Australia AAA Rating Downgrade?

Discussion in 'Current Affairs' started by JulieW, Nov 7, 2016.

  1. JulieW

    JulieW Well-Known Member Silver Stacker

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    Lower dollar on the way?
    Interest rates up?


     
  2. SilverDJ

    SilverDJ Well-Known Member

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    Can we have both go up please?
     
  3. Shaddam IV

    Shaddam IV Well-Known Member Silver Stacker

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    Turnbull is utterly useless. maybe we should put the socialists back in and let them finish what they started and get it over with.
     
  4. PeterS

    PeterS Member

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    I thought Turnbull was almost a socialist.
     
  5. Old Codger

    Old Codger Active Member Silver Stacker

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    AA has been inevitable for years!

    Ever since that phuckwit KRUDD was elected by the automatons of Australia.


    OC
     
  6. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

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    Flip it around...

    I actually think the AAA standard itself is probably going to be downgraded. The way things are going at the moment, there won't be any AAA rated countries left in a decade or so. So what's the point of even having an AAA standardin future if nobody can attain it?
     
  7. Dogmatix

    Dogmatix Active Member

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    Exactly.

    It's just a drawn out race to the bottom.
     
  8. SilverDJ

    SilverDJ Well-Known Member

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    Maybe it's a relative scale? In which case someone has to have AAA
     
  9. betterlatethannever

    betterlatethannever New Member

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    There has to be because that much truth will kill the last remote possible hopes for a better financial tomorrow,and that would also send Moody's and the like into bankruptcy as well having no need to exist.

    Downgrade our "AAA credit rating" if you like because it won't bother me :cool:

    Care factor zero ;)
     
  10. Old Codger

    Old Codger Active Member Silver Stacker

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    We should care.

    The AA rating would mean higher borrowing costs for our Banks and Governments, and all that feeds into higher lending costs to home buyers, and higher repayments for governments, paid from tax income.


    OC
     
  11. Caput Lupinum

    Caput Lupinum Active Member Silver Stacker

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    The impact of the loss of the rating is context dependent. The cut will very likely result in credit rating downgrades for the major banks as well, which will mean higher funding costs versus baseline, and thus more rate cuts more quickly which, in turn, will make government bonds more attractive.

    But there are a number of points we need to explore here. First, sovereign downgrades do not usually stop at one. The last time it happened in the late eighties, Australia dropped two notches to AA. This is because the downgrade is a reflection not just of public credit worthiness but why its debt metrics are deteriorating as well. In Australia case today it is because of our broken economic structure, an over-reliance upon commodity prices and private sector offshore borrowing to drive growth.

    That leads to the second point which is that a weakening credit profile may be fine when markets are looking elsewhere but at some point they will look back at Australia when China slows further or Europe has another accident and it is then that falling credit worthiness will bite, at the most inopportune time.

    Third, go ask the banks if they want to see Australia lose the rating! Structurally higher rates versus baseline are a profit killer and a direct pressuring of Australia's extant economic model as it exhausts what's left our our monetary firepower all the quicker.
     
  12. betterlatethannever

    betterlatethannever New Member

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    Good reasons to have - No Debt - and to - Own Gold - sounds like someone I know really well :D

    Australia has the most personal debt in the world - Soon To Bite You Right On The Arse :lol:
     
  13. long88

    long88 Member

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    interest rate will go up --> house price wont rise that much ?

    time to sell those houses ?
     
  14. SilverDJ

    SilverDJ Well-Known Member

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    I'll be cheering the day interest rates go up substantially and everyone who got in debt up to their eyeballs starts spitting the dummy.
    There is whole generation of borrows who think interest rates don't go up, they need to be taught a lesson.
    Yes, I'm mean.
     
  15. errol43

    errol43 New Member Silver Stacker

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    Export coal prices have gone up sharply over the last few months.. That means extra $$$ for NSW, Qld and Federal governments.

    Maybe the Australian economy is on the improve?

    Regards Errol 43
     
  16. ParanoidAndroid

    ParanoidAndroid Well-Known Member

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    Hi CL,

    Thanks for the analysis. It's timely for me as I was just having the discussion yesterday with my partner that we should look at locking in our mortgages to fixed rates.

    My reasoning was that to go fixed for 3 years gives us a slight discount to what we're currently paying on the investment property, and if we lock in for two years on our home we get it for slightly less than our current rate. That two years will basically be enough time to have the mortgage on our own home paid out.

    I've come to the conclusion that we're probably at the bottom of the cycle and even if the RBA cut rates, I doubt the banks will pass on much, if any of the cut, particularly for investment properties. And should there be any excuse, AAA downgrade, US rate rise in December, then our banks will probably jump on that as an excuse to raise their rates.

    What are you thoughts on that if you don't mind. I respect your posts on here and value your opinion on many of the economic matters discussed.

    Cheers.
     

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