Has he gone yet?
Good. Hopefully he’s taken his platitudes with him.
‘The future belongs to the free’, is the headline in today’s Australian. Puh-lease.
It must be great having a job where you can wander around, say stuff that is meaningless and still make people feel good about themselves.
In reality, the future should belong to the free market.
But if the future does belong to the free, there’s not many people left in this debt-soaked world who can claim it. As Andrew Jackson, a US president who came well before Obama said, ‘when you get in debt you become a slave.’
As we pointed out yesterday, US government debt just breached the $US15 trillion mark. That’s around 100 per cent of GDP. Add in household and business debt and you get nearly $40 trillion of IOUs. That’s around 265 per cent of GDP.
How does the Australian debt pile stack up? According to the Australian debt clock, which was sent to us by a reader a few weeks ago, total debt amounts to $2.14 trillion. This equates to around 160 per cent of GDP.
It’s not in the league of the US or Europe (or the UK and Japan, among others) but its nothing to be proud of. The rest of the world has been happy to lend to us, because they believe China’s boom will help us service our debt.
But when our creditors wake up to the fact that China’s GDP growth is a sham – unproductive and uneconomic – they are likely to reassess Australia’s capacity to repay.
On Wednesday, Slipstream Trader Murray Dawes predicted today’s market sell-off… To find out where he believes the market’s heading next, click here to watch his video market update.
for The Daily Reckoning Australia