Posted on Monday, May 24, 2010 - 9:28 pm:

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quote:

Rising debt became increasingly important for sustaining economic activity, and fuelled a culture of addiction to credit that lasted (despite major disruptions such as the late-1980s interest rate blow-outs and the early 1990s recession) until 2008. Australians became increasingly comfortable with high levels of mortgage debt, because house prices were also rising; but their ‘comfort’ resulted from increases in asset prices that were themselves caused by even larger increases in debt.

That process came to an abrupt halt as 2007 came to an end, and the sudden withdrawal of debt-financed spending is what really caused the GFC, both here and overseas.

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