Consumers are now putting whatever free money they have into debt reduction on housing, which is primarily unproductive capital. Therefore consumer spending on goods and services is decreasing which equates to less economic activity....
This will lead to a contracting economy, which is already evident outside the mining sector.
Not a good thing considering the RBA would have hoped that the saving in the general Aussie Joe mortgage would have gone on consumer spending to spark the economy again, not debt reduction.
Not saying all of Australia will crash in a US style, but it doesn't look good. Foolish to think the prior 10 years of gains will repeat... Its basic maths.
