"I forgot, add the modern twist. US now in recession, demand for goods from China will dwindle to nothing, China now cant use all our resources, and our economic miracle is over. And all the WA braggarts go from 150K plus for unskilled FIFO labor to unemployed with a 500K mortgage."
"demand for goods from China will dwindle to nothing"
Not a chance. First of all why do US consumers buy so much Chinese goods? Because its cheap. Recession or not people will consume but at different rates. Secondly China exports a lot of cheap generic products into the states, which means even the lowest wages earners will and need to buy clothing for example. In fact some products will be in a higher demand.
Another thing, China's exports to the US is worth a lot less then what people think. 40 per cent of GDP is export. 20% of that is to the US. 80% of that 20% goes to foreign companies because China makes the finished product from intermediate goods and components supplied and owned by those foreign companies. Lets say a recession slows China's economy by 2-3%. So what! They are trying to cool it down anyway. That would also be beneficial to them trying to control inflation.
"China now cant use all our resources, and our economic miracle is over."
China don't give a stuff if the US is in recession or not looking at it from a long term point of view. Most of the resources entering into the country is for domestic use. Building industrial/residential infrastructure. China are looking after their grandkids and not just next year like a lot of western country politicians are good at doing. A recession won't stop them industrializing 300mil people in the next 10-15 years.
IMO this resource boom has major legs.
Its the household debt that should concern Australians. When the Australian economy slows so will household income. A lot of people out there on the edge as it is. If we have loan defaults on a unprecedented major scale this will have a serious impact on all markets and could even push Australia into recession.
