Based on the flood of comments after yesterday’s piece about Australia’s mounting public debt obligations, it really is time we looked more closely at the mechanics of how the Rudd Government will potentially lift the national debt to $200 billion over the next four years.
They’ve certainly started with a flurry in February as this web page from the Australian Office of Financial Management demonstrates.
Whilst borrowing $150 a million a day into the future sounds scary, the cheap money continues to pour in too given these tender results over the past 14 days:
February 6: $600 million of six year bonds issued at 3.9%
February 11: $600 million of four year bonds issued at 3.46%
February 13: $600 million of five year bonds issued at 3.67%
February 18: $600 million of three year bonds issued at 3%
All up, that’s $2.4 billion in new debt over 14 days and given the relatively cheap rates, this will only cost about $90 million a year in interest. However, even 3% of $200 billion is $6 billion a year.
There’s no doubt that the government is in a far better position than Australian corporates, credit card holders and small businesses who are getting mercilessly gouged by the local banking cartel as they expand margins to cover mounting bad debt provisions.
However, journalists and citizens alike should keep a very close eye on the Rudd Government’s borrowing program, especially if the cost of money starts to rise as the balance sheet and national risk profile deteriorates.
The same goes for political journalists at the state level, who as a rule rarely cover government bond issues, borrowing programs or interest bills.
For instance, the Queensland government outlined a state-record $16 billion borrowing program for 2008-09 even before the global financial crisis hit
And the Queensland Treasury Corporation is not exactly open about how the program is going. We get these overall figures from the Queensland Treasury Corp website but nothing on the rates being paid or individual issues which are disclosed by the Feds.
Whenever a public company issues new shares, the law requires public disclosure of the details. It seems the same doesn’t happen in Queensland. Maybe this is because various heavily indebted state governments have found it very difficult to borrow ever since the Federal Government guaranteed private bank bond issues but failed to include their state brethren in the largesse.
Which bring us to the forthcoming Queensland election.
Given that Wayne Swan and Kevin Rudd put so much blood, sweat and tears into ending the National Party dominance of Queensland in the late 1980s, does anyone else suspect the Nambour High boys are motivated to spend Federal money to save Queenslanders from the prospect of a Springborg government?
Anna Bligh, like most of the premiers, was in Canberra for detailed discussions with Rudd and Swan just days before the stimulus package was announced.
Now there’s all this talk that Bligh will go six months early — possibly even next month. Would she be so cynical as to time an election to be within days of the latest $12 billion cash hand out?
Could we yet see Labor returned on the back of cash handouts shortly before the Federal government is forced to formally bailout the Queensland state government?
If it can happen to California…
Lets hope the $12 billion dollars doesn’t reinstate Queensland’s Bligh Government. Rudd’s handout (as if he doesn’t know) should be lodged with an administered fund for the benefit of the state less the presumed public funds continue to be used by the parliamentary branch of the ALP for near million-dollar compo claims made by wounded or totally incapacitated MP staff. When police resources are deployed to protect workers giving court evidence against an MP and are used to evict alleged wayward tenants living in an MP’s rental property (charges later dropped and the tenant cleared of allegations) there’s every evidence Rudd should save his state and not his beloved party.
If I was Kevin Rudd, I`d let the economy go into depression, all you winging harping pricks could slip off the edge, especially that whining Stephen Mayne, its bad enough having to watch him blubbering on the A.B.C because his father did`nt love him, but to have to read his crap on crikey too, well thats just too bloody much, a pox on all you whiners, and to all the so called fincial experts waiting for a recovery in the U.S, it won`t happen, as for blood in the streets in Europe, it will be the U.S. that will implode, don`t forget the population is armed with every conceivable type of weapon, freely available to any looney thats wants it, it was`nt a debt collapse in the U.S., its the wealth going more and more to the top end, not the lower end, who are the spenders, F.D.R worked that out, but not you dumb bastards, you`re too thick.
Brian Crooks – best comment ever!