Fairfax’s Ross Gittins penned an article earlier this week downplaying the risks embedded in Australia’s massive stock of foreign debt:
In a globalised world of floating currencies and free capital flows between countries, the big risk for an economy heavily indebted to the rest of the world is a sudden loss of confidence by its foreign creditors, which would be manifest in a sudden drop in its exchange rate (as we experienced at the turn of the century, when the Aussie briefly fell below US50¢).
