Australia: The lucky ‘CAD’ country?

To read the original version of this comment in the original context at Macrobusiness.com.au click this link. (link maybe locked – but there is a free trial available)

The fun will really start when people start to realise that our cheap mortgage rates have been facilitated by off shore lenders believing the same horse poop about China as our local lords and masters.

With a currency on the slide as the terms of trade message sinks in we are about to find what running a continuous CAD is all about.

CAD countries do not have full control over their interest rates unless.

1. They sell off assets quickly enough

2. They pay off all their debts.

The RBA may be comfortable cutting rates to increase the speed of the $AUS decline but they may quickly find that adding fuel to fire of changing sentiment towards $AUS is unwise.

Other emerging and chronic CAD countries are finding their ability to maintain low rates is withering, why is Australia any different.

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