AUSTRALIAN households have shouldered so much debt in recent years that consumer spending levels are expected to fall, which means tough trading conditions for small business this year. One prominent academic thinks it will cause a recession.
Only last week we learnt that our national credit card bill tallied up to $37.3 billion, and that's a record. In the past two years it has risen by $4 billion and then $5 billion.
Associate Professor Steve Keen, from the School of Economics & Finance at the University of Western Sydney, says this spending spree can't last. Economists see the past 15 years of economic growth as the longest boom in Australian economic history.
Prof Keen sees it differently.
"It has been the longest debt-driven, speculative bubble in Australian economic history," he argues. "Back in 1975, private debt - the sum of business loans, mortgages and personal loans -- was equivalent to 20 per cent of GDP. It's now 147 per cent of GDP - more than seven times as big."
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