From The Age:
Paul Keating has delivered a bearish assessment of the world economy, warning that another bout of global turmoil is possible if trade and capital imbalances go unaddressed.
The former prime minister and treasurer last night argued current account surplus nations such as China and Germany must urgently shrink their surpluses by lifting the role of domestic demand.
Failure to do so could trigger another sharp deterioration in global economic conditions, he said, damaging Australia’s growth prospects.
Mr Keating also casts doubt on China’s ability to continue growing at recent rates of near 10 per cent. He said this rate was being artificially supported by excessive investment and its pegged currency, which makes its exporters more competitive.
“Our biggest customer China is growing for the moment… but only on investment steroids,” he said.
The former prime minister also highlighted risks to foreign countries with large debts, such as the US and Europe.
In the event of a double-dip recession, Mr Keating said the developed world would not have the funding to support massive fiscal packages.
“If a financial crisis comes in the future there won’t be the method to deal with it as we’ve seen in this crisis,” he said.
Keating is correct.
Thanks to Rudd Labor’s panicked, massive “stimulus” spending – tens of billions of borrowed money wasted on pink batts, foil insulation, and Julia Gillard Memorial School Halls – Australia no longer has a safety net.
And despite the daily warnings of crisis dead ahead – now coming even from former “world’s greatest treasurer” Paul Keating – Rudd Labor is continuing to borrow well over $1bn a week.
When the next wave of the GFC comes, everyone will know that Barnaby is right.
Barnaby Is Right 
Although now looks as though China could run a deficit? Interesting times.
http://www.zerohedge.com/article/albert-edwards-vindicated-discusses-chinas-upcoming-trade-deficit-and-why-cny-devaluation-no