This is too good not to spread: Senator Bunning berates Bernanke at his confirmation hearing. What Bunning lacks in oratory he more than compensates in forthrightness and integrity. One phrase alone is worth hearing: “We [should] punish failure not reward it”.
I first realised that the world faced a serious financial crisis in the very near future in December 2005, as I prepared an Expert Witness Report for the NSW Legal Aid Commission on the subject of predatory lending.
My brief was to talk about the impact of such contracts on third parties, since one ground to overturn a loan contract was that it had deleterious impacts on people who were not signatories to the contract itself. I was approached because the solicitor in the case had heard of my academic work on Hyman Minsky’s “Financial Instability Hypothesis”.
The Departments of Political Science and of Economics at the University of Helsinki recently held a seminar entitled “Economics: Challenges for Political, Philosophical and Historical Research”. The motivation was a reorganisation of the University that will combine these two Departments. The flyer for the seminar advertised it in the following manner:
This seminar, organized jointly by the Department of Political Science, Department of Economics and Centre of Excellence on Global Governance Research, will start with reflections on the role of economics and economic studies.
Can we combine economics and politics through political economy?
Have political and economic studies neglected history?
Michael Hudson was a recent and welcome visitor to Australia, and I helped arrange a talk by him at Customs House that many people on this blog supported financially, and quite a few attended. My own attempt to record the speech was unsuccessful–the sound quality was just too low–but another recording of the event (by Sean Reynolds from Politics in the Pub) was more successful than mine. Here it is below. My apologies for taking so long to post it, but I’ve been even busier than usual recently and I simply didn’t have the time to do so until now.
I haven’t yet had time to post Michael Hudson’s talk at Customs House–hopefully I’ll manage that this weekend–but in the meantime here is the talk I gave a couple of days earlier at Per Capita’s Policy Exchange 2009 Conference in Canberra on October 21st 2009. The good folk at SlowTV put this together, and this is the link to the video on their site.
So I’m walking to Kosciusko–now that the ABS Established House Price Index has cracked its September 2008 peak of 131 to reach an all-time high of 134.4 (as of September one year later). This renewed bubble reversed the trend of falling nominal house prices that had dropped the index to a low of 123.8 in March 2009.
This level of price volatility–down 5.5% in 6 months, only to rise 8.5% in the subsequent six months–almost matches the stock market’s manic-depressive performance.
The most recent “unexpectedly good” growth figures for the USA appear to indicate that what will still be the worst downturn since the Great Depression is finally over.
However this is not your usual downturn. Not only is it acknowledged as the most severe since the Great Depression, it has also evoked the most remarkable government economic stimulus ever seen. It would be bizarre if this had not had an effect on the data.
Whether a recovery is truly underway in the private sector therefore depends on how the economy is likely to perform after the stimulus is withdrawn.
If I was asked to nominate the wisest aphorism of all time, Mark Twain’s “History doesn’t repeat, but it sure does rhyme” would definitely be one of my top two candidates.
On song, today Wall Street is replaying the 1930s, but to a slightly different meter. With the 80th anniversary of the Great Crash of 1929 falling on October 29th of this year, Wall Street is celebrating in characteristic style–with a euphoria-led bubble that now appears to be crashing up against economic reality.
Kenneth Davidson has been one of the most consistent voices for sensible economic analysis in the Australian media for decades now (another I’d give a similar accolade to is Brian Toohey), and he’s written a brilliant piece in The Age and The Sydney Morning Herald on the specualtive bubble that is the Australian dollar.
Davidson lays out the causes and probable effects superbly in the length of a newspaper feature. The causes are that:
The bailout funds in the USA and UK in particular have cashed up financial institutions that don’t want to lend any more to mortgages (and have long ago forgotten how to lend to fund productive enterprises), so they’re looking for short term hot money gains;
As I’ve noted here earlier, the blog newsfrom1930 performs a very valuable “reality check” for today by each day publishing a summary of the Wall Street Journal from the same day in 1930. The overwhelming flavour of reports from that time is that the Depression was over and recovery was imminent. Plus la change…
This week it’s offering another service–publishing summaries of news reports from one year earlier: 1929. The reason, of course, is that we are approaching the 80th anniversary of “Black Tuesday”: the day in 1929 when the Dow Jones fell for more than 10 percent for a second day in a row, bringing to an emphatic end the bull market of 1929 and ushering in the Great Depression.
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