At BS, Alan Kohler wrote a very good piece over the weekend that should send a shiver down everyone’s spine:
Australia’s last recession was mainly caused by the current account deficit getting to 6 per cent of GDP.
The reason we “had to have” the recession, as Paul Keating said, was to try to bring demand for imports back to within sight of exports. The sledgehammer duly cracked the nut, and the current account was brought back to minus 3 per cent of GDP.