Soaring Debt Levels Threaten The Economy

Soaring Debt Levels Threaten The Economy

Don't you love the media's negative headlines? Scary and not informative.

What had caused the headline was the annual release of the Australian annual debt to income ratio. This came in at 189%. In other words, your debts are nearly twice your annual income. First of all, they could have said that this compares with an international figure of 250% - but they didn't! That doesn't support the scary headline does it.

The next big difference between us and overseas is not our low debt level - but that our debt is good debt, not bad debt. In other words, we are putting our debt on rising assets, principally property.

Where would you put your money into? See below chart! Wow $7.1 Trillion in Residential property.

Residential Real Estate Underpins Australia's Wealth

In Germany in comparison, their debt is not safe bricks and mortar, most people there prefer to rent. Their debt is on bad debt. Cars, luxuries, travel, lifestyle choices.

We know full well that in twenty years time in Australia the assets that are giving us this debt figure, will pay huge dividends when it doubles and then doubles again.

As above this debt is on good debt, eg rising assets. Also a substantial part of it went into construction of new dwellings. We need over two hundred thousand of these each year to house our evolving population. This directly employs over one million people.

APRA and the chairman, Wayne Byres, are clearly unaware of the importance of dwelling investment. They have been attacking it since June 2015 with the result that last year for only the second time since the Rudd Financial Crisis, dwelling investment did not help grow wealth as measured by our gross domestic product. Last year this got worse with it being a negative loss to our GDP.

Investor Credit Growth

The Cart shows: Less Construction, Less jobs, Rising Rents & Prices!

If you are new to this column and don't own a property then you would be unaware that the repayments on that property, by sudden surprise, have jumped 45% or more in many cases. No, you can't suddenly jump rents, so where does the bank greed get satisfied from? More and more people, in desperation, are forced to sell their assets, leaving them exposed to a future on the pension. Our Treasurer is asleep on this issue!

Others, desperate to hold on to growing assets to avoid the pension, are forced to dip into their savings and reduce their consumption spending. A short sighted APRA has failed to see that this spending is the biggest part of the engine room growing our economy. APRA is decimating spending and decimating the economy.

APRA has engineered a recession risk because they failed to do sufficient research. They have excited the banks into "unprincipled and reckless profit grab". I am paraphrasing here the Commonwealth Banks CEO, Ian Narev, who used these words in his ironic attack on the Federal Government and South Australian Governments surprise tax "grab". It seems the banks like taking and not giving!

The Solution?

We alone represent consumers and property buyers. So part of our platform is to educate buyers with the facts, not scary headlines. Equally, it is to provide solutions to the constant and reoccurring problems that pop up in property, finance and the economy.

So what is the solution here to this grand larceny by the banks on you personally? Get away from the bloated big four!

Now on your own, you will find this nearly impossible as they used Kevin Rudd's money not to help the economy but to gobble up all of the opposition.

Our sleepy Treasurer Wayne Swann allowed this to happen and failed to take action and allowed the creeping monopoly to take over.

He failed to see that the monopoly would lead to fat profit margins at the expense of the economy.

Charts that we have used in the past have shown that we have witnessed the biggest transfer of wealth in Australia's history from everyone in the community, renters, builders, investors, home owners to the bloated banks.

You can help fix this problem by bringing it to the notice firstly of the media and then of our sleepy politicians.

The last Monday of the month your Club will be holding a rally outside a National Australia Bank in each City. Talk to your Mentor if you would like to join us at 1pm and stay for around 15 minutes! That’s all it takes.

Will this be effective? Check out our photo from past Rally’s where we were being interviewed outside the Reserve Bank back in 2009. Our repeated Rallys caused the RBA to look foolish as they continued to raise rates to 4.75% and had to suddenly make the biggest reversal in the bank's history.

RBA Rally

Don't be a victim, help us with the rally!

Also, if you are being squeezed by a bank then contact your Mentor, we are organising funds from the non-majors.

Now it's time for you to take action to help yourself, whether you're a tenant, investor or home owner. You are being squeezed.

I am Kevin Young and I am angry!"


Kevin Young

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