This is Why Australia Hasn't Had a Recession in Over 25 Years (bloomberg.com)

Australia is close to seizing the global crown for the longest streak of economic growth thanks to a mixture of policy guile and outrageous fortune. From a report: While growth is being underpinned by population gains and resource exports to China, failure to spur productivity has meant stagnant living standards and electoral discontent; a property bubble fueled by record-low interest rates has driven household debt to levels that threaten financial stability; and a timid government facing political gridlock could lose the nation's prized AAA rating as early as May because of spiraling budget deficits. Australia's last recession -- defined locally as two straight quarters of contraction -- occurred in 1991 and was a devastating conclusion to eight years of reform designed to create an open, flexible and competitive economy. But it also proved cathartic, paving the way for a low-inflation, productivity-driven expansion. As momentum started waning, China's re-emergence as a pre-eminent global economic power sent demand for Australian resources skyrocketing, helping shield the nation from the worst of the global financial crisis. But the post-crisis return of the boom proved ephemeral, failing to boost government coffers and pushing the local currency higher, eroding competitiveness and driving another nail into the coffin of a fading manufacturing sector.

Comments

Disjunction between headline and text

[Geoffrey.landis]

There's rather a disjunction between the rah-horray headline and the text, which seems to be about how Australian economy is heading for a major bust. "Failure to spur productivity has meant stagnant living standards and electoral discontent; a property bubble fueled by record-low interest rates has driven household debt to levels that threaten financial stability; and a timid government facing political gridlock could lose the nation’s prized AAA rating as early as May because of spiraling budget deficits."

The answer to the question posed in the title seems to be "because Australia is close to China, so when the rest of the world economy hit a depression, the Australian economy was buoyed up by the Chinese money."

Re:Quick questions

[tbannist]

Most of what you wrote is complete and utter bullshit. The majority of the bad loans weren't even written by banks, they were written by loan companies which were under no obligations to provide loans to anyone for any reason. You blame the government, but the banks would have done it anyway in the quest for profits. Sub-prime loans were extremely profitable, and as long as the housing market continued to rise, they were almost risk free because whoever owned the loan could foreclose on the house which would be worth more than the loan on it. The shady side of the subprime loan industry was the belief that even if they offered loans to people who likely couldn't pay, the lender could take their money until they couldn't pay any more and then steal the house for resale (and a quick profit) when they failed to make payments.

The government didn't have to force them to do anything, they hung themselves with short-sighted greed.