We are not sure why in a supposed democracy it takes a Freedom of Information request for someone inside the economic establishment to finally admin a problem exists that has been obvious to many people, including us, for a long time. But it seems that it did.
Today we note that under duress Australian Treasury officials have finally admitted that the Australian economy has a large issue of systematic risk caused by indebtness.
AUSTRALIAN banks’ reliance on overseas funding and the high level of household debt loom large as a ”significant” economic risks, Treasury has told the government in a normally secret briefing.
The nation’s top economic advisers yesterday released the incoming government brief known as the Red Book after a flurry of freedom-of-information requests. While the document painted a bullish picture in which the resources boom drives a return to full capacity, the frank commentary also said debt was a vulnerability.
”A key risk for the Australian economy is our reliance on short-term external debt, largely intermediated through the banking system,” the brief said.
Wow what a suprised. Talk about the worst kept official secret ever.
Highly indebted households, together with high dwelling prices, further heighten the vulnerability of the economy to shocks. While household finances are in good shape overall, and arrears rates and other financial stress measures remain much lower than in the early 1990s, households are more exposed than previously to adverse shocks.
Internationally, the Red Book said the risks to growth were “real and ongoing”.
So the RBA releases a paper trying to tell everyone we have no problem, the next day the Treasury is forced to admit we do.
As we quoted in a recent post
Governments are so incompetent that even “moderately intelligent” behaviour is unlikely.
Just a little more proof.
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