Australia's largest stock trading and investment forum Australia's #1 stock forum

Australians buying new cars is arguably the biggest deflator to...

First 12 Last

Share
Profile

Follow
DavoMagic

16,777 Posts.

47

14/01/18

11:37

Post #: 30288218
Share

Originally posted by jimace ↑

I put into Bold a thought that connects to a key principle. Overall, the greater the lending for consumption (relative to production), the sooner that debts become bad. Borrowing for consumption weakens the borrowers ability to repay that debt because by definition, consumption is not wealth generating. This has to include such debts as car finance. Often the car isn't wealth generating and also the car usually depreciates in value over time, so is poor collateral for the loan. Also, low or negative rental earnings (after building maintenance) on real estate (with unsustainable tax subsidies) indicate that there's plenty of consumption type real estate debt. The high proportion of consumption to production debt in the system is making the whole economy (yes worldwide) insolvent. The rules for finance will (have to change) as due to mass insolvency, the present system won't survive.

Expand

Australians buying new cars is arguably the biggest deflator to the economy with funds going overseas when they could spend on superior alternatives
Upvote

Reply

There are more pages in this discussion • 3 more messages in this thread...

First 12 Last