How the fashion industry proves that Free Can Equal Profits & Success ;



Fascinating. And inspiring.

(via @MoreOj)

Reserve Bank : Our Debt Binge Is Over

The Reserve Bank has sounded the alarm. Put away those credit cards. It's Frugal Days ahead :

Australia's decade-and-a-half-long debt binge is coming to an end and a new era of austerity, in which consumers pay down their debts, live within their means and save for the future, is beginning, the Reserve Bank governor, Glenn Stevens, has predicted.

As US authorities were forced to stump up $US85 billion to prevent the collapse of the insurance giant American International Group, Mr Stevens said it was time for a debate about how debt-fuelled asset bubbles could be prevented in the first place, as opposed to regulators simply waiting to "clean up the mess afterwards".

... amid the financial maelstrom, Australian households were likely to hunker down and focus on repairing their debt-burdened balance sheets.

"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," he said.

Since the early 1990s, households had run up their gross debt as a proportion of annual disposable income from about 50 per cent to 160 per cent. A period of low inflation, low interest rates and rising incomes had enabled Australians to indulge their love affair with housing. "As we have become wealthier, our aspirations for housing in terms of position, quality and size have naturally enough increased. But … there is only so much well-located land … In the end, a lot more of our income is devoted to housing, acquired by servicing mortgages, than was once the case."

Relaxed lending standards had also fuelled 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".

But with the world entering a new period of constrained credit and tightened lending criteria, Mr Stevens said he expected Australian consumers would begin to rein in their big-spending ways.

We were relaxed and comfortable under John Howard, but mostly because the lounge chairs were so stuffed with credit card receipts and second mortgage demand letters.

The Australian stock markets have probably just about finished their "adjustments". But where will the credit come from that funds small businesses, that allows a builder to buy a ute, or a delivery man to buy a bigger truck? Nobody seems to know right now. This is the quieter, but far greater concern, amongst economists than share market ups and downs. Who will lend us money now?

The Australian government continues pouring tens of billions into the markets to keep the dream alive, as they keep telling themselves, "It's almost over, it's almost over, it's almost over."

The free market turned out not to be so free, after all.

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