It costs $30 to produce iron ore, used to sell at $130 spot, now drop to $100. So you see green $$ eyes wanting profit tax!
Howard returned Australia to AAA ratings. It is very precious.
Good that Aussie household is "broke". It makes the term of trade looks good and the banks will borrow less overseas. Employment figures are good, and my rental yield will go up after Xmas after my agent discover my tenants bought a 5yo BMW.The local rental market vacancy down to <3%
It will take China recession to bring a private debt crisis. If so, retirement plans will be disrupted because many DIY Super/SMSF are invested in property.
Euro zone better plan smooth exit for Greece and Italy.
It will still be messy.
Greek drachma will devalue > 50% and major haircut for investor.
Italy is in much better shape. Perhaps 20% devalue for lira but give them 2 years to recover.
BUT with the Euro technocrats in charge, it will be a decade of recession keeping them in Euro.
As for Keynesian, it is not working. An Austrian approach is too late. It saves China now (credit tightening) but USA/Europe is too deep into the game. The aggressive surgery will kill the patient. 2 years ago, if Ireland has done an Austrian - save the depositors and kill the banks - it would be out of the woods, but it currently in worse shape than Iceland.
The Irish "save the banks" left blood on German hands. saving Irish banks saved German banks - but as we know by now, The current deepening Euro crisis is also Germany undoing.
As for USA, FDIC brokered "mark to market" policies saved US householders. But nothing is happening on the Too Big to Fail banks. They still mark to book which explain no progress on the mortgage front. Some bankers heads should roll into jail before we see real reform to bring us out of GFC.
The question is which US politicians will bite the hand that feed them.