The seeds of Australia's own inevitable "calamity" are well and truly being watered.
Having ridden on the sheep's back over a 100 years ago, we now ride on the Asian Tiger (how ironic given our historic policy of "2 Wongs don't make a white"). What a ride!
Resource millionaires have been on the rise for the last decade. And so has the wealthy Australian house owner! But I believe rising home prices over the last 10 years, have masked a number of flaws in our economy:
- Wages growth has been marginal at the middle to lower end
- It has been acceptable while house prices have gone up - Serious income inequality is brewing.
- Debt grows and grows
Australians, having seen the economy stay resilient, believe the government all powerful and able to come to the rescue, having forgotten the wastage of programs like the pink batts fiasco.
The banks today, lend ever increasing amounts, on higher LVR's, using values that are at extreme levels (as identified by Jeremy Grantham of GMO). But have no concern dear Aussie, our banking system is "safe".
The governments (state and federal) assume their tax revenues are somehow "normal" and continue to increase the range of programs and subsidies creating a welfare psychology at higher and higher levels of income. And in the last few weeks, the bloated federal government now proposes a carbon tax - capital knows when it is not liked!
The cost structure in this country is now at high levels. Try to get reasonable service in the tourist destinations - no wonder people are heading to Asia! Add mechanics on $120 to $180 per hour, truckdrivers making a $100k and yes you have a boom.
All is good until it isn't.
So are we the lucky country, or just a country with some luck? Our beaches are nice though - especially in Tasmania!
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