If you have $10B in debt and $10B in assets (that generate a higher rate of income than the debt servicing costs) is it smart to sell the assets to pay off the debt? .
PETER Costello, the treasurer who restored Australia's AAA rating with Moody's and Standard & Poor's in 2003, says that if the budget deficit and debt "journey" continues as it has for the past five years, Australia will be at risk of being downgraded again. The former Coalition treasurer said yesterday Australia had lost its AAA credit rating under Paul Keating and it had taken a long time to restore.
Kevin Rudd has used Australia's AAA credit rating as a defence against criticism of the budget deficit blowout to $30 billion last Friday and the breaching of the $300bn debt level.
Announcing the September 7 election on Sunday, the Prime Minister deflected questions about the drastic reshaping of the May budget forecasts on rising debt, deficit and unemployment by asking: "If there is a debt and deficit crisis requiring an immediate return to surplus, why did the credit rating agencies provide us with an AAA credit rating?
Show me where the income stream was greater than the interest component?
Without Howard/Costello dumbing down the debt how well do you think we would have gone through the GFC? This is what would have happened :fan We had AAA rating under Costello ..... remember?
I fully agree with you that Howard and Costello did there best with dumbing down the understanding of Government debt. Debt is not bad if it is used to invest in something that produces a rate of return higher than the cost of the debt. I would also argue that debt is a fairer way to share the cost of infrastructure than tolls, as a Govt can built the infrastructure with the goal to repay the debt over the economic life if the asset, whereas the public sector is looking for 15%+ annual returns on their investment, along with very restrictive terms eg only 1 public bus route allowed to Sydney Airport and most toll roads have restrictions on improved public transport competition (at least in NSW)
Another back flip, they are now talking about toning down the parental leave promise.
Looks like all the lefties may get what they wanted.
Glad to know the right were such strong supporters of Abbotts PPL.
Probably after the Graincorp cave in to the nationals Tony had to give something to the economic Liberals in the party.
Shame they're going to water down the FOFA legislation.
How is not requiring a Financial Advisor to tell their long term clients how much they're being charged for services in the best interests of the client?
How is continuing to allow conflicted advised to clients good for them? GREAT outcome for the industry though.
How is not being required to acting in the clients' best interests good for clients?
Seems the main thrust of the legislation has been removed. Not sure if there's anything worthwhile left in it.
This Govt will have to take a measure of responsibility for the next version of Storm Financial after making these changes.
Seems all that the Government is worried bout is the costs to the industry, not the general public who need better protections.
http://www.smh.com.au/business/cons...future-20131219-2znxq.html?rand=1387485621027
...stats compiled by Rice Warner Actuaries this year, commissioned by Industry Super Australia, which estimated that the FOFA reforms would boost Australians' private savings under advice by $144 billion by 2027 and that the average cost of advice would fall from $2046 before the reforms to $1163 after the reforms by 2027.
Another victory to the rentier class!
Glad to know the right were such strong supporters of Abbotts PPL.
Firing from the hip again Syd?
Dr Smith and several Abbott supporters, said they hoped Abbott would water down the PPL and it looks like they will.
Labor/union backed industry super funds, were pushing hard to demonise retail funds. I do agree reform is needed but some form of logical middle ground is required.
I don't use industry or retail funds so really don't have a vested interest either way.
I'll wait untill changes are made, before making a decision one way or the other.
I don't know anyone from the right in my circle of friends that supports PPL. I'm centrist and I hate it; I'd like to see it gone altogether.
AFAIC it's bad policy.
Sorry, I forgot to put my /sarcasm tag on
Maybe I'm quite upset because when I was younger and more trusting I got rolled by shoddy financial "advice". The damage went on for over 5 years. I'm probably 10 years behind where I should be with the money I lost and the opportunity cost.
.
We have all been there, I saw a financial advisor immediately after the 87 crash, I was in my early 30's.
He recommended units in insurance bonds.
Well to cut a long story short, after two years of going nowhere, cashed them in and bought Westpac at $2.50 and ANZ at $3.00, then Woolies at $2.40 when they were spun out of Adelaide Steamships.
Never looked back, since then do it all myself.
The problem with industry funds the governance IMO is suspect, the problem with retail funds is fees.
The answer isn't to crush the retail model, but find a middle ground.
One thing for sure the industry funds will have just as many underlying problems.IMO
You've avoided defining what you see a logical middle ground.
If you are going to "trust" a financial advisor then there has to be a legislated requirement that the advisor has the clients best interests at the fore. Currently it doesn't seem to be in many cases.
Labor has tried to make that a requirement. The current Govt seems to not think it's necessary. Do you agree with the current Government that conflicted advice is OK? If not, then the changes they are considering should worry you.
Waiting for the legislation to come out will probably mean it's too late to change it, considering how much effort the FIRE sector has put into watering down the FOFA already. What Abbott is proposing is like winning Oz Lotto every week of the year for the FIRE sector.
You believe the Industry funds have suspect Governance, yet isn't the high fees paid via the retail funds also an aspect of Governance that has been used to funnel billions of dollars into the big banks and likes of AMP and Macquarie? Just look at the issues that are coming to light from the Comm Bank allowing their advisors to run riot. Corruption and greed is not a "union" only problem. I'd argue retail superfund trustees face more conflicts with their "masters" interests and fund members than the industry funds do.
At least for most of the last 20 years the industry funds have outperformed the retail sector, mainly due to the lower fees. It's been a great outcome for those in the industry funds, not so great for the profits of the retail sector.
Ambassador for Women and Girls?
No better candidate could be found than Natasha Scott-Despoja, she of the feminist-leftist orthodoxy, and long time Coalition critic?
Julie Bishop, what were you thinking.
http://blogs.news.com.au/dailyteleg...self_inflicted_wounds_an_opening_for_enemies/
It's crazy. It won't appease the left and will upset conservative supporters. It's a lose:lose, IMO.
The government, and the Health Minister in particular, has some explaining to to do.
Using the festive season to foist one scarey health announcement after another on already stretched consumers.
The holiday season timing is mean spirited, bordering on politically cowardly.
- approves private health premiums up +6%, announced just two days before Christmas
- leaks a 6 month delay of considering the unwinding of the means test on premiums rebate
- today leaks the possible intention to charge $5 per visit under Medicare
PM Abbott, your government needs to be better than this.
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