Australian exceptionalism is old, enduring, deeply embedded and not to be underestimated. It has three characteristics that make it so strong. The first is domestic conformity. The second is external acquiescence. And the third is China. Each of these give the Australian economy – which is no more than a property hedge fund leveraging unstable commodity income – the gloss of a safe haven. Not until this halo of exceptionalism evaporates will Australia face its full reckoning. Will it happen in 2016?
Let’s run through the three dimensions.
Domestic exceptionalism stands upon three pillars: that the economy and housing markets are “different”, that private debt is irrelevant, and a kind of institutional unity around the first two notions.
