Debt -
Aussie government to pay for debt splurge - 22/09/2008
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Australia’s decade and a half long debt spending scheme is coming to an end, and a new scheme has been put into place for consumers to pay down their debts and to live within their means. Reserve Bank governor, Glenn Stevens argued how debt fuelled asset spending should be examined and such debt worries could have been prevented in the first place, instead of regulators waiting to “clean up the mess afterwards.”
The Australian sharemarket closed in the red for its third day, bringing total losses for the week to nearly 4%. However, Stevens claimed that the country was “weathering the storm well.” It is likely though, that Australia will focus on repairing their debt-loaded balance sheets.
Stevens stated: “There is … a good chance that households will for some time seek to contain and consolidate their debt, grow their consumption spending at a pace closer to income, and perhaps look to save more of their current income than in the recent past.”
Relaxed lending standards had also helped increase the debt boom to the point where “anyone who was creditworthy – and some who were not – have been able to access ample amounts of credit.” However, with other countries entering a new phase of constrained credit and tougher lending plans, Stevens expects that Australian consumers will also begin to control their spending habits.
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