Online Real Estate Technology

What is the Government doing with all our money?

This article is a departure for me from what I usually publish on this blog, however,given that at some stage in all of our lives we will head to a bank or financial instituion, borrow money and get into debt, I thought it worth sharing with you. I think it’s also relevant as the news of recent days has shown the Australian economy not in recession and the news that the Queensland government is about to sell off all the states assets.  

When it comes to finances and managing the household budget we all try and stay within your means, not spending more than you earn and not borrowing more than you can pay back. Now, great in theory, but not all of us can manage it, well here is a very interesting article from Ross Greenwood of Money News.

If this doesn’t scare you I don’t know what will:  

“Right now the Federal Government is at pains to tell everyone – including us the mug-punters to the International Monetary Fund that it will not exceed its own, self-imposed, borrowing limits.  How much? $200 billion. And here’s a worry. If you work in a bank’s money market operation; or if you are a politician; the millions turn into billions and it rolls off the tip of the tongue a bit too easily.

But every dollar that is borrowed, some time, has to be repaid. By you, by me and by the rest of the country.

Just after 5 o’clock tonight I did a bit of maths for Jason Morrison. But it’s so staggering its worth repeating now. First though … here’s what Chairman Rudd has been saying about – what he calls – these temporary borrowings.  Remember those words … temporary deficit … but the total Government debt could end up around $200 billion.

So here’s a very basic calculation … I used a home loan calculator to work it out … it’s that simple.

$200 billion is $200,000 million. The current 10 year Government bond rate is 4.67 per cent. I worked the loan out over a period of 20 years.

Now here’s where it gets scary … really scary.

The repayments on $200 billion come to more than one and a quarter billion dollars – every month – for 20 years. It works out we – as taxpayers – will be repaying $15.4 billion in interest and principal every year … $733 for every man woman and child – every year.

The total interest bill over the 20 years is – get this – $108 billion.

And remember, this is a Government that just 18 months ago had NO debt … NO debt. In fact it had enough money to create the Future Fund to pay the future liabilities of public servants’ superannuation … and it had enough to stick $20 billion into the Building Australia Fund last year …”

Money News
Ross Greenwood Presenter 

Thanks to http://www.australia.to/ for the use of this story