Debtwatch No. 43: Declaring victory at half time

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Note: the first part of this post will mainly be of inter­est just to Aus­tralian read­ers, but I con­clude with a numer­i­cal expla­na­tion of “Why Debt-Deflation Causes Depres­sions” that will be of inter­est to read­ers everywhere.

Last week I took part in a debate enti­tled “The Great Res­i­den­tial Hous­ing Debate — the next Bub­ble or a legit­i­mate Boom?” at the annual con­fer­ence for Peren­nial Invest­ment Part­ners; I put the Bub­ble case and Chris Joye of Ris­mark Inter­na­tional pre­sented the Boom case (here is my paper and my pre­sen­ta­tion). As is well-known, Aus­tralia is one of the few coun­tries in the OECD not to expe­ri­ence two quar­ters or more of falling GDP as a result of the GFC, and prob­a­bly the only coun­try that has not expe­ri­enced a fall in its prop­erty market.

Adam Schwab’s Pigs at the Trough

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Adam Schwab has fol­lowed up his many columns on Crikey with a book on the pil­lage of Aus­tralian com­pa­nies by Ponzi financiers and incom­pe­tent exec­u­tives. Some of the com­pa­nies mis­man­aged and in many cases fleeced by these once high-flying exec­u­tives no longer exist–but the exec­u­tives are still “high fly­ers” since the crash of their cor­po­ra­tions didn’t seem to affect their own per­sonal wealth.

The book, Pigs at the Trough, is launched today, and hav­ing read it I do com­mend it to Debt­watch read­ers. The pref­ace to the book, which gives a good feel­ing for both its sub­ject and its flavour, is repro­duced below.

On The Record Interview

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Car­son Scott inter­viewed me for Sky News Busi­ness Chan­nel last week for the pro­gram On The Record. Rather than focus­ing on the news of the day, this pro­gram attempts to give the back­ground to peo­ple in pub­lic life.

As such there’s more of a focus on the rea­sons why I have taken the activist stand that I have on the econ­omy than on my analy­sis of the econ­omy itself. While some of this focuses on my fam­ily and edu­ca­tional back­ground, it also gave me the oppor­tu­nity to explain that my major moti­va­tion was the desire to rid eco­nom­ics of the pseudo-scientific Neo­clas­si­cal non­sense that dom­i­nated eco­nom­ics since the early 1950s.

Max Keiser Interview

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Max Keiser inter­viewed me in his ines­timable style on the Max Keiser Report ear­lier this week, and the inter­view is now avail­able (the inter­view began at roughly mid­night my time on a day that had started for me at 5am, so there are some slips in my deliv­ery here–for instance at one point I say “fail to avoid” when I meant “avoid”).

I’ve had some dif­fi­cul­ties in get­ting the embed to work (the lat­est ver­sion of Word­Press seems to do some­thing unto­ward to the embed code) so you may need to hit the “refresh” but­ton before you’ll see the video below.

Greenspan wins Dynamite Prize in Economics

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Alan Greenspan has been judged the econ­o­mist most respon­si­ble for caus­ing the Global Finan­cial Cri­sis. He, and 2ndand 3rd place fin­ish­ers Mil­ton Fried­man and Larry Sum­mers, have won the first–and hope­fully last—Dyna­mite Prize in Eco­nom­ics.

In award­ing the Prize, Edward Full­brook, edi­tor of the Real World Eco­nom­ics Review, noted that “They have been judged to be the three econ­o­mists most respon­si­ble for the Global Finan­cial Cri­sis. More fig­u­ra­tively, they are the three econ­o­mists most respon­si­ble for blow­ing up the global economy.”

Doonesbury on Banking Pigs

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I’ve been a fan of Garry Trudeau’s Doones­bury car­toon since my stu­dent days (when, coin­ci­den­tally, Trudeau was pro­fil­ing life as a uni­ver­sity student).

As any reader of the strip knows, unlike most comic strips the char­ac­ters in Doones­bury age and move with the times. Today’s times are those of a finan­cial cri­sis, and once again I’m play­ing a role–though as ana­lyst and critic rather than par­tic­i­pant. Ditto also Trudeau, who has posted a lovely lit­tle jibe in today’s Sun­day spread. For all those who are exas­per­ated with the spin doc­tors and debt spruik­ers who have grown fat while bring­ing the globe to the eco­nomic precipice, I rec­om­mend today’s Doones­bury car­toon (Sun­day Feb­ru­ary 21).

Launching the Talk Finance Forum

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Many vis­i­tors to this site have com­mented that, though the dis­cus­sions are very infor­ma­tive, they are also very dif­fi­cult to fol­low. A dis­cus­sion that begins under one post will recom­mence under another, and with over 200 posts and 16,000 com­ments so far, that makes fol­low­ing a com­plete thread of dis­cus­sion effec­tively impos­si­ble. It was noted that a forum with struc­tured dis­cus­sion head­ings might be a bet­ter way to go. So we have estab­lished the Talk Finance Forum

Jessica Irvine’s piece in today’s SMH

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(Edit: Please note that there is a foot­note to this story)

I nor­mally don’t com­ment on arti­cles about me, since I am aware that now that my views are part of the pub­lic debate, I have to take the good with the bad in cov­er­age. I wouldn’t have writ­ten this either, were it not for the line “If only his pre­dic­tions were so reli­able” in Jes­sica Irvine’s piece in today’s SMHWalk­ing on a wire stretched between stim­u­lus and debt”.

Brilliant Business Insider Article on Dynamite Prize

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The Dyna­mite Prize for Economics–to be awarded to the three econ­o­mists most respon­si­ble for the Global Finan­cial Crisis–is going gang­busters with over 14,000 votes so far.

It may pick up even more thanks to some excel­lent work by Busi­ness Insider/Clusterstock, which has pro­duced a bril­liant graphic illus­trat­ing the prize.

It’s mag­nif­i­cent, and here it is below for your enjoyment–click on the “Go To The Short List of Nom­i­nees for the Dyna­mite Prize in Eco­nom­ics–>” link and that will take you to the graphic, or click here to go straight to the graphic.


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As most Aus­tralian read­ers would know, I recently lost half of a bet over Aus­tralian house prices when the Government’s “First Home Own­ers Boost”–which I pre­fer to call the First Home Ven­dors Boost–reignited Australia’s house price bub­ble.

As a result, I’m walk­ing from Australia’s Par­lia­ment House to Australia’s high­est moun­tain, Mt Kosciousko–a dis­tance of 224km (140 miles). The walk will start at 2pm on Thurs­day April 15 from the entrance to Par­lia­ment House and–my legs willing–finish 8 days later on the sum­mit of Mt Kosciousko (which is 2228 metres–or about 7000 feet–above sea level).