Party like it’s New Year’s Eve 1930

I rec­om­mend that you fin­ish the year with a look at the News from 1930 blog, which is pro­vid­ing some “year in review” com­men­tary on 1930 now–including these details on the mar­ket highs and lows. Obvi­ous­ly some things were much worse in 1930 than today–notably indus­tri­al pro­duc­tion and the stock mar­ket:

Mar­ket highs and lows:

Dow indus­tri­al aver­age high of 294.07 Apr. 17; low 157.51 Dec. 16. Rail aver­age high of 157.94 Mar. 29; low 91.65 Dec. 16. Util­i­ty aver­age high of 108.62 Apr. 12; low 55.14 Dec. 16.

Last week­end’s Sun­day Tele­graph point­ed out a new record for Aus­tralia: our ratio of house­hold debt to GDP is now high­er than the USA’s. I’ve writ­ten the fol­low­ing com­men­tary on this dubi­ous “gold medal” (or is it real­ly lead?) for the ABC’s The Drum.

In all the self-con­grat­u­la­tions over how Aus­tralia has man­aged to side­step the GFC, an incon­ve­nient truth has been over­looked: the cri­sis was caused by too much debt, and Aus­tralian house­holds have had a stronger and longer love affair with debt than even the Amer­i­cans.

I was recent­ly inter­viewed by Eric Tave­nier for the web­site Engineer.net, which is an engi­neer recruit­ment and job search ser­vice in the USA.

Eric was tak­en with my advo­ca­cy of what I called “Engi­neer Cap­i­tal­ists” (in con­trast to the finan­cial spivs who dom­i­nate busi­ness today in the USA) in my inter­view on The Keis­er Report, and want­ed me to elab­o­rate for his audi­ence. The inter­views have been post­ed to YouTube (see below).

For Aus­tralian view­ers, there was an inter­est­ing report in today’s Sun­day Tele­graph on the lev­el of mort­gage debt in Aus­tralia, which now exceeds 100% of our GDP–higher than Amer­i­ca at 95.5%.

Mike Shed­lock (“Mish” as he is known to all) has writ­ten an excel­lent piece on the defla­tion-infla­tion debate, focus­ing on the Achilles Heel of the latter–the fact that it is based on the belief that we live in a “frac­tion­al reserve bank­ing” mon­e­tary sys­tem. He offered to let me cross-post here, and I’ve repro­duced it in its entire­ty below (there’s only one point I’m not sure on–the com­ment that there are no reserve require­ments for sav­ings accounts. From my read­ing of the foot­notes to Table 12 in this Fed­er­al Reserve paper, that’s true of cor­po­rate accounts but not indi­vid­ual ones).

Max Keis­er inter­viewed me for his 4th Keis­er Report when I was in Paris ear­li­er in Decem­ber. I come in at about the 13 minute mark after Max’s ban­ter with Sta­cy:

It was a great interview–Max had about ten ques­tions pre­pared, but only asked about 3 of them because the con­ver­sa­tion flowed so well.

We also record­ed a pro­gram on what 2010 may bring for mar­kets and economies for BBC Radio 5 Live Break­fast; the pro­gram will go to air on New Year’s Eve at 10PM Lon­don time.

I gave the fol­low­ing pre­sen­ta­tion at the 4th Dijon Mon­ey con­fer­ence (Decem­ber 10–12 2009):

| Open Play­er in New Win­dow

Mike (“Mish”) Shed­lock­’s site MISH’S Glob­al Eco­nom­ic Trend Analy­sis pro­vides reg­u­lar, inci­sive and down to earth com­men­tary on the US and glob­al economies, and his site is one of my first ports of call when I want do take a more crit­i­cal look at any US data that appears to be more dis­sem­bling than inform­ing.

Mish has made a rare appear­ance on Yahoo’s Tech Tick­er–anoth­er reg­u­lar favourite of mine–to pull apart the most recent appar­ent­ly pos­i­tive devel­op­ments in the US uem­ploy­ment rate.

If you haven’t yet acquaint­ed your­self with Mish, then I sug­gest you watch this video (also embed­ded below) with Aaron Task from Tech Tick­er, and then check out Mish’s blog.

This is too good not to spread: Sen­a­tor Bun­ning berates Bernanke at his con­fir­ma­tion hear­ing. What Bun­ning lacks in ora­to­ry he more than com­pen­sates in forth­right­ness and integri­ty. One phrase alone is worth hear­ing: “We [should] pun­ish fail­ure not reward it”.

I first realised that the world faced a seri­ous finan­cial cri­sis in the very near future in Decem­ber 2005, as I pre­pared an Expert Wit­ness Report for the NSW Legal Aid Com­mis­sion on the sub­ject of preda­to­ry lend­ing.

My brief was to talk about the impact of such con­tracts on third par­ties, since one ground to over­turn a loan con­tract was that it had dele­te­ri­ous impacts on peo­ple who were not sig­na­to­ries to the con­tract itself. I was approached because the solic­i­tor in the case had heard of my aca­d­e­m­ic work on Hyman Min­sky’s “Finan­cial Insta­bil­i­ty Hypoth­e­sis”.

The Depart­ments of Polit­i­cal Sci­ence and of Eco­nom­ics at the Uni­ver­si­ty of Helsin­ki recent­ly held a sem­i­nar enti­tled “Eco­nom­ics: Chal­lenges for Polit­i­cal, Philo­soph­i­cal and His­tor­i­cal Research”. The moti­va­tion was a reor­gan­i­sa­tion of the Uni­ver­si­ty that will com­bine these two Depart­ments. The fly­er for the sem­i­nar adver­tised it in the fol­low­ing man­ner:

This sem­i­nar, orga­nized joint­ly by the Depart­ment of Polit­i­cal Sci­ence, Depart­ment of Eco­nom­ics and Cen­tre of Excel­lence on Glob­al Gov­er­nance Research, will start with reflec­tions on the role of eco­nom­ics and eco­nom­ic stud­ies.

• Can we com­bine eco­nom­ics and pol­i­tics through polit­i­cal econ­o­my?
• Have polit­i­cal and eco­nom­ic stud­ies neglect­ed his­to­ry?