Yves here. Steve Keen sent this note along with his post:
The journalist David Hirst was both one of the few to warn of the crisis, and someone who became a good friend. He died last week, as a long term consequence of internal injuries sustained about ten years ago in the USA, when he tried to stop a woman being bashed.
His spouse asked me to see if I could get the attached published on NC, which was one of his favourite sites.
If you know David’s writing, you’ll understand what a loss this is. And if you missed his prescient and incisive commentary before and during the crisis, I hope you’ll sample his work below and get a sense of what a talent he was. Either way, I trust you’ll join me in sending condolences to David’s widow and his family, as well as to Steve.
By Steve Keen, a professor of economics & finance at the University of Western Sydney and author of Debunking Economics and the blog . His Minsky Kickstarter page is .
One of the handful of journalists to fully grasp the enormity of the economic crisis that was to commence in late 2007 has died, long before the crisis itself will end. In his column , David Hirst’s poetic prose warned his readers of the coming economic tsunami, at the same time as the officials who should have prevented it continued to laud the very instruments of financial deceit that made it possible.
Though the Fourth Estate’s higher purpose is to keep the other Three in check, the human fear of being an outcast keeps most journalists within the bounds of conventional wisdom. David had no problem stepping outside it, as he stepped outside the conventions of so much else in life.
That truly fearless bravado is largely why David died so young—and, at his death, so frail. A tall, powerful youth who was selected for representative Australian Rules football—but prevented from playing by his arch-conservative pastor father, to whom the Sabbath was too sacred even for Australia’s football religion—and who once worked in a timberyard catching planks of wood as they flew off the circular saw, David would take on foes physically as well as with the pen if he saw injustice being done.
On the last of many such incidents, he went to the rescue of a woman being savagely attacked in rural America. This utterly typical display of courage, absence of fear of the mob, and disregard for his own survival, set the seeds of his early death. The attackers turn from their female prey to her would-be rescuer, and kicked him close to death. He survived, but the episode set off a cascade of physical traumas that left him with a greatly diminished intestinal system, and constant pain from the severing of nerves during the surgery that—along with his own strength and will to live—saved his life.
Over time, this Australian giant withered in physique, but the robust mind never weakened. He wrote his most brilliant dispatches about the American folly after this brutal confrontation with mob violence robbed him of his physical vigour. Years later, he warned me that the belief that a violent mob of any description is angry was wrong: they were having fun. Anger (or, in the case of the thugs he confronted, hatred of women) was a prelude to the mob event, which was a joyful release of that anger. During the event itself, the mob is euphoric, and if you disturb their fun—say, by coming to the rescue of someone being bashed, or expressing views contrary to the mob consensus—the mob will make you the object of their fun instead.
He was to experience that himself as a writer when he switched from Industrial Relations—his specialty while working for The Australian newspaper in Sydney—to being an Australian correspondent reporting on America, when he and his lifelong partner, script writer Valerie Morton, moved to California. There they witnessed the Internet Bubble and then the Subprime Bubble first hand. Knowing madness when he saw it, David turned his poet’s hand to economic journalism, eventually concluding that the speculative frenzy he was witnessing couldn’t be happening on Planet Earth, but instead must be taking place on “Planet Wall Street”.
Mob behaviour isn’t limited to violent goons. Sometimes it also happens with “investors”—and they take as kindly to scepticism about their chosen vehicle of speculation as … never mind. So David found his despatches from America treated with disdain as the Subprime Bubble rose. He and his partner Valerie decided to leave the Bubble behind, and return to Australia before the proverbial (whose existence the Subprime mob denied) hit the approaching fan (whose existence the Subprime mob also denied). They sold their Arizona property literally at the peak of the US house price bubble in 2006, and returned to sunny and oblivious Australia—where he established a column with The Age entitled … . In it, he continued to warn of an approaching economic Armageddon, while those in authority assured the public that all was well—and less iconoclastic journalists reported those official assurances as “news”.
In recent months, economists who didn’t even think a crisis was possible have . The “no you didn’t” claims focus on whether a model was used, and what and how it predicted—there is much academic esoterica in that dispute.
No such obscurantism can damage a journalist’s claims to having warned of Armageddon before it arrived, and on that case David stands tall. His column from July 27, 2007 (far from the earliest of his warnings, but the earliest that I could locate that was still available on the Internet—) contains the revealing line that:
Once again, the mainstream media have chosen to ignore a social catastrophe for reasons I have given up trying to explain.
We now . Anyone who listened to David before this date, and moved their money out of risky assets, saved themselves from the calamity of the subsequent crash. If you did, it’s time to grab a glass and drink to the memory of a great journalist, and great man, David Hirst. If you didn’t, the same nonetheless. David, after all, was right—and eloquently so. If you have never read his prose before, read the lines below as you drink that toast. We have lost a great voice as well.
Some Selected Passages
“”, (November 29, 2007)
NOTHING illustrates more clearly that Wall Street defies, indeed ignores, reality than the news that the largest bank in the US, Citicorp, has been “saved” (for the moment) by a cash bailout of $US7.5 billion ($A8.6 billion) from Abu Dhabi, part of the United Arab Emirates (UAE).
That no US or European bank or the US Federal Reserve would cough up what was only a few months ago considered small change, seems not to have been considered as the wonderful news spread.
Early this year (another lifetime) the UAE was sternly reproached by Congress for trying to buy some US ports (that’s national security, buddy). Yet today the beggar nation is dancing in the street.
Nothing illustrates better Warren Buffett’s warning of some five years ago, that the US was in danger of becoming a “sharecropper nation”, than this action and the reaction to it. For Americans, the expression has a vividness that is hard to translate. It conjures up the image of reconstruction, when the poor southern whites were reduced to the status of the freed African Americans. From this population the Ku Klux Klan drew its following.
“” (iDecember 8, 2007)
WITH millions of Americans delinquent on their home mortgages, in foreclosure, on or facing the streets, the man of action – “the go to guy” – went on air to unleash a plan devised by the two amigos, Henry Paulson and Ben Bernanke, and a cast of thousands.
A rescue no less. One could hear the faint sound of bugles as the nation stood and waited before their TV sets or listened as the saviour of New Orleans, the Commander-In-Chief, hero of countless campaigns, a Patton abroad, a Roosevelt at home, spoke.
The plan was revealed; the evictions would cease. A moratorium no less for those facing ruin. Salvation was at hand. It even came with a distress hotline where counsellors awaited consumers in crisis. Salvation indeed, as the President announced the number 1-800-995-HOPE.
Sorry, wrong number. Moments after the President left the podium the White House gave the correct number. Meanwhile a Texas organisation, the Freedom Christian Academy, which provides home material for Christian schooling, was blitzed.
“”, (July 16, 2008)
THE crisis in US banking has reached the stage where grandchildren will ask: “What happened?” Older Americans could seek guidance from their grandfathers.
Bank panics and financial failures, followed by severe depressions, were part of the boom and bust cycle of this young and unregulated nation.
But the US suffered panics in 1890, 1906, 1907 and, of course, 1929.
As I write we face another perilous night as the US markets pass judgement.
Two outstanding differences exist between today’s crisis and those of the past. One is that the panics of the past were by definition sensational and seemed to come from nowhere.
Although fingers of blame are being pointed at individuals, the problem has long been clear and plain. This column has on at least five times forecast, with certainty, a wave of bank collapses.
It wasn’t hard. The US Federal Deposit Insurance Corporation has been advertising for laid-off workers to return to their jobs, knowing skilled bail-out merchants would be needed.
“” (October 2, 2008)
IN THE mid-1980s, at the height of the savings and loan scandal – a smaller crisis than what is now gripping the US, but almost an identical harbinger of promises to come – the popular Phil Donahue TV show devoted a program to the situation. An angry man from the audience demanded to know: “Why can’t the government pay for these debts instead of the people?” Now we see the financial titans demanding: “Why can’t the public pay for these debts instead of us?”
“” (July 27, 2007)
A POPULIST candidate for Republican presidential nomination believes the Bush Administration has put in place martial law provisions to deal with coming economic discord.
Congressman Ron Paul predicted the US Federal Reserve’s efforts to save the US economy, pumping billions into liquidity creation, would fail and economic collapse was “all but inevitable”. Some months ago Planet Wall Street wrote about the coming social breakdown that will attend the collapse of house values in the US. The devastation is now becoming apparent, but only to people on the internet.
Once again, the mainstream media have chosen to ignore a social catastrophe for reasons I have given up trying to explain…
They were dubbed McMansions. That word has now at least seven new “derivatives”:
· McDilapidation. Self-explanatory.
· McMould. Likewise.
· McMammal. When animals move into your neighbour’s foreclosed home.
· McTermitebait. This actually can be used to include mould and all the other blights that come with leaving houses deserted for long periods.
· McRats. Say no more.
· McIcedam. Home after home has been deserted in the colder states but no one has turned off the water. If these are left in freezing temperatures, water bursts the pipes, snow builds up around and over the house and all sorts of other things happen. They may trouble the bears…
“” (February 2010)
Returning from overseas to Australia might not be a sobering experience but perhaps it should. Like that scene in Missouri Break’s when Jack Nicholson commiserates with Marlon Brando and tells him he didn’t want to wake him but “I just cut your throat.”
Is it possible for an entire nation to sleep through an economic cycle and not have its throat cut?
“Too easy,” says a nation deep in sleep.
For no nation is more complete in its vanity. Nor have the people who have come to populate it been so lacking in their fulfilment. “Far too easy” and “absolutely no worries” have become mantras of a nation without purpose. It is, given the fact that most of the world is attempting to face a global crisis that affects all differently synonymous with the child on a new bike crying “look no hands,” as his parent watch in delighted wonder and the banking sector cheers from the sidelines.
There was a time Australia cared about its wealth and therefore its future. It was huge with Whitlam’s Government and found sad and salutary expression in such things as superannuation and future Australia or some such thing. There were people who cried, “give me men to match my dreams” the future often on their minds.
No worries about the future of modern Australia. It is all “Too easy.”
While the nations of the world eye the future with grim forbearance and fear Australia has, unique amongst them all remained utterly thrilled at the prospects of tomorrow. For now we shall sell the farm and hold onto the good bits like BHP and Rio. Can anyone tell me who actually does own Rio or most the swag? We do! “No worries-too easy”.
IRA’s Chris Whalen gave something away yesterday at Institutional Risk Analytics when he wrote about “keeping the game going on a few weeks longer.”
The game is the money shuffling we call the world economy and Chris has been watching it pretty closely those past twenty years or more. And he likes, and knows his Rolling Stones. Keeping the game going for a few more weeks really means keeping the game going for as long as possible.
I don’t think many, even the most savage critics, want to see this thing come apart.
It will be worse than the thrill and spills of the events of the Phoney War of September-November 2008.
The bubble the Government has used as ammunition is running out. The belief structure is being battered as never before.
There are too many agendas at work, to many competing forces being unleashed.
We have to concede that no matter what the outcome of the eventual meeting of the buffaloed buffoons of the upper house of US politics has made a merry mess of their job. The entire Bernanke re-appointment fiasco was (as this column pointed out many weeks ago) a disaster waiting to happen. He will be the headless horseman of the Fed.
The political class can deliver its masters in the financial class their man but they might as well do it with his head on the plate.
“No worries,” replies an Australia that it blithely unaware of the massive dogfight surrounding all positions in the US financial hierarchy – except, of course those who control the Too Big To Fail Banks who are “forever young.”
Australia can walk through the next stage of the GFC as, it can sell stuff to China, has a solid banking system, er, it’s raining again somewhere, and nothing happened last time. Why the entire financial crisis is, as the Murdoch press is good enough to point out, is a contrivance of those who so falsely bought us climate change.
Three weeks ago The Australian newspaper listed all major (and a lot of minor) stocks – on an entire half page as buys or buy-specs.
You cannot lose money here. It is physical impossible for Australia to ever be troubled by hardship. In the following weeks all those buys were sold off.
But “she’ll be right, no worries, too easy.”
David’s Planet Wall Street Articles from 2007-2008