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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.
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."
Sadly that is the truth combined with Australia didn't have the bank problems of the rest of the world as we had regulations that prevented them from being leveraged to the hilt. Unfortunately even though we were not in any real danger in the GFC the then Labour government decided to use it as a vote buying/popularity exercise and sent the country from surplus into massive debt and overspend, and ever since neither Labour nor liberal governments have been able to rein in the overspending. The housing bubble while definitely overinflated isn't just a low interest thing, it is a market undersupply problem, in some places where supply has caught up (like Melbourne apartments, or Brisbane) we are already seeing an easing, we aren't likely to see a bubble pop unless interest rates massively increase due to the under supply issue.
I've posted this maybe dozens of times across the internet, I'm tired of shouting it and I'm tired of making lengthy posts with links and evidence.
The country is selling all it's gas, minerals at rock bottom prices to anyone and everyone for a start. In a huge massive way. The mining boom is finally slowing down significantly, at least so I hear.
We are also pretty lax with stopping people buying property. There's arguments why shouldn't we stop them, but seriously, I'm sick of debating it. If you can't see how someone vastly wealthier than the common local, bidding for houses isn't going to mess up the cost for the locals,..... well I don't know what to say. There's a reason Thailand, Indonesia, other smaller second class countries don't let foreigners buy.
We're getting 'Vancouvered'. It ain't about race, it's about economics and the locals (who don't own yet, you know, a LOT of people) are getting destroyed, totally by this.
That's the facts, it's as simple as that. Furthermore, as long as the Chinese can still buy property (and they do it legally and illegally) then I suspect the 'crash' which I've hoped for, for a decade, simply won't come. They'll just see a cheaper place to store their money they want to hide from China.
We're boned. Best benefit to all this would be a property developer in the last 20 years. Rest of us? Well I've held off using expletives but to say I'm white hot raging angry would be an understatement. @$#%^ our governments.
This is a very partisan point of view and totally ignores the effect the government stimulus had at the time. It could be argued that the stimulus could have been targeted better, but the focus at the time was on the dissemination of the stimulus as quickly and broadly through the community as possible. The actions of the government of the day during the GFC were widely regarded globally as an example of an economy that had successfully navigated the GFC.
Comments on property are also naive and ignore the different market segments. Apartments are over represented and it will take not much more than a bump in the road to cause a series of settlement crashes for the large number of high LVR loans which will cascade on to developers and their lenders.
The banks have already started to limit their exposure to apartment buyers and developers with tougher lending processes already in place for the financing of developments.
LOL.
The only reason anyone made it through the GFC was because Obama (which inherited the mess) fired up the money presses and kept liquidity in the economy. If not for that it could have been decades long, the only thing that fixed the great depression in the 30s ultimately was WW2.. because ta-da the government starts spending up by building lots of stuff, thus putting liquidity into the economy.
Australia is not special, its just been riding an almost never ending mining boom with China.
Quick question for you.
1) The US pretty-much doubled federal spending in order to get us out of the depression, putting us now $20 trillion in debt.
2) Depressions seem to come roughly every 8 or 9 years. Call it every 10 years.
3) When the next depression hits, will the US have had enough time to pay back the extra debt?
4) Are steps 1-3, a sustainable plan for shortening recessions going forward?
Extra credit:
According to your post, the US helped *everyone* through the depression. Was the extra debt borne by everyone, or only the US? Will foreign citizens help us pay back the money we spent to help them through, or only US citizens?
Was the extra money spent on things that would make our economy stronger, such as infrastructure, high-speed internet access, health care, or research? Or was it spent to expand the military (as in: number of aircraft carriers)?
Spending all that money, is the economy sound or are we just limping along? Are we back to the pre-depression unemployment levels and wage levels?
Would it have been better to simply let the banks fail, so that the depression was worse but much shorter? Did any other countries do this, and what were their results?
Oh please, spare us your xenophobia.
If I said the population of Africa is mostly black is that xenophobia? No? Then why is pointing out the simple fact that there is an incredibly large institutional investment from Chinese non-residents of Australia in the country?
I mean every major skyrise construction is bought out mostly by Chinese non-residents. Whole suburbs in major cities have been bought and build by Chinese non-residents. The two largest cattle companies in Australia have been bought out by Chinese consortium. The largest property in Australia (the size of Israel) was bought by a Chinese consortium. And let's not forget the all their investment in our dairy industry, coal industry, telecoms, ... they'd own it all if it weren't for the fact that the government keeps coming up with new laws limiting foreign ownership (and good-on-em as well).
I wonder why people were concerned about the Japanese and not the English.
You may wonder, but you don't know despite what you claim. There's a big difference between having foreign ownership from a country who is a close ally, has strong political ties, similar financial systems, and works on the same principles as yourself, vs a country who you will quite likely be at war with again within the century, who you have strained political relations with, and who you accuse of and constantly take to the various trade organisations of deceptively rigging their financial and trading systems. China is economically hostile, just as Japan was in the 80s.
The fact that you put this down to xenophobia is just an amazing display of ignorance.