[Sixstrings]

IN a new record, Australians now owe more in household debt than the country's entire economy earns in a year.

Reserve Bank figures show mortgage, credit card and personal loan debts now stand at $1.2 trillion, up 71 per cent from just five years ago and equating to $56,000 for every man, woman and child in the country, News Ltd says.

Our spending binge, fuelled most recently by the federal government's First Home Owner Grant, means personal debt now totals 100.4 per cent of Australia's annual GDP - one of the highest ratios in the developed world.
http://www.news.com.au/breaking-news/credit-binge-sets-new-debt-record/story-e6frfku0-1225813865594

Wow, a 71% runup in personal debt in just the last five years.

[SeaGypsy]

That's because our property values have not gone down during the crisis, indeed they have returned to growth. Australians are still doing the equity credit thing. We also have much better regulated banks than just about anywhere.

[Cloud9]

Hope it works for you guys. We thought greed and self interest would keep our bankters from burning the house down too. We were wrong.

[SeaGypsy]

Australia has very few mega rich people, they moved to America years ago! The tall poppy syndrome is pretty big in Australia, people despise rather than envy the rich. What we call filthy rich here, to Americans would be seen as just successfull or upper middle class. The kind of scammers who really psychopathicly hunt big money are globalists and prefer to be in a country which treats them like royalty. God bless America!

[Sixstrings]

That's because our property values have not gone down during the crisis, indeed they have returned to growth. Australians are still doing the equity credit thing. We also have much better regulated banks than just about anywhere.

You know, those first time home buyer programs can really backfire because they essentially just inflate the market. I bet you probably have a lot of Chinese and other Asians buying investment property too, so there's more real estate inflation.

The home equity ATM game works out great for as long is it lasts, but markets tend to want to self-correct. So if your housing market is on fire, that's going to attract oodles of developers and just like the US, Ireland, and Spain, you'll get overdeveloped and then pow the correction comes and everybody is underwater on their mortgages. I don't mean to rain on your party here, we Americans sure enjoyed it while it lasted.

Or am I wrong? Are growth prospects for Oz so strong that this trajectory of personal debt can be sustained?

[SeaGypsy]

Australia has net migration of 120,000 per annum.
Last 12 months a lot of expat workers in the financial sector came home.
55,000 of the migrants are professional and many of these are established financially.
20,000 are buying residency for $775,000 per adult half per child, these funds must be put into Australian shares or property and left there for 5 years.
Our population is 21 million currently.
Our baby bonus has pushed us just into growth at 2.1 children per woman.
Our 'home ownership' culture is very strong.
Average wages are $65,000pa. ($57,000 USD)
We have very restrictive building codes. Even my Territory capital (population 120,000 situation/ on the coast in the middle of nowhere) has strict boundaries on urban development which have pushed the cheapest suburban block up to $330,000.We are in the middle of the biggest new mining areas.
Australia is both a hoot and a rort.
Possibly the most 'planned' (controlled) society in the world. We are the testing ground for new technologies. Many high tech social 'tools' are implemented in Australia and New Zealand before being rolled out in Europe and the USA. Examples include ATM machines and digital spy networks.
Australia has some big problems with water in the south east, where 85% of the population is; but we have both sides of government clearly committed to growth strategy. There is still a heck of a lot of empty country.

[Sixstrings]

Australia has some big problems with water in the south east, where 85% of the population is; but we have both sides of government clearly committed to growth strategy. There is still a heck of a lot of empty country.

I'm not sure why I'm so fascinated with Australia -- I've never been there, have no connections to the place. But I like to try to get my head around what the future will look like, and I find it very interesting what's developing -- along with China, Australia and Brazil appear to be emergent powers of the future. Although, being so dependent on China, are Australians concerned about losing their sovereignty at some point? It seems to me the day could come when China starts telling you how to vote in UN, whether or not you should side with US in conflicts, and force you to abandon democratic allies like Taiwan.

Getting back to the debt situation, I found this chart illuminating:

http://www.whocrashedtheeconomy.com/?page_id=3

The end of that graph only goes up to '07, but really I have to say that sure looks like a credit bubble to me. You'll notice that as of '07 it shows household debt at 160% of disposable income. I think I read somewhere that it's now at 200%.

I guess what it all comes down to is as long as China does well, so will Australia. But if China busts out, then so will Oz.

[SeaGypsy]

For a small country, Australia has a formidable military reputation. We also have very strong ties with the USA including at least one major strategic communications base of yours at Pine Gap. We currently have a PM who speaks fluent Mandarin. Diplomacy is the name of the game. Every man to his guns is the strategic reserve. I know very few men who would not immediately line up to defend his country here. The outback here is extremely dangerous to those not familiar with it.

[DrBang]

All of the above is actually true. On the other hand this debt based society has to unravel at some point. Many people around me do not want to hear that things are on the edges of REALLY BAD. They just don't see it. Its like we live in a parallel dimension.

While our banks are hard nosed bastards we still have a vulnerability of it all unraveling (really quick too). People proudly say they play by the rules and all is well. What they don't understand is how those 'rules' are now inappropriate and must change. At some point all that debt has to b paid back. The endless boom must come to an end and a correction must come after that.

What is not helping is we have become a financial life boat to the rest of the world. Lots of foreign investment is flowing into Australia, artificially inflating our domestic economy. This has been IMO the reason we have been shielded from the harsh reality that affected the rest of the world so much, with more to come.

Our media is amazingly sterile for real news. Our internet is about to be more controlled than China's, which is really saying something. The really big moves on the world stage over the last few months didn't even rate a mention.

How this will pan out in Oz? I no longer have any idea. The talking heads now preach how we are doing really well and the bad stuff is now past. My predictions for the wave of volatility never made it to these shores. I was expecting what happened to the US and what is happening in Europe to overflow here. Eventually it must, due to choices made in the 1960's and 1970's where most manufacturing of goods left these shores.

What may make a difference is our tendency to to pull together in an emergency. When the shit hits the fan we tend to help each other out. Hopefully this will still be the case when its our turn.

Kind Regards

Dr Bang

[Outcast_Searcher]

While our banks are hard nosed bastards we still have a vulnerability of it all unraveling (really quick too). People proudly say they play by the rules and all is well. What they don't understand is how those 'rules' are now inappropriate and must change. At some point all that debt has to b paid back. The endless boom must come to an end and a correction must come after that.

+1 Dr B

What is so bad about massive debt is how VULNERABLE it makws the debtor. When something goes wrong (not a matter of if, but when) and the piper is still expecting a huge stream of payments, the pain can become massive quickly.

That's what I worry about in the states. Not that collapse is imminent as much of this community seems to think, but that ECONOMIC collapse is INEVITABLE in time, if our overspending ways aren't corrected.

[SeaGypsy]

Real estate prices are manipulated as I described ealier in this thread, this is a given.
Australia's huge advantage is just that; it's huge. We are very close to China and India and we have mega massive mineral reserves. If not for this and our relatively low population we would most likely be in the same position as most of Europe; if not the USA. (Having no land borders has so far been a major factor also)

[Sixstrings]

Real estate prices are manipulated as I described ealier in this thread, this is a given.
Australia's huge advantage is just that; it's huge. We are very close to China and India and we have mega massive mineral reserves. If not for this and our relatively low population we would most likely be in the same position as most of Europe; if not the USA. (Having no land borders has so far been a major factor also)

So what does that mean? Aussies are good to go to ramp up to 300% debt to income? 400%? 500%? There has to be a point at which the bubble bursts.

EDIT: I don't mean to be a party pooper here, it's just that it may be wise to learn from the mistakes of us Americans, the Brits, the Irish, the Spanish, etc. etc. It just seems like when the boom times are on (whatever the country) nobody can accept that they'll ever end.

[SeaGypsy]

So we are on average in debt for a bit over a years wages. Sorry but whoopty doo, nobody gives a hoot. 99% of Australians can see the future in the 'blue sky mine' and the manipulated housing prices seeing them through. Peak oil is like the dunce in the corner with the pointy hat. I believe peak oil will bring this country down way faster than people have any idea about.
But I am one of the 1%.

[DrBang]

I have also been put in the naughty chair with a pointy hat. They also confiscated my chocolate. The charge was fear mongering and insurrection. Both of which I am indeed guilty as hell for. Unfortunately, most people around me didn't get what I was saying and certainly didn't see any evidence of it (media white wash).

I think the perception is that things are going so well for Australia that we would be mad to try and change it. As such things will have to get really bad before something is actually changed at the fundamental level.

I also think that things here are heavily manipulated by the global power groups. Their agenda here though seems quite different to other places around the world.

Cheers

Dr Bang

[Ainan]

In light of peak oil, the economic crisis and so forth, would it be wise for a young Brit to emigrate to Oz in the Summer? I'm in the IT industry and don't think I will have a harder time getting a job in Oz over the UK. It would take me a lifetime to save up enough to put a deposit on a doomstead in the UK. Looking at Australian property websites it seems very affordable in OZ still, assuming I land a job in the right area.

Think I'd rather die trying to survive in Oz than have to live in the UK any longer. I doubt the grass is any greener in Oz( ) but I'd rather have a fighting chance than sit about watching the UK collapse.

[SeaGypsy]

Look into Australia's immigration laws. There is a special deal for qualified workers in remote parts of the country, called a 457 visa. If you come as a working tourist (only available to under 30 year olds), you can get extensions to the point of permanent residency after 2 years.
DON'T USE AN AGENT they rip you blind and there is no advantage unless you are functionally illiterate.

[Ainan]

Cheers SeaGypsy, I'm in IT so I doubt I'd find many jobs I could do in the Outback. Although I will put it on my 'ToResearch' list.

[SeaGypsy]

I could probably get you a job next week in local government in the Northern Territory, if you can webmaster. $70kpa plus. Pm me if you want the lead. The best job site in Australia is seek.com

[Ainan]

I could probably get you a job next week in local government in the Northern Territory, if you can webmaster. $70kpa plus. Pm me if you want the lead. The best job site in Australia is seek.com

Thanks for the offer SeaGypsy, I have done a bit of PHP and JSP webdev stuff in the past but it's not really my area. I'm in low level embedded and real time systems. Shame I left Germany with its large manufacturing base... I'm starting a Mandarin qualification in the next few weeks(If they ever get back to me) which will hopefully help in Oz if doomsday doesn't pan out.