Australia Only OECD Nation With Rising Debt

11 Mar

From Marketwatch:

Australia’s seemingly bulletproof economy could soon face fallout from high debt levels and purportedly misguided policies designed to pump up asset prices, according to an outspoken skeptic of the nation’s housing boom.

Economist Steve Keen of the University of Western Sydney, who claims* to have accurately foreseen the global financial crisis, said he’s been dismayed by what he sees as a growing nationwide housing bubble stoked by government efforts to forestall economic pain.

Keen points to a first-time homebuyer subsidy program, various other stimulus programs, and a 4-percentage-point reduction in interest rates — policies introduced in the wake of the 2008 crash and which he termed “The Boost” — as having helped fueled a new housing boom and a 6% rise in mortgage debt last year.

“The Boost has … given Australia a dubious distinction when compared to the rest of the OECD. Yes, we are the only country that avoided a technical recession; but we are also the only country where debt levels are rising once more compared to GDP, rather than falling” …

*Proof of Professor Keen’s “claim” can be independently verified in this research paper, which references a handful of economists who did predict the GFC in advance.


On April 15th through 23rd, I will be joining Professor Keen in his 230km “Keenwalk” from Parliament House to Mount Kosciuszko, in protest against Australia’s property mania that has been driven directly by insane – and in my personal opinion, immoral – Federal Government and RBA policies.

Please consider joining us, for the whole trek or even just for an afternoon section of the walk.

If you’d care to assist a genuinely worthy cause, then please consider sponsoring Professor Keen, or indeed myself. Funds raised will support the wonderful charity Swags For Homeless.


One Response to “Australia Only OECD Nation With Rising Debt”

  1. ak March 11, 2010 at 12:46 pm #

    OK so you got it. The key point is that the “stimulus” was not financed entirely by the government borrowing (whatever MMT scholars think about that term this is how it works in the current framework).

    The stimulus was boosted by the increase in the private debt. It was heavily leveraged. This is exactly what I think was morally deficient in the policy of Kevin Rudd. You must not sacrifice a group of vulnerable people to temporally fix the hole in the economy.

    I also think that the really dangerous component of the foreign debt is not necessarily the public debt. This may be the issue in the future but not right now. What is dangerous for all of us is the foreign debt of the banks and companies. We are all heavily in debt by proxies…

    So now you can go and whack the Labor. They probably deserve this. If the bubble bursts in time – the Coalition will win.

    You have to promise something to me. I know that both Barnaby and Tony are anchored in Christian values. They are both Catholic. This may sound naive as I know the rules but…

    Please make sure that both Tony and Barnaby have read and thoroughly digested the following document:

    I hope that they have done it already.

    Please make sure that when the current bubble bursts – they will think about the people who are going to suffer. Increasing the “wealth” and fixing the GDP growth is not everything. There might be other more important values. I am not a religious person at all but to me what the Pope wrote in that document is probably the best summary of the moral problems we are facing as the humans living in the modern society in regards to our economy.

Comments are closed.

%d bloggers like this: