I would say, the logic is that the private debt and the foreign investors are the important sources of incomes for the government now. If the private debts time bomb explodes now, the banks will be underwater instantly. The government needs to rescue the banks, but it's own book has to be clean enough. If the debt deleveraging comes right now. The governments' revenue will decline more rapidly. They will be in bigger trouble anyway. I personally don't think joe hockey is wrong, but where the private debt time bomb comes from. It was under the previous coalition government's supervision, the private debt level jumped from 90% of GDP to 150%. The labor government wasn't innocent either. They used very generous FHG and the very low lending standard lured thousands of young families into the property debt mincer. However the government did not force anyone to take on a mountain of debt. Is there anyone really innocent in this system? Who is the winner of this no one wins game?
