Jon Stewart at “Comedy Central” put together a masterful rip into the stock market spruikers on the CNBC network, exposing how their so-called expertise was little more than a blind exhortation to join in the euphoric excess of the bubble, and to keep it alive as it died an inevitable death.
The last quarter’s GDP figures, showing that Australia’s GDP contracted by 0.5% in the last quarter, ended the “phony war” debate over whether we’re in recession. The previous quarter’s 0.1% was so close to zero that it’s semantics to question whether we’ve seen six months of negative growth or not: we are in a recession.
The decision of the RBA Board to leave the cash rate at 3.25% today confirmed that its members don’t understand the economy.
There was an inkling of this in the statement by Board member Warwick McKibbin early last month criticising the Rudd Government’s stimulus package (“Reserve bank director opposes package”, SMH February 6):
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).
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.
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.
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).
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.
Frontline is running a special on the financial crisis:
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.
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