here's an article I posted back in 2011 and I believe it's relevant to this discussion, so worth reposting. Especially after retailers repoted record sales over Christmas last year (2013).
Hey, big spenders, it's time to worry about all that foreign debt
There is no doubt Australia is one of the most heavily indebted countries. A list compiled by the American Central Intelligence Agency puts us at No. 14 on the foreign debt scale with about $1.2 trillion owing to offshore lenders.
When you consider our relatively small population, and our strong but comparatively tiny economy, that means we are punching well above our weight in the spendthrift stakes. In fact, total foreign debt easily outstrips national income. The CIA reckons we owe the rest of the world 132 per cent of our annual gross domestic product.
But hang on, I hear you say. Didn't the Treasurer boast the other night that we are one of the least indebted nations in the developed world?
Indeed he did. Australia's net foreign debt would peak at just 7.2 per cent of GDP in the coming financial year, he claimed.
That's a long way shy of the figure calculated by the CIA, and far too big a gap to be explained by rounding or the rubbery calculations involved between net and gross debt. So who is telling the truth?
The simple explanation to this conundrum is that the Treasurer was only talking about government debt, the loot he's responsible for borrowing.
At about $120 billion, it's certainly a lot bigger than the $38 billion debt in the first year of the Rudd government. But despite the theatrics from Tony and Joe, government debt is negligible compared to the size of our economy and barely makes an impression when calculating who owes what to the rest of the world.
The real culprits in the foreign debt splurge are you and me.
Between us, with our mortgages, the renovations, our investment properties, our margin loans, the new car, the credit cards and that interest-free loan on the new fridge, we account for the vast bulk of that $1.2 trillion foreign debt.
Again, I hear you scratching your heads. How could that possibly be the case? Haven't we all been complaining about the dominance of the big four Australian banks, and how they have a stranglehold on the market?
Who on earth is borrowing all this money offshore?
I'll tell you who. The Commonwealth Bank of Australia, Westpac Banking Corporation, ANZ Banking Group and National Australia Bank.
For years now, they've been running around the world, raising vast amounts of cash, and then bringing it back home to lend to us.
Depending on the bank, up to a half the money they lend us comes from offshore markets.
The other banks were all into it as well before they were rudely interrupted by the financial crisis three years ago.
Entire Article Here
My point is, while wer'e going on about what a prosperous country we are, we should look at how much of our prosperity is based on credit. And creditors want to be paid back, eventually.
If we don't have the nest egg tucked away for that eventuality, wer'e going to have to start selling our asses assets.
At the rate Australia has been selling off federal and state assets, since 1980, will Australia Post and Medicare be next?
And what about after that?
