– Australia’s economy is built on shaky foundations:
WE’RE the lucky country but our luck is about to run out due to factors out of our control. Brace yourselves for a hard crash.
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As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.
Unfortunately for Australia, that “lucky” free ride is just about to end.
Societe Generale’s China economist Wei Yao recently said: “Chinese banks are looking down the barrel of a staggering $1.7 trillion worth of losses”. Hyaman Capital’s Kyle Bass calls China a “$34 trillion experiment” which is “exploding”, where Chinese bank losses “could exceed 400 per cent of the US banking losses incurred during the subprime crisis”.
A hard landing for China is a catastrophic landing for Australia, with horrific consequences to this country’s delusions of economic grandeur.
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H/t reader kevin a.
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