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Google runs a reg­u­lar sem­i­nar series on top­i­cal issues, which I spoke at last week. There was a sub­stan­tial audi­ence (see the quick scan of the audi­ence below) and Google’s staff lived up to their hyper-intel­li­gent and hyper-engaged rep­u­ta­tion.

Steve Keen’s Debt­watch Pod­cast 

| Open Player in New Win­dow

I gave a pre­sen­ta­tion that com­bined my stan­dard talk on debt and Min­sky, with some expo­si­tion of the Cir­cuit and Min­sky mod­els, befit­ting of an audi­ence to whom sim­u­la­tion is no big deal–unlike eco­nom­ics con­fer­ences where such approaches are still fringe activ­i­ties.

The dis­cus­sion was also exten­sive, and inter­twined with the talk, so it went for a long time–almost two hours. Most of the first hour was my lec­ture:

Steve Keen’s Debt­watch Pod­cast 

| Open Player in New Win­dow

And most of the sec­ond hour was an exten­sive dis­cus­sion with Google staff that I had to call an end to because my voice was about to fail:

Steve Keen’s Debt­watch Pod­cast 

| Open Player in New Win­dow

Next week I hope to post the recent pre­sen­ta­tion to UNEP of my work with the CSIRO, which will show­case both the dynamic mul­ti­sec­toral mon­e­tary model of pro­duc­tion I have built, and the CSIRO’s mul­ti­di­men­sional-data­base-dri­ven bio­phys­i­cal model of the econ­omy.

On another note, I have writ­ten a fea­ture for the April issue of Dis­sent (Num­ber 32, Autumn 2010), dis­cussing the usual vexed issue of Aus­tralian house prices. As part of it I gave my per­spec­tive on why Aus­tralia has to date come through the GFC so well, and one aspect of that was being on the receiv­ing end of largess from China’s stim­u­lus.

I noted how­ever that China’s largess may be com­ing to an end:

China’s stim­u­lus included a lend­ing frenzy that only China could have inspired, since while finance in The West is largely an inde­pen­dent force to which gov­ern­ments kow­tow, China is still fun­da­men­tally a com­mand soci­ety: the best guar­an­tee against crit­i­cism when things go wrong is to be able to prove that you car­ried out instruc­tions to the let­ter and beyond.

I well remem­ber a tour of China I orga­nized for Aus­tralian jour­nal­ists in 1979, just after the fall of the Gang of Four. An anom­alous pair of sta­tis­tics had turned up just before the tour began: Chi­nese light indus­try out­put had risen 17%, but heavy indus­try had fallen by 7%: how could these two con­tra­dic­tory things hap­pen, our party of largely eco­nomic jour­nal­ists won­dered?

We got our answer from a meet­ing with the Mayor of Shang­hai and an offi­cial who title was the “Eco­nomic Boss” of Shang­hai: the Cen­tral Com­mit­tee of the Com­mu­nist Party of China had issued a direc­tive to “pro­mote light indus­try”. So what did they do?

We stripped heavy indus­try fac­to­ries and turned them into light indus­try”.

In China, if a com­mu­nist party offi­cial tells a bank to lend, it lends. Chi­nese lend­ing rose 95% in 2009 over 2008 lev­els, boost­ing its money sup­ply by over 27%. That has undoubt­edly caused unin­tended con­se­quences that the Chi­nese gov­ern­ment may well now seek to reverse—and its recent deci­sion to increase the reserve ratio is a sign that this rever­sal may already be in train. If so, our Chi­nese largess could dry up just as sud­denly as it began.

And today we learn that China has instructed its banks to stop lend­ing

To read the rest of the arti­cle, buy Dis­sent when it comes out in April.

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  • Eter­nal Stu­dent

    FYI — Zero­hedge has some inter­est­ing com­ments from Whit­ney and Bern­tein:

    In addi­tion, we believe the medium term impact of the pro­posal will be a reduc­tion of liq­uid­ity in not only the cor­po­rate mar­ket but also in the con­sumer mar­ket. For the record, we believe the pos­si­bil­ity of this pro­posal going the dis­tance is high.”

  • @ak 43

    Some­body with a real web design expe­ri­ence like Alan Gres­ley would be a bet­ter adviser than me.”

    Not me. JW (Jeroen Wijer­ing) Play­ers are JavaScript based. I am good with CSS and seman­tic HTML/XHTML. This is some­thing to do with the code on this blog. The videos (orig­i­nals) plays much bet­ter from the below loca­tion even though it imports the video from this blog.

    The only thing you need to do is stop both videos from play­ing at the same time. BTW the caching is fast.

  • @MechanicalEngineer 62

    If you don’t mind, what do they pre­dict next? Depression/deglobalizaton/war?”

    All three of these are already occur­ring. With war, it’s largely an infor­ma­tion war to begin with. This is not against coun­tries but against the rich and pow­er­ful and the rest of us. When hasn’t cor­po­ra­tions been the rulers of gov­ern­ment? Here is a video that is quite reveal­ing.

    A ques­tion to ask is how long have we lived under Cor­po­ratism?

    Polit­i­cal sci­en­tists may also use the term cor­po­ratism to describe a prac­tice whereby a state, through the process of licens­ing and reg­u­lat­ing offi­cially-incor­po­rated social, reli­gious, eco­nomic, or pop­u­lar orga­ni­za­tions, effec­tively co-opts their lead­er­ship or cir­cum­scribes their abil­ity to chal­lenge state author­ity by estab­lish­ing the state as the source of their legit­i­macy, as well as some­times run­ning them, either directly or indi­rectly through cor­po­ra­tions.”

    Or how long have we been on the march to Neo­feu­dal­ism?

    The con­cept is one in which gov­ern­ment poli­cies are insti­tuted with the effect (delib­er­ate or oth­er­wise) of sys­tem­at­i­cally increas­ing the wealth gap between the rich and the poor while increas­ing the power of the rich and decreas­ing the power of the poor.”

  • d_g_law

    Great talk Steve! It’s funny, the fol­low­ing day the Obama announces he is going to put leg­is­la­tion into place to make sure finan­cial insti­tu­tions can’t get away with this reck­less folly of feed­ing spec­u­la­tion in the future.

  • Thanks d_g_law; yes tim­ing is a curi­ous thing. I don’t take that state­ment by Obama seri­ously yet how­ever: he has to feel real pain, and really fear a Demo­c­rat wipe­out, before speeches will trans­late into back­bone. If he goes on an unan­nounced coun­try­wide tour, sees the real estate dis­as­ter first hand, drops in on wel­fare agen­cies,… then maybe. I’m still wait­ing till 2011 for any­thing really sig­nif­i­cant to be done by him.

  • home­s4aussies

    This “new report” by the usual prop­erty spruik­ers men­tions surg­ing house­hold dis­pos­able income over the last 6 years or so as a rea­son for improved hous­ing afford­abil­ity.

    One hole in the argu­ment for the most recent period is the cash hand­outs — with Aus­tralia hav­ing the largest stim­u­lus pack­ages of the OECD, and much of that large direct pay­ments to house­holds, dis­pos­able income was boosted sim­ply by one-off gifts.

    Early in 2009 I was informed by the RBA that these pay­ments alone reduced the house price to dis­pos­able income ratio that they cal­cu­late by 30 basis points. And that was for data that did not include Stim­u­lus II and the full impact of Boos­t­e­ria (FHVG)

    But in the mid­dle of the naugh­ties I can under­stand that income growth was gen­uinely strong for some indi­vid­u­als (thus at the aggre­gate level) — espe­cially up to 2007 with the resources boom in full swing, and the case can be made that the RBA was too slow in rais­ing rates in response to it.

    But dis­tri­b­u­tion of that income is surely the most impor­tant issue. Median house prices should be com­pared with median house­hold dis­pos­able income.

    Is there any data series on median house­hold dis­pos­able income? I have not been able to find it if there is.

    The only such data that I have been able to locate is in the Cen­sus quick­stats where they can be derived for a given area (includ­ing sta­tis­ti­cal divi­sion — ie. city)

    I’ve done some quick cal­cu­la­tions for Bris­bane so I’ll use it as my exam­ple.

    At the last cen­sus (8/8/06) the Weekly Median House­hold Income for the sta­tis­ti­cal divi­sion of Bris­bane was $1,111 (for an annual income of $57,772). The ABS Bris­bane Median House Price for Sept qtr 2006 was $342,000. There­fore, the MHP:MHI was 5.8. (Note, if indus­try data for house prices was used the ratio would be higher because val­ues are con­sis­tently higher than from the ABS.)

    The Median Weekly Indi­vid­ual Income was $516(for an annual income of $26,832), and the MHP:MII was 12.4.

    (I looked for income data for the 2001 cen­sus for com­par­i­son — unfor­tu­nately they do not appear to have pub­lished them.)

    From Sep qtr 2006 to Sep qtr 2009 (the lat­est ABS house price data release), Bris­bane median house prices increased 29%.

    How likely is it that median incomes rose at bet­ter than 9% pa over this period (even with the unprece­dented cash hand­outs)?

    There is lit­tle doubt that the median house price to median indi­vid­ual and house­hold incomes ratios have risen over this period — from what were already very high lev­els — thus afford­abil­ity has dete­ri­o­rated even fur­ther in the last 3 years.

  • Re #81. Also, the chart I have pro­duced deflat­ing both house prices and dis­pos­able incomes by the CPI shoots a rather large hole in that spruiker argu­ment.

  • @Steve Keen 50

    Thanks d_g_law; yes tim­ing is a curi­ous thing. I don’t take that state­ment by Obama seri­ously yet how­ever: he has to feel real pain, and really fear a Demo­c­rat wipe­out, before speeches will trans­late into back­bone. If he goes on an unan­nounced coun­try­wide tour, sees the real estate dis­as­ter first hand, drops in on wel­fare agen­cies,… then maybe. I’m still wait­ing till 2011 for any­thing really sig­nif­i­cant to be done by him.”

    Why do you keep on per­ceiv­ing that Obama will wake up. If he held to his pledge which he gave when he was sworn in as Pres­i­dent, then if he was a true Pres­i­dent of change, he would have allowed the pre­vi­ous Pres­i­dent and his admin­is­tra­tion to be impeached on the grounds of launch­ing a war based on lies.

    Iraq had no WMD so the inva­sion of Iraq was an ille­gal act based on lies.

    Obama knows the true scope of the destruc­tion to Amer­ica as he is equally aware of the resis­tance that opposes him (in the 10 of mil­lions). One per­son who opposes him is Max Keiser. Max Keiser often uses the term of finan­cial ter­ror­ist. He cor­rectly describes what we are now see­ing.

  • home­s4aussies

    #82. Yes, that would do it, Steve.

    Here is the fun­ni­est thing about this “new report”.

    Six weeks ago Dr Joye was out and about talk­ing about his “new report” which he described as the most com­pre­hen­sive of it’s type — eg. got him a spot on 602 Busi­ness Chan­nel.

    It was essen­tially in response to talk of a bub­ble, after Ross Garnaut’s book release, and espe­cially a sting­ing arti­cle on Crikey by Adam Schwab a few days ear­lier

    Here’s a link to one of the con­se­quent media sto­ries on 10 Dec 2009

    I looked for the actual report then — couldn’t find it — just a blog arti­cle on Busi­ness Spec­ta­tor (hardly what could be described as the most com­pre­hen­sive of it’s type)

    Again, there seems to be no sign of an actual report with this lat­est round of media report­ing.

    How­ever, based on the arti­cle below, it would seem that the con­tent is exactly the same. So, the “new” part is highly unlikely, and the “report” part is still debate­able

    It just shows the bias in the media to report­ing pos­i­tive sto­ries about hous­ing (even though Dr Joye con­tin­u­ally claims the oppo­site) — because there is no greater vested inter­est than the media with their rev­enues highly depen­dent on realestate — yet none of the media has picked up on the bubblepedia\homes4aussies release which is well researched and is news­wor­thy because of it’s rel­e­vance to Aus­tralia Day, how Aus­tralians view our coun­try, to the upcom­ing elec­tion, hous­ing and the afford­abil­ity cri­sis, home­less­ness, and the Prime Min­is­ter.

    But none of this is sur­pris­ing. Actu­ally, in many ways it is encour­ag­ing!

  • ak


    I will put it bluntly: do you pre­fer the Tri­lare­tral Com­mis­sion or the Polit­buro of the Com­mu­nist Party of China? Because I don’t believe there is any other choice. 

    The inva­sion of Iraq (espe­cially how it was exe­cuted) was an act of extreme stu­pid­ity. The same applies to the way the war in Afghanistan was pros­e­cuted, it is explained here what was wrong and why the region is rel­e­vant to the Amer­i­cans:
    This part is more about the events from the late 1970-ties lead­ing to the strate­gic defeat of the Soviet Union:
    This part is also worth watch­ing:

    Alan, believe me or not but Zbig­niew Brzezin­ski is treated in Poland as a national hero because he helped to get rid of the Soviet
    oppres­sion. I may not agree 100% with all his opin­ions but I would never call him “one of the worlds great­est sleaze bags”.

    Of course you are enti­tled to your own views but please don’t be naive — this is how it works. It is bad that inno­cent peo­ple have died dur­ing the first Afghan war but in other sce­nar­ios many more peo­ple could have died. Lib­er­tar­i­ans just behave like chil­dren and what they are doing may con­tribute to the demise of their home­land.

    A few months ago I was hop­ing that a mul­ti­po­lar world could emerge — a kind of “con­cert of pow­ers” sim­i­lar to 19th cen­tury Europe. This might be bet­ter than the Amer­i­can dom­i­na­tion and the dom­i­na­tion of multi­na­tional cor­po­ra­tions. It is now pretty obvi­ous to me that I was wrong — the Chi­nese don’t care about inter­ests of any­body else and they are going after pro­duc­tive economies in any West­ern coun­try by pur­su­ing hard­core mer­can­tilist poli­cies: flood­ing mar­kets with cheap export, peg­ging the cur­rency and acquir­ing resources in Africa, Latin Amer­ica and Aus­tralia. There was an attempt to engage them in kind of self-lim­it­ing agree­ment in Copen­hagen. It failed. Finally the Amer­i­cans are wak­ing up — just watch what Paul Vol­cker is doing. Some­body has acti­vated the “human rights and free­dom of speech” rhetoric. Do you think that Sergey Mihailovich Brin doesn’t under­stand how the Com­mu­nist party of China rules the coun­try and what they have shown us they want to achieve? 

    What­ever the Chi­nese do in retal­i­a­tion will be dis­as­trous for them in the long run. Hope­fully the Chi­nese tech­nocrats have zero under­stand­ing of the dynam­ics of West­ern soci­eties — oth­er­wise they would have par­tic­i­pated in the game pro­posed by the Amer­i­cans and Euro­peans and signed the Copen­hagen accord. (Just don’t tell me it was about polar bears. It was about resources).

    Regard­ing the domes­tic Amer­i­can pol­i­tics:

    There is one key­word “Tar­gow­ica” which only Pol­ish would instantly under­stand. It was the ulti­mate per­son­i­fi­ca­tion of trea­son, a con­fed­er­a­tion of mag­nates bribed by the Russ­ian empress to par­ti­tion and dis­man­tle the state.

    Unfor­tu­nately we are deal­ing with a sim­i­lar bunch of mag­nates in the US in the form of bankers and some cor­po­rate exec­u­tives who make money from “free trade” and “glob­al­i­sa­tion”. You don’t like them because they are elit­ist. I don’t care much about that — my cur­rent job is to empty ash trays in the global finan­cial casino. But I have cho­sen to migrate to Aus­tralia not to Macao or Hong Kong. Even if I like Chi­nese cui­sine very much, I don’t like com­mu­nist par­ties in any form — includ­ing the largest one. So I do care about the Amer­i­can Mag­nates bring­ing the whole West­ern civil­i­sa­tion down to be only replaced by the com­mand sys­tem based on teach­ings of Con­fu­cius and Chair­man Mao. The New West­ern Mag­nates are per­fectly capa­ble of doing that. Peo­ple don’t need dif­fer­en­tial equa­tions to under­stand why.

    Supreme Court Rips Up Cam­paign Finance Laws.”

    “The new rul­ing blurs the lines between cor­po­rate and indi­vid­ual con­tri­bu­tions in polit­i­cal cam­paigns. It also strikes down part of the 2002 McCain-Fein­gold cam­paign finance law that banned unions and cor­po­ra­tions from pay­ing for polit­i­cal ads in the wan­ing days of cam­paigns.”

    Regard­ing Aus­tralia:

    I believe that Barn­aby Joyce is right. Once they buy up our resources — we are fin­ished as we have had enough local “lob­by­ists” already:

    AUSTRALIA’S fifth rich­est man, min­ing mag­nate Clive Palmer, has denounced the fed­eral government’s for­eign invest­ment rules as racist, claim­ing they are skewed against Chi­nese com­pa­nies buy­ing into resource projects in Aus­tralia.”

    Just don’t tell me that I am naive and that I don’t under­stand the rules of the game. I sim­ply don’t think that the rules will ever change. If you don’t like my analy­sis — read this guy’s blog, he writes about the cri­sis of the Amer­i­can soci­ety and state from the Russ­ian observer’s per­spec­tive:

    I sin­cerely hope now that the Amer­i­cans will pre­vail and our morally cor­rupt sys­tem (nobody has ever invented a bet­ter one) will last for a few more decades. This will hap­pen if their elites and oli­garchies really wake up to the emer­gency we are fac­ing. The finan­cial cri­sis is just an ele­ment of a much larger pic­ture.

    It is so sim­ple: wealth is cre­ated when peo­ple make more goods (usu­ally by exploit­ing work­ing class peo­ple but who cares?), not by “mak­ing” money by spec­u­la­tion. Paul Vol­cker knows that, will they lis­ten to him?

  • GSM

    “I sin­cerely hope now that the Amer­i­cans will pre­vail and our morally cor­rupt sys­tem (nobody has ever invented a bet­ter one) will last for a few more decades. This will hap­pen if their elites and oli­garchies really wake up to the emer­gency we are fac­ing. The finan­cial cri­sis is just an ele­ment of a much larger pic­ture.”

    To this point, we may be see­ing (MAY) the begin­nings of this in the US. The Mas elec­tions sent tremours through Obama’s Admin­is­tra­tion. The next big lit­mus test will be the re-con­for­ma­tion of Bernanke. Then it will be how fares young Tim­may. I sus­pect that if Vol­cker con­tin­ues to rise in promi­nence within Obama’s team, Timmy will be look­ing for a new job.

    I would also say it has noth­ing to do with “wak­ing up”. More about get­ting caught. The elites know fully well the game they are play­ing. To keep it going they require a dumbed down pop­u­lace, a reli­ably false regime of sta­tis­ti­cal dis­tor­tions and a will­ing media to bar­rage cit­i­zen with what essen­tially is pop­ulist Govt spon­sored BS.

  • noah cross

    84 home­s4aussies “shows the bias in the media to report­ing pos­i­tive sto­ries about hous­ing (even though Dr Joye con­tin­u­ally claims the oppo­site) – because there is no greater vested inter­est than the media with their rev­enues highly depen­dent on realestate”

    …all true and if you saw the ‘non-adver­tis­ing’ ABC finance report in their Fri­day evening news, this report was given lots of air­time and implied endorse­ment because no doubt the pre­sen­ter and the TV crew have mort­gages and likes the news to be pos­i­tive.

    I took this use and report­ing of Ris­mark reports up with Medi­awatch (ABC’s media review) in regard to Alan Kohler’s own pre­sen­ta­tions of data. They called me back inside 10 min­utes of my email to them. They are cau­tious — more so than com­mer­cial media- of such report­ing but implied endorse­ments come under indi­vid­ual per­cep­tion, although there must also be equally crit­i­cal com­ments on the same sub­ject to pro­vide bal­ance.

    Any analy­sis from pri­vate research com­pa­nies (or which has been paid for by vested inter­ests) about the indus­try they are also paid by is worth­less.

    Hav­ing worked in the con­sul­tancy busi­ness in var­i­ous coun­tries for over 20 years I would only ever use reports or data if the method­ol­ogy and base data is revealed for inde­pen­dent scrutiny.

    It is an indict­ment of media and gov­ern­ment that they read­ily use mate­ri­als sup­plied by research com­pa­nies that is in most cases unac­cept­able.

    Per­haps only with losses in real estate cou­pled with main­stream econ­o­mists inabil­ity to explain what is going on, will the need for bet­ter infor­ma­tion to cre­ate pol­icy be adopted.

  • jmi­hub­bard

    Thank you for post­ing the talk at Google. I opened it in IE8 under Win­dows Vista and had no video and no pause but­ton. It just played.
    What a tragedy that our econ­omy is run by igno­ra­muses who are edu­cated to the point that they won’t lis­ten to oppos­ing argu­ments.