Steve Keen's Debtwatch

(My apolo­gies for the pre­vi­ous post–I did­n’t check the YouTube link**, which was to an ear­li­er video.)

I gave the pre­sen­ta­tion below to a Grif­fith Uni­ver­si­ty sym­po­sium on Finance the­o­ry “after” the GFC/Great Reces­sion.

Speak­ers only had 20 min­utes, and if you think I nor­mal­ly speak fast, brace your­self for the speed of this pre­sen­ta­tion. I sug­gest you keep the mouse near the “pause” but­ton in case you want to spend more time read­ing some of the text–which is also here of course in the Pow­er­point File.

I’m tak­ing part in an Intel­li­gence Squared Aus­tralia debate on pop­u­la­tion enti­tled “If we keep pop­u­lat­ing we will per­ish” on Tues­day July 26th at the City Recital Hall in Angel Place, Syd­ney.

The speak­ers are, on the affir­ma­tive, myself, Dick Smith, and Sen­a­tor Laris­sa Waters (Greens, QLD). The neg­a­tive case will be put by Tan­veer Ahmed, Frank Bren­nan and Wayne Goss.

If you’d like to take part, tick­ets are $32 per per­son or $22 per stu­dent or pen­sion­er, and can be pur­chased from this link.

I’ve done numer­ous inter­views on Al Jazeera’s news and busi­ness pro­grams over the last 5 years; this is the first one I’ve been sent a clip of–and I’ll try to keep get­ting them now that the Prof­Steve­Keen YouTube Chan­nel is up and run­ning.

The top­ic was the role of the Cred­it Rat­ing Agen­cies and their role in the cri­sis. Though the inter­views are short new pieces and don’t leave time to get into top­ics in any great detail, the fact that Al Jazeera cov­ers top­ics like this in some crit­i­cal detail puts it sev­er­al steps ahead of the media pack, espe­cial­ly in the US and Aus­tralia.

That tran­scen­den­tal truth occurred to me while writ­ing the sec­ond edi­tion of Debunk­ing Economics–which will be pub­lished in Sep­tem­ber. In this video, I point out the most egre­gious instance of this, the “Son­nen­schein-Man­tel-Debreu” (SMD) con­di­tions. This refers to research by lead­ing neo­clas­si­cal econ­o­mists on whether the so-called “Law of Demand” that can be proven for an indi­vid­u­al’s demand curve applies to a mar­ket demand curve.

The “Law of Demand” is the propo­si­tion that, if a com­mod­i­ty’s price falls, the demand for it will rise. That sounds like a rea­son­able state­ment at first glance–and it will often be true in the real world. But it is an arti­cle of faith for econ­o­mists that this is always true.

One of the bonus­es of my recent trip to Madrid for the SASE con­fer­ence was being able to drop in to see Max Keis­er and Sta­cy Her­bert in Paris. We record­ed two inter­views, one for The Keis­er Report and anoth­er much longer inter­view for On The Edge.

Max and I cov­er a wide range of top­ics in this 23 minute inter­view: the cri­sis itself, shad­ow bank­ing, the inter­play of Glob­al Warm­ing, Peak Oil and Chi­na with the Great Reces­sion,  my new book, Debunk­ing Eco­nom­ics II (which is com­ing out in Sep­tem­ber)… And we had a lot of fun in the process.

Hi every­one.

This is a request for feed­back, rather than infor­ma­tion or analy­sis from me: if you want­ed to see where the Aus­tralian prop­er­ty mar­ket is frag­ile now, where would you go?

Obvi­ous places to check in gen­er­al are Perth and Gold Coast, but I’d like some more specifics (sub­urbs and, if pos­si­ble, streets) that only local knowl­edge can pro­vide.

In the Aus­tralian con­text, fore­clo­sures won’t pro­vide the data–as a sub­scriber recent­ly point­ed out, there are only about 400 mort­gagee sales list­ed coun­try­wide on realestate.com.au. But there are about 4,000 “moti­vat­ed ven­dors” out there, which is often a sign that ven­dors are under lender pres­sure to sell. Oth­er use­ful indi­ca­tors are areas where there have been sub­stan­tial price drops.

My focus is and will remain on explain­ing how the cri­sis came about, but in the mid­dle of the cri­sis, gov­ern­ment poli­cies have the poten­tial to either lessen the cri­sis or make it more extreme. Two of the best com­men­ta­tors on sen­si­ble poli­cies to lessen the cri­sis are Yanis Varo­ufakis and Richard Koo.

Yanis (togeth­er with Stu­art Hol­land) has authored the “Mod­est Pro­pos­al” to over­come the Euro­pean cri­sis (the lat­est ver­sion is here in PDF: “The Mod­est Pro­pos­al”). Richard Koo recounts the Japan­ese expe­ri­ence with the burst­ing of its Bub­ble Econ­o­my and the many pol­i­cy twists and turns after­wards in the Holy Grail of Macro­eco­nom­ics: Lessons from Japan’s Great Reces­sion.

A num­ber of blog mem­bers argued that my lead/lag analy­sis of the Cred­it Accel­er­a­tor and eco­nom­ic and finan­cial vari­ables (unem­ploy­ment, share and house price indices) appeared erro­neous.

I am the first to admit that–though my math­e­mat­i­cal mod­el­ling is strong–my sta­tis­ti­cal analy­sis is not up to the same lev­el. I long ago react­ed adverse­ly to the prac­tice of econo­met­rics in eco­nom­ics, large­ly on the same grounds that led Ed Leam­er to pub­lish his famous paper “Let’s Take the Con out of Econo­met­rics” (AER, March 1983), omit­ted vari­able bias, etc.

Par­don the Bib­li­cal open­ing from an agnos­tic, but there’s wis­dom in Jesus’s say­ing that is rel­e­vant here: what­ev­er we do to reduce home­less­ness, there will still be home­less.

At the most basic lev­el, it’s a sim­ple func­tion of turnover. Even if we could house every­one who was home­less today, there would be home­less peo­ple liv­ing on the streets tomor­row, because there are always peo­ple leav­ing where they live and hav­ing nowhere to go.

This is the pre­sen­ta­tion I gave at the 2011 con­fer­ence of the Soci­ety for the Advance­ment of Socio-Eco­nom­ics (SASE) annu­al con­fer­ence in Madrid last week:

It com­bines four themes that will be promi­nent in my pub­lic talks from now on:

• Neo­clas­si­cal econ­o­mists don’t under­stand neo­clas­si­cal eco­nom­ics;
• Neo­clas­si­cal “rep­re­sen­ta­tive agent” macro­eco­nom­ics (both the so-called New Clas­si­cal and New Key­ne­sian vari­ants) vio­late fun­da­men­tal research by neo­clas­si­cal econ­o­mists into the foun­da­tions of neo­clas­si­cal the­o­ry;
• The Cred­it Accel­er­a­tor explains the Great Depres­sion and the Great Reces­sion (here my argu­ments are sim­i­lar to those of Richard Koo, and the Cred­it Accel­er­a­tor is the same con­cept ini­tial­ly derived by Big­gs, May­er and Pick that they called the Cred­it Impulse); and