Author Archives: Cassander

The Depart­ments of Polit­i­cal Sci­ence and of Eco­nom­ics at the Uni­ver­si­ty of Helsin­ki recent­ly held a sem­i­nar enti­tled “Eco­nom­ics: Chal­lenges for Polit­i­cal, Philo­soph­i­cal and His­tor­i­cal Research”. The moti­va­tion was a reor­gan­i­sa­tion of the Uni­ver­si­ty that will com­bine these two Depart­ments. The fly­er for the sem­i­nar adver­tised it in the fol­low­ing man­ner:

This sem­i­nar, orga­nized joint­ly by the Depart­ment of Polit­i­cal Sci­ence, Depart­ment of Eco­nom­ics and Cen­tre of Excel­lence on Glob­al Gov­er­nance Research, will start with reflec­tions on the role of eco­nom­ics and eco­nom­ic stud­ies.

• Can we com­bine eco­nom­ics and pol­i­tics through polit­i­cal econ­o­my?
• Have polit­i­cal and eco­nom­ic stud­ies neglect­ed his­to­ry?

Michael Hud­son was a recent and wel­come vis­i­tor to Aus­tralia, and I helped arrange a talk by him at Cus­toms House that many peo­ple on this blog sup­port­ed finan­cial­ly, and quite a few attend­ed. My own attempt to record the speech was unsuccessful–the sound qual­i­ty was just too low–but anoth­er record­ing of  the event (by Sean Reynolds from Pol­i­tics in the Pub) was more suc­cess­ful than mine. Here it is below. My apolo­gies for tak­ing so long to post it, but I’ve been even busier than usu­al recent­ly and I sim­ply did­n’t have the time to do so until now.

I haven’t yet had time to post Michael Hud­son’s talk at Cus­toms House–hopefully I’ll man­age that this weekend–but in the mean­time here is the talk I gave a cou­ple of days ear­li­er at Per Capi­ta’s Pol­i­cy Exchange 2009 Con­fer­ence in Can­ber­ra on Octo­ber 21st 2009. The good folk at SlowTV put this togeth­er, and this is the link to the video on their site.

So I’m walk­ing to Kosciusko–now that the ABS Estab­lished House Price Index has cracked its Sep­tem­ber 2008 peak of 131 to reach an all-time high of 134.4 (as of Sep­tem­ber one year lat­er). This renewed bub­ble reversed the trend of falling nom­i­nal house prices that had dropped the index to a low of 123.8 in March 2009.

This lev­el of price volatility–down 5.5% in 6 months, only to rise 8.5% in the sub­se­quent six months–almost match­es the stock mar­ket’s man­ic-depres­sive per­for­mance.

Part 1: The USA

The most recent “unex­pect­ed­ly good” growth fig­ures for the USA appear to indi­cate that what will still be the worst down­turn since the Great Depres­sion is final­ly over.

How­ev­er this is not your usu­al down­turn. Not only is it acknowl­edged as the most severe since the Great Depres­sion, it has also evoked the most remark­able gov­ern­ment eco­nom­ic stim­u­lus ever seen. It would be bizarre if this had not had an effect on the data.

Whether a recov­ery is tru­ly under­way in the pri­vate sec­tor there­fore depends on how the econ­o­my is like­ly to per­form after the stim­u­lus is with­drawn.

If I was asked to nom­i­nate the wis­est apho­rism of all time, Mark Twain’s “His­to­ry doesn’t repeat, but it sure does rhyme” would def­i­nite­ly be one of my top two can­di­dates.

On song, today Wall Street is replay­ing the 1930s, but to a slight­ly dif­fer­ent meter. With the 80^th anniver­sary of  the Great Crash of 1929 falling on Octo­ber 29^th of this year, Wall Street is cel­e­brat­ing in char­ac­ter­is­tic style–with a eupho­ria-led bub­ble that now appears to be crash­ing up against eco­nom­ic real­i­ty.

Ken­neth David­son has been one of the most con­sis­tent voic­es for sen­si­ble eco­nom­ic analy­sis in the Aus­tralian media for decades now (anoth­er I’d give a sim­i­lar acco­lade to is Bri­an Toohey), and he’s writ­ten a bril­liant piece in The Age and The Syd­ney Morn­ing Her­ald on the specual­tive bub­ble that is the Aus­tralian dol­lar.

David­son lays out the caus­es and prob­a­ble effects superbly in the length of a news­pa­per fea­ture. The caus­es are that:

• The bailout funds in the USA and UK in par­tic­u­lar have cashed up finan­cial insti­tu­tions that don’t want to lend any more to mort­gages (and have long ago for­got­ten how to lend to fund pro­duc­tive enter­pris­es), so they’re look­ing for short term hot mon­ey gains;

As I’ve not­ed here ear­li­er, the blog newsfrom1930 per­forms a very valu­able “real­i­ty check” for today by each day pub­lish­ing a sum­ma­ry of the Wall Street Jour­nal from the same day in 1930. The over­whelm­ing flavour of reports from that time is that the Depres­sion was over and recov­ery was immi­nent. Plus la change…

This week it’s offer­ing anoth­er service–publishing sum­maries of news reports from one year ear­li­er: 1929. The rea­son, of course, is that we are approach­ing the 80th anniver­sary of “Black Tues­day”: the day in 1929 when the Dow Jones fell for more than 10 per­cent for a sec­ond day in a row, bring­ing to an emphat­ic end the bull mar­ket of 1929 and ush­er­ing in the Great Depres­sion.

Paul Krug­man some­times intro­duces his more com­pli­cat­ed posts on his blog as being “wonk­ish”. This post is wonk­ish in spades–though in the linked papers rather than the con­tent here.

I’ve just fin­ished the first rea­son­able descrip­tion of my mul­ti-sec­toral mon­e­tary mod­el of pro­duc­tion, which I’ll be pre­sent­ing at the Paul Wool­ley Cen­tre for Cap­i­tal Mar­ket Dys­func­tion­al­i­ty con­fer­ence lat­er this month.

There’s lots more to add before the mod­el is com­plete, but this is a work­ing first draft. Lat­er addi­tions will include a ten­den­cy to equalise prof­it rates across sec­tors and fixed cap­i­tal, as well as fiat mon­ey cre­ation in addi­tion to pure cred­it mon­ey as in this mod­el.

In the spir­it of “we all need a laugh”, this list of jokes is doing the rounds in the USA: