Australia’s debt ridden future

A friend sent me the following:

From Ross Greenwood of Money News
Right now the Federal Government is at pains to tell everyone including us the mug-punters to the International Monetary Fund – that it will not exceed its own, self-imposed, borrowing limits. How much? $200 billion. And here’s a worry. If you work in a bank’s money market operation; or if you are a politician; the millions turn into billions and it rolls off the tip of the tongue a bit too easily.
But every dollar that is borrowed, some time, has to be repaid. By you, by me, and by the rest of the country.
Just after 5 o’clock tonight I did a bit of maths for Jason Morrison. But it’s so staggering its worth repeating now. First though … here’s what Chairman Rudd has been saying about – what he calls – these temporary borrowings. Remember those words … temporary deficit . But the total Government debt could end up around $200 billion.
So here’s a very basic calculation … I used a home loan calculator to work it out … it’s that simple.
$200 billion is $200,000 million. The current 10 year Government bond rate is 4.67 per cent. I worked the loan out over a period of 20 years.
Now here’s where it gets scary … really scary.
The repayments on $200 billion come to more than one and a quarter billion dollars – every month – for 20 years. It works out we – as taxpayers – will be repaying $15.4 billion in interest and principal every year … $733 for every man woman and child – every year.
The total interest bill over the 20 years is – get this – $108 billion.
And remember, this is a Government that just 18 months ago had NO debt . NO debt. In fact it had enough money to create the Future Fund to pay The future liabilities of public servants’ superannuation … And it had enough to stick $20 billion into the Building Australia Fund last year
Ross Greenwood

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