Play the ball and not the man

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The import of Gerard Henderson’s diatribe in today’s SMH is that the media has done a “soft” job on  my views, which have only gained notoriety because of the extreme prediction I have made—about the forthcoming economic downturn qualifying as not merely a recession, but a Depression. It seems I’ve only got attention because of my extreme views, while the media has let the side down by doing a “tabloid” job only and not subjecting my views to scrutiny.

In fact, as many in the media know, I have gained attention because of my Debtwatch Report, which will be two years old as of the next issue (No. 28, to be published in November the day before the RBA meeting). The journalists who have reported my views—including of course Kerry O’Brien, who gets special attention from Gerard in his mockumentary—have read my analysis for two years now. I saw no sign of any attention to the analysis behind my predictions in Henderson’s piece—apart from possibly a “just in case” concession towards the end where he noted that “His predictions of a debt-induced decade-long depression … may be correct.”

In that case, the commentator who deserves the approbrium for “tabloid” journalism is Henderson himself, and not the ABC nor the Daily Telegraph, nor Sixty Minutes. They, after all, read my research, have quizzed me extensively about it, and made the decision based on investigative journalism that my views deserved coverage.

For this, I applaud them—for standing up for the principles of the Fourth Estate. Standard economic commentary has been dominated by the cheerleaders for the policies which have led to this crisis, while the authorities themselves and the academic profession of economics itself have turned a blind eye to any arguments that questioned the mantra in favour of deregulated finance.

I know this from extensive experience. I have made five applications for ARC funding to investigate the dynamics of debt-deflations and Depressions in the last ten years; all have been unsuccessful (including one time when I topped UWS researchers on the ARC’s then published referees’ point scores, after which seven UWS researchers received funding—but I was not one of them).

I made a submission to the Wallis Committee in July 1996, in which I warned that securitisation of loans could lead to a crisis exactly like the Subprime crisis that has now unfolded—and of course my comments were ignored.

I wrote to the RBA in June 1998 offering to hold a seminar on the “Financial Instability Hypothesis”, which is the foundation of my argument that we are likely to experience a Great Depression. The offer was declined.

As has often been said, official channels are often clogged to make sure information and criticism doesn’t get listened to. When I saw the debt that Australia’s speculative bubble in real estate (and belatedly shares) had got us into, I decided to turn to the journalistic profession to raise the alarm. To their credit, since I made a good case and the empirical evidence was compelling, journalists listened to me.

So Gerard, maybe you should do some investigative journalism now too. Go to my blog, where you will find Debtwatch Reports going back to November 2006, and academic papers on debt deflation published as long ago as 1995 (maybe even read Debunking Economics). And if you’d like to take a real risk and play the ball rather than the man, I’m more than willing to give a seminar on debt deflation at your Sydney Institute.

Over to you.

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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94 Responses to Play the ball and not the man

  1. Bullturnedbear says:

    Hi Steve,

    Don’t take any of that crap personally. Just about every other economist and analyst that gets reported makes up some description of what has happened or what “is happening” after the event.

    There is no question you have made your predictions and put them on the public record. To date your predictions are coming to pass. Time will tell if we go into depression or not (I also believe we will).

    Either way the rest of the analysts will stay on safe ground and keep making up a poorly informed description of what has already happened.

  2. pete says:

    It probably doesn’t help that you have accused the median economics academic of being mathematically illiterate, and unable to master dynamic systems. It may or may not be a valid point, but it is bad politics.

    On the other hand, the public is well aware that house prices are too high, and that new buyers are losing the ability to pay higher (versus share housing, renting, and other substitutes).

  3. Mr_Clean says:

    Steve, You have summed up the situation perfectly. Australia appears to have been “dumbed down” to such an extent that criticism of the party line in this country is almost non existent. I am a recent immigrant to Oz and I have to say that I have been shocked at the almost blissful ignorance of the population. It seems that Oz is far from the ‘lucky country” (whatever that means) and more a stupid country filled with (on the whole) stupid people. Strangely the Brisbane Times (another Fairfax rag) ran a story about Hans Redeker – head of foreign exchange strategy at BNP Paribas, Europe’s biggest investment bank, predicted: “The Aussie is going down, big time.” His views pretty much echo yours.

  4. Ken says:

    It seems that economics is different, any other area people make predictions and then they are tested and if they don’t work, somebody had better find a better idea. I think anyone who has seen this unfold, from the era of debt is OK (I can remember Gittins writing about how it was OK because there were a lot of opportunities out there) to the government effectively propping up banks in most of the western world has not been overly impressed by economists in general predictions. Apparently now it is going to be a recession but not a big one, except that the Chinese economy that was going to drag us through this is now having their own problems. Not unexpected when their interest rates have been kept similar to the inflation rate. Speculative construction of factories based on assumptions of an expanding economy.

    What I can see is that the financial instability hypothesis does have a theoretical foundation whereas standard economics has some very dodgy assumptions or “Equilibrium, What Equilibrium ?” to misquote the Supertramp album. I wouldn’t want to believe if I had a huge mortgage either. This is really the biggest case of denial ever. Not surprising when may people are looking at their equity being totally wiped out.

  5. BrightSpark says:

    Hello Steve

    What evidence has Henderson presented? what are his credentials? What does he know anyway.
    I am giving up reading newspapers, they used to be full of news with a small and well considered editorial content. Now they are full of editorial content written by people who are better at writing than researching a topic and have no particular expertise on the topics on which they wax eloquent. There is very little news and this is sometimes buried in any case in ignorant opinion.

    One bias that these people have is to ignore bad news or predictions. Henderson may have seen and promptly forgotten your comments of 10 years ago because he did not like them and they would not have been attractive to his readers.

    Your attempts to gain funding have been dealt with in the same ignorant way. But is this not the cause of the bubble? and the current looming disaster? Intelligent consideration of a full range of opinions and reliable data may have given a better result. Changes may have prevented the current disaster but instead “Reforms” have ensured its occurence and severity.

    What is this “Sydney Institute” anyway, I do not think that you should grace it with your presence.

  6. Pingback: Steve Keen (UWS) vs. Gerard Henderson (SMH) - Corporate Engagement

  7. Student says:

    Arrggghhhhhhh (bangs head on table repeatedly). I have just been reminded as to why i am never more frustrated in life then when i read the newspaper. The guy’s got no idea. Case in point – he mentions how a reporter said we are in the worst ever financial crisis and then disagrees with his reasoning being that the 1930’s saw 30% unemployment. Unemployment is NOT direct evidence of a greater FINANCIAL crisis!
    I’m at the point that i cant even be bothered getting worked up by the media anymore (well this was the last time anyway)Thanks goodness for blogs hey

  8. c says:


    Would you mind explaining how the US can experience deflation when the Fed’s balance sheet has grown from US$800 billion to $US1.3 trillion in a few months and expected to go to US$2.5 trillion by the middle of next year.

    You may also wan to explain how we could possibly experience deflation while the world’s major central banks are embarking on a huge monetary expansion.

  9. Aac says:

    Steve – Mikchael West of the Sydney Morning Herald echo’s a lot of your views. He’s one of the very few journalist in main stream media worth listening to; the rest as you rightly point out are cheer leaders.

    Mr_Clean – you’re spot IMO regarding the dumbing down of Australian and the westerm world in general – particularly in basic mathematics; the Bubble Media has played a significant role towards that affect.

  10. Grant says:

    I agree with Mr_Cleans comments above. We’re turning into a country that just has Pavlovian responses to slogans.

    I’ve really noticed over the last 2-3 years people can’t put together an argument to back up their views. They think if they rattle off enough slogans at you that somehow justifies their world view.

    There is a big different between putting forward a self consistent argument and just arguing.

    Simply asking people, “Why do you think that?” seems to bring them unstuck.

  11. Foundation says:

    Wow, how’s the photoshop to make the Prof look like Mr EEEEvil himself?

    That’s playing the man alright! Chuckle. Smells like somebody is wearing brown pants today, and I don’t think it’s Steve!

  12. Pingback: Play the ball and not the man | Credit

  13. kymbos says:


    As an practicing micro-economist with several years experience, I happened across your work about three months ago. Upon reading your research, I concluded that you had some very important points. While hoping that you over-stated your case slightly, I could not point to the fundamental flaw in your argument and subsequently withdrew my investments in the stock exchange. I’m very glad you did, and I thank you for your advice.

    Henderson is simply playing the politics of your economics. It’s not new, nor valid, and your rigorous analytical work is of more value than Henderson’s bizarre claims of ABC bias.

    Thanks again, and keep up the good work.

  14. Terry says:

    I have read many if not most of Mr Hendersons columns for a number of year’s and had up until now found his style of writing, which usually played the ball far more then the man to be fair and more often then not in my opinion to be balanced. Henderson nearly always backs up his arguement with relative quotes, facts and well sourced details that give his point of view nine times out of ten substance and clarity.

    In his diffence I would have to say he must have had a very bad day when he wrote this rubbish, this personal attack on you would be something that Alan Jones and his ilk could only be proud of.

    I take my hat of to you on your reply, it is everything that Hendersons poorly written article is not.
    Mr Keen you have reacted as a scholar and a gentleman would in this situation and have made Henderson look like a hysterical dill, which I never thought I’d see the day that would happen.

  15. Pingback: Play the ball and not the man | Depression Knowledge Info Blog

  16. LuckyGuy says:

    Steve, I wouldn’t worry too much about your detractors at this point in time. Nobody likes a Cassandra, especially when they’re correct. The major difference between you and many other commentators is the strength of your data. I had the sheer luck to come across one of your articles exactly one year ago, and while it was written objectively without all the dire predictions and impassioned rhetoric one hears so much these days, it prompted me to do some more research and then scaed the bejeesus out of me. I immediately withdrew my familys savings out of the sharemarket and have never regreeted that decision. So, matter what your detractors say next, it may be comforting to know that you may have saved at least one Australian familys future (or at least Christmas).

  17. Dave says:

    I am not an economist, nor do I profess to be one, but where I am looking from Mr Keen seems to be on the ball. I am seeing job lay off everywhere and this is just the start. 30/40 percent drop in house prices – easy.

  18. Big Game Hunter says:


    Great reply.

    As a former student of yours in your Ecomonic Thought & Methodology classes at UWS I want to congratulate you for sticking to your guns.

    Just know your work is appreciated by a lot of people out there who are well aware of the ‘dumbing down’ approach that fish & chips rags try too stuff down our faces.

    Keep it up & good luck with your message!

  19. NME says:

    Amusing to see the hindsight brigade out in full force, with their post-hoc rationalisations of what went wrong. Where were they a year ago? Fraternising with executives of now defunct financial institutions and endorsing the benefits of globalisation, deregulation and “financial innovation”. They were wrong – Steve was right. A middle age, slightly dorky (sorry Steve) academic from the burbs. I bet that stings…

    Of course Steve was not alone in his call. Steven Roach produced an excellent weekly commentary until he was ringing the alarm bell so loudly that Morgan Stanley had to ship him out to China to shut him up. Nouriel Roubini is another unglamorous academic who got it absolutely right. I can list another dozen people who not only forecasted a crisis, but laid out the unfolding sequence of events in some detail and supported by solid data. There is a huge difference between the two that clearly escapes Henderson and his “stopped clock” argument.

    The future is a blank slate and it is entirely possible that Steve is wrong. But if track record counts for anything then he deserves to be heard out. Better late than never.

  20. I think it is important when analysing what is going on to attempt to understand the vested interests at play at the political, business and media levels.

    The heterogeneity of reporting of the current crisis by the media has picked up over the last week. News Ltd was very helpful to the Government soon after the stimulus package was announced – attempting to create fear in FHBs with front page headlines of predictions of house price and rental increases (the stick to the FHOG carrot).

    Then on the weekend two very frank articles that house prices are falling and critical of the FHOG increases.

    Then the 60 minutes story by another media company.

    But over at yet another media company, Kochie was chatting with his mate Kev (though I have to admit they were surprisingly frank the previous week – well, at least they allowed Louis Christopher’s frank assessment to come through.)

    I suspect that media players are struggling to come to terms with the new environment they confront as the financial world is restructured. And all would like to be cosy with the PM – though some are not as cosy as others.

    I like Gerard Henderson’s comment “Not unexpectedly, the Prime Minister made it known that he was not in the business of providing predictions “about where house prices are going”.”

    Gerard neglected to add that Mr Rudd’s reluctance to comment on the likely movement in house prices DID NOT STOP HIM FROM RECOMMENDING TO A YOUNG COUPLE THAT THEY SHOULD BUY A HOUSE AS SOON AS POSSIBLE!

    Henderson has actually paid Steve the highest of compliments. Clearly he hasn’t bothered himself with conducting any research to make substantive arguments – he’s just attacked his character. (It’s akin to a bigger but less intelligent child getting physical when his intellectual shortcomings have been “shown up”.)

    Obviously Steve is having a significant impact which some elites find threatening. And worse still – he’s the most difficult threat to combat – he has no vested interest that they can attack. He’s simply warning people because his robust academic research has led him to these conclusions, and because he cares about the wellbeing of his countrymen (unlike others who are concerned about power and wealth!)

    Next week Gerard might like to personally attack Paul Barry for having the audacity to inform Australians about the American housing crisis, and suggest parallels to Australia. There’s even a Yale Professor – Robert Shiller – to “have a go at”. The ABC even showed an updated version recently!

  21. Peter N says:

    Bravo Steve Keen. Keep reporting as you see it. Your views are not to the liking of the vested interests who want to keep ordinary folk dumbed down so that they can keep ripping them off.
    An example of the media’s misreporting was last Sunday’s (19/10/08) Channel 7 News @ 6.00pm where Jennifer Keyte’s first item was that Mr Rudd’s recent policy announcements were having a positive impact on Saturday’s auction results. What a joke!

  22. dyork says:

    Well done! Since all publicity is good publicity, this nasty piece by an ex-teacher, journo and political hack is an acknowledgment that you and your views are ready for prime time.

    Make the most of it! Nouriel Roubini has built a global reputation on just two things: predicting the worst, and being right!

    We can really use someone in that role here and I think you’re nominated. Keep up the writing, comment on everything, be seen everywhere and we’ll keep cheering.

    The Keen Monitor has a ring to it!

  23. Think of the positives Steve -Gerard’s done you a big favour by bringing you to the attention of a whole lot more people-like me-who have been searching for some sanity from an economist. Whenever I see Gerard on the attack about someone, I know it’s bound to be someone I should know about..and so it comes to pass. Great to find your site and will be making it required reading over the dark times to come.

  24. James Haughton says:

    Attack by the right-wing commentariat is the sincerest form of flattery.

  25. James Haughton says:

    Shorter Henderson: I’m jealous this man gets more media coverage and has a nicer t-shirt than I do.

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