Markets have to believe that principal debt can be repaid, or that the taxes can be raised to do so. If they don’t, then the music will stop on the cheap money.
The loss of AAA credit ratings for Victoria and NSW will put up their interest bills by a few marginal tens of millions on the record debts they have run up in stimulus payments and lost revenues in the pandemic.
But far more importantly, their loss puts down a marker on the matter of the nation’s sovereign creditworthiness.
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The Australian Financial Review’s succinct take on the principles at stake in major domestic and global stories – and what policy makers should do about them.
