November 7 is the day when the Reserve Bank of Australia [RBA] announces the outcome of its decision as to whether there is a new official cash rate. Most analysts think the RBA will have to raise rates by at least 25 basis points. Marquette Turner Managing Director, Michael Marquette is inclined to agree that a rate rise prior to the 2007 is a high possibility but also points out that the sheer size of the debt burden of Australians should be a bigger cause of concern than by any single headline interest rate number.
Steve Keen, Associate Professor of Economics at the University of Western Sydney recently stated:
”At 160 per cent of GDP we are now faced with the highest level of private debt in the nation’s history – twice what applied during the Great Depression, and one and a half times the previous record, which was set during the Melbourne land boom and bust of the 1880s-90s,” he says.
”This is the biggest [credit] bubble we have ever had. Interest payments alone are now consuming 15.5 cents in every dollar of household disposable income.”