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.