Steve Keen's Debtwatch

Jim Stan­ford, the author of the pop­u­lar  Eco­nom­ics for Every­one (from which the car­toon to the left is tak­en), and I spoke at a dou­ble bill on the glob­al debt cri­sis for the ven­er­a­ble Syd­ney insti­tu­tion “Pol­i­tics in the Pub” last night.

We had a full house for an provoca­tive evening on why the Dis­mal Sci­ence is nei­ther nec­es­sar­i­ly Dis­mal, nor any­thing close to a Sci­ence, and why the debt cri­sis is still with us.

Jim, as well as being an out­stand­ing non-ortho­dox econ­o­mist, is also a very engag­ing speaker–as I whis­pered to the Chair (Pro­fes­sor Frank Stil­well, from Syd­ney Uni­ver­si­ty’s Depart­ment of Polit­i­cal Econ­o­my) while Jim spoke, he was a very hard act to fol­low!

This has just been post­ed on the Real World Eco­nom­ics Review

Revere Award for Eco­nom­ics for the 3 econ­o­mists who warned the world

Results

For Imme­di­ate Release

13 May 2010

Keen, Roubi­ni and Bak­er win Revere Award for Eco­nom­ics

Steve Keen (Uni­ver­si­ty of West­ern Syd­ney), receiv­ing more than twice as many votes as his near­est rival, has been judged the econ­o­mist who first and most cogent­ly warned the world of the com­ing Glob­al Finan­cial Cri­sis. He and 2nd and 3rd place fin­ish­ers Nouriel Roubi­ni (New York Uni­ver­si­ty) and Dean Bak­er (Cen­ter for Eco­nom­ic and Pol­i­cy Research) have won the Revere Award for Eco­nom­ics.  The award, spon­sored by the Real World Eco­nom­ics Review Blog is named in hon­our of Paul Revere and his famous ride through the night to warn Amer­i­cans of the approach­ing British army.

“THE BURDEN OF DEBT: HOW SERIOUS & WHO WILL PAY?”

Speak­ers [each giv­ing 20 minute talks on the top­ic]:

• Dr Jim Stan­ford, Cana­di­an Auto Work­ers Union, author of ‘Eco­nom­ics for Every­one’ and pre­sen­ter of last year’s Ted Wheel­wright lec­ture at the Uni­ver­si­ty of Syd­ney.
• Asso­ciate Pro­fes­sor Steve Keen, Uni­ver­si­ty of West­ern Syd­ney, author of DeBunk­ing Eco­nom­ics and recent­ly well pub­li­cised walk­er to the top of Mount Kosiosko.
• Chair: Frank Stil­well

Date: Fri­day, May 14, 2010

Time: 6:00pm – 7.30pm

Loca­tion: Gael­ic Club, Lev­el 1 upstairs/lift, 64 Devon­shire Street, Sur­ry Hills, Syd­ney

The Keen Walk to Kosciuszko was a fab­u­lous experience—as Matt Car­roll (one of the orga­niz­ers) put it, it was “the best hol­i­day ever”. That’s not to min­i­mize the effort involved: cov­er­ing 235 kilo­me­tres on foot in 8 days is no mean feat. But the com­bi­na­tion of great com­pa­ny, per­son­al suc­cess for all involved in an impres­sive phys­i­cal chal­lenge, love­ly scenery, excel­lent weath­er, and a cause that unit­ed a remark­able group of peo­ple, made The Walk far more plea­sure than pain.

As we head towards the fed­er­al elec­tion, the term ‘hous­ing short­age’ will be trot­ted out again and again by politi­cians. Their rhetoric will rely on the deeply ingrained received wis­dom that Aus­tralia has a ‘hous­ing short­age’, and no politi­cian will want to do the hard work of dif­fer­en­ti­at­ing between a gen­uine short­age in hous­ing stock (which we don’t have) and a short­age of ‘afford­able hous­ing’ which we do have.

And why won’t they acknowl­edge this dis­tinc­tion? Sim­ply, because admit­ting that it is only the prices of hous­es that are dys­func­tion­al, and not sim­ply the sup­ply, would be too much even for their loy­al vot­ers.

After Aus­tralian house prices rose 20 per­cent in one year, every­one’s talk­ing a bub­ble.  Chan­nel Ten’s new(ish) avant-garde cur­rent affairs pro­gram asked for my per­spec­tive on the day the RBA yet again increased inter­est rates.

After lead­ing in with the news and a fea­ture on Neil Rober­ston, the 26-year-old Aus­tralian snook­er play­er who won the World Cham­pi­onship, the sto­ry on house prices began 4 min­utes and 5 sec­onds into the video below.

The news that the Rudd Gov­ern­ment was rolling back its changes to Aus­trali­a’s for­eign invest­ment rules on hous­ing came as we were still on The Walk. Just pri­or to start­ing it, I received a note from Dr John Daffy, with the fol­low­ing let­ter from him to the PM attached. I asked John whether I could pub­lish his let­ter on the blog, and he agreed.

Just as the absence of sta­tis­tics on for­eign pur­chasers means we’ll nev­er real­ly know the impact they had on the mar­ket, we’ll prob­a­bly nev­er know how many indi­vid­u­als like Dr Daffy sent sim­i­lar let­ters to their MPs and the PM; but judg­ing from the rapid back­flip on that pol­i­cy, there must have been plen­ty.

Edward Full­brook, the edi­tor of the Real World Eco­nom­ics Review that cre­at­ed the Dyna­mite Prize in Eco­nom­ics and the Revere Award, has just sent out the mes­sage repro­duced below.

Vot­ing for the Revere Award for Eco­nom­ics for the three econ­o­mists who first and most clear­ly antic­i­pat­ed and gave pub­lic warn­ing of the Glob­al Finan­cial Col­lapse and whose work is most like­ly to pre­vent anoth­er GFC in the future, will close in a few days.  Please vote. So far the num­ber of peo­ple vot­ing has been dis­ap­point­ing.  To stim­u­late inter­est, the poll has now been set to reveal to you the cur­rent results once you have cast your votes.  You can vote for three. To view a time­line and to vote now, click here .  It takes only sec­onds.  By vot­ing you reward the deserv­ing.

On Thurs­day April 15th at 1pm, Steve Keen will begin a walk from Par­lia­ment House to Mt Kosciuszko, to ful­fill the famous bet with Rory Robert­son over house prices.

Keen claimed that, just as Japan­ese house prices had fall­en 40% since its Bub­ble Econ­o­my burst in 1990, so too would Aus­tralian house prices. In Octo­ber 2008, Robert­son chal­lenged him to a bet that this would nev­er hap­pen at a debate in the Par­lia­men­tary Library, where the los­er would have to walk from Par­lia­ment House to Mt Kosciuszko.

The T‑shirts have been print­ed and they look fan­tas­tic (if I do say so myself). There are 3 designs:

One high­lights the core issue that con­ven­tion­al eco­nom­ics ignores, and Debt Defla­tion the­o­ries take seriously–the ratio of pri­vate debt to GDP:

Debt to GDP Ratio from 1860 till 2010

Anoth­er shows the rela­tion­ship between the ratio of house prices to dis­pos­able incomes and the First Home Own­ers Grant. The Grant has been intro­duced, relaunched, or dou­bled on five occa­sions, and each time it made hous­ing less afford­able:

The FHOG and housing unaffordability