TD Bank economist Don Drummond told the Commons finance committee that the world is going to have a dandy hangover from the bailout/recovery spending binge now underway.
Drummond figures all those trillions of dollars will spark a wave of inflation that will have to be beaten down the old fashioned way - by raising interest rates. The good news from the former Finance Department official is that we're on track for a recovery in 2010. The bad news is that it's going to be a long and slow road back to what we understand as prosperity.
There's going to be an enormous amount of debt to get squared away and it will be in the course of dealing with it that we'll confront just what we did with that money, whether we got much value out of it.
My greatest criticism of the Harper-Ignatieff budget is its near total lack of vision. Yes it was important for the government to get billions of dollars flowing through the economy. Yes the budget seems to do that. But what's just as important is how that money is used, what we get for it.
The government that's just added those billions to our tax bills had a choice to either control where the money went, that is to spend the money itself, or it could simply give it away and lose control of it. The government chose to simply send cash-stuffed envelopes - to some. Some will get a hundred bucks or two to blow at WalMart. Some will get a subsidy to help put a deck on the cottage. Some cities and provinces will get money for infrastructure projects that were already scheduled on the books.
If I was going to build a new deck on the cottage anyway, the government "stimulus" is really just a give away. It didn't stimulate anything. If my city was going to pave some streets anyway, there's a handout without an associated stimulus. In those cases, the government is pledging our good credit and our kids' to borrow money to dole out to the lucky few for essentially nothing. There's no stimulus to that and, worse, there's probably little to no return either.
The government could have spent that money on brand, new projects, legitimate stimulus projects atop everything else that was already on the books. It could have designated projects that would spread the benefit equitably across the country. It could have identified programmes that would enhance our society, make it greener, more effective - thing that would have produced a return to the taxpayers for years to come. Hint - that deck on the cottage doesn't return a damned thing.
Obama's people knew what government spending was supposed to look like. Ours didn't have a clue - not the government of Stephen Harper nor the Opposition leader who supported the wastrel budget. In the result, we're not going to get the value out of all that gigantic debt that we should have. We're not going to get the basic stimulus value, the immediate objective, because a lot of this money won't wind up creating "new" activity. And we're not going to get the economic return that would offset the pain we'll all feel when we have to begin paying this off. There won't be a clean energy programme; or a modern, efficient rail system; or an electricity grid for the 21st Century. All those things that would have represented genuine investments (i.e. with tangible returns) were passed over when the prime minister and opposition leader signed off on this budget.
I'll bet it won't be a year before we wake up and realize just how badly our legislators on both sides of the House bungled this thing, how they let down Canada and her people. It's going to be a wild ride indeed, much wilder than it needed to be.
Showing posts with label Canadian meltdown. Show all posts
Showing posts with label Canadian meltdown. Show all posts
Thursday, March 26, 2009
Wednesday, March 25, 2009
Out of Jobs, Out of Money, Out of Ideas
The Harper stimulus budget aimed to create a pool of jobs to cushion jobs lost to the recession. At the time, I figured it'd take until February for layoffs to exceed Flaherty's good news estimate. I might have been pessimistic, being partisan and all, but if I was out, it was only by one month.
Parliamentary budget officer Ken Page says Canada has already shed as many jobs as Flaherty promised to create in his January estimates and there's no bottom in sight. From Bloomberg Press:
Finance Minister Jim Flaherty on Jan. 27 predicted deficits of C$33.7 billion for the 2009-2010 fiscal year and C$29.8 billion for 2010-2011. Page said those figures will instead be about C$38 billion and C$35 billion for the next two years, respectively. Lower tax revenue will lead the wider shortfalls, he said.
“Recent economic data and the Parliamentary Budget Office’s updated survey of private sector forecasters suggest a further significant deterioration in the outlook for the Canadian economy relative to budget 2009 fiscal planning assumptions,” Page said.
Harper and Flaherty are causing Canada and the Canadian people no end of pain by constantly underestimating the fiscal mess we're facing. They keep planning and budgeting for a brush fire when we're being consumed by a forest fire.
In a word, they're "incompetent." The best thing they have going for them is a complacent, timid Official Opposition headed by a man of very limited political depth and unable to communicate any alternate vision when that's what Canadians really need to hear.
Parliamentary budget officer Ken Page says Canada has already shed as many jobs as Flaherty promised to create in his January estimates and there's no bottom in sight. From Bloomberg Press:
Finance Minister Jim Flaherty on Jan. 27 predicted deficits of C$33.7 billion for the 2009-2010 fiscal year and C$29.8 billion for 2010-2011. Page said those figures will instead be about C$38 billion and C$35 billion for the next two years, respectively. Lower tax revenue will lead the wider shortfalls, he said.
“Recent economic data and the Parliamentary Budget Office’s updated survey of private sector forecasters suggest a further significant deterioration in the outlook for the Canadian economy relative to budget 2009 fiscal planning assumptions,” Page said.
Harper and Flaherty are causing Canada and the Canadian people no end of pain by constantly underestimating the fiscal mess we're facing. They keep planning and budgeting for a brush fire when we're being consumed by a forest fire.
In a word, they're "incompetent." The best thing they have going for them is a complacent, timid Official Opposition headed by a man of very limited political depth and unable to communicate any alternate vision when that's what Canadians really need to hear.
Wednesday, March 18, 2009
The End of Casino Capitalism
Don't buy the optimistic "end of recession" hype you're getting from Harper says former Bank of Canada governor David Dodge.
Dodge told The Globe & Mail that this recession is going to be a lot longer and a lot deeper than predicted by our boy economist prime minister - the supposed economist who's gotten everything wrong going back to last summer.
“I think anybody would be dreaming in Technicolor to think that you're going to get through this by the third quarter of this year.”
..For his part, Prime Minister Stephen Harper has boasted that Canada will lead the turnaround. Ottawa expects a healthy recovery that will bring its books back into surplus by 2013.
“They're not going to do that. It's totally unrealistic,” said Mr. Dodge, who is now a senior adviser at law firm Bennett Jones LLP.
...he sees unemployment climbing to above 10 per cent in Canada, as well as a permanent, painful contraction of several mature industries such as automobile production and newsprint, and a sober reassessment of investment in oil sands.
Policy-makers, especially in Canada, need to be thinking longer-term and more “sensibly” about their recovery plans, he said, rather than setting up spending plans that just paper over today's problems or “piss money down a rat hole” in the hopes of a quick recovery.
...rather than obsess on designing short-term programs that will expire in a couple of years with the aim of returning quickly to surplus, he said, Ottawa should be spending in areas where there will be a payback to the Canadian economy later in the next decade, and where governments have not been able to spend sufficiently in the past.
Unfortunately, the only people who could have forced the government to "invest" in legitimate recovery spending, real infrastructure with clear payback benefits, were the Liberals. But, instead of standing up to Harper, they chose to sign on to the Tories pathetic "middle-class tax cut and nail a deck on the cottage" stimulus budget. Thus the Ignatieff Liberals ensured Canadians would get the burden of the massive deficit spending but almost none of the reward that ought to have been reaped from it. Stephen Harper and Michael Ignatieff got together, dropped their drawers, and pissed the taxpayers' money straight down a rat hole - of course not before Mike told Steve that he was "on probation."
Read more here:
http://business.theglobeandmail.com/servlet/story/RTGAM.20090317.wrdodge18/BNStory/Business/home
Dodge told The Globe & Mail that this recession is going to be a lot longer and a lot deeper than predicted by our boy economist prime minister - the supposed economist who's gotten everything wrong going back to last summer.
“I think anybody would be dreaming in Technicolor to think that you're going to get through this by the third quarter of this year.”
..For his part, Prime Minister Stephen Harper has boasted that Canada will lead the turnaround. Ottawa expects a healthy recovery that will bring its books back into surplus by 2013.
“They're not going to do that. It's totally unrealistic,” said Mr. Dodge, who is now a senior adviser at law firm Bennett Jones LLP.
...he sees unemployment climbing to above 10 per cent in Canada, as well as a permanent, painful contraction of several mature industries such as automobile production and newsprint, and a sober reassessment of investment in oil sands.
Policy-makers, especially in Canada, need to be thinking longer-term and more “sensibly” about their recovery plans, he said, rather than setting up spending plans that just paper over today's problems or “piss money down a rat hole” in the hopes of a quick recovery.
...rather than obsess on designing short-term programs that will expire in a couple of years with the aim of returning quickly to surplus, he said, Ottawa should be spending in areas where there will be a payback to the Canadian economy later in the next decade, and where governments have not been able to spend sufficiently in the past.
Unfortunately, the only people who could have forced the government to "invest" in legitimate recovery spending, real infrastructure with clear payback benefits, were the Liberals. But, instead of standing up to Harper, they chose to sign on to the Tories pathetic "middle-class tax cut and nail a deck on the cottage" stimulus budget. Thus the Ignatieff Liberals ensured Canadians would get the burden of the massive deficit spending but almost none of the reward that ought to have been reaped from it. Stephen Harper and Michael Ignatieff got together, dropped their drawers, and pissed the taxpayers' money straight down a rat hole - of course not before Mike told Steve that he was "on probation."
Read more here:
http://business.theglobeandmail.com/servlet/story/RTGAM.20090317.wrdodge18/BNStory/Business/home
Friday, January 16, 2009
Back To The 50's - "Duck'n Cover" Time for Harpo
Like errant school children, the Harper Tories are working on talking points they hope will make Canadians believe the dog actually did eat their homework.
The theme seems to be we're not responsible for this recession, it was all somebody else's fault, we didn't make it worse for Canada and nobody could've seen it coming, not even us.
In other words there was no reason for Canada's Newly Awakened Government not to have acted these past three years as though Canada was recession-proof, despite the alarm bells that were ringing off the walls down south. There was no reason not to defund the federal government. No reason to have at least tried to introduce measures that would have reduced Canadian exposure to the looming American meltdown.
Nope, that's the past. Let bygones be bygones. Hey, isn't that the same message flogged to death by Grandpa McCain back in November?
From TorStar:
Don't expect apologies for having projected surpluses just two short months ago or for inserting into the November economic update those provocative cuts to public financing for political parties or curbs to public servants' right to strike that sparked the opposition's threat to bring down the government.
And don't expect any acknowledgment that Conservative policies – such as relaxed rules around mortgage financing brought in by the government – exacerbated the economic situation.
Instead, the tone remains defiant.
As far as Harper is concerned, and Conservatives will continue to repeat, the economic crisis "originated outside Canada's borders" and was not, as opposition critics argue, worsened by tax cuts or excessive spending by the government.
Conservatives are instructed to declare that the government's actions put Canada in a better position to weather the storm and to point to the "stable leadership" Harper has shown.
The goal is to hammer the opposition proposal to offer a coalition government if the budget fails. Expect to hear lots of Conservatives mouthing phrases like this: "The political chaos of an unstable coalition would leave our economy, unity and public institutions at risk."
It's part of a two-track strategy: Woo the Liberals, bring them into the tent, just as the government has invited provinces and municipalities to share responsibility for the budget-making. At the same time, delegitimize any coalition the Liberals might lead as a political option for leading Canada out of the crisis.
So there, sadly, you have it. Taking a page totally out of the Bush/Cheney/Rove playbook, the tactic is to simply ignore the facts, invent fanciful nonsense to use instead, and then lie your ass off until those dumb enough to believe you, do. Hey, Harper knows there's a good hunk of that type of voter to be found in the 38% who gave him the nod last time. When you really have no other choice, why not roll that dice again?
The theme seems to be we're not responsible for this recession, it was all somebody else's fault, we didn't make it worse for Canada and nobody could've seen it coming, not even us.
In other words there was no reason for Canada's Newly Awakened Government not to have acted these past three years as though Canada was recession-proof, despite the alarm bells that were ringing off the walls down south. There was no reason not to defund the federal government. No reason to have at least tried to introduce measures that would have reduced Canadian exposure to the looming American meltdown.
Nope, that's the past. Let bygones be bygones. Hey, isn't that the same message flogged to death by Grandpa McCain back in November?
From TorStar:
Don't expect apologies for having projected surpluses just two short months ago or for inserting into the November economic update those provocative cuts to public financing for political parties or curbs to public servants' right to strike that sparked the opposition's threat to bring down the government.
And don't expect any acknowledgment that Conservative policies – such as relaxed rules around mortgage financing brought in by the government – exacerbated the economic situation.
Instead, the tone remains defiant.
As far as Harper is concerned, and Conservatives will continue to repeat, the economic crisis "originated outside Canada's borders" and was not, as opposition critics argue, worsened by tax cuts or excessive spending by the government.
Conservatives are instructed to declare that the government's actions put Canada in a better position to weather the storm and to point to the "stable leadership" Harper has shown.
The goal is to hammer the opposition proposal to offer a coalition government if the budget fails. Expect to hear lots of Conservatives mouthing phrases like this: "The political chaos of an unstable coalition would leave our economy, unity and public institutions at risk."
It's part of a two-track strategy: Woo the Liberals, bring them into the tent, just as the government has invited provinces and municipalities to share responsibility for the budget-making. At the same time, delegitimize any coalition the Liberals might lead as a political option for leading Canada out of the crisis.
So there, sadly, you have it. Taking a page totally out of the Bush/Cheney/Rove playbook, the tactic is to simply ignore the facts, invent fanciful nonsense to use instead, and then lie your ass off until those dumb enough to believe you, do. Hey, Harper knows there's a good hunk of that type of voter to be found in the 38% who gave him the nod last time. When you really have no other choice, why not roll that dice again?
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