Nerf Herder
Wheel size expert
Looking to test what I'm missing in my comprehension.
Triple A ratings are good as it does a few things
- highlights economic stability
- suggests prudent economic management by the government or successive governments
- all of which is most useful in lowering borrowing costs. And making foreign investment in Australia more appealing for risk adverse investors. => this then has other linkages to such things as FX, employment etc etc but I'm not focused on those ... Which could be the shortfall in my understanding/interpretation.
Where I am focusing on is ... Really, the AAA rating is directly related to borrowing cost for govt ... But has morphed to become a proxy for govt economic management / performance.
Local business doesn't directly benefit from Australia's AAA rating ... Indirectly, banks and others with the size sufficient enough to look for international financing options could lift their rating by association ... ie Australia has a sound economic environment and therefore lower risk so the Co looking for finance is at lower risk versus other Co from lower rated economy ... But they won't gain a AAA rating unless their stand alone financials and history warrant?? Is this right?
Eg, Toyota is AAA rated, but that's isn't because Japan is AAA rated?
Ok, this is the actual question:
Given the penchant for governments to want to run surpluses ... And not borrow for a multitude of reasons ... What the fuck is a AAA rating actually good for ... Now days?
Really what you want is a solid AAA so you can nation build and build infrastructure that produces a dividend, whether via economic multipliers or hard cash. You borrow to the hilt and hope your tax receipts pay it down in the allotted time frame ... Then hopefully your investment bears fruit via increased economic stimulus => employment => and tax receipts ... So you can pay down your debt, and reduce effective cost of debt via early payment ... Which then generates additional income streams augmenting tax receipts which you could then use to lower tax rates. All this then should further boost your credit rating thus feeding a cycle.
In the past, toll roads, energy generation, railways, ports, airports etc ... All would have been nation building assets funded by govt ... But with deregulation, and more free market economics and successive conservative governments ... Public investment / nation building got transferred from Govt to private sector so the Private sector could securitise and spin out assets and in theory build more cheaply, whilst employing more people.
So because of this shift towards budget surpluses and zero or minimal govt debt ... AAA ratings are near useless to the average Australian business or individual ??? Is that too big a reach?
Am I being to left leaning in my interpretation ?
Is the AAA rating benefiting me (individual or business) in other ways?
What am I missing.
Be interesting to see if any of you are still interested in this kind off topic shizzle ... This has been in my head for awhile now and no idea where I can discuss without going back to uni. Not really shuttle car banter either.
Triple A ratings are good as it does a few things
- highlights economic stability
- suggests prudent economic management by the government or successive governments
- all of which is most useful in lowering borrowing costs. And making foreign investment in Australia more appealing for risk adverse investors. => this then has other linkages to such things as FX, employment etc etc but I'm not focused on those ... Which could be the shortfall in my understanding/interpretation.
Where I am focusing on is ... Really, the AAA rating is directly related to borrowing cost for govt ... But has morphed to become a proxy for govt economic management / performance.
Local business doesn't directly benefit from Australia's AAA rating ... Indirectly, banks and others with the size sufficient enough to look for international financing options could lift their rating by association ... ie Australia has a sound economic environment and therefore lower risk so the Co looking for finance is at lower risk versus other Co from lower rated economy ... But they won't gain a AAA rating unless their stand alone financials and history warrant?? Is this right?
Eg, Toyota is AAA rated, but that's isn't because Japan is AAA rated?
Ok, this is the actual question:
Given the penchant for governments to want to run surpluses ... And not borrow for a multitude of reasons ... What the fuck is a AAA rating actually good for ... Now days?
Really what you want is a solid AAA so you can nation build and build infrastructure that produces a dividend, whether via economic multipliers or hard cash. You borrow to the hilt and hope your tax receipts pay it down in the allotted time frame ... Then hopefully your investment bears fruit via increased economic stimulus => employment => and tax receipts ... So you can pay down your debt, and reduce effective cost of debt via early payment ... Which then generates additional income streams augmenting tax receipts which you could then use to lower tax rates. All this then should further boost your credit rating thus feeding a cycle.
In the past, toll roads, energy generation, railways, ports, airports etc ... All would have been nation building assets funded by govt ... But with deregulation, and more free market economics and successive conservative governments ... Public investment / nation building got transferred from Govt to private sector so the Private sector could securitise and spin out assets and in theory build more cheaply, whilst employing more people.
So because of this shift towards budget surpluses and zero or minimal govt debt ... AAA ratings are near useless to the average Australian business or individual ??? Is that too big a reach?
Am I being to left leaning in my interpretation ?
Is the AAA rating benefiting me (individual or business) in other ways?
What am I missing.
Be interesting to see if any of you are still interested in this kind off topic shizzle ... This has been in my head for awhile now and no idea where I can discuss without going back to uni. Not really shuttle car banter either.