Steve Keen's Debtwatch

Krug­man would def­i­nite­ly sub­ti­tle a post like this “Wonk­ish”!

Click here for this post in PDF: Debt­watch; CfE­SI

This is a paper I’ve recent­ly sub­mit­ted by invi­ta­tion to an Aus­tralian eco­nom­ics jour­nal. I have been very qui­et on the blog while fin­ish­ing this in the last 2 weeks. I’m like­ly to remain qui­et for the next fort­night, since I leave for the Fields Insti­tute in Toron­to on June 1^st, where I’ll be work­ing for a month with the math­e­mati­cians there to ana­lyze and refine my var­i­ous mod­els of finan­cial insta­bil­i­ty. Gras­sel­li and Cos­ta Lima have already done a bril­liant job ana­lyz­ing my 1995 mod­el in this paper.

For those who are unfa­mil­iar with this quote, it is tak­en from The Foun­tain­head, by Ayn Rand, and I rec­om­mend it as a high­ly amus­ing fic­tion­al read. I do find it rather iron­ic that this quote is eas­i­ly applic­a­ble to Pro­fes­sor Steve Keen’s con­struc­tive­ly cre­ative approach to eco­nom­ic the­o­ry. Sad­ly, neo­clas­si­cal eco­nom­ics— today’s con­ven­tion­al eco­nom­ic current–is the sec­ond han­der of this defunct “free mar­ket” eco­nom­ic pos­tu­late that Ayn Rand helped cul­ti­vate through her far right-wing phi­los­o­phy of Objec­tivism. If neo­clas­si­cal eco­nom­ics is a reli­gion, then Objec­tivism is more of a cult! Even more amus­ing than her fic­tion­al  nov­els them­selves, was that Ayn Rand refused to drink her own Kool-Aid when she used the very wel­fare sys­tem that she spent her life cam­paign­ing against.

Mish Shed­lock has just let us know that his wife Joanne, who has been suf­fer­ing from the degen­er­a­tive Lou Gehrig’s Dis­ease, has just passed away.

Mish has kept this prob­lem to him­self until the final months, when he launched an appeal to raise funds for research into this dis­ease. He is con­tin­u­ing that cam­paign now, so please con­sid­er mak­ing a dona­tion to assist (or buy­ing a lot­tery tick­et).

David Burchell pro­vides his inter­pre­ta­tion of the Keen vs. Krug­man debate on RadioN­a­tion­al Coun­ter­point with Michael Duff and Paul Com­rie-Thom­son.

By Michael Edesess

 Source: Advi­sor Per­spec­tives

A foun­da­tion­al prin­ci­ple of mod­ern eco­nom­ics is that the cre­ation of cred­it leads to eco­nom­ic growth. That pre­cept under­lies need for quan­ti­ta­tive eas­ing, and it is cen­tral to the ques­tion of what role mon­e­tary pol­i­cy can and should play in stim­u­lat­ing a faster recov­ery from the Great Reces­sion. It is also the sub­ject of a debate between one of the world’s most promi­nent eco­nom­ic schol­ars, Paul Krug­man, and a feisty Aus­tralian econ­o­mist, Steve Keen.

Paul Krug­man is wide­ly appre­ci­at­ed for his New York Times columns crit­i­ciz­ing Repub­li­can demands for fis­cal aus­ter­i­ty. He right­ly argues that cut­ting back pub­lic spend­ing will wors­en the eco­nom­ic depres­sion into which we are sink­ing. And despite his par­ti­san Demo­c­ra­t­ic Par­ty pol­i­tick­ing, he warned from the out­set in 2009 that Pres­i­dent Obama’s mod­est counter-cycli­cal spend­ing pro­gram was not suf­fi­cient­ly bold to spur recov­ery.

These are the themes of his new book, End This Depres­sion Now. In old-fash­ioned Key­ne­sian style he believes that the solu­tion to insuf­fi­cient mar­ket demand is for the gov­ern­ment to run larg­er bud­get deficits. It should start by giv­ing rev­enue-shar­ing grants of $300 bil­lion annu­al­ly to states and local­i­ties whose bud­gets are being squeezed by the decline in prop­er­ty tax­es and the gen­er­al eco­nom­ic slow­down.

LECTURER IN POLITICAL ECONOMY (2 vacan­cies)

FACULTY OF ARTS AND SOCIAL SCIENCES

SCHOOL OF SOCIAL AND POLITICAL SCIENCES

REFERENCE NO. 628/0412

. Join a lead­ing arts fac­ul­ty

. Work in a col­lab­o­ra­tive and sup­port­ive inter­dis­ci­pli­nary envi­ron­ment

. Full-time, con­tin­u­ing: $104.6K — $124.2K p.a. (includ­ing salary, leave load­ing and up to 17% super)

The Uni­ver­si­ty of Syd­ney is Aus­trali­a’s first uni­ver­si­ty and has an out­stand­ing glob­al rep­u­ta­tion for aca­d­e­m­ic and research excel­lence. It employs over 7500 per­ma­nent staff sup­port­ing over 49,000 stu­dents.

The lack of expan­sion in the Aus­tralian pri­vate cred­it mar­kets is cer­tain­ly hav­ing an adverse effect on com­merce in the post 2008 finan­cial cri­sis peri­od. Annu­al pri­vate cred­it growth has aver­aged 3.5%, since it dropped down to sin­gle dig­it fig­ures in Octo­ber 2008.

Per­son­al cred­it and busi­ness cred­it have been the deadweight’s, aver­ag­ing an annu­al growth of ‑1% and ‑0.5% respec­tive­ly. Hous­ing cred­it has off­set this with an aver­age annu­al growth rate of 6.9% since Octo­ber 2008. How­ev­er, this has since slowed to an aver­age annu­al rate of 5.3% for the first 3 months of this year and is con­tin­u­ing on this slow­ing trend. With sig­nif­i­cant­ly less cred­it com­ing into the mar­ket, the Gov­ern­ment have had no choice but to com­pen­sate deficit spend­ing.

There are sev­er­al providers of sta­tis­tics on Aus­tralian house prices, but only one that does­n’t have a vest­ed inter­est in the direc­tion house prices actu­al­ly move in: the Aus­tralian Bureau of Sta­tis­tics. So despite the crit­i­cisms of this series—that it’s based on detached dwellings only, based on medi­an sales data, too infre­quent, not adjust­ed for “hedo­nic” dif­fer­ences between hous­es, etc., it’s the only one I trust.

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

The fol­low­ing is a mini-doc­u­men­tary that was screened on one of the final days at the recent Insti­tute of New Eco­nom­ics Think­ing (INET) con­fer­ence held in Berlin.

Finan­cial sta­bil­i­ty, or the lack there­of. Lead­ing thinkers speak out on what they feel is at the core of the prob­lem.