Steve Keen's Debtwatch

I pub­lished this com­men­tary on Crikey and in the New­cas­tle Her­ald yes­ter­day; I will prob­a­bly expand on this for my Octo­ber Debt­watch Report, but here’s a “heads up” before next month–after all, with the speed with which events are unfold­ing, some­thing else might sup­plant this top­ic by then.

Welcome aboard the FF Titanic

Anoth­er day, anoth­er finan­cial col­lapse. The effec­tive nation­al­i­sa­tion of Fan­nie Mae and Fred­die Mac last week was ini­tial­ly greet­ed by the mar­ket, yet again, as The End Of The Cri­sis. Then Lehman Broth­ers teetered and final­ly fell into bank­rupt­cy. The cri­sis was, once again, alive and well.

I don’t have time to write a full blog on this myself, but here are some of the best com­men­taries to explain what’s going on that I’ve seen recent­ly.

On AIG:

http://www.nytimes.com/2008/09/16/opinion/16lewitt.html

On Lehman, coun­ter­par­ty risk, and the dan­gers of a deriv­a­tives melt­down (which an AIG col­lapse might well pre­cip­i­tate:

http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=2234

The pod­casts should now be func­tion­al. The prob­lem was sim­ple but obscure: my serv­er runs Lin­ux, which is case sen­si­tive, and the file names were all in low­er­case, but spec­i­fied with ini­tial cap­i­tals in the XML and HTML files.

I’ve suc­cess­ful­ly down­loaded and played them from the HTML. I would appre­ci­ate some­one try­ing the subcribe/iTunes update and see­ing whether they are now cor­rect there too.

My Comment on the Green Paper

Sen­a­tor Nick Sher­ry, as Min­is­ter for Super­an­nu­a­tion and Cor­po­rate Law, has released a Green Paper Finan­cial Ser­vices and Cred­it Reform: Improv­ing, Sim­pli­fy­ing and Stan­dar­d­is­ing Finan­cial Ser­vices and Cred­it Reg­u­la­tion (June 2008)

This is a very apt time for such an enquiry. It is now over a decade since the Wal­lis Com­mit­tee sup­port­ed fur­ther dereg­u­la­tion of the finan­cial sys­tem, and the con­se­quences of that dereg­u­la­tion are now evi­dent.  I doubt that a com­plete rever­sal of pol­i­cy is polit­i­cal­ly fea­si­ble now, but this inquiry may set the high water mark in the belief that the less reg­u­lat­ed finan­cial mar­kets are, the bet­ter.