Debtwatch No 35: Let’s Do the Time Warp Again

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Eco­nom­ic debate in Aus­tralia today reminds me of one of the great lines in The Rocky Hor­ror Show. As he invites Brad and Janet to meet Rocky, Frank-N-Furter taunts Janet with the lines:

I would like--if I may--to take you on a strange journey...

I would like–if I may–to take you on a strange jour­ney…

I see you shiv­er with antic­i­pa­tion!

But maybe the rain is real­ly to blame

So I’ll remove the cause,…

But not the symp­tom!”

It seems that in Aus­tralia, the reverse can apply: the symp­tom can be removed with­out elim­i­nat­ing the cause. We can avoid a seri­ous reces­sion while doing noth­ing to reduce pri­vate debt. 

Weekly GFC Roll for May 29th 2009

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Thanks again to blog mem­ber Evan Har­ris for com­pil­ing this week­ly list, and for blog mem­bers pass­ing on their sug­ges­tions. If you see any arti­cle or blog entry that you think deserves record­ing for pos­ter­i­ty, send the link to gfcwrap at

And a reminder for any blog mem­bers in Syd­ney that I’ll be speak­ing at Pol­i­tics in the Pub tonight at the Gael­ic Club in Devon­shire St Sur­ry Hills, start­ing at 6pm.

The Pool Room – Week End­ing Fri­day 29th May

Aus­tralian-Relat­ed Links:

Hous­ing & Hous­ing Finance: The View From Aus­tralia & Beyond, Luci Ellis [RBA Research], Dec 2006

What a load of Bollocks

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Two promi­nent eco­nom­ics text­book writ­ers have recent­ly writ­ten that the Glob­al Finan­cial Cri­sis (GFC) shows that the world needs more eco­nom­ics rather than less.

Writ­ing in the New York Times, Gre­go­ry Mankiw could see some need to mod­i­fy eco­nom­ics cours­es a bit in response to the GFC, but over­all he felt that:

Despite the enor­mi­ty of recent events, the prin­ci­ples of eco­nom­ics are large­ly unchanged. Stu­dents still need to learn about the gains from trade, sup­ply and demand, the effi­cien­cy prop­er­ties of mar­ket out­comes, and so on. These top­ics will remain the bread-and-but­ter of intro­duc­to­ry cours­es.” (That Fresh­man Course Won’t Be Quite the Same, New York Times May 23 2009)

The Pool Room, Week Ending May 22nd 2009

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Fans of the Aus­tralian movie clas­sic “The Cas­tle” will remem­ber the arche­typ­al line “This one’s going straight to the Pool Room”, uttered by the ever-opti­mistic Dar­ryl Ker­ri­g­an when­ev­er he was giv­en a gift. If you haven’t yet seen the movie, con­sid­er set­ting aside a cou­ple of hours to watch it.

Debt­watch’s “Pool­room gifts” come from the media cov­er­age of the Glob­al Finan­cial Cri­sis. Some are gems–incisive bits of analy­sis that are an infor­ma­tive read. Oth­ers are … well, best char­ac­terised as spin, though they range from out­right spin, to delu­sion derived from think­ing like a neo­clas­si­cal econ­o­mist.

Economics Students: Join Toxic Textbooks

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A new Face­book group ded­i­cat­ed to reform­ing eco­nom­ics tuition has just been estab­lished by Edward Full­brook, the coor­di­na­tor of PAECON, the Post-Autis­tic ECO­nom­ics Net­work.

Called Tox­ic Text­books,  its aim is to sup­port and coor­di­nate stu­dent protest against neo­clas­si­cal eco­nom­ics at uni­ver­si­ties and schools around the world. Its man­i­festo is:

Toxic textbooks helped cause the economic meltdown

The cur­rent eco­nom­ic melt­down is not the result of nat­ur­al caus­es or human con­spir­a­cy, but because soci­ety at all lev­els became infect­ed with false beliefs regard­ing the nature of eco­nom­ic real­i­ty. And the pri­ma­ry sources of this infec­tion are the “neo­clas­si­cal” or “main­stream” text­books long used in intro­duc­to­ry eco­nom­ics cours­es in uni­ver­si­ties through­out the world. 

Talk at Politics in the Pub (Newcastle)

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I’ll be speak­ing on the finan­cial cri­sis at the month­ly “Pol­i­tics in the Pub” meet­ing in New­cas­tle next week. It’s on Tues­day May 19 at 6pm at the Hamil­ton Sta­tion Hotel on the cor­ner of Fern and Beau­mont Streets Isling­ton (next door to Hamil­ton sta­tion on the Mait­land Road side of the rail­way line).

Budget 2009: Let’s Assume We Have a Can Opener

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I first heard the best joke about eco­nom­ics in 1975. The teller was the nuclear physi­cist (and nuclear pow­er advo­cate) Sir Phillip Bax­ter, and he told it in answer to a ques­tion I had asked at a pub­lic forum.

The joke is:

A physi­cist, a chemist and an econ­o­mist are ship­wrecked on a desert isle, along with a con­tain­er full of cans of baked beans.

The chemist says that if they can start a fire, he can cal­cu­late the tem­per­a­ture at which a can will explode.

Debtwatch No 34: The Confidence Trick

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And, at this point, con­fi­dence is what it is all about… The first thing is to main­tain some con­fi­dence in our­selves and the prospects for our coun­try over time… Unfor­tu­nate­ly, there is no lever marked ‘con­fi­dence’  that pol­i­cy-mak­ers can take hold of. Our task is very much one of seek­ing to behave, across the board, in ways that will fos­ter, rather than erode, con­fi­dence.  It is such con­fi­dence that, more than any­thing else, will help to dri­ve us along the road to recov­ery.” (Glenn Stevens, April 21st 2009)

Launch of “Marx and Hayek” by Eric Aarons

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Eric Aarons’ book Hayek ver­sus Marx: And Today’s Chal­lenges will be launched at Glee­books on Fri­day April 24th at 6pm. I will make an open­ing speech about the book and its remark­able author. There will be pre-launch drinks from 6 till 6.40.

Atten­dance is free, but places are lim­it­ed. Please con­tact Glee­books on (02) 9660 2333, or click on the link to Request a place on Glee­books’ auto­mat­ed book­ing form.  Glee­books is at 49 Glebe Point Rd, Glebe; the launch will take place in the upstairs room, which can accom­mo­date about 100.

My PhD Thesis on Minsky and Financial Instability

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A num­ber of blog mem­bers have not­ed that they’d like to have my PhD the­sis on Min­sky avail­able, as well as my more recent papers on finan­cial insta­bil­i­ty and endoge­nous mon­ey.

As a first step, here is a link to my PhD the­sis. It’s writ­ten in my usu­al style, though because it’s equa­tion heavy, it would­n’t qual­i­fy as bed­time read­ing. Ear­ly next week I hope to reor­gan­ise my Research Page to have most of my aca­d­e­m­ic papers acces­si­ble there, and struc­tured accord­ing to top­ic.