Here are the words of warning from the AFR's editorial team, led by Michael Stutchbury. It is hard to disagree with:
The Australian Financial Review agrees with the RBA’s central scenario that we have indeed been blessed with the good fortune of being tied to the most dynamic part of the world economy. The unprecedented scale of our mining and energy boom, and perhaps our agricultural boom to come, gives us a natural growth impetus. Nevertheless the national debate needs to stay focused on the medium term and not be diverted by calls to resist the discomfort of adjustment, to spend all our bounty rather than save it, or to seek to artificially inflate consumer spending or house prices. And we must remain alert to the risks. For while the China story may be intact, China’s investment boom might not generate the expected returns, which would saddle its banks with bad loans. The one-party Chinese political system will be challenged to maintain the dynamism of recent decades and a political rupture would have untold repercussions, as would an explosive resolution of the euro crisis. And, if commodity prices turn down sharply rather than moderately, Australia’s budget bottom line would deteriorate rapidly. Australia is well placed but we must shore up our luck by maintaining the discipline of working hard for our supper. For only fools expect their luck to hold all the time.
