Peter Martin reports in The Age today that Professor Ron Bird of UTS has weighed into the debate over the Rudd stimulus package. Professor Bird claimed that the stimulus was far less important than our strong economy prior to the crisis, and the secondary effect on our exports of stimulus packages undertaken elsewhere.
”The position we find ourselves in today is more due to our strong economic position going into the crisis and the massive stimulus packages undertaken by our trading partners,” Professor Bird says. ”The government can take little or no credit for either of these, a point it (and our learned academics) conveniently forget.” (Peter Martin, “Reserve Bank backing for stimulus”, The Age August 18 2010)
The record $6 billion profit that the Commonwealth Bank is expected to announce today is a sign of an economy that has been taken over by Ponzi finance. Fundamentally, banks make money by creating debt, and the amount of debt we’ve been enticed into taking on is the sign of a sick economy rather than a healthy one. The level of private debt that is actually needed to support business and maintain home ownership at historic levels (ownership levels have fallen over recent years!) is possibly as little as one sixth the current level.
I’m taking part in an Intelligence Squared debate on Tuesday next week–August 10 2010–on the topic:
“That only capitalism can save the planet”
I’m on the Opposition side, along with the poet and novelist Kate Jennings, and former Executive Director of Greenpeace International Paul Gilding. The Government side is Economics Editor of The Sydney Morning Herald Ross Gittins, businesswoman and company director Lucy Turnbull, and businessman, activist and writer Geoffrey Cousins.
The full description of the debate can be found here on the IQ Squared website.
We’ll be ranging across quite a few topics within that “That only capitalism can save the planet” rubric. To quote the IQ Squared header:
Chris Joye comments in his release of the recent RP Data-Rismark index that the news of a 0.7% fall in one month will be “manna from heaven for the housing market bears”. Far be it from me to disappoint him, so thanks for the manna. But what adds spice to the manna is the way that Chris has attempted to rationalize the outcome:
It’s sobering to remember here that we have had 17 consecutive monthly increases in Australian capital city home values. If the sharemarket rose for 17 months straight and then tapered, people would not think twice about. It might be wise to apply the same logic to our housing market.
The RPData-Rismark index has just been released, and it has fallen 0.7% in the month of June 2010.
I’ll have more to say on this shortly, but for now I can do no better than to direct you to the Business Spectator news report of the fall:
House prices fall 0.7% in June, flat in quarter
and Christopher Joye’s press release on this topic:
House prices on ice – for now
I also recommend Rob Burgess’s election blog perspective here:
POLL POSITION: Will Labor fall with house prices?
The American Monetary Institute has invited me to speak at their 2010 Monetary Reform Conference, at the University Center in downtown Chicago, between September 30th and October 3rd. I have agreed, though since this is in the middle of a teaching period for me it will be a “lightning trip” to the USA–leaving Sydney on Wednesday 29th and leaving Chicago on Monday 4th.
I’ll give a presentation covering the statistics on the debt-driven process that led to the economic crisis, an explanation of how money is created in a pure credit economy (based on my “Roving Cavaliers of Credit” post on this blog), and a model of debt-deflation as covered in my recent talk in New York.
The blog now has over 5000 members, and about 40 of them crowded into a small room in the FlatIron district of New York to hear me give a talk on debt-deflation. Since I had the luxury of more time than you get at an academic conference, and an engaging and intelligent audience, I gave a lot more detail on my modelling approach. The questions were also superb, and would have continued for much longer if I hadn’t called quits at an opportune point (the whole caboodle of presentation and discussion is almost 70 minutes long). My answers come through loud and clear on this video; I just hope that the questions themselves can be heard by better ears than mine!
This is a “remedial” post: I have just posted “Are We It Yet?” to this site, but for some reason it was posted after the “Naked Capitalism” post below.
If you’ve already read the paper I gave at the Minsky conference, then you’ve read what’s published there; the main reasons for putting it here in blog form were to make it more accessible, and to post a video of the talk I gave at the Levy. I’ve also reproduced this below.
Steve Keen’s Debtwatch Podcast
| Open Player in New Window
I met with Yves Smith of Naked Capitalism on the weekend, at a superb Japanese restaurant that only New York locals could find (and I’ll keep its location quiet for their benefit–too much publicity could spoil a spectacular thing). Yves was kind enough to post details of my latest academic paper at her site in a post she entitled “Steve Keen’s scary Minsky model”.
Yves found the model scary, not because it revealed anything about the economy that she didn’t already know, but because it so easily reproduced the Ponzi features of the economy she knows so well.
If you’ve downloaded and read the paper and presentation I posted in my previous entry, then there’s nothing new for you to read in the body of this post; the main addition is the video below of my talk.
Steve Keen’s Debtwatch Podcast
| Open Player in New Window
That in part gives you rather too good a view of the back of the heads of Randy Wray and Dimitry Papadimitriou, both of whom sat down in front of the camera after my talk began, but the slides are still easily visible.