Opinion

Opinion

Bad U.S. economic news also spurs fears in Ontario

July 10, 2010

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The latest economic signals from the United States are disturbing; they ought to give our political leaders reason to pause before embarking on draconian austerity programs.

In the past week, the U.S. reported a dramatic fall-off in home sales, a drop in manufacturing activity, a rise in new claims for unemployment benefits, and a net loss of 125,000 jobs. The unemployment rate fell marginally, to 9.5 percent, but only because many jobless people stopped looking for work. The stock markets responded with their worst week in two months.

The combination of negatives led to renewed talk of a W-shaped recovery, with the U.S. economy dipping back into recession.

That would be bad news for the whole world. It would be catastrophic for Ontario, where half of our economy is dependent on trade with the Americans. If they stop buying cars and household goods, our manufacturers feel the pain.

Perhaps in anticipation, the communique emanating from the G20 summit last month acknowledged that the economic recovery is still “fragile,” with unemployment in many countries remaining at “unacceptable levels.” As a result, the G20 called for countries to follow through on their stimulus plans and to move cautiously on restraint, with a target of cutting deficits in half by 2013. ...

This is summit-speak for: Don’t slam on the brakes.

The right-wing commentariat found that message far too limp and called for a more urgent approach to reining in government spending. In an opinion piece last week, Kevin Gaudet of the Canadian Taxpayers Federation compared the Canadian fiscal situation to that of the so-called PIGs (Portugal, Italy, Greece and Spain), when provincial deficits are lumped in with Ottawa’s. He urged Ottawa to “push the provinces hard to get their budgets back under control.”

Given the U.S. economic numbers, this is precisely the wrong advice at this time. Our governments should continue implementing the stimulus projects that have already been committed to and, indeed, should be prepared to fund additional stimulus if the economy falls back into recession. Deficit cutting can wait until the economy is back on more solid footing.

Online: http://www.thestar.com

Comments

Tom Shewmon 4 years, 11 months ago

Yet, Obama trashes Republicans while simultaneously telling us that we are "heading in the right direction". That's odd when pundits/economists, left and right, are now talking of a double-dip recession and some now are even fearing a full-blown depression down the road. There's your "change". Thanks a heap Obama, Pelosi and Reid.

just_another_bozo_on_this_bus 4 years, 11 months ago

So I take it that you agree with the editorial that there needs to be much more stimulus spending.

Flap Doodle 4 years, 11 months ago

Amazing how Canada is able to run their economy without millions of illegal aliens working at less than minimum wage. You know, we should try that.

just_another_bozo_on_this_bus 4 years, 11 months ago

Perhaps there is a reason for that---

"According to Canada's Immigration Program (October 2004) Canada has the highest per capita immigration rate in the world"

http://en.wikipedia.org/wiki/Immigration_to_Canada#Illegal_immigration_in_Canada

Flap Doodle 4 years, 11 months ago

Illegal aliens working off the books for sub-minimum wages and legal immigrants who obey the law don't have the same effects on a nation's economy. It's amazing that people get those confused.

whats_going_on 4 years, 11 months ago

However, those illegal aliens working for sub-min wages are doing work that most legal people are "too good for."

jaywalker 4 years, 11 months ago

"draconian austerity measures"

???

Yeah, sure, austerity is absolutely the wrong approach when faced with unsustainable entitlement programs (more than 50% of our budget now) and the incredibly ignorant practice of printing money that's as worthless as homemade counterfeit bills. Sure, sure, spend spend spend you're way into oblivion...errr... I mean "out of debt". That makes sense. Mm hmm.

camper 4 years, 11 months ago

The same debate was taking place during the great depression and FDR was confronted with the same question. Due we put on the breaks by reducing spending (ie stimulus), or do we continue using this economic tool?

Nobody likes running up huge defecits like we are now, but if we discontinue some form of stimulus there will not be any more temporary boosts to GDP. Recovery will become more natural and largely up to the private sector (which is all good). However, times are different now, and a private sector recovery will have to come from the service industry. Unfortunately, the US is no longer the manufacturing giant it once was.

Without stimulus it is more likely this will be a double-dip recession if not depression. One thing is certain, a depression will be many times more difficult and longer to recover from than a recession. If we end stimulus, this is the gamble we take.

I'm just saying. I do believe there are valid points to both sides of the argument however.

gccs14r 4 years, 11 months ago

No one needs to say anything naughty about you, Tom. All anyone has to do is read your posts and your naughtiness is self-evident.

Mike Ford 4 years, 11 months ago

I've been through Ontario and Quebec. I miss our money going a long way up there. That's what happens after eight years of dumblican rule encouraging devaluing money, borrowing from China to support pointless wars, and a lot of canada bashing by hillbilly isolationist Americans. Granted we take many of our dumblicans and export them to the prairie provinces to live along their dummies. The Cree, Metis, and Dakota people could teach the dumblicans how to survive the cold and grow food just like Wampanoag taught the pilgrims so that three centuries later they could spawn the bastion of xenophobia and religious judgement that occurs now and be hailed as American exceptionalism by the chuckleheads like Buchanan and Coulter on FOx. How this country champions the underachieving and thefts of and by other countries losers.... nice... I actually apologized for Bush at the Ottawa Embassy in 2003 because I was so embarrassed by this chucklehead and his war hungry followers.

Mike Ford 4 years, 11 months ago

I've been through Ontario and Quebec. I miss our money going a long way up there. That's what happens after eight years of dumblican rule encouraging devaluing money, borrowing from China to support pointless wars, and a lot of canada bashing by hillbilly isolationist Americans. Granted we take many of our dumblicans and export them to the prairie provinces to live along their dummies. The Cree, Metis, and Dakota people could teach the dumblicans how to survive the cold and grow food just like Wampanoag taught the pilgrims so that three centuries later they could spawn the bastion of xenophobia and religious judgement that occurs now and be hailed as American exceptionalism by the chuckleheads like Buchanan and Coulter on FOx. How this country champions the underachieving and thefts of and by other countries losers.... nice... I actually apologized for Bush at the Ottawa Embassy in 2003 because I was so embarrassed by this chucklehead and his war hungry followers.

Mike Ford 4 years, 11 months ago

I've been through Ontario and Quebec. I miss our money going a long way up there. That's what happens after eight years of dumblican rule encouraging devaluing money, borrowing from China to support pointless wars, and a lot of canada bashing by hillbilly isolationist Americans. Granted we take many of our dumblicans and export them to the prairie provinces to live along their dummies. The Cree, Metis, and Dakota people could teach the dumblicans how to survive the cold and grow food just like Wampanoag taught the pilgrims so that three centuries later they could spawn the bastion of xenophobia and religious judgement that occurs now and be hailed as American exceptionalism by the chuckleheads like Buchanan and Coulter on FOx. How this country champions the underachieving and thefts of and by other countries losers.... nice... I actually apologized for Bush at the Ottawa Embassy in 2003 because I was so embarrassed by this chucklehead and his war hungry followers.

Mike Ford 4 years, 11 months ago

I've been through Ontario and Quebec. I miss our money going a long way up there. That's what happens after eight years of dumblican rule encouraging devaluing money, borrowing from China to support pointless wars, and a lot of canada bashing by hillbilly isolationist Americans. Granted we take many of our dumblicans and export them to the prairie provinces to live along their dummies. The Cree, Metis, and Dakota people could teach the dumblicans how to survive the cold and grow food just like Wampanoag taught the pilgrims so that three centuries later they could spawn the bastion of xenophobia and religious judgement that occurs now and be hailed as American exceptionalism by the chuckleheads like Buchanan and Coulter on FOx. How this country champions the underachieving and thefts of and by other countries losers.... nice... I actually apologized for Bush at the Ottawa Embassy in 2003 because I was so embarrassed by this chucklehead and his war hungry followers.

Mike Ford 4 years, 11 months ago

I've been through Ontario and Quebec. I miss our money going a long way up there. That's what happens after eight years of dumblican rule encouraging devaluing money, borrowing from China to support pointless wars, and a lot of canada bashing by hillbilly isolationist Americans. Granted we take many of our dumblicans and export them to the prairie provinces to live along their dummies. The Cree, Metis, and Dakota people could teach the dumblicans how to survive the cold and grow food just like Wampanoag taught the pilgrims so that three centuries later they could spawn the bastion of xenophobia and religious judgement that occurs now and be hailed as American exceptionalism by the chuckleheads like Buchanan and Coulter on FOx. How this country champions the underachieving and thefts of and by other countries losers.... nice... I actually apologized for Bush at the Ottawa Embassy in 2003 because I was so embarrassed by this chucklehead and his war hungry followers.

just_another_bozo_on_this_bus 4 years, 11 months ago

Austerity measures will not create an economic rebound. To the contrary, they will exacerbate the recession.

The reason the economy went into the dumps is that it isn't efficiently producing enough of the goods and services people really need in a sustainable and ecological way. In other words-- it's broken.

So for stimulus funding to be effective, it should be very carefully targeted. Extending unemployment benefits, giving underwater homeowners help in staying in their houses, but most importantly tax credits and loans to alternative energy and other sustainable and ecologically sound industries, especially small businesses, will do the most to reinvent and reinvigorate the economy.

just_another_bozo_on_this_bus 4 years, 11 months ago

"The reason for the recession is Bush's stimulus spending."

No, the reason for the recession is the bubbles over the last few decades-- the Savings and Loan bubble, the tech bubble, the housing/derivitives bubble. These created the illusion of increased wealth, on which the various Wall Street and other scammers cashed in at everyone else's expense. A longer term cause has been deceptively cheap energy and other resources obtained along with massive externalized costs-- costs which are only now beginning to bite us all in the a$$.

"If you cut taxes but not spending, economically that is no different than keeping taxes the same but raising spending.."

True enough, but an economy can only be said to be healthy if nearly all people can meaningfully contribute in creating essential goods and services in sufficient quantities and then distributing that somewhat equitably among all people. By that definition, the world's economy has never been healthy.

Bush's tax cuts were designed to have exactly the opposite effect, and they succeeded wildly.

just_another_bozo_on_this_bus 4 years, 11 months ago

"You say to subsidize alternative energy and ecologically sound industries, but which ones? How much? Help small businesses, but which ones? How much?"

The devil is most certainly in the details, but there are answers to your questions if we have the political will to determine exactly what those details are.

And as far as which businesses get the help, I'm willing to let the markets decide that to a very large extent. But we'll never get to that point without government intervention creating a bridge from the current corpro-fascist model under which we currently operate. And that won't happen until government shakes off the control currently exerted by the current corpro-fascist power structures. That'll take common people getting much more involved in the political system.

Unfortunately, the Tea Party movement has been co-opted from the start by the corpro-fascists.

It's very hard not to believe that the human race is at the beginning of what could be a very quickly accelerating downward spiral.

just_another_bozo_on_this_bus 4 years, 11 months ago

"You expect government intervention to save us for the consequences of....government intervention?"

This assumes that all government intervention is necessarily the same, and it's clearly not.

"No matter how strong your will may be, as long as your system includes giving a certain group of people vast amounts of power over the rest of us the results are predetermined."

An ideal system wouldn't do anything of the sort. But I readily admit that getting to an ideal system, whether it's yours or mine, could very well be an unobtainable utopia.

" remember that the republicans are part of your plan."

No, they are the biggest impediment to my plan. But you are quite right that they probably won't be going anywhere, which is precisely why I think extreme pessimism is very realistic outlook for the future.

"The beginning or the end?"

Determining where it begins is probably an exercise in arbitrariness, but saying it begins now or in the near future merely assumes that we are just now about the pass the point of no return.

just_another_bozo_on_this_bus 4 years, 11 months ago

Bush, et al, merely wanted to completely privatize Fanny and Freddy, and if they had succeeded, the sub-prime debacle would have happened just the same, if not worse.

just_another_bozo_on_this_bus 4 years, 11 months ago

"The banks were only doing what the government wanted them to do."

More accurately, government regulations were tailored to serve what the banks wanted to do-- which was to package up risky loans and sell them off to (mostly) unsuspecting buyers.

camper 4 years, 11 months ago

I believe that stimulus, if used properly, is supposed to pump investment into the private sector, not divert it away from business. A good example is the Hoover Dam and other infrastructure projects. It is private companies that bid on these contracts and employ the private workforce.

I cannot say that the current stimulus is being used to an effective degree, but in principal, it should spur private economic growth.

As far as throwing resources away, funding military deployments is far more detrimental. This money is truly being diverted away from our country. Nation building in Afghanistan? This ain't helping our economy.

just_another_bozo_on_this_bus 4 years, 11 months ago

"True, just like building more unnecessary bridges, schools and dams doesn't help our economy either."

Are all bridges, schools and dams unnecessary? Has every private investment ever made been purely a matter of necessity?

camper 4 years, 11 months ago

Liberty, I'm not quite with you when you state that there is no demand for public works. They are the things that advanced societies need and when things are working properly we don't always notice them. Is there much private demand for a bridge? Probably not. But collectively a town or community may really need something like this.

camper 4 years, 11 months ago

True on all points Mud_Flap. We may be in for a long recovery because you remind us that we have some long-term issues that need to be addressed. And I don't think they will be addressed until things get really bad. We have not reached that point yet. Right now all we seem to get is political fighting between the two parties and it does not seem to be getting us anywhere.

When things get like they were in the "Grapes of Wrath" days, we are going to realize we truly have a problem on our hands. This is what it seems to take to move us Americans. And when we are moved, we have shown the great nation we are.

camper 4 years, 11 months ago

"That money is taken out of the economy and would have been used for something else"

This is the problem Liberty. In a recession, this money often is not being used on something else. Supply of goods is greater than demand. As a result business cuts back on orders in an attempt to lower inventories. This is why the great depression was characterized by deflation and this is why now, despite huge defecits, inflation is close to zero. We've got a demand problem.

George Lippencott 4 years, 11 months ago

Let us go back and revisit more money for stimulus? The Republicans have demanded we find sources to fund it. The Democrats have so far not been willing to do that. They argue we need to do this because we must.

You know we have spent a couple of trillion dollars on stimulus in the last two years. Will a little more really help that much? Many economists are saying much of the stimulus has had little simulative effect. In fact, most of our economic allies are moving away from stimulus and toward austerity. Whether this comment by a newspaper in Canada represents the position of the Canadian government is questionable. We seem to be almost alone going in the opposite direction. I though that was one of Mr. Bush’s bads. Silly me.

Now as I understand it, the focus for this money has so far been to pay for public employees and infrastructure (loyal democratic unions). I have nothing against civil servants. However, didn’t we just increase our state taxes to pay for their services? Is there not a proposal to increase our property taxes to maintain our local teachers? Has any body seen any data that suggest that construction workers are hit harder than many others are? Why them and not small businesses? How about displaced workers impacted by our decision to move jobs of shore (maybe retraining for real jobs?)

Why should we want to pay federal taxes to do what is proposed? Oh, wait a minute; this money is coming from Mr. Obama’s stash. Right? We all know it is going to come from the 50% of us that pay taxes. I guess it is just our contribution to California’s fiscal nightmare. Just maybe, California should deal with its own problem. Has anybody figured out that next January 1st all our taxes (those of us that pay any) are going up and Mr. Obama will not be guilty of breaking his campaign promise? That is when a portion of the Bush tax cuts expire and those impact the middle much more than the top, I do not see any way we will get extensions as the two parties will disagree and unless somebody gets a clean majority this fall nothing will happen.

Would it not be nice if the Democrats would use a little bit more logic in selling their never-ending desire to spend other peoples' money toward what might be viewed as vote gathering schemes that benefits their election prospects? Seems like increasingly the Democrat’s spokespersons are putting forward arguments that insult my intelligence as opposed to arguments in support of good governance.

camper 4 years, 11 months ago

George, let's not kid ourselves. Both parties spend our money like drunken sailors. I support stimulus and extension of unemployment benefits, but for the life of me I cannot understand why a couple trillion dollars has not been very effective thus far. What is going wrong? Is the money winding up in the wrong hands? I don't know.

And if we want to be honest about austerity, we must view the elephant in the room. And this is the funding of these two conflicts. One estimate is that it costs about 1 million per year for each soldier in Afghanistan and/or Iraq. The Republicans are the Hawk party and they got hacked off when their chairman spoke frankly (and quite truthfully I might add). But it is Obama's conflict now. I do not understand why he has taken up Afghanistan. In my mind it is not in the US interest to meddle there.

I ramble now. I do agree with you on much, but not everything. Peace.

George Lippencott 4 years, 11 months ago

Well Iraq is mostly OBE. We have incurred most of the debt and we have now moved into nation building. There may be some hope (fingers crossed) that something useful may come out of this expense as Iraq has infrastructure and may become a prosperous useful nation - may.

In Afghanistan, a lot of money is going for nation building including most of our troop expenses. I have a serious question as to whether that will work there. It did not work in Vietnam. I see many parallels including a 12th century county that has no sense of nationhood ruled by a religious or cultural oligarchy with the majority of the citizens wanting nothing more than to be left alone. This could become an open-ended pit that will only end when we all tire of paying for it. The left is correct in my opinion in calling for an end.

Your know one of the ironies of all of this is that we have built up our military and many of our soldiers (broad meaning) have several combat tours and actually longer periods in combat then many of the greatest generation. We are already talking about cutting their services and dumping them into a ragged (at best) economy. You know there is no GI bill (WWII type) or other benefits equivalent to what we did to recognize the services of the greatest generation.

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