Thank you to the roughly 170 individuals who have made donations to date via the “Donate” widget on the right hand side of the blog.
Donations have totalled A$7,730, of which about $800 has been for Michael Hudson’s talk in Sydney (on Friday October 23rd at Customs House, Sydney at 6pm).
I have just made the first purchase using those funds, of a Dell Studio 17 inch laptop that I will use while researching with my systems engineering colleague Trond Andresen in Europe later this year.
There will be a dinner with Michael Hudson and his wife after the talk at Customs House on Friday October 23rd at a restaurant called Young Alfred, which is also in Customs House. The dinner will start at 8pm.
If you’d like to be part of the booking, please let me know via an email to me at debunking (at) gmail dot com (spelt out this way to minimise the addition to the already ridiculous amount of spam I receive!).
I’m happy to admit that I underestimated how strongly governments would respond to this financial crisis. Dramatic reductions in interest rates, huge fiscal stimuli and—in the USA and UK—expansion of government-created money, have all had a positive impact on the economy and asset markets (both shares and houses).
In his recent essay, Australian Prime Minister Kevin Rudd estimated that the rescues were the equivalent of roughly 18 percent of global GDP over a 3 year period, which is an unprecedented level of expenditure by governments.
Eichengreen and O’Rourke’s comparison of today to the Great Depression gives the most balanced assessment of how effective these policies have been at the global level.
Ross Gittins has written a very good overview of the failings of neoclassical economics in today’s Sydney Morning Herald:
Self-righting markets and other shibboleths
The article mentions the Dahlem Report, but doesn’t provide a link to it. For those who would like to read it, here it is.
I also wrote a post on the Dahlem Report shortly after it was written, and helped publicise it by placing it on my blog. Given that its tone was in some ways even more dismissive of conventional economics than I am, the title for this post was obvious:
I delayed publishing this on the blog because I thought it was worth submitting it to a newspaper for first publication on the anniversary of the Lehman Brothers collapse. That has occurred: a slightly edited version of this post (for reasons only of length, I hasten to add!) is in today’s Sydney Morning Herald (page 4 of the print version), WA Today, and probably several other newspapers in the Fairfax chain.
You have just come from your annual medical checkup, where your doctor assures you that you are in robust health.
Michael’s visit is being organised by Prosper Australia, and they have asked me to link to their page detailing the tour and his speaking engagements while in Australia. It’s quite a good page, with some well chosen links to some of Michael’s research:
Prosper Australia: Professor Michael Hudson Touring October
The fund-raising widget has so far raised A$305, which is pretty good–thanks to all those who have donated so far. More donations of course are welcome: it would be good to hit the A$1,000 mark if at all possible, which will fund Michael’s hotel accommodation while in Sydney and make a contribution to the airfares for himself and his wife.
The renowned heterodox financial economist and economic historian Dr. Michael Hudson will be visiting Australia in October.
Michael is another of the handful of economists who predicted the Global Financial Crisis, and he has since worked intensively with the governments of Iceland and Latvia to attempt to pull them out of the economic quagmire. He shares my expectations that the “green shoots” being spied by more conventional thinkers will wither under the weight of the private debt that created this crisis in the first place (and whose existence has been ignored in all the rescue plans to date).
“Green shoots” are appearing everywhere—just read the newspapers, and you can be assured that we’ve turned the corner. Bar the latest rise in US unemployment—up 0.3% to 9.7%, after falling 0.1% the previous month—there’s nothing but good news as far as the eye can see.
Unless, that is, you take a look at a wider range of data, as economic historians Barry Eichengreen and Kevin O’Rourke have been doing in their series “A Tale of Two Depressions”.
“The Marxian view is that capitalistic economies are inherently unstable and that excessive accumulation of capital will lead to increasingly severe economic crises. Growth theory, which has proved to be empirically successful, says this is not true.
The capitalistic economy is stable, and absent some change in technology or the rules of the economic game, the economy converges to a constant growth path with the standard of living doubling every 40 years.
In the 1930s, there was an important change in the rules of the economic game. This change lowered the steady-state market hours. The Keynesians had it all wrong.
One of the reasons I’m still a bear on the economy is because the economists in the optimists camp are relying upon very bad economic theory. If that theory is telling them good times are ahead, that’s one of the best predictors of bad times you could have.
This isn’t because the optimists are bad economists, bad people, or any other permutation: most economists I know are good at what they do, and are very well intentioned too.
It’s just that they were taught a crock of nonsense at university, and they now build models based on a crock of nonsense that they erroneously believe to be accurate descriptions of the real world.