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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 (6,389 Views)
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According to S&P.....

The sovereign credit ratings on Australia benefit from the country’s strong institutional settings, its wealthy and resilient economy, and a high degree of monetary and fiscal policy flexibility.
The country’s high external and household indebtedness, as well as vulnerability to weakening commodity export demand, moderate these strengths.
We have affirmed the unsolicited ratings on Australia at ‘AAA/A-1+’, and the outlook remains stable.
The stable outlook is based on our assumption that Australia’s historically conservative budgetary policies will remain in place.

The stable outlook is based on our assumption that Australia’s historically conservative budgetary policies will remain in place such that fiscal deficits continue to narrow, and that the general government debt burden will remain low.

We could lower the ratings if external imbalances were to grow significantly more than we currently expect, either because the terms of trade deteriorates quickly and markedly, or the banking sector’s cost of external funding increases sharply. Such an external shock could lead to a protracted deterioration in the fiscal balance and the public debt burden. It could also lead us to reassess Australia’s contingent fiscal risks from its financial sector. We could also lower the ratings if significantly weaker than expected budget performance leads to net general government debt rising above 30% of GDP.
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Barista
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Higher banking sector borrowing costs downgrade the sovereign, on one side.

Higher budget deficit downgrades the banks, on the other side.

A nation in debt to its eyeballs needing to run through this race with a debt to disposable income ratio of circa 150% towards the promised future of the worlds most spectacularly uncompetitive globally exposed sector.

Its drenching time somewhere along the line.

This is now firmly on the radar and the course we chart over what – the next ten years – is going to have this following us, and arguably getting closer. And if either the budget, or the consumer, or an external shock were to go off anywhere near us then presumably we start to look at decompresurizing the whole economy with a balance of payments crisis and a currency collapse.

And that thing we see approaching rapidly is a real estate blowoff?

We want people to ignore that when they take on uber mortgages, we want international investors to ignore that when thinking about committing to Australian globally exposed businesses.

Of course that doesn't mean there has never ever anywhere ever been a better time to buy property.
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John Frum
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Dr Watson
30 Jul 2014, 11:28 AM
When did these ratings agencies become the source of all wisdom? Is it the case that the analysts who work at these companies are smarter than the rest of us? No? Why do we even listen to them?
Actually the problem is that the analysts who work for Moodys aren't as smart as the ones that work for the vampire squid.

It was their inability to see through Goldman's sophistry and give their junk CDOs a AAA rating that caused the GFC
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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newjez
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MMM
20 May 2014, 01:09 PM
When did other economies start losing their AAA ratings............

Many seemed to go from AAA to collapse......
Some did some didn't. But it will have more effect on a smaller economy like Oz than a larger one like the US.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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b_b
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newjez
30 Jul 2014, 06:39 PM
Some did some didn't. But it will have more effect on a smaller economy like Oz than a larger one like the US.
It will have no effect on Australia
(S – I) + (T - G) + (M - X) = 0
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MMM
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b_b
30 Jul 2014, 09:05 PM
It will have no effect on Australia
That's right Bob, a couple of letters on some piece of paper will make no difference as the economy heads into further decline. And all the other countries were all rated AAA just prior to them collapsing , so these clowns have proved they know nothing and are just another waste of time and money.

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roberto
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these agencies report what they are told to report by those that they report on. Who do people think pays for their reports, the news agencies? They are just another rag on a hand in the corporate puppet show.
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If the govt needs to reduce deficit to keep AAA and low interest rates, then that is what they will do.

They will cut spending and increase taxes.

Sure, this will reduce economic growth, but the alternative is reduced growth anyway from impairments to banks and housing values.

All Australians will bear the brunt of this in one way or another.

The majority of the country is heavily invested/indebted in housing, and so the government/bank of the day will do its best to make sure that their pain is borne by the rest of the country as well.

This is still a semi-planned and managed economy, and the system will be manipulated to the desires of the relevant interests (politicians’ electorates and donors), not left to the fairest or most sensible outcome.
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cokatoo56
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haha, moody's, the same crooks who rated mortgage backed securities AAA, before the GFC. If they highlight now that Australia is AAA and that you should keep playing the speculation game, it may mean it is time to stop, because there may be a storm coming.
beware folks, let the chinese play the property speculation game with their imported dirty money, it's not a game the "average" australian wins at.
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