Debt and Credit

It is no secret that Australia has some of the highest levels of debt in the world. Household debt has risen steadily…it is now 400% higher than it was 27 years ago. It’s little wonder that this is the case as more and more of us rely on credit cards and personal loans.

While many other countries have gained some control on their levels of personal debt since the Global Financial Crisis, Australia’s debt conundrum doesn’t look like it will be solved anytime soon.

Australia’s debt crisis

The majority of Australia’s debt comes from home loans and mortgage investments. Lower interest rates have made debt seem more affordable, while a plethora of financial providers have made loans more accessible. The government likes to continually remind us that they (and only they) can pull us out of the crisis.

10 years ago, Australia avoided an all-out recession by luck of a resources boom. Now that the boom has ended, ordinary investors are rightly concerned about the possibility of rising household debt leading to a slower economy.

The role of income and interest rates

Australia’s debt levels have eclipsed our income growth, leading to a debt-to-income ratio of 88%. Any changes to interest rates or a fall in housing prices in the future have the potential to further complicate this continuous debt cycle. Add in the low growth in income, our levels of personal (as well as public) debt are major concerns for both individuals and the wider economy.

Debt bubbles and credit crunches have decimated wealth, destroyed jobs and ruined families. And the current debt crisis is escalating at an alarming pace. So how can you protect and grow your wealth in a financial crisis? Find out here.

As Good As It Gets?

The Reserve Bank continues to hold the official cash rate at 1.5%. What’s going on? Is this as good as it gets for the Aussie economy?

The Second Half Slowdown

The smart money flow index has just plunged. There’s a risk that you’re going to see another leg down in US stocks very shortly. What will happen next?

When a Country Dies a Crypto Boom Is Born

If crisis hits again, people will flee the traditional system. They'll realise the current system isn’t as safe as they think. They’ll want something else. And crypto will be there, ready, waiting for them.

Reality Bites

Investors have retreated from European stocks after seeing political upheaval in Italy. The euro is once again facing an existential threat. What does this mean for world markets?

I Say Bollocks to That

The RBA reckons China’s debt is now around 260% of GDP. If the US and European economies slow into the second half of 2018 and into 2019, then China will feel the effect. How will this impact Australia?

The Tipping Point

The US dollar rally has barely paused for breath since getting underway in February. Late last week, it took its toll on commodities. Oil fell nearly 3%. Iron ore fell 3.7%, while aluminium declined 0.7%. What will happen next?

How Do You Feel About Tax Cuts?

Prime Minister Malcolm Turnbull may be one step closer to passing corporate tax cuts. This comes after One Nation’s Senator, Pauline Hanson, backflipped and announced she would back the company tax plan. Ms Hanson struck a deal with the Turnbull government. But what does this tax cut plan mean for Aussie businesses and workers?

Is This Bull Run Over?

Aussie stocks bounced back strongly yesterday, and are set to open flat today, in a sign that the concern over a trade war is overdone. Perhaps Trump’s team have done their homework. Perhaps they now see that a ‘spend as much as you want’ policy in government doesn’t quite gel with ‘let’s reduce our trade deficit’.

So Trump Wants to Reduce the Trade Deficit, Does He?

Trump doesn’t realise the debt he borrowed to build his property empire came courtesy of the US dollar standard. And he obviously doesn’t realise the debt he needs to borrow as President comes courtesy of that same standard. Right now, markets don’t appear as terrified as they could be. In a highly leveraged global economy, the threat of a trade war should be a big concern for the equity market.

We’re Almost at the Last Chapter of This US Economic Boom

In his big State of the Union address yesterday he laid down the plan - He’s going to increase the debt. A massive US$1.5 trillion infrastructure plan. Throwing good money after bad. Or should I say printing more money to pay off printed money. What to make of it all?
Money Morning Australia