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Archive for November, 2008

Stimulated by Tax Cuts?

Even as Conservatives jettison some of the worst features of Thursday’s economic statement, they appeared on this morning’s TV news programs reiterating that their tax cuts are worth 2% of GDP – the amount of stimulus recommended by the International Monetary Fund. Almost a year ago, Marc began noting the dubiousness of casting tax cuts […]

Economic Crisis and Coalition

Canadian Labour Congress Statement Why We Need a Coalition Government to Deal with the Economic Crisis. The Economic and Fiscal Update released by Finance Minister Flaherty on November 27, 2008 demonstrates that the Conservative government has no intention of seriously dealing with the global economic crisis and the prospect of fast rising unemployment. The recent […]

Fiscal Statement: Credibility Lost and Opportunity Squandered

I wasn’t originally planning to write a longer analysis and critique of Flaherty’s fiscal and economic statement beyond our immediate response because, like most people, I expected it would at least show some reasonable recognition of the problem and at least the framework for a stimulus program (besides, I had young children to pick up […]

PEF in the News

The PEF got a plug in the Toronto Star today. This article by Linda Diebel noted our open letter on the economic crisis and interviewed a few of our signatories. Overall it is a good article and the comments of a few signatories are excellent. We really appreciate the plug, but I should note, as […]

Capping Equalization

The Equalization changes are probably the most fiscally significant cuts in yesterday’s unstimulating Economic Statement. In 2009-10, the program is projected to pay out $14.2 billion instead of $16 billion. In 2010-11, it will pay $14.5 billion instead of $20 billion. This $5.5 billion difference exceeds the $3.5 billion in total projected savings from spending […]

We need public investment

http://news.guelphmercury.com/Opinions/article/409306 Today’s economic update by Jim Flaherty must provide investment in jobs the canadian press November 27, 2008 Ken Georgetti Federal Finance Minister Jim Flaherty must use today’s economic update to become part of the solution to our ever deepening economic crisis. Governments, leading economists and even the International Monetary Fund agree that cutting interest […]

Canada’s Non-Stimulus Package

By desperately clinging to the façade of a balanced budget, today’s Economic Statement rules out a meaningful stimulus package. The federal government optimistically assumes an economic slowdown rather than a sustained recession (it projects real GDP growth every year). To avoid the modest annual deficits that a slowdown would cause, the government proposes to reduce overall […]

Life After the Economic Crisis

Much has been written on this blog about immediate responses to the crisis. We have analyzed proposed measures in depth and advocated for bold novel solutions. But it seems to me that we haven’t spent much time looking forward a little past the here and now. Last week, I was contacted by a Montreal-based journalist, […]

Waiting for Stimulus

It appears that, once again, “We are all Keynesians now.” Almost everyone agrees that the federal government needs to inject significant fiscal stimulus into the deteriorating Canadian economy. In particular, there now seems to be a consensus for more infrastructure investment. While accepting this prescription in theory, the federal Conservatives maintain that tomorrow will simply […]

Deficits and Functional Finance

The following sign-on letter comes from PEF steering committee members Louis-Philippe Rochon and Mario Seccareccia, who challenge us to think differently about the role of deficits in fiscal policy. The Toronto Star’s Carol Goar recently published an article based on the letter. A NOTE ON DEFICITS AND FUNCTIONAL FINANCE EXPENDITURES Louis-Philippe Rochon, Associate Professor of […]

Alternative Economic and Fiscal Update

The CCPA released an Alternative EFU today by yours truly (with lots of helpful comments from other PEF bloggers!). It is available here. The EFU is a prelude to the feds’ own EFU to be released Thursday. I modeled four scenarios of economic downturn to see what the status quo deficits look like, as other […]

The Financial Crisis and Interprovincial Trade

In Saturday’s Globe, Gordon Campbell ridiculously presented eliminating inter-provincial barriers as a response to the global financial crisis. Although Marc beat me to the punch in replying, I have a few further thoughts. Several months ago, TILMA boosters said that removing alleged barriers to labour mobility was particularly pressing given a “tight” labour market. Today, […]

Obama’s green response to the crisis

This is very good news, given concerns that the economic crisis would push climate change off the table: Barack Obama and congressional leaders are preparing rapid legislation to cut US emissions that cause global warming and to kick-start a clean energy revolution. Two bills are to be introduced as soon as the President-elect takes office […]

Dumb ideas for fighting the downturn

The financial crisis and economic downturn have led to some silly ideas, namely, completing the Doha Round of trade talks at the WTO, and in Canada, a variant around eliminating inter-provincial trade barriers. BC Premier Gordon Campbell has pressed for the latter, in spite of scant evidence that any meaningful barriers actually exist (the perception, […]

Monetary policy through the looking glass

Many have noted that central bank lowering of short-term interest rates is running up against its limits, and  we are hearing calls for major fiscal stimulus, i.e. large deficits. In a normal world, this raises the spectre of the government having to sell bonds to the private sector to get the funds, which could actually […]

Time to Revisit the Mainstream Theoretical Framework

There’s a great article in today’s Vancouver Sun hammering on the fact that all major mainstream economists failed to anticipate the economic crisis. Provocatively titled Economics 101: Everything you know is wrong, the article quotes James Galbraith’s indictment on the mainstream of the profession that originally appeared in a New York Times Magazine article: “There […]

The Spectre of Deflation

Seasonally-adjusted consumer prices fell by 0.5% between September and October. While less dramatic than the 1.0% drop in the US, the sudden drop in Canadian prices also raises the possibility of deflation. The annual inflation rate declined from 3.4% in September to 2.6% in October, well below the US rate of 3.7% in October. This […]

Parliamentary Budget Office misses the mark

Canada now has a Parliamentary Budget Office to make budget projections for the Minister of Finance. This office in no small part owes its existence to the CCPA’s Alternative Federal Budget, which under Jim Stanford’s guidance, was the first and only voice to call the then-Liberal government on its excessively prudent (read: wrong) budget projections, […]

London Calling

I’m just back from visiting family in England, and got to have a first-hand look at how the economic crisis is playing out on the other side of the Atlantic. Suffice it to say, it is the dominant story. Before we left, the Bank of England cut short-term interest rates by 1.5% and it was […]

Stock tips from the PM

“I think there’s probably a lot of great buying opportunities emerging in the stock market as a consequence of all this panic.” – Prime Minister Stephen Harper, Oct 7, 2008, cited in the Globe from his CBC interview The TSX index closed that day at 9829.55 Today’s close was 7724.76. Thus, the TSX has dropped […]

The Speech from the Throne and Foreign Ownership

Says that “Our government will proceed with legislation to modernize our competition and investment laws, implementing many of the recommendations of the Competition Policy Review Panel.” The key recommendation of the panel was that only very large foreign takeovers worth more than $1 Billion (vs $300 Million today) should be reviewed at all, and that […]

Blakeney on Royalties, the Charter and NAFTA

Allan Blakeney, Saskatchewan’s Premier from 1971 until 1982, just published his memoirs, An Honourable Calling. Book launches are scheduled in Regina (Nov. 25), Saskatoon (Nov. 27), Moose Jaw (Dec. 2) and Ottawa (Dec. 9). A few years ago, Blakeney had me pull together some facts and figures for his chapter on oil, so I was […]

The Financial Crisis and Individual Retirement Savings

There’s been a fair bit of coverage recently about the big hit to defined benefit pension plans as a result of collapsing equity markets. That’s not a pretty sight, and many plan sponsors face serious short to medium term difficulties in financing their plans as funding deficits increase. But, most pension plan members can still […]

The G20 Summit Falls Short

International labour leaders including CLC President Ken Georgetti met with the heads of the IMF and World Bank, President Lula of Brazil and several other G-20 leaders before the summit to speak to the major trade union statement which called for immediate, co-ordinated action to avert a global jobs crisis, and fundamental reform of the de-regulated […]

Economic Crisis: World’s Trade Unions Respond

This statement is well worth reading, and may have some modest influence on the meetings. Brussels, 13 November (ITUC OnLine): Trade union leaders from the G20 countries will put forward a comprehensive plan to turn around the global economy, in meetings with world leaders in Washington DC on the eve of the financial crisis summit […]

Uniting the Left

There’s a lot of talk on the net and in the media right about how to “unite the left” post election, with Murray Dobbin, many folks at rabble.ca and a few others talking about the need for an immediate coalition of the opposition parties to defeat the Conservatives. The project of some immediate union of […]

Saskatchewan’s Tax Cuts

The conventional wisdom may be that political parties cannot successfully campaign against tax cuts. But the federal NDP recently achieved its second-best electoral result ever by running squarely against Harper’s corporate tax cuts. South of the border, the US Democrats just won a massive victory partly by campaigning against the Bush tax cuts. In public opinion […]

The G-20 Summit

Eric Helleiner and Stefano Pagliari have written an excellent briefing note on the politics of regulatory reform heading into the summit. In a nutshell, they argue that Franco-German initiatives to regulate some key elements of global finance – executive compensation rewarding extreme short termist, risky behaviour; off balance sheet activities; the fringe banking sector; over […]

Leader-Post Debate on Oil Royalties

The Regina Leader-Post recently ran an editorial opposing my proposal for higher resource royalties. My response is printed in today’s edition: The Leader-Post’s October 28 editorial critiqued my suggestion that the government of Saskatchewan increase oil royalties. It emphasized volatile oil prices, the volume of oil production in Saskatchewan and competition with Alberta. In fact, […]

Whither Commodity Prices?

I recently noted that, although the price of oil has fallen by half from its summer peak, it still approximately equals last year’s average. Last year was thought to be a time of very high oil prices. Beyond observing that most commodity prices are way down from their recent peaks, it is difficult to generalize […]