The more money you borrow, the more you have to pay back. It took LIB's about 6-7 years to pay off Keating's debts. Which means prior to the boom starting, the feds owed no money. At the end of the boom prior to GFC, they owed no money, had a surplus and a slush fund. It was no wonder Australia was never going to ride the GFC anywhere near as bad as many others and retain our AAA rating. Are we in the same position now?
Well, hate to say it, rtt, but the answer to your last question is 'YES'
You shouldn't swallow the nonsense served up by self-serving financial journalists and opportunistic politicians. Also lucky that real interest rates are negative, so the coupon rates offered by Treasury paper are below inflation (and bond prices higher in the secondary market), but that's not even necessary for Australia to ride out the coming slightly harder times that might be ahead.
Our national savings ratio is higher than during the Howard years because households are now more thrifty and govt saving isn't that much lower than it was, despite the howling from the right about govt borrowing.
Note also that the little Aussie Battler has fallen nearly to $US0.90 and it will go lower if current international trajectories continue as expected. All may not be for the best in a best of all possible worlds, but Australia's macro resilience is still pretty damn good, even if we don't have train lines everywhere we'd like them.
The sky ain't falling, Chicken-Licken.
