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.

The Daily Telegraph terrorises the RBA

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This blog entry first appeared as a fea­ture in the Dai­ly Tele­graph on Wednes­day April 9th 2008. If you’re a new­com­er to it cour­tesy of that fea­ture, and you want to look at this issue in more depth, there are links below to more detailed analy­sis.

The Dai­ly Tele­graph lived up to its nick­name of “The Dai­ly Ter­ror” last week, with a front­page attack on Reserve Bank of Aus­tralia Gov­er­nor Glenn Stevens enti­tled “Is he Aus­trali­a’s most use­less?”, and an edi­to­r­i­al that was no less provoca­tive: “RBA boss is los­ing inter­est”.

Talk on Subprimes

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I’m giv­ing a talk on sub­primes to the “Mon­ty Pel­i­can Soci­ety”:

  • Date: Wednes­day April 2nd
  • Venue: Syd­ney Mechan­ics School of Arts, 280 Pitt St, Syd­ney NSW 2000 (near Town Hall)
  • Time: 6.30pm-8pm
  • For more infor­ma­tion, con­tact Troy Hen­der­son (troyh@search.org.au), or just rock up on the night.

DebtWatch No 21 April 2008

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At Last, the 1975 Show?

My main top­ic this month is a com­par­i­son of the eco­nom­ic events of today to those of 1973–75, but the most recent Case-Shiller data on US house prices sim­ply has to be “the Chart of the Month”. Last *month* the index dropped by 2.3 percent–implying an annu­al rate of decline in the realm of 25%! US house prices are down 13% from the peak in mid-2006, and in free-fall now.

Sky News Interview Sunday March 23rd

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Helen Dal­ley of Sky Busi­ness News inter­viewed me and Tim Mul­hol­land, of Melamed and Asso­ciates, a Chica­go-based con­sult­ing firm, about the Sub­prime cri­sis. If you’d like to see the video, click on this link:

http://www.skynews.com.au/video/video.aspx?id=43

Then use the selec­tion pan­el to choose the third story–with the head­ing “Sun­day Biz”, and the descrip­tion “Sky News Reporter Helen Dal­ley talked finance with Uni­ver­si­ty of West­ern Syd­ney Pro­fes­sor, Steve Keen”.

Why Now?

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Why Now?

       There has been no short­age of com­men­ta­tors and play­ers will­ing to vouch that this is the worst finan­cial cri­sis they have ever seen. Equal­ly, there has been no short­age of bailout moves by the Fed­er­al Reserve–remedies that put “the Greenspan Put” to shame in their mag­ni­tude.
       And yet the mar­ket melt­down con­tin­ues, and the casu­al­ties con­tin­ue to mount, with Bear Stearns the latest–and sure­ly not the last.
       In all this, no one yet seems to have posed the ques­tion of “why now?”. Why is the cri­sis clear­ly more severe this time than ever before, and why are reme­dies that worked rel­a­tive­ly quick­ly in the past (remem­ber the fast turn­around of the mar­ket after Octo­ber 1987, and the rapid recov­ery from the res­cue of Long Term Cap­i­tal Man­age­ment?) failling today?
       The answer is, sim­ply, that the world has nev­er in its his­to­ry car­ried the lev­el of debt that it is car­ry­ing today. The reme­dies that worked when Amer­i­ca’s pri­vate debt to GDP ratio was a mere 150 per­cent (see Fig­ure 1) are inad­e­quate when that ratio is 275 per­cent.

Change of venue for Per Capita Lunch

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There has been a change of venue for the Per Capi­ta lunch talk. The details now are:

  • 12pm-2pm, Fri­day March 14 Deep­er in Debt Talk, over Lunch host­ed by Per Capi­ta
  • Reser­va­tions: info@percapita.org.au — $50 per per­son ($35 con­ces­sion).
    • Loca­tion: Board­room of Boston Con­sult­ing Group
    • Lev­el 52, 101 Collins Street.

Speaking Tour on Debt

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A speak­ing tour of Mel­bourne, Ade­laide and Can­ber­ra has been arranged for me by a num­ber of groups. I’ll be speak­ing on Aus­tralia (and the OECD’s) debt bubble–the phe­nom­e­na, analy­sis of how they came about, and what we might expect when they burst.

The details are:

Melbourne

7pm, Thurs­day March 13th

  • Deep­er in Debt Talk, and then a con­ver­sa­tion with Bri­an Cavanagh
  • Lev­el 1, 27 Hard­ware Lane, Mel­bourne, free entry
  • Drinks after­wards

12pm-2pm, Fri­day March 14

  • Deep­er in Debt Talk, over Lunch host­ed by Per Capi­ta
  • Reser­va­tions: info@percapita.org.au — $50 per per­son ($35 con­ces­sion).

Time to read some Minsky

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The cur­rent tur­moil on the Stock Market—and espe­cial­ly the sud­den col­lapse of many once high-flyers—has tak­en a lot of peo­ple by sur­prise.
One per­son who, were he alive today, would­n’t be the least bit sur­prised, is Hyman Min­sky, who pre­dict­ed that events like this would be a reg­u­lar fea­ture of a dereg­u­lat­ed finan­cial sys­tem.
He devel­oped what he called “The Finan­cial Insta­bil­i­ty Hypoth­e­sis”, and any­one who wants to under­stand today’s events needs to know about it.
The fol­low­ing is an extract from an arti­cle by Min­sky in Chal­lenge in 1977—well before even the 1987 Stock Mar­ket Crash—that pro­vides a nut­shell-sized pre­cis of his the­o­ry.

Steve Keen’s DebtWatch No 20 March 2008: Double or Nothing?

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The rev­e­la­tion in the min­utes of the RBA’s Feb­ru­ary meet­ing that debate focused, not on whether there should be a rise, but on whether it should be 0.25 or 0.5 per cent, shows that the RBA wagers that the threats to the Aus­tralian econ­o­my are upside ones–tighter labor mar­kets and high­er inflation–rather than down­side ones–a glob­al slow­down as asset mar­kets col­lapse dur­ing a cred­it crunch. The Feb­ru­ary min­utes implied that the RBA might real­ly throw its cards on the table at the March meet­ing, with a 0.5% rise being a dis­tinct pos­si­bil­i­ty.