We're told that we've never had it so good, but our yet our current account balance and foreign debt levels have rarely looked so bad.

Considering Australia's once-in-a-century commodities boom, we should be racking up huge current account surpluses and exporting capital to the rest of the world. Instead, we're are racking up record current account deficits and hundreds of billions in foreign debt.

Australians have spent the last decade pumping the savings of foreigners into an overheated housing market, leaving us with record levels of foreign debt but no increased capacity to service those liabilities. The commodities boom was meant to turn our fortunes around. But in reality, it has simply allowed us to keep borrowing rather than address the structural imbalances in our economy. Besides, high levels of foreign ownership in the resources sector have meant a constant outflow of money overseas in the form of dividend payments.

Australia seems to have fallen into a classic debt trap - borrowing in order to service existing debt. And the current global credit squeeze will only make Australia's debt burden more difficult to service.

So, what happens when the commodities boom comes to an end and Australia's terms of trade decline?

with luck, i could be dead by then. pollies figure, with luck i'll be dead by then too.

leaving your nation in the hands of pollies is as sensible as putting your super in a land developers prospectus, as responsible as letting pedophiles babysit your children.

to be fair, ozzies are an ignorant gormless lot, raised as sheep, trained to queue for fleecing, and incapable of protecting themselves. little wonder they submit to anyone who says: "i'll save ya!"

but reality doesn't care, the financial asteroid is unmoved by innocence.

i'll be dead, probably. wish i could be sure, globalization means a butterfly crash landing in brazil could bring it all down tomorrow.

There seems to be multiple reasons and I offer these as causes;

Closing of local manufacturing and import of the goods they used to make.
The selling off of either all or part of Australian companies which
provides good opertunity for over pricing of imports from parent
companies so enabling profit dispatch without tax.

Oil imports; during last years high oil price I had a look at the
import of crude oil increase due to local depletion and the increased
cost. The cost in one year went from $22 billion to around $28 to $30
billion. I obtained the first figure from the Aus Bureau of Stats
and the second from knowing the difference between price and depletion
plus demand increase. The result was a bit rubbery but would not be all that far out.
The depressing bit is it will get very much worse.

Dresdener,this is why the Howard Govt went for such a drastic IR reform.We have a balance of payments deficit that is almost $60,000.00 per working person.We either increase tarrifs or lower wages in order to keep industry here.The longer we procrastinate,the greater the pain.

We should have a import debit /export credit scheme, if you export you get credits which you sell on the open market or use to import, the price would be set by the need to import. if the price of the import credits gets too high then it becomes cheaper to produce and/or buy locally made.
Foreign companies likewise if they wish to export money must have an export credit or export commodity's in lieu of of cash, simple and presto no debt, plenty of jobs and corporations showing responsibility instead of gouging whatever they can wherever they can.

ok