Canada's Opposition Parties Vow to Bring Down Government, 1 month into its term...

[CrONoS]

Originally posted by Sharpe


Well, first off - something probably has to be done for the auto companies. Admittedly if the Americans do nothing for them, they are doomed anyhow, but if they do something and we do nothing, they will likely shutdown virtually all of their plants here - with would lead to an enormous loss of jobs directly and a lot more indirect jobs (and put key companies like Magna and others in trouble).

Second, they need to spend on infrastructure. That is usually a good way to help boost the economy and goodness knows - there are many areas that infrastructure has been badly neglected (water systems, roads, bridges/overpasses, getting cell systems and cable more out to the rural regions).

Third, they need to beef up the EI benefits - particularly the length of time you can get them as it will likely take people a lot longer to find jobs in this current economic climate.

Fourth, they need to start figuring out a way to shift our economy more directed towards Asia (although increased EU and other trade would be a good idea too). Just get us less dependant on the US economy which is in for a long struggle and a lot of restructuring (much more than us) and Canada's interests will likely be ignored and US interests favored there while they struggle out of a deep recession.

Just don't sell assets while they are in their depressed state - that doesn't help Canada at all - and tax cuts aren't a stimulus by themselves (and they are actually one of the least effective types of stimulus as they so favor the rich who don't spend as much in Canada). Also the program cuts and "savings" they are planning are somewhat of an anti-stimulus.

Well, KH resumed pretty well my thought, and in a better English than I could do.

About Increasing government spending in infrastructure:

Two thing he doesn't mentions, and I think are worth mentioning, with a canadian unemployment rate at 6.2% (the second or lowest unemployment rates Canada never had in 30 years.) you will surely took resources which would have been employed by the private sectors. (note that this reason apply only if the unemployment level is low).

2: The planning & effect in the economy will takes too much time.

[CrONoS]

Maybe I'm wrong, but I can't see any good thing doing an infrastructure programs when the unemployment level is at 6-7% ( in Canada)

You'll probably raise the wages, and/or you will keep people in the workpool while they would have return to school if they would have lose their jobs, etc...

Clearly, a recession should be an opportunity for people to return to school. If I was the government, I would give very low interest loans and grant, in order to help people of every ages returning to school. That would be, one part of my plan! Betting on the future!!

Anyhow, I would be curious to see the graphs of the variation of people which are going to school (university/college, professional school) during a recession. Comparing when the economy is going very good!

Edit: Can-> Can't

[CrONoS]

God, S. Gordon (http://worthwhile.typepad.com) just said in his last entry, what I just posted!
:gggrrrr:
Edit:

Here the graph:

[KrazyHorse]

That ****er is often in my head too.

[KrazyHorse]

A good idea for a stimulus:

* Permanently reduce income taxes.
* Increase the GST to 7%, effective January 1, 2010. (Perhaps accompany this with a reduction to 4% for 2009).

[notyoueither]

Does anyone have information on the effect of the decline in the dollar? When it was soaring there were complaints in Ontario, etc about the effect on manufactured goods. Has that reversed at all, or will the situation in the US overwhelm any possible improvement?

[KrazyHorse]

There is usually a lag of 6+ months associated with shifts in exchange rates, plus a few months for those numbers to be collected. I'm not sure if we have any data yet that would reflect the decline of the dollar.

[notyoueither]

Originally posted by Sharpe


Well, first off - something probably has to be done for the auto companies. Admittedly if the Americans do nothing for them, they are doomed anyhow, but if they do something and we do nothing, they will likely shutdown virtually all of their plants here - with would lead to an enormous loss of jobs directly and a lot more indirect jobs (and put key companies like Magna and others in trouble).

We have done stuff for the auto companies to keep jobs in Canada. They have burned the cash and turned around and reduced production/shifts/etc anyway, have they not?

At any rate, there are other good reasons for auto jobs here (there? in Ontario). Labour costs being a large one.

I think our federal government needs to work with/around Obama in any event, or we risk flushing cash needlessly, rather than just hopelessly. I think you have to wait for Obama to take over though, don't you?

Second, they need to spend on infrastructure. That is usually a good way to help boost the economy and goodness knows - there are many areas that infrastructure has been badly neglected (water systems, roads, bridges/overpasses, getting cell systems and cable more out to the rural regions).

I think we should use defecit spending when it will do some good. As others have pointed out, we'd be battling healthy industries for workers for these projects at this point.

I'm in favour of the government keeping its powder dry and not reacting in a knee-jerk fashion. After all, that borrowed cash will have to be repaid and trying to borrow it will have an effect on available capital needed by private industry (I would think).

Third, they need to beef up the EI benefits - particularly the length of time you can get them as it will likely take people a lot longer to find jobs in this current economic climate.

They have built in flexibility in the EI system. IIRC, your benefits last longer if you are in a depressed area.

There is zero need to reinforce the EI Ski Team in Alberta with extra vacation time because of laid off autoworkers in Ontario.

Fourth, they need to start figuring out a way to shift our economy more directed towards Asia (although increased EU and other trade would be a good idea too). Just get us less dependant on the US economy which is in for a long struggle and a lot of restructuring (much more than us) and Canada's interests will likely be ignored and US interests favored there while they struggle out of a deep recession.

Good idea. I don't know if a quarterly budget update is the place for big plans like these though.

Just don't sell assets while they are in their depressed state - that doesn't help Canada at all - and tax cuts aren't a stimulus by themselves (and they are actually one of the least effective types of stimulus as they so favor the rich who don't spend as much in Canada).

What asset sales? I've looked and cannot find any reported as part of Flaherty's document. Are you referring to his remarks of a few weeks ago about possible asset sales?

Can you elaborate on your negative views of tax cuts as stimulus? These tax cuts, or any tax cuts?

Also the program cuts and "savings" they are planning are somewhat of an anti-stimulus.

What program spending that is proposed to be cut would have an anti-stimulus effect?

[notyoueither]

Originally posted by KrazyHorse
The fiscal multiplier from spending increases in Canada is now strongly NEGATIVE. Perotti (2005). People in Canada are still very sensitive to budget deficits. They know that current deficits must be paid for with future taxes. This is basic Ricardian equivalence. Therefore they cut back their own spending in anticipation of future tax increases to pay for spending increase.

Wouldn't that change as the situation changes?

[notyoueither]

Originally posted by KrazyHorse
There is usually a lag of 6+ months associated with shifts in exchange rates, plus a few months for those numbers to be collected. I'm not sure if we have any data yet that would reflect the decline of the dollar.

I would have thought something like that, but Cronos seems to have lots of interesting economic info.

[KrazyHorse]

Originally posted by notyoueither


Wouldn't that change as the situation changes?

Yes, but data is better than idle speculation.

[notyoueither]

We don't have much data entering into a depression though, right?

If unemployment gets past a point and is going up, then I would think it would be a good time to open the spigot up a little, or a lot.

[KrazyHorse]

We are not even close to entering a depression. In fact, we are still near record highs of employment rates (unlike the US, which peaked in 1999 IIRC).

[notyoueither]

I'm not sure how one would know that at this time. Is the bad news over?

It's a hell of a bump and a rough ride for many of our trading partners at a minimum. I've though it would take time for the effects to work their way through to most Canadians.

[TCO]

The whole idea of a parliamentary government seems bizarre and strange to an American. Closest I know about that is reading Double Star by Heinlein.