Another economic crash is coming. How did this happen? Renegade Economist | Comment is Free

Another economic crash is coming. How did this happen? Renegade Economist | Comment is Free

Another economic crash is coming; how did
this happen? Well, I hate to break it to you but David
Cameron was right. But don’t worry – predictably, he was right for all the wrong reasons. He’s
said that Britain is facing another economic crisis – which is true – but not for the reasons
that he has given. The bankers, economists and politicians who
apparently saved the world from economic armageddon in 2008, told us that this could never happen
again. So what’s going on? Well, economists are – once again – looking at the wrong indicators
and politicians are beginning to realise that they’ve bailed out the wrong industry. After the crash, instead of channelling money
into the real economy where most of us live and work, politicians used Quantitative Easing
or money printing to repair the balance sheets of banks, naïvely claiming that this would
kick-start growth. This was the first massive fail. In fact, all it did was incentivise banks
to reflate the dysfunctional housing market through selling mortgages to support government
schemes like ‘help to buy’. So instead of financing real investment, politicians
financed more speculation. Second massive fail. The outcome? Well, kind of predictably, the
only industry to grow since 2008 has been financial services. Third massive fail. So, we find ourselves back in a very familiar
position where we have a bloated financial sector that has us all servicing mountains
of private debt – most of which has been used to pay for unproductive assets like houses. If our wages could support current house prices
then there wouldn’t be a problem, but the fact is that these prices are built on mountains
of private debt. Bankers and politicians have encouraged us
to take on this debt, seemingly still not realising that you can’t solve a private
debt crisis with more private debt. So, why do mainstream economists ignore private
debt, despite the fact that today private debt is at the greatest levels in recorded
human history? Because the core business of banks who employ economists is selling debt
and, as Upton Sinclair once said, “It’s difficult to get a man to understand something
if his salary depends on him not understanding it.” So, am I the only person talking about this?
Thankfully, no. Meet Professor Steve Keen, Head of Economics
at London’s Kingston University. A highly respected economist who predicted the financial
crisis in 2008. Keen is again voicing his concerns about the fragility of the global
economy. Keen believes that the level of private debt
and the speed in which it’s growing are two vital economic indicators. In medical
terms, it’s as important as taking your blood pressure. When household and business debt is above
150 percent of GDP and when it grows at 20 percent or more over the course of 5 years,
you’re in real trouble. So, what are the stats now? Well, including
the financial sector, private debt in the UK today stands at over 350 percent of GDP.
Yes, that’s more than double Keen’s warning figure and it wasn’t mentioned once in George
Osborne’s Autumn statement. The only thing that’s now keeping the UK
from becoming a zombie economy is government spending, but ironically they’re trying
to slash that because, despite their budget trickery and skewed statistics, borrowing
is at record highs. Further austerity economics won’t work – they lead to something that
I call backdoor privatisation. This is when you starve a public asset of cash and then
sell the beleaguered asset at a firesale price to the private sector. Escaping from our private debt trap will either
require a lost generation or policies that run counter to conventional economic thought. Only by making this leap can we begin to understand
the real reasons that we’re in this mess, and then instruct a government to favour the
real economy instead of the predatory short term interests of the financial sector.

56 thoughts on “Another economic crash is coming. How did this happen? Renegade Economist | Comment is Free

  1. Every god dam self proclaimed economists support the bailout, and so do every damn stock trade because it inflated commodities with lowered interest rates. Holly God Flaming F4ck Nuggets!! No one ever think about infrastructure anymore?! How about we increase efficiency of getting to work by building more highways? How about funding free colleges, how about f 4 king helping the people and not the balance sheets.

  2. Economists?!?!… pah.

    Money doesn't work, it's always collapsed whatever system's been built on top of it through recall-able human history. When there's a way for someone to have more than someone else, that's what'll happen, especially when people are encouraged to get as much as they can.

    To truly have an economy, we have to get rid of money and all that it stands for and sustain-ably share the resources as efficiently as we need to (for those resources to regenerate at least as quickly as we're consuming them) and as far and wide as can and treat the planet for what it is, a single entity with a bunch of squatters on it and not as something we divide up into chunks for different groups to fight over.

    Where in the 'economy' we have does 'economy' actually come in? manufacturing businesses need to keep manufacturing, so there's a huge incentive not to make something last, which would be economical, but instead to make it last 1 year and 7 days so they can stick a 1 year guarantee on it but be assured of another same in the shortest possible period of time.  It's so moronic I'm amazed it's not made me vomit… yet.

  3. funny. As usual, the Guardian is one of the last to find this out. Anybody who bothers to watch alternative media would have KNOWN this for a fact years ago, before they even tried QE. Fact is, our politicians KNEW what they were doing when they used QE. This was NOT some accident as this dude implies.

  4.  Excellent analysis. I am Greek and I totally agree with it. Amazing depth of arguments. The crisis of 2008, will probably repeat in 2016 in the UK, and I am gonna bet some money on it. Cameron was right, but now it's too late!

  5. It happened because central banks like the FED and ECB expand credit causing temporary booms and monetise debt. The solution is for people to abandon Keynesian schemes of money printing and go back to sound money.

  6. Another economic crash is coming. How did this happen? Renegade Economist | Comment is Free ►

  7. Why is the vocal channel only in the right channel? Looks like someone recorded in mono and then used stereo samples too! My right ear enjoyed the video though 🙂

  8. Come on people – we all know the reason why the global collapse is coming. The elite bankers have engineered it, as they have done throughout history. The elite create booms so that the masses work hard to build infrastructure and tangible assets. The elite then engineer busts so that they can buy up those assets for pennies on the pound. It's a global conspiracy, not a conspiracy theory. The politicians are just puppets – they don't make mistakes, they don't get it 'wrong'. They just follow orders from their financial and corporate paymasters. It's all a mighty circus act to keep the masses debating the myths, whilst the real powers can exercise their agenda unchallenged. Until we wake up, we will go round and round in circles talking about meaningless political theater.

  9. Of course debt is primarily possession. It's not necessarily an addiction to money in relation fat cats. Moreover they rely on peoples need for release – one way is to sell people the idea of credit. Once in you gotta get out and there you cannot think about the environment or expanding your awareness for you have other forces competing for your attention. They are suckers – they'll have all your energy and leave you with none….Get out of debt now!

  10. The Anal-Cranial-Inversionitis virus plaguing the worlds economy is now treatable.

    Anal-Cranial-Inversionitus is an arched (forward) curvature of the spine. When viewed from the side, a normal persons spine will show a small degree of swayback, a forward curvature of the spine. When a person with Anal-Cranial-Inversionitus is viewed from the side or front, the curvature of the spine is so sever it appear as if the persons head is up their butt—in sever cases an anal breach has occurred.

    Symptoms of Anal-Cranial-Inversionitis; talking out of your butt, always having to be right, an inability to hear what others have to say, a disdain for others views, and verbally or physically attacking people with different views. In rare cases sufferers reported seeing the world as total crap—if left untreated this may become permanent.

    Those with highest reported cases of Anal-Cranial-Inversionitis include, politicians, people in the news industry, late night television hosts, and anyone holding extreme political views.

    Helping in the fight against Anal-Cranial-Inversionitis is Humanatapilism, pronounced Hu-MAN-ah-TAP-il-ism, a new economic model that combines the best aspects of our humanity with the best aspects of a free market capitalism, to create a well balanced economy. And a well balanced economy is the most effective treatment for Anal-Cranial-Inversionitis.

  11. I hate to break it to you, BUT there really aren't many signs of inflation despite layers of QE in US, instead they think that deflation is much more likely. Returning currency to the gold standard.? Nah… there just ain't enough Gold in the world to be got, and if there were its far too heavy in yer pocket.

  12. I'm afraid I couldn't take in the messages about global economic doom because I'm being stalked by an advert about funeral services.  I know that I've long passed the age of being a proverbial spring chicken, but I'm certainly not ready to be an old boiler either.  As the song says – "economists – you've got your troubles – and I've certainly got mine"

  13. What a Johnny come lately watered down report. What do you mean you don't know how you, we got here? Thanks for finally pulling your head out of the sand!

  14. Seems pretty possible. I mean, it's kinda people's fault for taking out massive credit card loans that they can't pay back. And also, banks need to regulated, financial and economic freedom needs to come with accountability and responsability.

  15. Nicely said – but scary. This is exactly what I thought when I heard about quantative easing. Reminded me of the old saying "No problem can be solved with the same mentality that created it"

  16. Labour caused the previous economic crash, the Tories will cause the next one…neither political party has a clue on how to govern.

  17. George Osborne will deliver his sixth Budget as Chancellor on Wednesday. Here's Renegade Economist, Ross Ashcroft, on why another economic crash is coming ►

    David Cameron says a second financial crash is imminent. If he's right, it's because politicians bailed out the wrong industry, argues Renegade Economist Ross Ashcroft.

    Subscribe to The Guardian ►

    #budget2015   #budget   #economics   #economy  

  18. "If our wages had kept up with housing there wouldn't be a problem"

    Yes there would – unless you believe we should hand over all productivity gains to rentiers. Also Labour were at least as bad as the Tories because they all work for the UK establishment.

    The Guardian really is so partisan.

  19. We have just launched our KickStarter for Renegade Inc. We would love your support:

  20. To John Munro below who blocked me from posting a reply:
    If that is the case then I will happily read any statistical data, sourced from a reputable organisation of course, and stand corrected. 

    I already said it was capitalism which failed. I didn't deny that. Although it didn't fail. Get a grip man, it was a few banks involved. It wasn't capitalism which failed. That's like saying socialism failed because the NHS is a mess. 
    It should also be noted that the job of monitoring these banks was always the job of governments. It was they who didn't adapt their laws to keep up with the development of high frequency internet trading. 
    Private firms whose job it is to monitor banks had been warning for a long time what was going to happen. It was Governments who knew what was going on and were actively encouraging it. The Labour Government knew we were in a bubble and didn't do anything, instead preferring to pretend the increasing GDP was as a result of their policies. If the job of monitoring these banks was delegated to these private organisations this would never have happened. 
    It was not capitalism which failed. Capitalism is free market. The Government interfering in the market with their socialist policies aimed at first time black house buyers caused this. Good old fannie mae and freddie mac guaranteeing loans for poor minority families which we all now know they could never have repaid in a million years. Socialist interference in the capitalist system. It has always been the case throughout recent history that capitalism is a wealth creator until socialism interferes, distorts markets and eventually brings everything down.

  21. Nicely said, Ross. If only, the politicians could be held accountable for their defense of rent-seeking special interests.

  22. I posted this on 12th, Aug……
    "Where there is only one place left in the World where money makes money and that place devalues it's currency, obviously it will affect the global markets….

    One sees the total reliance on money making money (investing or gambling for want of a better word in China)…When that place isn't returning a profit on investments, then look out…
    Where else today, can those millions of people, who rely totally on money making money, make their living.?…

    We see here and in the USA and elsewhere, Q.E. and bail outs of the "too bigs to fail"…so that a collapse of market prices and asset prices cannot happen…But with most of the eggs in one basket now (heavily invested in China, the only place left where profits are to be made), a devaluation of that currency effectively reduces the value of those investments.

    The markets here and in America are at an all time high, along with record DEBT and record low interest rates for savers (and banks who get it from the governments at zero rates for investing)…
    To sustain this way of live (money making money), asset values and market values must be supported at all costs…That is why governments step in with Q.E. and bail outs of the too bigs to fail…But these bankers and giant finance houses have been putting their money in China where money makes money…..
    If China continues along this path of devaluation and in turn propping up their industries, then it is certain that others will follow….Just to sustain their well being….

    Expect more Q.E., here and in the USA…soon…

    These markets and asset prices cannot be allowed to go down…

    Scary times indeed."

    BUT it has happened…ASSET PRICES ARE DOWN….and are continuing to go down……
    The question that everybody will be asking is how far down can those prices go.?…

    Q.E> and bail outs since 2008 have worked for a while…..But no longer and with a major source of income for very large financial institutions (Banks etc) cut..i.e. no more money making money, where does this ;lead.?…
    Answer….Large financials going to the wall…just like 2008, but much worse..
    The too bigs to fail will die…

    Behemoth Dinosaurs organisations which have grown too big to fail, now cannot get their feed. (Money from money making money)…


    Unsustainable Debt…..
    When banks are running the show and not the elected representatives, then you know there is something gone badly wrong…

    Steinbeck knew who the culprits were seventy years ago.
    We know who the culprits are today.
    They are one in the same.
    The moneyed banking interests caused the Great Depression and they created the disastrous collapse that has thus far destroyed 7 million middle class jobs.
    Steinbeck understood that the poor working class of this country had more dignity and compassion for their fellow man than any Wall Street banker out for enrichment at the expense of the working class.

  23. My opinion is: I think there is like 90% of everything equal, above or on the highest level atm in the human history. And tomorrow is going to repeat itself because with time most of the thing looks like going up. (Not mentioned time relative as up and down too. These our opinions about what we see. Not covering the truth because truth itself again, relative or cannot be figured out till…well, maybe never.) This is the human nature itself. Up and go. War and suffering is continuous from the beginning of time just like greed and madness. We think we know what is happened in the past based on personal opinions. Nobody knows the future just predictions all the time and ofc there will be always somebody who can say "I was right.". But nobody put its life on it before the actual happening. As I see whats matter, if anything, is that we try to survive just to achieve death. Thinking about our children future destroys somebody else. There is a high probability of that. Crash, armageddon, collapse, bad, worst day after day. It seems the past always brighter than the future and its ofc because we marching to the unknown and almost most fear and tearful death. I say we can trust the future and learning from, not forgot the past is can be vital. There was problems in the past and there will be in the future while we can define something as problem not like lesson instead. Peace, love and harmony or war, hate and ignorance. There is all the tools we need to build the future but I'm sure the future itself is not planning to have us in its own future. Buried, forgotten. Just like this video and this comment. The clock is ticking 🙂

  24. Debt is based on a promise made by the borrower to pay wealth back.

    What is wealth?

    Where does it come from?

    Isn't speculative activity in the market just producing fictitious wealth?

    Don't commodities have to contain something of material substance to have value?

    Don't prices have to hover around value?

  25. The USA owe 200 Trillion Dollars and want to crash the system as they cant pay it back
    and as the rest of the world is moving away from the dollar for payment of iol

  26. The theories presented here are part of the reason why I've made it to my early forties without ever attempting to part – purchase and then repay interest on a house, car or credit card.

  27. A related measure of where the economy is in the credit-fueled, speculation-driven property market cycle is found in the residential property markets. Housing units are a capital good, and all capital goods experience depreciation. Thus, the value of a "house" is calculated as "replacement cost, less depreciation." The difference between this net value and the market value of the property is that of the location. Historically, property markets become overheated and unstable when land price increases raise the land-to-total value ratios above 25 percent. This is not a major problem at the very high end of the property markets, where the income of buyers is more than adequate to pay cash for property and not rely on obtaining mortgage financing. However, for most property purchases the buyers do not have sufficient savings to make a cash purchase. As the land-to-total value ratio is pulled up by rising land prices the impact on homebuyers is to increase the percentage of monthly income that must be allocated to property ownership. It also means that banks (and the investors in mortgage loans) are extending more and more financial reserves for the purchase of land and less and less for the purchase of actual houses. When the property markets reach their inevitable point of excessive stress, it is the land markets that crash.

  28. Crash is not "coming". The crash is over, starting in 1966 and currency is down 95%. The "consequences" of the crash have yet to occur, the default, finding out, "I am not paying". Crash is over, consequences have yet to occur. Protect yourself. Buy gold.

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