Finance News Network interviews Steve Keen
Lelde Smits: Hello, I’m Lelde Smits for the Finance News Network. Joining me today to cast some light on the global debt situation is Associate Professor of Economics and Finance, Steve Keen. Steve, welcome back to FNN. Now debt has been in the headlines and it certainly seems the US and Europe are drowning in it. How did we get into this situation and how is it different to the Global Financial Crisis of 2008?
Steve Keen: Well it isn’t different; it’s the continuation of exactly the same crisis, because we began accumulating too much private debt - not public - private debt. Gambling on rising asset prices all around the world, everything from the madness of the dotcom and the internet bubble of the nineties. Before that the eighties bubble which Australia was also caught up in. Real estate bubbles are all over the globe, of course the subprime but also in Australia and England and Spain, and God knows what. That private debt stopped growing in about 2007/2008 because the private sector had taken on far too much for this gamble. When it stopped growing that caused the crisis and now we are in the period where people are reducing their debt, and that’s what is causing the continued slump. And this particular experience now is just a case of people realising, ‘Hey, we’re not going to get growth back anymore’.
Lelde Smits: So it’s nothing different, it is the continuation of the GFC?
Steve Keen: It’s the continuation. This won’t be over for ten to fifteen years.
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