When Will the Av Australian Household get out of [b] DEBT [/b] ?

Discussion in 'Markets & Economies' started by errol43, Aug 31, 2013.

  1. errol43

    errol43 New Member Silver Stacker

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    Now both Tony and Kevin have promised we will be out of debt soon.

    But how long will it take for Joe the plumber and molly the teacher take to pay off their debt? Pay the house off in 20 years,plus the car loan plus the CR card debt plus their student loans, will they ever?

    I heard quite recently that the amount of private debt is 5 times as much as government debt. As times get harder so will credit get bigger for the low and middle class.

    The Government pays 4% for borrowed money.

    The workers pay 5/7% for housing loans, up to 18% for credit cards and car loans up to 10%.

    No wonder the only hope for Joe the plumber/Molly is for the price of homes to keep rising faster than their debt.

    With interest rates so low, no one is encouraged to save anymore except through super.

    Why is it that no one seems to care about private debt but they sure do about government debt?

    Regards Errol 43
     
  2. col0016

    col0016 Active Member

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    Holding oneself accountable is much harder than blaming somebody else.
     
  3. Midnight Man

    Midnight Man Member Silver Stacker

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    I will do my best not to go into a "rant against the system" ;) You raise a very good point, Errol :)

    The "system" today (and I'm referring to the financial system) is designed to enslave people from the cradle to the grave (almost).

    Think about it this way - in a system where every dollar that is born into existence has to be borrowed into existence implyies of course that there is interest due on that dollar, and that the interest goes into the pocket of the bank, it is in the interests of the bank to force people to borrow as much as they can. You will note also that with fractional reserve banking, 90% of loaned dollars are also conjured out of thin air, and this is obviously even more attractive to the banksters than even the interest payments.

    I will say at this point, to a degree, I believe it is the fault of people in general - because they do not understand the financial systems in place today, thus do not understand fully the sort of fraud that is being perpetrated upon them, and social pressures to "keep up with the Jonses" don't help... many people are living well and truly beyond their means - but this is the "new normal" today, many don't think twice about owning one or more credit cards, whilst simultaneously taking a loan for a holiday, mortgage on the house, finance on the car, and then shopping at a place like Hardly Normal and buying a couple thousand dollars worth of stuff because they can "Buy now, pay later".

    Households, like Governments, ultimately cannot live beyond their means, and at some point, the piper must be paid. The only difference really is how far each of these can kick the can down the road (hint: Governments tend to have better kicking skills because of the tools they have to kick with).

    None of this will end up well.
     
  4. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    The things you own end up owning you
     
  5. long88

    long88 Member

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    unless you have some one help you pay off the debt ie: positive gearing debt

    is that something good to have ?
     
  6. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Probably because taxpayers have a stake in Govt debt, but personal debt of others means diddly-squat to most.
     
  7. TheEnd

    TheEnd Well-Known Member

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    Just remember the real estate industry, the Labor government for last six years, AND the banks ALL contributed to the MASSIVE price rises in real estate that has enslaved so many aussies in the last 6 years.....And they're still talking it up saying there will be another BOOOOM next year...... Something is seriously wrong in my opinion!
     
  8. trew

    trew Active Member Silver Stacker

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    Until the banks run into trouble and are bailed out by the govt, then the private debt becomes public debt, then when the govt goes broke everybody is shocked

    ie. Cyprus


    Will it happen in Australia?
     
  9. Old Codger

    Old Codger Active Member Silver Stacker

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  10. long88

    long88 Member

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    we dont want that to happen... as that will means deflation.. and in deflation stacking is not good.

    i think what will be pushed now is inflation... they try to increase the minimum wages.. etc..

    if we can achieve that.. then the price of real estate can go up further.. banks make more money.. investor will be rewarded... cycle starts again..



     
  11. bordsilver

    bordsilver Well-Known Member Silver Stacker

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    Plenty of people are worried about private debt. Plenty of the threads on here are against the manipulated money system that artificially distorts the price signals which encourage excessive personal debt. "Debt" itself is not bad and indeed eminently normal.

    W.r.t. private vs Government debt it's simply a matter of choice versus coercion. You have absolutely no say in how much debt the Government forces onto you (or your children), no say in what the debt is used for and no say about the repayments terms. To even liken it to personal debt where you actively choose all these things is ludicrous.
     
  12. trew

    trew Active Member Silver Stacker

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    I don't wish that to happen either but I don't assume it is impossible
    I'm sure the people of Cyprus never thought it possible their great banking system would collapse

    Only deflation would be in anything priced in the local currency, like real estate

    PMs are not priced locally
     
  13. trew

    trew Active Member Silver Stacker

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    I find it fascinating how you are constantly posting about impending shtf scenarios yet have endless confidence in the banking system OC
     
  14. bordsilver

    bordsilver Well-Known Member Silver Stacker

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    He's right though purely because debt and savings happen in different times in people's lives and we will always have a spectrum of people trading promises to pay.
     
  15. errol43

    errol43 New Member Silver Stacker

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    Massive price rises have been going on for years.. Both the red and blue teams have both seen massive home price increases over the last 20/30years..The biggest price increase in homes was in the 1970's..Home prices doubled and even trebled in this period.

    A big concern I feel today is that people struggle for 20 or so years to pay off the house, the home selling price has gone up to at least double, then they borrow equity in the house, buy luxury of some kind. Then they have to pay off the house for many more years ..The banks like this. good security and knowing that have a good payer locked in.. The borrower thinks he has a good deal, no credit card at 18%, personal loan 14%, home equity loan 7%..On this basis it is a good deal unless home prices decrease in value or you loose income in your household or you become ill..

    ? for The End. Do you think house prices have only gone up under a red team government? :)

    Regards Errol 43
     
  16. Old Codger

    Old Codger Active Member Silver Stacker

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    "Old Codger wrote:
    Never?
    I find it fascinating how you are constantly posting about impending shtf scenarios yet have endless confidence in the banking system OC"




    Check out the question mark!

    And yes I defend the OZ banks from mindless attacks by people who have no effing idea what they are talking about. Faces too deep in socialist propaganda from the Green Left Weekly.
     

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