Play2Win, I think Oz shoud retain the AAA rating as the level of government debt is actually very good relative to many countries (for now).
The problem is in private household debt (which is the worst in the western world), the lion share built up over many years in a speculative real estate bubble which WILL bring down the economy (even without the helping hand of the european crisis and another credit crunch to speed things up).
People are now trying to pay down debt and this is the trigger to a MOTHER of all recessions. The whole Australian growth story of the last 10 years was based on DEBT ! People buying and speculating in things with money they haven't got. (Why do you think there is a massibe glut of properties on the market ??)
The Moody's rating is kind of like the IMF report on Australia. It's based on information provided by the Treasury (Wayne Swan).
The treasury is already hopelessly wrong on the budget for this year (the deficit has blown out massively).
Tax receipts going forward is greatly dimished (CGT, corporate tax, GST....you name it the lot). Also, the state's budgets are also going to experience a rude shock - take stamp duty for instance.
Wayne Swan even has the thick skin to suggests any talk of a job crisis is scare mongering by the libs when all the evidence is there that all industries and sectors are in dire straits and some are entering the tipping point phase like retail, construction and manufacturing.
