Current Affairs Economics Politics

The Big Bang Theory

Like lambs to the slaughter Seán and Síle Citizen trots forward eager to taste the sweet green grass of domestic recovery, attracted by the repeated cries of the establishment: the good times are coming back! However don’t raise your heads from engorging your bellies or you might see those thunderclouds on the horizon and feel the first patters of an approaching deluge upon your snouts.

Economist and author David McWilliams points out that while house prices (in BÁC) are on an upward slope for most people their incomes are on a far more precipitous downward slope.

“…while inflation is falling, wages are falling even faster than prices, and this means that people’s purchasing power is actually falling, not rising.

The numbers show that, even though unemployment has fallen in the past two years, so too have real wages.

This is why you feel poorer, not richer, despite the fact that everyone says there is a recovery in place. For the economy to feel prosperous, real wages have to be positive – they are now negative, and have been since 2011.

Without real wage growth, there can be very little prospect of sustained demand. Without sustained demand, there won’t be a sustained fall in unemployment.

The lack of jobs and demand means that the rate of inflation has continued to fall.

This is very worrying, because it shows us that prices in general are heading downwards, but house prices are heading skyward.

Why is this a problem? It’s a problem because your wages are linked to general prices, so as wages keep moving downwards, house prices move upwards.

This means houses are getting more and more expensive, but the only way the average person can afford a house is to borrow and borrow as much as possible, because wages and incomes are not keeping up with house prices. We’ve been here before. Don’t you remember the madness?”

Where there is a circus there are always some clowns. From the CLR:

“One can almost see the light bulbs flashing above the heads of those who thought up the latest cunning wheeze from the Reform Alliance camp. Let’s be honest, the latter formation (if that is too kind a word for it) isn’t exactly popular. The RDS shindig demonstrated that while there may indeed be those who are keen on reform, the RA’s USP was largely focused around the issue of abortion, or rather no abortion.

And it seems that lacking any genuinely charismatic figures (none even on the scale of that empathic titan Dessie O’Malley in the late 1980s. I joke, but only just) they are likely to dwindle to yet further insignificance.

So what are they to do?

Someone was looking at the polls, studying the elections and – ta-dah! Here we are presented with an Independent Alliance.”

A political party under the leadership of individuals who worship at the transitory altar of property booms and foreign direct investments? Would could possibly go wrong?


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