Michael’s visit is being organised by Prosper Australia, and they have asked me to link to their page detailing the tour and his speaking engagements while in Australia. It’s quite a good page, with some well chosen links to some of Michael’s research:
Prosper Australia: Professor Michael Hudson Touring October
The fund-raising widget has so far raised A$305, which is pretty good–thanks to all those who have donated so far. More donations of course are welcome: it would be good to hit the A$1,000 mark if at all possible, which will fund Michael’s hotel accommodation while in Sydney and make a contribution to the airfares for himself and his wife.
As noted, if we raise sufficient funds this time, I’ll do the same to arrange a public talk by Paul Ormerod when he is in Sydney in November.
September 12th, 2009 at 1:55 pm
For what it’s worth, I’ll vouch for Steve on this one. I know Michael and he’s both an excellent speaker and extraordinarily intelligent. As Steve noted, the range of his expertise is simply breathtaking. Well worth whatever funds anyone can contribute.
Scott Fullwiler
September 12th, 2009 at 4:37 pm
Steve, your right, its way to hard being a bear!
http://www.smh.com.au/business/riding-the-tsunami-20090911-fkqx.html
I give up – im off to buy an ultra expensive house and join the rest of the speculators as this party cant stop – Australia is just too strong, we are different, we have decoupled from the rest of the world.
September 12th, 2009 at 8:55 pm
Could someone please explain to me what is a debt jubilee? Thanks
September 12th, 2009 at 10:23 pm
debtjunkies, it’s amazing how none of these people notice that the solution we are using is identical to that used to the US in 2001, historically low interest rates and massive (for the time) government deficits. I don’t expect it to all hold together for as long as five years, which is all the Americans could manage.
September 12th, 2009 at 11:22 pm
Don’t worry ken, we will be spared the worst as long as possible, Rudd et al are constantly bombarding us with the “its a rocky road to recovery” line. The masses are being prepared for a third and forth wave of stimulus to be implemented as unemployment increases and the next wave of the financial crisis hits.
Governments are only concerned with the news cycle, despite the rhetoric, they only care about tomorrows headlines not 5 years. And the truth is the masses do not care until its to late either. As long as today they are good they will worry about tomorrow, tomorrow.
And at the moment today is good.
September 13th, 2009 at 3:49 am
reposting this from the end of last thread:
It wasn’t me with the biblical takes of jubilee – but how is a jubilee different to monetising the debt?
A jubilee will possibly be hyperinflationary, since every debt forgiven turns credit money into high powered money – since the original loan is still circulating yet has no attached liability.
A jubilee could only work if a sunstantial amount of the credit creationmachinery is permanently destroyed. That means, a lot less banks.
September 13th, 2009 at 9:24 am
“And at the moment today is good.”
Indeed. To see tommorow, and the day after that, and the day after that, until we are all long dead cast your eyes over this:
http://www.flickr.com/photos/42428164@N02/3913778866/
the tag for this graph is:
“Ratio of population aged 65 and over to the total population for OECD countries. An economic brick wall approaches.”
I created this graph from data at:
http://stats.oecd.org/
I hope this puts into perspective how solving the current debt crisis really solves nothing at all. Even if we were debt free today, the existing economic system would be doomed.
September 13th, 2009 at 10:14 am
scepticus,
I am not sure whether we are doomed because of demographics and / or environment. The current model based on unsustainable consumption growth certainly is. I will not cry for it when it’s gone.
If we look at the number of people required to:
1. provide food
2. manufacture enough consumer goods to maintain reasonable level of consumption
3. provide essential services (health care, education, eldery and disabled care, communication, transport)
4. maintain scientific and technological progress (this is the only progress and growth I believe in)
5. provide security (army and police)
you will realise that probably half of the population is enough. The rest especially working for the FIRE sector are parasites (like me).
For example if we get rid of marketing and advertisement how much can we save? These people do not make anything useful they only massage consumer demand.
I am not advocating real socialism where the state was responsible for the central planning of delivery goods and services listed above. The only “service” delivered on time was so-called “security”, scientific research level wasn’t bad and essential care services were delivered at a acceptable level. The rest was a disaster. We can look at the fossil of that system in Cuba if we want.
The current capitalist model delivers generally much better results but is unsustainable and inherently unstable.
Now the trick is to invent a path from the current mess towards a system which is sustainable (does not depend on growing consumption and wasting of energy). We even don’t know what is sustainable and not utopian / inhumane (as pure communism was) – I simply don’t believe in what has been proposed so far. But I am sure that in the worst case we will revert back to real socialism. It will work but life will be very unpleasant.
So far I am quite pessimistic and the least resistance path may lead some countries through a series of collapses however if the US experiences it first we may have time to reform system in Australia and start solving real problems rather than patching holes in the housing bubble.
Again – I am not advocating socialism but if we don’t act quickly to save the better system (based on predominantly private ownership of means of production, markets and so-called personal freedom) we will get a form of socialism anyway.
September 13th, 2009 at 10:48 am
ak,
Its not that we don’t need ad men or marketing gurus it is that as a society we want them.
We want to consume, we want to do better than the bloke next dooor, we feel sorry for those on the street but not enough to downsize our mcmansions and buy them a small flat.
A truly utopian society with a well designed economic structure where all people are working to better the lives of the person next door is only possible if all 7 billion of us want it.
Unfortunately I believe that the only way that we can move towards a system such as this is via a huge worldwide event that puts everything in perspective for all people. A truly world wide war; massive climate change leading to mass starvation and flooding events.
The problem is that we will hit 10 billion by 2050-2070. To really address the idea of an utopian society we first need to know what level of population is sustainable and then you need to somehow get to that level probably via oe of the aforementioned catastrophies. Only then can you move to implement this type of system.
September 13th, 2009 at 11:15 am
ak, my point about the demographics is that they contain incontrovertible evidence of an end to growth, at least for now and for a long period of time. I find this argument useful since it can’t easily be denied or refuted like peak oil or environmental arguments.
A society without growth or with negative growth can pick one of these:
1. either retain positive interest rates on the medium of exchange and free market distributions of wealth and jobs, with resulting high unemployment and extreme wealth inequality. This is not a stable society.
2. utilise command socialism to enforce distribution of surplus to maintain sustainable levels of ineqaulity and target high emplyment. This society is also not stable based on past evidence and the computational difficulty of central planning.
3. allow negative rates of interest on the medium of exchange and retain free market distribution of jobs and wealth resulting in high employment. This society is stable assuming an equilibrium is found in which a ruling elite can exist and perpetuate itself even though monetary wealth cannot be passed inter-generationally.
Given 1 and 2 are unstable I suggest the most likely outcome is 3, with the caveat that if 3 does not have a stable solution the result will be collapse.
Ask yourself the question – what will a society dominated by hordes of little old ladies prefer? I don’t know the answer to this, but its an interesting thought experiment for which prior human history provides little useful insight.
Perhaps we should ask some old ladies.
September 13th, 2009 at 11:20 am
dj, no chance we’ll hit 10 billion. According to the latest UN forecasts, even their median scenario only hits 9 billion.
And in any case the aggregate number is irrelevant, whats relevant is the population of the players in the monetary game now, the oecd nations and BRIC. Once you look at population projections with those restrictions, the numbers are much lower.
The only major growing populations will be south and central asia – india, bangladesh, indonesia and central asian nations.
September 13th, 2009 at 4:14 pm
Interesting to see Gittins in the SMH this weekend explaining that the reason economists didn’t see the GFC coming was due to their reliance on neo-classical economic models:
http://www.smh.com.au/business/why-economists-failed-to-predict-a-train-wreck-20090911-fkrd.html
Steve, if imitation is the sincerest form of flattery then it looks like you have a new fan!
September 13th, 2009 at 5:07 pm
thanks for the stats scepticus,
i wonder what the picture is for china , india, indonesia, iran, and russia, in terms of their ageing demographic profile. are they on the same wave as the rest of us?
September 13th, 2009 at 5:12 pm
sorry i didnt catch your later post where you mention asia and india ,
in geo political terms, the engine of global prosperity will move to those regions one presumes, and we will have to hang on to their coat tails,
a plausible scenario?
September 13th, 2009 at 5:32 pm
Perhaps all is not as rosy as continually tell us.
Insiders sell like there’s no tomorrow
‘The stock market has mounted an historic rally since it hit a low in March. The S&P 500 is up 55%, as U.S. job losses have slowed and credit markets have stabilized.
But against that improving backdrop, one indicator has turned distinctly bearish: Corporate officers and directors have been selling shares at a pace last seen just before the onset of the subprime malaise two years ago.’
http://money.cnn.com/2009/09/10/news/economy/insider.sales/index.htm?postversion=2009091107
September 13th, 2009 at 6:01 pm
“A truly utopian society with a well designed economic structure where all people are working to better the lives of the person next door is only possible if all 7 billion of us want it”
“Unfortunately I believe that the only way that we can move towards a system such as this is via a huge worldwide event that puts everything in perspective for all people. A truly world wide war; massive climate change leading to mass starvation and flooding events”
well said debtj,
we are in a way victoms of our evolutionary past, and as a consequence we have dragged along some of our retro grade behaviors which probably served us well as we chased down wooly mammoth on the tundra.
but in a world with 6 billion people and counting, with finite resources, it probably not a good thing that we havnt eliminated greed, murder ,genocide and total war from our make up, all in a world full of nuclear weapons,
the chances are, being the dominant species on the planet has gone to our heads, and so, as you say it might not be enough for us to look into the abyse, we may have to touch its murky depths and claw our way back up, more chastened for the experience
.
September 13th, 2009 at 7:38 pm
mahaish, before i go further i have taken all responses to your demographic questions from Harry Dents latest book, The Great Depression Ahead (2008).
In this work he does complete demographic analysis using his methods of most major regions of the world. I will try to summarise briefly but recommend anyone interested to read his works to get a complete picture for themselves.
China – “spending trends will start to peak between 2015 and 2020, and the country will age rapidly and lose population faster than the US starting around 2035″ (pg177).
India/Pakistan/Iran – Dent goes into depth on this region and on India predicts there peak spending between 2050-2060 (pg227-231) and notes that india it should be “the key region from 2023 to 2065″ (pg227).
Russia/Eastern Europe – Dent notes that Russia is already on a declining spending trend and thats its fortunes are linked to the commodity cycle (pgs 202-205).
Again I advise all bloggers that I have taken all this informationf rom Harry S Dent jr’s latest book, The Great Depression Ahead (2008) and all references and quotes are taken from the Australian edition published by Griffin Press and I advise all those interested to undertake their own investigations before taking my word exclusively.
That said, I do give credence to his theories and when combined with theories from others, especially Steve one gets a complete picture of what could be in store for us.
September 13th, 2009 at 7:41 pm
Got this from the evil speculator site. Thought you numbers guys (as there are many on this site) would love it.
The Dow closed at 9506 on September 11 2001 and this past Friday (September 11, 2009) the DOW closed at 9506. How cool is that?
http://farm3.static.flickr.com/2429/3913245422_...
September 13th, 2009 at 7:43 pm
Sorry,
The above link doesn’t work. The link was to a snap shot of the two closes back to back.
September 13th, 2009 at 8:49 pm
spooky btb,
what happened after sept 11, 2001 , to the dow, to see if the spookyness continues
September 13th, 2009 at 9:16 pm
thanks for the stas debtj,
it seems hard to believe that spending will peak in china in 2015/20, given that average income is what $2000 US compared to $45,000 in the US, and their industrial revolution is barely over 30 years old, if you take dengs reforms as the starting point.
may be the shear absolute numbers involved in the growing middle class are still going to make them and the indians the growth engine for the rest of the world over the next 50 years anyway.
mind you they are going to have to achieve their agrarian transition in a falling population envioronment as oppossed to great britain 250 or so years ago which engendered malthusian concerns
September 13th, 2009 at 9:17 pm
Actually guys the markets were not open on September 11.On September 10 2001 the Dow opened at 9605.852 and, believe it or not closed at 9605.512 (really 9606 but for all you conspiracy thoerists i will accept 9605) The markets were closed for one week and did not open until 17/9/01.
And again for you date thoerists and conspiracy nuts it took the dow until 9/11 (note its the reverse of 11/9) close above this level (9608).
We are all just pawns!!!!!!!!!!!!!!!!!!!!!!!!!!
For those that dont have charting software you can check it out for yourselves at:
http://bigcharts.marketwatch.com/
Click on the DJIA chart and then check onteractive disply. You can check out the the daily movements for the past decade.
September 13th, 2009 at 9:42 pm
Before all you conspiracy nuts go to far, neither the S&P500 nor the NASDAQ achieved the same remarkable achievement.
SP500 10/9/01 closed 1042 & 11/9/09 closed 1092
NASDAQ 10/9/01 closed 1695 & 11/9/09 closed 2081
Neither market correlates over the two day period.
September 13th, 2009 at 10:11 pm
We are all just pawns!!!!!!!!!!!!!!!!!!!!!!!!
i’m sure there’s some colonel ollie north or general vernon walters lookalike with above top secret classification controlling all of this from groom lake or NORAD
September 13th, 2009 at 10:19 pm
wonder if anyones done any research trying to correlate moon phases with the dow.
cops hate full moons,
wonder if the dow hates it as well
September 13th, 2009 at 10:19 pm
Sorry everyone, i forgot to clarify, the actual Dow close on 11/9/09 was 9605 (not 6506 BTB). This will better explain the whole conspiracy angle thing of 11/9/01 vs 11/9/09.
September 13th, 2009 at 10:39 pm
i digress, but on the subject of conspiracies
pure unfounded idle speculation i’m sure, it is said that there use to be a strong correlation between general vernon walters goodwill visits to TPLC’s(tin pot little countries) and the miracules regime change these countries would undergo in short order .
americans wanting regime change, i dont believe a word of it
September 14th, 2009 at 6:07 am
Hi Guys,
Re the DOW. I’m not suggesting there is a conspiracy. Why would anyone conspire for the DOW to have the same close. I just thought the same number 8 years later was both beautiful and totally unbelievable. No one in 2001 would have believed that in 2009 the DOW would close at exactly the same level. The closes were
September 14th, 2009 at 6:16 am
I posted that comment by mistake before I had finished. I’ll take that as a sign and move on.
Some of you will jump all over this comment. But here I go anyway.
This week may be a very interesting week in many markets.
The $US may have completed a bottoming pattern. (may). The pattern has been killing me softly. A falling wedge that keeps falling. I believe the pattern is terminal. It just keeps taking longer to reach the station.
Many commodities turned down in June, only to have partial retracements. Elliot wavers call that wave 2s. Several of these markets look ready for wave 3s down this week. Some other commodities markets look ready to roll over in 1st waves down as they seem to have completed their up patterns.
All very subjective but nonetheless I think this may just be an interesting week for the markets.
Of interest to Australia. Wheat seems to have completed a full falling pattern and looks due for a solid rise for many months.I hope for the farmers sake that is what plays out.
September 14th, 2009 at 7:19 am
dj I haven’t read dent’s book yet – I base my own thoughts mostly on the projections of professional demographers like wolfgang lutz. However dent does link things up to economic cycles nicely.
I’m not sure what he has to say about debt, it seems to me he has a somewhat plausible story that suggests that inflation is driven mainly by demographic shocks to the economy that drive up demand for money, creating investments which are not immediately productive but becomes so over time.
So in that sense a debt boom is not the ponzi scheme, since if the demographic boom that he says drives it continues then the debt is sustainable. Of course population of various age cohorts waxes and wanes and when it wanes, it leaves behind a debt burden that does not fall in line with the population. So the ponzi element can be reduced to the assumption on the part of investors that the demographic boom will continue unchanged.
Also I am wondering what his other outlandish predictions were.
September 14th, 2009 at 7:25 am
Demt amd I met up when he was in Sydney recently, and got on very well. He is foremost a demographic analyst, and as I’ve acknowledged I haven’t taken demographics into account in my own modelling–but if I did it would amplify my own case. I think Harry has a similar perspective–incorporating the Ponzi Scheme that has run in the last 40 years into his analysis would make the predictions from his demographics even more severe.
September 14th, 2009 at 8:06 am
Steve I think dent is saying – correct me if I am wrong – that the demographic rythym of our society drives, in this modern age of capitalism, debt accumulation. So on that basis he feels it natural in some sense that the biggest demographic boom in recent times has caused the greatest debt boom. This makes sense to me.
However the alternative explaination that I like for the debt accumulation is the marxian one of capital accumulation. That is strong growth in a capitalist society is a result of profits which in turn is the difference between wages and growth – leading ultimately to erosion of relative purchasing power which gap is then filled ponzi style with debt to sustain demand, profits and growth.
I think we need to understand the reasons why we went on a massive debt fuelled consumption binge. According to the first, dentian, thesis above, the debt accumulation can in theory be sustained indefinitely with sufficiently strong demographic growth. According to the marxian view though, the debt bubble is a result of inherent contraditions in the economic system is is therefor not sustainable regardless of other variables.
What’s your view steve? It would be most valuable to have your credit curcuit model augument with demographics. If you could set this new model off in 1900 augument with demographic data over the same period, it would be interesting to see whether the modelled outcome matches the history.
September 14th, 2009 at 8:07 am
Mahaish, I found this on dents site. I think you’ll like it.
http://www.hsdent.com/tngbb/tlv2.pdf
September 14th, 2009 at 8:44 am
Mahaish, ‘wonder if anyones done any research trying to correlate moon phases with the dow.’
On the topic of moon phases/magnetism, there seems to be plenty of work done on sunspot activity and the ‘link’ to global events including equity market activity. Check this out.
http://www.michaelmandeville.com/earthmonitor/cosmos/solarwind/Sunspot_Cycles_Influence_Human_History.htm
You’re right, cops hate full moons as does any nurse who works in an emergency department at a hospital.
September 14th, 2009 at 9:02 am
Sunspots – another one for your list steve.
September 14th, 2009 at 9:39 am
I think the most interesting correlation between the work of say Steve and Dent (Steve please correct me if I am grasping) is that steve has shown a peaking of debt in the late 20’s and into the depression and the same as with the current crisis. At the same time Dent notes (based on demographic analysis of populations) that peak spending occurs around the same time.
So maybe there is some link that can be made, as the population ages so does it propensity to take on more debt, this then compounds and leads to a speculation frenzy (particularly among those in the 45-55 age bracket). Eventually as the population ages so does it capacity to spend due to having way too many debts.
This leads to the retreat of the consumer and a process of deleveraging as punters move to pay down debts as they prepare to retire.
This seems to be what is playing out now in the western world.
It happened to Japan in the 80’s – peak spending in the population coincided with and increase in debt and a housing bubble before it all came crashing down and deleveraging kicked in.
September 14th, 2009 at 9:50 am
Scepticus, I think why we go on a debt fuelled consumption binge is that people tend to judge the value of their lives based on what they have accumulated (goods/money etc). In undertaking that assessment when they reach mid life (40-50)they probably feel as if they are not where they pictured themselves to be – this leads to the inevitable binge to try to make up for lost time.
No matter how we try to model we will probably never be able to factor in the psychology of the individual and its overall effect on the economy and accordingly there will always be boom and bust cycles.
I think the challenge is to try and understand as many different theories that may be possible and then having a round table and creating a model that takes as much as possible into account.
September 14th, 2009 at 9:54 am
K Rudd’s the king of the world.
http://bigpondnews.com/articles/TopStories/2009/09/14/Voters_happy_with_govts_handling_of_GFC_372348.html
September 14th, 2009 at 10:26 am
debtjunkies said –
“So maybe there is some link that can be made, as the population ages so does it propensity to take on more debt, this then compounds and leads to a speculation frenzy (particularly among those in the 45-55 age bracket). Eventually as the population ages so does it capacity to spend due to having way too many debts.
This leads to the retreat of the consumer and a process of deleveraging as punters move to pay down debts as they prepare to retire.
This seems to be what is playing out now in the western world.”
I totally agree with your comment … experienced almost exactly the same thing. It also corresponds with many folks peak earning years.
One thing though, with economic uncertainty & the limited ability to recover financially at about this age bracket from any crisis, it appears to me that the GFC has moved many in this age group to seek safer options for investment. In other words, the GFC has created a lot more perma bears than previously.
Gov’t policy seems designed to get people to take on more risk, but after all that has happened and continuing uncertainty, why trust the system anymore.
It also concerns me that the whole concept of mortgage has changed meaning over the past 15 years. How can someone over 45 be offered huge mortgage finance over 30 years.
Sure, they may have the security to get the loan, but it’s hardly a mortgage based upon earning capacity over the life of the loan. IMO it fuels speculation in the very age group you specify.
September 14th, 2009 at 10:37 am
scepticus,
There is no doubt that full moons and moon phases has marked effects on many peoples moods and personality. Any cop or ER nurse knows this. In fact I know of some cases where shift rosters take this into account. After all, a global force that is powerful enough to move the Earth’s oceans of water higher and lower over vast distances (tides)should not cause surprise that it can effect some people too.
I have not done a study on stocks, but from charting the dollar for many many years I know that full moons very often (not always) have coincided with a change from the prior trend, usually a few trading days after the full moon. This tends to be a more reliable indicator when extremes occur.I keep an eye on full moons for that reason.
September 14th, 2009 at 10:43 am
In relation to lending you will note that supeannuation assets are now considered when looking at loan applications.
The bankers know that soon as you retire you will be able to access to a liquid asset that can be used to repay outstanding loans.
While honorable in its origins – super has become a great con and keeps the ponzi scheme going – i will borrow more becasue at the end i know i will get a payout that is favourable treated (tax) and i will use that to pay off my debts.
The government will then sponsor me through retirement.
This is the reason modeling an economy is so difficult – there are any number of variables that can and will change from one year to the next – the government is constantly moving the posts to keep voters happy today without care for tomorrow.
As to why we will again trust the system – because it will one day be good and GFC will be behind us and then we will not care that it was bad for 5-10 years.
September 14th, 2009 at 10:47 am
GSM & Scepticus,
I have been the licencee of pubs and clubs now for nearly 10 years and recommend that on the full moon you should stay at home.
If possible I refuse to work – on a full moon anything can and usually does happen and when they are pissed it is down right scary.
September 14th, 2009 at 12:34 pm
debtjunkies, I agree with your point on super .. in Australia the security super provided enabled property speculation risk to be offset by a future tax advantaged benefits.
In a declining real estate market this will help stem the rush of sales, but at the expense of super providing what it was designed to do, support retirement.
It’s my opinion that this system of speculation was mostly worked by a part the boomer group (45-55). Sort of leverage the present on the future, all to be funded by limitless capital gains.
But now having been bitten by the GFC and new found risk aversion, I suspect “this group” will not be as energetic to get back into it again. The ability to recover in an underemployed & job risk environment is too great a risk.
September 14th, 2009 at 12:41 pm
One other thing on ‘property investment’. By re calibrating all the tax thresholds over the past couple of years, the advantage of ‘negative gearing’ has been hugely dimished for the middle class.
Those who would benefet most are those higher income earners – the same ones trying to sell their properties in the wealthier suburbs, where the largest property value falls are. I doubt they will be jumping into property soon.
September 14th, 2009 at 1:04 pm
Just a quick note on presonal debt:
TOTAL personal finance commitments fell 0.8 per cent in July, seasonally adjusted, to $6.85 billion, from $6.9 billion in June, the Australian Bureau of Statistics (ABS) said.
Total commercial finance fell 1.0 per cent, seasonally adjusted, to $25.857 billion, from $26.114 billion in June.
Lease finance rose 30 per cent in July to $436 million, compared with $336 million in June.
Housing finance for owner occupation fell 1.7 per cent to $16.884 billion in July from $17.176 billion in June.
http://www.news.com.au/business/story/0,27753,26069889-31037,00.html
September 14th, 2009 at 1:24 pm
Looks like someone is taking a haircut on some of these
Luxury firesales slash prices
‘THE number of luxury properties selling at mortgagee auctions has soared as receivers and banks cut prices by up to 50 per cent to meet the market.’
http://www.theaustralian.news.com.au/business/story/0,28124,26068669-5018055,00.html
September 14th, 2009 at 1:34 pm
Steel Prices Drop, Reversing Course in Sign Mills Ramped Up Too Quickly
Green Shoots!
http://online.wsj.com/article/SB125288508350207283.html#articleTabs%3Darticle
September 14th, 2009 at 2:01 pm
Hi Clive,
Add to the price drops a very strong Aussie dollar and you can be sure that the miners are seeing their margins fall.
September 14th, 2009 at 2:49 pm
If you guys haven’t seen this one yet. Worth a read.
“The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore.”
http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession.html
September 14th, 2009 at 3:06 pm
BTB – great link.
Worth just seeing the picture.
The reality of the situation is in the real economy, not the ‘phony’ markets.