So the current account deficit has widened once again to $15.6 billion, our worst ever figure, pushing our foreign debt to a new height of $425 billion, 7.2% of GDP, according to J P Morgan.

Standard & Poor’s says the deficit is the biggest risk to Australia’s AAA credit rating. We’re already setting ourselves up to pay plenty of interest to overseas investors. What will happen if we get a credit downgrade? The “it’s largely private debt” arguments the government’s been hiding behind will be harder to sustain.

Which leads us to one of Crikey’s favourite obsessions. What’s behind this debt? We’re not going to offer an opinion – but will take the liberty of steering you off to John Garnaut’s comments in TheSydney Morning Herald today:

Most economists agree that the current account deficit has been inflated by the housing bubble, which, in turn, has been partly fuelled by taxes and other policies that divert investment away from productive enterprises and into real estate.

Thus, on that analysis, the treasurer, Peter Costello, should be dissecting the housing bubble and asking hard questions about economic policy, especially tax. His assurances in Parliament betrayed no such concerns.