Firstly, you’ve probably heard about our massive levels of Government debt. But let’s take a look at how Australia’s debt compares to the rest of the world…
I’m not getting into any political side taking, but the broad point is undeniable – Australia is a long, long way from having “crisis” levels of debt (c.f Greek’s 180% of GDP). No one outside of Australia is at all concerned about Australian government debt (in fact foreigners can’t get enough of it, which is one of the reasons why the dollar’s so high historically.)
And while there has been a pick up in government debt in recent years, by historical standards, it’s barely a blip on the radar. Check out this graph…
And text-book economic management says you should save when times are good, spend when times are bad – to dampen the swings of the business cycle. If you’re not allowing room to spend into something like the GFC, then you’re pretty much ruling out any government intervention in the economy, at any time.
I know there’s a lot of noise about this coming into the election, but as you can see, really it’s a non-issue.
And our banks are in a leading position too. This graphic, from The Surgery, makes it very clear just how well the Australian financial sector fared through the GFC…
While the government put in place a Committed Liquidity Fund as a safety net, no public money was used to bail out Aussie banks.
Compare this with failures and bailouts in the US, which reached 24 percent of total bank assets, 29 percent in the UK, and 18 percent in China.
Believe me, Australia is one of the best places to be right now. Just take a look at what this chart, from The Surgery, has to say… Location, Location, Location…
This really hits the nail on the head.
The balance of the global economy is shifting. Our location (and isolation) used to work against us. Now it is firmly in our favour.
Here’s the bottom line: Interest rates are at record lows, the world is awash with easy money and it’s getting funnelled straight into asset prices.
Let’s take a look at the historical interest chart again from earlier…
This is one of the most revealing charts you’ll ever come across. You can use it to guide you as to when to accumulate real estate when it will go up in a significant way. As you can see, all the indicators suggest…
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