Nice analysis. The attempts of finance to prop up over-borrowing by more borrowing are pathetic and destructive. The media coverage is appalling and the government has been asleep at the wheel.
Now we have riots in England, partially caused by the economic policy of bailing out the private system and paying for it by hitting the middle class and poor with "austerity measures". There has been a lot of waste and destructive welfare, social stresses and the like but I reckon the poor and middle class will not like bailing out billionaires and millionaires much anywhere!
Time to let the risky speculators pay their debts, time to let the "too big to fail" fail. Time to get our financial system working on real accounting instead of Ponzi-land finance.
Alas, this requires a different mindset to the "leaders" who think that manufacturing and finance are interchangeable, welfare is for all, and its a Good Thing to make money using debt driven inflation.
Public economics is more dismal than it needs to be because it is rarely separated from politics...which is more about vested interests and rhetoric than honest profession.
Here's hoping your housing predictions come to pass soon Steve!

It's a very interesting analysis of what has happened, but excuse me when I do not put any faith or currency in the predictions for the future.

It seems everyone is in the prophecy game at the moment, and this is no exception .. the economists of past have been absolutely abysmal at forecasting, why would that change now?

I do admire though the confidence and commitment of prophets (to their prophecies), I guess that's where the money is made, certainly not from the actual predictions.

Already today, the news shows this article, is going to be quite incorrect in its cheery ending "Welcome to the Bear Market and the Second Great Contraction"

Amicus: Economic prediction is indeed a bit pointless, but that doesn't mean all analysis is untrustworthy. Economists like Steve allowed me to avoid the 2008 "GFC" and we saw this one coming months ago. I've lost none of my super, and done nicely on gold and silver. Read the Money Morning website old posts...they have predicted this exact scenario for months. These guys also warn that with the non-transparent government manipulation, what "should* happen often doesn't. This doesn't mean the theory is wrong...just that the inevitable can be put off and the pain spread out from the sector that caused it. It is incompetent governments that allow this.
The last couple of decades have seen unprecedented manipulation of markets, particularly money markets by governments and giant international banks. Just recently HSBC and another bank was caught manipulating the silver market. Interest rates have been cynically set to benefit the very few at the cost of the masses.
Economists and industry (not to mention workers) *should* have a much more predictable environment...but the magic of finance means that real-world factors are easily over-ridden by the whims of the finance oligarchs, who reap large fractions of GDP simply by dipping into the wealth flow at whim. Parasites indeed!

Good article and I agree with you Ozandy.

The press have been appalling in analysing and reporting so I have been reverting to the internet to get my information for the last couple of years. This has proved to be extraordinarily prescient.

How curing debt by creating more of it is quite beyond my comprehension. Now we have a situation where the amount to be repaid is impossible, particularly in the USA, so the only solution is to debase the currency (already underway) or default. This is gradually dawning on the population and why they are turning to bullion which has maintained its buying power for the last 4,000 years and is not a fiat currency that has no intrinsic value.

I went to the good professor's web site, and saw he is promoting a lecture tour by Ann Pettifor. He introduces her thusly:

"Ann Pettifor is one of the handful of economists who predicted and warned about the financial crisis of 2007 well before it happened."

What surprised me is who was sponsoring this tour. I thought it would be a conservative think tank, or maybe a highly conservative politician who is against debt like Barnaby Joyce, or perhaps a company from the financial sector. Nope. It's the Unions, Labor and the Greens. From the web site:

Melbourne - Co-sponsored by Victorian Trades Hall Council, SEARCH Foundation and the National Tertiary Education Union.

Brisbane - Supported by Senators Claire Moore and Larissa Waters and QLD MP Evan Moorhead and co-sponsored by the SEARCH Foundation, Queensland Conservation Council and the Green Institute.

Sydney - Co-sponsored by the SEARCH Foundation, Climate Action Network Australia, Catalyst, Greenpeace Australia-Pacific, Australian Services Union ...

So much for stereotypes.

I think they should try having a quiet word their local girl in Queensland, Anna Bligh. Her government would have taken us from a sound position to $80 billion in debt in 2014.

In Australia, it is certain that the Commonwealth has the power over the states regarding the use of wealth. What restrictions the Commonwealth makes, affects the ability of the way the states can work, so the states cannot operate efficiently if the Commonwealth has not put the right tax or any other controls in order. Quite bluntly, the top personal tax had already been shown to have to be at about 65% and it follows that to get the required 30% of GDP, it needs a zero tax on about $30,000. Unfortunately not one of the treasurers since Harold Holt has had the intelligence or integrity to take on this decision, they would sooner see the industries destroyed along with the farms etc and the wage earners getting kicked out of their homes because they could only get two or three days work a week and couldn’t pay their mortgage on the house. Unfortunately for the US, the same requirements exist there; I understand that George Bush reduced the top personal tax from about 70% to the 35% when he was the President, and this has been the downfall or the country. Quite bluntly the top personal tax has to be approximately 65% and there needs to be zero tax on about $30,000, but not one person has “lowered” his perspective to do such a horrible thing, just think what his associates would think of him, allowing lowly workers to obtain any income without having to pay tax.