I’m still having difficulties getting my podcasts up and running at the moment, so in lieu here is a link to the ABC Radio National Big Ideas recording of an Evatt Foundation forum on the Global Financial Crisis.
Speakers were Bernie Fraser, ex-Governor of the Reserve Bank of Australia, myself, and Garry Weiss, a corporate lawyer (this is also the speaking order).
March 30th, 2009 at 12:11 pm
excellent talk – I heard this on the radio and thought you were extremely clear and convincing
March 30th, 2009 at 12:15 pm
I’m becoming disengaged. I didn’t follow Bernie’s lecture as closely. I’m worried that I am ignoring the mainstream view too much.
I think Bernie gave a bit of history and then said. The current policy actions are spot on and we should see some signs of improvement by the end of the year. Did Bernie add any value to the discussion at all?
March 30th, 2009 at 12:24 pm
Steve,
We need to address to global crises. Peak debt (from expoental debt growth) and the climate crisis. A new money base can do both.
Firstly, what ever we use as the basis of our money standard will be hoarded and will increasingly be taken out of use for anything other than money. Yet gold has great application in electronics and other technology. We will be poorer without its use in these applications. What ever we use as a monetary base should be storable, stable, and something we want to stop using for other applications. Coal might be able to fill this need.
I hear that critics of the gold standard point to the way that the market has been cornered numerous times in history. They also point to the battle between those fighting for a gold standard (super rich) and those fighting for a silver standard (working people) at the turn of the last century. The relatively small amount of gold compared to other bases means that the super rich are more able to monopolies it.
The biggest barrier to making this as a new standard is that it would greatly favour nations like Australia with huge coal reserves, We could counter this in a positive way by including carbon in old growth ecosystems, systems that we want to value without destroying for consumption. There by our money supply would be limited by how much of our ecosphere we preserve.
March 30th, 2009 at 1:14 pm
Steve,
does it make any difference to your analysis, that the Fed is not merely pumping up Base Money and allowing the banks to multiply the liquidity, (which they don’t, merely piling up excess reserves); but it is also lending directly to the various markets, and so becoming “Lender of First Resort”?
In other words the Fed is bypassing the intermediaries and pumping credit into the economy directly.
March 30th, 2009 at 1:20 pm
Steve,
Given your theories on the impending housing market collapse, I was surprised to see that the level of over building here is far less than it has been in the other Anglo Saxon countries. Britain, Ireland and The U.S. are quite literally at the stage where they are mothballing whole housing developments and demolishing others.
It seems to me that while all the other causal factors of a bust stack up, the big difference is that lack of empties. Relatively speaking, there is not enough over supply in Australia to precipitate a major housing bust. I know the census says 860,000 empty units but how many of these are holiday homes?
Am I wrong?
B
P.S. Sorry Id didn’t post this in a more appropriate forum.
March 30th, 2009 at 5:00 pm
Steve Keen’s comments start at 19:14 or thereabouts.
March 31st, 2009 at 5:31 am
Hi Barry,
I don’t think that more than 10% of the housing stock could be holiday homes; homes4aussies knows more about this than I do, but it is probable that a fair fraction are unoccupied investment homes because negative gearing was more of a motivation for building them than rental, with its lousy returns in Australia.
We did have less overbuilding, but the obverse of that is that we had more pure speculation. At the end of our boom, 92% of mortgage finance was going to the purchase of existing buildings.
March 31st, 2009 at 5:32 am
Some but not a lot. The sheer scale they would need to lend still remains beyond contemplation, and by not abolishing the debt they are still maintaining the root problem.
March 31st, 2009 at 5:34 am
It was rather, well, embarrassing to listen to, from my point of view. Bernie has retired and decades ago, but the absence of analysis and degree of simple faith that the treasury and RBA officials would work out what to do and all would be well was not exactly reassuring.
March 31st, 2009 at 7:28 am
The credit default swap obligations are variously estimated to be at $600 trillion to $1.5 quadrillion. It would seem that you would need a new variable in your endogenous model for them.
Can you give any hint about the money flows involving them to the rest of the economy?
March 31st, 2009 at 11:41 am
This ABC recording is very good.
However Steve is ignoring the basics.
While buying and selling assets in a rising market is contradicted by the fact that debt can rise faster (Steve’s point), the real problem is that debt is rising faster than the real consumption power of society and that this is a necessary trend for a economy based on Capital.
This is Marx’s point. Debt is a sympton of a deeper cause.
Unfortunately Steve’s rude anti-Marxism (eg loosing their minds) is undermining his own analysis.
March 31st, 2009 at 4:35 pm
I can’t stand listening to Bernie ‘The Sandman(JJJ)’ Fraser. yuk.
March 31st, 2009 at 4:50 pm
great lecture steve. keep it up.
April 4th, 2009 at 1:44 pm
I’ve only just been able to listen to the Big Ideas lecture.
I just wonder if Bernie stayed for it all, and if he LISTENED to it, understood it and took it on board. I’m one of those students who only did one year of Economics, a long time ago, and Steve, what YOU say makes so much sense.
I have a connection to what Bernie was talking about back in the 1960s as my father ‘lost’ his business at that time because of ‘the credit squeeze’, and as a child I didn’t understand what it was all about.
So I hope Bernie learned something. Otherwise, I fear he’ll be ‘trotted out’ again and again to give his ‘expert’ view, as ‘he must know as he’s a former Governor of the Reserve Bank!’.
April 8th, 2009 at 1:17 am
excellent and very helpful lecture.
is there by any chance a transcript available? or should i try my hand at it?
April 8th, 2009 at 7:12 am
There’s no transcript selise, and I’ve had several such requests to provide one. I’d be delighted if you could afford the time to compile one.
April 9th, 2009 at 8:49 am
i might be able to try a draft transcript tomorrow. will let you know how it goes. thanks for the reply.
(even promise to use the shift key for capitalization)
April 13th, 2009 at 12:22 pm
steve – i wasn’t able to finish a draft transcript until today, but now that i’ve done it, i don’t how to send it to you. is there a contact page or link that i am missing? alternatively, i can be reached at gmail.