Steve Keen calls the end of the GFC

[MichaelW]

Hi,

Even our old mate Steve Keen has officially shut the door on the GFC.

http://www.businessspectator.com.au/article/2014/3/10/economy/closing-door-gfc

These are hardly sterling growth rates, but the fact that they are all positive is causing a noticeable change of mood in economic commentary -- and a shift in public expectations as well. Is it enough to call the GFC/Great Recession/North Atlantic Financial Crisis over?

It isn?t. But I?m willing to do so on an entirely different measure: the rate of change of private debt is now strongly positive. The period of private sector deleveraging that caused the crisis appears to be over. Debt is now not merely growing, but growing faster than GDP

With sustained positive growth in credit comes a tendency to positive economic news as well, and out of that a tendency to take on more credit too -- after all, that?s what gave us the previous boom, isn?t it?

Well there you have it. The biggest bear on the block is predicting a virtuous cycle of positive economic news feeding more personal debt feeding more asset price growth feeding more positive economic news and so on. Are we at risk of a future bust? According to Dr Keen we are, and if we move into another debt fuelled boom then assets could eventually go bubble. Hence the RBA's current moves to reduce systemic risk in the housing sector by increasing lending hurdle rates. That way they can slow lending for housing without actually raising the cash rate and hurting our economic recovery.

As a contrary investor, when Steve Keen says the boom has begun, does that mean we should all get nervous?

Cheers,
Michael

 

[HomePage]

Your sarcasm detector must be on the blink. I read it that he says the GFC is over only in that it will be dwarfed by what he thinks will come next.

 

[MTR]

What's coming next??? Now I am really worried, he seems to have his finger on the pulse

 

[The Fence]

How he gets a gig on Business Spectator I dont know.

But then he's far left thinking and totally out for exposure.

Good luck to him, he obviously thinks he's right...Um no...wait a minute, thinks he's correct.

 

[impala67]

...Steve Keen says...

 

[Peter_Tersteeg]

There's an aspect of which which means it's transferred from on place to another. Steve Keen is one of those who simply facilitates the transfer of wealth from those who listen to him to those who don't.

 

[jackbak]

Better batten down the hatches and start selling the assets - if Steve Keen's predicting the end of the GFC, then I'm predicting it it's just beginning....

 

[sanj]

How he gets a gig on Business Spectator I dont know.

But then he's far left thinking and totally out for exposure.

Good luck to him, he obviously thinks he's right...Um no...wait a minute, thinks he's correct.

Far left? I think you may possibly misunderstand the term, just like Sash wrongly labeled Troy Buswell far right yesterday.

"Far leftists seek to abolish all forms of hierarchy, particularly the inequitable distribution of wealth and power.[1] The far left seeks a society in which everyone is provided equal economic and social opportunities, and no one has excessive wealth or power over others.[1]
The far left typically believes that inegalitarian systems must be overthrown through revolution in order to establish egalitarian societies, while the centre left works within the system to achieve egalitarianism.[1] In societies that tolerate dissent, far-left groups usually participate in the democratic process to advance their goals.[2] The far left demands radical changes to dismantle unequal societies, including confiscation of wealth that is concentrated in a small elite, and redistribution of that wealth in an egalitarian manner.[1]"

ive certainly see no indication steve keen supports the above.

 

[jrc]

How he gets a gig on Business Spectator I dont know.

But then he's far left thinking and totally out for exposure.

Good luck to him, he obviously thinks he's right...Um no...wait a minute, thinks he's correct.

I think one of the original Spectators did an article on Steve Keen 4 or 5 years back and explained why they had taken him on. I've read parts of his book Debunking Economics and I think there is merit in a lot of his thinking concerning traditional economics.

The other aspect is as part of our risk management, how would we be managing if he is right. What can or should we do to protect against these risks and if he is right how can we profit from them

 

[willair]

It takes a lot of guts to try and predict precise outcomes,but it also makes one more vulnerable to the ones he did not predict,but for the first time ever had a letter in the mail box today where if one was to get aReal estate appraisal from a upmarket inner city re office they put you in the draw for a holiday for a week at Noosa..

 

[BayView]

I read his excerpt posted here as basically him describing the "human nature" factor;

As soon as folks get a bit of comfort level back into their finance position, and the news on the teev is a bit brighter; out they go and spend again...

When we lived in the USA the average person spent 105% of their income - and not on investments...

I doubt that this culture has seriously changed despite the GFC, and people tend to have short memories from my observation.

Here in Aus is exactly the same.

People talk about the savings increasing and so on - I reckon if the truth is known; it's more likely to be that folks have only decreased their consumer debt while the news has been bad.

 

[Deltaberry]

People make predictions all the time - and many get it right. That's why there's so many rich hedge funds, traders etc, and real estate speculators.