Seems we hear about personal debt and housing debt every week
Then talk of the impacts of trade war
Have economies ours or the worlds always risen
Are we near a correction
House prices are falling, some bought in as investments at the peak, can they take falling prices or interest rates rise,s
Will interest rates stay low forever
Only the date of a correction is not known, now may be a good time to reduce debt

Brace yourself for the next debate about having a surplus in the next budget.
The talk will be about a surplus but not about the deficit, which will still be there.

Dear rache,

Spot on as always.

It's already started with the Libs.
That's all they can come up with.

No there will not be a debt crisis. Interest rates don't just happen; they're set by the RBA. The RBA are not so incompetent as to set them at a crisis inducing level.

Aiden America? great wealth is made by some even in such as the not so great depression
And no one see,s one until it is here, watch bitcoin, see its fall over the past twelve months, it was always going to happen.
Can even the most optimistic of us think interest rates can stay at all time lows
Will house prices not continue to fall? what are the impacts of less migration on growth/the economy
Is world trade under any threat
Will oil rise or fall, money will be made or lost on it either direction
Personal debt, see buy now pay later stories this day, can we forever ignore it?

The talk will be about a surplus but not about the deficit, which will still be there.
rache,
Does anyone still remember who caused that Deficit ?

Some indeed recall that stopping the economy from sliding into recession and coming out of the GFC indeed created a deficit because a deficit was better than a collapsed economy and we were the top performing economy for a while and about the 4th best when Abbott took over.

Some also recall that the Liberal government, despite all their claims actually doubled the size of that deficit and now we are hovering somewhere around the 20th best global economy.

rache very true try to convince some and you never will
Every chance exists by the time of the promised deficit one will not be delivered
In truth the title of this thread may be deceptive, we may, probably are, already in such a crisis
Everything points to debt being a very big trouble for any government here
Even more so for some in Europe right now

Belly,
Interest rates in America are set by the Federal Reserve (aka the Fed) to control inflation. Right now Trump's running expansionary fiscal policy (aka bigger deficits) and tariffs have increased (which is inflationary) so US interest rates are going up. But there's a possibility that the Fed are being overcautious (as the RBA were under Gillard) and even if that's not the case, the Fed would stop raising interest rates well before the level that would cause a debt crisis.

>Can even the most optimistic of us think interest rates can stay at all time lows
Can or will? The answer is very different.

The government could use fiscal policy to control inflation (when tightened) or boost the economy (when loosened) the way monetary policy is currently used. Indeed I believe they should as it would enable greater control of inflation as they could direct spending to regions that are running below capacity. Once they realise the implications of the ability to use a combination of fiscal and monetary policy to control the speed of our economy (and the fact that we have unlimited credit) we can effectively choose what interest rate we want (with a tradeoff between interest rates and tax rates).

But what I think will happen is: the government will not make any bold fiscal moves. Interest rates will remain at record lows for a few more years. Eventually business confidence will rise, they will borrow and spend more, and interest rates will gradually rise. But they will stay low by historic standards (probably staying under 5%) because the economy is far more sensitive to interest rate changes than it used to be.

stopping the economy from sliding into recession and coming out of the GF

rache,
that does sound good but I think it had more to do with keeping the superannuation coffers for the public service topped up.

Aiden this I knew, in fact our reserve bank is the same,how do you come to the view they will not raise them.
We once had rates as high as 17 percent, it nearly broke us.
Lowest rates in history right now? maybe for here but over the past year rate rises in America have taken place
Bad housing loans drove the GFC last time, and may, just may, tip the balance this time
World trade, personal debt, interest rate rises, all could, separately or together be the driver this time.
Only when is in doubt
Remember some make fortunes at such times

Belly, Thursday, 29 November 2018 10:28:08 AM

Answer- Are you saying that we need to be more responsible? Perhaps balance the budget? Limit consumption?

It appears that increases in property prices are subsidizing our foreign spending. Perhaps we are importing people so we can export product- getting a permanent loss of control of our country in exchange for a temporary gain of jobs. We have advertising to promote Australian Made. Wouldn't it be simpler to just have tariffs or other protectionist measures? Business is to make money for the shareholders not protect the interests of Australia's people- that is supposedly the governments role.

We cannot be all things to everyone. There are concentric circles of control.

We need to be less slave to our desires and more disciplined-

"Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility."
Sigmund Freu

Calem Malem nothing in that I do not totally agree with
But we can not control interest rates, world trade foreign debt, personal debt [of others]
We have no real control over oil prices or other country,s debt
Stock markets fell today on fears about the America China trade war
History warns us markets are not forever good investments
personally? reduce our own debt, buy only in cash, go without until you can

Canem,
Australia's still at the stage of the economic cycle where there's too little consumption.

_____________________________________________________________________________________

Belly,
When our interest rates were 17%, inflation was a lot higher and the economy was booming, driven by a highly speculative private sector after a substantial cut to the corporate tax rate. Treasurer Keating chose to raise interest rates to kill off the boom, but he went much too far (and even he admits he was far too slow to cut them again afterwards). And in hindsight it seems pretty clear that rather than killing off the boom (which resulted in enormous economic collateral damage) he should have just dampened it by temporarily raising the corporate tax rate. (I've heard claims election promises effectively ruled out this option; I don't know whether that's true or not)

Nowadays, inflation is very low, Australia's economy is almost stagnant, the private sector's far less speculative, and in the unlikely event that corporate taxes are cut, it will be gradual rather than sudden. Because of the low interest rates, Australians do borrow more - but that means the economy is more sensitive to interest rate movements. Double digit inflation rates are consigned to the dustbin of history. Right now inflation's BELOW the RBA's target band. If it gets above the band, the RBA will raise interest rates, but importantly they won't raise them MUCH.

Banks are now a lot more cautious than before the GFC, the capital requirements are higher, the risk of CDSs are better understood, and there isn't the misevaluation of securitised assets that there used to be. So the events that caused the GFC won't be replicated.

And now at last the US government's running a more expansionary fiscal policy, the US economy can withstand higher interest rates.

There are many things that could cause a downturn, but not a catastrophic downturn. And in nearly all cases they're easy to recover from. The one exception is if conflict arose preventing us from trading with China.

Rache, Belly, if you want to have any credibility, you have to stop lying by inference.

Everyone knows, even you pair, that Gillard designed & left a number of time bombs for any government that followed her. She knew she was for the high jump, even if Labor held government, so set up some very costly, to get back at us for being disgusted by her.

NDIS & Gonski are just 2 better known of dozens of programs she got through parliament, which required little spending immediately, but had exponential growth of spending locked in.

What you can blame on the libs is not having the guts to get rid of these ridiculous spending programs. They should have bitten the bullet, & chucked the lot out. Yes their ABC would have screamed blue murder, but so what. No one with a brain listens to the ABC today, & the dills that do are going to vote Labor/green anyway. They would have cemented their credibility with all seriously thinking people, & kept the budget deficit down.

Of course, if they had real guts, they would have defunded the ABC & got some truth into the debate.

So kiddies, if you want to be taken seriously in this game, try not telling a host of porkies. As soon as the porkies start we know you have no legitimate argument to use.

Comment- But we can not control interest rates, world trade foreign debt, personal debt [of others]

Answer-
Bank Interest Rates are influenced by the Reserve Bank but there are advantages and disadvantages.
Foreign Debt is influenced by foreign spending- there are a few ways of managing these but again advantages and disadvantages- some consider it inapproapriate to adopt policy contradicting Free Trade. We need to be prepared to accept that other nations won't buy our product if we restrict theirs. One way to manage this might be with natural resources- If we demand that nations manufacture goods here from the raw materials then we get greater value for our scarce resources.
Personal Debt- Influenced by interest rate. I'm sure that there are other measures such as reducing accessibility to credit cards. Changing bank risk loan criteria and duty of care. This is an example of Tough Love/ Responsible Freedom policies where freedom is reduced to increase manageability. Those that have bank shares would be unhappy.

Comment- We have no real control over oil prices or other country,s debt. Stock markets fell today on fears about the America China trade war. History warns us markets are not forever good investments
personally? reduce our own debt, buy only in cash, go without until you can

Answer- We can insulate ourselves against Global forces to a point by being selective about participation. Oil prices are an issue due to the fact that cars are designed to use oil- cars and road vehicles are critical parts of modern infrastructure- we need to find solutions to this. Given nations have large populations new solutions become more difficult to implement. There are people working on this difficult problem many of the potential solutions have issues- these solutions need to satisfy the following criteria- comparable weight/ energy density/ safety, compatible with fleet and distribution capacity. Some solutions comprise "engine/ fuel" replacement some just "fuels". Cars are one of the main items that hook countries into the Global Economy another is computers. To much influence by the Globalisation is undesirable as it is un-democratic.

Aiden and Hasbeen appear to be advocating Free Trade/ Industrialist/ Capitalist policies. My position is "Conservative" both Socially and Economically. I agree with many of the business principles but it comes down to degree and balance. Free Traders appear to be more "risk-philic" than the average "risk-phobic" Australian- but then again they are in a better position to get the benefits of the risks. Business is about Risk verses Reward- in macro-economics often the risks can be passed to other parties- sadly this can only be done for so long before there is a correction. The Australian Liberal Party (Business Party) is made up of "Free Traders" and "Conservatives" sadly the Free Traders dominate.

Sorry Aiden appears to be advocating Free Trade policies. Not Hasbeen as I previously indicated.

Hasbeen what an offensive comment
We tend to lock verbal horns, but in the end? thought better of you
Yes as you constantly remind us you came from a very much higher income back ground than me.
This subject has *NOTHING TO DO WITH WHO IS RUNNING THE COUNTRY*
Yes my darkest fear, for some time, has been Labor may take over at the start of the next crisis, I know, my party, MUST prove its economic management ability
Hasbeen do you understand your outburst puts you in the company of a few others who no one ever considers as bright.
No current world government can ensure no crisis will take place Aiden, a far brighter poster than some,seems to think we can grow forever, free of any unknown hurdles ahead for the world or country
Only the date of a coming crisis is unknown Hasbeen will say it is the day Labor takes office

Belly, tell me what was untrue in my last post.

That you don't like the facts of the post does not make it any less true.

Canem,
I do advocate free trade, as there is more to gain from it than to lose.
I'm not sufficiently familiar with the term "industrialist" (as an adjective) to confirm or deny I support those policies.
As for capitalist policies, I oppose the policy of keeping capital scarce so everyone's beholden to the financiers. And though I'm pro market, I don't believe that markets are perfect, nor that undistorted markets are inherently superior. But I support most other aspects of capitalism.

I oppose economic conservatism because it blindly pursues what it wrongly believes to be good economic management, while ignoring the real needs of consumers and businesses. But with social conservatism it's more complicated - the centre has shifted so much that in terms of values I'm more likely to side with the conservatives on most (but not all) issues, but because I'm more libertarian than authoritarian I'm still more likely to oppose the conservatives overall on social issues.

I wouldn't define Conservatism as Authoritarian but more Traditionalist but feel free to use the term that you prefer. Like I said it's a matter of degree and balance- I appreciate your concept of economic momentum. It's hard to avoid extremes all we can really do is push in one way or the other- so we see the ship lurching left and right across the ocean of history.

Canem,
Whether or not conservatism is inherently authoritarian, the conservatives in our parliament (and indeed on this board) certainly are.

________________________________________________________________________________

Belly,
It's not that I think there will be no unknown hurdles; it's that I think they're easily overcome. Unless China goes to war, which really would be devastating (mainly for China, but also for the world in general).

Aiden forget interest rates, if another crisis is to come it may be for very different reasons
But interest rate rises may well come as a symptom of that other problem
We know, or should, the G20 meeting may bring China and America together on trade
Who is willing to say it will
Australian personal debt is even worse than our nations one
Who truly, saw the GFC coming
We all should have
Nothing is forever nothing can forever produce wealth without corrections

SMH this day, a warning about the America stock exchange, very real fear it will collapse.
Too a warning Trump v China trade war may make world trade worse
every day in every paper warnings we may well be headed down.
No time to let optimism blind us

Belly, I thought personal debt was what you were referring to from the start. Government debt is not a problem at all, as we are a sovereign currency issuer.

As I said, interest rate rises don't just happen - they're a deliberate decision. The only problem they could possibly be a symptom of is inflation, though that tends to be low when the global economy is weak.

Of course there will be corrections, but corrections should not stop us from producing wealth. The same goes for weak stock markets.

Has anyone factored in the ghost cities of China into this scenario?
Over 50 cities built for million people each sitting empty. Why?
What agenda is behind such an undertaking?

This is the one piece on the chessboard you should be paying attention to.
http://youtu.be/3mRc04XmkPI

Aiden one of the things Trump promised before being elected was to get America out of debt
You no doubt know just how much money that country printed to just keep it going
One day, the only way I can see, would be after a financial crisis all world debt being forgiven
As a start to a new beginning
My intention was all forms of debt, we are not in control of our country,s, see however Greece Italy Spain, others too in the EU
Our personal debt is not sustainable.
Low interest rates can not be forever
The Sky may not be falling but keep your eye on it

Armchair,
China's economy is highly speculative. Indeed in some ways it's a bit like Australia's in the late 1980s - but if the Chinese Communist Party ever try to implement Paul Keating's solution it would literally trigger a revolution!

____________________________________________________________________________________

Belly,
Eurozone countries (including Greece, Spain and Italy) are not sovereign currency issuers. They surrendered their sovereignty to the European Central Bank, and now have limited credit.

I was a supporter of Jubilee2000 and the subsequent campaign to cancel the debt of poor countries. It was only later I learned the real cause of the problem: fixed exchange rates prevented countries from creating enough of their own money, so they had to borrow money from other countries instead - sometimes with disastrous results. Yet still many poor countries maintain pegged currencies.

Whether our personal debt is sustainable depends mainly on how much we will earn in future. But low interest rates can be for ever if we (as a nation) decide they should be.

As for what Trump promised... did you actually believe him?

Aiden nothing Trump says can be believed, in the end he is a business man, a corrupt one at that
Printing more money is no answer once the gold standard ensured a base it no longer does
Financial pages, every day, warn us stocks are over priced,housing markets continue to fall
Those who bought in at the peak may already be in trouble if they wish to sell.

Belly,
>Printing more money is no answer once the gold standard ensured a base it no longer does

It would help if you could write in sentences.

Before dismissing the answer, you should be clear on what the question is. Because if it's how best to react to a downturn caused (immediately) by a lack of spending, increasing the money supply (colloquially referred to as "printing money") is exactly the answer.

You seem to think the gold standard was a stabilising factor. That's arguably true in the short term, where it stabilised the level of currencies against each other - but it left industry vulnerable when the price of the commodities the country exported fell.

In the long term the effects could be catastrophic. Being on the gold standard meant countries would experience hyperinflation if they ran out of gold. So to prevent that happening, countries had managed devaluations (which were much more inflationary than the current market led devaluations are, and which enabled speculators to get rich at the country's expense). Countries had to borrow money from overseas (allowing financiers to get rich at the country's expense). And countries had to limit the amount of their own money they created (preventing the economy from operating efficiently, so resulting in less production).

Are we or the world headed for a debt crisis?

I don't know, are western nations being polarised for civil wars?

Well, here's a question for those who have more of an economic background, or a finical education.

What are the options for dept management that are currently available? And if known, what options have there been before, or that could be implemented in the future?

-In the US there's an option of legal bankruptcy. Which if I understand it correctly basically kills your credit, but gives people a way out if they have more debt then they could pay off, and are being buried by just paying off the interest. I'm not as familiar with how debt forgiveness works in Australia, or if there is a legal way to tell the creditors that your in debt with, that you aren't going to pay them back.

-in International debt, I've heard that countries can buy off eachother's debt. Basically have a debt from your within country be turned into a loan type of debt towards another country. I don't know if that's a real thing, or why it would exist (a bargaining tool for foreign affaires maybe?) but if it does exist then this is another option in the economic world that deals with debt.

(Continued)

(Continued)

-other kinds of debt help exist such as government paying off higher education until a job from that education is secured, or even to have an employer pay (or help pay) for an employee's education with a contract that the employee is commited to working for them for a number of years.

-there's also government bailouts if a company is in a market that the government descides is worth protecting from going under. The bank bailouts several years ago come to mind for that.

If there are ways to stabilize and forgive debt without suffering a cost, perhaps those methods should be looked into more. It might not be so much as heading to a debt crisis, as much as what's the next step after that. What are the conquences of those next steps that are likely to be taken? I think most countries are either already in a debt crisis (if they are rich) or they are impoverished countries.

Aiden face it, My posts will never be even near perfect, so to will I never be, content is unaffected by grammar
IF we look with unbiased eyes, but clearly at both side, we have reason to be concerned
Not just us rug rats trying to make sense out of the subject.
But those experts including billionaire investors, who are warning us, things are far from perfect

SMH yet again, this day, official figures for national house price decline
Seems we are seeing a drop unmatched from the GFC
In fact they tell us, some states are worse
Buy at the peak, aiming to sell at a profit?
Some are already in trouble

Belly,
>content is unaffected by grammar

That's certainly not true - see http://www.abc.net.au/news/2017-03-21/the-case-of-the-$13-million-comma/8372956 and http://www.bbc.com/capital/story/20180723-the-commas-that-cost-companies-millions

_____________________________________________________________________________________

Not_Now.Soon,
Australia has bankruptcy laws similar in some ways to those of the USA. There's a general perception that the American bankruptcy laws are better, though I don't know the details.

What I do know is that, in Australia at least, if you're having trouble meeting your repayments it's usually better to negotiate with your creditors. They have a lot to lose if you go bankrupt, and will usually do what they can to avoid that outcome.

The debt of countries is in some way similar to that of corporations. It can be bought and sold on the bond market, sometimes at a small fraction of its face value. The Jubilee2000 campaign was focussed on cancelling this debt, as it was the main thing holding many poor countries back. A lot of the debt was acquired odiously (by dictators spending it on things that did not benefit their countries) and it was hoped the creditors could be made to take some of the responsibility for that. And for the rest of the debt, the cost of cancellation was far less than its face value.

The campaign did have some success, though nowhere near much as hoped. IIRC the rules were subsequently changed so the indebted countries didn't have to give debt servicing such a high priority.

The personal debt of those in default also gets traded, and more recently in America, there has been a charity that bought and cancelled personal debt (mainly of those who had medical fees they couldn't pay). I don't know if it's still going.

The other kinds of debt are as you've described. There's always a cost to cancelling debt, but it's far less than the debt itself because the markets have already priced in the effects of inability to pay.

Aiden nothing can change the truth, like far more eldest sons of big country family education came far down the track for me
I have achieved big things because of my self education.
Never grasped better ways of writing, even when at school, left forever just about 13, my attendance in very very small country schools was wasted.
So do not read my posts if it irks you
But know sadly, heaps of such men never even learned to read or write
While I live I grow, stolen from a long dead tree advertising a long dead clothing store, is my motto but learning some thing new every day is too
In passing the SMH story I spoke about above has been re written and the newer version is out right alarming, worth the read
Ignore the potential for a down turn at your peril

"With mounting bills to restore crumbling palaces, the Royal Household is keen to find income from renting out properties.
Documents seen by The Mail on Sunday suggest courtiers are also considering plans to rent out a third apartment at St James’s. The rental income from these dwellings is expected to help recoup the cost of essential renovations to St James’s Palace. It will also boost the Monarchy’s rental income – which last year rose to £2.8 million."

Willy and Katy went through 4million quid from not counting the commas in their credit card . They are cutting back, using 2nd hand lace and jewels and keeping council building inspectors away from Henry the 8million palace which borrowed a leprosy hospital.

Aiden your post, its content, is purely optimistic
Yes the world has many ways to handle debt, it is far less likely to suffer a great recession like the mid 20,s one
But the very basis of Capitalism, the only system we have to work with, is debt/credit
Manipulation, even of the value of our currency's, is used for profit
Just maybe we all should not fall back on it will be ok, and look at the whole world as it truly is
NNN the latest addition to the royal family appears to have added Kardashian like star power to the *firm*

It seems the Queen Mother sent her unpaid bills to the Queen . Charles owns Devon and bits of Surrey so that's OK.

Kardashians are something else , bending at the knee under the velocity of money. MV = PY. Here M is a measure of the money supply, V its velocity, and nominal GDP is written as the product of the overall price level (P) with real GDP (Y).

NNN In the end the Queens use of the term the firm is right
A show for the masses to let them think they are cared for, and they are while they continue to pay taxes
No point in keeping this thread alive, we will talk about it much more
Even live to see it take place, but avoiding it seems, just like the world/country at large talking about it is, well the last thing we need,sadly
Again headlines, not made up, but true warn Sydney house prices will be in very negative territory in just weeks SMH this day

Belly,
>Aiden your post, its content, is purely optimistic
Would I be correct in thinking you're reply to Not_Now.Soon about the workings of the financial system? I'm surprised you'd classify it as optimistic, as it doesn't have much in the way of predictions.
Or were you referring to something else.

>But the very basis of Capitalism, the only system we have to work with, is debt/credit
>Manipulation, even of the value of our currency's, is used for profit
So what? It's far better for an economy to have debt than not, as without debt most of the lucrative business opportunities would only be open to the already rich. Currency speculators can only make a profit if they take the currency where it's going anyway.

>Just maybe we all should not fall back on it will be ok,
Who's falling back on it will be ok? Don't you realise there are a lot of intermediate situations between "heading for a debt crisis" and "OK"?

>and look at the whole world as it truly is
Well iff you want to look at the whole world, you should note that some countries including the UAE don't have bankruptcy procedures, and if you can't pay your debts there you can end up in prison.

Aiden do me two favors please, read this mornings Sydney Morning Herald story, yes falling house prices again
It should warn you a very real crisis may be weeks or months away
Then reconsider your view of what my thoughts are here
My thought is not some pure negativity
I truly think we stand to be in a very real financial down turn
I put,any reasons, for having that thought
Including but not only, personal debt, housing, highlighting interest only loans and falling prices
My thought that such a fall is probable, surely gives you a way of seeing it is possible
That SMH story demands attention, it warns of bigger implications of housing price falls

Belly,
Do you mean http://www.smh.com.au/business/the-economy/housing-slump-the-biggest-threat-to-the-australian-economy-20181204-p50k79.html ?
It warns of a downturn, not a crisis.

We may well be heading for a downturn - but one driven by too little debt, not an inability to service it.

It is easy to escape a downturn, as Kevin Rudd demonstrated in 2008. But whether we will is a different story, for what is good economic policy and what the public thinks is good economic policy are two very different things, and the politicians ike to promote the latter.

Aiden glad you understand how Rudd limited the damage of the GFC
Yes that is my request you read one
May be worth going back , just done that too, and read the newer credit card debt warning
Too much debt? not enough? not sure but endlessly spending what you do not have surely is not a plan
For far too many of us Santa brings a big bag full of debt we in truth can not afford, some foolishly think they must give to prove love or looking to impress others
Sorry to say this thread, like personal and national debt, like stock markets falling as today, will bring us back to this subject time and again

Belly,
For an alternative view with the optimism you wrongly thought I had, read http://thenewdaily.com.au/money/property/2018/12/04/housing-downturn-buyers-remorse/

>Too much debt? not enough? not sure but endlessly spending what you do not have surely is not a plan
Certainly not for individuals. But it's different for the government which has unlimited credit and (through the RBA) can effectively control how much debt businesses and individuals can afford.

Aiden well aware good reasons exist for government to get in to debt
In fact Rudd underlined that by his actions
The truth is we are[under Liberal Government] in very very much more debt now
Too the massive growth in the last two centuries is powered by credit
But what of Greece Spain and a couple of others in the EU
Much hardship is both behind and ahead for those populations
Corrections make profits, for some, but overwhelmingly harm many others
Keating said [unfortunate choice of words] we once had to have a recession, 17 percent was the interest rates
My mind see,s even 4 percent rate rise would cripple many

Yes know the thread is dead
BUT every day the warnings about housing and financial difficulties ahead get more strident, something is coming