No, it's actually the derivatives, monetarist morons!

More "solutions" based on a system that no longer functions and is disintegrating before our eyes - "yeah, let's pump more super into the bubble!" "You're making the wrong kind of hyperinflationary bail-out!" Or like corporatist spin doctor Krugman: "Make sure you include the clauses in the fine print: we want healthy returns for the publicly funded bail outs of toxic sludge!"

Like trying to fight a bushfire with a flamethrower. Neolib geniuses all.

Undoubtedly the article is all good erudite stuff, even though stating the obvious that “The next casualty might be - might have to be - our complacency about net foreign debt”.

A far bigger casualty has not got a mention: Missed is the giant one of debt to the environmental resources we have been plundering ever more savagely over the past two hundred years. All indicators point to call-in time for repayment or rescheduling. Yet we are hell-bent on increasing the total of whole-of-nation debtors at the rate of 1.7 per cent per annum.

At the same time there is no indication of genuine intention of having the rate of per-capita indebetedness minimized (If stabilized, without increase, is that recession?).

*Now converting investment into strong net export growth also requires higher saving which can be delivered with further increases in compulsory super.*

Increasing super only makes exporters even less competitive in the
global marketplace.

Our current account would be alot lower, if Australians saved more,
but they don't, for they are not silly. Their bank deposit will
be eaten up by inflation, which takes a good deal of the interest,
tax takes the rest and does not allow for inflation. So they might
as well spend it.

"But it’s the wrong debt."

Indeed. We have spent more than a decade borrowing heavily from abroad, most of which has been used to finance a real estate bubble, rather than investment in the tradable goods sector of the economy which actually has a capacity to service our ballooning foreign liabilities.

"Will it end in tears?"

Hopefully. Australia's needs a good shock to the system if it is to wean itself off its unhealthy addiction to foreign debt.

I should have been more specific. The derivatives bubble makes approximately 1-and-a-half QUADRILLION dollars - nearly all toxic, unpayable debt.

The actual Australian commitment to such filth is over 14 TRILLION of the same toxic funny money.

Sound like a systemic problem? Yep, a system that's been imploding since mid-2007.

Sound like corruption? Yeah, on a massive, global scale, and in an ideological sense too.

But won't the bail-outs/"stimulus packages" help? What, like yet another shot of crystal methamphetamine is meant to help "stimulate" a long-term ice addict whose entire vascular system has collapsed?

Dream on. The real challenge here is the deep corruption and cowardice which ensure leaders' persistent refusal to declare the sick system BANKRUPT. The usurers who've been benefiting from this ongoing debt binge are staring down one most likely outcome for themselves too: drowning in their own vomit.

That would not be so bad in itself, but the effects on the rest of humanity - who overwhelmingly work for their living - are dire, and will be worse still.

Er no, the system has not collapsed, but what I have been predicting
will happen, is now happening.

Note the Chinese and Japanese now moving in to buy our resources.

First a chunk of Rio, now Oz Minerals, some iron ore mines in the
West, the main Paperlinx pulp plant, the list grows daily and
will no doubt keep growing, for if one is cashed up like the
Chinese Development bank, now is a great time for Aussie bargains!

So all those of you who hate capitalism, hang in there, soon
you too might be thrilled to work for a Chinese boss!