The only thing they have to fear


I didn’t care much for Stephen Harper’s accusation, earlier in the campaign, that the opposition were cheering for a recession. At the time, it seemed like a cheap shot. But the longer this goes on, the more I’m starting to think there’s something in it. The Liberals are now trying to make a “gaffe” of Harper’s perfectly sensible observation that the present panic on the stock markets presents a remarkable buying opportunity, for those with cooler heads. Stephane Dion, in particular, was quick to denounce the advice as “so insensitive.” 

I’m sorry? How? What would they have him say? Sell? Take your lumps? Do nothing? You can only call it “insensitive” if you are bound and determined that nothing should break the spell of panic that now grips the country — that no possibility of an upside should be allowed to intrude. Just so long as cooler heads do not prevail.

This is demagoguery of the worst sort. And I don’t just mean that nothing about the present state of the Canadian economy justifies lumping it in with the United States or Europe, still less invoking the ghost of R. B. Bennett. We have not suffered a real estate crash, nor are we likely to; we have not seen a single financial institution go under, nor is any likely to; we did not have anything like the sub-prime mortgage mess; nor do we have the institutional equivalents of Lehman Brothers or Bear Stearns — large, highly-leveraged, stand-alone investment banks without the backing of a chartered bank.

But that’s not what distinguishes the opposition demagoguery in this case. It isn’t that they’re fear-mongers: it’s that, having mongered such fears, they do not propose to do anything about them. Sensibly enough — the problems of the Canadian economy, such as they are, find their origins outside our borders, and will find their solutions there. But it’s the height of hypocrisy, whaling away at the government for doing nothing while offering precisely the same themselves. The 85 lefty economists who signed that letter demanding the government go into deficit and otherwise “stimulate” the economy might have been out to lunch, but they were at least putting their names on the line, and exposing their proposals to public criticism. The opposition are taking no such risk, or responsibility.

Toronto Stock Exchange, 2003-2008

Toronto Stock Exchange, 2003-2008

So. We are not in a depression. We are not even, so far as anyone knows, in a recession. And while the rest of the world’s financial system dissolves in panic, Canada remains a notable island of stability. We do not have an emergency on our hands. What we have is a nasty downdraft in the stock market — one that is reflective of a deeper crisis, to be sure, but a crisis not of our making.

Is a 35% drop in the stock market (from its June peak) a crisis in itself? No it is not. The stock market does not owe you a living. It’s down 35% from four months ago, but it was up 50% in the three years before that (see chart). The present “crisis” has taken prices on the TSE all the way back to where they were in the dark days of 2005 — when they had just finished climbing 50% in two years. Think back to that time. You were rich! You were happy! You were counting your money!

Maybe you should have sold then. But you didn’t, because you wanted more. Now you’re paying the price. You’ve given up three years of gains. But you’re still up 50% from where you were five years ago. And, if you’re sensible, you’ll make up for not selling then by buying now. Those who were on the buy side on October 19, 1987 made a killing in the months that followed. 

Not willing to risk it? Fine. Just sit tight. Worried about your retirement? If you’re anywhere under 55, you’ll be fine. You don’t need the money for 10 or 15 years. Stocks will have more than recouped their losses by then (at a compound annual growth rate of 5%, you double your money every 14 years). If you’re over 55 — what are you doing in the stock market? 

This bears emphasis: If you’re old enough to be worried about your stocks, you’re too old to own them. Stocks earn more in the long term, because they’re riskier in the short term. You should be heavily in stocks when you’re young, because you’re not going to need the money any time soon. But you should be gradually shifting into safer investments — bonds, T-bills — as you get older. By the time you’re of retirement age, they should be only a small part of your portfolio. That’s not complicated. It doesn’t take a PhD or a high-powered investment adviser. It’s just common sense. 

So when the Liberals invoke the pensioner who’s lost half of his savings in the stock market plunge, you have to ask: what was he thinking? To be sure, on this one point the Grits have actually proposed something creative — allowing pensioners to keep their investments in their RRIFs a while longer, rather than being forced to sell at these prices in order to make the required withdrawals on the usual schedule. 

But at some point, people have to take a little responsibility for their actions. Otherwise, we have the individual version of moral hazard: everyone has a great ride on the stock market on the way up, but comes crying to government to bail them out when things turn south.


The only thing they have to fear

  1. I think that’s the most sane thing I’ve read all week, or all month even. YOU bought YOUR stocks, fully aware of the inherent risks, and now all of a sudden it’s somebody else’s responsibility?

  2. “If you’re over 55 — what are you doing in the stock market?” It’s quite a bit more complicated than that, Andrew. Normal bonds provide no protection from inflation. Inflation-indexed “Real Return Bonds” do, but currently yield only an *after-inflation* 2%. Stocks historically provide inflation protection. Most people who are over 55 (I’m 60) have to prepare for many years of retirement, and should have some equities in their portfolios. One “rule of thumb” is that equities should be 100 minus your age; that would give 40% equity exposure to a 60-year-old.

    [I am not a financial advisor – but I have been living off my portfolio (which I manage myself) since taking early retirement at 50, and have written a well-received web book on investing.]

  3. This is demagoguery of the worst sort.

    Shrill and hysterical.

  4. Coyne: It’s an insensitive comment because it reflects Harper’s ignorance of the situation of average Canadians. Sure it’s a great time to buy.. but with what? All that money you had in the stock market? Bank credit? Your upcoming raise? None of those are there any more.

    In short, it’s insensitive because it’s only useful to those who are already quite well off.

  5. the Liberal policy might be not requiring sales of RRIF rather than RRSPS’s. Technically, all RRSP’s are rolled into a RRIF at 72 I believe.

    The short term issue is providing a holiday on RRIFs till the end of this year, since they get revalued at Jan 1st and the withdrawal amount is reset.

    But we are talking about 2.5 months.

    Another longer term issue is perhaps you extend the time on RRIF rollover to 75 or 80.

    Being a con sypmathizer I would suggest that they say they would immeadiately suspend the requirements for RRIF withdrawls till Jan 1st.

    That doesnt fix the problem for those that need the money, but it stops an immeadiate problem of people being forced to lock in losses.

    BTW, your article is bang on. The issue as I said in other comments is, Tories not looking like they are unaware of issues and the Libs and Dips not looking like they are cheering and benefitting from problems.

    At some point, the accumulated info will back one narrative or the other. A couple of days of sideways markets or a purchase of a US institution by a Canadian institution backs Harpers narrative.

    A run on a Canadian bank or major layoff announcements backs Libs and Dips.

  6. You ARE writing of the same man who just made the statement that “governments do NOT interfere in the Stock Markets” to mild applause – the same man – as head of the government of the day – who is advising people to consider “buying while bargains are there…”
    Sheesh – sometimes Mr. Coyne – your ideology – like his – makes fools of both of you!!
    OH – and incidentally – what was it that Other Governments – all over the world – have been doing this last few days – at least now in concerted fashion – but interfering in Stock Markets…

  7. T Thwim is right. The people who have money to buy stocks don’t need to get stock advice from the Prime Minister. Harper should be aware of his role. We look to him to run the country, tell us how he plans to run the country, and, yes, to show some tiny bit of recognition of the people who inhabit this country.

    What next? Harper’s advice on where to buy the best sweaters?

  8. I think it’s more a question of whether the stock markets are an indicator of the general economy in any meaningful way. Given their habit of creating “bubbles”, probably not. But I don’t think Harper has been effective at communicating this to voters. At the same time, most of us sense that a meaningful drop in stock value will push many companies into cost cutting to try and regain value. Which probably means job losses. So in that respect, Canadians aren’t being too crazy in being worried about the drop.

    As for the “buying opportunities” line – miniminally it was a pretty stupid thing to say, given that most of us aren’t sitting on vast quantities of cash to invest these days. Remember, he’s the one who wrapped himself in the sweater vest of empathy with “ordinary Canadians”. Most “ordinary” Canadians would need to win a lottery to raise the funds to take advantage of the current market.

    The opposition’s hyperbole around this has not been helpful, to say the least. But I think this is a moment when the nation’s more socialist inclinations are galvanizing, and the idea that government ought to be doing something is too powerful to be ignored.

  9. Bang on.

    This is why I keep reading Coyne.

  10. It’s true we don’t have the housing/banking bubble issues that the US does. We have a Oil/Mining bubble instead.

    Harper & Coyne are pretty out of touch if they think Canadians have anything left to play with in the stock market now.

  11. Andrew, what are you saying about Stephen Harper’s mother? Are you saying she is irresponsible to be in the stock market? Because she’s the example he keeps using when trying to show that “he cares” and that “he understands.”

  12. Catherine and T Thwim:

    Quite frankly people who don’t have money aren’t the ones who are losing money on the stock market either.

    A lot of smart ones pulled their cash out long ago. I can recall many of my friends pulling everything out of the market a little over a year ago. Its people like them, people who have pulled their cash out that the market that need to be willing to take the plunge back in.

    As for me, well, I wish I had money to invest.

  13. Rubbish. People seem to be confusing politics with economics. Economists can quote facts and figures and demonstrate why certain behaviours are irrational. Politicians (at least politicians that want to win) need to demonstrate empathy and concern and at least the appearance of doing something. Not releasing a platform until the last minute demonstrates a terrible arrogance. Releasing a do-nothing platform at the last minute demonstrates a terrible arrogance and a surprising tin ear. Bye Steve!

  14. I think the Canadian stock market is tanking at the suddenly very real possibility that Stephane Dion might be PM.

    Markets hate uncertainty and I’m quite certain would rather see Harper remain at the helm.

    I wonder if anyone will ask Dion about his transition team again. When they asked last week Dion’s staffers laughed the question off as ridiculous.

  15. Nice link to the story about the “85 lefty economists”. Apparently they exist out in the ether somewhere unlike the signatories of the first letter. They ,too, work in academia and business. Former bank economists and past presidents of the CEA. But they all know that the Invisible Hand often carries a stiff extended middle finger. So that makes them “lefties”.

  16. “QUEBEC CITY — Faced with the prospect of a Liberal minority government…”

    That’s the first line of the Globe’s article (about Duceppe’s potential alliances, but the rest is secondary).

    The prospect of a DION government.

    Dion, who’s made a recent political career of being the “anybody but” candidate, is now a real choice for Canadians.

    The last time Dion was a real choice was at the beginning of the campaign.

    Harper and Dion were neck and neck, and the public, not so much ran to Harper, but ran away from Dion. Over the last two weeks, it’s been all about an “anybody but” which viable when considering a minority v majority Harper government push.

    The game’s been “reset” to where it was at the beginning of this campaign.

    Faced again with a real choice between Harper’s policies or Dion’s, lets see where the folks go.

  17. “what distinguishes the opposition demagoguery in this case. It isn’t that they’re fear-mongers: it’s that, having mongered such fears, they do not propose to do anything about them. ”

    But Dion has a plan! He said so at the French debate.

    Also, Canada is not an island, I heard. If credit markets keep seizing around the world, the Government will need to intervene – it would be useful to consider whether that intervention should look like the US troubled asset purchases or the UK/Iceland’s “nationalizations”.

    If people panic about the safety of their bank deposits , that will require the Government to step in on the deposit insurance side too (this type of panic could reasonably result from opposition demagoguery). Any PM has a responsibility to try to calm that kind of panic and Harper seems to be playing that role adequately.

  18. Coyne is right on the money with this post, but it seems impossible to resist the calls to do something, anything.

    Harper’s mistake has been to not explain what he is doing and why. Flaherty has been no better. They simply could not see why they should explain themselves to the Canadian people and this may cost them dearly.

  19. BTW the Liberal idea is a good one, all RRIFS will be reset in 2.5 months but it is a good idea. First good idea I have heard from the Libs this election.

    Tories should steal it, make it immeadiate and add to it quite frankly, allow for top up of the RRIF in 2009 based on the closing value of the value of the portfolio or something.

  20. The only thing they have to fear is

    Liberals back at their old tricks. They do this every time and every time it works for them.

    The public just laps it up.

  21. Looking like the TSX will close up today.

    Glad I bought Potash Corp for the last two days and gold for the last week.

  22. Mr. Coyne, you are thinking like someone who is part of the population that is better off than 95% of the rest, for whom there is shelter from the economic storm that sudden market volatility can unleash. The IMF today bestowed “1930s” gravitas to what the world’s financial markets are experiencing.

    The end of US world hegemony is likely upon us, they are heading into a severe recession and Canada does more trade with them than anywhere else. This isn’t merely a fine time to scoop up some bargains on the stock market. There are real mortgages and credit lines being declined to Canadians this week that were easily provided last week. There are stories in the media warning that countless firms may soon be struggling to finance their payrolls, and that economic activity might grind to a halt. We already know the manufacturing sector is reeling in Ontario, and that new tar-sands and energy projects are being second-guessed in AB and SK based upon their suddenly accelerating risk to profit ratios.

    As long as we are hearing such grave warnings, our leaders need to get out in front of the situation. They must at least assure us they are aware of how bad it might get, and what utilitarian actions they can take to mitigate the fallout for the populace. That’s the essence of the tin ear so glaringly exposed by Mr. Harper yesterday.

  23. If I had an inkling of a suspicion that Harper might actually ever listen to even one opinion different than his own, I might agree with this.

    If he had said for instance that he and the Finance Minister have been in communication with minsters in other countries, with representatives of Canadian and other financial institutions and pension plan representatives to get their views, and have decided that the best strategy is to stay the course, not doing anything drastic, I might have some confidencein his position.

    Otherwise, this just looks like all the other times he has been overconfident, unwilling to compromise and aggressivley wrong.

  24. Right, as long as you don’t depend on Americans to buy your products, you are fine.

  25. Thank you; this is the most sane market analysis I’ve seen in a while, and I read a lot of market analysts.

    (I pulled everything out of the equity markets in December 2007, bought a pile of GICs, and decided to wait this out a bit. I don’t personally think it’s time to buy yet, but I don’t blame others for thinking it might be.)

  26. “Right, as long as you don’t depend on Americans to buy your products, you are fine.”

    The Canadian dollar is below 90 cents right now. I’m in the USA right now… lining up behind money spending Americans at stores, restaurants and attractions.

  27. Silly of Dion to assume most of us don’t even have stockbrokers.

  28. The Canadian dollar is below 90 cents right now. I’m in the USA right now… lining up behind money spending Americans at stores, restaurants and attractions.

    Rome wasn’t destroyed in a day.

  29. Not that I think this matters, or should matter in the short run, but there is a lot of green on US and CDN markets today. Not big increase, but thats ok.

    So to Andrews pooint, and mine, if you are Dion and Layton and you have invested yourself in finding bad news to justify your election what do you do when there isnt bad news anymore?

    I tell you, a couple of days of “normal” sideways or up markets and the Thanksgiving discussion becomes about who panics and screams and who doesnt.

    But once again, the tories arent in control of markets either so continued fall will do them damage.

    If Mr Harper is the control guy they say he is then this has got to be killing him inside. Bested on the economy by Dion.

  30. I think Coyne is combining two issues into one. First there is the issue that Harper thinks we don’t need to do anything immediately, and this is likely correct. The second issue is that Harper basically told us that we don’t need to worry about our jobs, our savings or our homes. This one is way off target. Way off. Look, it’s okay for a guy to be off-target on some things. This would appear to be a big gaffe though. I’m an easy going guy, and despite the fact that I’m not a fan of Harper, I don’t take too many things to heart. But he really did a number on my solar plexus with his casual “our economy is ok, don’t worry” attitude. It’s not ok, and if you don’t believe me then you feel free to pay my wages once I’m laid off because it’s impossible for our our company to raise capital right now.

  31. I liked your article. I’m personally not affected in any direct way as I pulled out my investments last year when the housing issues broke out in the U.S. I agree though that stocks etc. are obviously risky and when you buy them, there’s a reason why you sign away to that issue. Although I sympathize with those that have lost money, I agree that they should take their own responsibility for their losses.


    p.s. I would actually agree that most people that are able to vote do not have a stock broker

  32. (Begin sarcasm)

    Personally, I think that Dion and Layton both have some sound ideas in this area and just proves that you don’t need a degree in economics to create good economic policies.

    Take Layton. I read (in passing) that Jack Layton wants to drop the interest rates on credit cards. This is going to do wonders for the economy. The financial bubble was caused in a large part by wide spread access to cheap financing. Clearly fueling the engine that drove the bubble into it tailspin is the best way to improve thing.

    (end sarcasm)

    On the whole, it seems that the Opposition wants to encourage this a morally and intellectually bankrupt sense on Entitlement where “we” get all the things we want and when its difficult then the Government gets it for us. Given our highly regressive tax structure, in which Canadians like myself who work hard to provide a modest house and a modest life style for my family carry a disproportionate percentage of the load, I’m frankly fed up with their abusive lunacy.

  33. Oh Andrew,

    Today the IMF an organization you likely love said the following:

    “World growth will slow amid most dangerous financial shock since 1930s.”

    And if you are right and Canada is somehow going to be an island in this global storm, how will that change your understanding of the economy. I wouldn’t can myself a faithful reader but it seems to me you are a big believer in unfettered markets, the invisible hand and all that crap.

    So I would suggest before you go off slagging Jack for speaking truth and understanding the concerns we are all feeling you may want to look in the mirror to figure out how the hell we are in the mess we’re in.

  34. Andrew, you are really are loosing it! I expected much more from you. Your excessive partisanship is oozing out all over. Harper must be a terrible disappointment to many of his most ardent supporters including yourself.

    The CP’s ‘cacoon’campaign, mostly fluff with very little substance, has been, and continues to be, terribly mismanaged by Harper and his vaunted and expensive war room spinners.

    Harper gambled that Canadians would never really engage in his illegal snap election and that the Liberal Leader, Dion, would never become a ‘real’ politician. Dion has proven to be a very quick learner, far quicker than Harper who worked in the Reform trenches for over two decades.

    Harper’s CP risked all on this rather pathetic strategy, one which treated Canadians like children and made a mockery of democracy and transparency.

    Defending Harper’s indefensible comment – stocks are now cheap, very cheap, grab them up quick! – is highly unprofessional. Harper’s attempt to play the role of a stockbroker reveals his mindset, one focused almost exclusively on the Corporate Board Room. Harper was just pandering to his business audience and had the stupidity to repeat his out of touch comment with Peter Mansbridge – he just does not get it!!

    What Canadians need from their best journalists in the fews days left before the election is clear-headed analysis and far-sighted non-partisanship. Macleans’ millions of readers deserve this and more.

  35. TSX composite closes above 10,000 up 228 on the day.

    This in spite of what triggered the slide in the first place, Don Carson of Merril Lynch downgrading Potash Corp. from buy to under perform or in other words sell.

    Then Dion and Layton running around like chicken little saying “the sky is falling.”

    Dion/Layton are not fit to govern, especially Dion. Just how much of his leadership debt does he still have to pay off after having received two extensions?

  36. Earlier this year the Tories tightened rules on mortgage lending, and strengthened the Bank of Canada’s powers to deal with a financial crisis. It’s a bit bizarre to claim that Harper is out of touch on this issue – the main criticism seems to be that he doesn’t *act* concerned enough. Even more bizarre, Dion is now applauded for being better at acting concerned on the part of average Canadians.

  37. Style, they’re the ones that allowed 0/40 in the first place, so they can’t really get credit for tightening the rules back up can they?

  38. Bill Simpson, you are bang on. Harper’s biggest mistake has been one of campaign strategy and communication (or lack thereof). He is quite right that the ONLY strategy available to government is “steady as she goes.” The Opposition may tell us that they can Canada from the financial storms brewing outside our borders, but that is at best a lie, and at worst a delusional fantasy.

    Harper’s failing, thus far, is that he has done a very poor job getting the message across that he is doing, and has already done, all that government can or should do. For too long he clung to the line that “the economy is fine”. In clinging to that, he has precluded any serious addressing of the economic issues currently facing us. He cannot tell us the economy is fine while at the same time explain why he is the best one to lead us through the coming turmoil. That message is contradictory. The economy is NOT fine. He should have acknowledged that sooner, and hammered home why only he can be trusted to steer us through it.

    Is it too late now? Who knows?

  39. Correction, in my first paragraph, it should read “…The Opposition may tell us that they can rescue Canada from…

  40. Okay, can anyone point to an actual, quantifiable problem in Canada, using only Canadian data?

    Yes, there’s the stock market crash. Big whoop. Explain why it matters.

    Is the Canadian federal government supposed to fork out the terabucks necessary to solve the world’s problems? Why?

  41. Ian, the Conservatives only appointed one director to the board of the CMHC by November 2006, the other nine were leftovers from Chretien/Martin.

  42. “Big whoop. Explain why it matters.”

    in order of appearance

    restricted credit in the real economy

    reduced inventory levels

    reduced exports

    unfavourable shift in our trade balance

    from what this hobbyist has seen, that last one is one of Canada’s hair triggers.

  43. Ian, the rules were introduced in 2007 and reversed in 2008, without any evidence of a mortgage crisis in Canada. Why shouldn’t the Government get credit for making a good policy decision that averts a Canadian crisis? By the way, the first political commentary I found on the move is a blog post by Garth Turner that’s sceptical that it was the right move…

  44. Okay, can anyone point to an actual, quantifiable problem in Canada, using only Canadian data?

    Slurpee sales in Winnipeg are down.

  45. But Andrew it is about “empathy” not facts, geez I think you missed the Macleans memo.

    Liberals Good,

    Conservatives Bad…

    Get with the program Andrew this is not about policy or facts but “Empathy”…..

    PS:Yes and who cares if Dion’s spending promises are based on 4 percent growth, that don’t match at all with private predictions. He has “empathy”

  46. It’s not just the people with money in the market that are having problems. Everyone is worse off in a credit crunch. Not just people who have made bad investment decisions, as you’re trying to imply, Andrew.

    Only the most wealthy can afford to take advantage of a downturn in the economy by buying stocks.

    Therefore, suggesting that this crisis is not a crisis because you can just buy stocks cheap is insensitive to the positions of people who can’t.

    Even people who agree with Harper that this is not a major issue should be able to admit that the optics are bad, and he should have said it differently, or not at all.

  47. “Yes and who cares if Dion’s spending promises are based on 4 percent growth”

    If revenues haven’t been racing ahead of growth for years I’d be more worried about that.

  48. Jason, exactly who are you talking about? So far, the only people who have been hit hard are those who play the stock market. Who else should Harper be talking about or to?

  49. “So far, the only people who have been hit hard are those who play the stock market.”

    pension funds?

    RRSPs? RIFFs?

    not everybody reads the trade rags.

  50. Stephen,

    Does the evolution of the corporate paper rate since mid-September give some evidence? After plodding along around 3.1% (below the bank rate) it has now climbed to 3.8% (well above the bank rate).

  51. In a cruel twist the PM was criticized in year end interviews for saying there were storm clouds on the horizon. Too critical yada yada

    The issue is one of communications, I have to say that the cons have looked rather sluggish in the last two weeks. I was expecting more activity, more pizzaz, more ads, more announcements. something.

    This may yet play out for them, but yes it seems the smae old sag problem has happened. And this time without the word abortion being mentioned.

    I still find it hard to believe that the Con vote will be below what it was in 2006 in raw numbers and I really would have expected it to be higher given that they seemed to not “scare people” I think AC’s issue would be that even being “nice” doesnt get you anywhere and it leaves you noweher to retreat to or attack from philosphically.

    But polls are polls and we shall see what the only that counts says in 6 days. Not Harpers style to make announcements late….there are rallies coming.

    Two more days like this on the markets and the Liberals and NDP might begin to look a little silly. harper jst needs to hope that there isnt another metdown on election day or on the Monday in the US.

    But perhaps the fact that market gyrations can blow the Tories, Liberals and Dippers off course or on course tells you how shallow the keel is.

  52. Stephen – it was Bernanke’s job in the States too, until credit seized and monetary levers became less effective. The Bank of Canada numbers are evidence of a credit crunch. And today’s Globe suggests that financial institutions are not reacting to the latest rate cut. That’s evidence of monetary policy losing its effectiveness. These are both the early stages of the same crisis that has already hit the US and Europe.

  53. Smitty
    “I think Coyne is combining two issues into one. First there is the issue that Harper thinks we don’t need to do anything immediately, and this is likely correct.”

    I actually disagree here. While I’ve been raised to fear the evils of deficit spending, let’s consider the facts:

    1. The U.S. is only at the beginning of a recession. The financial crisis will his people’s pocketbooks in a big way soon. All those people who had subprime loans – they can’t buy cars now, they can’t go out to dinner, they can’t buy a new computer. And all those people who were selling cars, dinners, and computers will now suffer. So we will see more layoffs.

    2. The s*** will hit the fan when consumer spending reports are released from the US. They’ll show that noone is buying anything. There will be a proverbial crapstorm when post-Christmas spending figures come out. There will be even more layoffs, more people going bankrupt, and we will be seeing foreclosures on previously sound (not subprime) mortgages.

    3. After Obama takes power, he will have to curtail military spending to keep the country from going bankrupt. Who knows what will happen then? Wars in Iraq, Afghanistan and Pakistan? Pakistan is going bankrupt by December, didn’t you know?

    4. Whoever said an end to US world hegemony is absolutely correct. The US is in for lean times, and that’s the least of it.

    So, if you’re employed in a manufacturing firm that exports to the United States (All of them) manufacturing SUVs, sea-doos or other crap people don’t need, do you feel confident enough to buy into the stock market right now?

    If you’re employed in the tar sands and you see oil headed towards $50 a barrel, when most new tar sands projects need $80 a barrel to be economical, do you invest?

    Now, I agree, Dion’s plan is doing nothing. Which I disagree, is NOT prudent. The government should guarantee the backing of all manufacturing companies in Canada, and all energy companies too. Subsidies, lots of them. Maybe we can get out of this relatively unscathed, before it hits us. And believe me, it’s gonna hit us.

  54. Hey Coyne! In your rush to give voice to weak opposition parties, and not calling them on their inane economic policies, it’s now likely that we’ll see a Lib-NDP coalition gov’t.

    Yeah, I’m sure they’ll be fiscally prudent!

    Hold onto your hats, we’re about to go through the ringer …

  55. It was nice to see that someone from the other side had sense enough to reassure Cdns. about their banks.

    It’s ironic that the guy known for stooping to any low to win, has to come out of retirement to school the Doomsday Quadruplets in the intricasies of public confidence in our institutions. Where is the media in pointing out this amateur hour of Chicken Littles.

  56. Stephen – it was Bernanke’s job in the States too, until credit seized and monetary levers became less effective. The Bank of Canada numbers are evidence of a credit crunch. And today’s Globe suggests that financial institutions are not reacting to the latest rate cut. That’s evidence of monetary policy losing its effectiveness. These are both the early stages of the same crisis that has already hit the US and Europe.

    No, no no.

    The US and European banking systems ‘have a solvency problem’ (a polite way of saying ‘are broke’). We don’t have over-leveraged banks tottering into bankruptcy. Quite the opposite, if anything: Canadian banks are looking around for cheap assets to snap up. They most definitely do not need bailing out.

  57. davenewdem: “Today the IMF an organization you likely love said the following:

    “‘World growth will slow amid most dangerous financial shock since 1930s.'”

    And the IMF also stated on Tuesday that Canada would lead the G7 nations in economic growth for 2009.


    Now, it’s only 1.2% growth, but the main fact is that it’s growth. It doesn’t preclude a recession (2 quarters of GDP decline), though it would mean that if we had one that the bounceback would be bigger than a steady 0.1% monthly increase for the year.

  58. The most sober analysis to date. Thanks Andrew.

  59. The government should guarantee the backing of all manufacturing companies in Canada, and all energy companies too. Subsidies, lots of them. Maybe we can get out of this relatively unscathed, before it hits us. And believe me, it’s gonna hit us.

    Pete, you’ve got to be kidding me. You’re asking that the government take on massive debt in order to prop up companies that are too weak to survive the coming recession. Wouldn’t it be better (assuming the government should go out and spend a bunch of extra money it doesn’t have – which I don’t agree with anyway) if they spent it on infrastructure, job retraining, and perhaps extending unemployment benefits? Rather than just handing it over to money-losing companies to keep them afloat? I would think that massive increases in subsidies would be the absolute worst thing the government could consider doing. If they must go into deficit (again, I’m not saying they must) then at very least spend it on something tangible that will pay off in the future.

    Companies have to be allowed to go bankrupt. Trudeau tried the subsidy game in the 1970s, and by the 1980s we were in a severe recession, with a full 50% of federal spending financed through deficit. Then he tried subsidizing energy prices through the NEP, and squashed the only sector of the Canadian economy that had any life left in it. We really don’t need more subsidies. Really, we don’t.

  60. Andrew,

    You should send this post to Peter Masbridge before he interviews Dion tonight. It is a very sound analysis.

  61. Agree RR. Would anyone suggest the government nationalize and then operate Ford Motor Co. of Canada? Well, subsidies to keep on with idiotic business practices are only a few steps down from that.

    For example, is it the government’s fault that GM is so stupid as to plow forward with a Camaro assembly line, in this era of high oil and enviro-sensitivity?

  62. The IMF is predicting that out of the G7 countries that Canada’s economy will grow the most in 2009 at a rate of 1.2%.

  63. Raging Ranter
    “Pete, you’ve got to be kidding me. You’re asking that the government take on massive debt in order to prop up companies that are too weak to survive the coming recession. Wouldn’t it be better (assuming the government should go out and spend a bunch of extra money it doesn’t have – which I don’t agree with anyway) if they spent it on infrastructure, job retraining, and perhaps extending unemployment benefits? ”

    Who’s to say what will work and what won’t, given particular circumstances. I’m not trying ot be difficult, but think of it this way:

    Example 1: Do nothing during major recession, just keep a balanced budget i.e. the Bennett model from the 1930’s. That leads to disaster.

    Example 2: Support failing industry with subsidies, the Trudeau model. Leads to the disaster, and worse, the Reform party.

    Example 3: Spend on infrastructure and socialism, i.e. the Bob Rae Ontario model. Leads to disaster, and worse, Mike Harris.

    I’m firmly convinced that Option 2 is the better model. Why? Because of Quebec separatism. What does that have to do anything? I’m gonna go out on a limb and suggest that the reason that the Referendums happened was because of economic discontent as much as political. Both were at the tail end of major recessions. But Referendum 1 was soundly defeated (during the Trudeau era), and Referendum 2 was barely defeated (the Chretien cost-cutting era). I think Trudeau pacified Quebec with his subsidies.

    Consider if Harper gets reelected. He won’t go into deficit to prop up Bombardier et. al. when the Quebec economy fails. Duceppe starts whining about the fiscal imbalance, Mario Dumont starts whining about some constitutional recognition of the Quebec nation, to guarantee more federal handouts right in the constitution, natch. Mario and Marois form a coalition and foist a seccession referendum on a severely pissed off and broke Quebec population.

    Bam! End of Canada.

  64. Andrew,

    I take two big issues with your post:

    1) a claim of insensitive does not equal a a call for inaction… the former is about messaging… if my friend’s dog died tomorrow, and I knew he loved his dog and hanging with his dog, I might honestly believe it is in his best interest to get a new one… that being said I suspect ‘get a new one’ wouldn;t be my main message….

    2) you no doubt know more then I do about the state of the economy so I will take your word that is better than some parties are gonna make it out to be….

    but you are gonna go after Liberals/opposition alone for fear-mongering…. please… at various points in this campaign SH has said/inferred that 1) the Green Shift will cause a recession; 2) that continued minority government will cause a recession; 3) has criticized SD because the proposed 30-approach does not respond quickly enough…

    The Tories have been at least, if not more (I find using minority government as a threat to be so distasteful and anti-democratic) fear mongering in their approach over the last two years and mis-leading.

    SH goes back and forth near daily on 1) are fundamentals are sound and 2) SD can’t respond urgently enough to impending doom… FYI right now the front page of the CPC website advertises ‘a need for both action not talk’ and the existence of a credit crunch….

    IF you are gonna call BS on people on a particular issue pls cover all your bases.

    If I was to buy your argument, that the Libs, are recklessly

  65. Style,

    Banks reacted today and the evidence is that the Interbank lending rates are coming down to near normal levels. Google for Libor rates tomorrow morning. If this is true, we will see tomorrow, then the storm is abating, didnt say over. Nerves are still pretty fragile.

    But lets look at the evidence, when this is overwith, there hasnt been a bailout by the canadian government. At worst there may have been some backchannel backup but no public statements required. In fact the US Fed is shopping institutions directly to our banks!

    So please, why can we not say that Canada is an island of relative stability in all of this, because it sure looks like it. And I have argued in other places you have to give credit where credit is due, generally the government in charge. Can you imagine the preening that would be going on right now if either Chretien or Martin was in charge right now.

    chretien would be talking about how much he loves canada and how we arent Bushes america and thats why we are stable….Martin would frentically be calling meetings and looking busy, dropping the names of the world leaders he had just spoken to yada yada. Probably would have offered to host a meeting of the G7 himself in the middle of a campaign.

    Anyway, if you cannot recognize Canada’s position of fortune in this mess then uncharitable is the least I can say, because you know how the oppsoition would be screaming and crying and spitting purple if the government did have to bail out a bank.

    Maybe its going to take a comment from a foreigner or foreign news organization to point this out to Canadians, the country where you can never be a hero at home.

    Advice to con warroom, get a mention on CNN and Bloomberg and from a couple of US and Euro analysts about how canada has been a relative rock of sanity in this. Get that out there! canadians listen to foreigners….because our own media is too tied up in reporting a horserace to have any perspective on this…that along with being innumerate and economically illiterate, our blog host is the exception that proved the rule.

    Amanda Lang of BNN said today she didnt know what Libor was before this. A little shameful for a business reporter, but hey at least she had the honesty to say she didnt but now does. How many other business reporters, let alone political reporters in this country would say the same. Oh, xyz corp just released another poll, and Duceppe is up by one, Harper down by one, may up by one….This changes EVERYTHING!!

  66. Oh and here is a nice link describing all of the actions, some less serious than others, that other countries have had to do. Noticeable by its absence is the the following


    The canadian Government has had to do nothing in the current crisis except defend the fact it isnt in crisis.


    Here is the text…read it and tell me Canada has a problem….it doesnt by the way.

    Credit crisis: World in turmoil

    As global markets fall sharply, the BBC News website looks at some of the countries affected by financial turmoil and what their governments are doing to alleviate the crisis.

    Six of the world’s biggest central banks have cut interest rates by half a percentage point in an effort to steady the faltering global economy.

    The US Federal Reserve, the European Central Bank, the Bank of England, and the central banks of Canada, Sweden and Switzerland took the unprecedented, co-ordinated step.

    Central banks cut interest rates

    China joined the interest rate offensive, cutting rates by 0.27 percentage points.

    Austria officially announced a guarantee for all personal bank savings, retroactive to 1 October.

    “Deposits in Austrian banks are safe and the state is vouching for them,” said Chancellor Alfred Gusenbauer.

    The government announced a £50bn ($88bn) package to prop up eight of the largest banks and building societies. In return, the government would receive shares in those institutions.

    A further £200bn would be made available by the Bank of England to provide the banking system with much-needed liquidity.

    A special company will also be set up to provide up to £250bn in loan guarantees to banks and building societies.

    The announcement came after UK banking shares plunged on Tuesday and the British Chambers of Commerce (BCC) warned that Britain was already in a recession which could see unemployment rise by 350,000 by next year.

    The UK government increased its guarantee to savers from £35,000 ($62,000) to £50,000 from Tuesday.

    The Northern Rock bank and the mortgage lender Bradford & Bingley were nationalised earlier, and two other large groups, HBOS and Lloyds TSB, are to merge.

    UK unveils bank rescue plan

    State-owned savings banks in Germany reported a flood of new deposits as people look for safer accounts which are insured for 100% of their value.

    The country’s second-biggest commercial property lender, Hypo Real Estate, was threatened with collapse last week after incurring large amounts of bad debt.

    The government attempted a bail-out, only for it to collapse on Sunday after a banking consortium withdrew support for the deal. A new bail-out was arranged with guarantees of 50bn euros ($68bn; £38.7bn), 15bn euros more than the first rescue attempt.

    The German government also announced what appeared to be unlimited guarantees for private savings. However, it said there would be no legislation to give extra protection to savers.

    Chancellor Angela Merkel said those financiers who did “irresponsible business” would be made accountable.

    Germany clinches bank rescue deal

    The Prime Minister of Iceland, Geir Haarde, confirmed that negotiations were going on with Russia for a big loan to support Iceland’s banking system.

    Mr Haarde said a delegation from Iceland would go to Moscow in the next couple of days to finalise the deal. He thanked Moscow for its offer of more than $5bn in emergency loans.

    Iceland’s government has taken control of Landsbanki, the second largest bank by value, and has dismissed the board of directors.

    The bank, which also trades as the internet bank Icesave, is being taken over by the Icelandic Financial Supervisory Authority (IFSA).

    Customers of the Icesave have been warned they will probably have to claim compensation for money held in their savings accounts.

    Iceland’s prime minister said he hoped to find a “mutually satisfactory solution” to the loss of UK Icesave deposits after Prime Minister Gordon Brown threatened to sue Iceland to recover the money.

    Iceland’s parliament has passed emergency legislation giving the government wide-ranging powers to dictate banks’ operations.

    Mr Haarde said the legislation would help the island avoid national bankruptcy.

    Iceland will also offer an unlimited guarantee for all savings accounts.

    The Icelandic krona plummeted against the dollar after the government nationalised the country’s third-largest bank, Glitnir, last week. By Friday it had lost one-fifth of its value.

    The government has agreed measures allowing the banks to sell off some foreign assets to help shore up the financial system.

    Icesave savers warned on accounts

    The Belgian government has agreed to guarantee bank deposits of up to 100,000 euros ($136,000) – an increase of 80,000 euros.

    The country’s largest banking group, Fortis, has been in difficulty since it joined two other banks to purchase the Dutch bank ABN Amro, just before the global financial crisis began.

    After several failed bail-out attempts, French giant BNP Paribas agreed to buy 75% of Fortis’s operations in Belgium and Luxembourg. The two governments will take a minority share of the company, while its Netherlands operation has been nationalised.

    Ireland was the first government to come to the rescue of its citizens’ savings, promising on 30 September to guarantee all deposits, bonds and debts in its six main banks for two years.

    The move initially prompted consternation among some European partners, but several countries have since followed suit.

    Cowen defending Irish banks move

    Spanish Prime Minister Jose Luis Rodriguez Zapatero on Tuesday increased bank deposit guarantees to 100,000 euros ($136,000) from the current 20,000 euros.

    Mr Zapatero told leading banks that the government would take immediate steps to increase deposit guarantees to boost confidence in the financial system.

    Spain has been calling for a joint European initiative to tackle the world financial crisis.

    The Italian Prime Minister, Silvio Berlusconi, said the government was prepared to buy stakes in failing banks while waiving voting rights in an effort to guarantee stability.

    “Eventual intervention will be carried out by the treasury,” said Mr Berlusconi after a cabinet meeting to address the impact on Italy of the global credit crisis.

    The Netherlands trebled the amount of savers’ deposits it will protect to 100,000 euros (£77,700; $136,776).

    The Greek government said on Friday it would fully guarantee all bank deposits of citizens, but an official added that this was a “political commitment” and the banking system was not at risk.

    The Danish government and banks on Sunday agreed a crisis plan which removes the ceiling on savings deposit guarantees, to be funded partly by banks and partly by the taxpayer.

    President Dmitry Medvedev announced 950 billion roubles ($36.4bn) of long term help for banks at an emergency Kremlin meeting on Tuesday.

    Russia’s two leading stock exchanges were forced to close after suffering massive falls in value.

    Trading on the RTS and Micex bourses was postponed on Wednesday for a second time in less than a week after each fell by more than 10% on opening.

    Russian President Dmitry Medvedev called for urgent international measures to combat the global financial crisis in a statement.

    “The crisis of the international financial system demands urgent joint action. It’s absolutely obvious the time has come for new decisions,” said Mr Medvedev.

    Falls halt Russian market trading
    Australia’s central bank has cut its key interest rate from 7% to 6% – a much bigger-than-expected reduction.

    The Reserve Bank of Australia said that the sharp cut was justified given the prospects for growth, even though inflation is currently above target.

    Prime Minister Kevin Rudd said the move would maintain financial stability and help Australia in “tough times ahead”.

    The cut, the bank’s largest since May 1992, was well received by investors and the stock market rallied.

    Observers had only expected the rate to be cut to 6.5%.

    Australia slashes interest rates

    The Hungarian government has proposed raising the guarantee on bank deposits from the current 6m to 13m forints (£40,000; 51,000 euro) following talks with the president of the Hungarian central bank.

    The proposal will go before parliament for approval on Monday.

  67. Missing from that list is a story about a troubled Canadian bank.

    Is Stephen Harper supposed to step up to the plate and bail out Belgian banks?

  68. Well, gee, after the CPC took advantage of Adscam, we now have a good deal of sour grapes and whining because the CPC appears to be mismanaging its campaign. Boo hoo. Mr. Harper engineered this election and if he wasn’t prepared to fight it with flexibility, that’s his problem.

  69. Whoops. Sorry, stephen. I missed this part where you said Here is the text…read it and tell me Canada has a problem….it doesnt by the way.

  70. Stephen G,

    I know long email…sorry…

    Diane, and what does it have to do with Adscam? This is a problem with people not having perspective on a story. Open your eyes, look around and see just how bad others have it.

    The US had to pledge a bail out package of 5% of its GDP, maybe more. The UK just pledged 33% of its annual GDP!!! OMFG

    Canada has had to spend how much of taxpayer capital….ZERO, not one red cent, whereas adscam had a 100,000,000 fraud tag attached to it, but we wont go there.

    NOTHING, so the fact that the Cons arent having to run around like headless chickens, a la Paul Martin, is a bad thing? Do we miss the drama that much?
    Now I will say I do think Harper should have been strutting a la Chretien, but it isnt in him to do that, it wouldnt be authentic.

    But maybe some people can give their head a shake, assuming things settle out a bit, and recognize that maybe the reason we didnt call the fire department was because there wasnt a fire, and that was due to some prudency, good gardening on the part of the current government.

    So you can worry about who emotes the best, but I would rather be in a situation where emoting wasnt required…

    Look at the facts, two leaders paniced and spouted and one leader remained calm. I tell you, Dion will regret his actions by the end of the week if the markets settle out and the all clear is sounded. He and Layton will look like cassandra’s of the worst order….not a leader will still apply, only more so.

    Canadians should appreciate our little island built on high ground. I am sure the point will be made.

  71. Hi Andrew,

    I take your points. Your post is very good. I would suggest, however, that there is one exception – the income trust scandal.

    Senior citizens investing in blue chip preferred stuff looking for a safe income instrument were told by the CPC that income trusts would not be taxed. Their advisors signed them up telling them that the conservative government would keep income trusts safe.

    You are quite right that society, government, is not responsible for the downside of an investor’s portfolio. The government, however, should not knowingly cause the downside, as it did in the income trust case.

    Keep up the good work.

  72. This is all kind of nonsense. If the US market crashes (and John McGlaughlin, no less, predicted 11 percent unemployment US next year. Would that make it 15 up here?) ours crashes. We have all parties proudly declaring that they won’t run deficits, which is lunatic as we learned from Tommy Douglas and Bennett. Nothing wrong with deficits provided you don’t run them to 45 billion a year because you’ve jacked interest rates to eighteen percent, and you accept that they will be temporary meaning you’re investing the money in infrastructure and capital projects which trickle money up through jobs.

    Green Shift ironically could save us by stimulating high tech jobs making photovoltaic cells, windmills, hydrogen cell cars, electric cars, diesel from algae and octane from hydron and carbon dioxide. And none of it courtesy of government oversight but plain jane enrepreneurs sensing profit.

  73. “The US and European banking systems ‘have a solvency problem’ (a polite way of saying ‘are broke’).”

    Putting aside the question of whether this originated in the banking sector, this is not why Bernanke spent the last year transforming the Fed’s balance sheet. He was trying to get liquidity into the market, recognising that traditional monetary levers were insufficient. That’s why Carney pushed for new powers for the Bank of Canada.

    There is a lack of liquidity in the American market that is now spreading to Europe (and possibly to Canada). Read the model of this Krugman posted to his blog a couple of days ago – he points out in passing that housing values are still relatively high. If the underlying asset values are still high, your institution is not insolvent. That’s why TARP might work, even though the problem might be better addressed through equity purchases by the government.

    Canada does not have a housing bubble, nor does it currently have banks in crisis. It could be hit by the credit crisis, though, and it would be helpful to have a discussion over how that might be averted or mitigated.

  74. The issue is not that he said anything about stocks! It’s the fact he offered no empathy for anyone suffering from the meltdown. People that play the stock market know they should buy low and sell high. People that have pensions or RRSPs which have money in play that they do not “control”, where others are making bets in the markets for them andf who are faced with diminishing portfolios are being hurt. Sure, everyone take your money out of the market! That would really be helpful, eh! Or maybe with the diminishing returns those that are playing the markets are making stupid choices and are causing people’s pension funds to drop substantially. Yes, I’m sure that’s it, those market ofiicianados are the one’s causing the portfolios of the elderly pensioners to hit rock bottom!

    Stephen Harper had a choice of what comment to make to Mansbridge’s question and he chose to make light of it and suggest people buy, afterall it is a down market!

    Instead he blew it by saying this. People would have listened harder to his message about the economy if he had shown some empathy for their plight! That, however, is not somehting that Stephen Harper knows how to do. It’s his way or the highway and if you don’t understand that then, well, then your are “dysfunctional” (and maybe we need to have an election!!!).

  75. Andrew,

    Regarding “The 85 lefty economists who signed that letter demanding the government go into deficit and otherwise “stimulate” the economy might have been out to lunch, but they were at least putting their names on the line, and exposing their proposals to public criticism.”


    Many signers don’t even appear to be economists at all, unless sociologists count.

  76. it is to bad that this is in your blog and not in your magazine…..on the last week of the campaign it is disapointing that one of the few slightly balanced media sources (mccleans) had there most critical issue on Harper & the conservatives….the timing is wonderful and funny in light of your blog where you laugh at everyone else…I’m not saying you guys aren’t 100% better, you are…but it looks like your magazine joined the pile on this week, the most important week of the cammpaign…what I can’t understand is how almost 70% of canadians want to vote for separatists, socialists, crazy environmental greens who want to go back to the dark ages and the lost & arrogant natural governing party who has elected the weakest leader in it’s history, has gone the furthest left in its history and wants the greatest rejiggering of our tax system probably ever….why isn’t anyone talking about how the majority of canadians must be not balls to be horrified of these guys.

  77. If you think the English channels have it in for Harper…Listened to Radio Canada’s 6:00 newscast with later commentary by Michel Auger. The only shots of the Conservatives were about a press conference with Con candidates and Josée Verner the Quebec spokesperson for the Conservatives. It supposedly showed how nervous the conservatives are and how Josée is overwhelmed by the tension. Next we get a long coverage of a demonstration against the Cons outside by Kyoto supporters – the same ‘spontaneous’ group that shows up at every Con. meeting and rally.

    Radio Canada and Auger were salivating at the possibility of a Dion minority and the coverage ended with the anchor saying what a great end of the election to look forward to!

  78. Canada is already running a $23 billion dollar deficit that Harper and Flaherty are avoiding talking about using semantics as a shield.

    Ask Harper point blank – what’s the NET surplus/deficit figure.

    He’s hiding behind the good ol’ “budgetary surplus” chunk of the balance sheet. There’s the very significant other side which currently is $23 billion to the red.

    That’s not chump change… and the debt was incurred during “better” economic times this year.

    A commodity price collapse, a manufacturing collapse, and a housing slowdown which is asserting itself very clearly in markets like Vancouver, Calgary, Edmonton, southern BC interior and other areas that have been visited by bubblicious speculation – well these things are going to make it hard or impossible to achieve revenue projections that would have been made at budget time.

    By the way, $23 BILLION is far and about the largest financial requirement (debt) the finance ministry has taken on in any individual year over this entire decade. Almost double the next closest, and several times larger than the average.

    Much larger than post 9-11. Larger than SARS.

    And the economic crisis hasn’t even shown up properly in Canada’s financial statements.

    Another point blank question to ask Flaherty or Harper is why the next monthly update for Canada’s books won’t be published until Oct 20, six days after the election. Coupled with tomorrow’s Afghan mission costing, Canadians are likely to want to have a much more up to date picture of the country’s finances than July’s snapshot.

    I’m an investor. I want to see such data – country or corporation. Lets see it. Now. Its the “conservative” thing to do.

    PS: An easy to understand chart showing the significant increase in government borrowing this year, source data and a spreadsheet is available for your looking and downloading pleasure:


  79. Actually disagree, Coyne. Dion, Layton are doing exactly what anyone would expect of opposition parties.

    The Real Question, is why is not the Media reporting the sensible points you just brought up? They seem to be behind the shrill chicken little cries as well….

  80. Awesome article Sir.

    After reading the comments I finally understand why my country sucks. Seems like barely a third of the country has any real men left. The rest of you are like screaming women and children. I finally now undersdand who is voting for those 4 parties. I alway’s though it was mostly mindless, faceless folks that did not take the time to inform themself on their choices with a slant towards the gimy for nothing crowd.

    What do you guy’s do? Run home to your famelies and cry that the gov’t didn’t more of other peoples money to save your ass? Own up to your shit dudes.

    And crying and whining that our prime minister is not acting like a scared kid on your behalf? God lord. A man in control does not do that, but I guess for your vote he should pretend to not have a clue. Same old shit, you want the tooth fairy to tell you rosy stories, because you are not grown up enough for reality.

  81. Man, man, man, finally a reasonable voice ringing up out of this wilderness! I have not read one of the comments underneath your honest and much needed ‘diatribe’, Andrew. Thank you so much. I know you are all for people taking personal responsibility. You clearly said so when speaking on OTV during that ‘Munk centre’ debate back in February, the one in which Ms.May so openly expressed her opinion on the understanding of Canadian voters.

    But you know what? If you really care to look at the past few weeks and start analyzing what has happened in this particular campaign, we must bring the presence of two solitudes within Canadian politics to the fore once more. Again? No, please, not again, and yet it is so.

    Yes, yes, Harper fumbled in his response to the art’s gala. But what he had said had a truth ring to it as well; afterall the arts funding had not really been cut back, but had merely been altered. I don’t really want to bring up the arts funding issue again (hoping that this country will have an ongoing debate about that after the election), other than to say that the art’s cuts, AS AN ISSUE, have been grabbed onto as a real possibility for renewing the BQ’s position: the possibility to upstage the Canadian potential once again.

    No one asked if perhaps the province of Quebec has certain responsibilities for keeping Quebec culture flourishing. No one asked if perhaps a provincially based party, namely the BQ, should have such wide ranging powers within a federal election. Do other provinces get a chance to play with the big guys one of these days? And if so, would they be able to get off completely scott free? And why do you think Duceppe kept hammering at the Kyoto target setting?

    Here is another thing I think about daily: The poopin’ puffin was considered an insult to many Canadians. The 22 minute campaign to turn Mr.Day into Ms.Doris Day was considered a hoot! He had deserved it, no doubt, but why had the poopin’ puffin not been equally deserved? It had been Ignatieff afterall who had suggested the bird to pose as mascot for the Liberal party, and let’s be frank, if Stockwell day had pooped on his own parade (the creation story, the ride on the sea-do, etc.) it had been Mr.Ignatieff and Mr.Rae, just to single out these two, who had dumped a lot of stuff onto Mr.Dion. I cannot, for the life of me, figure out why this difference of tolerance keeps persisting.

    But that same level of tolerance difference is being presented over and over again. We ‘must’ attack Mr.Harper for being to ‘barbarian’ when speaking about the ‘cultured elite’ who did not really care for speaking the truth, or else the country will break itself in half, and Mr.Duceppe gets to ride the dividend all the way to a soon to be released election’s result. He saw that one coming from miles away.

    In the meantime, many Albertans (and perhaps Saskatchewanians and Newfies also) are wondering how long the $7 @ day daycare within Quebec will continue if the tarsands are put on hold, or the Big Oil ‘cheaters’ are ‘put in their place’.

    Mr.Dion doesn’t come close to seeing below the surface. He prefers to not scratch the surface. His Green Shift might hold merit, but honest about it he is not. He makes it sound as if there will be no cost associated with the plan, but there will be, as there will be under the Conservative proposed cap and traden plan; the difference being that Harper actually admits to it, and has done so repeatedly (see debates as well) while Dion keeps harping at the neutrality of it all – that’s the deception.

    I believe it was Harper also who, during the first part of the campaign, told us about the potential for renewed regional tensions appearing out of the Green Shift. He didn’t have to shout it off rooftops because subtle understanding might work for the better here, as they appear to do under Duceppe’s manouvering play-out of deceptions.

    But in any case: thank you for bringing up personal responsibility. Let’s come to an understanding of where the average Canadian voter really stands on things.

  82. Stephen,

    I went and looked at the daily spread between the Canada bank rate and the 1-month commercial paper rate. Since 1998, the commercial paper rate had never been as much as 35 bp above the bank rate – until August 2007. During the past month, this spread has regularly hit record highs (43 bp on Sept. 14, 45 bp on Sept. 17, 50 bp on Oct. 2, 53 bp on Oct. 3). I think this is plausible evidence of the credit crunch hitting Canada. Mark Carney may not be able to fend this off all by his lonesome.

  83. I am relieved to FINALLY read someone who still has a functioning brain during this socialist uprising. But I guess that Andrew’s sound words won’t change much to the big picture on Oct. 14…

  84. I’m voting for Andrew for Prime Minister. He’s the only one who makes sense.

  85. For those who clain that Canadian’s don’t have the money to invest in the market’s bargains… cry me a river.

    Way too many of us made the decision earlier on that we wanted to invest in travel trailers, boats, expensive home renovations, vacations and cars with nav systems and DVD players.

    My wife and I have never had a combined income in excess of $50K a year, yet we paid off our mortagage(s)early, retired young, take vacations, buy a new car now and again and have invested for our retirement. We have no pension plan, but a substantial investment portfolio. Sure, it’s down somewhat today. But so what. We don’t need to draw on it yet because we’ve put cash away for such rainy days and should we choose to do so, we’ll use some of our rainy day cash to buy some of the bargains.

    If we can do all that on a $50K combined income, I have little sympathy for those many who chosen to buy all of lifes little shiny baubles instead.

  86. I am a retiree on a fixed income and the prospect of having Stephane Dion as leader makes me afraid. I don’t know if, in all the hype, people are checking to see what his tax means.
    For me and my husband on a combined on a combined income of $60,000, according to the calculator on the ‘green shift” web site, the tax benefit (income tax return) would be $578.
    The Globe and Mail (http://network.nationalpost.com/np/blogs/posted/archive/2008/06/19/the-liberal-carbon-tax-by-the-numbers.aspx) estimate that the annual increase in my heating cost (natural gas) will be between $228 and $266. per year.
    That may sound good but consider that the increase cost of a trucker’s diesel fuel is expected to go up by $1700 annually. Things begin to look a little darker. That means increase in almost everything that I buy, as the trucking companies will surely pass the costs down to us. Food, especially, will be getting more expensive.
    What with the economy in a downward turn and from what I hear the high possibility of inflation, Dion’s plan becomes very scary indeed.
    I think Harper seems to be on the right track, careful, no extra taxes, but I think he’s doing a disservice to everyone by not exposing this tax for what it really is, a further tax burden on Canadians.
    Dion’s tax will probably produce a greener Canada but the burden on the ordinary Canadian will be heavy.

  87. “In a cruel twist the PM was criticized in year end interviews for saying there were storm clouds on the horizon. Too critical yada yada”

    As for proof that the media bias is part of Harper’s problem – you have to look no further than the fact that every one of them have those interviews in their vaults – they know for a fact that the PM planned for this – yet they continue to promote the fact “he didn’t get it until too late and now he is reacting”.

    So here is a question for Andrew – why are those year end interviews not pulled out and put on the airwaves to calm the Canadian people that the Government has been planning for this? Why would the press not want to calm Canadians fears?

  88. “People would have listened harder to his message about the economy if he had shown some empathy for their plight!”

    BobbyB – I keep hearing this type of comment all over the newspapers and airwaves. Maybe you could tell me what he could have said that would not have been spun exactly like this one was.

    Please – let me know because in my mind, saying “I feel your pain” or “my mother has stocks” gets the same negative spin from the opposition and the media.

  89. “as the trucking companies will surely pass the costs down to us.”

    If they do it means they’re keeping the tax break that came with it to themselves.

  90. Style,
    That may be the case. This and Libor are the things to watch, rather than political statements.

    The increased risk drives the cost, as does the supply of money available for these purposes and the demand, if the demand is high and the supply low then the price goes up, that little tautology never gets old :->

    this is the canary in the coal mine, and if they can find ways to affect it so it is operating normally then we drop back from Hurrican storm to just a nasty wind. Fortunatley we havent seen these issues, to date, in canada….but the you are correct taht may change.

  91. Buy low; sell high!

  92. Stephen,

    True enough that risk, supply and demand determine prices. What’s happening in Canada now is that the price of commercial paper is tanking:
    – supply hasn’t increased
    – demand may be dropping due to international conditions
    – the risk premium might be rising.

    If it’s the third factor that’s dominant, then it’s not clear how the Government should react. DeLong has a good description of how Bernanke tried “open market operations aimed at the risk premium” (Operation Twist) and notes that they weren’t sufficient. This suggests Mark Carney won’t be able to head this off and the incoming Canadian government may need to intervene…I suspect journalists need to get past the real estate and stock market indicators for us to hear any debate over this…

  93. From my comment in “Broker-in-Chief” of two nights ago:

    Chrystal, if seniors are so heavily invested in equities, despite enough common sense out there telling you to have more safety in your wealth as you age, then, here I am at my sympathetic emotional best: tough on you, you screwed up what’s left of your own future. Why is that Harper’s problem?
    It is not the job of the PM to push the TSX to infinite. If enough Canadians feel that is the job of a PM, then we deserve the mess we’ll get.

    OK, so Andrew Coyne did a far better job explaining why the sky is not falling, and especially why panicky investors should look at the mirror for blame. And I’m not Australian. So I guess it’s not plagiarism. But I’m watching you, buster…

  94. Finally! I’m glad to see a voice of reason. The media is doing a great disservice to the Canadian People even though they would have you believe differently. I ask two Questions: How is implementing a new tax now (i.e. the Carbon Tax) going to help the present economic situation? and How is taxing Corporations at a high level going to help keep jobs in this country? Everyone needs to start thinking logically and not emotionally. A steady hand in these times is what is needed, not a fuzzy teddy bear who can provide nothing but a hug at best!

  95. Marg: The tax on carbon won’t help the present economy, however, the accompanying reductions in corporate and personal income tax from the Green Shift should, and the carbon tax will help the future economy.

  96. Finally….a refreshing change from the propoganda being passed off as news. As for the Green Shift Marg beware of those that say tax breaks will make up for the Green Shift. They won’t – they can’t – Dion is proposing higher spending on social programs and inventing new ones as well. Someone has to got to pay for it. There is nothing neutral about his plan we will all pay. Truckers will not be receiving their $1700.00 a month back even if they receive a tax break at the end of the year. Even if they got it all back (fantasy land)they cannot afford to defer the extra charges. In any case the most worrisome will be the tax on heating and electricity. Not all provinces have access to Hydro so they use coal fired generators….in fact the oil sands are not the highest ghg producer in the country…electricity producers are. The tax on electricity will be passed down through every business and product that requires energy in order to be made…that is a fact. Not to mention what it will cost to heat a home.

  97. Surely everyone is aware just how Dion’s “Revenue Neutrality” works? It’s a synonym for Liberal client groups.

  98. Yeah, after this column I’m thinking about a “Coyne ’08” write-in campaign.

    The opposition are ABSOLUTELY cheering for a recession. Elizabeth May openly stated she wants an 80 cent dollar. Well, after 5 or 6 days of market meltdown, we’re around the 87 cent mark, and if this continues she might just get her wish.

    Mind you, if you asked May today, she’d probably blame Harper for the current state of the dollar and ask when is that bad man going to “do something??!!”.

    Then when asked about her previous comments, she’d probably deny them. And when confronted with video of them, she’d claim she was misquoted, or she talks too fast for Canadians to understand her, or some other such nonsense.

    This is coming from the same woman who said in the debate that Canada needs more pulp and paper mills. Seriously. One of the heaviest polluting sectors in the economy today. She was probably “misquoted” about that too.

  99. On the prospect of a housing crash in Canada I would like to point out that Canadians are paying a steep interest cost on their home mortgages due to the inflated prices of single family dwellings relative to average Canadian income. For some time companies like Xceed Mortgage Corp. and GEMoney have been granting the mortgages to middle income Canadians when the Banks won’t and the need is great. The effect has been to push many people completely out of the housing market forever. So while there may not be a housing crash to raise the alarms in the Banking Industry and Government, I think it is important to understand that many more Canadians are living closer and tighter in high density and it is our standard of living that is crashing.

  100. diane marie: “Well, gee, after the CPC took advantage of Adscam, we now have a good deal of sour grapes and whining because the CPC appears to be mismanaging its campaign. Boo hoo.”

    Only a Liberal could compare and equate taking political advantage for the biggest political scandal in modern Canadian history (!), and taking political advantage off a global economic crisis that isn’t hitting Canada as hard as it’s hitting others.

    Yeah, like Adscam wasn’t the Liberals fault, and that they didn’t gain an unfair advantage through it for two elections (1997 & 2000)!

    Oh no, not their fault at all … BUT this global economic crisis that has its origins in the country directly south of us, the one with the economy 12x our own, yeah, that’s all Harper’s fault!

    I despair for what passes as fair comment in this country! Seriously! Get serious people!

  101. I despair for what passes as fair comment in this country! Seriously! Get serious people!

    I know that I speak for all of Canada when I say…We’ll try.

  102. yes it is common sense. but you are also investing your trust into these things.

  103. Absolutely bang on Coyne. These are the facts, but the facts are troublesome for Dion and Layton. They want to first manufacture an economic crisis, and then blame in on Harper.

    They are truly vile and disgusting human beings, for fearmongering 36 million people into voting for them.

  104. I see this week The Economist is tepidly endorsing Harper while lambasting the opposition parties for sowing unjustified panic (see their editorial on the election and their article on the oppositions tactics).

    It seems to me that Canadians don’t know how to react to our new place as the global economic and governmental standard. Things were so much simpler back when we were just another backetcase eh? ;)

  105. I see this week The Economist is tepidly endorsing Harper while lambasting the opposition parties for sowing unjustified panic (see their editorial on the election and their article on the oppositions tactics).

    It seems to me that Canadians don’t know how to react to our new place as the global economic and governmental standard. Things were so much simpler back when we were just another backetcase eh? ;)

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