Steve Keen's Debtwatch

The Euro­pean Sta­bil­i­ty and Growth Pact is based on the prin­ci­ple that sta­bil­i­ty and growth are enhanced when gov­ern­ment deficits are either min­imised or elim­i­nat­ed. I want you to dis­pas­sion­ate­ly con­sid­er an argu­ment that reach­es a dif­fer­ent con­clu­sion. It may sound like some­thing you have heard before from oth­ers and already dis­missed. But bear with me.

I’ve spent the past two weeks in Europe, with speak­ing engage­ments in Italy, Greece and Aus­tria. This was my first vis­it to Greece, and my first chance to get an admit­ted­ly super­fi­cial tourist’s view of what a coun­try with Great Depres­sion lev­els of unem­ploy­ment looks like.

It didn’t look like any­thing in par­tic­u­lar until the dri­ve from Athens, Greece’s cap­i­tal and largest city, to Thes­sa­loni­ki, its sec­ond largest. Then it struck me: the roads were near emp­ty — as the toll booth shown in Fig­ure 1 illus­trates. My host Nikos reck­ons he has done a mil­lion kilo­me­ters over the years on this 500km dri­ve, and he con­firmed that roads which were now vir­tu­al­ly emp­ty were once full of cars, and espe­cial­ly trucks — that mobile sign of a thriv­ing econ­o­my.

This is the talk I gave on this top­ic in Vien­na yes­ter­day. Once I have time, I’ll post the slides and the data.

This is the talk I gave at the Finance, Math­e­mat­ics and Phi­los­o­phy sem­i­nar orga­nized by the Depart­ment of Phi­los­o­phy and the Depart­ment of Physics at Sapien­za Uni­ver­si­ta de Roma. It was an extreme­ly good con­fer­ence, with the spe­cial bonus that I got to meet one of my heroes in non­lin­ear dynam­ics, Ping Chen.

PS Video below init­lal­ly linked only to the adver­tise­ment before my video. That is fixed now, and I only hope my bags also get found after going astray in Rome air­port.

I’ll fol­low up with my paper short­ly, once I have time to com­plete it.

Kingston Uni­ver­si­ty has adver­tised three fixed-term lec­tur­er posi­tions with a very tight dead­lline of June 22nd, with inter­views to be held on July 1st. Appli­ca­tions from econ­o­mists with a research area in het­ero­dox eco­nom­ics are wel­come.

For queries please con­tact Julian Wells (J.Wells AT kingston.ac.uk), who is the Direc­tor of Stud­ies.

The for­mal details of the posi­tions are below.

Ref­er­ence Num­ber: 1264

Salary: £35770-£38869

Fac­ul­ty / Depart­ment: Fac­ul­ty of Arts & Social Sci­ences

School / Sec­tion: School of Eco­nom­ics, His­to­ry and Pol­i­tics

Loca­tion: Pen­rhyn Road Map & Direc­tions

Permanent/Fixed Term: Fixed Term (FTC)

Full Time/Part Time: Full Time

Aus­tralia could have been the world leader in lap­top com­put­ers — if we didn’t have a brain-dead finan­cial sec­tor.

Han­nah Fran­cis’ arti­cle last week about the Vix­tel Uni­ty — a new Aus­tralian-designed mul­ti-func­tion Tablet/Laptop/Phone (The three-in-one Aussie device that could kill the PC) — seri­ous­ly stopped me in my tracks when I saw that its devel­op­er was Ter­ry Crews. For that rea­son alone, I popped over to the Indiegogo site where Vix­tel is run­ning a crowd-fund­ing cam­paign and chipped in $645 towards its $100,000 goal — for which I’ll receive one of the first pro­duc­tion run tablets that will be avail­able in July (about 4 to 6 weeks from now).

Diver­si­ty — not spe­cial­i­sa­tion — is the advan­tage.

When I was invit­ed to speak at a con­fer­ence in Bonn some years ago, my host insist­ed that I stay with him, rather than in the con­fer­ence accom­mo­da­tion. I expect­ed to find myself in a sub­urb of Bonn, but instead we drove to a tiny vil­lage with just 5,000 inhab­i­tants 130km away.

The bonus was that this was July 4, on which date each year a local Phil­har­mon­ic group put on an open-air con­cert on the banks of an near­by extinct volcano’s caldera lake. The whole town was there for the event, and my host intro­duced me to a love­ly old cou­ple sit­ting on a park bench.

It was an inter­est­ing expe­ri­ence to be part of the bud­get lock-up last week, but as I warned in my arti­cle, I could make mis­takes under that time pres­sure — and I did. I’ll cor­rect them below, but I want to open with a dec­la­ra­tion that I nev­er expect­ed to make: that the best sense I heard spo­ken about the bud­get was uttered by nei­ther Lib­er­al nor Labor nor Green, but by Clive Palmer.

NOTE: I made an error in my arith­metic in this post which I’m fix­ing up after too lit­tle sleep last night thanks to the post-Bud­get lock­up drinks: the basic log­ic is OK but the num­bers are wrong. I’ll link nonethe­less and amend the num­bers tomor­row.

Will the Lib­er­al Party’s his­toric eco­nom­ic for­tune hold for this bud­get? Bal­anc­ing Joe Hockey’s books would seem to require Aus­tralian pri­vate sec­tor debt around 250 per cent of GDP by 2025…

If the US econ­o­my was per­form­ing as well as the US stock­mar­ket, even Wal­mart work­ers would be break­ing out the cham­pagne.

Since 2009, the S&P has risen over 250 per cent in nom­i­nal terms, and almost 230 per cent in infla­tion adjust­ed terms. In nom­i­nal fig­ures, it is at its high­est val­ue ever, though when you adjust for infla­tion, it is still 10 per cent below its peak in 2000 (see Fig­ure 1).

The $64 ques­tion is: will it keep on going up?

Fig­ure 1: The S&P 500 before and after infla­tion