Australia drowning in debt as the era of free money comes to an end

By John Miller

Saturday the 9th of December, 2017

 

This morning the economic headline of the week is that Australia owes too much money. No shit, sherlock.

The banks are handing credit out like candy, and interest rates have been lower than a journalist playing limbo. And it’s been like this since Camelot, or so it seems. It’s the 1.7 TRILLION dollar bender, and we’re all on it.

Most Aussie bank customers either don’t remember or have forced themselves to forget the era of economic brainlord Paul Keating and his 20% interest rates in the early 1990s. Likewise we have all marched on oblivious to the mortgage belt meltdown that routinely occurs in lesser countries, and forgotten that it used to happen here fairly regularly as well. But Pepperidge Farm remembers.

Today I read that it was scary that our household debt had recently risen above 100% of GDP. Well that part of the article was bullshit at least, since Household debt broke 100% of GDP well over a decade ago, and it has been rocketing upwards since the early 90s, although that bull run of debt may finally have ended. We have become a safe haven for capital, but is that a well-deserved reputation?

What matters is not so much the headline figures, per se. Australia shares a rare air with Switzerland, our household debt towers above our Total GDP, being yet another full quarter of GDP again, more or less. We are just slightly off the height of our credit binge of about a year ago.

What actually matters is two things. One is confidence in our economic future, and the other and most important factor is our capacity to repay all that debt.

Here we may have a problem.

Everybody knows that we have been on a bit of a tear these last 25 years, with no recession since the one we had to have, and every Aussie who isn’t a dimwit Millennial avocado eater owns at least one house.

Some households have even bought an investment property for their dog, or for their lazy kids so they can walk around their castle naked. I have an Asian mate who used to collect Magic cards, and now he collects rental properties. Whatever floats your boat, I guess.

Yet as the era of free money comes to an end, many Aussies are geared up to their eyeballs in investment property, which allegedly is guaranteed to only ever increase in value.

Heh, you wanna bet?

The residential property bubble here alone is currently valued at around $7 TRILLION buckeroos, which by way of comparison was approaching a THIRD of the value of the market capitalisation of the ENTIRE New York Stock Exchange, although that seems to be sprinting ahead right now.

In any case, that’s quite a lot of rent that you expect to draw from 25 million people, sport. Most of whom are either home owners already, or not the sort to dig in and see a project through when times get tough. Urban Aussie millennials are a bunch of whiny poofters, there’s just no avoiding that fact, and they will drive this country into the ground.

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So when this bubble pops, we can just dig our way out of trouble with our resources r-right?

Not so fast there, champ.

Red China spent most of the period of Aussie prosperity, AKA le Resources Boom, building new cities for the 270 Million rural Chinese retards that moved from village to the city. This was the largest migration of people in human history, but it’s over now. Most of these factory cities they built are surplus to requirement, and have been for the last few years, even as our iron ore prices have been tumbling and the resources boom dwindles to a memory of jet skis on the lawn of every cashed-up bogan.

The ageing Chinese workforce isn’t going to save us, as they start to flee these toxic towns of Victorian chimney stacks so they can breath the country air again.

Perhaps Red China will implement a two or three child policy and start building mega-cities, or America will become Great Again fast enough to buy all our wool and minerals, or some either rainbow will strike us in ass. We are the lucky country after all.

 

I’m tending to think the good times have rolled on for long enough though, and I’m sitting on my cash until this speculative property bubble bursts and the credit crunch comes. Don’t say I didn’t warn you if you didn’t tighten your belt a little now and get caught with your pants down.

Immoderate greed is never a good look. Didn’t your mom ever tell you not to touch the oven?

11

Full disclosure: John Miller’s IRL name is Frank Faulkner. I’m an Aussie and when I’m not obsessing about Conservative politics or defending Trump I also enjoy various sports and Christian activities.

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