Sir John Howard

[rumpole]

gg,

If you want to start a fund to finance the erection of a 20 ft bronze statue of JWH overlooking the shores of Lake Burley Griffin, I would be delighted to make a contribution

 

[nulla nulla]

Do they have pidgeons in the ACT?

I couldn't think of anything more appropriate for JH than his efigy covered in pidgeon dung.

 

[sptrawler]

And household debt that was 50% of GDP. By the time they finished household debt was 150% of GDP but the government was debt free. All things being equal what do you think happened? Is it that hard to understand That's been the only point I've been trying to make despite your numerious attempts at creating strawman arguments.

Goodnight.

Good morning.
If household debt is only a function of government debt and a reflection of cad as you are infering. Then households are doing extremely well at the moment by actually paying down household debt, which as I stated is tied to the speculative housing market. The housing debt has a reflection on the gross debt by the fact it is non productive debt, thereby robbing the markets of investment capital.

 

[McLovin]

Good morning.
If household debt is only a function of government debt and a reflection of cad as you are infering.

I never said that, that's about the third time you've put words in my mouth. Once again, and this is getting tiring, I'm explaining the relationship between the CAD and private/public sector balances: the CAD + Private sector balance + public sector balance must = 0. If the government ran a surplus and the CAD continued then the private sector must become more indebted by an amount equal to the CAD + the government surplus. The government was running a surplus of 1.5% and the CAD was about 5% creating a shortfall for the private sector of 6.5% of GDP; ie they needed to borrow 6.5% of GDP in order to fund the CAD. So like I said, and as the Pitchford Thesis advocates, the debt in the economy was moved from public to private sector. Simpletons of course marveled at the incredible job the government was doing in reducing debt, when it was really sleight of hand and it had just been moved around the economy. The net foreign debt position confirms this. Property bubbles aside, as long as we run a CAD we will continue to need to borrow from overseas to pay for those imports.



Anyway, no point continuing with this. You believe what you want and I'll do the same.

 

[Julia]

There's no question in my mind that the LNP coalition was effective at getting the Australian economy back on the tracks during his period of leadership, but, in the end, little Johnny did a great disservice to both Australia, and his own party, by failing to acknowledge that it was time to stand down and surrender the reigns of leadership to someone more palatable.

When the LNP lost to their opposition, much of the good work that had previously been done, was promptly undone. I do not have a specific grudge against the LNP - but I detest little Johnny for allowing his vanity to override the better interests of Australia and her citizens...............

Your posts are always welcome, Cynic, but couldn't you just refer to John Howard by his given name, rather than indulge in the petty pejorative insult referring to his stature?

 

[Garpal Gumnut]

Your posts are always welcome, Cynic, but couldn't you just refer to John Howard by his given name, rather than indulge in the petty pejorative insult referring to his stature?

+1

gg

 

[Calliope]

Your posts are always welcome, Cynic, but couldn't you just refer to John Howard by his given name, rather than indulge in the petty pejorative insult referring to his stature?

The Howard haters never refer to Hawke As "little Bobby" whereas he was in fact 5 cms shorter than Howard - 1.7m to 1.75m. The silver bodgie wore built-up heels.

 

[sptrawler]

I never said that, that's about the third time you've put words in my mouth. Once again, and this is getting tiring, I'm explaining the relationship between the CAD and private/public sector balances: the CAD + Private sector balance + public sector balance must = 0. If the government ran a surplus and the CAD continued then the private sector must become more indebted by an amount equal to the CAD + the government surplus. The government was running a surplus of 1.5% and the CAD was about 5% creating a shortfall for the private sector of 6.5% of GDP; ie they needed to borrow 6.5% of GDP in order to fund the CAD. So like I said, and as the Pitchford Thesis advocates, the debt in the economy was moved from public to private sector. Simpletons of course marveled at the incredible job the government was doing in reducing debt, when it was really sleight of hand and it had just been moved around the economy. The net foreign debt position confirms this. Property bubbles aside, as long as we run a CAD we will continue to need to borrow from overseas to pay for those imports.
.

Your last sentence is the only thing I disagree with. You say "property bubbles aside" I maintain you cannot leave property borrowings out of the equation when talking about current account defecits. The majority of the housing finance is sourced from overseas, therefore it forms a major part of our balance of payments.
Also as I said housing debt is non productive debt, the Pitchford Thesis supports private sector debt as long as it is productive debt.

Also check out mortgage debt to GDP and tell me it isn't an influence.

http://www.macrobusiness.com.au/201...orsens-recessions/imf-mortgage-debt-to-gdp-8/

 

[sptrawler]

I'm explaining the relationship between the CAD and private/public sector balances: the CAD + Private sector balance + public sector balance must = 0. If the government ran a surplus and the CAD continued then the private sector must become more indebted by an amount equal to the CAD + the government surplus.

Agree completely, the only issue is Private sector balance is the sum of household debt(mortgage + credit car) and public companies debt.
The major companies don't have an out of control debt problem. Households do, due to poor lending policies, greed and the fiat monetary system.
As you keep refering to Pitchford, it states debt must be underpinned by assett value.
Therein lies your problem, households have been using debt as a substitute for wages. This works fine untill the underlying assett value drops and exposes your foreign loans or account balance as you would call it.

Also throwing in words like straw man and simpleton, doesn't add to the debate.

 

[Judd]

Is he actually Sir John Howard or is he John Howard who has been given a gong by the Queen? Got a bit lost due to all the political brouhaha which sprung up in the thread.

 

[noco]

Is he actually Sir John Howard or is he John Howard who has been given a gong by the Queen? Got a bit lost due to all the political brouhaha which sprung up in the thread.

John Howard received the Order of Merit in which he is one of 24 in the Queen's exclusive club. It was not a Knight Hood.

http://www.theaustralian.com.au/in-...-joins-queens-24/story-fnaivo74-1226378774360

 

[sptrawler]

Is he actually Sir John Howard or is he John Howard who has been given a gong by the Queen? Got a bit lost due to all the political brouhaha which sprung up in the thread.

Yep, easier just to sit back and let misleading comments go unchallenged. Then the debate is the same as the one at the pub.

 

[McLovin]

Your last sentence [above] is the only thing I disagree with.You say "property bubbles aside" I maintain you cannot leave property borrowings out of the equation when talking about current account defecits

Debt has nothing to do with the current account. It's a capital account item.

Example: I buy a car from Japan for $20,000 and sell them $15,000 in steel to build the car. The current account would look like

Imports: $20,000
Exports: $15,000

current account deficit: $5,000

In order to pay for the current account I have to borrow money from a Japanese bank which creates a separate capital item giving me a capital account surplus of $5,000 (ie have recieved money in). Similarly, when a bank borrows money overseas to write mortgages in Australia it goes through the capital account and has nothing at all to do with the current account.

So property speculation (or any asset) have nothing to do with the current account deficit.

But as per my example, when we run a CAD we need to borrow an equivalent amount from foreigners in order to pay for those imports. This debt would go through the capital account as a seperate item.

Agree completely, the only issue is Private sector balance is the sum of household debt(mortgage + credit car) and public companies debt.The major companies don't have an out of control debt problem.

If you accept that equation and are arguing that the non-household private sector does not have a debt problem then by extension wouldn't it be the household sector that is the one taking on the debt to pay for the CAD?

Also throwing in words like straw man and simpleton, doesn't add to the debate.

Apologies for using simpleton, it wasn't called for.

 

[CanOz]

Apologies for using simpleton, it wasn't called for.

Well done McLovin...fine example of forum etiquette.

So many arguments on here lately, we should all take a leaf out of your book when things get a little frustrating.

CanOz

 

[sptrawler]

Debt has nothing to do with the current account. It's a capital account item.

In order to pay for the current account I have to borrow money from a Japanese bank which creates a separate capital item giving me a capital account surplus of $5,000 (ie have recieved money in). Similarly, when a bank borrows money overseas to write mortgages in Australia it goes through the capital account and has nothing at all to do with the current account.

So property speculation (or any asset) have nothing to do with the current account deficit.

But as per my example, when we run a CAD we need to borrow an equivalent amount from foreigners in order to pay for those imports. This debt would go through the capital account as a seperate item.


If you accept that equation and are arguing that the non-household private sector does not have a debt problem then by extension wouldn't it be the household sector that is the one taking on the debt to pay for the CAD?

Apologies for using simpleton, it wasn't called for.

No I must appologies, I thought our banks lending overseas money, whether it be for mortages or business lending was still a debt incurring an interest cost on our balance sheet.
Also I would have thought the household borrowings for investment property and or equities would have to be underpinned by income or collateral.
If that isn't a problem then let the party go on, 10 investment properties and work for Bunnings, that isn't causing a problem.LOL

Also the problem if you are correct will be resolved in no time, because people aren't buying anything.
So imports should plumet and by your reckoning we will have a CAD in surplus in no time.
All's good.LOL the government should employ you.

 

[sptrawler]

If you accept that equation and are arguing that the non-household private sector does not have a debt problem then by extension wouldn't it be the household sector that is the one taking on the debt to pay for the CAD?



Apologies for using simpleton, it wasn't called for.

How is that debt manifested? DUH
They certainly have the debt.

 

[McLovin]

I don't even understand the point you're trying to make anymore. I'm done here.

 

[sptrawler]

I don't even understand the point you're trying to make anymore. I'm done here.

Agree completely, last post Alan Greenspan 2005.

An increase in household saving should also act to diminish borrowing from abroad. The growth of home mortgage debt has been the major contributor, at least in an accounting sense, to the decline in the personal saving rate in the United States from almost 6 percent in 1993 to its current level of 1 percent. The fall in U.S. interest rates since the early 1980s has supported both home price increases and, in recent years, an unprecedented rate of existing home turnover.

This combination has led to a significant increase in home mortgage debt. The rise in home prices creates capital gains, which become realized with the subsequent sale of a home. The amount of debt paid off by the seller of an existing home averages about three-fifths of the mortgage debt taken on by the buyer, effectively converting to cash an amount of home equity close to the realized gain. This cash payout is financed by the net increase in debt on the purchased home, and hence on total mortgage debt outstanding.

Even after accounting for the down payments on any subsequent home purchase, sellers receive, net, large amounts of cash, which they view as unencumbered. The counterpart of that cash, the increased debt taken on by the homebuyers, is supported by the new home values enhanced by capital gains. In addition, low mortgage interest rates have encouraged significant growth of home equity loan advances and cash-out refinancings, which are another channel for the extraction of previously unrealized capital gains on homes.

All told, home mortgage debt, driven largely by equity extraction, has grown much more rapidly in the past five years than during the previous five years. Surveys suggest that approximately half of equity extraction shows up in additional household expenditures, reducing savings commensurately and thereby presumably contributing to the current account deficit.
My bolds.

 

[Caveman]

Your posts are always welcome, Cynic, but couldn't you just refer to John Howard by his given name, rather than indulge in the petty pejorative insult referring to his stature?

C`mon guys isnt this a bit rich?You only have to read down these forums and see for yourself
all the ridicule and Nicknames of Prime ministers,ministers Present and past.

 

[wayneL]

C`mon guys isnt this a bit rich?You only have to read down these forums and see for yourself
all the ridicule and Nicknames of Prime ministers,ministers Present and past.

Yeah but the Fabian socialist heathen deserve it. :