those services the funds were used for in the first place must be reduced. Far better to improve services through a budget surplus.
  • Symon Peters | 07 Jun 2013, 12:42 PM Agree 0
    I don't believe the analogies are helpful as they relate to businesses that are based on debt. In Particular the bank analogy. In an economy a Govt is supposed to manage the inflows and outflows through a regulatory system with fiscal management being assisted by the reserve bank which is supposed to be independent as it is in Australia. Where are politicians capable of managing the biggest (in effect) and most diverse company in the country; the country itself? Of course they are not capable of it and nor will they ever be as the incentives as well as checks and balances to properly manage the economy are not in place to allow it, other than the election every three years.
Post a reply