I’m sure you’ve seen it, but Michael Burke has a very good post on the Irish government’s current deflationary policies:

The main problem in the economy remains the slump in investment. Gross fixed capital formation has fallen by €31.7bn from its peak. This accounts for more than either the decline in GDP or GNP during the recession. It is down for 12 consecutive quarters, falling again in Q1, down 30% from Q1 2009. The ESRI is forecasting that it will fall by a further 24% in 2010 (p.10, Table A). This would leave investment at just 12.5% of GDP. By comparison, even with the slump in investment elsewhere, the OECD average investment rate in Q4 2009 was 18.4% of GDP, and is expected to pick up somewhat later in the course of this year. At this rate, the genuine MNCs based here might have to reconsider their position.

If the ruling ideology bore any relation to reality, this could not be happening. ‘Expansonary Fiscal Contractions’, ‘crowding in’ and similar nonsense are premised on the idea that, as government withdraws from economic activity, the private sector would fill the gap, and more efficiently. It is doing neither. It is further argued that cutting government spending, both current spending and capital spending will reduce the deficit and the debt. But the decline in the deficit still remains next year’s forecast away and the debt continues to climb. Meanwhile hundreds of thousands of Irish women and men are not working.

Neither is policy.

Coincidentally enough the post is called ‘The future looks like the past’.