Would the Real GDP please stand up

GDP is going down like rat down a drain (censor stopped the previous analogy as I am writing before the watershed). There is nothing to worry about, its not negative, its just a correction. Either that or its very modest assessment. Housing stock is part of the 'I' of 'gross investment' within 'inventory' as a component in the complex formula GDP = C + I + G + (X-M), which is designed to be short to allow Minister's of Finance the time to read it. If the prices of our grossly inflated houses that we all have are reducing in value, then that price ought to be reflected in the size of "I" and the final sum. Buuuuuutttttt if Dept of Finance are not 'marking to market', that is incorporating the value that our houses would get if we should flog them tomorrow, and are using the values the banks insist on keeping in their books, then "I" should actually be a whole lot smaller and this year's projected GDP contraction is another tale of economic fantasy.

I'll get on to the toxic bank thing someday soon, maybe the day you want to experiment with blow drying the hair in the bath.

Deflation, deflation, only game in town

The wife's tenant called this evening to say that the local hospital had cut her hours back and she couldn't afford the rent and was going to have to move in with her mum. Her husband works in construction, we imagine money was already tight.  We are going to offer her a cut in the rent, but I doubt it will be enough. We can afford it as we are both sufferers of PTED (Post Traumatic Eighties Disorder), we hoarded assets and married late, and thus the wife's house has had her name on it for 12 odd years. 

We have begun the race to the bottom, no plan for growth, just for expenditure reduction. Less work, less hours, less pay, less spend, little left to do. They didn't have a model for Ireland Inc for 10 years and never got a exchequer return right once, and lived with an inflation target that was reminiscent of a competition between two school boys in the showers.  Now they have no idea how their red pen financial management will lead to, but they call it a plan, we call it deflation.

Deflation and the establishment of a 'toxic bank' all at the same time? That's for another day.

Ulick McEvaddy

Old Biggles told us we are in 'an economic war this week and we need heroes to come forward and do something, sod the Geneva convention [Davos as well for not getting an invite]'. First step for Flight Left Behind Attendant McEvaddy is to lead by example and run at a machine gun nest so we can carve his name on the Cenotaph of the Celtic Tiger, beside the other MIAs of Fitzpatrick et al. Kill em all and let God sort them out, as the good old boys of the 82nd say.