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Beyond the Australian Debt Dreamtime: Recognising Imbalances

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  • Mark McGovern

    ()
    (Business School, Economics and Finance, Queensland University of Technology, 2 George Street, GPO Box 2434, Brisbane QLD 4001, Australia)

Abstract

Sadly, all the efforts of a generation of Australian men and women have only made them more indebted to the rest of the world. Australia’s external net wealth is negative, soon passing minus $900b on an accelerating downward trajectory. This ongoing dissipation of national resources is unsustainable. Australians live in a debt dreamtime, one from which the rest of the world has been rudely awakened. After years of inadequate policies, the nation has a large external debt and significant government exposures. Servicing pressures are growing as rising uncertainties permeate global credit markets. Reserve Bank policies are worsening Australia’s external position and needlessly driving up internal costs. Major policy rethinking is warranted. Relevant issues are still little considered, crowded out of dialogues by comforting myths that accompany the Australian Debt Dreamtime. Imbalances need proper recognition with new approaches and strategies developed. Automatic corrections will not occur as history and current overseas experiences demonstrate. A real awakening, improved positioning and a touch of luck are required if Australians are to avoid being seriously impoverished by world events and their own confused Dreaming.

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Bibliographic Info

Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

Volume (Year): 41 (2011)
Issue (Month): 3 (December)
Pages: 169-194

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Handle: RePEc:eap:articl:v:41:y:2011:i:3:p:169-194

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Postal: GPO Box 2434, BRISBANE QLD 4001
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Web page: http://www.journals.elsevier.com/economic-analysis-and-policy/
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Keywords: balance of payments; monetary policy; open economy; government; Australia;

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  1. Manasse, Paolo & Roubini, Nouriel, 2009. ""Rules of thumb" for sovereign debt crises," Journal of International Economics, Elsevier, vol. 78(2), pages 192-205, July.
  2. Mark McGovern, 2010. "Asleep at the wheel: the real interest rate experience in Australia," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 40(3), pages 283-296, December.
  3. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
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