The Australian Economy v The US Economy

Morbo posted on Mon, Dec 1 2008 10:54 PM

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As an Australian I'm naturally very concerned about how the current recession in the US will effect us.

I've been reading a lot lately by Austrians describing the fundamental weaknesses in the US economy. As an Aussie, the good news seems to be that it is a misconception that the world's economy depends on the US consumer. As Asian economies expand and begin to consume the goods they were shipping to the US on credit, their demand for goods from Australia's resources rich economy will surge.

The bad news appears to be that a lot of the fundamental weaknesses besetting the US economy are also present here. Fortunately, we have not had the absurdly low interest rates of the US, however, our central bank has kept them low over the last decade and is now foolishly cutting rates further. Our banking system is more stable than the US and the government has not encouraged the sort of large scale bad debt seen in the US. However, our economy is still heavily reliant of foreign debt much like the US, although I don't have the actual stats.

Does anyone have a better idea of the situation Australia is in? Right now I would say the outlook is bad, but better than the US.