Tuesday March 22, 2016

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Editorial Cartoon by Graeme MacKay, The Hamilton Spectator Ð Tuesday March 22, 2016 OttawaÕs deficit-spending budget WhoÕd have thought that a governmentÕs deficit-spending budget would garner such universal support? But most business groups, usually the shrillest of critics, are behind the Liberal governmentÕs plans. This backing includes support from the Canadian Chamber of Commerce, Canadian Manufacturers and Exporters, economists at the big banks and several think tanks. And this, even though the budget may see a $30 billion deficit when unveiled in Ottawa Tuesday. It says a lot about how the world has changed. In the past decade, many economic assumptions have been turned upside down. Many attitudes have also changed. Who would have once thought that our central bank would be trying to stoke inflation, rather than crush it? Or that instead of worrying about rising interest rates killing the economy, weÕd be worried that falling rates killing the economy? Or that it would okay for central banks to create trillions of dollars out of thin air? This new consensus is really a capitulation. It says that, after eight years of manipulating interest rates, that policy hasnÕt worked. No amount of pushing on that string has created growth. So itÕs time to pull lever number two, fiscal policy. You spend money you donÕt have (but promise to pay back). You hope to stimulate demand so that businesses will follow along and economic activity will increase. Central banker Stephen Poloz delayed cutting CanadaÕs key rate again in January from its lofty one half of one per cent for this reason. He wanted to see what Ottawa planned to do. The frantic effort to get something going is as much about the future as the present. The concern is that when the next recession arrives Ñ which inevitably it will Ñ there will be nothing central banks can do. ThereÕll be no ammunition left in the rate-cut gun. Most economic expansions last between five and seven years. The current one i

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday March 22, 2016

Ottawa’s deficit-spending budget

Who’d have thought that a government’s deficit-spending budget would garner such universal support?

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator - Friday February 12, 2016 Trudeau shies away from Liberals' balanced-budget vow, cites fading economy Prime Minister Justin Trudeau is backing away from a campaign vow to balance the public books before the end of his government's four-year mandate Ñ a promise that was central to the Liberal election platform. As a result of a weakening economy, the government's upcoming 2016-17 budget plan will show a deficit larger than the Liberals' promised $10-billion shortfall cap, Trudeau told Montreal's La Presse newspaper. Just how big that deficit will be remains unclear. If the economy continues to deteriorate, it will be difficult for the Liberals to live up to their pledge to balance the books in 2019-20, Trudeau said in an interview published Thursday. Less than two months ago, Trudeau insisted that the Liberal plan to make good on that key balanced-budget promise was "very" cast in stone. The doubts raised by Trudeau offer a glimpse of the fiscal pressure faced by the Finance Department as it crafts the government's first federal budget, expected late next month. "If we look at the growth projections for the next three or four years, it will be difficult (to return to balance)," Trudeau was quoted by La Presse as saying. "But everything we're doing is aimed at creating economic growth. When predicting the level of growth four years in advance, governments often miss the target." During the fall election campaign, Trudeau promised to keep deficits below the $10-billion mark in 2016-17 and 2017-18 unless the economic situation got radically worse. "Yes, we will go over $10 billion," Trudeau told La Presse. "By how much? We are in the process of examining that." In recent months, the Canadian economy has sputtered in large part due to the steep drop in commodity prices. On Wednesday, a National Bank of Canada report said the country's fading economic prospects could put the Liberal government on tra

Friday February 12, 2016

But most business groups, usually the shrillest of critics, are behind the Liberal government’s plans. This backing includes support from the Canadian Chamber of Commerce, Canadian Manufacturers and Exporters, economists at the big banks and several think tanks. And this, even though the budget may see a $30 billion deficit when unveiled in Ottawa Tuesday.

It says a lot about how the world has changed. In the past decade, many economic assumptions have been turned upside down. Many attitudes have also changed.

Who would have once thought that our central bank would be trying to stoke inflation, rather than crush it? Or that instead of worrying about rising interest rates killing the economy, we’d be worried that falling rates killing the economy? Or that it would okay for central banks to create trillions of dollars out of thin air?

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator Ð Thursday February 18, 2016 Canada to lose 2,830 jobs as Bombardier slashes workforce Bombardier Inc. says it will cut 7,000 positions over the next two years including 2,000 contractors in both aerospace and train divisions Ð almost 10 per cent of its global work force. Most of the job losses will be in Canada and Europe, but will be partly offset by hiring in certain growth areas as production ramps up for the new CSeries aircraft. ÒWe are taking this difficult decision to make Bombardier strong,Ó said Bombardier CEO Alain Bellemare on a conference call with analysts on Wednesday after reporting weak fourth quarter earnings. The Montreal-based aerospace and rail equipment company says the cuts will begin in the coming weeks and be completed by 2017. It was not immediately clear where the job cuts will be, though 2,830 will be in Canada. Of those, 430 will be in Ontario and 2,400 in Quebec. In Canada, 400 jobs will be eliminated in the transportation division and 2,430 in the aerospace division. Transport Minister Marc Garneau says he has mixed feelings about the job cuts and the Air Canada deal. The minister sang the praises of BombardierÕs new aircraft, but he did not immediately commit to helping the troubled company out of its financial difficulties. The Quebec government is putting up $1 billion (U.S.) for a 49.5 per cent stake in the CSeries program, while the Caisse de depots et placement du Quebec, the pension plan, spent $1.5 billion (U.S.) for a 30 per cent stake in the companyÕs train division. Bombardier has asked the federal government to join in with financial assistance for the CSeries, but like Garneau, Navdeep Bains, minister of innovation, science and economic development, said Ottawa is still studying the idea. ÒAny action the government takes with respect to Bombardier will be first and foremost in the interest of Canadians,Ó Bains said in a statement. ÒWe have been clear th

Thursday February 18, 2016

This new consensus is really a capitulation. It says that, after eight years of manipulating interest rates, that policy hasn’t worked. No amount of pushing on that string has created growth.

So it’s time to pull lever number two, fiscal policy. You spend money you don’t have (but promise to pay back). You hope to stimulate demand so that businesses will follow along and economic activity will increase.

Central banker Stephen Poloz delayed cutting Canada’s key rate again in January from its lofty one half of one per cent for this reason. He wanted to see what Ottawa planned to do.

Saturday August 29, 2015The frantic effort to get something going is as much about the future as the present. The concern is that when the next recession arrives — which inevitably it will — there will be nothing central banks can do. There’ll be no ammunition left in the rate-cut gun.

Most economic expansions last between five and seven years. The current one is weak, but is still in its seventh year. For the U.S., it’s the fourth-longest period of growth recorded.

There’s nothing to suggest any downturn is imminent, though early in the new year many wondered. Things are looking a lot better than they did then. A low dollar has perked up manufacturing. Retail sales surprised in the latest reading. American unemployment is low. (Continued: Toronto Star)