Household Debt Warning
The following is a transcript from the video:
It’s good morning to you and of course plenty of households right now could do with the cash that is around here on the Today show this morning. I told you yesterday that the federal government’s debt the net debt right now 317 billion dollars and rising in the interest bill.
We’ve paid through taxes 12.3 billion dollars a year or 34 million of dollars every day but I now want you to stop and think about your own household finances because in relative terms your situation might be even worse than the government’s. The Reserve Bank is highlighting that again looking at household wealth and finances. Now this is a big one over here and that is seeing household debt since the early 1990s go through the roof almost triple. That’s now approaching one hundred and ninety percent of your income. Alongside that is the interest at households of paying so while debt skyrocketed but with falling interest rates three payments have actually gone down. Now all that’s okay so long as you keep on earning. Employment here is the key. So long as interest rates of course don’t rise very quickly and that’s why the Reserve Bank is sort of stuck with interest rates. It can’t raise rates because that might trigger a disaster. He can’t cut rates either because that would only fuel that housing market. But when you lump the household and the federal and state government debt together Australia now is more exposed to external shocks.
If you like another global financial crisis. And the thing is, the problem is getting worse and that’s why the federal budget the cooling of the hot housing markets and the health of our banks is so important to regulators right now
Otherwise it’s goodbye to that triple-a credit rating and a step closer to Australia’s next recession.
Quick look at the markets for you this morning. What we can see the Aussie dollar right now 76-70 5.68 us cents. We moved further on commodity markets, oil prices back about fifty dollars us a barrel, the Dow Jones index is right now down by 41 points and then finally we get to the Australian market yesterday the all ordinaries up by 20 points. Right now back to Lisa and Tim in Inverloch
Source: ACA Money Minute/Ross Greenwood