OT: Current Affairs and Politics

[Poupou Escobar]

Well this must be out of date then: https://www.rba.gov.au/speeches/2019/sp-dg-2019-08-27.html

 

[crocodile]

Well this must be out of date then: https://www.rba.gov.au/speeches/2019/sp-dg-2019-08-27.html

The current account and government debt are not the same thing. Current account is merely the balance left between imports and exports. Deficit on current account is a private debt, not a government one.

 

[Poupou Escobar]

Well I'm only talking about government debt:

What has been the driver of the increase in foreigners' holdings of Australian long-term debt over the past decade or so? The main explanation has been the large accumulation of Australian public sector debt by foreigners, including by central banks and other public sector asset managers. Central banks increased their allocation to Australia in their foreign reserves portfolios in the aftermath of the global financial crisis. Foreign ownership of Australian Government bonds increased from around 40 per cent in the early 2000s, peaking at nearly 80 per cent in 2012 (Graph 4). At the same time, the size of the Australian Government bond market grew significantly.

As a result, foreign holdings of public sector debt increased from 7.5 per cent of GDP in 2009 to around 20 per cent by 2015 and has been relatively stable since then. Correspondingly the public sector's share of gross debt liabilities increased from around 10 per cent in the late 2000s to around 20 per cent in 2012, where it has remained since (Graph 5). At the same time, the share of private financial debt (mainly banks) has fallen since the crisis.

 

[crocodile]

Well I'm only talking about government debt:

Not quite the same thing either. That simply means that foreign investors are buying Australian government bonds and securities. Since these are issued in our sovereign currency, it makes no difference when the securities are redeemed. After all, they would have to have been acquired in native currency in the first place in order to purchase the bonds. It's nothing remotely like going off to the Bank of Calathumpiastan and asking for a loan.

Note also that Australians are pretty fond of buying foreign bonds as well.

 

[Bandwagon]

Because what is a reasonable amount of debt today could change very quickly, the same way a nothing-to-see-here SARS-type virus in China quickly became widespread unemployment and unprecedented government debt.

It seems to me that the only qualification you are offering up is that other issues might see a scenario where debt is no longer a viable solution to those problems.

So the issue you have with debt is that if we have too much of it now, we may not be able to have enough of it later.

Which sounds awfully like you are arguing that we should save our capacity for debt for a rainy day?

 

[Poupou Escobar]

Not quite the same thing either. That simply means that foreign investors are buying Australian government bonds and securities. Since these are issued in our sovereign currency, it makes no difference when the securities are redeemed. After all, they would have to have been acquired in native currency in the first place in order to purchase the bonds. It's nothing remotely like going off to the Bank of Calathumpiastan and asking for a loan.

Note also that Australians are pretty fond of buying foreign bonds as well.

Well all this is fine when it's business-as-usual, but owing your own citizens money is quite a different political position to being in debt to foreign governments.

It seems to me that the only qualification you are offering up is that other issues might see a scenario where debt is no longer a viable solution to those problems.

So the issue you have with debt is that if we have too much of it now, we may not be able to have enough of it later.

Which sounds awfully like you are arguing that we should save our capacity for debt for a rainy day?

That's exactly what I'm saying. Rather than waste debt on bullshit, like we could have done, it's good that we've been able to hold out for a crisis. But I fear this level of debt will become the new normal and a future crisis could wipe us out.

 

[Gronk]

But I fear this level of debt will become the new normal and a future crisis could wipe us out.

The debt sky isn't falling.

https://www.imf.org/external/datamapper/GGXWDG_NGDP@WEO/OEMDC/ADVEC/WEOWORLD/USA/NMQ/AZQ/AUS/NZL

 

[Poupou Escobar]

The debt sky isn't falling.

https://www.imf.org/external/datamapper/GGXWDG_NGDP@WEO/OEMDC/ADVEC/WEOWORLD/USA/NMQ/AZQ/AUS/NZL

Let's wait and see how things look after we're all allowed to go back to work.

 

[Poupou Escobar]

So George Pell.. falsely accused or insufficient evidence? And do any of us have the right to decide either way?

 

[Gronk]

So George Pell.. falsely accused or insufficient evidence? And do any of us have the right to decide either way?

Not his go ?

 

[crocodile]

Well all this is fine when it's business-as-usual, but owing your own citizens money is quite a different political position to being in debt to foreign governments.

That's exactly what I'm saying. Rather than waste debt on bullshit, like we could have done, it's good that we've been able to hold out for a crisis. But I fear this level of debt will become the new normal and a future crisis could wipe us out.

You're missing the point. It doesn't matter if the bond holder isn't a citizen. They are denominated in our own sovereign currency. Unless the bond holder gets a horn over looking at bits of paper with pictures of our past explorers they are useful only for trading locally.

 

[Kornstar]

So George Pell.. falsely accused or insufficient evidence? And do any of us have the right to decide either way?

Not his go ?

The only thing we do know is that lawyers have new extensions, tennis courts and hobby farms thanks to this. They are the real winners.

What a waste of time to be honest.

 

[Gronk]

 

[Poupou Escobar]

You're missing the point. It doesn't matter if the bond holder isn't a citizen. They are denominated in our own sovereign currency. Unless the bond holder gets a horn over looking at bits of paper with pictures of our past explorers they are useful only for trading locally.

If it's a foreign government it could also be used as leverage if you can't pay. It could even be used to justify hostile acts.

 

[crocodile]

If it's a foreign government it could also be used as leverage if you can't pay. It could even be used to justify hostile acts.

It isn't possible for a sovereign currency issuer to run out of money.

 

[Poupou Escobar]

It isn't possible for a sovereign currency issuer to run out of money.

I guess that's why some of them are unable to refinance their debt.

 

[crocodile]

I guess that's why some of them are unable to refinance their debt.

No, there is no need to refinance the debt. The debtor holds an asset of equal value. It's called a bond.

 

[Gary Gutful]

Well this must be out of date then: https://www.rba.gov.au/speeches/2019/sp-dg-2019-08-27.html

No-one is clicking on that link, Casper.

 

[crocodile]

No-one is clicking on that link, Casper.

I clicked on it and read it. Unfortunately, Pou is confusing the current account with sovereign debt. It's an easy mistake to make. Private debt looks high but it isn't easy to analyse. Private debt for the funding of consumption is not so good. Private debt for the acquisition of capital equipment and stock on the other hand is very good. It isn't quite so simple.

 

[Gary Gutful]

I clicked on it and read it. Unfortunately, Pou is confusing the current account with sovereign debt. It's an easy mistake to make. Private debt looks high but it isn't easy to analyse. Private debt for the funding of consumption is not so good. Private debt for the acquisition of capital equipment and stock on the other hand is very good. It isn't quite so simple.

Thats because he is a dirty f**ken Fremantle Dockers supporting simpleton.