Confidence too high for consumers that don’t remember?

 

In particular, I refer to the Liberal campaign highlighting high interest ratesduring prior Labor governments. I have heard this a number of times before, and to be honest my reaction wasprobably not what the liberals were hoping for.

I disliked the ads, and felt that it was old ‘news’ and they should be either finding something new to hammer Labor on, or find something positive to say about themselves. It was getting old.

I asked my parents what they thought would happen with a new government and their response was a real surprise. They showed genuine fear that interest rates would climb very high! Their justification for these worries (and I guess what highlighted my lack of concern) was that they had experienced 17%+ interest rates some years ago and I hadn’t.

And I think they are right. Most people of my age (30s) with home loans, maybe a first home, or possibly on to their second, cannot remember such hard economic times.

I hope interest rates don’t grow too much, not only for my sake, but for many young borrowers. It scares me to think there is sich a high amount of debt, increasing debt to equity ratios, and massive amounts of commerce being funded by credit.

A strong economy, young families in decent jobs, high confidence, increasing property values, and big credit card limits could put many of us in a danger zone all too soon should the economy slow.

And from what I have been reading, if there is further and growing impact from the US sub prime market next year, it will be time to put some cash back into the savings account!

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