Tuesday, December 4, 2012

Ditto, ditto, ditto


Steve Keen writes:
If you were told the following graph showed two indicators of Australia’s economic health, and one of them had to be addressed urgently, which one would you expect politicians and economists to try to bring under control first?


If you picked the blue line, you’ve obviously not a politician. The blue is the ratio of private debt to GDP in Australia; the red line is the ratio of government debt to GDP (debt to the banking sector only; both series come from RBA table D02). The red line is the one that both sides of politics in Canberra are obsessed about; the blue one they both ignore.

Not only in Canberra, I might add.

3 comments:

The Arthurian said...

Keen refers to the RBA -- the Reserve Bank of Australia.

Here is their Chart Pack page.

Luke Smith said...

Australia has a very large mining sector which is dependent on Chinese demand. The large rise in Chinese demand over the past 10 years has driven almost all of the economic growth in Australian mining.

The Chinese economy is slowing down, and mining projects being overbuilt in Australia means the next few years will see falling commodity prices. It's a vicous cycle. I wonder how dependent on Chinese investment the blue line is.

Luke Smith said...

Found this video of Steven Keen on RT's Capital Account talking about debt deflation and the US's similarity to Japan post-real estate bubble.

http://www.youtube.com/watch?v=KXGqnu5RA-E