America Has Wiped Out Its Middle Class. Time for Canada to Follow Suit?

That's likely the message Harper FinMin and garden gnome Jim Flaherty will get when he gets together with his future employers top Canadian CEOs for his annual summer "policy retreat."   Flaherty, it seems, wines and dines the Big Boys and they return his generosity in the form of legislative wish lists.   Here's what they dished up last year.

According to documents obtained by the Globe and Mail, at last year's sessions the minister was urged to adopt measures to reduce the pay of Canadian workers, limit union power by enacting U.S.-style right-to-work legislation, and allow two-tier health care.

Labour issues surface in several discussion categories, with the general view that Canadian workers are overpriced.

"Need to address wage differentials in labor market among countries; we are losing jobs to other countries," reads a point-form summary of one of the discussions.

"Right to Work legislation should be pondered as it creates inequities in productivity; US example was provided."

There were also calls for a higher retirement age and to open Canada's shipping, telecom and airline industries to more foreign competition.

The CEOs are certainly bold enough but they know that, in Flaherty and Harper, they're dealing with the most corporatist government in Canadian history.

What Business Does a Sitting Government Have Proclaiming Policies Another Government Would Have to Introduce?

When Harper was in Davos he was practically busting to tell the high priced nobs that he was going to trim Canada's sails, especially our nation's Old Age Security programme.   That promptly backfired sending Tory MPs slithering for cover into their favourite dark places.

Not to worry.  Tiny Jim Flaherty, Harper's pet leprechaun, now assures us that old age pension security won't be cut until 2020 at least, maybe not even until 2025.   What?  In other words, some future government will have to implement the legislation, not Harper's.

Gee, I'd really like what passes for a government today to focus on the very real problems confronting our land today and stop dicking around with something some future government may or may not do.  Sheesh.

Flaherty Issues "Stern Warning" To Americans

Harper minion, the Diminutive Jimbo Flaherty, is said by the Montreal Gazette to have given a "stern fiscal warning" to the United States.

Tiny Jim, to take a Dickensian liberty, told New York's business elite that America must tackle its deficit if financial markets are to retain confidence in America's ability to manage its debt.

Evidence that this was just more meaningless lipflap from Tiny Jim (copyright) was the noticeable absence of any suggestion that the US stop spending more than the rest of the world combined on military expenditures, wrap up a couple of its pointless wars or start taxing the rich like they were rich.  I guess it's okay to point out a nation's deficit but bad form to mention what lies behind it.   Way to go Jimbo.   Now, hurry back to Ottawa.   Steve wants his limo washed in time for the weekend so you've got some real work to do.

Why Are Harper & Flaherty So Damned Clueless?

A lot has been written lately of the succession of astonishingly erratic and offmark economic statements we've been getting these past months from what passes for a prime minister in Canada today and his diminutive finance patsy, L'il Jimbo.

It's gotten to the point that, whenever either of them pronounces on the economy, you know that, if what they're now telling you is right, it'll be a first. Time after time after time they've weighed in and got it wrong.

So, what gives? Harper is supposedly a trained economist. Flaherty is a veteran finance minister with both federal and provincial experience. The two of them sit atop a sea of accountants and actuaries and economists and all other manner of financial wizardry.

My guess? There's a deliberate disconnect between the political side and their advisors. I think Harper and Flaherty have been discarding the forecasts and clarion calls of their staffers and, instead, shaping their public statements to conform to their political purposes. I think they've been telling us only what they wanted us to hear.

When it comes to respecting the public and treating them with candour, Steve feeds them a diet as lean on truth and rich on fantasy as he thinks he can get away with. And these days, with such complacent, even collaborative Canadian media cartels, he's pretty much got a blank cheque to lie his ass off without being called on it. And so he does. Who needs to worry about honesty when you've got CanWest Global, Bell Globemedia and SunCor curled up around your feet before the hearth?

It was obvious in what L'il Jimbo was saying yesterday that one of two things is going on with Harper/Flaherty. Either they've been getting really lousy advice or they've been getting good advice but ignoring it so they could game the forecasts for their political advantage. From Toronto Star:

"Just three weeks after saying that the federal budget was on track for modest surpluses, Flaherty admitted there will now be a deficit of at least $5 billion next year.

"It's quite clear on the basis of the forecasts and the continuing declines in the forecast that there will be a deficit," said Flaherty in Saskatoon after meeting with his provincial counterparts at a brainstorming session.
He also admitted for the first time the economy would suffer an outright contraction in 2009 – the first in 18 years. He said economic growth next year would decline by 0.4 per cent. In his November economic statement, he said the economy would show slight but positive growth of 0.3 per cent in 2009.

Come on Jimbo. Three weeks to go from "modest surplus" to billions in deficits next year? At this rate what is Harper's fiscal leprechaun going to drop on us after the new year? I'll bet we haven't heard the truth yet from Flaherty or Harpo.

Harper's Ever Worsening Economic Forecast Of The Day

Well, there it is. The Globe has Harp's Minister of Funance saying two years of recession is possible. Canadian Press has the very same Minister of Funny Forecasts warning that we're in for four years of recession. Did Flaherty goof up? Wasn't he supposed to save the "four year recession" warning for tomorrow?

But fear not. Weeks after Obama put together the best and brightest economics minds in America to help him forge a recovery plan, Flaherty has finally gotten off his backside to announce he'll be going to Canada's corporate elite, apparently that's good enough for True Northerners.

What in hell do Canada's business czars know about putting together a federal budget? You'll be playing this time for the matching lawn furniture. The answer: you guessed it, SQUAT! They're Boardroom Barons, not economists, Jimbo. If we wanted the country run like a second-rate, mismanaged corporation - oh wait, I guess 38% of us did vote for just that.

Anyway I'm sure L'il Jimbo's "experts" will give him all the advice he needs on how to recession proof Bay Street. As for you and me? Ah, who cares?

Why Do Flaherty and Harper Hate Canadian Homeowners?

A good article in today's Globe & Mail accompanied by a good interpretation by Garth Turner at his blog. The Fox News-style title pretty much sums it up.

The story uncovers how Harper's neo-con ideology, i.e. if it's American, it's gotta be good for Canada, along with Flaherty's legendary incompetence combined to subvert Canada's housing market. What they did is something they'd had in mind well before they defeated the Martin government - the zero-down, 40-year term mortgage. They made sure it was in their very first budget in 2006.

"New mortgage borrowers signed up for an estimated $56-billion of risky 40-year mortgages, more than half of the total new mortgages approved by banks, trust companies and other lenders during that time, according to banking and insurance sources. Those sources estimated that 10 per cent of the mortgages, worth about $10-billion, were taken out with no money down.

The mushrooming of a Canadian version of subprime mortgages has gone largely unnoticed. The Conservative government finally banned the practice last summer, after repeated warnings from frustrated senior officials and bankers that the country's financial system was being exposed to far too much risk as the housing market weakened."

In keeping with their standard Karl Rovian practice, Flaherty praises the Harper government for banning these toxic mortgages while conveniently omitting that they were his idea, his creation in the first place.

At the time, Mr. Flaherty announced that the government was opening up the market to more private insurers.

"These changes will result in greater choice and innovation in the market for mortgage insurance, benefiting consumers and promoting home ownership," Mr. Flaherty said.

The new rules encouraged the entry of U.S. players such as American International Group [you may know them as AIG, the outfit that got a quarter-trillion dollar bailout from Washington]- the world's largest insurance company - and Triad Guarantee Inc. of Winston-Salem, N.C. Former Triad chief executive officer Mark Tonnesen, who spearheaded his company's aborted push into Canada, said the proliferation of high-risk mortgages could have been mitigated if Ottawa had been more watchful.

"There was a lack of regulation around the expansion of increased risk," he said.'

Garth Turner warns we'll all pay the price of the Harper/Flaherty ideology over the next year or two:

"One year ago, in December 2007, I sat and wrote the book, “Greater Fool” which spelled out in detail my problem with these Canadian subprime mortgages, and predicted the outcome – a US-style real estate contagion which would sweep Canada. Unfortunately, I was right. It is now infecting every city. It will grow more virulent as the economy weakens and unemployment spreads. By the time the real estate market bottom in perhaps a year, maybe longer, values will have dropped by up to a third more."

I have my own take on this, one honed during the years I practised bankruptcy law. I've seen this story far too many times - a newly married couple wanting to start their family, a rising real estate market, real desperation to get a house for the kids to come. With the best of intentions (who intends their own financial ruin?) they find a house that they can afford but just barely. They take the plunge hoping that the market won't falter, that neither of them will lose their job, that they'll somehow hold on until their incomes grow and their debtload lightens.

Now imagine that same young couple when a 40-year term, no down payment mortgage is dangled before their eyes. No money down, no need to wait. 40-year term, either lower but still barely affordable payments or more house. They lunge at the bait and that's just what Harper and Flaherty and their pals at AIG were counting on. Suddenly you have an overheated real estate market in which first time homebuyers are spending an estimated 78% of their combined, after tax income on servicing their mortgages. That's the figure reported by CBC for first time homebuyers in Vancouver last year.

I want to repeat that again. SEVENTY EIGHT PER CENT of COMBINED AFTER TAX INCOME.

And, while you may argue that these subprime borrowers got themselves into it, that they're the authors of their own misfortune, the Conservative policies that made this possible have wreaked damage that has spread throughout the real estate market.

Especially today with Republican conservative subversion of global securities/stock markets, many Canadians are seeing their retirement portfolios crater before their eyes. Now Harper/Flaherty have undermined their fallback retirement asset, their home equity. They did it in the deliberate pursuit of a mad, uber-right ideology and we're all going to pay dearly for that.

I want to be hypothetical for a minute. If Stephen Harper and Jim Flaherty had any integrity - any integrity - they would take responsibility for the havoc they have wrought on the Canadian public and they would resign not just their offices but their seats in parliament. Yet Stephen Harper is bent on doing to our constitutional structure pretty much the same thing as he's done to our real estate markets - smother it in a thick layer of his greasy ideology. The man has to be stopped and driven straight out of Ottawa before he can make our lives and our country that much worse.

http://www.theglobeandmail.com/servlet/story/LAC.20081213.MORTGAGE13/TPStory/National

There's Been Good Times, There's Been Bad Times

Curious, innit? Ontario, which for decades has fed the national equalization machine now takes an economic hit, becomes a "have not" and just in time to see the federal Tories rejig the deal in a way that'll slash Ontario's due.

As Ivison reports in today's National Spot, under Flaherty's 2007 reform, Ontario should have been in line for about a billion in equalization benefits. Under Flaherty's 2008, 'election safely in the bag' reform, Ontario will be cutback to something in the range of 200-300 million instead.

That's Harper and Flaherty's thank you note to all those naive Ontario voters, their way of saying, "You play ball with us and we'll stick the bat straight up your ass." Quebec is apparently in for its own unique form of proctological retaliation from the Harpies for denying our Furious Leader his rightful majority government.

This year's lineup of "have" provinces comprises B.C., Alberta, Saskatchewan and Newfoundland and Labrador. You Libs should think about that when you shortlist your leadership candidates to Ontarians and Quebecers. Curious, innit?

Another Harpie Heading for the Toolbox?

I never understood Jim Flaherty.

There was always something about the guy that didn't add up, that seemed somehow off. He wasn't what we've come to expect in a Finance Minister. He wasn't that essential bit reserved and considered. Instead he more closely resembled the beer hall brawler on a Saturday night at closing time.

Flaherty exuded a dull and brutish tone, presenting a character that seemed to constantly embrace a simmering belligerence. He always struck me as a tad unhinged. Come to think of it, that could equally well describe Harper's EnviroMin, John Baird. Maybe there's something in that flawed character profile that genuinely appeals to our Furious Leader. But I digress.

In the Toronto Star, Chantal Hebert ponders what may be, for Flaherty, the end of the road:

"In the week since Bernier's resignation, Flaherty's future as finance minister has become the focal point of the upcoming cabinet shuffle. One way or another, his fate will reveal more about Stephen Harper's mindset in the lead-up to a possible fall election than any other cabinet move.

Earlier this week Flaherty's cabinet future, rather than Bernier's romantic past, was the prime topic of speculation at Stéphane Dion's end-of-session garden party. Almost to a man and a woman, senior Liberals expect the Prime Minister to seize the pretext of an unexpected shuffle to replace Flaherty with the less abrasive Jim Prentice.

With cabinet fever running rampant within Conservative ranks and with at least a half-dozen ministers pining for new assignments, the impetus for a major shuffle has been gaining momentum daily on Parliament Hill.

But the finance minister is a central figure of the cabinet. His role is ultimately more pivotal than that of the foreign affairs minister; to replace Flaherty at this advanced stage in the life of the government would be a delicate operation.

On the other hand, if the Conservatives do want to run as the team best equipped to deal with a flagging economy in the next election, Harper has no interest in going into the campaign with his current finance minister.

Flaherty may not have been the only minister from Ontario to engage in a war of words with Queen's Park but it was his vocal part in the federal attacks on Dalton McGuinty that seemed to finally gel the province's public opinion and send Conservative popularity on a downward spin this spring.

With satisfaction with the government declining in tandem with public confidence in the economy, Flaherty's credentials as a former Mike Harris minister do little to dispel the perception that Harper's regime is short on sensitivity and compassion."

But we shouldn't be too hard on Jim Flaherty. There's no way he could have gotten away with his bellicosity toward Queens Park except with Stephen Harper's approval.

Maybe we should pity Flaherty. After all, he's coming out of this looking a bit like the loser in one of those internet street brawls where the rubbies beat the hell out of each other for a bottle of hooch.

What is Flaherty Playing At?

Sitting out here on Vancouver Island, I view Ottawa/Ontario politics with a degree of puzzlement. It's more than a degree, I just don't get it.

Now, as I understand it, Harpo's FinMin, Flaherty, is a recycled dud from the former Ontario government of Mike Harris, the outfit that surprised the good people of that province with a parting gift in the form of a $5-billion deficit.

There are certain things we all know. Globalization hasn't been good for North American manufacturing sector, this we know. Stephen Harper really gets off on playing Rovian wedge politics, this we know. Harpo can't stand Liberals, federally or provincially or even those who just show up at voting stations, this we know. SHarper's minions, that is to say his cabinet ministers, don't wipe their backsides without Steve's say so, this we know. Furious Leader has two eyes; one he uses to scan the country in search of carrion, the other he keeps focused on his home province and future energy superpower, Alberta, this we know.

So why is Harper using his trained chimp, Flaherty, to pick a fight with Ontario premier Dalton McGuinty? Is it because Harpo has been too busy defunding the federal government just as McGuinty has come, Oliver Twist style, asking for another bowl of gruel? Is that what this is all about? Does Harpo want to make Ontario voters believe their province's economic woes are their Liberal government's fault? What is it?

Now you know that a guy with a name like McGuinty who resembles nothing so much as a reincarnation of Ichabod Crane, doesn't come to power unless the outgoing bunch really screwed the pooch somewhere. The voters have to be some peed off to do that. Flaherty was, of course, a player in that reviled government so why, of all people, is Harpo using him to wage war on Ontario?

Sorry, I don't have any answers. Please enlighten me.