eugene43

is this the whole point of a forum ? no question is stupid. I could ask you questions & I expect you would not know the answer but I would give you the answer if you asked or do you not know the answer to martinluther question ?

MartinLuther

There is a point. It's so I can find out why you think the size of the stimulus is important. It may be obvious to you but I can't get a grip on your point unless you use something more tangible than a patronising throwaway.

To me the size of the stimulus is not as important as the size of the deficit. If person A starts with 100 and spends 200 they are still better off than someone who starts with -50 and spends 150. The first person spent more than the second but I'd still say they were better off.

So would you care to enlighten us mortals?

Centurion

I'd like to know too. I can't see the relevance to the exchange rate.

swigski

Australia has tackled the GFC by giving people direct payments.
For the plan to work it is necessary that people receiving these rebates go out and consume right away. However such a plan is only a minor fix and will end up exacerbating the original problem that caused this recession: debt.


How does a plan help in which the government encourages the people to go further into debt by buying a new television, computer or DVD player? Also, it has encouraged thousands of FHB to enter the property market at a time when interest rates are at EMERGENCY lows with the increased buyers(sorry sellers) grant!

Temporarily there will be a surge in profits and sales, but as soon as monthly payments for product with low down payments and high interest rates are due we will see how the economy does then. My prediction is not too good.

swigski

If I could understand that I would reply!

Catch

yes but i live in WA,anything slightly controversal gets cut out by the newsagent before i buy the paper,i have to rely on well informed peeps like you to bring it to my attention

ABCDiamond

But if these people used the grants to buy things, then they don't have the debt you mention.

It has also been reported that Australians have been reducing credit card debt. http://www.abc.net.au/news/stories/2...17/2689420.htm
Therefore the things you have mentioned may not actually be happening.

Australia was also very fortunate to have a massive surplus at the beginning of the GFC, which they were able to use to keep us out of trouble.

But also, remember what the cause of the GFC was... Non Performing Housing Loans ? Australia was not really affected by this, when compared to other countries.

MartinLuther

But the main affect of the stimulus has been to transfer private debt to public debt. Now, given that Aus started in the black the larger stimulus in Aus has not pushed Aus more into the red than the UK or US or pretty much anyone else apart from Canada.

As for the impending doom predictions I suspect they hold as much water as the predictions that the GFC is going to hit Aus sometime later than the rest of the developed world because it takes time for the effects to reach us from the UK and US. (Presumably because it's on a slow boat somewhere on the high seas.)

The biggest danger now is that all the extra money sloshing around will cause inflation. Although that is countered by the strong dollar (bingo - there's the connection to the exchange rate).

What is reassuring from reading the UK and Aus press is that Aus seems to have planned for the worst case senario and things have turned out better than expected whilst the UK has planned for the best case scenario and things are not working as well as they hoped. But then again maybe the Aus press just has it's head in the sand

MartinLuther

Good point. The WA press does seem to exhibit a lot of the foibles raised by many a Brit

swigski

Maybe it does!

Anyway, it'll all come out in the wash when the slow boat arrives.

swigski

t

ABCDiamond

You mean that Australians are now being sensible about Debt ?

Credit Card Debt Comparisons

The average American household with a credit card held $10,679 in credit card debt at the end of 2008.
http://news.bbc.co.uk/2/hi/americas/8009299.stm

The average UK adult owns nearly 2.5 credit cards and has debts on those approaching £2,300
http://www.bbc.co.uk/northamptonshir..._feature.shtml

The average Australian credit card balance in July 2009 was $3,106
http://www.smh.com.au/business/credi...0917-fssg.html

MartinLuther

But if the exchange rate hits 1.35 then Aussies will be more in debt than the Brits and the world will explode. We're all doomed.

swigski

I mean that people who are able to are choosing to reduce their debt levels. For most low income earner, the struggle continues!

ABCDiamond

Nothing changes on that then... it just continues..