Australian Situation

Submitted by Garry Lockwood (Australia), Oct 20, 2011 at 19:19

Don't be fooled by the positive view of the Australian economy held by many overseas people. Our situation is not as rosy as you might be led to believe. When the GFC hit, we were cushioned because the previous government had run budget surpluses for many years, and held substantial savings in a "Future Fund". Also we have substantial earnings through the export of mineral resources, which countries like China still needed, even through the GFC. The current government squandered this future fund in poorly aimed and wasteful "stimulus" measures and ran up considerable debts. Now we have no reserves and are even more dependent on exports continuing at a high level.

If another GFC hits, perhaps because people overseas decide they can't continue to run trade deficits with China and stop buying Chinese goods, then China stops producing, stops buying our minerals and we are toast. In addition, China can be a difficult country to deal with. They have recently slapped a ban on Australian lobsters for reasons which nothing to do with our producers. They are stockpiling huge amounts of copper for some reason, far beyond what their domestic use can conceivably require. So Australian exports are not as secure as some people think.

Note: Opinions expressed in comments are those of the authors alone and not necessarily those of Daniel Pipes. Original writing only, please. Comments are screened and in some cases edited before posting. Reasoned disagreement is welcome but not comments that are scurrilous, off-topic, commercial, disparaging religions, or otherwise inappropriate. For complete regulations, see the "Guidelines for Reader Comments".