The government is borrowing record amounts to consume, not invest- a ticking fiscal time bomb.
In the 2014-15 budget, the newly-elected Abbott-Hockey … government gave up on expenditure restraint and spending has been consistent with past recessions ever since.
The government is only borrowing to consume.
Losing the AAA rating may not be the market mover that it once was, but in the event of another global economic, financial or geopolitical shock, experience proves that for peripheral countries like Australia, it could find itself further down the queue when it comes down to attracting global capital without a AAA rating.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
