International investors are famously skeptical about Australia’s economic performance.

Henry was once in Edinburgh trying to talk a canny Scot into buying Australian shares. At the end of his pitch, the canny Scot said, “We remember the last great mining collapse, laddie.”

Investors have remained wary about the “miracle economy” that is Australia’s stellar economic performance. Australian stocks were marked down along with those of the big developed nations when everything fell apart a year or so ago. Now, belatedly, Australian markets are finally showing some tendency to out-perform.

The Aussie dollar at US$.86 and rising; gold through US$1000 an ounce; the prices of oil, copper and silver rose further overnight; and the local share market is rising strongly and would seem likely to rise further yet.

Business confidence is up and rising further; household confidence has recovered, the official unemployment may be stabilizing, but hours worked are sharply down — but there is a favorable interpretation of that, as a flexible response to keeping good workers on the books despite lower sales.

Crisis, what crisis?

Risks remain, but now the risk of a “double dip” recession globally is being replaced by fear of inflation.

When history is written, it is likely that the theme will be that a Keynesian spending offensive, an expansionary monetary agenda and vital bank bailouts saved us from another great depression.