# 15 Oct 08: Challenges for the Next Canadian Government



## Edward Campbell (5 Oct 2008)

Although we are more than a week away from the 14 Oct 08 general election, some of the important and difficult challenges facing Canada are already quite evident - beyond an economic crisis that is, hopefully, transitory in nature. We have discussed some of them in out own *real issues* thread but there are many more.

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from yesterday’s _Globe and Mail_,is an excellent article by Edward Alden on one of the many challenges facing the next government:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081003.wcoessay1004/BNStory/specialComment/home/?pageRequested=2


> The Great Wall of the United States
> 
> EDWARD ALDEN
> 
> ...




It has been said many times before but it bears repeating: for early 21st century America, security trumps trade and trade agreements.

For Canada, on the other hand, the challenge remains the same one we faced throughout the last century: how to profit from our lopsided relationship with the USA.

Both need to relearn the old lesson that Alden repeats: For each, “openness is its greatest strength.”

In the USA the _Lou Dobbs_ faction of neo-isolationist, economically illiterate mouth breathers will scream “America First!” In Canada the loony-left, mindlessly anti-American, economically illiterate mouth breathers will complain that any sensible act towards establishing continental* borders is “knuckling under to Uncle Sam.” Both factions are wrong – but there is just enough of a tiny grain of truth and much more of popular myth (which is better than truth (see, e.g. _peacekeeping_)) in each position to give them huge credence in their respective populations. 

Alden presents the challenge, clearly, as: _”the next Canadian government will have to sit down with the next U.S. administration and gently try to nudge it back to the spirit of the Smart Border accords. Ottawa will have to try to persuade the new White House to separate the northern border issues of security versus commerce from the far more complicated southern border stew of drugs, gangs, corruption and illegal immigration. They will have to point out that a modern, global economy cannot function without a high degree of trust.”_

Despite the ongoing economic crisis, the USA remains a large, rich, nearby, secure (by laws) and friendly market – exactly the market we *need* for our prosperity. We need a true _common market_ for goods, services and people. We, Canadians, can compete successfully with the Americans – and they with us – in such a market. But it requires a leap. Every good, every item in Canada must be ‘acceptable’ in the USA, every person in the USA must be ‘acceptable’ in Canada, and so on – in both directions. In other words, we need a common, continental border. We need to harmonize production and import standards and (especially tariff) regulations for goods and services - a task that is already about 95% complete, I have heard/read. Common immigration standards and the free movement of people might will be more difficult but need not be managed coincidentally with goods and services.

But it – a ‘smart’ but above all open border – is one of the first challenges with which new Canadian and US governments need to deal. It is an important issue for the USA - one of many, it is vital issue for Canada.


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* But, of necessity, excluding Mexico which, despite impressive progress, is not a modern, sophisticated, capitalist, liberal democracy in which the rule of law and the principle of equality at law have much sway.


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## Edward Campbell (5 Oct 2008)

This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is, _essentially_, the Harper/Conservative position and one with which The Ruxted Group concurred:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081004.wafghan1004/BNStory/International/home


> Afghan victory impossible to achieve, British commander says
> 
> JILL LAWLESS
> The Associated Press
> ...




Many people will recoil from this thesis – as did Jim Davis, father of the late Cpl. Paul Davis. But, while Ruxted agrees that we should stay the course until sensible’ victory conditions’ are obtained, those conditions are, essentially, what Brig* Mark Carleton-Smith describes: the Afghan people being able to make their own social and political decisions – even decision with which we will disagree – in their own ways, subject only to not, once again, making their state a _de facto_ terrorist/enemy base; and the Afghan government being – minimally - able to look after its own security.

Canada ought not to leave Afghanistan, not in 2011, perhaps not until, as Thucydides said until 2015 or later, But, our current mission, may – arguably should - change quite radically.

The challenge for the next government is to present a clear, coherent *strategy* to Canadians – not just for Afghanistan but for Canada’s place and ‘role’ in the world.


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* Note to media: here are no brigadier generals (Brig.-Gen.) in the British Army. The rank is brigadier. There *were* brigadier generals (in the British Army) during the First World war but, around 1920, here was a great hue and cry in the British parliament re; the Army being “all bands and brigadier generals” or something like that. The army responded, by renaming the brigadier generals as brigadiers and rebadging them to look more like colonels. _Voila_! Problem solved.


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## The Bread Guy (5 Oct 2008)

<slight hijack>

And if you want to see how other media outlets picked up and covered the same comments, check here:
http://forums.army.ca/forums/threads/80304.0.html

</slight hijack>

Back to your regularly scheduled thread....


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## Edward Campbell (10 Oct 2008)

It might be fun to *imagine* some of the goings-on in _Official Ottawa_ later this fall, after 15 Oct 08.

It’s early in the morning, on a dull, wet late fall day, in the office of the Clerk of the Privy Council in the Langevin Block, an imposing, even handsome building across the street from Parliament Hill.

The Clerk has invited the Deputy Minister of National Defence for a _working breakfast_. It’s just the two of them, none of the other very senior officials from PCO or DND are present. The two are old friends; back in the ‘80s they were bright young economists in the Department of Finance - they have not worked together since but each has a high personal regard for the other. It’s a fine breakfast; the Clerk’s personal assistant has ensured that each is getting just what he likes, the way he likes it. Breakfast is served at the small conference table in the Clerk’s office. The conversation goes a bit like this:

Clerk (hereafter C): “Thanks for coming, _name_, I want to give you a heads up about the new government’s plans and priorities.”

Deputy Minister (hereafter D): “I appreciate that – I imagine that we are all going to have to adapt to some pretty major shocks.”

C: “Afghanistan is still a bit of a bleeding sore for your Department. The PM is adamant: we are ending the combat mission – the 800 or so soldiers doing the actual fighting and dying are coming home in 2011. But we are not leaving Afghanistan – not for quite a while. The PM understands that rebuilding Afghanistan is a Canadian commitment and it is one that he wants us to do well.  I can easily imagine that we will still be in Afghanistan, in a _nation building_ role, in 2021 and even beyond.

What will change is what we are doing, where we are doing it, with whom we are doing it, who reports on it to Parliament and the public and, to a lesser degree who is doing it. We will keep the PRT in Afghanistan but not in Kandahar. _Name_ (a very senior official from Foreign Affairs) is in Brussels today negotiating a move of the PRT – we will want to work with European or Australian, maybe NZ troops. The PRT will have more and more civilians added, but it will still be a military unit, with a military commanding officer and it have a military security force – I’m guessing that 100 to 150 soldiers will be enough. There will be a base – much smaller than Kandahar Airfield, with a large civilian contracted work force. I expect that you will have about ⅓ of the force that’s here now – maybe 850 people, all up. Finally, the Minister of Foreign Affairs will answer for the new mission in Parliament.

The biggest job for DND in 2011/2012 and 13 will be to retain more of your really great people and recruit and then train thousands of new people. Your Army will get another _operational pause_ but this time there *must* be something to show for it.

During the Army’s _operational pause_ the Navy will have to do more, to keep up Canada’s reputation for ‘punching above its weight’ in the world. 

We see the rebuilt Army as having three ‘forces’:

1.	A Defence of Canada Force which will also do about half of the ongoing PRT work and will look after Haiti which, we believe, is sure to require more help, from time to time, for decades. It’s obviously something you need to discuss inside your Department, but: The *political guidance* is that the Defence of Canada Force is to be centred on Valcartier;

2.	A light, quick reaction force able, on short notice, to send a battle group, maybe supported by a _six pack_ of fighters, anywhere in the world on very short notice. I’ll want to hear from you on what degrees of notice are reasonable under varying circumstances; and

3.	A heavy force – one that can produce and sustain battle groups like the one we have in Afghanistan for years and years, far away from home. 

The PM has been briefed by _name_ and _name_ (two highly regarded international _strategic_ specialists) and they scared him nearly witless. He is convinced that we need bigger, better armed forces – soon. This is your chance to reshape DND and the Canadian Forces into a modern, flexible, effective tool of national policy. You have support from the very top – from me and from down the hall, from the PM, himself. You’ve got to make it work – within budget.”

D: “Make what work, _name_?”

C: (Chewing on his breakfast) “The total _transformation_ of the whole place – the Department and the military. I don’t think Rick Hillier, for all his vision and imagination, ever understood what *real* transformation is all about. I want an effective and *efficient* defence organization – your part and Natynczyk’s part, too. You need more people, over all, but they need to be better organized and better utilized – you can start by telling the military that it is time that they learned how to manage and how to command and control *efficiently*. I know all about the dilemma of small forces and minimum HQ staffs and so on but, with respect to the uniformed people, there *must* be better ways – if they cannot find them then you and I may have to show them how to do it, and they wont like that one little bit!”

D: “Within budget? You’re kidding me, right? The ‘Canada First Defence Strategy’ is a bad joke. We - you, me, the PM and the whole government - are actually planning to *shrink* my budget over the next 30 years, as a share of GDP. You’re asking me to empty the ocean with a teaspoon.”

C: “Settle down, _name_, you’ve won your big war. Your new, ‘Canada First’ budget is for routine, ongoing expenses including one major – but not as big as Afghanistan, and one minor overseas operation and several small detachments on UN duty and that sort of thing. Unscheduled, unforecasted operations, like Afghanistan, will be funded by the _centre_ – by me and Finance. Your people have said that you can grow and live with that. It’s not everything you wanted – you still have to fund some operations out of your budget – but it’s more than I thought you would get. There’s enough money there for thousands of new people, new ships, new aircraft and most of the other new kit your admirals and generals say they need.

D: “Well, thanks, _name_, that’s good news. We’ll find ways to manage _efficiently_ and _effectively_.”

C: “OK, good; now here’s what scares the PM: The people over at DFAIT and my people in the Foreign/Defence, Security/Intelligence Secretariats and in the International Assessment Staff think that West Asia and the Middle East is going to remain a very serious problem – one with nuclear peril. They tell us that Africa, especially Sub-Saharan Africa is going to blow up into a series of, first, and then one great big social, political, economic, humanitarian and *military* crisis. The scale of human suffering may be more than you and I can really imagine – millions and millions dead, chaos, disease and then more and more killing.”

D: “I’m hearing similar things in my office – quiet words, for now, but really, really frightening.”

C: “Our people say we have to be ready before 2015. Ready means having bigger, better combat forces that can go, quickly, to some of the most difficult and remote places in the world, sustain themselves there and, simultaneously, fight some really bad guys, do some _nation building_ and reconstruction, and some old fashioned, blue beret style peacekeeping.”   

D: “How much bigger?”

C: “People are guessing that we may have to have 2,500 or more combat troops plus all the appropriate support/logistics and others forces. We keep hearing that you are straining to sustain a force of 2,500 in Afghanistan. My *guess* is that you’ll need to sustain more than twice that number in Africa.”

D: “OK, that’s a fair planning estimate. And we need to have that by 2015, right?”

C: “Right. The retention, recruiting and training programmes have got to work or the military will have failed the country. We, here in the centre, will provide enough, maybe just enough money, but the military has to get its wits about itself and do the damned job. There can be no excuses this time. If they cannot retain and recruit the people we need then I’m go to say, “Failure of leadership!” to the Prime Minister. Tell Natynczyk that’s a promise, not a threat.”

D: “Will do; but he’s a good guy, you know, he’s on our side. He understands efficiency, but it’s a big, slow, awkward machine – a big ship to steer. So is my side of the organization. I hear you on efficiency and effectiveness but I’m going to have to put blood on the floor, civilian and military blood, to make the kinds of changes you and I want.”

C: “I know, _name_, it’s gong to be tough. But the world is getting more and more dangerous and you and Natynczyk and your people must be ready for real, deadly threats. It’s too bad you’re all in this hole, _’tit Jean Chrétien_ really put the fiscal boots to DND and the CF and I understand how hard it is to dig your way out of the hole he put you in but you must do it. Start with leaner, meaner, tougher management and command teams. I’ll back you up when the civil service unions scream bloody murder; tell Natynczyk to do what he has to do to get the military staff to *work* – I’ve seen the numbers, I cannot believe that the defence headquarters is so HUGE.

I’ll take some actions here: we’re working on a new defence procurement system, on the lines of the Australian model. That will save people, time and money. I’ve already told _name_ at Treasury Board that she must streamline the defence spending approval process so that you get what you need when you need it – so long as your budget will support it.

I cannot promise you that your budget is sacrosanct. This financial crisis is priority one, priority two and priority three around here these days but you, _name_ and DND are the PM’s priority four. You may get cut, if our tax revenue is cut too deeply, but you wont be slashed like Chrétien and Martin did back in the ‘90s – you’ll take the same cuts as other departments, maybe even smaller ones.”

D: “Fair enough; that’s all we can ever ask for.”

C: “Well, that’s all I have for you. Thanks for taking the time to come and see me. Good luck.”

D: Thanks, _name_, and thanks for the breakfast and the guidance. We, Walt Natynczyk and I, will do our very best.”



Edit: punctuation


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## Edward Campbell (14 Oct 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ are some thoughts on tomorrow:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081014.election14/BNStory/politics/home


> Leaders face tough fight beyond finish
> *Economic turmoil, internal rifts take toll on campaigns; today's outcome may put parties' top jobs in jeopardy*
> 
> BRIAN LAGHI
> ...




If, and it is a HUGE IF the market found its ‘bottom’ last week then, aside from one more rough year (2009), this will not be a bad time to govern Canada and Dion and Layton might want to form a coalition. But, as I have mentioned before, and as Prof. Gibbins notes, while it is _fair_ to for the Liberals and NDP to join with the Bloc to defeat the government, I don’t think Canadians will support any BQ participation in a government. Still, the Liberals and NDP might be able to govern for a while with tacit BQ support – until the Bloc’s demands become too much, as they certainly will.

Most likely, however, the Liberals are only gong to get 25-27% support and Dion will be on his way out and Layton will not want to form a coalition with a party in transition and the Liberals will not want to topple Harper until they have a new leader – by which time things may be looking better and parliament will have been in session long enough for Harper to demand that the GG give him another election.

With regard to Harper’s cabinet: he should still have a few “stars” like Stockwell Day – who has done surprisingly well in the public safety portfolio, James Moore, Jay Hill, Diane Ablonczy, Jim Prentice, Jason Kenny, Laurie Hahn and so on, across the country to Peter McKay. There is enough talent to fill the key ministries: finance, foreign affairs, justice, treasure, trade, industry and defence.


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## Edward Campbell (15 Oct 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _National Post_ is Don Martin’s analysis of last night and tomorrow:

http://www.nationalpost.com/news/canada/election-2008/story.html?id=882329


> Tories get another minority, but a stronger one
> 
> Martin, National Post
> 
> ...




Notwithstanding Danny Williams all three _national_ parties are *competitive* in Atlantic Canada. It is not a Liberal fiefdom. Conservatives can win ⅓ of the seats there.

Harper managed to hold on to 10 of the Conservative’s Québec seats. There are, now, four Québecs:

1.	Montréal – an _allophone_, multicultural _enclave_ with 15± seats (more than six of the ten provinces) that remains, for now, a Liberal stronghold – but the NDP made an inroad;

2.	Small city Québec – the Québec City area and the Eastern Townships where the Conservatives do well. There are 15+ seats there;

3.	West Québec – Gatineau and the Pontiac, where all four parties are competitive, there are 5 ridings there; and

4.	Rural Québec – 40 ridings, more seats than in BC or Alberta, which is dominated by the BQ.

It seems to me that, for the next few elections, Harper’s Conservatives are only _competitive_ in 20+ seats. Their ambition must be 10 or 15 with probably none in Montréal. His policy towards Québec needs to be to appeal to ‘small city’ Québec where both _law and order_ and the _anti-culture_ stance did no real harm 

Ontario is up for grabs. I think the Liberals have a ‘lock’ on only 20 seats and I think another 10 ‘belong’ to the NDP. That leaves 75 seats in which the Conservatives are competitive. They got 50 this time, 60 is within each. Neither ‘law and order’ nor the ‘culture cuts’ did any appreciable arm in Ontario.

That makes 105 seats in Central/Eastern/Atlantic Canada (out of 213) in which the Conservatives are, at least, competitive, they won 71 of those 105 this time out.

There are 95 seats West of Ontario. The Conservatives are competitive in 80 of them; they won 72 of those 80 this time.

Big gains in Ontario and in BC came from the courting of the multicultural ‘community.’ 

All that to say that I think Don Martin is right:

Harper has a new ‘mandate’ and, despite what Bob Rae and Jack Layton are saying to every microphone with range about holding him ‘accountable,’ he will have an effective majority for 18 months or more;

Dion must go – but it’s not obvious that either Ignatieff or Rae have broad enough support in the Liberal Party to be the ‘leader’ who can unite the party and beat Harper in, say, 2010 or, maybe, even 2011. The Trudeau/Turner and Chrétien/Martin ‘wars’ still rage – and an Ignatieff vs. Rae, right vs. left war may be is the last thing the Liberals need. Several morning radio news reports suggested that John Manley might want to jump in, for a few years, to oversee the restoration of Liberal fortunes. 

_Caveat lector_: I know John Manley; I like and respect him, too.

I think he *could* reunite the Liberals and aim them towards a more traditional _*l*iberal_ and _*L*iberal_ space in the political spectrum. But: he’s old; not as old as either Ignatieff (born in 1947) or Rae (1948) but older than Harper (1959) or Jim Prentice (1956) in an era that positively worships youth. Bigger BUT: he *might* just be another St Laurent: someone Canadians actually ‘like’ (they ‘liked’ Mike Pearson and Jean Chrétien, too) but, generally, Canadian PMs (Diefenbaker, Trudeau, Mulroney and Harper) are not much liked, even when some Canadian *adore* them. St Laurent parlayed ‘like’ and good, solid administration into several years of Liberal power just when Canadians were truly sick and tired of the Liberals under Mackenzie King.

Now, there will be a faction in the Liberal Party of Canada that will want a new, English leader, who can serve for about five years, hopefully (for Liberals) winning a minority government in 2010/11 so that, in 2013/14 Justin Trudeau (born 1971) can perform well as a minister and then take over (from an ‘old’ leader) as leader/_’saviour’_. It’s more hope and dream than real ambition – for now. Ignatieff or Rae are the best choices for the _Trudeaumaniacs_.

But there are other contenders: Martha Hall Findlay (born 1959, same year as Harper), a ‘right’ wing Liberal, and Gerard Kennedy (born 1960), a ‘loony leftie,’ for example who would perpetuate the Trudeau/Turner and  Chrétien/Martin wars for another generation and frustrate the ambitions of the _Trudeaumaniacs_.

In any event: Harper has time to rebuild his campaign team, to govern Canada through the economic crisis and to win a majority, albeit not a large one, in 2010/11.


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## a_majoor (15 Oct 2008)

I suspect the time factor can derail the "best laid plans". Mr Dion will have to be shown the door (or carried out) quickly lest there be a destructive bout of infighting within the party, while a standoff between Rae and Ignatieff will also lead to destructive infighting. As well, both Rae and Ignatieff have baggage which can negatively affect them both inside and out: Rae's disastrous tenure as Premier of Ontario and Ignatieff's perceived "pro American" bias based on his writings and works (all produced in the United States where he has been for the bulk of his adult life). On the other hand, the party and leaders mired in debt (something the MSM seems to conveniently overlook), which tends to limit options. The party might be frozen in place without funding to carry on day to day operations.

Since the Liberals still do not seem to have realized they have no coherent ruling philosophy, the next step might be for them to draft the "young Dauphin" posthast to stem the infighting and try to capitalize on the magic of the Trudeau "name" as a counter to the anti charismatic Harper. (This seems a bit odd, since my personal impressions of the Young Dauphin and Prime Minister Harper are in opposition to the perceived realities; then again after sitting through a dull and uninspiring speech by young Trudeau or meeting the Prime Minister does tend to strip off the caricatures the MSM creates of these people). 

Given the lack of charm, experience and accomplishments of the young Dauphin, I expect the Liberals might learn the true meaning of "be careful what you wish for".


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## Edward Campbell (16 Oct 2008)

This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, not Afghanistan, not Africa, is the first, big problem that will confront the new government:

http://www.reportonbusiness.com/servlet/story/RTGAM.20081016.wrecession1016/BNStory/Business/home


> BMO projects Canadian recession
> 
> HEATHER SCOFFIELD
> 
> ...



Even the economists who say we will not go into recession tell us hat growth will be small and slow and government revenue will fall. The Conservatives will, first, want to cut expenditures and it will be hard, politically, to cut social programmes and then ask the Grits and NDippers to pass the budget. Defence spending may well be cut – although the government will doubtless promise to meet its long range _Canada First Defence Strategy_ budgetary goals.


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## GAP (16 Oct 2008)

Actually, I wouldn't count on anything over the next year to year and half.....we are going to get walloped hard...


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## a_majoor (16 Oct 2008)

WRT the economy, I think the various nostrums being floated or practiced now are dangerous nonsense. Nationalizing the banks or the debt will further distort the economy and lead to inflation, with many negative effects that will spill over our borders no matter how insulated and well run our internal economy is. Someone needs to take the lead with a more radical approach that restores liquidity and confidence without breaking the bank. My prescriptions for Canada:

a. Eliminate business income tax entirely. Business does not pay tax anyway, they just pass on the costs to consumers. Dropping the tax will free up massive amounts of resources to retool, pay off debts or whatever else the owners see fit, and give the overall economy a huge boost. The political downside can be contained by pointing out that every business and region will benefit without prejudice or special favor, and the amount of funds released to the productive economy will create many new jobs (the $50 billion that Jack wanted to take back is the resources to create 1,000,000 new jobs. That's a lot of kitchen tables! I don't have the figures for how much the Federal government receives in business income tax, but it is probably in this order of magnitude (I actually believe the $50 billion was a cumulative figure, but never could get to the bottom of that).

b. Institute a single tax (AKA flat tax). Eliminating all loopholes, exemptions etc will make revenue collection much easier, and also deflect criticism from the Left. As well, it can free up an estimated $3 billion in compliance costs to Canadians, who pay lots of money and take lots of time working out their taxes. More money in the productive economy pot.

c. Eliminate corporate subsidies to pay for "a". Actually, given the corporate world will get a huge boost from the elimination of business tax, this is a fair trade off. As well, by painting the elimination of the tax as the way of assisting all business, the calls for corporate subsidies to "selected" industries can be muted.

The Prime Minister has demonstrated that he is a skilled political tactician and "could" take steps to implement this program even with a minority government. Inviting selected Liberal, BQ and (gasp) NDP members to cross the floor and join a "national unity" cabinet will certainly provide the horsepower and votes, although this particular plan would have to be sold two different ways to appeal to the business wing and business minded members of the Liberals and BQ, while the direct benefits to the working Canadians would have to be heavily emphasized to the NDP. (The fact this plan can actually satisfy both imperatives just shows the power of classical economics)


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## Edward Campbell (16 Oct 2008)

Thucydides said:
			
		

> WRT the economy, I think the various nostrums being floated or practiced now are dangerous nonsense. Nationalizing the banks or the debt will further distort the economy and lead to inflation, with many negative effects that will spill over our borders no matter how insulated and well run our internal economy is. Someone needs to take the lead with a more radical approach that restores liquidity and confidence without breaking the bank. My prescriptions for Canada:
> 
> a. Eliminate business income tax entirely. Business does not pay tax anyway, they just pass on the costs to consumers. Dropping the tax will free up massive amounts of resources to retool, pay off debts or whatever else the owners see fit, and give the overall economy a huge boost. The political downside can be contained by pointing out that every business and region will benefit without prejudice or special favor, and the amount of funds released to the productive economy will create many new jobs (the $50 billion that Jack wanted to take back is the resources to create 1,000,000 new jobs. That's a lot of kitchen tables! I don't have the figures for how much the Federal government receives in business income tax, but it is probably in this order of magnitude (I actually believe the $50 billion was a cumulative figure, but never could get to the bottom of that).



Agreed!



			
				Thucydides said:
			
		

> b. Institute a single tax (AKA flat tax). Eliminating all loopholes, exemptions etc will make revenue collection much easier, and also deflect criticism from the Left. As well, it can free up an estimated $3 billion in compliance costs to Canadians, who pay lots of money and take lots of time working out their taxes. More money in the productive economy pot.



A single tax, yes, but not an income tax which is a tax on savings and investment and, therefore, a tax of productivity.

Institute a comprehensive carbon tax with two aims:

1.	Raise revenue; and

2.	Change behaviour – make people use less carbon and more alternative sources.



			
				Thucydides said:
			
		

> c. Eliminate corporate subsidies to pay for "a". Actually, given the corporate world will get a huge boost from the elimination of business tax, this is a fair trade off. As well, by painting the elimination of the tax as the way of assisting all business, the calls for corporate subsidies to "selected" industries can be muted.



Yes, agreed, eventually, but not until we negotiate a ‘level playing field’ with our rading partners and competitors.

We pay for “a” with the carbon tax.



			
				Thucydides said:
			
		

> The Prime Minister has demonstrated that he is a skilled political tactician and "could" take steps to implement this program even with a minority government. Inviting selected Liberal, BQ and (gasp) NDP members to cross the floor and join a "national unity" cabinet will certainly provide the horsepower and votes, although this particular plan would have to be sold two different ways to appeal to the business wing and business minded members of the Liberals and BQ, while the direct benefits to the working Canadians would have to be heavily emphasized to the NDP. (The fact this plan can actually satisfy both imperatives just shows the power of classical economics)



Yes, there are a few – two or three maybe even four or five likely candidates in the BQ and Liberal ranks, including former “conservatives” Scott Brison and Keith Martin – maybe, just maybe one (Stoffer) in the NDP.


Edit: typo


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## Brad Sallows (17 Oct 2008)

A registered party does not need very many registered MPs to obtain official recognition in Parliament - 12 IIRC.  That would also be enough members to form a viable majority voting block in Parliament.  All that is needed is 12 centre-leaning dissenters from the LPC, NDP, and Bloc - perhaps with one or both of the independents - to split off, form themselves as a party, and the three other opposition parties would have to think a lot harder and longer about being less obstructionist and more productive lest they be disregarded as entirely irrelevant.


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## Edward Campbell (17 Oct 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ is more on the financial crisis with some specific references to defence spending:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081016.wtories17/BNStory/politics/home


> Ottawa on track for deficits: TD
> 
> STEVEN CHASE
> 
> ...




There are some ways to make some money:

•	*Sell the CBC* – that ought to raise several hundred millions over three or four years and, by the end of, say, 2011, there ought to be nearly $1 Billion/year, year after year, in savings;

•	*Auction off more radio spectrum* – specifically at the top end of the UHF TV band, but there are other small bands that are attractive, too. The 700MHz (channels 60+) TV spectrum has already been reallocated in the USA. Canada still reserves it for a few lazy broadcasters. While that auction will not, as the most recent PCS/cellular one did, raise $4 Billion, it ought to net $1 Billion; and

•	*Cut transfers to some provinces* – so that Ontario is no longer a _”poor relation”_. Provinces that are able to spend quite a bit more (per capita) than Ontario are not _“have not”_. It’s not as simple as a direct, percentage cut, but some provinces get too much.

I understand Drummond’s reasoning about *not* cutting transfers but, I think Harper can get away with it if:

•	He does it very, very quickly, while the crisis is front page news; and

•	During the next campaign he reminds Canadians that he just did what Chrétien/Martin did in the mid ‘90s: reduce the federal government's deficit by offloading it onto the provinces.


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## a_majoor (17 Oct 2008)

I'd agree with your agreements Edward  , except for the time factor. The Government just ran an election against a carbon tax, so pulling a P.E.T and instituting one will seriously damage their credibility, hence the call for a Single Tax instead. A graduated reduction of the single tax (perhaps by increasing the number of legitimate means of sheltering income like RRSP's, the $5000/year sheltered savings account, changing RESP's to resemble RRSP's, introducing Registered Medical Savings Plans (RMSP's) while introducing a Nordic Carbon Tax (similar to a VAT or Sales Tax, not the Green Shaft Shift for people joining the discussion).

Negotiating subsidy reductions with our trading partners will take a lot of time (but should be done regardless); in this environment I actually see subsidies and protectionism rising around the world as panic stricken reactions to the economic events of the day. Unilaterally withdrawing subsidies seems like a risky step (and it is), but I would count of the revocation of business income tax to provide the econoomic horspower that corporations need to compete. The other advantage is the companies will essentially be forced to innovate and become more productive in order to stay afloat; one of your long standing issues has been to improve productivity so here is one answer!


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## Edward Campbell (18 Oct 2008)

Rifleman62 said:
			
		

> Harper will not be able to, and no other PM could, _punish_ Quebec cause the Lieliberals and the NDP, let alone the Bloc, will suck up to get the Quebec vote. Without Quebec seats, very difficult to form a government, let alone a majority. And Quebec knows that, and utilizes that fact ...



Here, in a column reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ national affairs columnist Jeffrey Simpson continues his analysis of Québec’s ‘new’ place in society as a _demandeur_ rather than as a participant:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081017.wcoessay1018/BNStory/specialComment/home


> Quebeckers' mental Bloc
> In the wake of the Bloc Québécois's sixth consecutive electoral success, Stephen Harper has been reintroduced to the Quebec political culture
> 
> JEFFREY SIMPSON
> ...



Here is the very political and _national_ essence of _Simpson’s Québec_:

_”They want, through the Bloc Québécois, a variation of an old and enduring ambition: to be part of Canada, but only sort of, and on their terms, which means some sort of associate status, égal à égal, separate but not fully separate, sovereignty but with association, autonomous but still tied, somewhat in but somewhat out, or, in the metaphor of the brilliant Quebec journalist Jean Paré, parishioners in a church called Canada they seldom attend except for important occasions like Christmas, Easter and maybe marriages. They want to take but not to give.”_

I’ll bet a substantial number of _Canadians_ agree with him.

According to Elections Canada it is not quite so clear. Only 38% of Québecers voted for the BQ. 60% of Québecers do want to participate, but the minority rules.

Proportional representation would produce about these results, in Québec: BQ - 30 seats, Liberals – 18 seats, Conservatives – 16 seats, NDP – 9 seats and Greens 2 seats. That’s, probably, a fair reflection of how Québecers’ _commitment_ to the job of governing Canada.

*I do not favour proportional representation*, rather I think Prime Minister Harper should follow up on one of  Thucydides’ many good ideas: Harper should try to form a _national_ government by _poaching_ a couple of Liberal members from Montréal. He should not offer the Liberals a _coalition_ nor need he ask those Liberals to abandon their old party completely. Rather he should say:

_“Look, Liberals, we are in a financial crisis and I need all the good advice I can get – advice from every region. I need one Newfoundlander and one or two Montréalers and another member from each of Toronto and Vancouver. I’m not going to appoint senators any more and I’m not looking to fabricate a majority – I just need some help with this _*national*_ crisis. Each of you will be _inside_: one or two will be ministers, others will be parliamentary secretaries – you will all be sworn in as privy councillors and you will be bound by all the normal rules of cabinet confidentiality and solidarity. I will not ask you to tear up your Liberal Party cards nor will you be invited to join out various partisan caucus committees but you will be required to participate in some caucus briefings so that, like all other _insiders_, you can hear the back benchers’ concerns and tell them what’s going on in your departments. If, when or even before the crisis is addressed, you want to return to the Liberal caucus then you will always be welcome to leave – subject only to your oath as a privy councillor. If you decide that you want to join our party we’ll consider that, too.”_

If we are going to be stuck with successive minority governments then this ‘system’ may become popular and one could imagine that _circa_ 2016 a few Conservatives might, temporarily, cross the floor to give a Liberal government some representation from Calgary, Edmonton and Québec City.

With specific regard to Québec:

•	There is nothing wrong with the federal government withdrawing from areas of provincial jurisdiction – provided only that it does so for all provinces. Some, perhaps even all of the other provinces and territories may want a _national_ agency to deal with this, that or the other issue, and they can create them – without federal control;

•	Enough is enough – the _fiscal imbalance_ issue is behind us, for a generation; and

•	This government should actually enunciate Simpson’s idea – that it understands that Québec  wants _results_ without participating, but that the government cannot and will not _play_ along.

I think, faced with the reality that the government in Ottawa cannot be bribed, many, many Québecers will reconsider their political loyalties.


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## GAP (18 Oct 2008)

Quebec should get no more, nor any less than it is due, in comparison to the other provinces. 
No special deals/donations/funds/recognition, just another province.

The Bloc supposedly represent the majority of Quebec, fine....if Harper can work out enough  of a deal with the Liberals (the Dippers are too caught up in themselves) to avoid a new election, then he should play it straight down the line....not punish Quebec, just treat them like one of the 10 unruly children they are...


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## Edward Campbell (18 Oct 2008)

It appears that there is a certain _animus_ towards Québec inside the Conservative Party, too, according to this article which is reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081017.wcharest18/BNStory/Front


> Charest's disapproval leaves ‘scars' on Tories
> 
> CAMPBELL CLARK AND RHÉAL SÉGUIN
> 
> ...



The Premier of Québec is, of course, one of that _triumvirate_ Simpson mentioned (just above) that keeps relentless pressure on the _centre_. I agree with GAP that Québec should not be punished but, equally, should be treated as _une province comme les autres_. Of course, Québec is anything but _une province comme les autres_  - as all the hand wringing demonstrates; it is _special_, Harper has proved that Lord Dufferin was right: we do have “two nations warring in the bosom of a single state.”

But: I think Harper should make a few exemplary moves:

•	No _special_ treatment for Québec, signalling his disapproval of the province's entry into a federal campaign; and

•	Selective _punishment_ for Bloc ridings – when there is something to be given out it should be done on a highly partisan basis: _’goodies’_, such as they might be when money is very tight, should go, first, to Conservative ridings, then to Liberal ones and, finally Independent and NDP ridings. To the greatest degree possible nothing should go to BQ ridings, and that fact should be communicated to Québec through the media – and then it must promptly be denied by the Conservative Party of Canada. The aim is to remind voters that votes have consequences.


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## Rifleman62 (18 Oct 2008)

As I stated before, the politics of Quebec had consequences on the battlefields of Europe in WW I and II. Service personnel died as a result of these politics. Don't believe me, read some history and personal accounts of the war. If the government did not have the personal fortitude to do it during a war like WW II, they will not do it during peacetime/Afghanistan. Remmember all the controversy leading up to the deployment of  5 CBG units?
I for one have been for years sick to the death of the constant whining of Quebec. With all the money poured into Quebec over the century, it is still is a have not province. Something like Dept of Indian Affairs or whatever it's called.
Harper do something.
P.S. Sell the CBC. Maybe the Bloc will buy Radio-Canada.


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## George Wallace (18 Oct 2008)

On that note, and having just read the Jeffery Simpson article, and being put in a pissy mood again about the Quebec follies in politics, I began to wonder.  What if the plan to send troops to Goose Bay involved the gradual reintroduction of Air Force assets there.  Gradually move the Sqns up from Baggotville and leave Baggotville in the state that Goose Bay currently finds itself.  Sort of the move the Liberals pulled when they moved 1 CMBG from Calgary to Edmonton.


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## Kirkhill (18 Oct 2008)

Reference the Simpson article on Quebec, I wonder if there isn't a case to be made that in modern secular Quebec "Canada" hasn't replaced The Seigneurie and God while the BQ has replaced the Church.

Under the Seigneurie everything came from on high - both reward and pain.  The Seigneurs, and even God from whom they drew their ultimate authority via "le Roi", were capricious and unreachable entities that controlled the lives of "les habitants".  

In that environment the Church promised intercession.  They had a direct impact on the secular.  They could control the Seigneurie.  They also claimed an impact on the spiritual and an ability to influence God.  Whether or not God was influenced was entirely immaterial.  People believed that they could.  Successes were the result of the Church.  Failures were the result of your personal failure or a capricious Seigneur.

I don't think the psychology is much different today.

Nor do I necessarily believe that that psychology is limited to Quebec - I think analogues can be found amongst the Anglo "Left".    It is just that in Quebec it is aligned with both the magnetic, cohesive force of Nationalism and the insulating and isolating force of language which contains Quebec the way that surface tension contains a bubble or a drop of water.


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## Edward Campbell (20 Oct 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ is Lysiane Gagnon’s take on Harper’s Conservatives vs. Québec over the next couple of years:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081017.wcogagnon20/BNStory/specialComment/columnists


> Not too late for Harper in Quebec
> 
> LYSIANE GAGNON
> 
> ...



I agree with Gagnon on all counts: everyone, including Stephen Harper and the Conservatives, must govern the whole country for the benefit of the whole country. Canada’s second largest province, home of its largest _minority_ must matter – at least as much, if not more than Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Newfoundland, & Labrador and  PEI, combined.

A _national_ party needs some seats in Québec – maybe 10 is just enough but 15 is probably the minimum needed to provide a few competent cabinet ministers.

It is, as I have said before, possible to “win without Québec” but the important question must be: is it ‘smart’ to try to do so? My answer is: “No!” Not if one wants to fundamentally alter the Canadian political ‘reality’ so that the Conservatives are one of two ‘great’ _national_ parties – the one in the *centre* with virtually all of the centre-right and right wing supporters, too.


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## GAP (20 Oct 2008)

The only consoling thing about the CPC not winning with a large chunk of Quebec contributing, is the losses went to the Bloc, which essentially puts those seats in limbo until the next election.


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## dapaterson (20 Oct 2008)

There is also a significant concern that the Tories have limited representation from the county's two largest cities.  The urban/rural cleft this implies should not be understated.

Canada's current electoral system provides a disproportionate number of seats to rural constituencies; urban areas are under-represented in Parliament on a per capita basis (even if we disregard the absurdity that the Bell Centre in Montreal holds more voters on a Saturday night hockey game than any riding in PEI).  It would be an interesting exercise to determine the population of each riding, then calculate totals represented by party.  I suspect the Libs represent a similar number of people to the Tories now, a dynamic that could make or an interesting Parliament...


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## Edward Campbell (20 Oct 2008)

GAP said:
			
		

> The only consoling thing about the CPC not winning with a large chunk of Quebec contributing, is the losses went to the Bloc, which essentially puts those seats in limbo until the next election.




That’s fair enough GAP in a narrow, partisan setting, but all three _national_ parties (Conservatives, Liberals and NDP) must try to win seats from the BQ, not from each other. We need to convince Québecers that their new _demandeur_ status is counterproductive – in other words we mustn’t give in to BQ demands in BQ ridings.


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## Edward Campbell (20 Oct 2008)

dapaterson said:
			
		

> There is also a significant concern that the Tories have limited representation from the county's two largest cities.  The urban/rural cleft this implies should not be understated.
> 
> Canada's current electoral system provides a disproportionate number of seats to rural constituencies; urban areas are under-represented in Parliament on a per capita basis (even if we disregard the absurdity that the Bell Centre in Montreal holds more voters on a Saturday night hockey game than any riding in PEI).  It would be an interesting exercise to determine the population of each riding, then calculate totals represented by party.  I suspect the Libs represent a similar number of people to the Tories now, a dynamic that could make or an interesting Parliament...




I “did the math” elsewhere and concluded that equal representation under the existing Constitutional rules (PEI gets four seats) means that we need nearly 900 seats.

Either later today, when I get back from some senior officers’ and officials’ remedial drinking, or tomorrow, when I’m recovering, I will try to apply _broad brush_ provincial election results to get a party-by-party seat count.

I’m guessing you may be being a bit _conservative_, dataperson   , it may be that the Liberals, being highly concentrated in seriously underrepresented urban Canada, represent more voters than do the Tories and will “win” with my numbers.


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## GAP (20 Oct 2008)

agreed.

For the moment though, the extra seats are noneffective in respect to this coming period in the Commons...only by combining all three opposition parties together to defeat legislation can they have any effect. If Harper continues with his confidence motions on important legislation the Liberals will have to have some members disappear the day of the vote, unless they want an election.

I see Charest is now claiming the fiscal imbalance in not settled and that Ottawa should shovel over a lot more.....


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## Kirkhill (20 Oct 2008)

GAP said:
			
		

> I see Charest is now claiming the fiscal imbalance in not settled and that Ottawa should shovel over a lot more.....



No problem.  Eliminate the corporate tax.  Drop the income tax to a low flat level.  Create tax room.   

Let the Provinces decide what they need and raise taxes to meet those needs.

Give the cities the authority to raise a wider variety of taxes.  They have the mechanisms in place to gather taxes.  

Only then will people realize that there is no great pot of gold  from which they can be showered indefinitely.

It is always their money, their needs and their decisions.


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## Edward Campbell (21 Oct 2008)

dapaterson said:
			
		

> There is also a significant concern that the Tories have limited representation from the county's two largest cities.  The urban/rural cleft this implies should not be understated.
> 
> Canada's current electoral system provides a disproportionate number of seats to rural constituencies; urban areas are under-represented in Parliament on a per capita basis (even if we disregard the absurdity that the Bell Centre in Montreal holds more voters on a Saturday night hockey game than any riding in PEI).  It would be an interesting exercise to determine the population of each riding, then calculate totals represented by party.  I suspect the Libs represent a similar number of people to the Tories now, a dynamic that could make or an interesting Parliament...





			
				E.R. Campbell said:
			
		

> I “did the math” elsewhere and concluded that equal representation under the existing Constitutional rules (PEI gets four seats) means that we need nearly 900 seats.
> 
> Either later today, when I get back from some senior officers’ and officials’ remedial drinking, or tomorrow, when I’m recovering, I will try to apply _broad brush_ provincial election results to get a party-by-party seat count.
> 
> I’m guessing you may be being a bit _conservative_, dataperson   , it may be that the Liberals, being highly concentrated in seriously underrepresented urban Canada, represent more voters than do the Tories and will “win” with my numbers.



OK, I did “the math” again.

First I used the percentage vote by province from the Elections Canada web site;

Second, using my ‘level’ model, I assined those percentages to the 892 equal seats to get a proper view of all seats;

Third I ran a _sample_ of urban vs rural ridings in each province except PEI and the Territories. This gave me a (very imperfect) measure of voter efficiency - which turned out to not be a simple urban/rural split across Canada;

Fourth I reassigned some of the equal seats – mostly from Conservatives, Greens and Independents to, mostly, the Liberals and the NDP who had much better results in the urban seats; 

Fifth I converted the new, equal and voter _efficiency_ rated seat distribution back to percentages; and

Sixth I converted he percentages to seats and rounded again.


The result is:

Province Read in six columns BQ / Cons / Greens / Libs / NDP / Ind 
TR:          0 /  1 / 0 /  1 / 1 / 0
BC:          0 / 16 / 1 / 10 / 9 / 0
AB:          0 / 19 / 0 /  5 / 4 / 0
SK:          0 /  8 / 0 /  2 / 4 / 0
MB:          0 /  7 / 0 /  4 / 3 / 0
ON:          0 / 42 / 2 / 42 / 20 / 0
QC:        27 / 19 / 0 / 23 / 3 / 1
NB:          0 /  4 / 0 /  4 / 2 / 0
NS:          0 /  3 / 0 /  4 / 3 / 1
PE:          0 /  1 / 0 /  3 / 0 / 0
NF:          0 /  1 / 0 /  4 / 2 / 0

That comes to:

BQ: 27 seats
Cons: 121 seats
Greens: 3 seats
Libs: 104 seats     ) _IF I’m right, in a system within which the 308 seats are more ‘fairly’ distributed,_ 
NDP: 51 seats      ) _these two parties could form a stable _*majority*_ coalition government._
Indeps: 2 seats.

One of the interesting things I think I found was that the Conservative votes was very _efficient_ in small city/big town and suburban Canada while the Liberal and NDP vote is efficient in the inner cities. The Greens probably get more seats than they deserve but they finished well enough in a few big city ridings to _earn_ a least one or two. The BQ was, surprisingly to me, very _inefficient_, as the result shows.


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## Old Sweat (21 Oct 2008)

Edward,

You are an energetic little rascal. I suggest that there are too many variables and possible assumptions for this to be anything but a gee whizz exercise, or maybe a topic for a term paper assigned to a nerdy polsci undergrad. As we don't have very many nerdy polsci undergrads on this site, and I like dapaterson too much to suggest him in lieu to check and massage the data, what does this really mean? If anything, it may suggest that we great unwashed in unurban Canada have our muddy rubber boots planted on the necks of the sophisticated urban elite. And that, I add with undisguised satisfaction, is just fine with me.


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## Edward Campbell (21 Oct 2008)

Old Sweat said:
			
		

> Edward,
> 
> You are an energetic little rascal ...



Thank you for the "little." Herself is casting suspicious glances at my waistline again. I can almost feel the new diet and exercise programme coming - administered with a WCTU like zeal that I find unbecoming in a Chinese woman.  :'(


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## Kirkhill (21 Oct 2008)

Here's the solution:

Designate Toronto and Montreal (and maybe even Vancouver/Victoria) as independent provinces.  They can raise their own taxes and everything then.  Heck they can even have their own Senators.  

Now listen to McGuinty and Miller swap debating points..  >


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## a_majoor (21 Oct 2008)

Is the world prepared for crypto socialist city-states? 

I am OK with the idea so long as they are not allowed to prey on the surrounding suburban belts or countrysides  >


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## Kirkhill (21 Oct 2008)

I figure that isolation and quarantine is the best method of dealing with an infection.


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## Edward Campbell (22 Oct 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ web site, is an interesting _special_ with some excellent advice for the Liberals:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081021.WSteele21/BNStory/politics/?pageRequested=3


> Are the Liberals in a death spiral?
> *How a once-dominant party developed the Tory Syndrome - and 12 steps to cure it*
> 
> ANDREW STEELE
> ...



First, Andrew Steele is a big time Liberal insider so this is meant to be read and studied by Liberals – because while not exactly a wholesale supporter of the Liberal Party of Canada, the _Globe and Mail_ is the ‘journal of record’ for many, many Liberals.

Second, there is also much good advice for the Conservatives here, too. Specifically: 

*1. Admit you have a problem.* If the Conservatives come to believe it's _natural_ that they are the government, they will come to believe they can act without real consequences. Government is earned, not expected.

*3 2. Make a decision to unite.* This is harder than it sounds. The Conservatives need to become a larger, more broadly based party, and that means a lot of factions that need to be united around a few core principles. There are always a lot of hatchets to bury. It takes constant effort to do so.

*5 3. Admit you made make mistakes.* This doesn't mean walking around bemoaning the culture cuts. It means each Conservative leader admitting their own role in election failures and internal disunity, rather than pointing the finger at the next guy. There is more than enough blame to go around. Make sure you take your share. This must be a constant effort, for the sake of party unity and Canadians’ confidence.

*6 4. Give up your shortcomings.* Conservatives hold onto Shibboleths almost as badly as the NDP. There are emotional positions on immigration, deficit fighting and a host of issues. These need to be examined rationally for their place in the 21st century, rather than clung to like a life preserver in a storm.

*7 5. Humbly begin to remake the party.* If there is going to be a Conservative government in the next decade, it will be because those who care now are working now. Work doesn't mean sitting around "strategizing." It means running for office, fundraising, signing up new members, costing policy ideas, phoning long lists and knocking on doors.

*8 6. Figure out where the party needs to grow.* With the lopsidedness of the Conservative caucus, it is critical that the party look to its future and not its present. Determine key areas for growth: Toronto, Montreal and its suburbs, Vancouver and its suburbs and Atlantic Canada. Focus on these areas and what unites them.

*9 7. Focus policy and tour ruthlessly on growth.* In Parliament and press releases, Conservatives have a habit of playing the Ottawa game: jumping on the media story of the day, looking for scandal to punish he opposition down, ignoring the Canada outside the Queensway. Instead, policy and issues in the House should be set by the Conservative growth strategy. Focus only on those items that will produce more seats in the next election; leave scandal mongering to the media and the Liberals.

*10 8. Constantly focus on correcting problems.* This won't be easy. There will be bad days, bad polls and bad by-election losses. But public criticism isn't helping. Instead, focus on correcting problems internally, staying united and staying positive.

*11 9. Reconnect Stay connected with the middle-class.* The way to stay in government is through the living rooms of people making $35,000 a year. Too many Conservative MPs and senior party managers don't spend a lot of time in those circles. They should.

*12 10. Never stop uniting and ensure new Liberals Conservatives focus on uniting.* When members are thought of as nothing more than potential leadership convention delegates, internal disunity becomes the norm. It is imperative that the future Conservative Party channels Conservatives, young and old, new and old, into positive challenges that help them and the party: by-elections, election training, fundraising and outreach. And those members and MPs who cannot be team players should be increasingly disciplined or even removed.


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## Old Sweat (22 Oct 2008)

The first step for the Liberals is to take a hard look at Steps One and Two. If they can draw the lessons from these, the rest should come along more or less automatically. The iron discipline of the Liberal Party also meant that plans, policies, organizations, etc tended to be driven from the top. Perhaps more than the other parties, the Grits tended to seek out star candidates and go for the flavour of the month in policy. This ultimately led to a gap between the leaders and the mass of volunteers and more so the voters who were frustrated by what was seen as a sense that the national treasury existed for the benefit of the few chosen ones.

The unwritten Step Thirteen is to accept that nothing is easy, and there will be frustrations, failures and perhaps even worse days than 14 October 2008 to come. If the party can get the aim right, and that aim is not to regain and retain power at any cost, then perhaps the way ahead will emerge.


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## Edward Campbell (22 Oct 2008)

This article, by Peter C Newman, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is of more historical than political interest but Newman does get one or two thins right, for a change:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081021.wcoliberals22/BNStory/politics/home


> Here's what the Grits must do
> 
> PETER C. NEWMAN
> 
> ...



Here’s where Newman is right:

•	_“The Liberals ought to pull a _Ben Tre_ manoeuvre — the Vietnamese village that, in 1968 "had be destroyed in order to save it."_” That which needs to be destroyed is, by the way, the very thing Newman most admires: _” their ideals of a humane, progressive society.”_ That’s been accomplished – holding fast to past achievements keeps the Liberals from seeing what Canadians want, now; and

•	_”A new Kingston-style conference ought to opt for the accountability and transparency currently missing from federal politics.”_ This is what Stephen Harper promised but failed to deliver. I think, despite my regular protestations to the contrary, that Canadians do understand the inherent limits of government – especially on _big league_ strategic and economic issues. What they want is *honest*, open government so that they can be assured that they have elected good people who are dealing with tough issues.

 As a partisan Tory I’m hoping that the Liberals will miss the obvious – as they have so often since 1970 – and keep trying to repeat their one, good _big idea_. My guess is that the Liberal _machine_, not just the leadership, is unable to abandon the politics of 10 second sound bites about scandal and will, therefore, fail to use this opportunity to renew itself and admit, finally, that Pierre Trudeau is dead but that Pierre Trudeau will not come again because he is not divine.  :boring:


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## GAP (22 Oct 2008)

> fail to use this opportunity to renew itself and admit, finally, that Pierre Trudeau is dead but that Pierre Trudeau will not come again because he is not divine.



Not true, at all.....

You can sense the wistfullness in their (Liberal) voices and reserved awe that maybe, just maybe there is another Trudeau riding to the rescue.

From what I can see of him, he is nothing but a name engendered with his father, but does hold fast to some fanciful versions of fantasy and some of what his father spouted, except I doubt he did or would take the effort to convert them to practical application. Eventully, young Trudeau will rise to the top, but I doubt he will ever achieve what his father did. Wrong time, wrong generation. Best guess is he will end up looking a lot like Pink Loyd without the skill.


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## Edward Campbell (22 Oct 2008)

GAP said:
			
		

> Not true, at all.....
> 
> You can sense the wistfullness in their (Liberal) voices and reserved awe that maybe, just maybe there is another Trudeau riding to the rescue.
> ...




Quite right, but you see, GAP, that's precisely the problem identified by Andrew Steele, just above when he says:



> [size=11pt]
> *2. Give up on the white knight.* Liberals believe that if only they could find the next Trudeau, they would win without working. The fact is that Trudeau was a failure as a politician in his first term and almost lost the 1972 election. There are no white knights. Only work and discipline will earn you back government.



The last sentence, *"Only work and discipline will earn you back government."*, or back-to-back governments if you're Stephen Harper's Conservative Party, is critical and it is a potentially fatal error being made by all those wistful voices. Less wishing and hoping and more hard nosed policy and politics can save the Liberal Party from itself and its own death wish.


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## GAP (22 Oct 2008)

Seen, thanks....missed it

Agreed


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## Old Sweat (22 Oct 2008)

Edward,

Agreed that that is what they should do, but will they? For every Steele and Ledrew urging that the party rebuild itself, there seems to be a dozen or more looking for the quick fix. And to complicate matters there also are proposals to keep Dion in place and even one that appeared in a letter to the editor in today's Ottawa Citizen to combine the Liberals, NDP and Greens. None of this is necessarily a bad thing yet, and a consensus will emerge in time. The key is what will the consensus be? 

Will the Grits have the discipline to rebuild during the long, lean years as they create a base of contributors and supporters? Or will they adopt the Animal House solution and blow everything on a giant Toga Party? I am betting on the latter.


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## Edward Campbell (22 Oct 2008)

I know I’m repeating myself, but I have never believed in _”Gott mit uns” or special providence  or anything like that.  


_







Thus I know that a Conservative government will, eventually, need to be tossed out of office and allowed time in the ‘political wilderness’ to regroup, rebuild and rearm itself with good policy ideas. When, not if, that time comes *we need* a strong, _centrist_ Liberal Party as the ‘government-in-waiting’ because the alternative, _Taliban Jack_ Layton and the NDP as our other choice, doesn’t bear imagining.

I wish our Liberal friends well and hope they will make the *right* (centre, anyway) choice.


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## GAP (22 Oct 2008)

Oh, the Liberals will elect a new leader, but I seriously doubt he/she will lead them out of the wilderness after this term for the CPC.

There is little if any depth there, and no one to inspire....just tired old rehashed concepts and people....


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## dapaterson (22 Oct 2008)

The beauty of politics is that you never know.

Imagine a decade ago if someone told you that in an American presidential election it was likely that a Hawai'ian born African American Democrat with a slight political resume would defeat an experienced Republican war hero.

Or in 1984, just after Mulroney's massive majority, if someone told you that within a decade the Tories would be reduced to two seats in the Commons.


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## Kirkhill (22 Oct 2008)

E.R. Campbell said:
			
		

> Quite right, but you see, GAP, that's precisely the problem identified by Andrew Steele, just above when he says:
> 
> The last sentence, *"Only work and discipline will earn you back government."*, or back-to-back governments if you're Stephen Harper's Conservative Party, is critical and it is a potentially fatal error being made by all those wistful voices. Less wishing and hoping and more hard nosed policy and politics can save the Liberal Party from itself and its own death wish.



But I believe it is more than that.  As I have said elsewhere. It is not just that they want a White Knight because they want an easy road back to power.  They want the White Knight because they are of that section of society that craves a Leader to make the tough decisions for them.  That saves them from individual responsibility.

They are the antithesis of the self-view of most conservatives that crave individual freedom, accept individual responsibility and look not for a Leader but rather a competent manager.   

It is not just that they don't like Stephen Harper, they fear that he doesn't lead anywhere.  They are concerned that he doesn't tell them what to do and how to do it.  The console themselves with the notion that he MUST have a plan that is apparent to his followers but hidden from them.  They can't understand people supporting someone who doesn't lead.


----------



## Old Sweat (22 Oct 2008)

They are concerned that he doesn't tell them what to do and how to do it.  They console themselves with the notion that he MUST have a plan that is apparent to his followers but hidden from them.

Do you mean he has a hidden agenda?

I think, Chris, you are on to something. Look at the childcare proposal that became a key factor in the 2006 election. Implicit in it was the presumption that the government was able to do better job of raising children than were their parents. Farther back I recall after the Kingston conference circa 1960 the statement was made that once the Canadian people became comfortable with the nanny state, the Liberals would be in power forever. This was the principle behind its thesis, not the desire to make peoples' lives better.


----------



## OldSolduer (22 Oct 2008)

The nanny state is another euphemisim for extreme socialism...Communists were in too much of a hurry.


----------



## Kirkhill (22 Oct 2008)

Old Sweat said:
			
		

> Do you mean he has a hidden agenda?



Yep, I think that is, if not the origin of the fear, at leat why it resonates so well with the Liberals and the Socialists.   There has to be a plan because how can you be a leader without a plan? And how can people support you if you aren't a leader?

You need a leader to lead you forward into the brave new future.

Or, in the words of a favourite mantra of the 80's "If you're not progressing, you're dying".  It doesn't leave much room for acceptance of the status quo.


----------



## OldSolduer (22 Oct 2008)

You know I really hate those stupid left wing mantras, as well as some of the right wing ones too.

My personal pet peeve mantra is "today is the first day of the rest of your life"


----------



## a_majoor (22 Oct 2008)

*Carpe diem!*


----------



## Brad Sallows (25 Oct 2008)

>"today is the first day of the rest of your life"

I prefer sentiments along the lines of: "If you do <something to which I object strenuously>, it'll take you the rest of your life."


----------



## Edward Campbell (30 Oct 2008)

Here is the new cabinet, the people who will meet the challenges.

By the way, those who may have watched the lead up to the swearing in ceremony on CTV _Newsnet_ will have received an excellent brief on how cabinet and ministers really work - and why Jack Layton is a _propagandist_ rather than a 'public servant' - from David Emerson and Monty Solberg.


----------



## OldSolduer (30 Oct 2008)

I'm going to try to get a laugh here:

I should be in that Cabinet as The Minister of Nothing in Particular or is that job already gone?


----------



## Edward Campbell (30 Oct 2008)

OldSolduer said:
			
		

> I'm going to try to get a laugh here:
> 
> I should be in that Cabinet as The Minister of Nothing in Particular or is that job already gone?




No, it's open. I promise to mention your name to the PM next time we have a wee chat.

Sadly, this quite vital cabinet appointment is already taken by the best qualified candidate.


----------



## The Bread Guy (30 Oct 2008)

If I might be allowed to be a bit parochial, I note that there is a Minister of State (Economic Development Agency of Canada for the Regions of Quebec), a Minister of State (Atlantic Canada Opportunities Agency), and a Minister of State (Western Economic Diversification), but in spite of having a Conservative MP in northern Ontario (in the 807 area code, not the 705 "near north"), there is no Minister of State for FedNor named (although I presume Minister Clement, as Industry Minister, will retain the "second hat").

I leave analysis of this ignoring of northern Ontario, and the merits of voting for the winning team, to those wiser than myself...


----------



## OldSolduer (30 Oct 2008)

E.R. Campbell said:
			
		

> No, it's open. I promise to mention your name to the PM next time we have a wee chat.
> 
> Sadly, this quite vital cabinet appointment is already taken by the best qualified candidate.



Oh darn!! I was going for that one as I can mimic a Silly Walk, but I bow to the grace and expertise of the current Minister. He rocks!! ;D


----------



## The Bread Guy (31 Oct 2008)

milnews.ca said:
			
		

> If I might be allowed to be a bit parochial, I note that there is a Minister of State (Economic Development Agency of Canada for the Regions of Quebec), a Minister of State (Atlantic Canada Opportunities Agency), and a Minister of State (Western Economic Diversification), but in spite of having a Conservative MP in northern Ontario (in the 807 area code, not the 705 "near north"), *there is no Minister of State for FedNor named *(although I presume Minister Clement, as Industry Minister, will retain the "second hat") ....



The latest - CBC Radio paraphrases an Industry Canada spokesperson saying they're looking into the highlighted part.  Like they're going to name another cabinet minister next week?  Riiiiiiiiiiiiiiiiiiiiiight - centre bones the periphery once again...


----------



## Edward Campbell (31 Oct 2008)

According to his own web site Tony Clement "continues to be Minister for FedNor."

Maybe _Steve_ didn't tell him the news or, perhaps, the PM's web site is in error.


----------



## The Bread Guy (31 Oct 2008)

E.R. Campbell said:
			
		

> According to his own web site Tony Clement "continues to be Minister for FedNor."
> 
> Maybe _Steve_ didn't tell him the news or, perhaps, the PM's web site is in error.



Thanks very much for that ERC - funny how it appears the Minister's personal site bio was updated quicker than the official Ministerial bio, where his new appointment isn't mentioned (.pdf attached to prove it wasn't there when I looked).  Also, one of the Conservative candidates in Thunder Bay got the same word from party HQ.  

As for the List o' Cabinet, I know when Minister Clement was double-hatted (health & FedNor), both portfolios were mentioned in his official title - maybe someone thought it redundant to say "Industry Minister and Minister Responsible for FedNor."

Nonetheless, this shows me the priority of northern Ontario (the 807 bits, not just the 705 bits) at the Cabinet table and in communications regarding changes the region would be interested in, even with a Tory member in the area... sigh...


----------



## Edward Campbell (31 Oct 2008)

Notwithstanding _optics_ or _politics_, in my opinion the Minister of Industry already has control of and responsibility for too many _regional_ programmes and ought not to have specific responsibility for any specific one of them.

I firmly believe that all of them, the regional programmes, not the Industry Ministers, should be abandoned - North, South, East and West. They are all great examples of _pork barrelling_ gone horribly wrong.

If we have to have _FedNor_ they should give it to Jim Prentice - he was born up there.


----------



## The Bread Guy (31 Oct 2008)

E.R. Campbell said:
			
		

> Notwithstanding _optics_ or _politics_, in my opinion the Minister of Industry already has control of and responsibility for too many _regional_ programmes and ought not to have specific responsibility for any specific one of them.
> 
> I firmly believe that all of them, the regional programmes, not the Industry Ministers, should be abandoned - North, South, East and West. They are all great examples of _pork barrelling_ gone horribly wrong.



VERY fair ball to discuss & debate, and I'm guessing you're not alone on that one....



			
				E.R. Campbell said:
			
		

> If we have to have _FedNor_ they should give it to Jim Prentice - he was born up there.


Yes, I'm sure putting an MP from Calgary (albeit a pretty damned powerful one, number three to the throne according to some commentators) will assuage our parochial worries about the interests of northern Ontario being represented in Cabinet  

Not normally this vocal, but I wrestle with the issue of democracy being what it is re:  majority rule while living in a part of the world with nowhere near enough voters (even if they do all turn out) to make huge differences or call enough attention to the area.


----------



## Kirkhill (31 Oct 2008)

milnews.ca said:
			
		

> .... but I wrestle with the issue of democracy being what it is re:  majority rule while living in a part of the world with nowhere near enough voters (even if they do all turn out) to make huge differences or call enough attention to the area.



And that is where a reformed senate would be a worthy addition.  A couple of days ago I suggested that maybe Toronto, Vancouver and Montreal should be declared their own provinces with their own Senate representation and their own taxing powers.  Maybe there is a way to divide and conquer and serve real needs.  Split Quebec and Ontario (and BC) along Urban / Rural lines and give the various societies their own champions in the national debate.  Redefine Regionalism.

Of course Queen's Park and l'Assemblee Nationale will squawk ..... but think what it would do to McGuinty-Miller.  It might also necessitate a new Ontario Parliament as Queen's Park is clearly the Toronto Parliament.

Peterborough's a pretty nice place, although Wawa might be more central.


----------



## The Bread Guy (31 Oct 2008)

Interesting idea on the Redefined Regionalism (constitutional amendments notwithstanding - no pun intended).  I know every so often, there's rumblings, "why doesn't northwestern Ontario separate?" (to get provincial clout) or "why doesn't NW Ontario join Manitoba?" (to be a larger fish in a smaller pond).



			
				Kirkhill said:
			
		

> Of course Queen's Park and l'Assemblee Nationale will squawk ..... but think what it would do to McGuinty-Miller.  It might also necessitate a new Ontario Parliament as Queen's Park is clearly the Toronto Parliament.  Peterborough's a pretty nice place, although *Wawa might be more central.*



If you draw a straight line between the southernmost and northernmost points of Ontario, and another between east-west extremes, those lines would cross pretty damned close to Wawa, indeed.  Then again, if that was the criterion, the House of Commons should be in Hudson's Bay....  

_- edited to fix spelling mistake -_


----------



## a_majoor (31 Oct 2008)

milnews.ca said:
			
		

> Interesting idea on the Redfined Regionalism (constitutional amendments notwithstanding - no pun intended).  I know every so often, there's rumblings, "why doesn't northwestern Ontario separate?" (to get provincial clout) or "why doesn't NW Ontario join Manitoba?" (to be a larger fish in a smaller pond).
> 
> If you draw a straight line between the southernmost and northernmost points of Ontario, and another between east-west extremes, those lines would cross pretty damned close to Wawa, indeed.  Then again, if that was the criterion, the House of Commons should be in Hudson's Bay....



The tour of the parliamentry library in scuba gear would be the high point, followed by the syncronized Swimming of the Guard during the summer month... ;D

Really, our national obsession with regionalism is costing us dearly as a nation. Prime Minister Harper (or any other Prime Minister to be) cannot gather up the best talent to become ministers of the crown (I'm currently free, and I will accept the position of Minister for Everything Else, since Ministry of Silly Walks and Minister for Nothing in Particular have already been spoken for  ). Since he has to appease all the regions, he may (will) find himself in a situation where there are only a small number of candidates for Ministerial office from a particular region, and they may not be suitable due to lack of political experience, lack of real world experience, limited smarts, etc.

Damned if he does; everyone will complain that Minister "x" isn't the person capable of handling the portfolio, while damned if he dosn't; some region or group will feel shortchanged if Minister "y" has the position because he/she/it clearly is the smartest person on the block but dosn't come from the region or belong to the group. I would like to appoint HAL 9000 to the Senate and give it a portfolio; so long as you avoid conflicting directives, everything will be fine....


----------



## a_majoor (1 Nov 2008)

Although the conclusions Steven Staples draws are not grounded in the same reality that most of us inhabit, the questions are valid and worth considering (don't ask how I ended up on the mailing list, but this is a sweet conduit into what the "other" side thinks):



> *Canada After Bush: How the Next U.S. President Could Affect our Country*
> Tell us your opinion on Ceasefire.ca
> 
> Dear Ceasefire.ca supporter,
> ...


----------



## OldSolduer (3 Nov 2008)

Thucydides said:
			
		

> Although the conclusions Steven Staples draws are not grounded in the same reality that most of us inhabit, the questions are valid and worth considering (don't ask how I ended up on the mailing list, but this is a sweet conduit into what the "other" side thinks):



I'm a big beleiver of "following the money" Who funds Mr. Staples et al? I'm sure it would be interesting.


----------



## Edward Campbell (5 Nov 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ is a report on Obama’s (lack of) influence an Canada’s decision to change our Afghanistan mission in 2011:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081105.wcannon1105/BNStory/National


> Obama win won't affect Afghan troop pullout: Cannon
> 
> The Canadian Press
> 
> ...



Not even Barack Obama is going to persuade Québecers, Torontonians and Vancouverites that Afghanistan is an appropriate mission for Canada.


----------



## Old Sweat (5 Nov 2008)

I suspect, based on no more than cynicism, that Canadians will indeed get their wish and we will end the Afghanistan mission in 2011. However by then some other horrible place will have erupted and we will find our forces in some miserable miasma fighting as part of an international coalition. In fact, we will probably have no real choice. Taking on this new mission will be the price for removing ourselves from Afghanistan without fear of international criticism or sanction.


----------



## Edward Campbell (5 Nov 2008)

And that, of course, is how we found ourselves in Afghanistan (for the second (and subsequent) tours): trying to avoid being called upon to join the Americans in Iraq.

As you know I am persuaded that the next ”miserable miasma” will be found in Africa when the _Bottom Billion_ finally collapses - because rich, sophisticated countries like Canada are *unwilling* to come to the rescue of Africa and Central Asia, including Afghanistan, and Haiti and Bolivia and Yemen and Burma and so on because aid to the poorest of the poor might take away from our _pogey_.

We need to get at least our combat forces out of Afghanistan because we need to rebuild and _transform_ the Army (and Air Force) for a long, long, bloody campaign – 20 years, at the very least – in Africa.


----------



## GAP (5 Nov 2008)

> We need to get at least our combat forces out of Afghanistan because we need to rebuild and transform the Army (and Air Force) for a long, long, bloody campaign – 20 years, at the very least – in Africa.



After 2-3 years they'll be crying to get out of there too!!


----------



## Rifleman62 (5 Nov 2008)

Africa is a big powder keg. There are not many stable governments south of the countries bordering the Mediterranean Sea. Many, many are corrupt, and it does not matter a hoot who takes over the countries government next, as it then becomes "my turn now".

I hope Canada never again gets involved in Africa. It is hopeless. The Colonists were kicked out, freedom gained, then chaos. Maybe I am generalizing too much.
Let that esteemed body, the UN sort it out. (Thats a joke.) China and Russia will veto a Western force supporting African "forces". Western countries will not want Chinese/Russian to re dominate in Africa.

Anyway, to preclude Canadian military participation, all the rebels have to do is get the media to file several stories on child soldiers.

I sure don't want my grand daughter there in a couple of years.


----------



## a_majoor (5 Nov 2008)

"We" have been warning of this for some time now, but perhaps this will give the issue of defense some traction:

http://cnews.canoe.ca/CNEWS/Canada/2008/11/04/pf-7302916.html



> *Fiscal crisis raises spectre of defence cuts*
> By Murray Brewster, THE CANADIAN PRESS
> 
> 
> ...


----------



## Edward Campbell (8 Nov 2008)

And here, reproduced under the Fair Dealing provisions (§29) of the Copyrioght Act from today’s _Globe and Mail_ is a sure recipe for allowing the Liberals to do an _Obama_ in Canada:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081108.wtories1108/BNStory/politics/home


> Grassroots Tories urging PM to move to right
> *Demands at next weekend's policy convention could challenge Harper's effort to soften party's image*
> 
> BILL CURRY
> ...




It is OK, just, to allow some of these resolutions to be debated this year, but not next year or beyond - as we get closer and closer to an election. The *right* is always more than welcome to vote Conservative but if they are allowed out in public they become Liberal weapons of mass (Conservative) destruction.

Regarding the current resolutions, here is my take: 

Supreme Court judges  - Supreme Court of Canada judges should serve 10-year renewable terms. X

Health care - Provinces should be encouraged "to further experiment with different means of delivering universal health care utilizing both the public and private health sectors." √, but carefully.

Auto emissions - Canada should match California's more stringent standards. √

Military parents - If they die while serving Canada, their children should be given free tuition to postsecondary institutions. √, but “die while serving Canada” in action.

Human Rights Commission - The Canadian commission's authority to investigate complaints related to hate messages should be removed. √ but very, very carefully.

Streamlining - The government should "streamline government services and eliminate waste, unnecessary overlap and duplication between the levels of government. √

Free votes - Replace current party policy that all votes, other than the budget and main estimates, are free votes, with the policy that a Conservative government will make "most votes free." X


----------



## Edward Campbell (8 Nov 2008)

Thucydides said:
			
		

> "We" have been warning of this for some time now, but perhaps this will give the issue of defense some traction:
> 
> http://cnews.canoe.ca/CNEWS/Canada/2008/11/04/pf-7302916.html




Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Ottawa Citizen_, is a good piece by our old friend (Liberal) Senator Colin Kenny:

http://www.canada.com/ottawacitizen/story.html?id=437f4d9a-cbf3-4091-9eea-d3b5c0572ddf


> Don't touch defence spending
> *In tough times it's tempting to slash military budgets -- but that spending is a key to cross-border trade and prosperity at home*
> 
> Colin Kenny
> ...




Kenny doesn’t go back far enough. The detailed, intentional _evisceration_ of the Canadian Forces began, in earnest, in 1969 and continued – albeit with slightly less enthusiasm under Mulroney – until 2002. That’s 30 years worth of policy vandalism – initiated by Trudeau whose aim was nothing less than unilateral disarmament, by stealth.

It is good of Sen. Kenny to take our side; it would be better if he was just a wee bit less partisan.


----------



## Edward Campbell (9 Nov 2008)

This report, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ web site, has *strategic* implications:

http://www.reportonbusiness.com/servlet/story/RTGAM.20081108.wzoellick1108/BNStory/Business/home


> World Bank head warns financial crisis could drive up number of poor
> 
> HEATHER SCOFFIELD
> 
> ...




First: Robert Zoellick is not some kind of left-wing bleeding heart; he is a hard-nosed lawyer/negotiator with special expertise in trade; he is a Republican and a free trader.

Second, and parenthetically, in saying _“You_ [the US, UK and Europe] _need to think of exit strategies_ [from the bank subsidy programmes],” Zoellick has zeroed in on an issue of great importance to Canada. The American and European bank subsidy programmes are hurting well managed, high quality Canadian banks and we want them gone ASAP. They constitute *illegal* subsidies and if they are not gone soon we, Canada and a few others, will need to haul the US and Europe into the WTO and seek big, damaging sanctions.

------------------------------​
However, the *BIG* issue is poverty and its strategic implications.

The _”Bottom Billion”_ is already the home of many of the world’s _troublemakers_, allowing it to get even poorer is not a good idea, not good at all.

Poverty breeds despair – especially in our age of instant, mass communications. Young men and women in the world’s poorest countries can see, they can _almost_ feel and taste the ‘good life’ in the West (and East Asia – China, Japan, Singapore, South Korea, etc). These are not stupid people, nor are they lazy. Because they are not stupid they can see that no matter how hard they work their chances to ‘grab the brass ring’ and live our ‘good life’ are almost non-existent.

Despair makes one easy prey for those with a siren song that combines *desire* for what we (the West and East Asia) have with hatred for us because we have it. Like the original siren song in Homer’s _Odyssey_, the new one leads those who listen to their doom - but it is so seductive that they cannot resist.

The ‘message’ of the new _sirens_ is compelling, especially when, as is so often the case, it is wrapped in the cloak of Islam. The West (and East Asia), poor Muslims are told, stole the knowledge that allowed them to create their great wealth from the Muslims back in the 15th century. The Muslims of old, the story goes, used the knowledge for the benefit of all believers, but the _kafirs_ used it only to advance our secular, anti-Muslim goals – in so doing we provide our people with _baubles_ and ‘bread and circuses’ in order to keep them placid.

(There is a lot in the message that would be familiar to Karl Marx, his modern acolytes like Sandra L. Smith, and (former) _Trotskyites_ like Judy Rebick. In fact, a very similar ‘message’ was propagated in Africa and around the world in the 1950s – on orders from Moscow. The Communist _party line_ was assiduously toed, here in Canada, by very ‘respectable’ people like Stanley Brehaut Ryerson. There were equally ‘respectable’ versions of Ryerson all over the world – including Australia, Britain and the USA.)

With the message firmly implanted, thanks to e.g. Saudi/_global_ Wahabi funded _madrassahs_, the poor and desperate are only a very short, even easy step away from taking up arms (or bombs) against the _kafirs_.

Why not? It’s been a long time since I was in Accra or Kinshasa (Leopoldville when I was there!) but I’m told (by people who go there often) that the situation is worse than it was 30 or 40 years ago – the *only* places in the whole world where, over about a half century, things have gotten measurably worse for the people who live there. Why bother working and struggling against hopeless odds when something good might be had with a gun?

To a potent mix of poverty, despair and radical Islam we can add AIDS which is killing Africans, especially, at such a rate that soon – within a decade -  we will se societies bereft of adult leadership. In other words we will have big, poor, desperate, indeed hopeless *children* (for all practical purposes) with equally big guns.

An explosion is just a very tightly spaced series of individual little fires. What we are seeing in Africa and West Asia (and parts of the Caribbean, too) are those fires – in Rwanda, Afghanistan, Darfur and Congo – growing increasingly close together. Soon they will not be individual fires – each amenable to some sort of  _solution_; soon they will be so close together – in time and space – that they will be a literal *explosion* – right in our faces.

I can argue that the West (and East Asia) can and should do nothing. We should wait out the chaos and enter, with massive humanitarian aid when the Africans, West Asians and Haitians have exhausted their murderous rage against whatever and are ready and able to accept our help and guidance. I can ague that, but I will not because I am convinced that our own basic humanity will not allow such a course of action. Faced with a humanitarian crisis of proportions equalled only by he _Holocaust_ we will be morally compelled to act.

I would prefer that when we decide to confront the crisis of the bottom billion that we, in the American led West, ante up the money (many, many hundreds of billions of dollars – more than we will spend buying our way out of the current credit crisis) and let others, especially India, do the _’work’_. India is an ally and a democracy but it has a fundamental geographic problem: no hinterland – defined as essential for geopolitical success by e.g. Mackinder. There are many, many reasons – one or two even good reasons – why this is unlikely to happen. Reason one is that China will not allow it.

That leaves option three: the West, the OECD, really, plus China and India will have to form a _coalition of the willing_ and *able* nations to send expeditionary forces to Africa (and keep them in West Asia) to rescue the Bottom Billion from the fate to which we, through inaction, have consigned it. There is no point in sending militarily _incapable_ nations to do the sort of _heavy lifting_ that will be required when, *inevitably*, the Bottom Billion move from _problem_ to *threat*.

And, we’ll you’ll have to do that while the defence budget is under attack because Canadians want whatever money there is spent on them.


----------



## Edward Campbell (10 Nov 2008)

Kirkhill said:
			
		

> And that is where a reformed senate would be a worthy addition.  A couple of days ago I suggested that maybe Toronto, Vancouver and Montreal should be declared their own provinces with their own Senate representation and their own taxing powers.  Maybe there is a way to divide and conquer and serve real needs.  Split Quebec and Ontario (and BC) along Urban / Rural lines and give the various societies their own champions in the national debate.  Redefine Regionalism.
> 
> Of course Queen's Park and l'Assemblee Nationale will squawk ..... but think what it would do to McGuinty-Miller...



This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ is an opinion piece that echoes what I have been saying – Senate reform, electing senators, once begun becomes an irreversible process, formal Constitutional amendments are not required:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081107.wcosenate10/BNStory/specialComment/home


> *COMMENTARY*
> From unelected to elected: Senate reform by stealth
> 
> BRUCE HICKS
> ...




My position has been, and remains (based on no formal Constitutional changes being possible):

From: http://forums.army.ca/forums/threads/25692/post-495206.html#msg495206



> •   No change, for now, to the equality of Senate representation – that would require reopening the Constitution, a prospect which, while welcome to me, personally, ought not to be on the agenda of level headed Canadian politicians;
> 
> •   All currently serving senators to be invited to submit a letter of resignation to be effective on the date of the next (applicable) provincial general election; and
> 
> ...



I had a bit more to say and I have amended it, here, based on the most recent data:

------------------------------​
This system would play havoc with the current caucusing system.  I did a very rough calculation this morning and I _guesstimate_ that an elected (by my system) Senate of Canada, circa end Oct 2008, would look like this:

•   Bloc Québecois – 10
•   Conservatives – 30
•   Green – 0
•   Liberal - 41
•   NDP – 17
•   Other (ADQ)/Independent - 7

Based on current _provincial_ ‘preferences’ the Liberals would have minority control of the Senate, but, equally clearly, the Liberals would be unable, on their own, to block government bills but the Liberals plus the NDP could form a majority coalition IF all the Liberals caucused together.  But, it is not obvious to me that the BC Liberals, for example, would caucus with the federal Liberals or that the NF Conservatives would caucus with the federal Conservatives.

My elected Senate becomes a ‘House of the Federation’ and, effectively, undercuts (but does not totally negate) the ongoing, interminable federal/provincial first ministers’ conferences.

Being, broadly, representative of provincial legislatures, the Senate (elected on my terms) could be expected to give the government-of-the-day real heartache on matters in which the federal government has intruded into areas of provincial jurisdiction.

------------------------------​
As I have also mentioned before, my reading of the Constitution shows that there are only a very few formal _qualifications_ for an appointment to the Senate – property being one* - so the PM can, if he wishes, slice and dice senators by region within provinces. The problem would be that is the system is based on _equality_ of representation then Vancouver, Calgary/Edmonton, Saskatoon/Regina, Toronto, Ottawa, Montreal and Halifax will have most of the senators. If it is done ‘fairly’ – to ensure a loud, clear voice for remote and rural regions – then it will be less democratic, more _gerrymandered_.


--------------------
* I remember a bit of _excitement_ a few years ago when one putative appointee was rushing about Atlantic Canada to buy a cottage or even a wood lot in order to meet the property requirements of §23 (3) of the Constitution - the bit that says that one must own, free and clear, $4,000.00 worth of real property in order to be "called" to the Senate.


----------



## Kirkhill (10 Nov 2008)

> As I have also mentioned before, my reading of the Constitution shows that there are only a very few formal qualifications for an appointment to the Senate – property being one* - so the PM can, if he wishes, slice and dice senators by region within provinces. The problem would be that is the system is based on equality of representation then Vancouver, Calgary/Edmonton, Saskatoon/Regina, Toronto, Ottawa, Montreal and Halifax will have most of the senators. If it is done ‘fairly’ – to ensure a loud, clear voice for remote and rural regions – then it will be less democratic, more gerrymandered.



Eschewing silly notions like equality, fairness and justice for a moment then would you think this scenario possible?

A quiet word in the ear to David Miller that at the next municipal election he consider running an election for a Senator-in-Waiting.

A nominee is created by popular vote.

PM appoints nominee to Senate.

PM appoints fully democratically backed Senator to Cabinet to represent GTA interests.

Lords have been Prime Ministers.  Senators have been Ministers.  And the current Prime Minister can pick his Senators on whatever grounds he likes so long as he has 24 from Ontario and Quebec.  

How about a "democratically" determined nominee from a Union of Rural Municipalities?   Or for that matter a "democratically" determined nominee from the CAW?

The nominees would have bona fide Ontario constituencies.  They just wouldn't be geographical constituencies.

Anointed for one 7 year term with no do-overs.

As you say though: it would play hob with the caucus system ( and federal-provincial relations).  But that wouldn't necessarily be all bad.


----------



## Infanteer (12 Dec 2008)

Kirkhill said:
			
		

> And that is where a reformed senate would be a worthy addition.  A couple of days ago I suggested that maybe Toronto, Vancouver and Montreal should be declared their own provinces with their own Senate representation and their own taxing powers.  Maybe there is a way to divide and conquer and serve real needs.  Split Quebec and Ontario (and BC) along Urban / Rural lines and give the various societies their own champions in the national debate.  Redefine Regionalism.



Going back a little further - fascinating idea.  We grouse about changing up the "rules of the game" (or at least restoring them) in order to create a more responsive and effective government, but we've never really considered changing up the gameboard as well.  This would also recognize the fact that urban metropolis' (we have 3) and everything else are, really, two seperate contingents in Canada.


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## Edward Campbell (15 Dec 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is more relative to my stimulus/anti-bailout recommendations here:
--------------------
http://business.theglobeandmail.com/servlet/story/RTGAM.20081215.wrcsuite15/BNStory/Business/home

 How to get things moving
*Slash taxes and interest rates, spend on infrastructure and training, feel free to run a deficit – and do it quickly. That's what Canada's pessimistic business leaders are telling Ottawa*

RICHARD BLACKWELL

From Monday's Globe and Mail
December 15, 2008 at 4:37 AM EST

Canadian business executives want tax cuts, further interest rate reductions, infrastructure spending and money for training to pump the economy as they plan cutbacks of their own.

In the latest quarterly C-Suite survey of top executives, which shows those in the corner office are hunkering down for a major rough patch, respondents called on Ottawa to get the economy moving and pull it out of the downturn as fast as possible.

The survey was conducted in November for Report on Business and Business News Network by the Gandalf Group.

In their responses, executive presented a list of actions they would like Ottawa to take. At the top of that list are corporate tax cuts and interest rate cuts, both considered "very helpful" or "somewhat helpful" by almost 90 per cent of those surveyed.

Infrastructure investments and funding for employee retraining are also crucial, most executives said, and a large majority said a federal budget deficit should be permitted to get stimulus spending flowing.

The advantage of infrastructure programs, said Harvie André, a former Progressive Conservative cabinet minister and now chief executive officer of Calgary-based Wenzel Downhole Tools Ltd., is that they involve one-time capital spending that shouldn't contribute to continuing budget deficits in the years ahead.

Another benefit: Virtually all the spending will remain in Canada.

Whatever the recipe to fix the economy, most executives surveyed are pessimistic about the next 12 months. Fully 85 per cent expect a moderate or strong decline in the Canadian economy over the next year, by far the most negative projection since the C-Suite survey began three years ago.

After 21 years in Parliament, including almost a decade in cabinet, Mr. André is in a unique position to suggest what Ottawa should do to help Canada recover from a projected recession.

In Mr. André's view, tax cuts and infrastructure spending are the best tools to get the economy moving again. Bailouts to large industry players are less effective, although he acknowledged they are inevitable in this political climate.

It is "futile and horrendously expensive" to try to stop the job losses that are certain to take place in a recession, Mr. André said.

However, it is possible to help with job creation, particularly among small enterprises that can respond quickly to tax cuts by expanding their businesses, he said. In addition, "their horizons are primarily domestic," so Canada gets the direct benefits of any new jobs.

Still, Mr. André, who served in Progressive Conservative cabinets from 1984 to 1993, acknowledged that there is tremendous - and irresistible - political pressure to try to help big companies with large numbers of employees, even though that action may "not really be that productive."

In response to the downturn, executives are taking actions of their own. More than 80 per cent said they will likely trim operating expenses, possibly through job cuts. Three-quarters said they will likely cut capital spending, while more than half said they may dispose of non-core assets.

About half of those who responded, however, said they'll likely consider using the economic downturn as an opportunity to make purchases on the cheap.

One company in that boat is Questerre Energy Corp., a Calgary oil and gas exploration firm that was fortunate to have completed a $75-million financing just before the market turned down. It now has no debt and positive cash flow, plus excess cash in the bank, said CEO Michael Binnion, so it is in a position to go shopping.

"We're actively thinking, analyzing and looking at ... where we would want to buy, and what we could buy," he said.

The problem, he said, is that Questerre will likely be spending its money on assets that are already drilled, rather than doing new drilling itself. "That doesn't create any employment, does it?"

Over the long term, Mr. Binnion hopes any weaker company his absorbs will eventually grow and contribute to job creation when the economy recovers.

Many companies are not in same enviable position as Questerre. Almost all executives surveyed said it is harder to get financing now than it was two years ago, and more than two-thirds said it was "significantly" harder.

"The single biggest challenge we face is the access to capital," said Michael Pyle, CEO of Winnipeg-based Exchange Industrial Income Fund, a diversified trust that owns small airline and industrial manufacturing operations.

Exchange Industrial is a "serial acquirer," Mr. Pyle said, so its activities have been crimped by tight credit markets. Bank financing is still available, he said, although increases in pricing by financial institutions are offsetting the drop in the prime rate. But the alternative - going to the equity markets - is extremely difficult now.

Many executives are preparing for a long siege. More than 90 per cent of those surveyed said there will be no turnaround for at least six months, and 44 per cent said there will be no growth for at least another year.

David Yager, CEO of HSE Integrated Ltd., a safety service company based in Calgary, hopes things begin to improve in the second half of 2009. At the moment, he said, "everybody is in the end-to-life-as-we-know-it camp," but oil prices should rise next year, giving a boost to companies in that sector.

Mr. André, of Wenzel, is even more optimistic. He said he thinks "we'll be feeling a little bit better about the future come March, although we won't yet be out of the slower times."

The massive amount of government support should have had some impact by then, he said. "There's been a colossal amount of money put into the system around the world by all kinds of governments, and it is hard to believe that's simply going to go down the sewer with no effect."

Mr. Pyle of Exchange Industrial said he thinks one vital element for a turnaround is for politicians and economists to "stop talking the economy down."

Consumers and business people are being constantly admonished to stop spending, he said, and that is making a long downturn a self-fulfilling prophesy.

Recessions, he said, "happen because people think they're going to happen."

*****

ABOUT THE SURVEY

KPMG

The quarterly C-Suite survey was conducted for Report on Business and Business News Network by Gandalf Group, and sponsored by KPMG.

The survey interviewed 158 executives between Nov. 6 and Nov. 27. Respondents were split evenly by company size, and represent all parts of the country.

The margin of error in the survey is plus or minus 7.2 per cent, 19 times out of 20.

In rounded numbers. executives in resource industries represent 44 per cent of the sample, the service sector 36 per cent, and manufacturing industries 18 per cent.

Each quarter, a $1,000 charitable contribution is made on behalf of a survey participant. For the September survey, a donation was made to the Canadian Cancer Society on behalf of Cameron Ritchie, chief financial officer of Phoenix Technology Income Fund in Calgary. For the June survey, a donation was made to Community Living Toronto on behalf of Duncan Jackman, chief executive officer of E-L Financial Corp. Ltd. of Toronto.

_Want to know more about what the nation's leaders think? Join host Andrew Bell tonight on Business News Network for the C-Suite Survey at 8:30 p.m. (ET)._

*****

EXECUTIVE OUTLOOK

Economy

Executives' confidence in the economy has taken a nosedive, with a large majority expecting it to shrink next year. Those predicting growth have fallen to 15 per cent from 40 per cent. Sentiment about the U.S. economy is even worse, with an almost unanimous expectation of a decline, and more than half looking for a strong drop. Companies are responding by cutting spending, trimming capital outlays and considering asset sales.

Q: What are your expectations for the Canadian economy over the next 12 months?

November, 2008

Strong decline: 15%
Moderate decline: 70%
Moderate growth: 15%

September, 2008

Strong decline: 1%
Moderate growth: 39%
Moderate decline: 59%
Strong growth: 1%

*****

Q: What are your expectations for the U.S. economy over the next 12 months?

November, 2008

Strong decline: 54%
Moderate decline: 42%
Strong growth: 1%
Moderate growth: 3%

September, 2008

Strong decline: 17%
Moderate decline: 59%
Moderate growth: 22%

*****

Q: Is it likely your company will make these changes?

Cutting operating expenses: 81
Reducing capital expenditures: 75
Disposing of non-core assets: 57
Growing through acquisitions: 49
Looking to merge: 43

*****

Impact

Corporate credit is tighter than ever, executives report, with almost all saying that it is harder to get financing than it was two years ago. A surprising two-thirds expect their firms to grow in the next year. But the usual corporate optimism has been tempered sharply since the last survey, with more than 30 per cent predicting a decline in business. About of quarter of companies will be increasing staff, while a third will be cutting employment.

Q: Is the credit crunch making it harder to access financing?

November, 2008

Not at all: 3%
Slightly harder: 9%
Somewhat harder: 20%
Significantly harder 69%

September, 2008

Don't know: 2%
Not at all: 7%
Slightly harder: 11%
Somewhat harder: 31%
Significantly harder 49%

*****

Q: What are your expectations for your company over the next 12 months?

November, 2008

Strong decline: 3%
Moderate decline: 28%
Moderate growth: 58%
Strong growth: 9%

September, 2008

Moderate decline: 10%
Strong growth: 25%
Moderate growth: 60%

*****

Q: Will you be changing your company's staff levels over the next 12 months?

Reducing: 36%
Keeping as now: 37%
Increasing: 27%

*****

Response

Business leaders' impressions of Finance Minister Jim Flaherty have improved, after slipping in the past two surveys. A turnaround in the economy is not coming soon, most say, with almost everyone expecting the upward movement to begin in the third quarter of 2009 at the earliest. Ottawa can best help by cutting corporate taxes, trimming interest rates and helping fund infrastructure spending and training programs, executives say.

Q: What is your impression of Jim Flaherty in his role as minister of finance?

November, 2008

Very unfavourable: 12%
Somewhat unfavourable: 14%
Neither: 30%
Somewhat favourable: 34%
Very favourable: 9%

September, 2008

Very unfavourable: 18%
Somewhat unfavourable: 16%
Neither: 31%
Somewhat favourable: 25%
Very favourable: 5%

*****

Q: How long do you think it will be before the Canadian economy starts to turn around?

Don't know: 1%
3 to 6 mos.: 6%
6 mos. to 1 year: 49%
Longer than 1 year: 44%

*****

Q: What policy initiatives would be helpful to increase economic growth?

Reduce corporate income tax: 89
Further interest rate cuts: 89
Allow a deficit to maintain stimulus: 83
Fund training and skill programs: 82
Increase infrastructure investments: 81
Fund retraining and retooling: 81
Ease rules around pension shortfalls: 77

NOTE: CHARTS MAY NOT ADD UP TO 100 DUE TO ROUNDING

KATHRYN TAM/THE GLOBE AND MAIL; SOURCE: GANDALF GROUP
--------------------


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## Edward Campbell (15 Dec 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is a report on the latest step forward, or backward or to one side or the other in _Iggy_’s dance with Harper and the already aborted coalition:
--------------------
 http://www.theglobeandmail.com/servlet/story/RTGAM.20081215.wlibs1215/BNStory/politics/home

 Liberals want details from Flaherty

KEVIN CARMICHAEL

Globe and Mail Update
December 15, 2008 at 12:08 PM EST

Ottawa — The federal Liberal Party's economic spokesmen are making more detailed information about the state of the country's finances a condition of their co-operation with Finance Minister Jim Flaherty's effort to design a budget that will pass Parliament.

In a letter released to reporters on Monday, John McCallum, the head of the Liberals' economic committee, and Scott Brison, the party's finance critic, say they have little faith in the numbers Mr. Flaherty released in his economic and fiscal update last month.

They ask in the letter that Mr. Flaherty provide them by Friday with an updated economic forecast and further details on his plan to save $10.1-billion over five years by trimming departmental budgets and selling federal assets.

“If the Liberal Party is to be actively involved in the budget process, the first thing the Liberal caucus and all Canadians need to know is the true state of the government's books,” Mr. McCallum and Mr. Brison wrote. “Meaningful discussion and input requires honest budgetary numbers.”

Mr. Flaherty surprised many economists and members of Parliament by predicting a $100-million surplus in his Nov. 27 update even as Canada enters its first recession in almost two decades.

That document, which included aborted plans to scrap a subsidy for political parties that would have disproportionately hurt the government's opponents, sparked a political crisis that forced Prime Minister Stephen Harper to suspend Parliament to avoid being toppled by a united opposition.

The Finance Minister balanced his books largely by promising to end unspecified programs and sell unspecified assets.

“We do not consider it fiscally prudent or credible to break generally accepted accounting principles and book asset sales before the sales have occurred,” the Liberal letter says. “We require a detailed plan of which non-financial assets the government plans to sell and at what price.”

The two Liberal critics took their demands to Mr. Flaherty in person at a meeting Monday morning in Toronto. The finance minister initiated the meeting with his Liberal counterparts, reflecting the threat posed by a united opposition.

Mr. McCallum and Mr. Brison also said they back Mr. Flaherty's pledge to design an economic stimulus plan to fight the recession, saying any program should last for two years and focus on helping troubled industries such as forestry, housing and skills training.

Still, they said they want to know more about how much Mr. Flaherty is willing to spend before they take budget discussions seriously.

“If we are to enter into greater detail on this issue, we need to know more about the scale and composition of the fiscal stimulus your are preparing for budget 2009,” the wrote.
--------------------

I agree with Brison/McCallum that:

•	Everyone – not just Liberals – need updated economic projections but I thought Flaherty was aiming for a revised update at end Dec. Why is end of this week so important? Are three or four working days – all that’s left between Friday and the end of the year – all that important?

•	_Possible_ asset sales ought not to be counted – it’s _counting chickens before they hatch_ which, if I remember, is an accounting ‘No no!’

Contrary to Brison/McCallum and the _Globe and Mail_/_CBC_ etc: The stimulus program ought not to be designed to last beyond two years – we’ll be recovering by 2011 and stimulus will be the last thing we need. It ought to focus, primarily, on infrastructure that has, thanks to inept and, too often, corrupt politicians at local, provincial and national levels, declined shamefully – making us akin to some second and third world nations.

But the real blame for the sad state of our infrastructure rests with lazy, stupid Canadians (the majority) who reward politicians who build rather than repair. We Canadians deserve the inept and corrupt government we get because they reflect us so well.


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## Edward Campbell (15 Dec 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _CBC_ web site, is more – with a slightly different _spin_ – on the Con/Lib budget dance:
--------------------
http://www.cbc.ca/canada/story/2008/12/15/flaherty-liberals.html

 Brison 'confident' government will address Liberal concerns

Last Updated: Monday, December 15, 2008 | 1:45 PM ET 
CBC News

Opposition Liberals say they're hopeful Finance Minister Jim Flaherty will move quickly to address their concerns following "constructive" pre-budget discussions on how to stimulate the economy.

Flaherty met with Liberal finance critic Scott Brison and John McCallum, who is chair of the party's advisory committee on economic strategy, for about an hour in Toronto on Monday as part of pre-budget consultations happening throughout the week.

Both said they informed Flaherty of the need to be straightforward about the state of Canada's economy if the minority Conservative government wants to put together an effective stimulus package.

Brison, who called the meeting "very constructive and businesslike," said he's hopeful the government will respond quickly.

"I would hope that prior to Christmas, we can have our concerns addressed and realistic, up-to-date and honest fiscal numbers for us to work on," said Brison.

"I'm confident that we will get the information that we need to proceed."

The Liberals on Monday released a letter they sent to Flaherty last week outlining their demands. Signed by Brison and McCallum, the letter asks for:

•	"Honest budgetary numbers" and an updated economic forecast.
•	A detailed plan on any Crown assets the government is considering selling.
•	A Finance Department briefing for the parliamentary budget officer.
•	A commitment to a two-year, multi-industry economic stimulus package.

The letter asks for a response from the government by Friday, Dec. 19.

Brison said the Liberals are looking for the government to present its figures in a way that doesn't include revenues from Crown assets yet to be sold, which he said is a generally accepted accounting practice for the government and private sector.

Flaherty has publicly mulled the possibility of selling some Crown assets as a way of avoiding a deficit, although he hasn't been specific about what might go up for auction.

The Opposition is also seeking an indication of the scale and scope of the stimulus package the government will present in its budget, Brison said, noting that the Liberals are pushing for investments in infrastructure, industries, housing and training.

"We want to see meaningful stimulus that not only helps Canadians get through this economic downturn but builds a more competitive and productive Canadian economy in the future as we move back into a period of recovery," Brison said.

*Confidence vote for budget*

While meetings with industry representatives and interest groups are usually a routine part of constructing any federal budget, there is an added urgency to this year's consultations, the CBC's James Fitz-Morris reported Monday.

The minority Conservative government will face a highly anticipated test of confidence when it tables its budget on Jan. 27 — a day after Parliament resumes following its prorogation earlier this month.

If the opposition parties vote against the budget, as they threatened to do with the November fiscal update, the country could find itself facing another general election or see the Conservatives replaced by a Liberal-NDP coalition government.

Budget consultations are normally carried out by the House of Commons finance committee, which has been prevented from meeting since the government asked for Parliament to be suspended. Instead, the job has been left to Flaherty, who is also slated to meet with NDP finance critic Thomas Mulcair.

Mulcair said he plans to give Flaherty "our view of what's gone wrong in what the Conservatives have done for the last three years, and what we plan to do taking it forward."

Mulcair has also accused the finance minister of not being forthcoming with the economic numbers.

NDP Leader Jack Layton warned Monday that the government risks "facing the coalition again" if it's not willing to open its books.

He said the New Democrats have been clear with the Conservatives about their ideas for economic regeneration, including immediate help for key industries, tougher rules on banks to loosen credit and assistance for senior citizens.

In the fiscal update delivered at the end of last month, Flaherty projected balanced budgets and small surpluses through 2012-13, but warned that world economic uncertainty made it impossible to rule out future deficits.

Opposition parties have lambasted the Tories for failing to include a stimulus package for the slumping economy in the fiscal update, accusing the Conservatives of using tumultuous times to try to push through ideologically driven measures they said attacked women and public servants.

*Aid, stimulus packages in works*

Meanwhile, there are reports the Conservatives are preparing to offer aid to Canada's beleaguered mining and forestry sectors in the budget.

In an interview with CTV's Question Period on Sunday, Industry Minister Tony Clement said a number of other industries are "under distress" and "other industrial sectors, other extraction sectors are on the table for our budget coming out on Jan. 27."

Support for resource industries wasn't included in the fiscal update or Prime Minister Stephen Harper's recent throne speech.

Harper told CBC News last week that the federal government may have to produce sector-by-sector stimulus measures to ease Canada's economic pains in the weeks ahead, but that the "big stuff" will have to wait for the budget.

Clement announced Friday that the federal government and Ontario had reached a deal to offer proportional funds to Canada's auto industry if a proposed $14-billion US aid package is approved in Washington. That aid would amount to approximately 20 per cent of the U.S. proposal, or about $3.3 billion.

The approach has been met with criticism from some opposition members who say that while Canada should work in some measure of harmony with the U.S. in providing financial assistance for the auto sector, stronger steps must be taken to protect Canadian jobs from being moved south.

"The Canadian government's approach is after these discussions [in the U.S.] are over, Mr. Harper and Mr. Clement hope that somehow we're going to dovetail in and add on at the end and somehow we'll get good consideration in terms of jobs in Canada and in terms of product mandates," Brison said.

"And I think that's very naive."
--------------------


Uh, Jack and Gilles; _Iggy_ has a message for you: here.

The budget passes, parliament remains in session. The question then becomes: can _Iggy_ convince Harper to hold off an election long enough to give the Liberals a coherent policy and some money?


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## Edward Campbell (16 Dec 2008)

Yet more, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _National Post_, on why, despite the *political imperatives* the stimulus package likely to be unveiled in Canada – to pacify the Liberals and their entrenched special interest groups – is going to be a waste of your money, and mine:
------------------
http://network.nationalpost.com/np/blogs/fpcomment/archive/2008/12/15/terence-corcoran-here-comes-statist-claus.aspx

Terence Corcoran:
Here comes Statist Claus!

Posted: December 15, 2008, 9:34 PM 


*Stimulus Week: It’s global, it’s big and it’s taking the world  economy back decades*

By Terence Corcoran

T’is the week before Christmas, soon to be known across Canada and around the world as Stimulus Week. Here comes Statist Claus, here comes Statist Claus. It’s the return of big fat rolly polly government, rising deficits and taxpayer money flowing out in all directions. Ho. Ho. Ho.

In Germany, Chancellor Angela Merkel staged a weekend summit of labour, business and economic figures to work out a new stimulus package to add to an earlier plan announced in November. Ireland and Portugal are cranking out fresh spending extravaganzas. The EU outlined a $3-billion stimulus initiative on Saturday.

But Germany took no new action over the weekend. The Wall Street Journal quotes a German official who said Germany would wait for Barack Obama to take office in Washington and announce his stimulus plans for the United States. Then Germany would announce its own plan as part of a co-ordinated global effort. Japan, meanwhile, outlined a $250-billion spending binge.

What will Mr. Obama deliver? Everybody is talking about the big number: $1-trillion. Whether that’s new money or old, over one year or two or more, nobody knows. That’s not the point. The objective appears to be to make the number hit $1-trillion, regardless of where it comes from or when it’s spent. At that level, giving the auto sector $20- or $30-billion will seem so unimportant, so natural and necessary, a small piece of a giant initiative. 

In Canada, big increases in government spending and deficit financing have rolled to the top of the policy agenda. The deficit taboo of a couple of years ago, rhetorically enforced by Liberals and Conservatives, columnists and economists, has disappeared. Now, deficit spending is said to be essential, crucial to the emergence of Canada from recession. Only governments can get us out of this economic mess.

Through this week, Finance Minister Jim Flaherty is on a cross-country stimulus tour, scouring the the land for spending strategies and initiatives. Industry Minister Tony Clement has already dug up some corporations in need of taxpayer-to-mouth resusitation. The auto sector will get a few billion, with forestry, mining and other “extraction sectors” due to receive fiscal aid in the next budget.

Stimulus Week: It’s global, it’s big and it’s taking the world economy back decades. To recognize Stimulus Week, FP Comment will dedicate its pages to commentaries related to stimulus policy, including auto and other bailouts. Today, National Post auto columnist David Booth hones in on the North American auto bailout (hailed as part of government stimulus measures) and argues that what Detroit needs is weeding, not watering. The best option would be to put Chrysler through reorganization. It’s already all but dead, he says, and rationalizing its products might even help save General Motors. 

On the economic front, Dale Orr, of IHS Global Insight, notes that most of what Canadian governments might do to stimulate the economy would be a waste, and the one thing they likely will not do on any grand scale -- cut taxes -- is the one thing that could do most to help the economy.

The main point is that major bursts of government intervention and spending cannot do anything to turn the economy of any country around. For a video treatment of stimulus theory, the best yet was posted Monday by Dan Mitchell, senior fellow at the Cato Institute in Washington. In less than eight minutes, Mr. Mitchell traces the origins of stimulus ideology from its founder, British economist John Maynard Keynes, through to its disastrous application by U.S. presidents Herbert Hoover and Franklin D. Roosevelt in the early 20th century, and to its later failures -- as neo-Keynesianism -- during the 1970s and 1980s. 

More recently, massive U.S. government spending and deficits under George W. Bush have also done little to stave off the current recession. Indeed, many economists have been accusing the Bush administration of reckless fiscal policies and of risking the U.S. economy with massive deficit spending! Why should more of the same policy help the U.S., or Canada or any other country, this time? 

In the days ahead on these pages, we’ll explore the ideas behind stimulus theory, from Keynes to Krugman. What can governments do, via fiscal policy, to help produce growth -- besides nothing?

The revival of Keynesian economics, from near death just a few years ago to front-line economic policy today, is a function of the always present belief in the need for governments to manage economic activity and control markets. As Peter Foster wrote on this page last Saturday, commenting on the Keynesianist revival promoted by died-in-the-wool interventionist Joseph Stiglitz, “soaking the rich and letting public spending rip had a terrible record both in the 1930s and the 1970s, and will always have such a record.” The inevitable result is stagflation and deficits.

We’ll have another look at Keynesianism tomorrow from Mr. Foster. But Lord Keynes rarely disguised his focus on the need for massive redistribution of wealth and government manipulation of investment and consumption to raise growth. In his most famous work, he wrote: “The chronic tendency of contemporary societies to under-employment is to be traced to under-consumption -- that is to say, to social practices and to a distribution of wealth which result in a propensity to consume which is unduly low.”

Damn those rich people: They only invest and don’t consume enough. With those words, Keynes opened the door for the worst economic system outside of communism and fascism.

_Financial Post_
--------------------


Keynesian economics is debatable, Keynes wasn’t wrong just because I’m not a true believer. But _intervention_ isn’t always the answer and it is never the only answer.

From a distinctly Canadian perspective:

1.	Washington/Obama matters more to us than does Ottawa/Harper. The US stimulus, which may be harmful to the US in the medium and longer term, will help us, in the near term, by stimulating demand for resources, goods and services.

2.	We can, economically, afford to coast along and wait for the markets to do their work – aided or hindered as they may be by the Keynesians – stimulating next to nothing at all, although some hefty infrastructure spending would be a good idea. That would be the fiscally prudent course.

3.	We will stimulate because it is a political imperative.


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## Edward Campbell (16 Dec 2008)

And even more, on the same topic, this time from _Keynesian_ Jeffrey Simpson, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_:
--------------------
http://www.theglobeandmail.com/servlet/story/RTGAM.20081215.wcosimp16/BNStory/politics/home

 If you want stimulus, watch out for the traps

JEFFREY SIMPSON

From Tuesday's Globe and Mail
December 16, 2008 at 12:00 AM EST

We are all Keynesians now. But for how long?

Canadians were half-Keynesians in the nightmare years of deficits and growing national indebtedness that stretched from the mid-1970s to the mid-1990s. Their governments spent more than they raised in taxes when times were bad, just as John Maynard Keynes recommended. But governments did the same thing when times were good, which was not what the great man recommended.

Once hooked on deficits, Canadians couldn't shake the addiction. Too many interest groups got plugged into patterns of spending and specific programs (or tax incentives) that benefited them. Policies designed to be “temporary” became permanent. Ferocious opposition confronted attempts to curb spending, so that even a government such as Brian Mulroney's, with its huge parliamentary majority in 1984, trembled.

Canadians became inoculated against deficits by the late 1990s, after the Chrétien-Martin Liberals showed that balancing the books benefited, rather than hurt, the country in normal economic times.

While Europe and Japan kept running deficits, and George W. Bush plunged the United States back into the deficit spiral that emerged under his father and Ronald Reagan, Canada stood out among Western countries for its steely resolve not to run deficits.

The resolve paid dividends in lower absolute debt, sharply lower debt-to-GDP ratios, and smaller annual interest payments on the debt. The country hit the sweet spot of smaller interest payments, lower debt, lower taxes and more money for such programs as health care and defence.

Canada did during its inoculation period exactly what Keynes had recommended. It reduced future obligations in good economic times. The pity was that this critical half of Keynes's dictum had been forgotten for too long.

Now, just as sharply as Canadians inoculated themselves against deficits, everyone is crying for them. The plutocrats in the business community want deficits, and the Harper government has grudgingly conceded deficits lie ahead.

Canadians appear realistic. They know that the economic downdraft of weak credit, consumer reticence, low commodity prices and rising unemployment requires a stimulation of demand by government. But they also seem properly leery about open-ended commitments. They want deficits that are targeted and short term. They are, in other words, wise.

The tricky part is how to stimulate fast.

A lot of ideas for stimulus get the timing wrong. Infrastructure projects, for example, take a while to prepare. Plans must be made, materials bought, tenders given and labour found, to say nothing of environmental and regulatory hurdles. Rush any of these, and say hello to potential cost overruns and poor design.

So just when the economy has recovered, say in 2010-2011, the infrastructure projects are coursing money into the economy – at the very moment when it's not needed. Unless, of course, you want to return to deficit financing for a long time – in which case, cycles don't count for much.

These cycles were always among the banes of Keynesian economics. Matching stimulus to downturns, and restraint to boom times, proved next to impossible. So did scaling back stimulus, with the results of chronic deficits and inflation.

Today, the cries are up to help the auto industry. But those cries predictably produced pleas from the forestry sector. And then the mining sector. What's next?

It's telling that these manufacturing/resource industries get so much attention, but who's talking about helping high-tech companies such as Nortel that still do a lot of research and development in Canada, a country that desperately needs more R&D.

Once governments start picking sectors in the name of short-term stimulus, they don't always pick the right ones with the right tools, and they neglect sectors that don't squawk as much but are arguably more important for the economy.

There are, in other words, a whole series of traps lying in wait for those who cry for economic stimulus.

The 1970s offer instruction on the tax side. Eager, even desperate, to boost growth in an era of stagflation, the Trudeau government pockmarked the tax code with dozens of incentives for industries. The result eroded the tax base. Spending kept growing, but the revenue holes (or “tax expenditures”) widened the gap each year between spending and revenue, and contributed to the long-term deficits.
-------------------

The key bit here is that when _”governments start picking sectors in the name of short-term stimulus, they don't always pick the right ones with the right tools, and they neglect sectors that don't squawk as much but are arguably more important for the economy.”_ That’s what Stephen Harper, driven by a need to pacify _Iggy’s_ Liberals, is about to do: he will pour money into dying sectors, in a vain attempt to delay the inevitable, and he will, likely, ignore stimulus spending that might be productive.


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## Kirkhill (16 Dec 2008)

I noted earlier the need for theatrics - to convince people who wonder "What must be done?" that something is being done - and that the biggest concern in my mind was the inflationary effect of politicians throwing around trillions of dollars.  Not because of the number itself but just because of this from Corcoran: 



> The objective appears to be to make the number hit $1-trillion, regardless of where it comes from or when it’s spent. At that level, giving the auto sector $20- or $30-billion will seem so unimportant, so natural and necessary, a small piece of a giant initiative.



At this point in the game I can only hope that Harper can get away with a single digit or low double digit (billion) deficit for about 18 months to 2 years - just to show that he is "doing something".


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## Rifleman62 (16 Dec 2008)

I can hear it now, the LPC will bill the CPC as the government who brought the deficit back to Canada after the LPC had slayed the deficit and in consequence saved Canada.They will even have the gall to say this in March 2009 or earlier. And do you know what, this message will be repeated, and repeated by the likes of CTV, G & M, and of course the CBC. And Canadians will believe it. The black beast indeed.


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## Kirkhill (16 Dec 2008)

Just hearing "on CTV" that the Ontario government has released a study saying that the loss of the Big 3 would result in 500,000 lost jobs.

Does that make Ontario, or at least SW Ontario Canada's biggest company town?  Just like all those lumber camps, mining towns and outports that have died across Canada over the last few decades?

I note that Canada is supplying 20% matching financing because we apparently supply 20% of the North American market.  I wonder how we manage to defend that politically when we are only 10% of the population.

It is arguable that there would be no auto-industry in Ontario if it weren't for the statist Autopact.  A giant make work project if you will.  Although it is now dead and buried a low dollar and NAFTA kept the established industry alive but did nothing to promote innovation.


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## Edward Campbell (16 Dec 2008)

And here it is.

There is another side to every story and here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _CBC News_ web site, is a report on a report prepared for the Ontario Manufacturing Council, _”an advisory panel of industry and labour representatives:”_
--------------------
http://www.cbc.ca/canada/story/2008/12/16/jobs-auto.html

 582,000 Canadian jobs would be lost with collapse of Big Three: report

Last Updated: Tuesday, December 16, 2008 | 7:45 AM ET 
CBC News

Canada would lose 582,000 jobs within five years if the Big Three automakers completely shut down, according to a report prepared for the Ontario Manufacturing Council, an advisory panel of industry and labour representatives.

The report, which was prepared by the Centre for Spatial Economics, projects a bleak economic picture for the province and the rest of the country if the automakers were to go out of business.

Effects on employment would be felt right away, the report states, with Canada losing 323,000 jobs if production ceased immediately, and 281,800 in Ontario alone, the report forecasts. Those figures would climb in five years to 582,000 jobs nationally in 2014, 517,000 of those in Ontario.

A cut in production by 50 per cent would eliminate 157,400 jobs nationally immediately, 141,000 in Ontario. By 2014, 296,000 jobs would be lost, 269,000 in Ontario.

"The fact is that if this industry goes, it is going to involve a lot of people," said Rob Wildeboer, a council member and the executive chairman of Martinrea International Inc. "A lot of people that are going to be your neighbours, they're going to be friends, probably family members."

The depreciation of the Canadian dollar, lower interest rates and lower production costs would eventually help the economy to partially recover, but the loss of the Detroit Three would leave a permanent dent in Canada's economy in terms of jobs and output, the document says.

The collapse of the Big Three would have far-reaching effects, including a reduction in production by the Canadian automotive parts industry of 80 per cent, the report predicts.

The Canadian subsidiaries of the Detroit Big Three automakers had asked Ottawa and Ontario for financial aid that could total as much as $6 billion.

Last Friday, the federal government and Ontario reached a deal to offer $3.3 billion to Canada's auto industry, contingent on the approval of a proposed $14-billion US aid package in Washington.

"This report says that Canada is better off providing life-support to GM and Chrysler, because the demise of auto in Canada is the economic equivalent of a nuclear freeze, with catastrophic effects that would knock us into a deep recession," said Ontario Economic Development Minister Michael Bryant.

The U.S. bailout package collapsed in the Senate. But the White House has said it is considering using money from the $700-billion US Wall Street rescue fund to support the domestic automakers.
--------------------

Here is more about the Centre for Spatial Economics.

You can expect anti-bailout people, like me, to be beaten about the head and ears with this report for days and weeks to come.

But it is important to remember that real working people, lots of them, and their families are going to be hurt by this long, deep recession and the consequential restructuring.


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## Brad Sallows (16 Dec 2008)

>Canada would lose 582,000 jobs within five years if the Big Three automakers completely shut down,

But the Big Three automakers are not going to completely shut down, even if they receive not a dime.  They are going to go into bankruptcy and work the problem.

If the Big Intellects behind this report and its public spin are bright enough to do a meaningful impact analysis and to communicate that in terms most people will be able to understand, they should get on with it.  If all they can do is fearmonger, I invite them to shut their overpaid mouths.


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## Brad Sallows (16 Dec 2008)

A .pdf of the report is at http://www.cbc.ca/news/pdf/omc-autoimpact-b.pdf.

Here is what the report's authors have to say about their scenarios (100% and 50% production drop):

"These scenarios, while extreme, are clearly possible and their ramifications need to be understood."

While we can all discuss "extreme" scenarios, it would be more useful to discuss "likely" scenarios.

Among their assumptions:
- the 100% or 50% drop in Big 3 production
- no change in foreign manufacturers' production in Canada (unlikely if not already invalidated by events at foreign auto plants in Canada)
- net change of less that -100% in Big 3 dealership employment in the 100% production loss scenario - if the Big 3 cease production, their dealerships will cease to exist long before all existing inventory has cleared; what the report describes as employment transferred to foreign auto dealerships are by definition not "Big 3" and assume that the foreign auto dealer network will need those salesmen.  But that depends on what sort of change in consumer demand is necessary to trigger a full shutdown.

GIGO.


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## George Wallace (16 Dec 2008)

Brad Sallows said:
			
		

> >Canada would lose 582,000 jobs within five years if the Big Three automakers completely shut down,
> 
> But the Big Three automakers are not going to completely shut down, even if they receive not a dime.  They are going to go into bankruptcy and work the problem.
> 
> If the Big Intellects behind this report and its public spin are bright enough to do a meaningful impact analysis and to communicate that in terms most people will be able to understand, they should get on with it.  If all they can do is fearmonger, I invite them to shut their overpaid mouths.



Imagine if the Big Three did shut down.  We would all have to become equestrians.


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## Kirkhill (16 Dec 2008)

I'm still trying to figure out if Ford really is at risk.  They seem to be playing this game differently than the other two.  Its almost as if they are in a position to ride out this storm but are just seeking to buttress themselves from being put at a competitive disadvantage if the other guys get free money.

They are asking for a line of credit "if necessary".  They seem to be more free with the information that they are filing in these cases while GM and Chrysler are holding back (at least that is the take that I get from this morning's press conference).

Also, the Auto Parts Manufacturer's rep seemed to suggest that their biggest problem would be if GM went down and left them holding the bag on unsold parts.  That would render the businesses unprofitable and force them into bankruptcy.  

The problem is not necessarily the loss of trade, other car makers will eventually take up the slack.  It seems to be strictly about covering GM's debt if it fails.


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## Edward Campbell (17 Dec 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _National Post_ is a useful, pretty basic _critique_ of the _Keynesian_ theory/method:
--------------------
http://network.nationalpost.com/np/blogs/fullcomment/archive/2008/12/16/peter-foster-the-ugly-spectre-of-new-keynesianism.aspx

Peter Foster:
The ugly spectre of ‘new Keynesianism’

Posted: December 16, 2008, 7:39 PM 

*Keynesianism has been found fatally wanting in both theory and practice, so why is it back?*

By Peter Foster 

Zombie Keynesianism, with its promise of 10,000-volt stimulus, continues to lurch around the political scene, while John Maynard Keynes’ acolytes struggle to gussy up his policy Frankenstein for another prime time appearance.


Chief among Lord Keynes’ public proponents are economist Joseph Stiglitz and his biographer, Robert (Lord) Skidelsky.


Prof. Stiglitz recently wrote in _Vanity Fair_ of the importance of understanding the roots of the present crisis. “The battle for the past will determine the battle for the present,” he wrote, reflecting communications strategy from _Nineteen Eighty-Four_. “So it’s crucial to get the history straight.”


It is indeed crucial to understand the past, but rather than clarifying Keynesian history, both Messrs. Skidelsky and Stiglitz seem intent on shoving inconvenient truths down the memory hole, and engaging in rhetoric rather than objective analysis. There is an old economic joke: “Sure, it fails in practice but does it work in theory?” The approach of Messrs. Stiglitz and Skidelsky is to bury the evidence of practice, demonize straw-man opposition and not so much establish the theory as simply assert its moral credentials.


No comment has been more eagerly leapt upon by interventionists than Alan Greenspan’s _mea culpa_ about his misplaced faith in markets. In a piece in last Sunday’s New York Times, Lord Skidelsky suggested that since the case for light regulation lies in the market “efficiency” that Mr. Greenspan found wanting, then the free-market capitalism jig is up. 


In fact, the case for free markets since Adam Smith has not been that they are perfect, but that they represent an astonishing co-ordinating mechanism that government attempts to improve — beyond the protection of property, and the enforcement of contracts — at everybody’s peril. 


If Mr. Skidelsky is interested in _mea culpas_, meanwhile, a more relevant one is that of  former British prime minister James Callaghan, who said, in 1976, “We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you, in all candour, that that option no longer exists; and that insofar as it ever did exist, it only worked by injecting bigger doses of inflation into the economy followed by higher levels of unemployment as the next step. That is the history of the past 20 years.”


Lord Keynes was concerned about a very real problem in the 1930s: that economies might be “stuck” at a low level of output and a high level of unemployment, which he saw as a failure of classical economic theory. His analysis was contained in his book, _The General Theory of Employment, Interest and Money_, which was published in 1936. Keynes claimed that such a phenomenon — when individuals were, in their irrational fear, allegedly socking away cash in their mattresses — required government expenditure to keep up “aggregate demand.” It didn’t matter where the government spent — be it roads, pyramids or even wars — such expenditure was needed to jolt the economy back to full employment.


Adam Smith had observed that “What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.” Keynes’ version, as economist James Buchanan pointed out, turned this wisdom on its head: “What is folly in the conduct of a private family may be prudence in the conduct of the affairs of a great nation.” 


Spend yourself rich!


But how could government inject anything into an economy that it did not take out, either currently via taxes, or by taking on the burden of debt? In fact Keynes said that government deficits should be matched by corresponding surpluses in good times, but Keynesianism inevitably proved a one-way pendulum, as Prof. Buchanan had warned. Meanwhile Friedrich Hayek, who was both Keynes’ friend and rival, had pointed out that there was an even greater danger in any policy system that implied that governments knew best; it was called _The Road to Serfdom_.


Significantly, both Hayek and Buchanan were stigmatized for their apostasy, not least because Keynesianism — with its stratospheric worldview and its promotion of “macroeconomics” — proved wildly popular with both politicians and policy wonks.


As Milton Friedman, wrote: “Here was one of the most famous and respected economists in the world informing governments that the way to full employment was paved with higher spending and lower taxes. What more attractive advice could politicians wish for?”


Keynes was at least vaguely aware of the potential dangers of his policies, but chose to believe that the politicians to whom he gave advice shared his own sense of noblesse oblige.


In a famous letter congratulating him upon the publication of _The Road to Serfdom_, Keynes wrote to Hayek: “Dangerous acts can be done safely in a community which thinks and feels rightly, which would be the way to hell if they were executed by those who think and feel wrongly.”


As Prof. Friedman mischievously pointed out, Keynes’ agreement with “virtually the whole” of [i\The Road to Serfdom[/i] obviously did not extend to the chapter titled “Why the Worst Get on Top”!


Meanwhile Keynes’ theories had other purely economic flaws, a major one of which was pointed out by Robert Lucas. Prof. Lucas’s theory of “rational expectations” pointed out that the success of Keynesian stimulus depended essentially on fooling all of the people all of the time. In fact, businessmen would tailor their decisions to government policies, thus neutralizing them.


Keynesianism has thus been found fatally wanting in both theory and practice, so why is it back? One reason is sheer political desperation, or as Professor Lucas put it, “I guess everyone is a Keynesian in a foxhole.”


However, the support of Messrs Stiglitz, Skidelsky and other modern liberals, such as Paul Krugman, is also based on a fundamental distaste for free-market capitalism as the rule of greed and materialism (not to mention a system that deprives them of their rightful role as society’s guardians). 


Prof. Stiglitz looks at the doughnut and sees only a hole: the economy in his eyes is everywhere plagued by “market failure.” Lord Skidelsky’s moralistic approach is on flagrant display in an article in the current _Prospect_ magazine. He fulminates against materialism and “the corruption of money.” He denigrates “off-shoring.” He bemoans globalization and the “rape of nature.” Above all, he projects a world in which a race of omniscient Keynesian geniuses make markets “well-behaved” and render globalization “efficient and acceptable.”


Lord Skidelsky stresses with approval that Keynes was “a moralist as well as an economist. He believed that material wellbeing is a necessary condition of the good life, but that beyond a certain standard of comfort, its pursuit can produce corruption, both for the individual and for society.”


So a guardian class must decide, presumably, what an acceptable dividing line between “comfort” and “corruption” will be. Otherwise, as Keynes hysterically suggested, “We are capable of shutting off the sun and the stars because they do not pay a dividend.”


Such is the thinking behind the “new” Keynsianism. High moralism. Desperate politics. Terrible economics.

_Financial Post_
--------------------

What many _Keynsians_ and most _anti-Keynesians_ forget is that despite the grandiose title (_The General Theory …_, Keynes was dealing with a highly specific situation – one created, in large measure, by bad policies (see _Smoot Hawley_ etc) – which he proposed to address with some highly specific remedies. Keynes ought not to be blamed because:

•	His ‘theory’ worked in that one, specific situation; and

•	Most everybody failed to read Chapter 2 with all its warnings and admonitions to save when times are good.

It is not fair to blame Keynes for e.g. Pierre Trudeau; economic idiocy of that magnitude cannot be taught – not even in the old, red *pinko* London School of Economics of the 1950s.

Spending, even deficit spending does stimulate the economy  and some _stimulus_ can mitigate the effects of recession/depression IF it creates *productive* jobs – such as those involved in e.g. maintaining/rebuilding crumbling infrastructure. But, and it’s a great *Big BUT* debts, even debts incurred in a ‘good cause’ must be paid back – the quicker the better. Keynes advised that it is better to have large surpluses (from overtaxing in good times) that can then be spent during hard times – but many would argue against that position.

Smith's _“What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.”_ is good advice: work hard and work effectively and efficiently; keep your fiscal head above water; save for a rainy day (which, in Canada, may require some creative accounting given our laws and practices about public finance); deficits/debts need not be bad if they are managed well - consider your own mortgage, for example (I hope your mortgage is a good example of fiscal prudence); pay off your debts quickly; and so on.


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## Edward Campbell (19 Dec 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is a report on the Tories’ deficit/stimulus promises – those being the new tools for currying electoral favour:
--------------------
http://www.theglobeandmail.com/servlet/story/RTGAM.20081218.wharper19/BNStory/politics/home

 Harper eyes stimulus worth $30-billion

STEVEN CHASE

From Friday's Globe and Mail
December 18, 2008 at 10:00 PM EST

OTTAWA — The Harper government will embark on the biggest deficit-spending program in Canadian history to try to jump-start the country's faltering economy – a stimulus package in the 2009 budget worth up to $30-billion.

“Some people are talking in the neighbourhood of a $5- to $10-billion deficit. Our own assessment is frankly that will not be sufficient given the challenges we're facing,” Prime Minister Stephen Harper told CTV News in a year-end interview.

“I think what will be more realistic in terms of the kind of stimulus our economy is going to need is going to be in the $20-billion to $30-billion range.”

But even as he put a price tag on the planned aid, Mr. Harper said he's prepared to go further if necessary. “It will be scalable. We will be able to move it up if we need to move it up,” he said. “We're going to do whatever it takes to get our economy through this recession and on to a long-term recovery.”

Mr. Harper didn't say how big a deficit Ottawa would run, but a stimulus package of the kind he's planning would push the federal government deep into the red next year – likely by more than $30-billion.

On Thursday, Canada's parliamentary budget watchdog, Kevin Page, separately released a memo estimating that a $30-billion stimulus package in 2009-2010 would lead to a deficit that surpassed $34-billion for that year.

The last time Ottawa ran a deficit was 12 years ago, and the last one exceeding $30-billion was 1995-1996, before the former Liberal government balanced the books.

The Prime Minister said the stimulus package in the Jan. 27 budget will include:

* Measures to spur consumer spending, although he declined to say whether this might include a temporary reduction in the goods and services tax – or tax-cut rebate cheques. “It's easy to lower taxes but it's harder to ever raise rates back up again,” Mr. Harper noted.

* Infrastructure spending including an already-announced doubling of infrastructure project funding to $6-billion in 2009.

* Housing funding, measures that sources expect will help aboriginals and low-income Canadians and spur energy-efficient retrofits.

* Significant worker retraining “making sure these people who lose their jobs are getting ready for the next job.”

*Aid for industries such as the auto and forestry sectors, as well as communities.

The Tories are expected to lengthen the period during which employment insurance benefits can be collected – so that workers can be retrained – but Mr. Harper said he doesn't want to make it more lucrative to be unemployed.

He stressed, however, that the package spending will be one-time only, so Ottawa can easily climb back out of the red. “Everything we do will be temporary to avoid a permanent deficit,” he said.

The Prime Minister described Canada's planned auto aid – that so far has been estimated at about $3.4-billion – as a defensive move to avoid the wholesale departure of the Canadian industry.

“We have concluded we either do our share of the restructuring or we will have no share of that industry in Canada. If the United States does all the restructuring themselves, the industry will move to the United States.”

He said he expects that the aid will grant Ottawa some measure of control over how auto makers operate in Canada. “Obviously as public money goes into that, there will be more public say about how that money is used.”

CTV's annual conversation with the Prime Minister will be broadcast on Saturday at 7 p.m. local time.

Separately, Mr. Harper was wholly unapologetic for triggering a political confrontation with his opposition rivals in late November, saying he believes Canadians support his bid to scrap per-vote subsidies for political parties.

“We believe … at a time of economic difficulty, it is not right for political parties to be getting tens of millions of dollars in political subsidies. The Canadian public overwhelmingly supports that position.”

Mr. Harper brushed off suggestions that his attack on the Liberal-NDP coalition for allying with the separatist Bloc Québécois would hurt him in Quebec.

And he said the alliance of parties should be prepared to face another election if they defeat his minority government in early 2009 as they have threatened.

“Canadians certainly did not elect a coalition under which the Bloc Québécois would have a veto to govern the country,” he said.

He said he'd be “delighted” to sit down with Liberal Leader Michael Ignatieff to discuss ideas for the January, 2009, budget at any time.

On U.S. president-elect Barack Obama, Mr. Harper called the Democrat a “thoughtful, articulate guy. He's easy to talk to and a very good listener.” He said he thinks the Tories' approach to fighting climate change will jibe with the Obama administration and said he thinks the United States will be able to bounce back from their deep economic woes. “Never underestimate the resilience of the American economy and the American people. The Americans did not get on top of this world for no reason.”

On Afghanistan, Mr. Harper said the deaths of Canadian soldiers in the war against the Taliban is the toughest part of being prime minister.

“I have some big challenges in this job, but nothing is a cloud over my head like the sadness we feel knowing once again there are more of these Canadian families who will not be having loved ones return to them from Afghanistan.”

He declined to say whether he'd reverse course and keep combat troops in Kandahar past 2011 if Mr. Obama asked Canada to stay. “I'm not going to speculate on hypotheticals,” he said.
--------------------

The media and the opposition big spenders – who want to let their friends have “fun” on our (taxpayers’) dime – have sent fiscal prudence to the back of the bus. Canadians are frightened and they believe that, somehow, if government just spends enough of everyone else’s money the cash will, magically, trickle down to them. We Canadians are, finally, Reagan Democrats.


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## Edward Campbell (19 Dec 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ is an opinion piece by Frank L Graves of _Ekos_ (the polling firm) that dovetails with the opening article in this thread:
--------------------
http://www.theglobeandmail.com/servlet/story/RTGAM.20081217.wPOLgraves1217/BNStory/politics/home

 Toward a big North American idea
*Now is the time to transcend our narcissism of small difference and engage our American friends, Frank Graves writes*

Globe and Mail Update

December 17, 2008 at 11:20 PM EST

Understanding Canadian attitudes to the United States is one of the most complex and misunderstood areas of public opinion research. American attitudes to Canada are, on the other hand, fairly straightforward. Based on low levels of fluency and interest, Americans see us in either positive or benign terms. For many Americans we are seen as mostly like them, an acknowledgement they would consider complimentary. Although this loosely formed sense of sameness is in large measure accurate, many Canadians bridle at the thought of being seen as largely similar to Americans. Herein lays the essence of a national conundrum.

For many years Canadians have defined and prided themselves on their un-Americaness. This may be why Fire and Ice (Adams 2003) has been such a resonant national narrative. The harder evidence suggests this sense of large and growing difference is both untrue and at times unhelpful. Now nowhere are we suggesting that Canada and the United States are homogenous societies. Canadians are more secular, statist, and cosmopolitan than their American cousins and unlike Europe, where national identities have increasingly been eclipsed by local and continental identities since Maastricht, national identities in North America have been strengthening since the FTA and NAFTA agreements. Our research (Graves 2007), however, and the research of other scholars as well (Basáñez, Inglehart, Nevitte 2007) , is increasingly concluding that, far from the thesis of elemental and widening normative differences, our value differences with the United States are modest at best, and the recent historical pattern is to convergence, not divergence.

So why is this observation so difficult for Canadians? And why the tension between what is happening and what we wish to be the case? Further, is this reluctance to acknowledge our similarities hindering or helping our progress as a nation?

Let us begin by considering some public opinion evidence that we recently updated for Carleton University's Canada-US Project. By a wide margin (more than 2:1), Canadians think we are becoming more, rather than less like the United States. This conclusion is consistent with our empirical tests of value changes over the past decade, and largely resonant with the "post-materialist" models which see value convergence occurring in most of the advanced Western world. In fact, one would be hard pressed to find two countries with more similar value systems than Canada and the United States. The second part of the question shows the rub. By an even larger margin (8:1) Canadians say they would like to become less like the United States, rather than more similar. So why does a country which Canadians readily acknowledge to be our best friend and ally (roughly 7 in 10 in agreement) and which displays broad normative resonance, engender such a wilful desire to diverge?

I am not generally fond of psychological explanations for social facts, but Freud spoke of the narcissism of small differences. In this case the insecurities of the smaller and somewhat neglected neighbour stimulate a magnified sense of difference. This irrationality imposes a challenge for Canada's political leaders: they must negotiate a delicate equilibrium of intimacy and difference. Despite the fact that we find Canadians close to unanimous (95 per cent) in their desire to see the federal government strengthen the relationship with the United States to at least some extent (Americans, by the way, feel the same way), heaven forbid if the leader is seen as casting Canada in an obsequious or servile position.

Following September 11th, we were all Americans. But in the aftermath of the exuberant internationalism that produced — in the minds of both Canadians and Americans — an adventurous, but the ultimately wrongheaded foreign policy of President Bush's administration, we saw an erosion of reciprocal outlooks. In many respects, America entered a new period of isolationism tantamount to the period after the Vietnam War ended. Americans once again wanted to pull the drawbridge up and cut off a hostile and unwelcoming world. The new isolationist and protectionist sentiments in the United States were mirrored in a more negative outlook on the United States by Canada (and indeed most of the external world). In this context, we witnessed the border between Canada and the United States "thicken" with the introduction of the Western Hemisphere Travel Initiative and the resulting deleterious impact this had on trade and travel. Likewise, the erstwhile longest undefended border now bristles with guns on both sides.

This brings us to the situation today. The security ethic, which has gripped America since September 11th, is showing some signs of relaxing its hold on the public. On both sides of the border, we have seen a warming trend in our views of each other. With these trajectories already in place, the election of President-elect Obama has signalled the possibility of a leap forward in the relationship. Canadians had overwhelmingly preferred Obama's candidacy and our new research shows that nearly half of the public in Canada (47 percent) feels that the change in the US federal administration is indicative of the arrival of a "fundamentally different" era in the Canada-US relationship (a change that is interpreted as being mostly a "good thing").

So what areas would constitute the preferred focus of the renewed relationship and what should be the tone and style of this renewal? The survey evidence reveals strong public support for pragmatic cooperation across several key areas.

For one, Canadians are prepared to consider merged approaches to regulatory areas like food safety (i.e., there is recognition that Americans are no more interested in consuming tainted foods than Canadians). While it is notable to find that Canadians recognize that our sense of identity and self is not defined by regulatory regimes, we suspect that they would still prefer a partnership approach here, rather than a simple adoption of American rules. There is also a strong desire to see greater cooperation in the crucial areas of borders and trade; particularly as the upper North American economy is sputtering.

The harmonization of other areas, such as immigration, is met with more resistance. Indeed, receptivity to immigration has tracked in sharply difference directions in the two countries since September 11th. It is notable that, despite the broader patterns of value convergence, Canadians are becoming more multicultural and cosmopolitan. In fact, Canada is moving in a different direction on issues of multiculturalism than the US and Europe.

Perhaps the most interesting and important area for greater bilateral cooperation is climate change. There has been an important evolution of public thinking here. Concerns with climate change and the environment have been rising for 20 years and it is no longer simply an issue of social virtue; it now includes crucial security and economic layers. This is particularly timely as we consider wild fluctuations in the price of oil and the imperilled state of the North American automobile and manufacturing sectors. The Canadian public strongly supported the Kyoto accord and understand that air and water do not respect political geography. Yet there is a growing recognition that the entire globe may be too ambitious a net to cast at this stage in history. A continent, particularly North America, is a pretty big place and with only three players, a more practical starting point.

If we factor in energy, environment and border management into the mix, we start to get the broad outlines of an exciting and timely North American project. Continental energy self-sufficiency, more open borders with a shift to focus on perimeter, a blueprint for managing the economic transition to a post-carbon economy, and a clear and ambitious climate change plan with measurable goals would go a long way to relieving some of the deep foreboding that North American citizens feel about the medium and longer term future. Now may be the time to transcend our narcissism of small difference and to engage our American friends in a bold new North American project that speaks to the deepest hopes and fears of its citizenry in this 21st Century.

_Special to The Globe and Mail_
-------------------

This should set the fervent nationalist cats amongst the level headed canaries.


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## Infanteer (19 Dec 2008)

E.R. Campbell said:
			
		

> This should set the fervent nationalist cats amongst the level headed canaries.



Expect forthcoming books by Mel Hurtig and that other lady....


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## Kirkhill (19 Dec 2008)

So does this mean, especially given the Globe and Mail source, that the US will get the Fortress North America that eluded George Bush now that it is being sold by Barack Obama?


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## Edward Campbell (22 Dec 2008)

Further to some of my earlier comments, here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Ottawa Citizen_, is an opinion piece by long time Liberal strategist Tom Axworthy (the smart one – younger brother of Pink Lloyd Axworthy – well known as a fount of sensible, practical, _progressive_ ideas):
--------------------
http://www.ottawacitizen.com/opinion/forward+Harper/1097129/story.html

 The way forward for Harper

BY THOMAS S. AXWORTHY

DECEMBER 19, 2008


The last time interest rates were this low, John G. Diefenbaker, a Progressive Conservative, was in power. In battling the recession of his time, however, Diefenbaker at least had the stability of a parliamentary majority.

As the recent Parliament Hill drama has proved, Prime Minister Stephen Harper must both respond substantially to the economic storm that is gaining gale force and politically to the parliamentary tempest, which is equally blustery. The January budget must contain a combination of policy and politics that were so sorely lacking in the November economic statement.

By cutting interest rates to a 50-year low, the Bank of Canada has acknowledged that Canada is in recession. Falling commodity prices, a depressed American economy and consumer fears are hammering the economy. In November, 71,000 jobs vanished — the biggest drop since 1982.

The actions taken by the Harper government, to date, are pitiful compared to the dramatic moves of our allies. The Economic Statement on Nov. 27, which actually precipitated the parliamentary crisis, was a stand-pat document that called for a reduction in spending.

In contrast, the conservative administration of George W. Bush has contributed six per cent of GNP to bailing out the financial system, while the Europeans and Chinese have been bolder and gone further.

If the Harper government does not show significantly more imagination in its Jan. 27, 2009 budget, it will be defeated in the House. Full stop. End of story.

Bold trade policies should be one pillar of the forthcoming budget. The creative initiative of a Europe-Canada free-trade agreement is already on the government’s agenda, but has received surprisingly little attention even though it is certainly in keeping with the recent G-20 meeting of world leaders, who lauded liberalization of trade. A full-court press by the Harper government for trade liberalization would be an appropriate response to the recession.

Given that the New Democrats are more anti-free trade than Conservatives and Liberals, this free-trade agreement would have the added political advantage of pulling the Liberals from their putative alliance with the NDP. Roy McLaren, for example, a former Liberal trade minister, is the main proponent of a Canada-Europe free-trade agreement.

The European Commission and Canada’s Department of Foreign Affairs and International Trade demonstrated the value of such a pact in the recently released joint study on the costs and benefits. It concluded that with 700 million wealthy European consumers, the implementation of this pact by 2014 would increase Canadian real income by 0.77 per cent of GNP. Trade would be diversified. Along with NAFTA, a Canada-European free-trade agreement would give us preferred access to the two most developed economies in the world. The Liberal party would have to applaud, leaving the New Democrats to sputter.

Promoting free trade with Europe simply requires more concentration from the harassed Harper government. It does not require the Conservative party to stretch.

My next suggestion does.

Infrastructure is the buzzword of every party’s economic plan. But projects take years to develop. With the recession biting hard today, we need to immediately put money into the hands of low-income Canadians. The place to start is in the restoration of Employment Insurance to its rightful function as protection for Canadians in times of distress, and as a macro-economic stabilizer. Revitalizing Employment Insurance would also have the political benefit of gaining Bloc Québécois support. The Bloc has consistently done Canadians a service in pointing out the inadequacies of our current EI scheme. Making EI reforms the centrepiece of a forthcoming stimulus would stun the coalition.

This idea springs from the excellent work of the House of Commons Standing Committee on Human Resources in its 2005 report, “Restoring Financial Governance and Accessibility in the Employment Insurance Program.” As the report recommends, we need to reform Employment Insurance so that more workers are covered by the plan and livable benefits are paid out longer to unemployed Canadians.

Unemployment Insurance was created in 1940 as an employment stabilizer, but through various cutbacks it is no longer capable of fulfilling this function when we need it most — to spur spending in a recession. Seventy-four per cent of workers were entitled to receive benefits in 1990; by 2004 this number had been reduced to only 36 per cent. Two in three working women who pay into Employment Insurance never receive a penny in benefits, often because they do not accumulate enough working hours to qualify.

The federal government used to contribute directly to EI but now employers and employees are the sole contributors (and the Supreme Court ruled recently that the government has set contribution rates far too high). Every point rise in unemployment leads to an additional $1.5 billion outlay in the fund. Can one think of a greater perversity than taxing jobs during a recession? The government must resume direct contributions to the fund thereby relieving the pressure on employers. The hours necessary to qualify must be reduced so that a majority of Canadian workers will once again be covered, the duration for benefits extended, and training enhanced.

John Diefenbaker struggled with the 1958 recession, but his commitment to working Canadians was never in doubt. As he said in his famous One Canada speech: “I was criticized for being too much concerned with the average Canadian. I can’t help that; I am one of them!”

If Stephen Harper can adopt that particular Progressive Conservative tradition, he might just survive today’s economic onslaught.

_Thomas S. Axworthy is chair of the Centre for the Study of Democracy at Queen’s University. He is former principal secretary to prime minister Pierre Trudeau._

© Copyright (c) The Ottawa Citizen
--------------------


My thinking is along these lines: EI should be an insurance programme into which workers, employers and government all pay and from which workers can draw payments based solely on how much they paid in – no distortions for regional economic problems, etc. How much is available, and for how long, should be determined by actuaries based, solely, again, on the ‘health’ of the EI fund.

But Axworthy’s advice to emulate _Dief the Chief_’s concern for _average Canadians_ is good and Harper ought to follow it.


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## Kirkhill (22 Dec 2008)

My problem with the UI/EI system is the way that it treats seasonal workers vice full-time workers.

I agree that this current, UNPLANNED AND UNPREDICTED, dislocation requires the EI system to function - and the Government should be backing the play with National not Personal dollars (or at least not JUST Personal dollars).

Applying EI to seasonal work is just perverse.  There is nothing unpredictable about seasonal work.  Those workers in it know that it only lasts for a short period of time every year and that it employs a variable number of them for a variable time.  Those that choose to chance their luck in those industries have to understand that if that is their only source of income for the year then they better budget accordingly.  If they need assistance in operating a savings plan to spread that money over the year then perhaps that is a role for government, although there are financial planners aplenty willing to offer the same service.  If they don't earn enough off of one job then find alternate sources of income, or move.

I have had a SIN card for 36 years.  I have paid EI for virtually all of those years, except for the 7 years when I was a consultant (fancy term for unemployed).  In addition to that period there was one shorter period when I could have benefited from UI (at that time).

I have never received a penny of Insurance Money from that fund.  I was declared to have been too well served by my previous salary, or my severance or the money in the bank.  I apparently didn't NEED my money as much as some poor wretch choosing to live off of scenery in the remoteness of Canada.

Meanwhlle I have lived in BC, Alberta, Saskatchewan and Ontario, as well as Indiana.   I have worked in all l0 provinces and more than half of the states.  I have moved my family, whether they wanted to or not, at some personal cost.

All in the name of supplying needs and wants.

I have worked with Phillipinos, Mexicans and Guatemalans who leave their familiies behind to live in barracks in Alaska or crowded apartments in Alberta for 6 months to a year at a time in order to keep their families fed at home and create a better life for their kids.

Take the seasonal work compensation out of the UI plan.  If that is politically inexpedient then create a separate plan for seasonal workers funded from their own income.  There are lots of models to follow including one instituted in Britain by the Labour Government after the war that involved private co-operatives.

I don't even mind if the UI rules that excluded me from compensation are kept in place.  My family, and I, survived and ultimately have prospered.

But  UI, like any other Insurance plan, should be a hedge against the unpredictable future. Not a programme for supporting the unsupportable.

(And as you can tell, here's one where I have difficulty standing back  :-[ )


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## Brad Sallows (22 Dec 2008)

>Unemployment Insurance was created in 1940 as an employment stabilizer, but through various cutbacks it is no longer capable of fulfilling this function when we need it most — to spur spending in a recession.

After paying rent and utilities and purchasing groceries and basic necessities, how much "spur spending" does a person on a low or fixed income contribute?

For a few weeks now I've been reading claims that pushing more money to people with lower incomes will spark recovery, based on the reasonable assumption they will spend every dime.  Undoubtedly they must, or will.  But can anyone put a number - as in fraction of total economic activity - behind that?

I am skeptical that our current economy, which is based so much on providing unnecessary services to each other and already has a healthy and practically immutable fraction of government spending, will respond to anything less than the routine (pre-"meltdown") spending habits of the middle class majority and the conspicuous consumption of the upper decile of income earners.


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## Edward Campbell (22 Dec 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is more, in the form of an editorial, on EI:
--------------------
http://www.theglobeandmail.com/servlet/story/LAC.20081222.EEI22/TPStory/Opinion/editorials

* EMPLOYMENT INSURANCE*
A still better stimulus

December 22, 2008

As part of the upcoming fiscal stimulus package, Employment Insurance needs to be reshaped to make it a more effectively counter-cyclical program, smoothing out the ups and downs of the economy.

It is all the more unfortunate that partisan political manoeuvres have led to the prorogation of Parliament, because some of the desirable changes to EI require legislative changes, sooner rather than later.

EI, like social-assistance payments, is called "an automatic stabilizer," because its payments naturally go up when economic activity goes down. It puts money in the pockets of the unemployed, the very people most likely to spend rather than hoard, because they need this money to put food on their tables, clothe themselves and their children, and pay rent.

But it could do much more to help turn the economy around. EI's present arrangements, for both premiums and benefits, are based on an assumption that in 2009 the unemployment rate will be 6.5 per cent. If symptoms persist, layoffs will mean that the rate is significantly higher. The automatic stabilization from EI and welfare, as they now stand, are not such a great comfort, because they have already been taken into account in the economic forecasts on which premiums and benefits are calculated. In other words, we cannot count on the current EI rates to do much to stabilize the economy, to make our outlook more favourable.

Employment Insurance, needless to say, is not like ordinary insurance policies of the kinds that are sold to households and businesses; for one thing, it's not a voluntary contract. More than that, however, it would work best if it were understood as diametrically opposite to normal insurance.

Insurance policies are quite properly designed so that, as the risk rises, so does the premium. But EI is about a "social" risk. As the probability, and indeed the actuality, of unemployment go up, it would aggravate an economic recession if EI premiums are raised. In technical language, that is "pro-cyclical," rather than counter-cyclical.

EI premiums take a bite out of the paycheques of workers; as that mouthful gets larger, it eats into consumer demand and makes a recession worse. Employers pay much of the premium, too, so it is one of the costs of hiring people. Increasing those costs acts as a perverse incentive to lay people off, or not hire them in the first place.

That is why Employment Insurance should be redesigned so that the premiums instead go down, and benefit go up, as the risk of unemployment rises.

As Kenneth McKenzie, head of the department of economics at the University of Calgary, puts it in a recent submission to the Canada West Foundation, included in a report called Taking Action on the Economy: Advice from Western Canada, "reduced EI contributions should be tied to the unemployment rate so that they are unwound as the economy emerges from recession."

Similarly, Professor McKenzie says, higher EI benefits should also be tied to unemployment rates, so that these too are "unwound" as the economy recovers.

Under the current EI program, rates are set so that they stay fairly steady. The present version of the statute has a quite tight mathematical formula for the range within which they can vary. The previous wording called for maintaining "relatively stable levels throughout the business cycle." That suggests an indifference to economic volatility; stability "over the business cycle" might have been better. Neither version provides the flexibility that would allow the federal government to respond either to slumps or to their reverse, to overheating and inflation.

The need for Parliament itself to deal with these matters became very clear in a decision by the Supreme Court of Canada this month. The Confédération des Syndicats Nationaux, a Québécois nationalist labour-union syndicate, had objected to Ottawa's control of training programs under the federal employment-insurance power in the Constitution. Incidentally, the CSN also made a no-taxation-without-representation argument, to weaken the federal government's position, because the Liberal cabinet had three times revised the EI system without amending the statute.

On Dec. 11, the Supreme Court rejected the point that the CSN really cared about, but held that, because EI premiums are a payroll tax, the Liberals had in 2001, 2002 and 2005 violated the Constitution by an act of Parliament that delegated too much to the cabinet, imposing tax without the approval of the House of Commons. Mercifully, the court gave the government some time to figure out how to correct this, rather than force it into some enormous refunds.

There are other ways, too, to deploy EI as a better fiscal stimulus: giving the same treatment to low-unemployment as to high-unemployment regions, expanding eligibility and lengthening the benefit periods.

Employment insurance payments are a singularly rapid way of delivering cash into the hands of people who can then recirculate it, simply by meeting their needs.

There are of course strong ethical grounds for getting money straight to the poor and those at risk of poverty, to those who have lost their jobs, as to those who simply cannot work, not just counter-cyclical reasons. For once, morality and economic expedience coincide.
--------------------

Professor McKenzie is wrong: EI should not be _tied_ to anything except contributions made and employment status. If/when a person is unemployed – through no fault of his own, but not on retirement when a pension is paid – that person should be entitled to payments base solely on how much (s)he contributed.

If, over whatever period of time, you contributed $10,000 (and your employer also contributed was taxed $10,000 and the government added $10,000) then you should be entitled to get, say, $24,000 to be paid out over some defined period of time – say 26 weeks. The other 1/5 of the $30,000 ‘contributed’ in your name is used to stabilize the EI fund and pay operating expenses. Any money you don’t collect should be credited back to you account.

When one retires, on a pension, a person should be given his/her unused contributions (but not the employer’s or government’s ‘shares’ – 75% of the employer’s share should be reimbursed) and should be allowed to roll them directly, tax free, into a RRSP.


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## Kirkhill (22 Dec 2008)

> Insurance policies are quite properly designed so that, as the risk rises, so does the premium. But EI is about a "social" risk. As the probability, and indeed the actuality, of unemployment go up, it would aggravate an economic recession if EI premiums are raised. In technical language, that is "pro-cyclical," rather than counter-cyclical.
> 
> EI premiums take a bite out of the paycheques of workers; as that mouthful gets larger, it eats into consumer demand and makes a recession worse. Employers pay much of the premium, too, so it is one of the costs of hiring people. Increasing those costs acts as a perverse incentive to lay people off, or not hire them in the first place.
> 
> That is why Employment Insurance should be redesigned so that the premiums instead go down, and benefit go up, as the risk of unemployment rises.



Nonsense, while the risk to the individual rises during a downturn, at the societal level there is no "risk" of unemployment. There is merely the Fact of the Unemployed.  

During this period the Unemployed are collecting the benefits of the insurance that they paid.  The premiums paid to support this insurance policy are not paid concurrently, they should be paid in advance, during good times or, in particularly egregious situations can be paid against future earnings (deficit financing or mortgaging).

Employment Insurance needs to be structured EXACTLY like a conventional insurance plan.  It needs to set money aside in the now for the future.  The fact that it hasn't means that we now need to finance it from the future for the now.

But for Gawd's Sake lets not pretend that seasonal work is in the same category as decadal cycles.


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## GAP (22 Dec 2008)

> When one retires, on a pension, a person should be given his/her unused contributions (but not the employer’s or government’s ‘shares’ – 75% of the employer’s share should be reimbursed) and should be allowed to roll them directly, tax free, into a RRSP



Less what they have collected over the same lifetime.....therefore, the annual collector is not in the same boat as the once in a lifetime collector...............


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## a_majoor (23 Dec 2008)

The economic challenge is to get John Galt back to work. While this is a global issue, whoever figures this out first and brings Capital back to work will have a huge advantage over the others:

http://pajamasmedia.com/edgelings/2008/12/22/capital-is-on-strike/



> *Capital Is On Strike*
> 
> Posted By edgelings On December 22, 2008 @ 12:01 pm In Opinion, Uncategorized | 6 Comments
> 
> ...


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## a_majoor (3 Jan 2009)

Maybe *this* is the stimulus package:

http://business.theglobeandmail.com/servlet/story/RTGAM.20090102.wflahertyconsumer0102/BNStory/Business/home



> *Flaherty hints at tax cuts in budget*
> 
> JULIAN BELTRAME
> 
> ...


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## a_majoor (22 Jan 2009)

This might also be appropriate for the Canadian Economic Superthread as well. The interesting thing to note is the $6 billion "Structural surplus" which can be tapped to lower taxes. This seems to be over and above the real savings that are available by chopping ineffective programs ($19 billion by ending subsidies to business, and untold millions/billions on agricultural subsidies, regional "development funds" etc.)

http://www.calgaryherald.com/life/family/cuts+possible+affordable+Flaherty+told/1203234/story.html



> *Tax cuts possible, affordable, Flaherty told*
> 
> By David Akin and Andrew Mayeda, Canwest News ServiceJanuary 21, 2009Comments (1)
> 
> ...


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## Rifleman62 (23 Jan 2009)

The Star http://www.thestar.com/comment/columnists/article/574487

*Next week's budget will be the flip side of '95*

Jan 21, 2009 04:30 AM
CHANTAL HÉBERT

OTTAWA—Even if the troubled life of a nascent minority Parliament did not depend on it, next week's federal budget would be one for the history books.

It is no accident that 1995 was the last time so much hype surrounded the preparation of a Canadian budget. Then as now, a transformative exercise was in the works.

Paul Martin's second budget as finance minister set in place the conditions for a decade of federal surpluses and helped put its author on track for the job of prime minister. But it also created larger gaps in Canada's social safety net, most noticeably on the fronts of health care and unemployment relief. 

Indeed, by most popular standards, Martin's iconic 1995 budget was a bad-news political document. Very few Canadians escaped the pain associated with it. Some of its collateral damage endures to this day. 

In many ways, next week's budget will be the flip side of the one Martin delivered almost 14 years ago.

In 1995, the social envelope was too big to ignore in the quest for cost-saving measures. Next week, social programs will be left alone. Prime Minister Stephen Harper has vouched to keep the provincial transfers for health, post-secondary education and welfare on their current track.

In 1995, the budget winners were the programs that escaped the government's knife. Next week, the losers will be the groups who fail to get extra financial attention from the federal government.
The 1995 budget put Canada on track for balancing its books. Next week's will herald a new cycle of federal deficit-financing. 

Political convention would suggest that it is harder to cut programs than to spend money. But that premise will be seriously put to the test Tuesday. 

When all is said and done, Martin faced an easier task in balancing the books than Harper does in trying to spend Canada out of the worst of a global recession.

To achieve his goal, Martin had to reset the internal mechanisms of the federal apparatus. But Harper has no control over the major pieces in the global financial puzzle. If they don't fall into place, his budget will have little or no durable positive impact and it will turn into an albatross around the neck of the Conservative party.

At this point, forecasters agree that red ink will not be a passing feature of the federal fiscal picture. For all the current talk of an exit strategy from the upcoming deficit cycle, talk is all that it is.
There are some obvious pitfalls to avoid. Measures that take a permanent toll on the federal government's fiscal capacity would only make getting back in the black immensely harder. 

But beyond that, and with the best of intentions, no one can forecast with certainty whether Tuesday's budget will end up being part of the problem or part of the solution.

Too much of its success lies elsewhere, in particular in Washington and the presidency that was inaugurated yesterday. 

For all of the above, the test of the budget can only rest with the demonstration that Canada will have something constructive to show for its spending once the current downturn comes to an end.

That may sound like a modest criteria except that it is a test that successive Liberal and Conservative regimes failed to meet when Canada was awash with surplus money and the opportunity for modernizing the country's social and physical infrastructures came and went.


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## Brad Sallows (24 Jan 2009)

I cannot express strongly enough how frustrated I am that the Conservatives have been stampeded into adopting the Liberal/NDP/Bloc spending panic.

The new spending will achieve f*ck-all of consequence except to write down several years' worth of miniscule "principal payments" on Canada's federal debt.  There is no reason to believe that the pundits and experts have any idea whatsoever of what to expect: compared to all previous economic downturns, the current state of global commercial interaction, technological and social advances, and levels of government spending as a fraction of economic activity have no precedent on which to base wild-ass guesses, let alone sober predictions.  Unintended consequences - the unforeseen and unforeseeable reactions of millions of "invisible hands" - will pervert everything.  I truly wish for once the "great minds" would admit they really haven't a f*cking clue and allow the system to find its own stability.


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## GAP (24 Jan 2009)

I couldn't agree more.....this whole response is bullshite.....


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## Kirkhill (25 Jan 2009)

Agreed....


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## a_majoor (26 Jan 2009)

Although this quote is from Rush Limbaugh speaking about the American Administration and Congress, it is applicable here, moreso because 4 Federal parties (Liberal, NDP, BQ and Green) and @ 66% of Canadian voters actually endorse this sort of thinking:



> *Obama's plan would buy votes for the Democrat Party, in the same way FDR's New Deal established majority power for 50 years of Democrat rule, and it would also simultaneously seriously damage any hope of future tax cuts*.  It would allow a majority of American voters to guarantee no taxes for themselves going forward.  *It would burden the private sector and put the public sector in permanent and firm control of the economy. Put simply, I believe his stimulus is aimed at re-establishing "eternal" power for the Democrat Party * rather than stimulating the economy because anyone with a brain knows this is NOT how you stimulate the economy.



The challenge forthe CPC is to give the appearance of a stimulus package in the budget _without_ creating long term burdens on the private sector and permanent increases in State power over the economy.


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## a_majoor (28 Jan 2009)

Healthcare is another structural issue that really needs to be addressed before it drags us down even further:

http://www.nationalpost.com/opinion/story.html?id=1222021



> *Medicare, made in India*
> National Post
> Published: Tuesday, January 27, 2009
> 
> ...


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## a_majoor (29 Jan 2009)

While many many people in the Blue end of the Blogosphere are quite angry at the current Federal budget, there were few realistic responses that the Government could have made without making a kamakazi run. Like it or not (Not), we are stuck with it. The only potential bright spot is the true recession might actually bottom by summer and the turnaround begin in late 2009 early 2010, so the government "could" withdraw the spending extravaganza and pull us away from the sustained deficits for five years scenario.

Other things can be done in the mean time:

http://www.bluelikeyou.com/2009/01/29/a-message-to-the-naysayers/



> *A Message to the Naysayers*
> 
> David Asper’s column in today’s National Post is a must-read for anyone complaining about the liberal lean to the left of the stimulus budget (you know who you are). His insights follow closely on the heels of Stephen Taylor’s excellent post yesterday, as well as Monte Solberg’s column in the Ottawa Sun. The message is this:  Look at the big picture.
> 
> ...


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## a_majoor (7 Feb 2009)

If we substitute (name of Canadian Province) for California, then we see the same pattern to greater or lesser extents here in Canada:





> - Works and Days - http://pajamasmedia.com/victordavishanson -
> 
> Thoughts on the Therapeutic Style
> 
> ...


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## Kirkhill (8 Feb 2009)

> When the people find that they can vote themselves money, that will herald the end of the republic.
> -- Benjamin Franklin



And my google-fu isn't up to it tonight but didn't Keynes say something to the effect the when a system can't continue it will stop.

So what happens the morning after when the politicians are out of work, the police are unemployed and the banks are broke.

My guess is that people continue talking and eating and trading and travelling.


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## a_majoor (8 Feb 2009)

Kirkhill said:
			
		

> And my google-fu isn't up to it tonight but didn't Keynes say something to the effect the when a system can't continue it will stop.
> 
> So what happens the morning after when the politicians are out of work, the police are unemployed and the banks are broke.
> 
> My guess is that people continue talking and eating and trading and travelling.



Since there will be no effective central government under those conditions, people who wish to talk, eat or travel will do so under the sufferance of whatever warlord they swear fealty to. Examples exist from the end of the Imperium to the dissolution of Yugoslavia.

Sign up early; I have a limited number of barony's and knighthoods to offer...


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## Kirkhill (8 Feb 2009)

Thucydides said:
			
		

> Since there will be no effective central government under those conditions, people who wish to talk, eat or travel will do so under the sufferance of whatever warlord they swear fealty to. Examples exist from the end of the Imperium to the dissolution of Yugoslavia.
> 
> Sign up early; I have a limited number of barony's and knighthoods to offer...



Unless they turn nomad......behold the wandering peddler.


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## Brad Sallows (8 Feb 2009)

Speaking of things which can't go on forever, with pretty much every government setting itself to spend a healthy deficit, from where are they expecting to get all the money?  I assume they're counting on the banks to buy bonds.

And if there turns out to be a great reluctance to facilitate the proposed spending, what then?


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## SeaKingTacco (8 Feb 2009)

Brad-

My take is that there is no way all of these Govt Bonds can be made to float- so the alternative is to print money.  If we are in a deflationary cycle, my gut feeling is that a few months (maybe a year?) of printing money won't do too  much damage, as all it will do is paper over some of the wealth destruction that occurred when the markets corrected in Oct 08.

Of course, very few Governments can be trusted to shut down the printing presses in time.  My prediction- from summer 2010 onwards, an inflation rate of 5%, moving upwards with interests rates two percent above that, moving upwards in lock step.  Welcome back to 1978....

Of course, I'm just guessing....


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## Brad Sallows (10 Feb 2009)

>I assume they're counting on the banks to buy bonds.

OK, scratch that.  Among the recent commentary among the US bailout's supporters (now that the bill looks ready to clear the US Senate) I found the observation that the balance sheets of the US banks are in no shape to be lending money (ie. buying T-bills).  Oh, and apparently the $800B is going to be too little, too late.  It should be two or three times as much.

I do still suppose that banks in Canada, being healthier, could afford to buy Canadian government bonds, if they were so inclined.

There is something missing from the picture that I don't understand, and I'd appreciate if someone can explain it.  Who the f#ck is going to buy bonds?  I'm not going to sell out my equities near the bottom of the market in order to buy bonds - are you?  Unless there is some magic plan for reinflating the book value of a whole hockey sock of holdings, is it the case that the only resort left is to print money?  If so, good luck if you're on a fixed income or have a cap on your COLA.  You're f#cked.  Pardon me while I figure out where to park my basic savings so that they can at least gain in pace with inflation.

[Add: Having thought about it some more, the obvious solution is the likely one.  Taxes will have to be increased.  Just cutting all the willy-nilly spending should bring the deficit in range of a 2-3% GST increase.  An across the board cut in jobs or compensation to shave federal payroll by 5-10%, coupled with income tax increases (or surtaxes, as in the past) will gain us enough of a surplus to start paying down debt again before interest rates start to strangle federal revenues again.]


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## a_majoor (10 Feb 2009)

There will be a great show, but no one with serious cash will pony up and buy 0% T-Bills, certainly not to the tune of $800 billion or one trillion dollars worth.

Serious investors (and people who are looking at the US Economy thread) recognize there are serious and systemic risks in the US economy that are sitting like secondary devices under the "toxic assets" IED; massive debt to equity ratio, increasing tax and regulatory burdens on the economy, unfunded government employee pensions and the looming insolvency of Social Security.

Lots of options do exist, but almost all are very ugly. Rationing healthcare, massively reducing Social Security payouts and huge tax increases are probably the least of it, and a spectacular fountain of money coming off the presses will provide the appropriate backdrop.

This will result in accelerating inflation, coupled with an increasingly depressed economy; Stagflation for fans of President Carter, and of course the United States will export inflation throughout the world (starting with us, since they purchase 82% of our exports). If American securities get dumped by panicking investors or because of the machinations of hostile nations who hold or influence large amounts of US debt, then the situation will get....interesting.

A few possible outs exist.

Much of the Stimulus package is pork set to be served in 2010, 2011 and even 2012 to influence (buy) future elections. The CBO has stated that the recession will end in 2009 without a stimulus package, so if rising public anger over the size and scale of the package is harnessed by the Republicans, then a putative Republican congress can start canceling large portions of the bill in 2010. (The Conservative government can do the same in Canada's 2010 budget).

Lower levels of government can do a 180 and swim against the tide; dramatic reductions in State, Provincial and Municipal spending and taxes will do a great deal to limit the damage, and indeed concentrate and focus financial ruin on American "Blue" jurisdictions and Canadian "Red" and "Orange" ridings. Since investors and skilled workers always migrate to where they can get the best returns on their investments, "Progressive" regions will see their economies hollow out. (This may be behind the Obama administration's attempts to hijack and politicize the US Census; they can preemptively redistrict electoral boundaries on the basis of mythical "voters" (remember ACORN?) while disenfranchising the real concentrations of voters and electoral power).

An organized or spontaneous John Galt strike will cripple large portions of the US economy, bringing many of the politicians promoting the package into disrepute as their program visibly fails.

Of course American voters can start sitting down together over a nice cup of tea....


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## a_majoor (11 Feb 2009)

Why do the Kiwis get it and we don't?

http://www.thesurlybeaver.ca/index.php?itemid=646



> *Yes! Yes! Yes! A Politician who gets it!*
> 02/11/09
> 
> Some original thinking from former New Zealand finance minister Sir Roger Douglas:
> ...


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