Steve Keen's Debtwatch

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.

I’m cur­rent­ly at the Fields Insti­tute in Toron­to, work­ing with math­e­mati­cians here to devel­op my mon­e­tary mod­els. I am tak­ing part in some “no maths barred” sem­i­nars every Tues­day:

http://www.fields.utoronto.ca/programs/scientific/11–12/nonlineareconomics/

But I will also give two rather more acces­si­ble talks while here. The first is on the pri­vate debt bub­ble and its impli­ca­tions for Cana­da:

Below is Lec­ture 3 from Steve’s Advanced Polit­i­cal Econ­o­my class at the Uni­ver­si­ty of West­ern Syd­ney. The class offers an in depth cri­tique of the fail­ures of neo­clas­si­cal the­o­ries, as well as detail­ing my approach to a new eco­nom­ics.

Lec­ture 3 — Neo­clas­si­cal Pro­duc­tion Fal­lac­i­es

Geoff Davies

Micheal Pas­coe wrote a great arti­cle yes­ter­day enti­tled; Throw­ing mon­ey at hous­ing is no cure for fear. He did a poet­ic job of con­trast­ing recent record car sales to the con­tin­u­ing stag­na­tion of the hous­ing mar­ket. Michael ref­er­enced ‘the warn­ing issued by the Reserve Bank two years ago about rely­ing on res­i­den­tial real estate for­ev­er ris­ing.’ To recap, Glenn Steven’s offi­cial state­ment was:

 “I think it is a mis­take to assume that a risk-less, guar­an­teed way to pros­per­i­ty is just to be lever­aged up into prop­er­ty”