Here is some even more disturbing news about the state of the Australian economy, which is that Australians have a higher percentage of household debt then even Americans:
The Lex columnist cautioned against investing in Australian shares. “Australian bulls like to believe life is different Down Under: the commodity boom and full employment, the argument goes, offer a buffer against defaults. By extension, lending banks are sitting pretty once you erase the toxic made-in-the-US paper. But the Australian consumer does not look that robust. Household debt-to-income ratios, at 177 percent, are higher than in the US, according to Morgan Stanley. Houses are every bit as over-valued as elsewhere, if not more so: the average house/price ratio is 5.5 times.”
Here is a graph from the Reserve Bank of Australia that shows how much more debt Australians are carrying compared to Americans:
So how long can this spending spree possibly continue before people need to start paying up?