It seems we’ve moved from Stanley Kubrick to John Cleese. Rory Robertson’s reply to my “Rory Robertson Designs a Car” post reminds me of one of my many favourite scenes from Monty Python, the fight between King Arthur and the Black Knight:
King Arthur: [after Arthur’s cut off both of the Black Knight’s arms] Look, you stupid Bastard. You’ve got no arms left.
Black Knight: Yes I have.
King Arthur: *Look*!
Black Knight: It’s just a flesh wound…
A new high performance hybrid car has recently been released by a Roring Motors, Inc. According to Managing Director Rory Robertson, the new “GoFlowMobile” ™© achieves unparalleled performance for a hybrid car, by applying a simple insight from economics to the hide-bound world of engineering.
Mr Robertson, an economist, took over the firm in a hostile private equity bid, because he saw an opportunity to bring economic thinking to bear on the vexed issue of designing the world’s fastest hybrid car.
Bnet Australia has just posted an interview with me by Phil Dobbie.
The interview is linked here, and I’ve also tried to post it to my podcast feed using a new WordPress plug in.
Can subscribers to the Debtwatch podcast please let me know whether this turns up in their iTunes, etc.? I don’t get any confirmation of whether the posting succeeds or not.
I’ve also embedded the talk here, so if you’d like to hear the interview ASAP, click below. The topics are the usual suspects: whether we’re going to experience a recession (no, it’ll be a Depression), why neoclassical economists and the RBA in particular got it wrong, and so on.
Jon Stewart at “Comedy Central” put together a masterful rip into the stock market spruikers on the CNBC network, exposing how their so-called expertise was little more than a blind exhortation to join in the euphoric excess of the bubble, and to keep it alive as it died an inevitable death.
It’s both informative and very amusing. Click here to watch it.
The last quarter’s GDP figures, showing that Australia’s GDP contracted by 0.5% in the last quarter, ended the “phony war” debate over whether we’re in recession. The previous quarter’s 0.1% was so close to zero that it’s semantics to question whether we’ve seen six months of negative growth or not: we are in a recession.
Now that we’ve had our Dunkirk moment, it’s time to consider what policy should be, given that avoiding a recession is no longer an option.
A first step there is seeing why we recovered from previous recessions, and asking whether we can pull off the same trick again this time.
The decision of the RBA Board to leave the cash rate at 3.25% today confirmed that its members don’t understand the economy.
There was an inkling of this in the statement by Board member Warwick McKibbin early last month criticising the Rudd Government’s stimulus package (“Reserve bank director opposes package”, SMH February 6):
“A RESERVE Bank board member has expressed concern about the size of the Federal Government’s $42 billion fiscal stimulus package… Professor Warwick McKibbin also accused the Government of playing politics with the economic slowdown and warned that this could shatter fragile consumer and business confidence.
A quick quiz: when did Australia’s biggest private debt bubble burst?
A young Gough Whitlam
If you consider the rate of increase of debt, the correct answer is “in mid-1973”. The bubble started to expand a year before Whitlam came to power, and its collapse during Whitlam’s term was the real–but at the time, unappreciated–cause of the economic crisis that undid his government.
Niall Ferguson has just made the first call for widespread debt rescheduling that I have seen published in a major newspaper–today’s Australian, and I am sure it is reproduced in many newspapers around the world (if your local paper is owned by News Limited, there’s a good chance that you will find it there).
The article is linked here–The great repression–and some excerpts are shown below. Read it and refer your friends to it. Finally the call has gone out that what is needed to get out of this crisis is not more debt, but less.
My railing against the economics profession on this blog might give you the impression that I’m a lone wolf, taking on the economics profession single-handedly. I’m pleased to say that’s not the case; though the rebels are outnumbered by the True Believers in neoclassical economics, there are many academic economists who are critical of the economic orthodoxy.
Recently some highly regarded economists have made this emphatically clear with an eloquent and well argued document entitled “The Financial Crisis and the Systemic Failure of Academic Economics”.
Alex Mitchell is one of the political writers I’ve always enjoyed reading. Today he excels himself in The New Matilda, with a post on other journalists–specifically economic journalists–that really goes for the jugular.
Overall I think Anatole Kaletsky is on the more important track, to destroy the unjustified credibility of the academic neoclassical economists whose theories justified the nonsense that gave us this crisis, and whose inane theories “the bottom feeders” repackaged for popular consumption through the media (see Fabulous attack on neoclassical economics by Anatole Kaletsky for my commentary, and Economists are the forgotten guilty men for the original article). But those bottom feeders also deserve to be whacked over the head too, and Mitchell does this in great style.
