There has been some press in the US that the recent Chinese bailout of local government is a portent of things to come. Australia is especially vulnerable to a slowdown given our very unhealthy reliance on a cyclical resource sector. Maybe resources will stay "stronger for longer" but history shows that rarely happens without a few major hiccups along the way.
It amazes me that with record terms of trade our Federal budget is so far into the red. Return to surplus is based on very optimistic assumptions of future Chinese growth. If China busts our revenues will cop a pasting and we have no surplus to fall back as we did with GFC1.
We already have most of the economy in struggle street (excluding the resource sector). If the AUD pops it could provide some relief for exporters but working against that is that if China slows so too will worldwide economic growth.
No wonder our market is so skittish.
Time to enjoy a nice brew and not worry about things outside our control....
