Canada, Australia, Sth Africa, Brazil are commodity-based economies that were hammered by the GFC. But we/they 'recovered'. While I agree with the idea that the excessive debt issuance of the past 30 yrs will pull us down eventually, neither you nor I know when that will happen.
Sure, conditions appear ripe for a recession now. But they did in 2008/9 as well.
Yes, this time the bond vigilantes are out in force, wreaking havoc in global bond markets, and that is a significant difference compared to 2008/9.
But, if global debt markets decide China is still a safe bet, then aussie debt - by extension - will likely be considered a safe bet too.
To mangle a metaphor - the fat lady isn't singing until she actually is. She might be clearing her throat offstage but no way is she in full voice, and you can be sure the idiots in government will do their utmost to stop her stepping out on-stage. Interest rate cuts (yes, they are coming from the RBA at least), first home owner grants, sales tax relief, you name it, all these tools will be deployed to keep the ponzi going.
