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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA: Austerity 'populism' burdens households, RBA: PIMCO

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Austerity 'populism' burdens households, RBA: PIMCO

Australian Financial ReviewMay 9, 2019 12.32am

Jonathan Shapiro


Global bond giant PIMCO says the Australian economy will remain reliant on ultra-low interest rates and a highly geared consumer until politicians can achieve a better mix of fiscal and monetary stimulus.

The $2.5 trillion fund’s Australian portfolio management head, Robert Mead, says a failure of governments to borrow money to spend on productive investments such as infrastructure represents poor economic management and will only serve to increase the burden on monetary policy at a time when the economy is weakening.

“It has been a populist approach to balance budgets, which is all good in a perfect world, but we are not living in that world,” Mr Mead told The Australian Financial Review.

“This is a world where the consumer has been asked to do all the borrowing and somehow that is OK, and we have a government sector that can sit back."

Mr Mead spoke to the Financial Review from the fund’s Newport Beach headquarters where its advisory board, and guests who included former central bankers Ben Bernanke, Janet Yellen and Jean-Claude Trichet, met over three days.

He said there needed to be a better mix of fiscal and monetary policy if Australia were to achieve sustainable growth.

Not enough learning

“The RBA was able to observe other central banks and learn from that and apply that – but from a government perspective, I don’t think there has been enough learning.”

“We have seen this play out in Europe post crisis with all the austerity [measures] and now we are back into negative interest rates. It is not a good recipe to be austerity oriented and rely on the central bank.”

His comments came after the Reserve Bank chose to hold the cash rate at 1.5 per cent on Tuesday, disappointing traders who had priced in an even chance of a rate cut.

But the decision to hold meant the central bank was able to remain a peripheral factor in its last meeting before the May 18 federal election.

The Reserve Bank, however, is still widely tipped to lower interest rates before the end of the year, with markets pricing in a 25-basis-point reduction in the cash rate to 1.25 per cent.

Mr Mead said that the fact that the market was undecided about the intentions of the central bank meant that its signalling had not been clear enough heading into the meeting.

He said future interest rate cuts were unlikely to spur underlying inflation at a time when the terms of trade were strong and commodity prices were high.

The central bank would favour fiscal conservatism in conditions when the economy was growing at or near its potential.

Spend to build

“When you are permanently below the potential growth rate and inflation is permanently below the bottom end of the band, then that is no longer normal,” he said.

With long-term interest rates now near 1.8 per cent, he argued that it was an opportune time to borrow money invest in productive assets such as infrastructure projects.

“Fiscal spending is slow burn. It takes a couple of years to really impact growth. You don’t start [spending] when you are in recession. You start when you have some cushion.”

While governments have proved reluctant to borrow of late, households have significantly expanded their borrowings even as incomes have stagnated.

Mr Mead said that a low government debt-to-gross domestic product ratio of 20 per cent and household debt level at 120 per cent “was substantially at odds with every other developed country”.

He disagreed that policies that increased the ability of households to borrow more, such as lowering the interest rate at which borrowers were assessed, did not offer a long-term fix.

“Any solution where the Australian consumer becomes more levered is a Band-Aid.”

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