Steve Keen's Debtwatch

What are your pre­con­cep­tions about the author of a book with the title The Next Eco­nom­ic Dis­as­ter: Why It’s Com­ing and How to Avoid It? Aca­d­e­m­ic? Left­ist? Anti-cap­i­tal­ist? Anti-banker cer­tain­ly?

Pre­pare to drop them all, because the author is none of the above. Tak­ing the last first, the major­i­ty of his career has been in bank­ing — and as a founder and CEO.

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Last week I made my first over­seas trip on which I ticked the box ‘Aus­tralian res­i­dent depart­ing per­ma­nent­ly’. It’s giv­en me cause to reflect on my career as an aca­d­e­m­ic econ­o­mist (and part-time jour­nal­ist) in Aus­tralia.

The Murray inquiry's observations on financial advice, household debt and super are commendable, but its boneheaded proposal for the government to underwrite RMBS is a concern.

A gov­ern­ment report is always a Parson’s Egg, and I’ll start with the parts of this one that were excel­lent. These were its wari­ness about and obser­va­tions on super­an­nu­a­tion, finan­cial advice and house­hold debt.

The Com­mon­wealth Bank’s response to the Sen­ate inves­ti­ga­tion of ASIC blames incom­pe­tence and indi­vid­u­als for the scan­dals at Com­mon­wealth Finan­cial Plan­ning Lim­it­ed. Chief exec­u­tive Ian Narev: “Poor advice pro­vid­ed by some of our advis­ers between 2003 to 2012 caused finan­cial loss and dis­tress and I am tru­ly sor­ry for that.”

This is the pre­dictable ‘rot­ten apple’ defence to alle­ga­tions of impro­pri­ety. And it is sim­ply absurd to describe some of the alleged actions of those advis­ers not­ed by the Sen­ate Report — such as “forgery and dis­hon­est con­ceal­ment of mate­r­i­al facts” (Sen­ate Inquiry Exec­u­tive Sum­ma­ry, p. xvi­ii) — as mere­ly “poor advice”. If the bank can describe that as “poor advice”, then a bank rob­ber would be enti­tled to describe his pro­fes­sion as “mak­ing with­drawals”.

The Abbott gov­ern­ment has react­ed with pre­dictable dis­dain to attacks over its poli­cies on refugees, home­less, uni­ver­si­ty stu­dents, unem­ployed, and wel­fare recip­i­ents. And why shouldn’t it? These are com­plaints from peo­ple who nor­mal­ly wouldn’t vote for them any­way, while the poli­cies them­selves appeal not only to “bolt­ed on” Lib­er­al vot­ers, but also to dis­af­fect­ed Labor vot­ers. It’s good pol­i­tics, even if the bad press means a tem­po­rary hit in the opin­ion polls.

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