Bestselling author Peter Zeihan has predicted that Australia is facing a depression that could last half a decade.
Zeihan, a geopolitics expert and author of The End of the World is Just the Beginning, warned in a Youtube video that Australia will be hit hard by a collapse in Chinese commodity demand combined with a lack of domestic production and a homegrown sub-prime mortgage problem.
However, he predicts Australia’s economy will be rescued by its alliance with the United States and its natural resources.
“Of all of the western nations, Australia is absolutely the one that has gotten into bed the deepest with the Chinese economically,” Zeihan said in the seven-minute clip.
“That’s going to be a problem moving forward because a lot of the Chinese demand has never been economically viable.
“So, it’s not that Australia is looking at a recession, it’s that they’re looking at a depression that’s probably going to last a half a decade. And that’s going to be horrible.”
Zeihan said Australia’s sub-prime mortgage problem is five times larger than the US’s before the 2008 Global Financial Crisis, and said the problem had festered over 15 years.
He warned that a “sharp de-globalisation or de-Chinafication” would cause all three problems to hit at the same time, but said the silver lining is that Australia is at the top of the list of US allies and one of the few that enjoys a free trade agreement with the US.
