Perception affects business and consumer confidence, and our perceptions of the European debt crisis are influenced by scary statistics which - says Professor Neville Norman of Melbourne University - are often exaggerated. It's important, he reminds us, to separate public debt from private and to look at debt servicing ratios rather than the size of the debt itself. Despite all the recent conjecture about interest rates, he sticks to his forecast of a small cut in the near future, but predicts that the US dollar exchange rate could fall into the 80 cent range during 2012- which would still leave it well above its level of two years ago.
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