CHART OF THE DAY: Why Australia's Debt Ceiling Debate Is Stupid

The eyes of investors are on Australia as the debt ceiling debate threatens to put politics in the way of markets for the first time in decades.

Yesterday the Treasury Secretary, Martin Parkinson, stumbled into the argument confirming that the Treasury had advised the Government that a limit above the $430 billion “peak” level would be preferable.

He also noted that he didn’t want Members of Parliament to spook international markets and said: “We have seen in the US, politics getting in the way of good government.”

Indeed, and this chart from the ANZ Economics team shows just how stupid the hand-wringing is about the debt ceiling.

If you say $400 or $500 billion it sounds like a lot of money – and of course it is. But what’s important is the debt as a percentage of GDP.

On that count, this chart shows that Australia has nothing to worry about.

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