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Whitlam Institute talk on the financial system and the crisis

August 24th, 2009

The talk I gave at the Whitlam Institute in July is up on SlowTV. Comments from Steve Keen and Guy Debelle.

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  1. Martin
    August 25th, 2009 at 02:19 | #1

    Do you have a transcript?

  2. jquiggin
    August 25th, 2009 at 09:33 | #2

    No, I should suggest this. TED is a video site that offers a transcript tied to the video, which is great in a lot of different ways, including for people who prefer reading to watching videos.

  3. Keith
    August 25th, 2009 at 14:52 | #3

    I was interested in your comments during your part of the session in regard to the public sector having a greater role in banking, and in regulation. Realistically, this greater role will need to be staffed by economists and financial market operatives who, given the failure of the private sector, need to be much smarter than their private counterparts. As a practical matter, where do you expect to find these people (given that there are not enough available) ? Won’t there be significant migration from private to public ? Wouldn’t this encourage a revolving door outlook, and consequently a lack of serious examination of the status quo ? What else would we get but more of the same ?
    Also, had I been present, I would have liked to ask each panelist what they would consider a prudent bank would lend on a typical mortgage, in terms of debt to equity ratios, and in terms of percentage of disposable income ?

  4. Alice
    August 25th, 2009 at 21:11 | #4

    @Keith
    What worries me Keith – is that a small army of de-regulation at any cost, free markets, neo liberal style economists with their newly hatched stochastic models based on current free markets training will apply for the jobs to regulate banks and get them and instead pursue further de-regulations…programmed free markets zombie economists with nice computer models and the ticks of their US school style examiners and we will get more of the same non questioning econometrists….

  5. Alice
    August 25th, 2009 at 21:26 | #5

    despite what the stock markets are doing (more manipulative bubble land) perhaps these charts might be of interest…

    http://slowsmile.hypocrisy.com/2009/08/19/looking-for-green-shoots-keep-on-looking/

  6. smiths
    August 26th, 2009 at 10:40 | #6

    i thought Guy was weak in the content of his talk and in his response to questions,

    i appreciate that you cannot comment on this though john,

    i thought you were very good but ultimately i think steve keens assessment is correct,
    i just started a little diary, which is going to be my depression diary,
    just recording whats going on in the world close to me and in the wider world over the next five years or so, might be a good record one day

  7. Colin Cook
    August 28th, 2009 at 11:39 | #7

    I listened to the talks on ABC ‘Big Ideas’ and from Steve Keen’s site and was amazed that none of the speakers, yourself, Prof Steve Keen or Dr Guy Debelle, mentioned LAND. There was frequent reference to HOUSING – bubbles, crises, costs, etc. as if housing is unrelated to land.
    Most depressing of all was to hear Dr Debelle – Asst Governor of Reserve bank with a very impressive CV (IMF, MIT, Int Bank of Settlements) say, “Housing is just something we consume – like, food, television or cars”. How wrong can experts be!
    Housing comprises two fundamental elements, LAND and STRUCTURE.
    The latter may be anything from a temporary humpy to a multi-story block of units with infinite man-made variations between. There is no insuperable problems in making the structure.
    But LAND is unique stuff.
    1. It is essential for human activity – living, working, sustenance.
    2. They are not making any more give or take a micro-micro percentage
    3. It cannot be moved – not to the Caymens or anywhere else
    4. Generally it does not degenerate or depreciate with time
    5. Each piece is unique; ‘Position, position, position’, intone Real Estate Agents
    6. Strangely, its value depends mostly on what is around it – not its own intrinsic properties – and on the stroke of a Planners pen!
    7. It was the first of the COMMONS to be subject to privatisation.
    8. It is a major source of wealth for most Australian billion and millionaires.
    9. Taxing land – Community Land Rental, if you like – is totally different from taxing income, goods and services; Even the IPA is on record as calling it a ‘half-decent tax’ when properly applied; it cannot be dodged or evaded and gives a return on worthwhile public expenditure.

    Do ‘food, television, cars’ have any of these characteristics? Yes, food is essential (1), otherwise, NO MATCH.

    Even Steve Keen spoke of House Valuations without a hint of the Land component; makes a difference whether it is freehold or leasehold. It would have been more encouraging when considering our ‘Economic Options’, LAND – access, ownership and taxation – had been part of the conversation

    Here are two Big ‘LAND’ Ideas from me!
    A Flat-rate Land Tax of 2% is mandated by the Federal Government to be collected and used by the States; GST would be wound back appropriately. We should start looking at all ways to raise revenues that do not impinge on economic activity; if free-trade between nations is a ‘good idea’, why cannot we have ‘free-trade’ within our nation?

    To relieve Mortgage Stress, banks should re-possess the Land only; bundle up the parcels of land and on-sell them to Government – all at Local Valuation. The house owner then becomes a leasehold tenant of the Government, paying Ground Rent. There would need to be a Government Land Holding Agency. This could also buy land from asset-rich, income poor pensioners – freeing up the equity in their homes and also the land from cash-strapped commercial developers leaving them to get on with their core business of building/leasing/selling; no need for the Ruddbank. The purchase and selling of land by the Holding Agency would give a good measure of control over housing finance, liquidity etc, in addition to Interest rate determinations.

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