After the recent spate of Parliamentary Inquiries into 'Everything Financial in Australia',
this stocktaking may help to bring back some common sense palnning. Or it may not!
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If we are so wealthy, why are we in so much debt?
Date: October 4, 2014 Paul SheehanSydney Morning Herald columnist
"You load sixteen tons, what do you get? Another day older and deeper in debt." – Merle Travis (1946)
This classic line may be from a song about an American coal miner but it has some relevance to modern Australia.
After a long commodities boom, 24 consecutive years without a recession, and a historic rise in household wealth,
why are Australians as deep in debt as they have ever been?
During the past 24 years of unbroken economic growth, real household debt has gone from $20,000 for every person to $80,000. The ratio of average household debt, when compared with average household income,
has broadly trebled in 24 years, from 60 per cent to around 180 per cent.
This takes us into new social territory. The core driver of debt is Australia's obsession with property and over-capitalisation of housing.
Australia's rate of mortgage debt is more than double that in Germany and France.
It is about 50 per cent higher than in the United States and Japan. It is even comfortably higher
than in the United Kingdom.
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