Comments on: Spending borrowed monies leads to false bravado http://www.crikey.com.au/2009/10/19/spending-borrowed-monies-leads-to-false-bravado/ now with extra source Sun, 12 Feb 2012 02:48:10 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Gary Johnson http://www.crikey.com.au/2009/10/19/spending-borrowed-monies-leads-to-false-bravado/#comment-41870 Gary Johnson Mon, 19 Oct 2009 08:12:17 +0000 http://www.crikey.com.au/2009/10/19/spending-borrowed-monies-leads-to-false-bravado/#comment-41870 You just about covered every colour of the rainbow here Adam....and in time I know you will be proven 100% correct. I don't wish it or want it, but fear it's fate accomplei. Puting home equity over-draft accounts in the hands of the uninitiated borrower so they can splurge on everything that opens and shuts, is like giving that loaded gun to the baby...it's just a matter of time. The "Enablers" are at it again. They twist and turn the available data as positive spin while completely ignoring the facts for short term gain ( you discussed that at length in previous articles ). ..and as you say at the long term expense. According to below link, those who are really in the know at Wall St are selling big time. http://money.cnn.com/2009/09/10/news/economy/insider.sales/index.htm?postversion=2009091107 You just about covered every colour of the rainbow here Adam….and in time I know you will be proven 100% correct. I don’t wish it or want it, but fear it’s fate accomplei.

Puting home equity over-draft accounts in the hands of the uninitiated borrower so they can splurge on everything that opens and shuts, is like giving that loaded gun to the baby…it’s just a matter of time.

The “Enablers” are at it again. They twist and turn the available data as positive spin while completely ignoring the facts for short term gain ( you discussed that at length in previous articles ). ..and as you say at the long term expense.

According to below link, those who are really in the know at Wall St are selling big time.

http://money.cnn.com/2009/09/10/news/economy/insider.sales/index.htm?postversion=2009091107

]]> By: Scott http://www.crikey.com.au/2009/10/19/spending-borrowed-monies-leads-to-false-bravado/#comment-41839 Scott Mon, 19 Oct 2009 05:42:42 +0000 http://www.crikey.com.au/2009/10/19/spending-borrowed-monies-leads-to-false-bravado/#comment-41839 Living standards are a concern of long term economic growth. Of course the government isn't concerned about them at the moment. When the house is burning, you are not too concerned about having the new TV. Worry about that later. Propping up consumer demand is a short run fiscal policy. But the government hasn't totally forgotten about long run fiscal policy. The production function involves technological advancement, capital investment and lastly human capital. By investing in schools and university research, the Government is certainly getting that sorted. And the tax breaks in the stimulus package were not just for cars, but any equipment and machinery bought up to the 31 december 2009 and installed before 31 december 2010. This will surely increase the capital stocks in the long run. As for the whole savings thing...according to the ABS, the savings ratio was up to 4% in seasonably adjusted terms..down 0.4 in the trend.But I think you are also forgetting that consumer savings don't really exist. When we save our money in the bank account, really we are investing in the bank by giving them a loan. Sure its low risk investment, but is still investing (that is why customer deposits are listed as a liability on the banks balance sheet), with a very small yield. So whether the punters invest in bonds, the stockmarket or the banks (depending on their utility), it's all increasing investment in the economy which can only lead to long term economic growth. Putting the money under the bed is probably the worse thing to do to the economy. I think most people would prefer to invest in the stock market for 7-8% expected return rather than the 3% they are getting from the Banks, but that will change as interest rates go up. Living standards are a concern of long term economic growth. Of course the government isn’t concerned about them at the moment. When the house is burning, you are not too concerned about having the new TV. Worry about that later. Propping up consumer demand is a short run fiscal policy.
But the government hasn’t totally forgotten about long run fiscal policy. The production function involves technological advancement, capital investment and lastly human capital. By investing in schools and university research, the Government is certainly getting that sorted. And the tax breaks in the stimulus package were not just for cars, but any equipment and machinery bought up to the 31 december 2009 and installed before 31 december 2010. This will surely increase the capital stocks in the long run.
As for the whole savings thing…according to the ABS, the savings ratio was up to 4% in seasonably adjusted terms..down 0.4 in the trend.But I think you are also forgetting that consumer savings don’t really exist. When we save our money in the bank account, really we are investing in the bank by giving them a loan. Sure its low risk investment, but is still investing (that is why customer deposits are listed as a liability on the banks balance sheet), with a very small yield. So whether the punters invest in bonds, the stockmarket or the banks (depending on their utility), it’s all increasing investment in the economy which can only lead to long term economic growth. Putting the money under the bed is probably the worse thing to do to the economy. I think most people would prefer to invest in the stock market for 7-8% expected return rather than the 3% they are getting from the Banks, but that will change as interest rates go up.

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