Today Tonight on possibility of Depression

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Chan­nel Sev­en’s Today Tonight is doing a piece on whether we might face a Depres­sion, and if so what it might be like. It should go to air tomorrow–Tuesday Feb­ru­ary 3rd.

They have inter­viewed me for analy­sis, and Eric Aarons–who lived through the Great Depres­sion and at 90 is still a dynam­ic sculp­tor and author.

They also want to speak to any­one who has lost their job recently–specifically if pos­si­ble as a result of the glob­al finan­cial cri­sis.

So if any­one out there is will­ing to speak on cam­era about it, please con­tact the jour­nal­ist James Thomas:

Steve Keen’s DebtWatch No 31 February 2009: “The Roving Cavaliers of Credit”

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Click on Marx’s image to down­load this post in PDF for­mat

Talk about cen­tral­i­sa­tion! The cred­it sys­tem, which has its focus in the so-called nation­al banks and the big mon­ey-lenders and usurers sur­round­ing them, con­sti­tutes enor­mous cen­tral­i­sa­tion, and gives this class of par­a­sites the fab­u­lous pow­er, not only to peri­od­i­cal­ly despoil indus­tri­al cap­i­tal­ists, but also to inter­fere in actu­al pro­duc­tion in a most dan­ger­ous man­ner— and this gang knows noth­ing about pro­duc­tion and has noth­ing to do with it.” [1]

A China Tale

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I’ve just been inter­viewed for an SBS News piece on Chi­na (for non-Aus­tralian read­ers, SBS is Aus­trali­a’s mul­ti­cul­tur­al tele­vi­sion sta­tion, and its news has a strong inter­na­tion­al focus).

Ordi­nar­i­ly I don’t com­ment on Chi­na, because I don’t know enough about their econ­o­my right now–except to deride the belief that was pop­u­lar in Aus­tralia last year that our exports to Chi­na would insu­late us from the glob­al down­turn. “Decou­pling” they called it–China was sup­posed to have its own inter­nal growth dynam­ic that would mean it would con­tin­ue grow­ing and buy­ing our raw mate­ri­als even as the OECD tanked. This theory–ironically spout­ed by the same peo­ple who once tout­ed that the world is now glob­alised and every­thing affects (and ben­e­fits) every­thing else–is now rather less pop­u­lar as Chi­na’s growth has slowed.

Ballmer Gets “It”

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Ordi­nar­i­ly I’d sim­ply post a link to a media report in either my Gems or Brick­bats page. But this quote from Microsoft CEO Steve Ballmer shows that he real­ly under­stands what is going on now, in a way that no oth­er per­son in author­i­ty seems to have done as yet. The full report can be found at:

Microsoft resorts to first lay­offs, cut­ting 5,000

Ballmer’s per­cep­tive analy­sis of what is going on is:

Debwatch on a new ISP

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I have just moved the blog to a new ISP after my pre­vi­ous provider IXWeb­host­ing proved to have intractable prob­lems with mal­ware.

The new host­ing is being pro­vid­ed pro bono by Cyanide Web Host­ing, which I great­ly appre­ci­ate.

Some posts may have been lost in the process, but that was prefer­able to putting up with a site that dis­trib­uted virus­es to all and sundry. So if you have made a post and it has­n’t turned up here, please re-sub­mit.

Bernanke an Expert on the Great Depression??

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Note: This post has been mod­i­fied ni the light of com­ments that the ini­tial ver­sion quot­ed Bernanke out of con­text.

A link to this blog from a US legal advi­so­ry web­site the Prac­tis­ing Law Insti­tute’s In Brief ( “DEFLATION IN THE REAL WORLD”) remind­ed me of  Bernanke’s book Essays on the Great Depres­sion, which I’ve been aware of for some time but have yet to read. I’ll make amends on that front ear­ly this year; for­tu­nate­ly, an extract from Chap­ter One is avail­able as a pre­view on the Prince­ton site (I could­n’t locate the promised eBook any­where!; in what fol­lows, when I quote Bernanke it is from the orig­i­nal jour­nal paper pub­lished in 1995, rather than this chap­ter).

A Couple of Gems

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One blog par­tic­i­pant brought a post by George Mon­biot to my atten­tion. I fre­quent­ly com­ment that the finan­cial regime ini­ti­at­ed after WWII omit­ted key ideas that Keynes proposed–in par­tic­u­lar, a new cur­ren­cy for inter­na­tion­al trade and con­trols on the behav­iour of sur­plus nations as well as those run­ning deficits. Mon­biot pro­vides the his­toric detail of these pro­pos­als and their defeat. It is well worth a read.

A link to my site from anoth­er blog alert­ed me to anoth­er post, from the oppo­site end of the spec­trum, which is a cert for my “Brick­bats” page–both for its con­tent and its tim­ing. On Jan­u­ary 19, 2007, Ger­ard Bak­er of The Times edi­to­ri­alised that “His­to­ri­ans will mar­vel at the sta­bil­i­ty of our era”. An excerpt for you:

Neoclassical Wage Restraint Madness

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It had to hap­pen: neo­clas­si­cal econ­o­mists are now advis­ing that the antic­i­pat­ed reces­sion will be much milder if only work­ers would accept wage cuts.

When I saw this cri­sis was immi­nent in Decem­ber 2005, one major fac­tor that moti­vat­ed me to go pub­lic with my analy­sis was the cer­tain­ty that, when the cri­sis hit, neo­clas­si­cal econ­o­mists would either blame it on wages being too high (”the abo­li­tion of Work Choic­es caused the Depres­sion!”), or would sug­gest that wages should be cut to reduce the imbal­ance between the sup­ply of and demand for labour.

Ponzi Maths–Part 3

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This is get­ting a bit like Star Wars, but I promise–this will be the last post in this series. In the pre­vi­ous two, I con­struct­ed a mod­el of a pure cred­it econ­o­my in which the mon­ey sup­ply and eco­nom­ic activ­i­ty can expand smooth­ly of time.

Of course, that’s not the real world. As we know from the bit­ter expe­ri­ence of the finan­cial cri­sis that is this blog’s rai­son d’e­tre, finance char­ac­ter­is­ti­cal­ly desta­bilis­es an oth­er­wise healthy econ­o­my. Part of the rea­son for that is the exis­tence of Ponzi Financing–something that the recent Bernie Mad­off scan­dal has thrown into $50 bil­lion high relief.

Ponzi Maths–Part 2

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In the pre­vi­ous post, I out­lined my basic mod­el of a pure cred­it econ­o­my, in which a sin­gle ini­tial loan allowed a con­ti­nous flow of eco­nom­ic activ­i­ty (at a con­stant lev­el) over time. The basic flowtable of that sys­tem was:

 

Type 1 -1 -1 -1
Account Firm Loan (FL) Firm Deposit (FD) Bank Deposit (BD) Work­er Deposit (WD)
Inter­est on Loan +A      
Inter­est on Deposit   +B -B  
Pay Inter­est on Loan -C -C +C  
Pay Wages   -D   +D