In May 2007, before the sub-prime mortgage bubble had burst in the USA, I published ‘Unlocking the Riches of Oz’, a summary of Australia’s real estate bubbles over the last 35 years.
Whilst it was based on Australian data, I considered it stood as a proxy for the same bubble/burst process that had taken place in most western countries. The current bubble in land prices was enormous.
As it eventuated, on the recommendations of US Treasury Secretary Hank Paulson in a telephone conversation* to the Australian Treasurer Wayne Swan, Kevin Rudd’s government took immediate steps to spend more than $50 billion in order to keep the Australian property bubble afloat.
Unlike the US, the Australian government’s action avoided an Australian recession, but simply ‘kicked the can down the road’ to a later date for a far greater financial collapse.
*Swan recounts the telephone call that he answered in his car at 6:30 am in Maroochydore on 10 January 2008 in the first chapter (‘No Ordinary Phone Call’) of “The Good Fight: Six years, two prime ministers and staring down the Great Recession”.