CBA and Their Bad Debt Problem

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“Are you one of those American finance guys from Lehman Brothers or something?”

Your editor was eating pizza at a café on St. Kilda Road last night with a friend who works in the mainstream financial media. The owner knew our friend, but not us. And once he picked up on our accent, he had a few questions like, “What is wrong with all those people in Greece?”

We’ll get back to that story in a moment. But this week’s markets make for compelling reading – and the week is barely half over! In today’s Daily Reckoning, we confess the things we don’t know, look at the routine rigging of the global financial system, and discuss whether the People’s Liberation Army of China is about to drop the big one on the United States of America.

Let’s quickly dispel a rumour. There was a rumour on the Internet of secret emergency meeting in Sydney of the world’s central bankers. We’ve been assured by sources that it was just a regularly planned retreat by the Bank of International Settlements. Rather than some extraordinary rigging of the world’s financial markets, it was just regularly scheduled, ordinary rigging.

In the not so mundane world of markets, today is looking pleasant, if not totally rigged. The futures were up overnight, so Aussie stocks will probably follow New York’s lead and have a big day out. The big report today is the half-year earnings for the Commonwealth Bank of Australia. And the big question: have bad debts peaked?

“Yes!”, says CBA chief Ralph Norris. Last year the bank reported nearly $2 billion in charges for “bad and doubtful debts.” This year, it’s just $1.39 billion. The bank also reported a 13% increase in first half profit to $2.91 billion. Yep, doing it tough is the old CBA.

There’s no doubt that the reduction in bad debt charges is a good sign for the banks. The “operating environment” (the real economy) appears to be less threatening. We’ll see how it goes, but the rest of the market could take the CBA numbers as a sign the debt problem has well and truly peaked. A re-rating of the bank shares might take place and you’d see a mini rally.

Mind you it’s not a rally we’d care to go to. There was another interesting note in the CBA’s media release about the last six months. It reported a 49% increase in home loans to $1.19 billion. The CBA said the home loan growth was, “mainly as a result of increased market share and significant growth in outstanding home loan balances.”

In other words, CBA had less of a bad debt problem in the last six months. But just you wait. It rode the FHOG to higher loan values and volumes and market share. If those borrowers struggle with higher interest rates or – horror of horrors – Aussie house prices grow less fast (or even fall) – we’d expect to see the bad debt problem again affect earnings growth and, ultimately, the valuations on Australian bank stocks.

But there is a lot about the world we don’t understand. As our old friend Thom Hickling used to say when he visited us in France, “Je sais rien…I know nothing Dan. That’s my motto.” It’s more or less our motto as well. That’s why we ask a lot of questions.

And it’s also why you’ll find apparently contradictory statements and advice in the Daily Reckoning. Your editor thinks you should use any rallies in the market to gradually liquidate your stock portfolios. In other words, retire now before the government seizes your super assets or the market crashes.

Yet we work with experienced traders and analysts who’ve spent years in the markets finding great investments. We publish and sell their research and that contains buy recommendations on all sorts of Australian stocks. We publish that because fundamentally, we have no idea what will happen. It’s what we’re all trying to figure out.

The best strategy in that case is to surround yourself with people who are thinking hard and working hard to figure things out. And ultimately, you get to choose the ideas and editors you agree with or whose thinking you’re interested in and whose track record impresses you. And even if you never take a punt on any of those publications, we’ll keep reckoning every day for free! How good is that?

While we’re still on the subject of debt, three cheers for Senator Barnaby Joyce! The finance spokesman for the opposition is copping it from all sides for suggesting that Australia is in hock “to our eyeballs to people overseas.” He also said, “You have got to ask the question, how far into debt do you want to go? We are getting to a point where we can’t repay it.”

Even members of his own coalition have turned on him for suggesting Australia may not be able to repay its sovereign debts. But we say if Barnaby Joyce is fiscally incompetent, we need more men like him in government. He couldn’t do much worse than the debt-first mentality of the establishment.

You can also judge a man by his enemies. In an article titled “Credit experts line up to rebuff Joyce” published by the ABC, we learn that experts from Fitch, Standard and Poor’s, and Citigroup assure us that Australia is in no danger of defaulting on its sovereign debt obligations. Yes, the same people that nearly brought the global financial system to its knees and didn’t see it coming are telling us there is nothing to worry about.

Irony aside, it’s true that Australia’s fiscal position at the sovereign level is better than a lot of other countries. As Michelle Grattan points out in today’s Age, “Australian net debt is expected to peak at 9.6 per cent of GDP, or $153 billion, in 2013-14. In contrast, debt in 2014 in the US is estimated to be nearly 85 per cent of GDP. It will be nearly 92 per cent in the United Kingdom, 143.5 per cent in Japan and 93 per cent for the major advanced economies collectively.”

Based on these numbers, it’s looking pretty grim for the Senator isn’t it? He does look a bit alarmist for warning of an imminent crisis in servicing Australia’s sovereign debt. What’s interesting is how vigorous the attacks on him are. What’s going on there?

Well, there are certain interests in government and finance who want the debt to go higher. It’s the business they’re in and it supports their livelihoods and lifestyles. Some of the people criticising the Senator benefit tremendously from larger and larger government borrowing in Australia – whether it’s the politicians who spend it or the bankers who arrange it or the ratings agencies who get paid to slap a triple A on it.

And in case these folks haven’t noticed, the funding model for the welfare state is breaking down all over the world. It will catch up to Australia eventually. Indeed the very premise of the welfare state – that society can enjoy less risk higher standards of living through progressive taxation on a tax base that’s getting smaller and less productive by the day and faces global wage deflation – is being exposed as bogus and fraudulent. That’s why you should expect more measures that punish you for withdrawing your money from super or the banks – or restrict it outright.

But on this issue of debt, if only the Senator had spoken about Australia’s net foreign debt as a nation, he would have made a better point. The net foreign debt is the sum total of how much Australians have borrowed from the rest of the world, minus what Australians have lent or own in equity. According to the ABS, “Net foreign debt is equal to gross foreign debt less non-equity assets such as foreign reserves held by the Reserve Bank and lending by residents of Australia to non-residents.”

A simpler way of thinking about it is “how much of the world do we own and how much do we owe to the rest of the world.” The facts on this matter clearly support the Senator’s position. According to research published last year by the Statistics and Mapping section of the Parliament of Australia’s Parliament, Australia’s foreign debt was just $3 billion in 1976. According to the ABS, it’s now $637.5 billion – or about 63% of GDP. That’s a lot higher than the sovereign debt-to-GDP level of 9%.

Even without knowing how this compares to other countries, it’s safe to say that number is alarming. Australia has $1.1 trillion in foreign assets. Half are in equities and half in debt securities. As always, there’s the risk that asset values, especially equities, can fall.

On the debt side, Australia has $1.8 trillion in foreign liabilities. Nearly $700 billion of that is foreign equity ownership of Aussie stocks. The other $1.2 trillion is debt owed to foreigners by Australians. The odds are that if there’s a double dip global recession this figure will increase. Domestic consumption of imports will rise with more stimulus while exports would presumably fall in a global slowdown.

But so what? Who cares if Australians firms and households borrow abroad to finance their consumption and investment? Isn’t that a private or market-driven decision? Well, yes. But we think it exposes the country to several big risks.

First, the lenders might not always be so forthcoming. With massive borrowing needs in places like Japan, the US, and the UK, it’s probably not safe to assume a ready supply of foreign capital. Even with a great credit rating, in a credit depression capital is going to be scarcer and the cost of it will inevitably go up.

The big risk, of course, is that you build an economy based on debt which isn’t sustainable when the creditors turn you down. You have long-term liabilities you racked up when the currency was strong. But if they’re denominated in foreign currencies and the Aussie crashes again (as it might in a global W shaped depression) paying back your debts gets more expensive.

Ultimately, it comes down to what you’ve down with your borrowed money. Have you invested in wisely? An increase in debt – or even net foreign debt as a permanent feature of Australia’s economic landscape – wouldn’t be so bad if it translated into an increase in productive assets. You’d be a capital importer. But you’d use it to build your asset base.

Those assets – especially capital equipment in the resource sector – would lead to higher exports, lower current account deficits (also as a % of GDP) and generally more investment led growth instead of consumption led growth. It would be a responsible use of debt.

But if the debt – as we believe the numbers show – has been taken on to finance a housing boom, or worse, to finance speculation by Aussie banks and financial firms in asset markets abroad, then it’s not going to be what we call productive debt. So we’ll see, won’t we?

Tomorrow, we’ll show you why borrowing your way to prosperity is not only a sure fire bet to national servitude, but also a recipe for political instability. Our case in point will be the United States of America and its main creditor, the People’s Republic of China.

Finally, our waiter last night asked us, “What’s wrong with those Greeks? Is there some sort of crisis or something? Is it like that Lehman thing you guys caused?”

“What’s wrong with Greece? They can’t pay their bills. Nobody wants to admit it. But they’re living beyond their means. All of Europe is.”

“So what will happen?”

“Probably some fake bail out. The bigger countries in Northern Europe will guarantee emergency borrowing by the Greeks. No one wants to admit that standards of living have to fall and government spending has to fall too. They’re going to fight it…but it’s like fighting the orbits of the planets.”

“Hmm. Imagine that. Even in antiquity the Greeks were bad with money. But the Romans figured it out didn’t they? They were good at collecting taxes. Not the Greeks. They had all the good ideas though.”

Dan Denning
for The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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120 Comments on "CBA and Their Bad Debt Problem"

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Bertie
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Howard gave Rudd the keys to the lodge debt free, imagine that, not letting a good crisis go to waste, the Rudd Wallys have run up a massive debt again(Keating left Howard 80 billion) under the guise of stimulus. Rex Connor would be proud. Labor governments cant help themselves, spend, spend, spend and the comes the inflation and higher interest rates.

geo
Guest

Howards middle class welfare was even stupider in my opinion.

Biker Pete
Guest
DD: “There was another interesting note in the CBA’s media release about the last six months. It reported a 49% increase in home loans to $1.19 billion. The CBA said the home loan growth was, “…mainly as a result of increased market share and significant growth in outstanding home loan balances.” Nothing at all to do with Gail Kelly’s fox paws, I suppose… ? Moi, je ne sais pas… but the CBA’s comment they had less of a bad debt problem in the last six months would be grounds for litigation by shareholders if untrue. We can assume the CBA… Read more »
Ross
Guest
The biggest threat is what the 4 pillars did in kiwi land with their AU balance sheets. Read the APRA 2004 report and it features as known risk that their fuzzy law constitution let them ignore. $1.1tr assets incl kiwi houses and there is no way to let the cross rate adjust to save the kiwi export business sector because the Aussie banks and their b/s currency swaps can’t stand the devaluation. Add those extend and pretends to those of MAQ and Allco foreign assets with their of b/s claims of title on foreign assets and the 1.1 is under… Read more »
Dan
Guest

Yes, the worry in the end is if the game is up for banks and banking, they may elect to muddle up the board and force everything to start again – like a spoilt loser in a game of Monopoly.

Stillgotshoeson
Guest
I agree with you 100% geo.. The Howard/Costello team were not the great ecomonic wizards that many believe them too be.. they just happened to be in government while we went Australia went through a huge resource boom giving the country a huge wad of funds which was not well spent, but merely habded back as middle class welfare for to keep them in government. Keating was a far better treasurer than Costello. People blame Keating for the 18% interest rates we had, but those rates flooded in from the world economy (US had similiar rates a couple of years… Read more »
Dan
Guest

As much as I dislike debt, I have to say that insulating houses and installing solar systems are productive moves because they improve energy efficiency over the long term. They are minor interventions though, compared to the enormity of the rest of the Rudd govt’s spending spree.

Stillgotshoeson
Guest
Credit is going to get harder and more expensive to come by and the banks need to refinance or build deposit base to cover these billions of dollars of loans that are due to be covered by June 2011.. Deposit rates are going to rise to attract deposits… interest rates on mortgage, credit cards and business loans are going to rise regardless of RBA moves over the coming 12 months.. tighter credit and higher rates is going to put pressure on the mortgage markets.. those that have over commited or have poor savings discipline and just used the FHOG to… Read more »
Biker Pete
Guest
You’re assuming a lot here, Shoe-son: “…tighter credit and higher rates is (sic) going to put pressure on the mortgage markets..” Yesterday’s 9/02/’10 comment by Glenn Stevens: “…the bank could not stand by and let financial imbalances develop – as happened in the US housing boom, which then collapsed spectacularly, pitching the world economy into its worst recession for 75 years. But he also forecast that if Western governments give priority to cutting back their budget deficits sharply – as the Rudd government has promised – this would inhibit growth, and therefore could mean ”a lengthy period of rather low… Read more »
Stillgotshoeson
Guest
50% of bank funds are from deposits, 50% from overseas markets, the rates from both these sources are set to rise.. these rises will be passed on to borrowers regardless of what the RBA does or does not do in the future in respect to rates.. Bank rates will move outside RBA moves as they already have at times… The reserve bank and the government have no control over the banks… Stevens and Swan can comment on the bank moves but can do nothing about those moves. Don’t forget to send a letter of thanks to P Keating for those… Read more »
Stillgotshoeson
Guest

forgot too add, I am not waiting for a housing crash.. of gone Gold instead more specifically Gold Mining. Bought another 50000 shares yesterday..

Fiscal Phil
Guest
Dan, I agree with making peoples houses more efficient users of energy, they may even be able to produce it. My question is does the govt basically subsidizing the entire process increase the price of the exercise. I seriously investigated an opportunity to import insulation (not the foil type thank god) and found that the artificial demand created by the govt put the price of the product through the roof (pardon the pun)as demand outstripped supply. hence my interest. I managed to secure a supplier from China but baulked at the last minute because it became apparent that my order… Read more »
Stillgotshoeson
Guest

First paragraph of an article in todays Financial Review…

RBA backs rate rises to prevent bubbles.

The Reserve Bank of Australia has signalled a tougher approach to reining in rapid rises in asset prices and credit and has warned that interest rates should not allowed to remain too low…….

Fiscal Phil
Guest

I’ll confess I’ve been a labor voter my whole life but i had a lot of sympathy for Barnaby J this week.

Basically he said what a great many of us think and was effectively turned into grilled cheese on toast for his efforts.

The last person to tell the truth was one P Keating, who’s Banana Republic line was also a warning against excess borrowing. He too was placed on the foil and slid into position.

Two honest statements in more than two decades, what chance do we have.

We’re getting the pollies we deserve, no wonder where looking down the barrel.

Ned S
Guest

I’d consider emigrating to Holland then – Cause not much of it is “under water” I’ve been reliably informed recently!

Yap, Yap :)

Stillgotshoeson
Guest

Fiscal Phil.. If Barnaby had articulated himself better he would not have got the roasting he did.. not so much what he said but how he said it…

Ned S
Guest

I did say I didn’t reckon he was the type to chuck a wobbly hey Dan? Leastways, not a SELF destructive one. :)

Ned S
Guest

Last time I saw Coy “Roy” and “Fiscal Phil” and “Stillgotshoeson” gathered en masse was here:

http://www.dailyreckoning.com.au/aussie-stocks-tenterhooks-rba-decide-interest-rates-increase/2010/02/01/

And Yes, I definitely took note of what a flash trader “Stillgotshoeson” was at the time – Wow!!! (For anyone who feels to review same?)

PS: “Chunkton” mentioned he was putting up a Thai condo or two for sale, but I let that thought go through to the keeper at the time – That’s just me I suppose?

Yap, Yap! :)

Biker Pete
Guest
Shoe-son: “The Reserve Bank of Australia has signalled a tougher approach to reining in rapid rises in asset prices and credit and has warned that interest rates should not allowed to remain too low… ” If you re-read my post, I think you’ll find we’re referring to the same report. For whatever reason, the deletion of Stevens’ prediction of “..a lengthy period of rather low short-term interest rates…” should stimulus cutbacks slow the economy, brings a little irony to the debate. While DRA argues that stimulus and borrow should cease, now, Stevens warns that if there’s any pain during that… Read more »
Stillgotshoeson
Guest
If the RBA lowered rates to zero you will find the mortgage rate will still stay at around 5% simply because of the cost of funds from overseas markets and the rates on offer to attract deposits and the need to appease shareholders.. I believe the best we can hope for is rates stay around current levels but I beilieve that influences out side of Australia are going to cause them to rise.. ultimately they will come back down but the 64 million dollar question is how high and how much damage first… The banks will act outside of the… Read more »
Dan
Guest

The banks are already acting outside the RBA by not passing on interest cuts and exaggerating interest rises.

Stillgotshoeson
Guest

exactly…

Dan
Guest

Well that’s just evidence that government policies were directed towards supporting banks and not first home buyers.

Stillgotshoeson
Guest

Ned S. I sold out positions on JB Hifi, Harvey Norman, Robust, and Rex last month for a nice tidy profit… :)

Ned S
Guest

Good luck and good health – To ALL! And remember to take your financial pills under the MOST carefully considered of totally independant advice. Or what you reckon is a good idea regardless! :)

With the latter tending to be what I do. :)

Stillgotshoeson
Guest

“Or what you reckon is a good idea regardless!”
Yep that’s me…

Ned S
Guest

Goodo!

SV
Guest

Dan,

If the RBA lowers the rate to 0 but the banks are still unable to get deposit at 0.5%, then the government will mandate the super funds to allocate 50% of their assets to bank deposits.

The remaining 50% will be allocated to government long-term nation development bonds which will pay for school buildings and computers and second home-owners grant (for upgraders).

And if that is not enough, the RBA can buy more government bonds, US style.

Biker Pete
Guest
Shoe-son: “If the RBA lowered rates to zero you will find the mortgage rate will still stay at around 5% simply because of the cost of funds from overseas markets and the rates on offer to attract deposits and the need to appease shareholders… the best we can hope for is rates stay around current levels but I beilieve (sic) that influences out side of Australia are going to cause them to rise.. ultimately they will come back down…” Interesting, because that’s not what happened elsewhere. We were offered 3% fixed, in Canada. What I’d give to be in the… Read more »
Stillgotshoeson
Guest

Most mortgages in Australia are variable rate mortgages not fixed rate..

That is another pending problem for the US of A this year and next, alot of Adjustable Rate Mortgages are due to be “adjusted” over the near term.. Will this add to delinquent mortgages.. probably.. as bad as sub prime, I hope not.

“Thanks for your gold tips, which I’m sure we’ll _all_ watch with interest… . ”

Not as much as me ;-)

Biker Pete
Guest

Ned: “Last time I saw Coy “Roy” and “Fiscal Phil” and “Stillgotshoeson” gathered en masse was here:
http://www.dailyreckoning.com.au/aussie-stocks-tenterhooks-rba-decide-interest-rates-increase/2010/02/01/

Yeah, good point, Ned. Same cluster of bears, I see… all prophesying doom’n’gloom… DOW less than 5000, collapse of property markets 40%, same old sh*te. Figure you’ve found the common link (the MISSING link, actually.)
Where is Fluox Man, lately? “Houston to FM… is there anybody out there?!”
(With apologies to P. Floyd, whose cash registers are probing the DSOTM… .)

Biker Pete
Guest

Shoe-Son: “”Thanks for your gold tips, which I’m sure we’ll _all_ watch with interest… . ” Not as much as me ;-)”

I doubt that, S-S. It’s one thing to announce what you’ve just _sold_ for a profit… and quite another to announce what you just bought. Blogsites are littered with the leaning posts of those who announced successful sales at high prices. It’s quite another thing to disclose your recent purchases.
That stuff just doesn’t go away… ever… .

I’ve done the same. I’m backing WA property. _Fortnightly_ dividends.
Good luck! :)

Stillgotshoeson
Guest

I’m a bear in the current market, I am also a realist, it will go back up again.. I’ts a rollercoaster ride with it’s ups and downs and twists and turns.. when it is all over I will look back and say I enjoyed the ride..

Stillgotshoeson
Guest

“That stuff just doesn’t go away… ever… . ”

only play with what you can afford to lose…

Biker Pete
Guest

You’re using your own cash, of course… (?) ;)

Stillgotshoeson
Guest

of course….

Ralph Norris of Commenwealth Bank today……

“Overall, Mr Norris said rates were only likely to go higher.

“Our forecast is for higher cost of funding,” he said.

That was because competition for funds was keeping wholesale funding costs well above pre financial crisis levels, and competition among banks for deposits were pushing up those interest rates, Mr Norris said.”

Biker Pete
Guest

Well, Ralph _would_ say that, wouldn’t he? He’s a banker… . ;)
But you’re using _cash_ so you don’t need to worry. You ‘only play with what you can afford to lose…’ It’s just ‘play money’, right?!~ :)

christina
Guest
So I can imagine this happening one day very soon. (warning- sarcasm is intended in the following paragraphs. If you are offended by sarcasm, please turn away now) So, sll the angry Aussies will say to China and India and all the other emerging countries in the world “Hey, you lot, we know that you have been working very hard for like, 4 generations to try and get ahead, but now that you are all finally getting ahead, we Aussies would like you to stop it, because we really don’t want you to have the money, even though you have… Read more »
Bertie
Guest

Howard/Costello could of easily mismanaged Australia’s wealth but they didn’t. A healthy middle class is vital for any economy hence the focus on ‘middle class welfare’.

Ned S
Guest
I was thinking along similar lines as christina once. But figured getting in the road of a billion chinese and a higher standard of living sounded like a bit of effort – a tad risky even? So I voted for Plan “B” : Bring lots of the smart ones over here to work hard and pay tax so Kev can keep giving me my beer money. I reckon it’ll work out OK. Providing we don’t do anything silly – like let THEM vote! Hmmmmm … Hey Kev, I know we’ve already had the vote ‘n all like; But I got… Read more »
Ross
Guest
Biker, this show by Ralph and John Schubert is a pantomine. They don’t have anywhere near the global influence they had in the early nineties when they got the capital loopholes out of BIS to let them dress their balance sheets. The Americans and the Brits have gone through all this pain and they won’t accommodate our 4 pillars. Whining to APRA? What will that achieve? Hybrids are debt and will be treated like debt and nobody else is going to let little old Australia have another rule. And risk ratings & risk price is going to converge with measured… Read more »
Joe
Guest

Bertie clearly didn’t read Dan’s report.
Sovereign debt is not the problem, it is private debt.

Howard gave Rudd the keys to the lodge debt free.

No he didn’t .. If public debt is not an issue but private debt is, it is still debt we all (collectively) owe.

So how did Howard exactly hand over the keys debt free ?

Keep you politics to yourself please.

Nirvan
Guest

Pete
Banks like Westpac will implode, ya right. I hope you are not suggesting Westpac will implode.

Biker Pete
Guest
Ross: “…we must call Battelino’s hypocritical comments for what they are …Australian households can take on relatively more household debt because of lower healthcare costs and property prices can keep rising …. in one breath …. and then in the next the Reserve can keep interest rates lower because disposable net income after mortgage and rent are constrained by the blunt effect of increases in interest rates on mortgages off a low base not likely to be revisited…” There’s a certain irony about the RBA’s statement, I agree. We’re acting to prevent a bubble… but if things go pear-shaped, we’ll… Read more »
Biker Pete
Guest
Nirvan: “Banks like Westpac will implode, ya right. I hope you are not suggesting Westpac will implode.” I like Encarta’s definition, NV: “implode: 1. transitive and intransitive verb burst inward: to collapse inwardly with … The corporation imploded as a result of gross mismanagement…” Westpac is highly unlikely to make public its loss of mortgage business. In what may be the worst PR exercise the bank has ever employed (other than reneging on Ansett Flight points!) management initiated a shameless interest grab nearly double the RBA’s recommendation. How many borrowers walked we’ll probably never know… and the loss of _new_… Read more »
Ross
Guest

This is cool http://www.zerohedge.com/article/collapse-euro-insights-joseph-stiglitz-and-hugh-hendry-two-part-bbc-miniseries

Spain and 19th century socialist romantic claptrap on one side and hedge fund on a bet on the other.

89peterg
Guest

under Howard we swapped public debt for private debt, much of which has been squandered on speculation and luxuries, and could have been better spent on infrastructure (material and social capital), by public or private investment.
under Rudd, more of the same, with a little more public “investment”

Fiscal Phil
Guest
Bertie, as a fully paid up memeber of the middle class I was particularly angry when K Rudd (who i voted for)started giving out thousands of dollars to everyone except me. My ex wife got the cash splash largesse and i got zero. I caused me to start examining what is the role of government in our daily lives. I quickly came to realise that K Rudd, John Howard, Costello and whoever is likely to follow them are seen as being responsible for every thing that happens and as a result they get involved in and initiate activities that should… Read more »
Justin
Guest

Citigold Stillgotshoeson!?

There’s a penny stock if I ever saw one! My worst performer & I bought in pretty much at the trough in ’08.

Don’t be surprised if that one hasn’t bottomed yet, though I’m thinking another 50000 at say, 1 cent, could be a good investment!

Deo
Guest
Bertie clearly didn’t read Dan’s report. Sovereign debt is not the problem, it is private debt. Howard gave Rudd the keys to the lodge debt free. No he didn’t .. If public debt is not an issue but private debt is, it is still debt we all (collectively) owe. In terms of problem for the whole economy excessive public or private debts is bad / risky but in terms of fairness and being an incentive / disincentive to the productive population…I much prefer private debt of Howard hands down against public debt prob of KRudd. People with private debt at… Read more »
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