In the past 3 years Australia’s currency has gained about 25% in value versus the dollar and the euro and the nation’s external debt has gone from below 100% of GDP to 130% of GDP.
I would have thought that the rising aussie dollar would have devalued the external debt. Either there’s something that I don’t understand about external debt, or there’s something deeply screwed up with Australia’s economic model, despite the many positive points. The GFC has been nothing more than a mild recession for Australia.
"The GFC has been nothing more than a mild recession for Australia. "
Australia did so well during the GFC due to the mining boom and the fact that they had 10 years of relatively free markets. Forgive me if I indulge in a bit of recent history:
Australia had a decade of relatively laissez-faire government (still hugely interventionist but compared to Europe it was almost minarchist). The PM at this time, John Howard, was certainly aware of the Austrian School - his opponent Kevin Rudd lambasted him as a follower of the mad Austrian Hayek!! Rudd is, however, the least intelligent man I’ve yet come across (his successor is the least intelligent woman and person). He became PM just around the time of the GFC. At that time, the Australian government had 0 debt - in fact several billion dollars surplus. 3 years later and government debt is at 20% of GDP.
Of course, when the opinion polls showed Rudd would lose the election, he was assassinated and replaced by the current PM (who only holds power due to the self-aggrandisement and sycophancy of 3 bribed independents). She is torturous both to behold and to hear. She wants a tax on mining (Australia’s fastest growing industry), an extremely wasteful and useless National Broadband Network (at the cost of $4000 per household, just to install), and just this week has announced a brand new tax on CO2. Politically she is screwed, and like her predecessor may not last out her term. Opinion polls show that her party will definitely lose in the next election - she barely survived the last one which is an extreme rarity for a first-term government - but luckily that election is over 2 years away!!
Here’s a recent gem from the Australian PM:
If we look at the information technology revolution the reason Bill Gates is such a rich man today is that he got in on the change. .. The same is true now. This is the time to be pricing carbon.
I suggest you look her up on youtube just to hear how terrible her accent and voice are and how patronising her tone.
Your conclusion follows from your premise, but how is it that external debt is not held in foreign currency? Australians can’t borrow Australian dollars from foreign banks.
The rise of Australia’s public debt from 10% to 20% of GDP doesn’t come anywhere close to explaining the external debt.