Steve Keen's Debtwatch

I gave the talk below last Sun­day at UWS’s Open Day, as an into­duc­tion to eco­nom­ics for prospec­tive uni­ver­si­ty stu­dents. Prepar­ing it made me reflect on the great good for­tune I had to be appoint­ed to UWS.

This might evoke a “Huh?” response from the usu­al sus­pects on such issues–why be pleased about being appoint­ed to a sec­ond-rate Uni­ver­si­ty (and in an out-of-the-way place like Syd­ney to boot)? It’s because the Eco­nom­ics & Finance pro­gram at UWS has been almost unique amongst eco­nom­ics depart­ments around the world in delib­er­ate­ly pur­su­ing a “plu­ral­ist” approach to eco­nom­ics.

Bernie Mad­off, is often the first per­son that comes to mind when you men­tion the words Ponzi scheme these days, in the midst of the ongo­ing finan­cial cri­sis. The Mad­off Ponzi scheme fab­ri­cat­ed almost $65 bil­lion of mon­ey that didn’t exist. The expo­nen­tial rela­tion­ship between find­ing new investors mon­ey to fund­ing the old investors overzeal­ous and unsus­tain­able gains were bound to come crash­ing down as new investors were nowhere to be seen,having lost con­fi­dence in the mar­kets in the after­math of the 2008 crash. One would think that investors would have learnt their les­son on when returns are too high and can not be jus­ti­fied by any legit­i­mate mar­ket­place, but old habits die hard in the cur­rent finan­cial cri­sis!

Below is a great inter­view with Steve and Simon Maude — a pre­lude to Steve’s New Zealand tour, host­ed by talk­sNZ. Steve reit­er­ates how today’s eco­nom­ic envi­ron­ment is the begin­ning of a debt induced depres­sion, how this could give rise to polit­i­cal insta­bil­i­ty, and hits some of his well regard­ed notes on exces­sive bank lend­ing.

We are all speak­ing at the Amer­i­can Mon­e­tary Insti­tute con­fer­ence in September–from Thurs­day 20th till Sun­day 23rd. The full list of speak­ers is here. It’s a chance to hear peo­ple who are all inter­est­ed in mod­el­ing the finan­cial sys­tem and mon­e­tary reform in gen­er­al, but who approach it in very dif­fer­ent ways:

My dynam­ic non-equi­lib­ri­um Cir­cuit approach;

Michael Kumhof’s DSGE mod­el with bank­ing; and

Kaoru Yam­aguchi’s sys­tems engi­neer­ing mod­el (designed in Ven­sim)

As well as hear­ing Michael Hud­son and Eliz­a­beth Kucinich (wife of Con­gress­man Den­nis Kucinich).

By Philip Soos

The Con­ver­sa­tion

The lev­el of sub-prime mort­gages in Aus­tralia may be far in advance of what was pre­vi­ous­ly assumed and pro­vid­ed for by banks. The sto­ry was bro­ken on the ABC, and cov­eredelse­where. The rev­e­la­tions cen­tred around two per­son­al­i­ties: Kate Thomp­son and Denise Brai­ley.

Steve will be tour­ing New Zealand from Thurs­day 6^th Sep­tem­ber through till Mon­day 10^th Sep­tem­ber, at the invi­ta­tion of talk­sNZ, to give 3 exclu­sive sem­i­nars. These will include exam­i­na­tion of eco­nom­ics as a real world con­cern, and analy­sis of the glob­al finan­cial sit­u­a­tion and the New Zealand econ­o­my. Steve will be pre­sent­ing 2 sem­i­nars in Auck­land and 1 in Welling­ton, with the dates/times sched­uled as fol­lows:

Top­ic:   The New Zealand and Aus­tralian Asset Mar­kets

Date:     Fri­day 7 Sep­tem­ber
Time:     8.45am — 3.00pm
Venue:   Bar­rycourt Hotel
20 Glad­stone Rd, Par­nell, Auck­land

Top­ic:   The Glob­al Econ­o­my

By Thomas Palley

Last Fri­day 3^rd August, Dr. Matheus Gras­sel­li from the Fields Insti­tute in Toron­to Cana­da presents an in depth talk on the math­e­mat­i­cal foun­da­tions of the Keen-Min­sky Mod­el on finan­cial insta­bil­i­ty. Steve spent 6 weeks with Matheus at the Fields Insti­tute over June and July, with an inten­sive research agen­da to progress the math­e­mat­i­cal log­ic behind Min­sky.  The event was held at UWS. Unfor­tu­nate­ly the audi­ence ques­tions are dif­fi­cult to hear with micro­phone set­up that was used, and there is a small break in the footage at 12 min­utes and 18 sec­onds in.

Click here to view Matheus’s research paper.

On this day 5 years ago, the glob­al eco­nom­ic cri­sis began. The trig­ger was the deci­sion by BNP to sus­pend redemp­tions from funds that were linked to the US hous­ing mar­ket. Those of us who had been expect­ing a debt-defla­tion­ary cri­sis
and warn­ing about it
for some time (see also here and here) could nev­er have picked the trig­ger itself—that would have been prophe­cy, not prediction—but very rapid­ly it was clear that this was it.

(Click here for this post in PDF)

Fig­ure 1

The site “Home­Loan­Find­er” has pub­lished an amus­ing set of pro­files of com­men­ta­tors on the Aus­tralian prop­er­ty mar­ket, includ­ing yours tru­ly. As well as pro­vid­ing some cute car­i­ca­tures, it gives con­tact details for us all.