Hubris and other signs of trouble ‘down under’

Australia is rich in iron ore, coal and copper … and its stock of hubris seems to be growing.

After a recent trip to the “quarry in China’s backyard” SocGen’s Dylan Grice is even more worried about its economy than he was beforehand. It seems a book describing Australia’s economic success as “a miracle” was the catalyst (more on that below). In a note to clients Grice is recommending shorting the aussie dollar. And, if you’re lucky enough to be Australian, stockpiling gold.

But let’s rewind. His point is that the commodity boom has masked the full extent of the credit expansion and has fooled some into thinking the country’s economy is stronger than it really is.