10 times? Have you got anything to support that?
T'was a pretty simple question though, as a taxpayer of the country, what kind of debt level is unserviceable? 100 billion? 200 billion? 500 billion?
Well most other western countries currently have debt levels of around 45% of GDP which is still (the market believes anyway) sustainable. Thats what I mean by 10x as big - our GDP is a little more than 1 trillion so a package of 450bn would put us on par with the rest of the western world's debt.
There is no magic figure that triggers the collapse in the exchange rate - if the Forex market completely loses confidence (and I mean completely) in a nation's economy for any reason, not just debt, the owners of AUD would sell like mad until the currency was virtually worthless. We do not want this because it is economic doomsday - interests rates must go up to attract investors to hold the exchange rate which causes domestic demand to stop while the collapsed dollar would mean that inflation would be huge. In other words your completely and totally f***ed.
But for that to happen our debt would need to be far far far bigger - I would hazard a guess at around 100% of GDP give or take 20% - but the market is unpredictable - I cant be certain of those figures. I do know that it is considerably more than 100bn and probably a lot closer to $500bn.
Theoretically all the future surplusses should be used to finance deficits over the course of the business cycle (from recession to recession) and 100bn in that case isn't anything to worry about. But look we should question these decisions - they are big decisions with consequences but the consequences of a minor future restraining of growth is far surpassed by the consequence of not going into debt which is a deeper and prolonged recession.
