Steve Keen's Debtwatch

I’m speak­ing at the Aus­tralian Share­hold­ers Asso­ci­a­tion Investor Hour next Tues­day (August 18) at 12pm with the top­ic “The Mar­ket Crash: Ori­gins and Prospects”.

I’ll take a long view of the finan­cial data–going back to 1890–and explain the booms and crash­es of stock mar­kets as symp­toms of debt bub­bles and their burst­ing. From that point of view, this is the largest asset-price bub­ble in the last 120 years–and prob­a­bly in all of his­to­ry. The prog­no­sis for the mar­ket is there­fore grim, despite the cur­rent ral­ly.

The Whit­lam Insti­tute is con­duct­ing a series of talks on the finan­cial cri­sis. The third of these will be held this com­ing Thurs­day (July 23rd) at the River­side The­atre com­plex in Par­ra­mat­ta (on the cor­ner of Church and Mar­ket Streets). The keynote paper is being giv­en by Pro­fes­sor John Quig­gin, with myself and Guy Debelle, the Assis­tant Gov­er­nor (Finan­cial Mar­kets) of the RBA as dis­cus­sants.

Pro­fes­sor Quig­gin will present his paper “After the Cri­sis” for about 30–40 min­utes, after which there will be a 20 minute ques­tion and answer ses­sion with the audi­ence.

STEVE KEEN and EVAN JONES in conversation with FRANK STILWELL

In this event to cel­e­brate the pub­li­ca­tion of Polit­i­cal Econ­o­my Now!–the his­to­ry of the Polit­i­cal Econ­o­my strug­gle at Syd­ney University–Evan Jones, Frank Stil­well and Steve Keen will dis­cuss the strug­gles inside the uni­ver­si­ty eco­nom­ics depart­ments and their sig­nif­i­cance, not only for teach­ing, but for the world econ­o­my itself.

Polit­i­cal Econ­o­my Now! by Gavan But­ler, Evan Jones and Frank Stil­well is the sto­ry of one of the most sub­stan­tial and endur­ing con­flicts in the his­to­ry of Aus­tralian uni­ver­si­ties. Begin­ning in the late 1960s, it pit­ted those com­mit­ted to the teach­ing of main­stream eco­nom­ics at the Uni­ver­si­ty of Syd­ney against the pro­po­nents of an alter­na­tive pro­gram in polit­i­cal econ­o­my. It explores issues such as

I’ll be speak­ing at Pol­i­tics in the Pub on Fri­day May 29, along with Jacob Saulwick from the SMH.  The Loca­tion is the Gael­ic Club, Lev­el 1 (Tel. 9212 1587) 64 Devon­shire Street Sur­ry Hills–just 50 metres or so from the Chalmers Street exit from Cen­tral Sta­tion.

The top­ic will be rather appo­site to the most recent blog entry: “The Rudd-Swan Bud­get 2009 – Whose Inter­ests Will It Serve?”

The event starts at 6pm and fin­ish­es at 7.45pm, after which any­one who wants to sol­dier on can join us for din­ner at a near­by restau­rant.

In May 1973, dis­sat­is­fac­tion over the teach­ing of eco­nom­ics at the Uni­ver­si­ty of Syd­ney went from a fes­ter­ing sore amongst the staff only to an out­right revolt by a minor­i­ty of the staff, and a major­i­ty of the stu­dents.  In 1975, a new Depart­ment of Polit­i­cal Econ­o­my had its first intake into Eco­nom­ics I℗. Thir­ty four years lat­er, it is still going. Pro­fes­sor Frank Stil­well, who has lived this dis­pute since 1970, is launch­ing Polit­i­cal Econ­o­my Now!, a his­to­ry of the dis­pute, next Tues­day at Syd­ney Uni­ver­si­ty’s Fish­er Library (May 5th, 5.30pm, Lev­el 5).

Title: “Crunchtime”: Bring­ing togeth­er the best pol­i­cy minds to dis­cuss Aus­trali­a’s future
Loca­tion: Trades Hall Audi­to­ri­um, 4 Goul­burn St, Syd­ney NSW
Link out: Click here
Descrip­tion: The best pol­i­cy thinkers from Aus­tralia and abroad will come togeth­er for “Crunchtime” — Aus­trali­a’s first pro­gres­sive think-tank con­fer­ence.

Tax, social pol­i­cy, the glob­al finan­cial cri­sis and cli­mate change will be pulled apart by impres­sive pol­i­cy minds includ­ing Ann Pet­ti­for from Advo­ca­cy Inter­na­tion­al in the UK. Ann has writ­ten exten­sive­ly on debt and finance, cli­mate change and inter­na­tion­al devel­op­ment and was one of the authors of the UK nation­al eco­nom­ic foundation’s Green New Deal.

As usu­al, the lat­est set of data from the ABS on the econ­o­my was “unex­pect­ed­ly worse” than (neo­clas­si­cal) econ­o­mists had been expect­ing. The con­sen­sus was for a 0.2% increase over the month of March, from 5.2 to 5.4 per­cent. In fact, it leapt by two and a half times as much, to 5.7%.

This was right in line with what I was expect­ing from a non-ortho­dox, “Hyman Min­sky” point of view. As I have argued in numer­ous blogs, aggre­gate demand is the sum of GDP plus the change in debt. Now that our econ­o­my is utter­ly debt-depen­dent, the debt-financed asset-price bub­bles have burst, and debt de-lever­ag­ing has begun in earnest, the econ­o­my will tank and unem­ploy­ment will explode as debt-financed spend­ing evap­o­rates.

I’ve just been sent this link to a hilar­i­ous face-off between Max Keis­er and an Eco­nom­ics Pro­fes­sor. Max calls the Wall Street spec­u­la­tors “finan­cial ter­ror­ists”, calls for decap­i­ta­tion as in days of olde…

The most fun I got out of this was watch­ing the Pro­fes­sor’s dis­com­fort, and his attempts to under­stand the cri­sis in terms of neo­clas­si­cal eco­nom­ic the­o­ry: mar­kets  are ratio­nal  and mere­ly respond to pol­i­cy, bonus­es are fine, the cri­sis is all due to bad mon­e­tary pol­i­cy…