Australia has about $1.2T of gross foreign debt and $0.6T of net foreign debt. Per capita, we have similar debt exposures to the USA.
Our ability to manage that much debt and leverage depends very much on the outlook for global interest rates. I believe that these rates may start rising rapidly at some (unknown) point, for two reasons: firstly because of increasing global competition for available sources of credit, and secondly because lenders need to demand increasing margins to protect themselves against rapidly rising levels of risk. Interest rates are currently being suppressed for trade purposes, but it is becoming steadily harder to do so, and the benefits of doing so are reducing. Sooner or later the dam of imbalances will burst.
