A quick quiz: when did Australia’s biggest private debt bubble burst?
A young Gough Whitlam
If you consider the rate of increase of debt, the correct answer is “in mid-1973”. The bubble started to expand a year before Whitlam came to power, and its collapse during Whitlam’s term was the real–but at the time, unappreciated–cause of the economic crisis that undid his government.
Niall Ferguson has just made the first call for widespread debt rescheduling that I have seen published in a major newspaper–today’s Australian, and I am sure it is reproduced in many newspapers around the world (if your local paper is owned by News Limited, there’s a good chance that you will find it there).
The article is linked here–The great repression–and some excerpts are shown below. Read it and refer your friends to it. Finally the call has gone out that what is needed to get out of this crisis is not more debt, but less.
My railing against the economics profession on this blog might give you the impression that I’m a lone wolf, taking on the economics profession single-handedly. I’m pleased to say that’s not the case; though the rebels are outnumbered by the True Believers in neoclassical economics, there are many academic economists who are critical of the economic orthodoxy.
Recently some highly regarded economists have made this emphatically clear with an eloquent and well argued document entitled “The Financial Crisis and the Systemic Failure of Academic Economics”.
Alex Mitchell is one of the political writers I’ve always enjoyed reading. Today he excels himself in The New Matilda, with a post on other journalists–specifically economic journalists–that really goes for the jugular.
Overall I think Anatole Kaletsky is on the more important track, to destroy the unjustified credibility of the academic neoclassical economists whose theories justified the nonsense that gave us this crisis, and whose inane theories “the bottom feeders” repackaged for popular consumption through the media (see Fabulous attack on neoclassical economics by Anatole Kaletsky for my commentary, and Economists are the forgotten guilty men for the original article). But those bottom feeders also deserve to be whacked over the head too, and Mitchell does this in great style.
Australia’s previous Liberal Party Prime Minister John Howard “came out swinging” last night in support of the policy agenda his government shared with the preceding Labor Party government of Bob Hawke and Paul Keating: “neoliberalism” (for non-Australian readers, the Australian Liberal Party is closer to the US Republican Party or the UK’s Tories than the US vision of the word “Liberal”, while the Australian Labor Party is akin to the US Democratic Party or the UK’s Labour Party).
In Five great reforms are an essential legacy, Howard defends “neoliberalism”, and argues that the financial crisis was actually the result of distortions to the financial system by well-meaning but ill-advised government tampering with the financial system:
As regular readers of this blog know, I argue that the dominant school of thought in economics, “Neoclassical economics”, is not only incapable of explaining this crisis, but actually helped contribute to it by its deluded analyses of finance and money.
I wrote Debunking Economics eight years ago to explain why Neoclassical economics was inherently flawed and should be abandoned. In that book I was merely collating the many compelling critiques that have been developed by economists of this theory over the years, that this school of thought has blithely ignored (I unexpectedly added one of my own, critiquing the theory of the firm, and also discussed flaws in conventional Marxian economics, but that’s by the bye here).
Frontline is running a special on the financial crisis:
http://www.pbs.org/wgbh/pages/frontline/meltdown/
It should make interesting viewing. It will be available from 9pm New York time on February 17th–which I think means midday or thereabouts on the 20th, Sydney time.
I’m off to work with the CSIRO for a few days on modelling, and I may not be able to keep up with blog comments as well as I’d like to.
I’ve also had a correspondent who is prevented from posting to the blog by a too-strict Internet censoring policy in the country he’s currently in. I suggested that perhaps someone on the blog would be willing to “shadow” for him: i.e., sign on to the blog with an additional alias, and copy any emails from him as posts to the site.
The calendar widget that I’ve added the the site recently (see the left hand side bar below the login section) is great, but has an annoying bug: it gets the date right, but the day of the week wrong.
My guess is that this reflects if US origins, and the author has set it up on US time only. Since the USA is a day behind Australia, while the actual calendar is correct, all the days are shown as the day before in the text popups.
So today’s talks (on THURSDAY February 12th) are shown as taking place on Wednesday February 12th when you click on the date.
I’ve recently added a Calendar widget to the blog–just below the login widget on the left hand side.
I will use it to maintain a calendar of upcoming public events–and also conferences where I am speaking–as well as media coverage, if I get enough notice of it. The widget is very well designed–days coloured red to indicate an activity; hover over a highlighted day to see a summary; click on the date to get full details.
The first event there is a discussion about the crisis on the Sky News Program “On the Record”, at 8am this morning.
