There have been a few stories around this week about Australia's increase in bankruptcy rates, somewhere around a 15% increase for business. But these snippets paint a more complete picture of a booming economy:
"Australia's booming economy has brought with it a higher cost of living as consumers get a taste of the good life.
The trouble is that many consumers, especially lower income earners, are caught short when external events like drought drive up the cost of food or higher interest rates make mortgage payments harder, said Paul Leroy, who is a registered bankruptcy trustee at Hall Chadwick.
"The overall picture of the last few years is one of increasing pressure on lower income people," Leroy said.
"I don't see anything changing on the horizon that can alleviate that."
Increasing competition to sell credit is also behind the surge in debt levels, said Mr Leroy, adding that he saw a case six months ago of a person with 14 credit cards declaring bankruptcy.
Of the debtors declaring bankruptcy, more than two thirds had incomes of less than $30,000 in the 12 months prior, according to the Profiles of Debtors 2005 from ITSA.
Some 55 per cent of bankrupts were male and 54 per cent were unemployed.
The growing bankruptcies comes as unemployment hovers at 30-year lows.
Confidence about being able to stay employed may be lulling some consumers into thinking they can take on more debt.
"In times like this when anyone who wants a job has one people feel more confident and may take on more debt," CommSec chief equities economist Craig James said.
"People may not factor in rises in interest rates or that they have a job in a sector that is not all that strong."
Economists have said that the latest economic data may point to at least one more interest rate hike this year.
All too often the current economics focuses on the high end of the market. It's these figures that will be directly relevant to the Federal election due later this year. People at the base are hurting. The question is, how deep is the problem, enough to swing the vote? The positive for the Howard government is that like the voters are like those bugs that just go on happily, until they are splattered against the windshield.
9 comments:
Looking at Australia's numbers this month opened my eyes. Not actually that good in terms of debt, consumer prices and the like. For all the talk of boom, the Aussies sure seem to be getting the short end of the stick.
Same old BS PT. There is an election coming up so the creative fiscal reporting is happening.
Dress it up however they like the average voter doesn't absorb the reports they just live the reality.
Bad as it might be, it'd be worse if you didn't have national health coverage.
That is a fact Abi, such as it is. There is still hope for the demise of the Howard government before we see the demise of that.
cartledge,
Externally the word bankruptcy raises some eyebrows, but isnt it just par for the course? My brother worked for a company that declared bankruptcy 4 times, and 4 times they changed their name, but the managing team were loaded (and they had a different company name). To me, it seems businesses and their affiliates use bankruptcy as a means for 'writing off' against their income from the main source.
I wonder if the people who crunch numbers take everything into consideration when delivering these statistics.
cheers :)
GORN, I know what you mean. We call them Gold Coast Cowboys here and I know one of them in the process now. Except he's not as smart his associates and is more true to the overall indication of a downturn.
I expect the effect you mention is quantified as an on going part of the stats. But much of it is genuine hardship.
You gotta wonder too Cartledge, are these stats including illegal sources of income that are actually and ironicly , hehe and don't take this to heart anyone, 'good for the economy' like drug sales (bringing in foreign currency), prostitution and gambling.
As I'm sure you are aware, there are people living high on the hawg with these unaccounted statistical sources of income.
I just don't buy all that to be fact.
cheers;)
Good post, cartledge - the same is happening here in the U.S. We're told it's patriotic to buy on credit. The preznut told us to "Go shopping" when he was asked at a December press conference what Americans could do to support the war effort.
Meanwhile, the personal debt skyrockets, the Repubs rewrote the bankruptcy laws so the banks WILL get their money plus interest and fees no matter what, and the top 1% makes ever more money.
Oh you cynical Gorn.
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