COMMENT FROM ROSS GREENWOOD

Reality pill needed for Australians

This is really well put, in terms the average punter can understand ...
it cuts thru political doublespeak and provides clarity

USA Today

Lesson # 1:

Why the U.S. was downgraded:

* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:

* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts: $385

Got It ?????

OK now Lesson # 2:

Here's another way to look at the Debt Ceiling:

Let's say, you come home from work and find there has been a sewer
backup in your neighbourhood ... and your home has sewage all the way up
to your ceilings.

What do you think you should do?

Raise the ceilings, or pump out the (ummmm) "effluent"?





Lesson 3 :

Australia today

FROM ROSS GREENWOOD

Quoted by: Ross Greenwood of Money News..

Right now the Federal Government is at pains to tell everyone -
including us the mug-punters and the International Monetary Fund, that
it will not exceed its own, self-imposed, borrowing limits.

How much? $200 billion. And here's a worry.


If you work in a bank's money market operation; or if you are a
politician; the millions turn into billions and it rolls off the tip of
the tongue a bit too easily. but every dollar that is borrowed, some
time, has to be repaid. By you, by me and by the rest of the country.

Just after 5 o'clock tonight I did a bit of math for Jason Morrison (
Sydney radio presenter). But it's so staggering its worth repeating now.

First thought; Gillard, Swan, Wong, before that Rudd, all of the Labor
Cabinet, call these temporary borrowings, a temporary deficit.

Remember Those Words : Temporary Deficit.

The total Government debt will end up around $200 billion.
So here's a very basic calculation .. I used a home loan calculator to
work it out..... it's that simple..
$200 billion is $2 hundred thousand million.

The current 10 year Government bond rate is 4.67 per cent. I worked the
loan out over a period of 20 years. Now here's where it gets scary ....
really scary.

The repayments on $200 billion, come to more than one and a quarter
billion dollars - every month - for 20 years. It works out we - as
taxpayers - will be repaying $15.4 billion in interest and principal
every year .. $733 for every man woman and child - every year.

The total interest bill over the 20 years is - get this - $108 billion.

Remember, this is a Government, that just 4 years ago, had NO debt. NO
debt.

In fact it had enough money to create the Future Fund, to pay the future
liabilities of public servants' superannuation, and it had enough to
stick $20 billion into the Building Australia Fund .....

A note was sent to me which explains that the six leading members of the
Government, from Ms Gillard down, have a collective work experience of
181 years, but only 13 in the private sector.

If you take out of those 13 years the number that were spent as trade
union lawyers, 11, only two years were spent in the private sector.

So out of those 181 years:

- no years spent running their own business
- no years spent starting their own business
- no years spent as a director of a family business or a company
- no years as a director of a public company
- no years in a senior position in a public company
- no years in a senior position in a private company
- no years working in corporate finance
- no years in corporate or business restructuring
- no years working in or with a bank
- no years of experience in the capital markets
- no years in a stock-broking firm
- no years in negotiating debt facilities with banks
- no years running a small business
- no years at the World Bank or IMF or OECD
- no years in Treasury or Finance.

But these people have plunged Australia into unprecedented debt.

Well, in a way you can't blame them.
It's clear the electorate did not do their homework, because the
Government is there by right.

Ah, but they are Labor and people vote for them because Labor is good
for the working family - right???

If you have read this you may like to pass it on to your friends to help
educate a little as you, them and I, will be repaying the above.

The Libs run the country like a business and the ALP run it like a charity.

sausage said...

Quoted by: Ross Greenwood of Money News..

...

The total Government debt will end up around $200 billion.

...

The current 10 year Government bond rate is 4.67 per cent.

Get it? It's kinda arbitrary.

As for the red corner vs blue corner, and panic merchants:

Panda,
Metho and a good scrubbing brush will get that Kevin '07 sticker off your bumper bar .

PS - I know dumbing down something so complex as Global economics is not exactly prudent so I'll take your rap across my knuckles quietly.

evlPanda said...

As for the red corner vs blue corner, and panic merchants:

That graph convienently ends at 30 June 2008. Not long after the Labs took over, Libs at the helm until late November 2007, Rudd not PM until December 2007, and the events of late 2008. It does not show our current position.

Also, an important thing to consider is how the global ecomony is shifting, and the development cycle. We have high labour costs (and a high Labor cost - sorry was trying to be punny) and we are not going to complete with Asia, then India, then Africa on manufacturing. We need to do something else, and we are lucky we do other stuff. The reality is that the opportunities are harder and fewer. We need to be a little more clever with where we invest to maximise our returns. It puzzles me why the government invests heavily in non-competetive industries, making arteficial bubbles, which eventaully burst or deflate and burn us. Encouraging real opportunities in new industries seems a better strategy.

And you guys think that regardless, his or her mob in office will mean a better deal for the average punter out here trying to make end meet.

If you believe that, then please send me some of whatever you are on, I could do with a pound of it

Majority would be horrified to hear what our elected so called politicians actually think about Mr and Mrs average.

Poodle said...

MORAL OF THE OLD STORY:
Be responsible for yourself!

Poodle said...

MORAL OF THE STORY:
Be careful how you vote !

Sounds like one and the same to me!

mineral1 said...

Majority would be horrified to hear what our elected so called politicians actually think about Mr and Mrs average.

So... just how many of our elected so called politicians do you know on a first name basis? Or are you just pulling this out of where your Weet Bix ended up?

SomeOtherGuy said...

mineral1 said...

Majority would be horrified to hear what our elected so called politicians actually think about Mr and Mrs average.

So... just how many of our elected so called politicians do you know on a first name basis? Or are you just pulling this out of where your Weet Bix ended up?

No, I actually have some reasonable close contacts, both Federal and State.
Majority of them think Mr and Mrs average are rather thick, and easily manipulated with a little help from their spin doctors and close minders.

mineral1 said...

SomeOtherGuy said...

mineral1 said...

Majority would be horrified to hear what our elected so called politicians actually think about Mr and Mrs average.

So... just how many of our elected so called politicians do you know on a first name basis? Or are you just pulling this out of where your Weet Bix ended up?

No, I actually have some reasonable close contacts, both Federal and State.
Majority of them think Mr and Mrs average are rather thick, and easily manipulated with a little help from their spin doctors and close minders.

Can't blame the majority of them for believing that. Just listen to the dingbats that ring in to Alan Jones on any given day. They'd believe the sky was paisley if Alan told 'em so.

Go back to the gold standard

log man said...

" (and a high Labor cost - sorry was trying to be puNNy)"....one too many "n"s I reckon

Thanks for noticing Being 10-12 kg lighter has made all the difference to my sailing It has been a nice marriage of pun and funny that has helped me with this...



Errr OK... Did you get paid to write that Part of your job at Australian Labor

Presumably the grasshopper is Labor in your story, and the ant is the other?



So, the ant works hard, and yet the laughing, dancing grasshopper feels hard done by... Reminds me of this:

Suppose that every day; ten men go out for beer and the bill for all ten
comes to $100. If they paid their bill the way we pay our taxes, it
would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every
day and seemed quite happy with the arrangement, until one day, the owner
threw them a curve. He said, "Since you are all such good customers, I'm
going to reduce the cost of your daily beer by $20. Drinks for the ten
now cost just $80."

The group still wanted to pay their bill the way we pay our taxes, so the
first four men were unaffected. They would still drink for free. But
what about the other six men -- the paying customers?
How could they divide the $20 windfall so that everyone would get his
"fair share"? They realized that $20 divided by six is $3.33. But if
they subtracted that from everybody's share, then the fifth man and the
sixth man would each end up being paid to drink his beer. So the bar
owner suggested that it would be fair to reduce each man's bill by
roughly the same amount, and he proceeded to work out the amounts each
should pay!

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men
began to compare their savings.

"I only got a dollar out of the $20," declared the sixth man. He
pointed to the tenth man, "but he got $10!"

"Yeah, that's right,' exclaimed the fifth man. "I only saved a dollar,
too. It's unfair that he got ten times more than I!"

"That's true!!"shouted the seventh man. "Why should he get $10 back when
I got only $2 ? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat
down and had beers without him. But when it came time to pay the bill,
they discovered something important. They didn't have enough money
between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our
tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up any more. In fact, they might
start drinking overseas where the atmosphere is somewhat friendlier.

Pugwash said...


So, the ant works hard, and yet the laughing, dancing grasshopper feels hard done by... Reminds me of this:

Suppose that every day; ten men go out for beer and the bill for all ten
comes to $100. If they paid their bill the way we pay our taxes, it
would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every
day and seemed quite happy with the arrangement, until one day, the owner
threw them a curve. He said, "Since you are all such good customers, I'm
going to reduce the cost of your daily beer by $20. Drinks for the ten
now cost just $80."

The group still wanted to pay their bill the way we pay our taxes, so the
first four men were unaffected. They would still drink for free. But
what about the other six men -- the paying customers?
How could they divide the $20 windfall so that everyone would get his
"fair share"? They realized that $20 divided by six is $3.33. But if
they subtracted that from everybody's share, then the fifth man and the
sixth man would each end up being paid to drink his beer. So the bar
owner suggested that it would be fair to reduce each man's bill by
roughly the same amount, and he proceeded to work out the amounts each
should pay!

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men
began to compare their savings.

"I only got a dollar out of the $20," declared the sixth man. He
pointed to the tenth man, "but he got $10!"

"Yeah, that's right,' exclaimed the fifth man. "I only saved a dollar,
too. It's unfair that he got ten times more than I!"

"That's true!!"shouted the seventh man. "Why should he get $10 back when
I got only $2 ? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat
down and had beers without him. But when it came time to pay the bill,
they discovered something important. They didn't have enough money
between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our
tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up any more. In fact, they might
start drinking overseas where the atmosphere is somewhat friendlier.

I like this, what do you think each of their annual income would have been, and what their night out would have cost as a percentage of their income.

^no, that is an absolute load of crap...

SomeOtherGuy said...

Pugwash said...

evlPanda said...

As for the red corner vs blue corner, and panic merchants:

That graph convienently ends at 30 June 2008. Not long after the Labs took over, Libs at the helm until late November 2007, Rudd not PM until December 2007, and the events of late 2008. It does not show our current position.

Current position (on the numbers given previously here) is $50B deficit on a GDP of $924B ... ie about 5% ... or about the same as the 2008 line on the chart. Happy?

interesting graph that. Looking back at the financial disaster that was the Whitlam government makes you think that the finances of the country weren't as bad as the conservatives were saying......hang on I've heard that before somewhere!

Pugwash said...

^^^Nah, it's been around a while, so blatantly stolen. As I posted it, I was thinking about what the breakdown would look like in our current tax system, probably the revised scenario, with the cash back and the beating

In our current tax system it looks nothing like that. If you think the wealthiest people pay half the tax and we're all benefiting from that then you're dreaming. The likes of Clive Palmer and Gina Rinehardt probably pay bugger all tax.