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Moody's says Australia is doing brill. AAA rating safe amid strong finances.; But S&P says Australia is on the same path as Spain
Topic Started: 13 Jun 2012, 12:08 PM (6,388 Views)
Strindberg
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http://www.finanzen.net/nachricht/anleihen/Australia-Government-of-Moody-s-says-outlook-for-Australia-s-Aaa-rating-remains-stable-1909280
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Moody's Investors Service says that the outlook for Australia's Aaa foreign and local currency ratings remains stable.

Australia's Aaa ratings are based on four factors:

- the country's very high economic strength;
- very high institutional strength; \
- very high government financial strength,
- and very low susceptibility to event risk.


Economic strength is classified in Moody's rating methodology as very high, based on the country's economic diversity, the performance of the economy during the past two decades, relatively good growth prospects and high per capita income.

The outlook is for some acceleration in the rate of economic growth, supported by the mining sector. In the next few years, investment in the mining sector (including LNG, iron ore, and coal) should remain strong, while private consumption continues to grow at about 3% annually, supported by a relatively strong labor market.

Moody's assesses Australia's institutional strength as very high, ......

The report also notes that as an advanced, diversified economy with strong, stable political institutions, Australia has very low susceptibility to event risk.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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Frank Castle
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Business As Usual

It's oh so quiet
It'a oh so still
You're all alone
And so peaceful until......................

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Ignore posts by The Whole Truth · View Post · End Ignoring
The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
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Black Panther
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Fantastic News. :tu:
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earthsta
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That would be the same Moody's that gave Lehman Brothers and Bear Stearns a clean bill of health?

That would be the same Moody's that gave the big thumbs up for the PIIGS?

BAHAHAHAHAHAHA

Another quality post by the bottomboy and quality followups from dumb and dumber
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NotFooled
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The Bear Whisperer

earthsta
13 Jun 2012, 03:01 PM
BAHAHAHAHAHAHA

Another quality post by the bottomboy and quality followups from dumb and dumber
So you are claiming the following is incorrect?
Quote:
 
Australia's Aaa ratings are based on four factors:

- the country's very high economic strength;
- very high institutional strength; \
- very high government financial strength,
- and very low susceptibility to event risk.
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themoops
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NotFooled
13 Jun 2012, 03:06 PM
So you are claiming the following is incorrect?
How are we strong when we have a massive property bubble?

Moodys are corrupt as shit!

I would agree our governments' finances are in reasonable order, so they should be ok when they have to bail out the banks!
Edited by themoops, 13 Jun 2012, 04:25 PM.
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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genX
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NotFooled
13 Jun 2012, 03:06 PM
So you are claiming the following is incorrect?
Yes.

- Nominal GDP has declined to stall speed two quarters in a row.
- CDS spreads are widening on big four, and would be much higher if not for the wholesale guarantee
- Government debt is accelerating the fastest since 1990
- Price deflation worst since GFC and accelerating.
- Extremely high susceptibility to event risk, including liquidity problems in the banking system, rising unemployment and loan delinquencies.
- Extremely high capital risk tied to maintaining current commodities prices.

Moodys doesn't know what the fuck they are talking about. When Egan Jones or Fitch reviews Australia's sovereign rating and gives it A3, wake us up.
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NotFooled
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The Bear Whisperer

genX
13 Jun 2012, 10:53 PM
Yes.

- Nominal GDP has declined to stall speed two quarters in a row.
- CDS spreads are widening on big four, and would be much higher if not for the wholesale guarantee
- Government debt is accelerating the fastest since 1990
- Price deflation worst since GFC and accelerating.
- Extremely high susceptibility to event risk, including liquidity problems in the banking system, rising unemployment and loan delinquencies.
- Extremely high capital risk tied to maintaining current commodities prices.

Moodys doesn't know what the fuck they are talking about. When Egan Jones or Fitch reviews Australia's sovereign rating and gives it A3, wake us up.
Thanks genX. I don't agree with all the points, but some are certainly a cause for strong concern.
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Thatguy
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The report from Moodys seems pretty obvious to me. But I don't see what this has to do with property bears vs bulls. This doesn't really have much to do with whether property will increase, decrease, outperform or underperform CPI for the next 5 years.

Besides Frank and BP you have both gone out of your way recently to say how different (decoupled) your property portfolios are compared to the mean property values reported. So it's even less relevant to you two. Or are you now claiming the opposite?

As for the bears....well if they want a general collapse then they're just plain weird.

The good news, somewhat related to this article, is that property is being deleveraged which will allow prices to deflate without significant harm to the general economy. ie. Glenn Stevens is correct in his focus.
Edited by Thatguy, 14 Jun 2012, 10:03 AM.
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genX
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NotFooled
14 Jun 2012, 08:45 AM
Thanks genX. I don't agree with all the points, but some are certainly a cause for strong concern.


I can elaborate on any of those points. :)

Anyway, I will hallucinate which points you don't agree with and elaborate anyway :)

- Extremely high susceptibility to event risk, including liquidity problems in the banking system, rising unemployment and loan delinquencies.

Wholesale guarantee ends in 2014, and new liability coverage ended in 2010 (although Westpac rolled over some 3Y notes in early 2011). If the global economy has not turned the corner by 2014 (and I personally think it won't), then money-market spreads on short term paper for Australian banks will increase significantly. The big 4 still have between 20-50% of their funding in short term money market paper, so they would need to unwind all of that or they will take a significant profit hit as their lending spreads go negative. The only other sources of funding are (1) deposits, which need a positive real return to be attractive to depositors (2) secured funds from the RBA, and they don't really have the collateral for that kind of funding, unless they bundle up their toxic mortgages into rMBS and post those as collateral with the RBA and the RBA doesn't mind having impaired collateral on their balance sheet (like the Fed and ECB) (3) covered bonds, which leave depositors (or taxpayers) on the hook if the bank becomes insolvent or illiquid.
But before that even happens, there is a real possibility of impairment of mortgage collateral. Remember that if the underlying property value declines, that can put your mortage into a greater than 80% LVR, which would mean that if house prices declined quickly, the mortgagor would need to start paying mortgage insurance on top of their loan service. This alone could send marginal lenders into default.
But wait, there is more, unless house prices decline substantially, loan growth will continue to decline. So all that infrastructure and extra staff the banks put on for growth will have to be let go or they will take a profitability hit (and they won't take a profitability hit because that would impair equity and that has a number of disastrous side effects). Bottom line, there will be a lot more layoffs from banks.

- Extremely high capital risk tied to maintaining current commodities prices.
I posted a chart in another thread about the parabolic increase in mining capex in the last 10 years, which has accelerated even faster in the last 2 years. All of that investment is based on current return-on-investment numbers that assume current commodity prices will be maintained or reverse direction and climb again. The risk here is that commodity prices will continue to decline (as China goes through a recession mild or severe), and the return on capital will be impaired, and that has numerous knock-on effects such as cost cutting, declining employment in the sector, declining equity and so on. If the price of iron ore drops to USD100/ton, Fortescue will no longer be able to service their debt.

All of the other points are based on ABS or other reliable data sources.
Edited by genX, 14 Jun 2012, 07:44 PM.
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