Economists Ain’t Economists when They Work for Banks

I have watched with interest over the last few months as the Big Four Banks’ economists put the banks spin on each drama in this financial crisis.

From Australia is decoupled from the USA to China Neoclassical Economics is fundamentally flawed will see us through, to the Mining Boom will protect us, is to name just three “spins”.

I understand why they do this. They are working for a bank and that bank has to present a certain view based on it’s own situation.

When this sub prime mess first hit our shores all the bank economists almost to a man said their banks were safe and/or they only had a small exposure to sub prime mortgages. Then one or two of the banks no names here please, suddenly found the odd $1Bn sub prime mortgage CDO lying around in the back of the store.

The evening news-bites where business-suited bank economists are given 2 minutes to explain the state of the Australian and World Economies are really all about promoting confidence about the economy or the bank depending on that days news.

It must be hard putting a bank’s view if your personal view is not in line with it, as may well be the case on occasion. He who pays the piper….

So you always need to seek an independent economic viewpoint if you can. Preferably one that is totally independent of a bank, a government or any other financial institution with a vested interest in putting a spin on the latest news headline.

In Australia there is probably none better than Professor Steve Keen. In his About page on his Blog. “Steve Keen’s Debtwatch” he says,

“As an economist, I do something very unusual: I treat money seriously.”

Read the rest of his About Me page for more incite into his thinking.

He is famous in Australia amongst the real estate profession for talking down the real estate market. In fact he is Dr Doom on house prices in Australia. He sold his own house/unit recently because of his deeply held believe based on his research that house prices in Australia could fall 40%.

But this is a side show to his main passion which is tracking, reporting and commenting on debt levels in Australia and the US.

Debt has taken over the world stage this last year and a bit. It is likely to do so for some time to come. You need to educate yourself on debt and learn all about it.

Whether you are from the US or an Australian, Steve’s Blog has something to offer. You might not agree with his views but it will certainly provide you with some perspective on the major problem facing all governments – massive debt.

The comments on some of his blog posts are worth reading too. There are some smart contributors.

One final thing. You should get his book, “Debunking Economics“, ( I have) available for download from his blog as an eBook for only $10.00. The description includes,

“Debunking Economics explains to non-economists why conventional economic theory–known as “Neoclassical Economics”–is fundamentally flawed.”

His web site to read more on Debunking Economics is at Debunking Economics.

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