Prime Minister Tony Abbott this morning:
“If these necessary measures don’t pass the Senate our AAA credit rating is at risk, and if we lose our AAA credit rating we pay higher rates of interest on our debt, and that means it’s more than $1 billion a month, every single month, just to pay the interest on the borrowings.”
Hang on a minute.
For a start, ratings agency S&P was backing away from “warnings” reported in The Australian Financial Review today that Australia’s rating is at risk. As one financial wire reported:
“… new headlines on the subject are now crossing the wires, indicating that ‘there is no immediate risk to Australia’s AAA rating’, adding that ‘stable aust. rating means less than 1-in-3 odds of change’.”
And as Bernard Keane and Glenn Dyer argue today, maybe a ratings downgrade wouldn’t be so bad?
“The Reserve Bank doesn’t particularly respect Standard & Poor’s and its incorporation of politics into their ratings. If you look at the US, its position has improved immeasurably in the past year, despite S&P’s downgrade. Moody’s and Fitch didn’t change the US rating, and later this year a very chastened S&P will lift the US rating back to AAA — it has changed its US outlook from negative to positive, which says an upgrade is on the way.”
Not to mention (which Keane and Dyer do in making a compelling case) the impact on forcing down the value of the Australian dollar — a godsend for local business.
Too much of Australia’s economic debate is built on mythology. The truth is inconvenient for a government trying to sell the most unnecessary budget levers.
One more Abbott lie – being Abbonomical with the truth?
To adopt Obama’s rhetoric re capitalists not needing government help for little things like roads & contract law, “you didn’t build it”.
So, Smoking Joe, tell me again how the “smoking ruins of an economy” that you talk about is AAA rated by all three agencies and this endangered – by your ideological obsession endanger this imprimatur.
That Abbott can’t get this right is hardly surprising. look at his gaffe for the comparison with the first Howard budget.
Could somebody please please please get through that $12B pa in terest is the equivalent to just 3% of the Federal govt revenue. As a ratio it is laughable that any concern should be voiced.
The other point about debt is that if a company has no debt then it is accused of having a lazy balance sheet and any gearing level below 50% is considered reasonable. The Govt gearing ratio would be well below that plus on a debt to income basis it would also be well within any conservative parameters.
Could Crikey please start a section any statement that Abbot has made that is either
The Truth
Accurate
or not a three word slogan.
I am guessing that such a section would be almost void. Pretty much like the PM himself
Particularly after the GFC (but there have been numerous examples of credit ratings distinct from reality before and since) does anyone with half a brain or any sense of history respect what the clowns at S & P, Moody’s and Fitch have to say about anything? Over 100 years ago Mark Twain noticed that “even if you lined up all the economists in the world, they still wouldn’t come to a point.” I understand we’ve moved past reading entrails and tea leaves but is this really the pinnacle of financial analysis and prediction? Do we not have enough blindfolds and dartboards to improve on their data?
Why does anyone take any notice of these idiot agencies? These are the guys who rated CDOs as AAA. I suggest they are either crooks or to quote my old dad “Don’t know their head fro their arse.”