The Today Tonight segment has been delayed till this evening (Wednesday February 4th)–which is a pity in a way because I will also be speaking at a public forum tonight at Circular Quay organised by the Property Knowledge Forum: An excerpt from the promotional flyer:
ARE WE HEADING FOR A DEPRESSION?
When will the bottom hit? Are we in store for 40% drops in property or has the recovery already begun?
Channel Seven’s Today Tonight is doing a piece on whether we might face a Depression, and if so what it might be like. It should go to air tomorrow–Tuesday February 3rd.
They have interviewed me for analysis, and Eric Aarons–who lived through the Great Depression and at 90 is still a dynamic sculptor and author.
They also want to speak to anyone who has lost their job recently–specifically if possible as a result of the global financial crisis.
So if anyone out there is willing to speak on camera about it, please contact the journalist James Thomas:
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“Talk about centralisation! The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner— and this gang knows nothing about production and has nothing to do with it.” [1]
I’ve just been interviewed for an SBS News piece on China (for non-Australian readers, SBS is Australia’s multicultural television station, and its news has a strong international focus).
Ordinarily I don’t comment on China, because I don’t know enough about their economy right now–except to deride the belief that was popular in Australia last year that our exports to China would insulate us from the global downturn. “Decoupling” they called it–China was supposed to have its own internal growth dynamic that would mean it would continue growing and buying our raw materials even as the OECD tanked. This theory–ironically spouted by the same people who once touted that the world is now globalised and everything affects (and benefits) everything else–is now rather less popular as China’s growth has slowed.
Ordinarily I’d simply post a link to a media report in either my Gems or Brickbats page. But this quote from Microsoft CEO Steve Ballmer shows that he really understands what is going on now, in a way that no other person in authority seems to have done as yet. The full report can be found at:
Microsoft resorts to first layoffs, cutting 5,000
Ballmer’s perceptive analysis of what is going on is:
I have just moved the blog to a new ISP after my previous provider IXWebhosting proved to have intractable problems with malware.
The new hosting is being provided pro bono by Cyanide Web Hosting, which I greatly appreciate.
Some posts may have been lost in the process, but that was preferable to putting up with a site that distributed viruses to all and sundry. So if you have made a post and it hasn’t turned up here, please re-submit.
Note: This post has been modified ni the light of comments that the initial version quoted Bernanke out of context.
A link to this blog from a US legal advisory website the Practising Law Institute’s In Brief ( “DEFLATION IN THE REAL WORLD”) reminded me of Bernanke’s book Essays on the Great Depression, which I’ve been aware of for some time but have yet to read. I’ll make amends on that front early this year; fortunately, an extract from Chapter One is available as a preview on the Princeton site (I couldn’t locate the promised eBook anywhere!; in what follows, when I quote Bernanke it is from the original journal paper published in 1995, rather than this chapter).
One blog participant brought a post by George Monbiot to my attention. I frequently comment that the financial regime initiated after WWII omitted key ideas that Keynes proposed–in particular, a new currency for international trade and controls on the behaviour of surplus nations as well as those running deficits. Monbiot provides the historic detail of these proposals and their defeat. It is well worth a read.
A link to my site from another blog alerted me to another post, from the opposite end of the spectrum, which is a cert for my “Brickbats” page–both for its content and its timing. On January 19, 2007, Gerard Baker of The Times editorialised that “Historians will marvel at the stability of our era”. An excerpt for you:
It had to happen: neoclassical economists are now advising that the anticipated recession will be much milder if only workers would accept wage cuts.
When I saw this crisis was imminent in December 2005, one major factor that motivated me to go public with my analysis was the certainty that, when the crisis hit, neoclassical economists would either blame it on wages being too high (”the abolition of Work Choices caused the Depression!”), or would suggest that wages should be cut to reduce the imbalance between the supply of and demand for labour.
This is getting a bit like Star Wars, but I promise–this will be the last post in this series. In the previous two, I constructed a model of a pure credit economy in which the money supply and economic activity can expand smoothly of time.
Of course, that’s not the real world. As we know from the bitter experience of the financial crisis that is this blog’s raison d’etre, finance characteristically destabilises an otherwise healthy economy. Part of the reason for that is the existence of Ponzi Financing–something that the recent Bernie Madoff scandal has thrown into $50 billion high relief.
