Dustin thought that you would find this recent article we received from Smartline Personal Mortgage Advisers of interest:

“With all of the talk about “Budget Deficits” and the “European Debt Crisis”, I thought you might appreciate a confidence boost……

I have found a terrific website that visually compares the government debt levels for almost every country on our planet. It is called the “global debt clock” and can be found on “The Economist” magazine’s website. Yes, I know it sounds extremely boring but I guarantee it will surprise you.

Our Federal Government has made a very public promise to get their spending below their income (a budget surplus). I think this is a very worthwhile endeavour and I hope they keep their promise.
However, many disagree with this position and believe that this is the wrong time to be making cuts to Government spending.

My argument against a budget deficit centres around the unemployment rate, which is only 5.3% in Australia (which is historically very low). In terms of the Government budget, a low unemployment rate means much lower welfare expenditure and much higher income tax revenue. In other words, if there was ever a time where a government could be spending less than they earn, it would be during a period of low unemployment.

The following table from the Economist website shows where Australia sits compared to France, UK, USA, Greece, Germany, China and Japan. As you can see, our “government debt per person” level is around one third of the other Western countries. A great position to be in. We just need to make sure that this debt level does not expand any further via budget deficits.

 

 

 

 

 

Our relatively benign level of government debt helps to shelter us from external economic shocks and in theory also keeps interest rates lower.

All good news as we head into 2012.”

This article provides general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take  into account your particular investment objectives, financial situation and individual needs. AXA FP and it’s Authorised Representatives do not accept any liability for any errors or omissions of information supplied.

Author: Dustin Kavanagh 

Authorised Representative of
AXA Financial Planning Limited
AFSL Number 234663

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