Hey fellow ET'ers. Something pop up in my mind today. I would like to see someone here showcasing your awesome understanding of economics. So Australia has a target cash rate of 4.5%, set by the Reserve Bank of Australia. That translates to a business lending rate of about 8%. When Australian companies as a collective borrows at 8%, in order to be able to repay the loan, it must produce return on capital investment of at least 8% to service the loan. But Australia only has a GDP growth rate of 1%. How can it produce so little yet able to service a loan repayment so big? [Update 1] Pardon my lack of research before asking this. I was just thinking out loud. I just found this article about Australia's unsustainable debt. http://cpd.org.au/2007/09/unsustainable-debt-australia’s-own-subprime-crisis/ It's a bit dated. Everyone feel free to chime in with any additional info.
in AU ~100K "THANK YOU for the contribution but we dont need you an more" notices will be or has been forked out around NY '12, yet EURAUD is at 25 year LOW at 1.28 !!!! some major pressures building up in the market.