As part of the background to the LateLine interview yesterday, I graphed the US household debt to GDP ratio against the Australian. All the news recently has been about the sub-prime crisis in the States, of course: but guess where household debt has been growing fastest? That’s right, good old Australia has out-done itself once more. The accompanying graphic tells the story, which I’ll embellish in the next Debtwatch report in early April.
ABC LateLine is doing an item on the sub-prime mortgage crisis in the USA tonight (Wednesday March 14th); I was one of those interviewed for the story. Please tune in! LateLine goes to air at 10.35pm.
A subscriber to my Debtwatch newsletter suggested that I establish a blog. I plan to publish my monthly Debtwatch report here, as well as sending it out to subscribers.
Next month I will also start a USA version of Debtwatch. The recent panic on Wall Street can be seen as yet another “correction”, but it might also be the beginning of the unwinding of America’s long-running housing bubble, which has driven private debt levels there to over 160 per cent of GDP–higher even than Australia’s. While we definitely have enough debt “home brew” of our own to trigger a crisis, we are as always just minnows next to the USA; the old saying that “if the USA sneezes, Australia catches a cold” may come home very powerfully soon if the world’s largest economy actually comes down with the pneumonia of a debt deflation.
