Top StoriesMay’s sharp fall in jobless numbers added to the greenness of the ‘recovery’ (or less bad) thesis; overnight June’s unemployment figures were so awful that they could have stunted at least, the wavering shoots.
Economists lining up to disagree with Steve Keen
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Yes, Associate Professor Steven Keen, they are all out to get you. The apparent conspiracy you referred to in Crikey on Tuesday is real — a concerted effort to deny the easily frightened public the benefit of your visions. And Gerry Henderson is the least of your worries. In the past couple of days no less than three prominent economists have publicly knifed you — heavens knows how many hundreds or thousands have been doing it in private. Macquarie Bank’s Rory Robertson used some subtlety:
Robertson’s letter to clients then went into economic talk about the impact of falling interest rates on households. It seems lower mortgage payments will ease some of the pressure on household income and therefore on the housing market. Who’d have thunk it? Then TD Securities’ Steven Koukoulas weighed in under the header “Australian interest rates to fall to zero? What utter rubbish” and made Henderson look like a fence sitter:
And then Koukoulas resorted to economic arguments to debunk your claims. What a dirty trick. Access Economics’ Chris Richardson was crueller for two reasons. First, his comments received a broader audience as they were reported in The Age by Mark Hawthorne. Second, he didn’t use your name, just referring to “that guy from the University of Western Sydney”. How cruel. |
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9 Comments
It’s a pity no one’s taking you to task over this article, Michael:
http://www.crikey.com.au/Business/20070316-A-super-sub-prime-beat-up.html
They mocked and ignored Taleb, Faber and Roubini as well. Peter Schiff was scorned in America for years, but he was right. Keen’s just following the theories derived by Hyman Minsky and Irving Fischer. Not the mindless public shills that are Richardson, Koukoulas, and of course, Pascoe.
Maybe Steve Keen’s predictions will turn out to be wrong in which case we’ll all be better off and Steve will have egg on his face. However, Michael Pascoe’s piece is once again poor quality, relying on sneering and gloating to make a point . What do we know about Koukoulas’s and Richardson’s performance in economic forecasting? Who checks their predictions against actual economic outcomes? I think most people would know them only through the occasional short grab on TV or radio. At least Steve Keen has the courage to publicly put his reputation on the line.
MIchael, Keen has used these headline grabbing claims to illustrate a valid point about our obsession with debt for consumption. I hope it gets through our collective national skull.
Debt incurred for consumption and speculation distorts the economy. Runaway asset prices can only result in one of two outcomes: Asset price falls (deflation), or a fall in the value of money, against which those assets’ values are measured (inflation). Whilst we appeared to be heading for the latter, most, including the RBA, have quite clearly concluded that we’re now hurtling towards the former.
Houses are now like computers were. Your choice is to buy now or buy cheaper. The only reason you can’t buy cheaper now is the Mexican stand-off between vendors and purchasers. Rising unemployment and forced sales will fix that in favour of purchasers. Prices have fallen where sales have occurred but if there is no liquidity (activity) in a market, you just can’t tell.
Michael, if you had taken the time to go and read Steve’s Blog you would see where these estimates come from. They are based on solid empirical data.
(1) Boom property and share prices come back to the long term trend line after a credit crunch, regression to the mean you might say. In property the peak was about 40% higher than the long term trend line.
The empirical evidence for this comes from Depression, the Japanese crash and now the US, UK, Irish and Spanish property crashes.
(2) The estimate of unemployment rates come from the impact from the rate of increase in debt stopping, which gives a sharp drop in GDP and consumer spending.
This comes from 1st principles and the Australian GDP data from the ABS, look it up it is actually quite interesting.
Steve is one of the World’s experts on Minsky Instability Theory, which predicts and describes the current world wide state of play.
I suggest, reading Steve’s Blog, his acedemic website and buy his book “Debunking Economics”. You will receive a wonderful education on economic history and theory.
Some is a bit technical, but you can just skip the hard mathematics, as a lot of it very clear and easy for the layman to understand.
Actually Michael, I’ll up the stakes a bit. I will debate with you on the forum of your choice, with 2 weeks notice. On the table: the past and current position. Your record of predicton and analysis. SK’s record.
Theory and reality.
Pick your venue.
I’ll offer Steve Keen a tulip for his house. That’s how much I think it is worth.
Well Mr Pascoe?……are you going to answer Old Skeptic’s challenge?
You could at least attempt to dismantle his propositions…..
Excellent to see all but one comment coming out in support of Keen.
Why has the author of this article chosen to take such a childish tone? What is the purpose of this article? If the author had simply stated that various economists disagree with Keen and why they disagree with him then so be it. But why all the childish rancour? Why so one-sided? Surely it needs to be stated that so far everything that Keen has been warning about has started to happen. His predictions may deviate from this point on but that’s a different story.
This really is one of the most fatuous and pointless articles that I’ve had the misfortune to read on Crikey. If I wanted to read this rubbish then I would read The Daily Telegraph.