Stars Are Starting To Align

The blue line on the below chart indicates the 2.9% that Australia is thinking of offering investors around the world for our thirty-year loan. I take two points from this.

Firstly, it supports the case for "low rates for longer" and therefore the case not to fix until the long term becomes clearer.

Secondly, why is Australia offering the world's highest rate? England, for example, is offering just 1.5% and has been knocked down in the rush from investors. We are simply not good sales people. We should be selling the fact that we are a safe haven, that the vast oceans that surround us protect us from the terrorism that is sweeping Europe, the UK and the USA, and that we are tied to the world's fastest growing economy in China, supported by India.

Why then is Australia offering our money to pay overseas investors a world-high rate? Is this the time for our Prime Minister and Treasurer to stand up for Australia?

In any event, the good news is that if they choose to use this inflow of extra cash would be to fulfill the RBA's main charter of creating and maintaining full employment. The funds would be utilized not for roof insulation or $500 cheques but for long-term items that would continue to produce income year upon year to service the loan and generate a profit on top of that to reduce the deficit.

We live in exciting times where all the stars are starting to align. Let's see what the politicians do to stuff it up!

Regards,

Kevin Young Club Founder