did you bought in yesterday doh doh doh, page-48

How long is short term?

The interest rates on the US sub prime loans are to be reset at higher rates over the next 2 years. Ongoing pain. Other borrowings also affected be higher interest rates. Households facing a decline in wealth (via house prices and shares), so will they spend as much? Will they continue to use their houses as an ATM in the face of falling house values? Will US go into a recession? What about other countries that have lived beyond their means? Is there no connection between the money supply and the real economy? Is the world inter-connected?

At least the party can continue for longer in Australia because despite the fact that we are borrowing about 5% of GDP per annum since the middle 1980s to support the immigration programs, we still have plenty of assets to sell. Only in the last 3-4 years has the capital inflow into Australia been used in part for productive purposes. Mostly its just been for current consumption.