Madam, – One of my teachers of English would get very exercised over the term “poetic licence”. “Who”, he would browbeat the unfortunate invoker of this lame explanation of poetic craft “issues poetic licences? The Government? The corporation? Is it like a dog licence, or a driving licence? Do you have to pass a test to get one, or can you just send in a stamped addressed envelope for one, with a postal order? ”. (This was some time ago.)
I now find myself asking similar questions of economic cycles. Are they unicycles, or bicycles, or even ovulatory cycles? Who makes them? Where can I get one?
The truth, of course, is that there is no such thing as an economic cycle, no more than there is such a thing as a poetic licence. There may be strange attractors in the complexity or chaos of the economy, but these are not cycles that necessarily follow one after another in a predictable fashion.
To think so is to fall for a cargo-cult fallacy that the past reliably predicts the future, even when we don’t understand what really went on in the past. Surely the fallibility of recent projections and their constant revision by soi-disant authorities makes this apparent to even the dimmest of bankers, journalists and politicians.
To suggest now, as the geniuses of our financial world are doing, that the toxic assets destined for Nama can be valued in a “procyclical” manner is, quite simply, nonsense. For the jilted lovers of the market so readily to abandon market value is perhaps unsurprising, but could they please refrain from indulging in their meaningless mumbo-jumbo with the vanishing resources of the public purse? – Yours, etc,