Listening to Flaherty this morning, and worrying. - Macleans.ca
 

Listening to Flaherty this morning, and worrying.

JOHN GEDDES


 

Listening to Flaherty this morning, and worrying.

Update:
Speaking Montreal moments ago, the Prime Minister amplified Flaherty’s morning message about a sprawling, ambitious budget, in which anything is possible. “We are examining hundreds of options,” Stephen Harper said.

Hundreds?
He went on to sketch a budget that will simultaneously attempt short-term stimulus and ambitious steps aimed at shoring up Canada’s post-recession competitiveness. “We really do have an opportunity here,” he said, “to do some unprecedented measures to build on our strengths and to emerge stronger than ever.”

The combination of short-term defensive actions and long-term opportunistic moves will, he said, result in “one of the biggest budgets in a long time, a comprehensive budget to deal with a range of not just economic problems and challenges, but economic opportunities.” Yet this massive blueprint is being drafted fast against a backdrop of shifting understanding of the economic situation, which Harper said “has frankly changed every couple of weeks.”

Jim Flaherty was at his phlegmatic best at his news conference in Thornhill, Ont., this morning. Yet stolid as he was, I couldn’t take much comfort from his message. He made it sound like everything is on the table as he conducts cross-country pre-budget consultations. Rather than conveying a sense of strategic focus, he gave the impression of a man trying to maintain control of a bewilderingly wide-ranging policy process.

If you were under the impression that the Jan. 27 budget might be a surgically targeted stimulative response to the economic crisis—a gush infrastructure spending, an injection of tax relief—think again. I counted at least a half dozen significant thrusts in Flaherty’s relatively brief remarks, which he delivered with this catch-all warning: “We are in uncharted waters. There is a high degree of uncertainty.”

Flaherty started out by suggesting that getting banks and other financial institutions lending more freely is his top priority. “The Number One concern that has been expressed to us has been access to credit.” He spoke of federal financial agencies, including the Export Development Corporation and the Business Development Bank, meeting with the banks today to sort out what can be done. Sounds like taxpayers, one way or another, will be backstopping more loans.

When it comes to more direct government stimulus, Flaherty unsurprisingly said infrastructure and “tax measures,” by which he must mean cuts, are the “two primary areas.” He did not touch on the obvious problems with either. On infrastructure, big projects require long planning, and hence it is unclear enough can be done quickly to have the desired impact this year. On tax reductions, economists warn that many Canadians (although not the poor) would, quite prudently, use them in bad times pay down debt or build up savings, rather than buy stuff.

Flaherty also signalled that Ottawa is receptive to pleas for the provinces and others for special programs to help those thrown out of work during the tough months ahead. “We are going to have substantial job losses. Now, what’s the government’s job when it comes to dealing with that? We need to respond to the needs of people who will lose their jobs this year,” he said. “We have lots of suggestions being made to us in the course of the consultations with respect to employment issues, with respect to retraining issues, with respect to work sharing—all important matters to help Canadians get through what is going to be a difficult year with respect to employment.”

Hard to argue with this thrust, but retraining is not on any list I’ve seen of good ways to stimulate a faltering economy. Flaherty is describing measures that might help the jobless find work when things pick up. Similarly, the massive help for the auto sector, along with any other support directed at troubled industries, has to be seen not as a way to fight the recession now, but an attempt to position these sectors to thrive whenever the economy recovers.

And there’s no doubt that a lot of ideas for pumping money into business and public projects are being contemplated. Flaherty listed four other cabinet ministers who are engaged in their own pre-budget consultations, paralleling his own. It’s hard to image they won’t come to him with a grab-bag of ideas, some worthy, some dubious. Sorting it all out in the mere two weeks before the budget will be a daunting task. And there are other major policy questions vying for Flaherty’s attention, not least of which will be responding to the study of securities regulations that he announced will be released in Vancouver next Monday.

It all adds up to a blur of activity, on a confusing array of only loosely related ideas, in an unusually compressed pre-budget period, as horrible economic numbers just keep coming. And another thing: the usual pre-budget niche pleas for money for special projects haven’t stopped flowing in just because times are tough. Flaherty’s news conference ended with a local reporter’s question about possible federal funding for a medical devices development centre. “Yes it’s one of the items that is under consideration,” he answered. “We’re in the process of developing the budget, and decisions have not been taken with respect to specific projects.”

We can only hope that Flaherty and his officials have the discipline to take all this and make something coherent of it. It’s a test unlike any I’ve seen a finance minister face, including Paul Martin is his mid-’90s deficit-fighting budgets. Then the economy was growing and the goal was sharply defined. Today, the economy is contracting and, worse, exactly what the budget is supposed to accomplish has still to be made clear.


 
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Listening to Flaherty this morning, and worrying.

  1. “On tax reductions, economists warn that many Canadians (although not the poor) would, quite prudently, use them in bad times pay down debt or build up savings, rather than buy stuff.”

    I don’t understand why economists, and many others, have a problem with people paying down their debts. A big part of how long/hard recessions are is peoples moods and how they see their future and the future of others. If people start making some headway in paying down their debts, that’s a good thing, and their mood is likely to change for the better. Trying to get people to spend even more money they don’t have, and to feel good about it, is a fool’s errand now that mood has changed to doom and gloom.

    I think Flaherty and his scattershot approach is correct because no one has a clue what policies will work, or won’t work, so not putting your eggs all in one basket is sensible.

    • “I don’t understand why economists, and many others, have a problem with people paying down their debts”

      Go into debt to pay down debt. But don’t stimulate the economy? Agree this is good in the long term but irrelevant in the short term.

      “I think Flaherty and his scattershot approach is correct because no one has a clue what policies will work, or won’t work, so not putting your eggs all in one basket is sensible”

      This is perhaps the funniest thing I have read today. Sounds a bit like a Government Hedge Fund.

  2. I believe that the wildcard for the conservatives is social welfare spending (education, health, welfare). You can bet that the scale Flaherty is using doesn’t have social welfare spending as it’s fulcrum. The constant deliberations that are undoubtedly stressing his mind revolve around deciding cuts to our social programs in a shotgun manner, unannounced cuts/politically charged cuts, that he uses to weight his scales. If the money spent on social welfare spending fails his stimulus spending will not not be as successful. The conservatives don’t have enough heart to make social welfare spending a priorty and firmly keep it out of the balancing act of stimulus spending. They need the other parties to tell them what is really needed, not just for stimulus spending but to maintain efficiences in social welfare spending such that results are assured. Here is where the Liberals, NDP and Greens show why they have to wait until the next election to take power. They don’t have the social welfare spending worked out.

  3. jwl – The point is to stimulate economic activity, which requires people to buy things. If the money just goes to pay debt, than we’re racking up public debt so that people can pay private debt. What’s the point of that?

    That isn’t to say that tax cuts could not have a role in a stimulus package, but they should by no means be the primary instrument.

    • I don’t believe stimulus spending does what it’s proponents claim it does. Trying to get people to spend money when they don’t want to is a mug’s game as far as I am concerned.

      In my scenario, people are at least paying off their debts. In stimulus spending world, private/public debts continue to rise, and that’s supposed to ‘help’ us even though debt is what got us into this mess in the first place.

      • However the government can buy things that are needed in the long-term, say new MRI or CT Scanners, new buses or train cars or locomotives, new helicopters and boats for the coast guard, etc.

      • I dunno – the whole debt/savings meme is more a US thing, with its large, persistent deficits in the current account and the government balances. That’s not the case in Canada. Our main problem is that the US has a problem.

        • I gotta go with JWL here. If people choose to pay down debt, then you’d think that the banks are happy they aren’t losing money & will be more willing to lend more money. One of the problems is the banks are having liquidity issues, and it’s probably better for the banks to solve this by actually generating cash flow on their lending (ie, people paying down debt) than being bailed out or by inflation-generating-ly low central bank rates.

          The thing is, government can borrow money at a fraction of the cost that you and I and all but the largest corporations can. Government debt costs less than consumer debt, & not being in debt means we can be more useful to the economy. If I didn’t have to pay half my salary in student loans I’d have a lot more money to spend on things like restaurants & entertainment, & make more investments. These things generate tax revenue, and that pays down public debt. Would you prefer to pay more money on interest on your own debt, or a smaller amount on taxes to pay collective debt? I don’t care if I’m giving my money to the banks or the government, I just want to give less of it away.

          Exports drive a pretty substantial chunk of our economy. If our trading partners stop buying less, we’d have to increase our domestic buying power by an awful lot to make up for it. Like, double or triple it. Not gonna happen overnight.

          Flaherty’s approach sounds almost Galbraithian. Admitting that your theories might be wrong & that the elite (pick your favourite one — government, business, intellectuals, yourself) don’t always have all the answers . . . not a good little neocon. If he actually understood his supposed core ideology that would have to hurt, but being an ambulance chaser in his former life he probably doesn’t feel remorse over ideological issues.

  4. We’re screwed, no two ways about it!

  5. If Flaherty and Harper were doing their jobs, they would not be in this scattered state. They should be hard at work with the opposition, hammering out a jointly supported budget. They seem to have learned nothing from the crisis they created and are acting like proroguing parliament is just another ordinary event. Given all this, one can expect that the budget is not going to go over well.

  6. I only hope that someone is able to clone, and import, my new hero … ,er, heroine … Elizabeth Warren.

    • Importing heorin, on the other hand, would be more of sedative than a stimulus.

  7. After 30 years of mystifying neoliberalism, I find it somewhat comforting to discover that the people in charge of things really don’t know what they’re doing, which is what I’ve suspected all along.

    I’m far more of a neoliberal than a socialist, but in practise, it’ll never work, as long as a complex system like the market is denied vital information (particularly feedback) in order to function properly. There’s plenty of blame to go around, but I’m settling on what a few thinkers (such the social theorist, David Harvey) have suggested: that this has been the result of a class war ignited in the early 80’s by Reagan-Thatcher dressed up as the expansion of freedom and economic populism.

    • “ignited by Reagan-Thatcher”? What? I thought it was Harper-Bush!

      • No, it started with Reagan-Thatcher (which in itself was a reaction to more command-and-control economic policies of welfare liberalism). It could be that both of them honestly thought neoliberalism was the route freedom and prosperity, but whenever that happens, the elite are quick to take advantage and when that happens, the noblest ideas get corrupted.

  8. Good thing Flaherty is such an accomplished minister. I’m sure he’ll handle this challenge well. After all, he did such a good job with a booming Ontario economy, then such a good job with a booming Canadian economy…

    And don’t forget how we got here. We could have had a functional sitting of the House this fall, but the Conservatives instead called an unnecessary election and then manufactured a political crisis.

  9. Huh, and here I thought it was due to massive public investment in the private sector in funds which nobody really knew what they were investing in, namely in bundled loans which were huge risks. Then since all the investment firms had been lending out many times the assets they controlled when the bad debts came due, suddenly the financial sector was overextended and everyone scrambled to cover the bad debts which dried up credit and liquid capital.

    I should known it was class warfare and subconscious sociological zeitgeist instead. God I hate Hegel and his legacy. I hate that people are thinking that a stimulus package is going to psychologically trick people into acting in a way that is against their interests for the good of the economy. I hate the ethics of it, and I hate the fact that people think it is going to work.

    I especially hate the fact that people can’t seem to comprehend that the economy has grown massively in the last 20 years based on speculation, and not on tangible assets. Since it wasn’t based on anything real, it is going to actually shrink back to tangible assets. You can’t stimulate this kind of economic problem because nobody is having kids, everyone’s personal debt is sky high with no tangible savings and assets (besides perhaps the theoretical value of their house). There is no long term plan for economic development, and the western economy is based on speculation and service rather than product (though Canada does better in the last regard than most western countries).

    Contrast this to the great depression, where largely people had 3-12 kids, a lot more people owned assets which they could draw some sort of income from (since the majority of the population was rural), they didn’t have nearly the amount of frivolous debt, and corporate investment was a lot more centralized among the WASP oligarchy. In that case, yes if you want to spur economic investment, there are reserves to draw upon to get people to invest and spend.

    The fact that people don’t seem to realize that this is a completely different kind of economic situation absolutely baffles me. The only thing the stimulus is going to accomplish is to fritter away the money to various corporations and special interests, and at best absorb some bad corporate debts so their management can keep doing business the way they’ve been doing it.

    Whenever you introduce public money to prop up an industry, generally people keep doing business the way they’ve always done business whether it is sustainable or not. It is not because they are malicious or lazy, but because that they’ve done is what they know how to do. The industry does not change its management or how it manages its companies, and gradually the industry shifts to how it actually makes its money, lobbying the bureaucracy and parliament. Eventually the public money dries up, and everything collapses anyway. Rather than spending it on infrastructure that a new company or new investment can use to grow the economy, it has all been tossed away.

    All my fellow citizens are morons, especially the ones we’ve elected to lead us and their advisors.

    • I can’t really disagree with any specific point. I think there might be a good argument that it was something resembling class issues that allowed the situation you described to develop, though. What else do you call giving complete & unfettered control of much of the world’s economy to a tiny group of “managers” who reward themselves like kings & who don’t have to face the consequences of their actions. The better parts of Lenin would be more interesting than Marx in this regard. Marx never really grasped international trade.

      I wouldn’t agree that all of the “growth” has been imaginary or speculative. Certainly some of it has been, but a lot of it has been the classical Adam Smith comparative advantage via international trade type. Part of what’s been going on in the last decade is our elite not comprehending that this type of growth may be reaching its peak. I think a lot of it has to do with the fact that we made huge “investments” in society during the the New Deal era (improved education, health care, infrastructure, etc.) , and with the rise of Reagan/Thatcher neoconservatism, we’ve made massive withdrawals & are now in “debt”.

  10. After 8 years of Harris and Flaherty in Ontario, I understand very clearly what the Tories mean by tax cuts: starve the treasury to then starve social programs. It didn’t work in Ontario, and it doesn’t work for Canada. This is the neo-liberal mantra of ‘tax cuts, deregulation and privatization’ that has been pounded into our gullible heads for the past twenty five years and that has got us into this mess in the first place.
    Of course they’re floundering; their entire economic philosophy has proven to be bankrupt (literally) but they are clinging to their ‘free market’ illusions despite the reality on the ground. I wish another party, any other party, was in charge at this crucial time.

    • How about an election pitting the Coalition Party of Toronto, Ottawa and Montreal against the Conservative Party of Canada? Let the people decide!

  11. Yes, because the last 25 years have also proven that a command economy is the rock on which a free, happy and prosperous society can be built.

    What is wrong with you people? You’ve borrowed a lot of money since the 70’s at the private, public and corporate level and now it is time to pay it back. It isn’t a grand cosmic struggle, or an apocalyptic vision, but a necessary correction. It is going to be rough for a lot of people, but do people really think that you can simply have an expanding economy forever without an increase of population and a service based economy?

    • No, Terry. Apparently we the people and politicians just want the bill to be deferred until we are no longer alive. When I hear the talking heads go on and on about the virtues of massive deficit spending, over several years, in order to sustain just a wee bit longer what is actually not sustainable, I remove my agnostic hat and pray there is a hell for these evil thieves preying on the next generations.

      We have to update the sad joke: a trillion here, a trillion there, pretty soon you’re talking real money.

      • Right you are, MYL: those next generations will need the money to deal with the imploding climate you want us to leave to them.

        • Jack, I bet you three trillion US dollars that, in 2130, the City of New York will NOT be the Lost Undersea City of New York Thanks to Global Warming. You in, bud? Don’t worry, that’s not too pricy a bid. Just follow the helicopters throwing out cash over the landscape later this year; you’ll be good for the wager by then. Of course, a dozen eggs costing 45 thousand US dollars won’t be so fun.

          ++Early-mid 20th Century USA solution: print more money.
          ++Modern Zimbabwe: print more money.
          ++Early 21st Century Western Developed Nations: print more money.
          Conclusion: Those who do not study history are condemned to repeat it. Those who DO study history can’t seem to think of anything else anyways, either.

          • Gambling with your great-grandchildren’s future, MYL? I’m shocked, shocked.

          • Actually that is one solution for US problems that I haven’t seen mooted: deliberate hyperinflation. Which, if it happens, would see me take that $3 trillion bet immediately.

          • Gambling with your great-grandchildren’s future, MYL?

            Nope. Leave our descendants out of this. You and I have a date at Times Square, July 4, 2130. I’ll be the one with the satisfied (but toothless) smirk. You’ll be the one with the snorkel and flippers which, to your disappointment, will be dry.

          • Great, see you there. I’ll be on the TGV from Toronto, getting in at 11:10:43am.

        • Right you are, MYL: those next generations will need the money…

          Two possible answers:
          (A)
          Depending on how much pillaging our elected representatives have for the future, I may be getting my kids spayed and neutered.
          (B)
          Bloody hell, it’s their money.

          I keep waffling between one and the other.

    • “It isn’t a grand cosmic struggle, or an apocalyptic vision, but a necessary correction.”

      I think it is an apocalyptic vision….for those people who believe that there is no way for anything to have value unless there’s a market for it (which confuses value with *price*).

      That’s not the really wealthy however. They know the difference between value and price. They just don’t want a critical mass of population to figure it out.

      This necessary correction, at best, will just be a return to the status quo.

      • Hey, I’m all for a stable pastoral existence where people don’t consume like mad dogs to try and get an imitation of the good life.

        You know what’s best for curbing excessive consumption? Actually living within your means. If we have an economy that is actually an economy instead of one that is speculated far beyond its value and underwritten with easy credit, then that will do more to curb global warming than any number of bureaucrats. It would also curb massive imports of goods from countries where the regulations are shoddier than our own, if we spend our money carefully.

        Now, it would be a good time to examine how the markets work, and take a good 5 years or so to do a thorough examination of what institutions you want to put in place to monitor public trading of the credit and global stock market, and make a commitment over the next couple decades to revisit it every once and awhile to ensure things are running as they should. It would be nice if the people would learn from this and act like adults, and learn that you have the primary responsibility of how and where you invest your money, and that you should invest in what you know and the people you know. It would be wonderful if people didn’t think wealth could be generated from nothing in the long term.

        But nobody is ever going to learn this any time soon, because people are far too spoiled, and running around screaming about the end of civilization is far more interesting than balancing their accounts, training themselves in the skills necessary to run a household, and carefully building a life within their means with an eye to developing a fortune based on long term interests that your children, rather than you, might be the beneficiary of.

        It will take times getting a lot harder than they are for that lesson to be learned though.

  12. No sense at all. Canadians have to have real purchsing power with real dollars. Not more access to credit. Paying down personal debt is the only way to go. Credit card interest also has to be lowered and controlled. Pass legislation to lower credit card interest and at the same time cut the limit Canadians on the amount of debt they can carry on credit cards.
    We have lived for 20 years with companies and financail institutions pushing credit down canadians throats. Now is the time to live within our means. Bank and credit card companies must be controlled or we will all go down the tube.

    • ?? Come to Maclean’s comments for economic insight ?? Like getting a lecture from Grandpa.

      • Or “lip” from punk kids?

  13. People who earn large salaries need to kick back to the rest of society so that we can have services we need like:more hospital beds, clinics, public affordable housing for low income people, living wages and ofcourse more and better innovative public transit.
    If we don’t pull together and pool our resources we are doomed.
    Eating high off the hog is no longer the way to behave. Nor is pulling into Tim Horton’s for morning coffee and donuts while idling.
    Government officials and executives, MLAs ,MPs, all of you can cut back on your salaries and expense accounts.

    • Wow, it’s solved! Close the drive-throughs at Timmy’s, and this crisis is averted. Phew!

      I trust you put that as “other” free-text at Flaherty’s suggestion-box website. Thank heavans he opened up that online consultation with Canadians for the type of innovative thinking you likely wouldn’t get from anyone with at least a basic understanding of economics.

      Are you one of those generous high-wage earners or government officials who will be “volunteered” into your utopian project? Or are you just helping yourself to other people’s stuff?

      • sarcasm is so becoming….. gee, I wish you were in charge

      • I am a human being sharing this planet with others and trying to take care of it by walking gently on the earth with care and concern for my fellow beings.
        What are you?

  14. The feds may get some money back when the CAW succeeds in driving GM and Chrysler out of Ontario.

  15. An option that is probably not on Flaherty’s table but should be: when he talks of running a deficit, why doesn’t he consider what government used to do in the Bretton Woods days, when economies were not based on roller coaster bubbles and were much more stable, and have the Bank of Canada start creating some money, real or as debt, to finance the deficit at nominal interest, rather than having banks finance the debt at commercial rates? (no, that is not necessarily inflationary, if the commercial banks have their money-creation powers reduced to the same extent the Bank of Canada is used – it’s a much deeper story, more here – Banketeering http://www.rudemacedon.ca/banketeering.html )

    And second – he notes there are opportunities to be had in times like this – this is surely true. Imagine a true visionary here, opening the doors to a post-capitalist society (which we really need to do if we are to save the planet) – imagine a society where, to make up for the lack of jobs since so much can be done by machines and technology, and so much ‘work’ is destructive and unnecessary, the average work week was reduced by 50%! This would involve several new steps, of course, as ‘work for the sake of work’ became a thing of the past – there is lots of money and wealth in the country, and being produced each year, and a sustainable society needs to share that wealth amongst its people. This would be bad for the super-wealthy parasite class, of course, and their jet-set managers, as we stopped basing our ‘work’ on the creation of massive excess-value for them to siphon off – but like the dinasaurs, their time as the dominant carnivore has come to its end, if we want to survive as a species.

  16. With Flaherty as finance minister, you are not the only one worried. His record is awful, he did a number on Ontario and also on Canada. It seems the only reason Harper keeps him on as minister of finance is so that he has a patsy to blame. We need a PM and a minister of finance who are capable of steering us through these dificult times. Their economic policies since 2006, show us neither man qualifies for the job.

  17. JOHN GEDDES …..

    Lets deal with the facts …… The Fixed Election Date Election was called because Harper & Co fully knew about the world train wreck ….. hello we who read knew it ….. any person with any amount of education into world events knew it …. then Harper/Flanagan who have had this destroy the Liberals and become King for ever plan for years thought the time was right to plow their fields with salt …. it backfired …. big time ….. they knew and understood that the “Coalition” was valid and stood a good chance of working why not as the Reform/Alliance/Western Separatist/Conservative worked for them to this point.

    Harper and Co have increased their staff (s) made 148 appointments prior to the scam election, have cut hundreds of non tendered defence contracts , made 18 Senate appointment plus another 25 appointments which flies in the face of true Conservatism ( Just like his mentor GWB) …. and it continues as Peter MacKay has just sent the Yanks another non tendered contract ….. also just under the radar was the helicopter contract where the Yanks demanded and received an extra $500 million and delayed their delivery ….. hello more money demands to follow ……

    Canadians are finally starting to wake up ……. also what went under the radar was Harper’s plan to give inspection/ QA to the beef industry …… hello …. we are talking BSE here!!!!

    Harper will not tell Canadians nor the opposition about the monies and sales of Canadian assets ….. we know it sold them at low market values and rented them back at inflated prices and under what type of contracts? ……. hey there is more …… much more …. and it has been going on since he first took office starting with his gun registry appointments and pay raises …. why do think he shut down ministers voices ….. wrote a 200 page book on committee control …. ran one scam after another to build and fund political war rooms ….. and continued to snowball the MSM via threats of cutting them off ….. and of course there were promises to CTV and special journalists …..

    John ….. please stop and think just how many journalist world wide have given their life in search for the truth ….. than pause and ask yourself why so many here in Canada cowed down on their hands and knees in front of Harper …. like Martin or Chretien or not …. they and their ministers stood on the firing lines and took many good shots on the chin …… it’s called Democracy ….. Harper’s world was and is anything but.

    Now what I here from Tim’s is that Canadians will go to the polls in a heartbeat knowing what is really going on and will go in large numbers when they are running in fear of their basic needs …… and they will vote for change ……. and the truth is Harper has not provided the truth nor has he provided any evidence he can handle ethier …. electing 18 Senators in tough economic times just does not cut it in providing hope for all Canadians ….. our true hope lies in the MSM not only demand the truth but reporting it each and every day …… not seeking a Senate seat or a promise from Harper & Co .

  18. I must be missing something. It would seem to me that if individuals were to start paying down their debt, that would help to stimulate the economy. I thought that a large part of the economic problem we are facing today is because many people are not paying their monthly mortgage and not paying their monthly credit card debt. So, if we were to be given tax breaks/incentives that resulted in more money in our pocket and we decided to use use this money to pay down some of our debt, would that not stimulate the economy? Banks, credit card companies (including retail store credit cards), mortage companies would be receiving the much needed money they are crying for. Money being put back into the system whether to buy new things or to pay debt is money in the system.

    So what part of all of this am I not understanding?????

  19. This clown Flaherty doesn’t have a clue. If the other parties don’t come up with some ideas he will be completely lost. He, along with Harris & Co. almost broke Ontario. Thsnk you God for not allowing those idiots take over all of Canada.

  20. The problem with having spent the last three years or so watching the Harper Conservatives in action is that I have become bitter and cynical. Here’s what I think will happen, looking at things from that jaded perspective. The budget will contain:

    – Sweeping tax cuts (income or GST, probably both)
    – Infrastructure spending targeted to potential Conservative swing ridings
    – Cuts of things the Conservatives don’t like, and directed at people the Conservatives don’t like and/or have given up hope of persuading
    – An intensive publicity blitz to support all of the above

    Either that, or Flaherty will bring down a provocative budget in order to call an election that will be framed as a contest between the Conservatives and the “Bloc-backed coalition”.

    This is probably unduly cynical – I hope I’m wrong, and that Flaherty and Harper are hard at work on a middle-of-the-road budget that benefits all Canadians in this difficult economic climate.

  21. Dave, the only thing you got wrong was calling your forecast ‘probably unduly cynical’ Take out that pesky ‘un’ in front of ‘duly’ and you nailed it.

  22. I think the govt should be concentrating on blunting the pain of the economic downturn (increasing EI benefits, helping retrain laid-off autoworkers, etc.) and investing in things that will improve our long-term competitiveness (investing in education, R&d and infrastructure; getting serious about improving our trade balances with China and India).

    I agree with those who have been arguing that trying to provide short-term stimulus is futile and likely a waste of money.

    Our economy will turn around when the U.S. one does, and not before that. Lets cross our fingers for Obama.

  23. “Flaherty started out by suggesting that getting banks and other financial institutions lending more freely is his top priority. ”

    Yes dear leader, we know. The secret to wealth is not to work hard, put off luxuries, save money, and invest it prudently. The secret is to borrow and consume as much as possible, and in case anyone doesn’t want to lend money, simply print even more money and keep on consuming.

    At least, that’s the secret to making politicians and their cronies rich – because free-spending and impecunious people are the ideal clients of the welfare state.

    Anyone can understand what economic garbage the politicians are selling right now, by considering a simple analogy.

    Say that two men living along on an island, Crusoe and Friday, survive by picking coconuts (Crusoe) and catching fish (Friday). Every day they exchange one fish for one coconut. Now suppose that Crusoe takes time off from picking coconuts so that he can build himself a gigantic and luxurious hut to live in. Every day he still receives a fish from Friday, but he only trades him a banana leaf with “IOU one coconut” written on it. After a while Friday has a huge pile of banana leaves and is wondering if he’s ever going to get the coconuts he’s owed. If they were alone on the island, then Crusoe would have to knuckle under and get back to work, and maybe lose his hut by giving it to the real worker, Friday, in lieu of paying his huge debt in coconuts. But if Jim Flaherty (or Iggy, or Jack Laytoon, or Obama) lived on the island, they would say, “To hell with living within your means, Crusoe, vote for me and I’ll make sure you get trillions more banana leaves to give to Friday. Because we have to lend freely in order to keep credit markets functioning.”

    That’s what the politicians want to do to your country – cover it with banana leaves from coast to coast. Then when the economy is completely ruined because no one can be bothered working or investing when all they get is a lot of worthless banana leaves in return, the politicians and their pals will buy up everyone’s real property for next to nothing. Or expropriate it in lieu of back taxes, or whatever works. For them.

    • Not quite. We’re actually past that. What’s happening now is that Friday has been collecting Crusoe’s IOU’s for years and Crusoe is now unable to pay him. So we face a choice, as gods of the island, between bailing out Crusoe so he can pay Friday what he owes him (and still be broke) or watching them both starve, since Friday had been counting on Crusoe’s IOU’s.

    • Not quite: this desert island economy dies off with the two participants. Whereas over here in the real world, we’re up to our eyeballs in banana leaves already, many of those leaves are rotting, and the best we can come up with is to scribble on more banana leaves.

  24. we will be gettin what the opposition paries and much of the punditocracy, and many commentators here, have been asking for…..stimulus, give me some stimulus because clearly the tories dont get there is a crisis out there, and peoples jobs, excuse me while I wipe away a tear here, are at risk.

    Mr geddes, why in the world would you expect anything of any coherence beyond dollops of money being delivered when this was the request? Or at least with those whose signal went ove the noise.

    Canadians are about to get exactly what they apparently asked for, despite the protestatons from those whose only complaint will be thecolour of the ink of the minister signing the cheque.

    No, it was a “crisis” that was so serious that a change of government was required so the amount of money that was to be spent could be accelerated by a mere few weeks. So we are about to get exactly what we requested a mere two months ago. Funny how 3 weeks of no politics over Christmas makes the crisis less “crisisier”.