Aussies $1.2 trillion in debt

In a new record, Australians now owe more in household debt than the country's
entire economy earns in a year.
Reserve Bank figures show mortgage, credit card and personal loan debts now stand at
$1.2 trillion, up 71 per cent from just five years ago and equating to $56,000 for
every man, woman and child in the country, News Ltd says.
Our spending binge, fuelled most recently by the federal government's First Home
Owner Grant, means personal debt now totals 100.4 per cent of Australia's annual GDP
- one of the highest ratios in the developed world.
"It's the first time household debt has cracked 100 per cent of annual GDP and it's
a terrible, terrible sign," University of NSW economics professor Steve Keen told
News Ltd.
"It shows we are living beyond our means and many highly geared borrowers are now
extremely vulnerable to further rate rises - they are already saturated with debt
and will not be able to tolerate much of an increase to their repayments."
Australia's financial headache is likely to get worse before it gets better. The
country is in the midst of the peak spending season, when billions goes on the
plastic, yet the Reserve Bank data dates back to October's debt levels only, so that
means there are another two months of First Home Owner Grant-fuelled mortgage
activity still to be taken into account.
The extra cost is expected to add billions to the burgeoning debt tally.