Naked Capitalism Link of the Day

Today's link from naked capitalism: They're onto us, at MacroBusiness.  The post looks at Moody's downgrade of 4 large Australian banks and quotes the Moody's press release to highlight the strains on the Aussie economy:

Ouch. Put this down as the China warning. Australia’s entire economic model is being peeled back here. For well over a decade, Australia’s banks have funded huge swathes of the current account deficit. As well, over the past two commodities booms, much of the export income has been leveraged up and blown on housing and fancy living. Moody’s is effectively calling the risks of this model to account. And they’re still not finished:

It goes on to say that Moody's is indicating the four banks are too big to fail, and if the Australian government backs off on implicit guarantees, they'll really cut the ratings.  Way to protect the banksters and investors at the expense of taxpayers, again.  We've got bad stuff brewing in Asia and Europe, while we plod along looking at huge government cutbacks sooner or later with a still highly-leveraged private sector.  I don't see this ending well.

Naked Capitalism Link of the Day

Today's link: Will Aussie housing go bust? at MacroBusiness:

A funny thing is happening in Australia. At a time when the economy continues to flourish, Australian families have gone on a spending strike. Unemployment is low at around 5%, interest rates are neutral rather than contractionary and not a day passes without the public being told that Australia sailed through the global financial crisis undamaged, thanks to China and of course brilliant political leadership.
But the average punter doesn’t seem to believe it. Families are paying down debt like there is no tomorrow. Australia’s household savings rate has now hit an extraordinary 9.7% of disposable income compared with about 5% in the USA and close to zero in New Zealand. This is a multi-year high for Australia.
Retailers especially are unhappy and are blaming the weather, online vendors, the Government and just about any one else they can think of. But sales revenues continue to shrink and high street shops continue to close their doors. ”For Lease” has made a big come-back.
The problem, as Keynes elucidated many years ago in his “Paradox of Thrift”, is that if everyone saves at the same time to create a buffer against looming adversity, it just makes the whole problem worse because those savings suck demand out of an economy.

It is interesting to me that this is happening while the Chinese fueled commodity boom is still going on.  But I guess the U.S. housing boom ended with the mini meltdown in August of 2007 (although I've also seen April 2007 given) while the rest of the economy still appeared to be healthy, then built up to a climax in September 2008.  It will be interesting to see what happens down under.