Click here for this data in Excel: Debt­watch; CfE­SI
Click here for this post in PDF: Debt­watch; CfE­SI

Steve Keen, Uni­ver­si­ty of West­ern Syd­ney
Matheus Gras­sel­li, Fields Insti­tute, Toron­to

“It ain’t what you don’t know that gets you into trou­ble. It’s what you know for sure that just ain’t so.” (Mark Twain)

Introduction

That the Euro has fall­en into cri­sis a mere decade after its intro­duc­tion is hard­ly sur­pris­ing. The intrin­sic prob­lems in its design were evi­dent to econ­o­mists as wide­ly sep­a­rat­ed intel­lec­tu­al­ly as Wynne God­ley and Mil­ton Fried­man. Writ­ing in 1992, God­ley observed that

The Fall of the Com­mu­nist Dynasty and The Loot­ing of Chi­na touched on the wide­spread fraud that has become appar­ent, both in main­land and US list­ed Chi­nese com­pa­nies. I also showed that an extra­or­di­nary num­ber of the Com­mu­nist Par­ty and the mil­i­tary cadre  had mas­sive unex­plained wealth, with the Top 70 record­ing a net col­lec­tive worth of over $80 bil­lion. This week Bloomberg  was banned by the Chi­nese gov­ern­ment for report­ing the incom­ing pres­i­dents fam­i­lies assets at over $367M.

As Xi climbed the Com­mu­nist Par­ty ranks, his extend­ed fam­i­ly expand­ed their busi­ness inter­ests to include min­er­als, real estate and mobile-phone equip­ment, accord­ing to pub­lic doc­u­ments com­piled by Bloomberg.

Earth­shar­ing Aus­tralia, in col­lab­o­ra­tion with Pros­per Aus­tralia and the Land Val­ue Research Group (LVRG), has put togeth­er the Spec­u­la­tive Vacan­cies in Mel­bourne: 2012 Report, authored by Philip Soos. The report is for­mu­lat­ed from water usage data pro­vid­ed by City West Water and Yarra Val­ley Water to esti­mate prop­er­ty vacan­cies in the Mel­bourne area.

Earth­shar­ing Aus­tralia has been pro­duc­ing the Spec­u­la­tive Vacan­cies report annu­al­ly since 2008. The report clas­si­fies a vacant prop­er­ty as real estate show­ing water con­sump­tion less 50 litres per day (50L/d) aver­aged over the six months peri­od, July-Decem­ber 2011.

I can scarce­ly believe what Brad Delong has dared to pub­lish on Project Syn­di­cate today:

We econ­o­mists who are steeped in eco­nom­ic and finan­cial his­to­ry – and aware of the his­to­ry of eco­nom­ic thought con­cern­ing finan­cial crises and their effects – have rea­son to be proud of our analy­ses over the past five years. We under­stood where we were head­ing, because we knew where we had been.

In par­tic­u­lar, we under­stood that the rapid run-up of house prices, cou­pled with the exten­sion of lever­age, posed macro­eco­nom­ic dan­gers. We rec­og­nized that large bub­ble-dri­ven loss­es in assets held by lever­aged finan­cial insti­tu­tions would cause a pan­icked flight to safe­ty, and that pre­vent­ing a deep depres­sion required active offi­cial inter­ven­tion as a lender of last resort.…

Below is the talk I gave to the Cana­di­an Cen­tre for Pol­i­cy Alter­na­tives on the Debt Bub­ble and its impli­ca­tions for Cana­da. I cov­er my Min­skian analy­sis of the Depres­sion in gen­er­al, and con­clude with data on the Cana­di­an econ­o­my. The mort­gage accel­er­a­tion data in par­tic­u­lar implies that the Cana­di­an house price bubble–which is not as big as those in Aus­tralia, the USA or the UK–is close to being over.

This is the screen record­ing of the talk–better for read­ing the slides them­selves.

I’ll edit the post tomor­rrow to add links to the Pow­er­point slides and an audio recording–I can’t access the servers right now to upload them.

Max Keis­er, recent­ly crowned the most dan­ger­ous per­son in the finan­cial media, inter­viewed me for Episode 307 of the Kaiser Report.

Next Fri­day at 4.30PM, I’ll be live in the Wash­ing­ton stu­dio with two oth­ers who should be on that list, Lau­ren Lyster and Demetri Kofi­nas of The Cap­i­tal Account.

As I set out in The Fall of the Com­mu­nist Dynasty, and a HT to John Hempton’s piece with­in which he con­tends that the entire Chi­nese econ­o­my is a Klep­toc­ra­cy , this week we have news from Cit­ron Research who reports that  Ever­grande Real Estate Group Ltd is ‘a decep­tion on a grande scale’ .

Cit­ron quote ;-

‘Ever­grande who ranks among the top 5 Chi­nese prop­er­ty com­pa­nies. Our analy­sis and pri­ma­ry research reveal that: 1] Ever­grande is insol­vent; and  2] Ever­grande will be severe­ly chal­lenged from a liq­uid­i­ty per­spec­tive. The Company’s man­age­ment has applied at least 6 account­ing shenani­gans to mask Evergrande’s insol­ven­cy. Our research indi­cates that a total write-­down of RMB 71bn is required and Evergrande’s pro for­ma equi­ty is neg­a­tive 36bn.’

Move over Arnie. Google tells me that “Hablan­do en pla­ta” trans­lates as “Talk in Sil­ver”. OK, so it does­n’t have the ring of “Has­ta La Vista, Baby!”, let alone the dra­mat­ic impact, but it’s now become part of my pid­gin-Span­ish ver­nac­u­lar.

Why? Watch this video–and pay close atten­tion at about the 1 minute 15 sec­ond mark.

Amaz­ing­ly, this has had over 400,000 views: http://www.youtube.com/watch?v=09YSNOsVebM.

This is the sec­ond video from Steve’s talks at the Fields Insti­tute in Toron­to Cana­da, enti­tled A Mon­e­tary Min­sky Mod­el. The talk focus­es on inte­grat­ing the the­o­ries of Hyman Min­sky into math­e­mat­i­cal mod­el­ling.