Steve Keen's Debtwatch

Fair­fax man­age­ment has recent­ly decid­ed to sack its in-house sub-edi­tors, and out-source the role to the com­pa­ny Page­Mas­ters:

Fair­fax to look at out­sourc­ing options

Fair­fax sets new out­sourc­ing dead­line

Fair­fax con­firms out­sourc­ing plans with 82 jobs to go

Fair­fax jour­nal­ists to dis­cuss strikes

In one way, this move is an under­stand­able response to the impact of the rise of the inter­net on adver­tis­ing sales rev­enue for news­pa­pers. But in anoth­er, it is a weird attempt to reduce costs by out­sourc­ing an essen­tial step in the process of pro­duc­ing a dai­ly newspaper–a bit like com­mit­ting Harakiri in order to lose weight.

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Aus­tralia is once again prov­ing itself to be the Land of the Twee­dles. Though Labor and Lib­er­al loud­ly pro­claim their dif­fer­ences, on the key eco­nom­ic issues, they’re (par­don the pun) car­bon-copies. Both agree that the Fed­er­al Bud­get should be returned to sur­plus. Both believe that the “Glob­al Finan­cial Cri­sis” (which Amer­i­cans and most of the rest of the OECD call “The Great Reces­sion”) is behind Aus­tralia, and the imper­a­tive now is to stop the growth in gov­ern­ment debt. And both would leave untouched spend­ing pro­grams that make us worse off by pro­mot­ing asset bub­bles rather than seri­ous invest­ment.

Today’s fig­ures for the fall in house prices over the last quar­ter and year were larg­er than the usu­al bull-side pun­dits expect­ed: a 1.7% fall for the quar­ter (ver­sus the 0.5 per­cent medi­an pre­dic­tion of 17 econ­o­mists sur­veyed by Bloomberg) and 0.2% fall for the year (ver­sus expec­ta­tions of a 1.6% gain for the year by the same group of econ­o­mists, accord­ing to Chris Zap­pone’s arti­cle).

Fig­ure 1

I won­der if the same econ­o­mists will now assert that declin­ing immi­gra­tion and/or pop­u­la­tion is behind the fall? After all, pop­u­la­tion growth and a sup­ply short­age rel­a­tive to pop­u­la­tion growth were the rea­sons they gave for a rise in prices in the first place—surely the same argu­ment must work in reverse?

A cor­re­spon­dent just sent me the fol­low­ing set of Depres­sion jokes. I’ve seen it before, but there are a cou­ple of new twists that are worth shar­ing.

US RECESSION

The reces­sion has hit every­body real­ly hard…

• My neigh­bour got a pre-declined cred­it card in the mail.
• Wives are hav­ing sex with their hus­bands because they can’t afford bat­ter­ies.
• CEO’s are now play­ing minia­ture golf.
• Exxon-Mobil laid off 25 Con­gress­men.
• A strip­per was killed when her audi­ence show­ered her with rolls of pen­nies while she danced.
• I saw a Mor­mon with only one wife.

The USA’s West­ern Eco­nom­ic Asso­ci­a­tion Inter­na­tion­al holds a Pacif­ic Rim con­fer­ence every two years, and this year the host was the Queens­land Uni­ver­si­ty of Tech­nol­o­gy in Bris­bane, Aus­tralia.

I spoke in two ses­sions on what Amer­i­cans call “The Great Reces­sion” and Aus­tralians calls the “GFC”–the Glob­al Finan­cial Cri­sis. The first ses­sion had two oth­er papers of inter­est to read­ers of this blog: a paper on house prices by Jakob Mad­sen, one of the “Beze­mer Twelve” who pre­dict­ed and warned of the impend­ing cri­sis, and anoth­er on the dan­gers inher­ent in Aus­trali­a’s high lev­el of for­eign debt by QUT’s Mark McGov­ern.

I have been asked to post a sur­vey to gauge inter­est in a poten­tial finan­cial prod­uct relat­ed to Aus­tralian house prices. If you are inter­est­ed in such a prod­uct, please click here to take this sur­vey.

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Fig­ure 1

In last week’s post I showed that there is a debt-financed, gov­ern­ment-spon­sored bub­ble in Aus­tralian house prices (click here and here for ear­li­er install­ments on the same top­ic). This week I’ll con­sid­er what the burst­ing of this bub­ble could mean for the banks that have financed it.

Betting the House

For two decades after the 1987 Stock Mar­ket Crash, banks have lived by the adage “as safe as hous­es”. Mort­gage lend­ing sur­passed busi­ness blend­ing in 1993, and ever since then it’s been on the up and up. Busi­ness lend­ing actu­al­ly fell dur­ing the 1990s reces­sion, and took off again only in 2006, when the Chi­na boom and the lever­aged-buy­out fren­zy began.

The Dis­cov­er­ies Need Dol­lars cam­paign to stop the rumoured cuts to research fund­ing will now have ral­lies in Syd­ney and Ade­laide as well as in Mel­bourne:

I’m attend­ing the Soci­ety for the Advance­ment of Socio-Eco­nom­ics (SASE) annu­al con­fer­ence in Madrid on June 23–25. Giv­en that I have to fly from Aus­tralia, I’m mak­ing this an extend­ed trip. I will spend 3 days in Lon­don (June 13–15), 3 in Paris (16–18), 3 in Barcelona (19–21) and 4 in Madrid (22–25).

As well as some tourism and meet­ing up with friends like Max Keis­er in Paris, I’m open to giv­ing a talk or three, if there is suf­fi­cient inter­est.

There are wide­spread reports that the polit­i­cal fetish with return­ing the Fed­er­al gov­ern­ment to a sur­plus will result in cuts to Aus­trali­a’s research fund­ing bud­get of close to half a bil­lion dol­lars:

Research cuts put lives at risk, say med­ical insti­tutes

Research cuts will cre­ate ‘brain drain’

These cuts are dri­ven by an obses­sion with run­ning a per­ma­nent bud­get sur­plus that is good pol­i­tics but bad eco­nom­ics. For Aus­tralia to con­sid­er achiev­ing this point­less goal by fur­ther under­min­ing its already pathet­ic lev­el of research fund­ing is even more insane.