Symmetry Watch

Will the people who argued that budget surpluses were equivalent to 'overtaxation' now argue that budget deficits are 'undertaxation' and push for tax increases?

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The sad part is, you could make an argument that one's responses need not logically be symmetrical, but that argument would be pointing out that since we have an accumulated debt in the hundreds of billions, we should be running surplusses through good times and bad (larger surpluses during good times, naturally) in order to eliminate the debt.

Debts No Honest Economy Can Pay

"Well, I got a job and tried to put my money away
But I got debts that no honest man can pay
So I drew what I had from the central trust
And I bought us two tickets on that coast city bus
Well now, everything dies, baby, thats a fact
But maybe everything that dies someday comes back"

From Atlantic City, by Bruce Springsteen
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Over the last few years, I've thrown out the odd comment here and there about how many economic charts seemed to put us right about where we were prior to the Great Depression (or worse). Some of those charts measure income inequality, but mostly they are debt related.

The last few decades, much like the 1920's, have seen a massive run-up in debt levels across society. Now, as anyone who has borrowed money knows, the amount of money you can borrow and still make ends meet depends on interest rates: the lower the interest rate, the more debt you can handle.

So, since the early 80's we've been able to carry this increasing debt load thanks to ever lower interest rates (which have now reached 0 in the U.S.) After 9/11 when a recession looked likely, central banks lowered interest rates down to 1 or 2% for a couple of years, which was enough to prevent a serious recession from occurring, and also started us on our latest run of piling up even higher and higher debt levels.

So we now have (or had a year or two ago) a massive mountain of debt which could only be supported with very low interest rates and with an ever expanding credit bubble providing higher asset prices to prevent losses. At some point, the economy simply couldn't take on any more debt and things began to unravel. The U.S. housing market was one of the first shoes to drop and it's a pretty big shoe. But once the bubble bursts, it's hard to prevent it from collapsing entirely.

As I said, central banks managed last time by reducing rates almost to zero, prompting further inflation of the debt bubble via (in part) the creation of a global housing bubble. But this time, I'm not sure anything will prevent the debts from being wiped out in a self-reinforcing collapse.

So, from my standpoint, the problem the economy faces is a crippling debt load and the solution is anything that will reduce this debt load back to manageable levels in an orderly fashion.

With that in mind, I have to admit I find headlines like the following puzzling:

Carney Urges Banks to Lend More

I appreciate that we don't want the economy to implode as the debt bubble unwinds, but shouldn't we be trying to just manage the debt reduction process, not actively trying to create more debt? Maybe I'm missing something. It almost seems as if central banks think they can restart the economy based on further expansion of our debt levels, but surely they must have realized by now that, even if that was possible (which seems unlikely), it would only lead to an even bigger mess the next time the economy collapses under the weight of too much debt?

There's basically three ways to get rid of debt:
1) The most orderly way is for people to pay it back.
2) People can default on their debt. Bad for creditors (people who are owed money), good for debtors (the people who owe the money
3) The value of the debt owing can be reduced. This could be done by renegotiating terms, by government order, or, more usually, by inflation. Inflation reduces the value of money, allowing borrowers to repay their loan using dollars that aren't as valuable. Imagine you owe $200,000 on your mortgage, if we have 10% inflation and you get a 10% raise every year, it gets a lot easier to repay that mortgage as the years go by.

Faced with deflation (which has the opposite effect of inflation and will make our crippling debt levels extra crippling) it seems as though central banks are trying to print enough money to cause inflation instead. While dangerous (inflation can turn into hyperinflation which can wreck an economy) it seems the most likely escape from our debt prison at this point, so it's a reasonable approach. But what I can't figure out is that they seem to be trying to cause inflation by giving banks money and having the banks lend that money to people. But given that that is how we got into this mess in the first place, it seems an unlikely method to get us out.

Anyways, I don't know much about macroeconomics and this is all over my head, but it seems to me like the government should be focusing on reducing debt, not expanding it.

It brings to mind the stories we read back in school about Solon, the legendary ancient Greek leader who helped bring about the flourishing of ancient Greek society.

Here's a fairly standard account of the successful reforms Solon made:

"First coming to prominence (c. 600 B.C.) for his patriotic exhortations when Athens was fighting a war against Megara for possession of Salamis [see Map section Dab], Solon was elected eponymous archon (the magistrate whose name the year is known by) in 594/3 B.C. and perhaps, again, about 20 years later. Solon faced the daunting task of improving the condition of:

* debt-ridden farmers
* laborers forced into bondage over debt, and
* the middle classes who were excluded from government,

while not alienating the increasingly wealthy landowners and aristocracy. Because of his reforming compromises and other legislation, posterity refers to him as Solon the lawgiver.

In the 8th century B.C., rich farmers began exporting their goods: olive oil and wine. Such cash crops required an expensive initial investment. The poorer farmer was more limited in choice of crop, but he still could have continued to eke out a living, if only he had either rotated his crops or let his fields lie fallow.

When land was mortgaged, hektemoroi (stone markers) were placed on the land to show the amount of debt. During the 7th century, these markers proliferated. The poorer, wheat farmers lost their land. Laborers were free men who paid out one sixth of all they produced. In the years of poor harvests, this wasn't enough to survive. To feed themselves and their families, laborers put up their bodies as collateral to borrow from their employers. Exorbitant interest plus living on less than five sixths of what was produced made it impossible to repay loans. Free men were being sold into slavery. At the point at which a tyrant or revolt seemed likely, the Athenians appointed Solon to mediate.

Solon, a lyric poet and the first Athenian literary figure whose name we know, came from an aristocratic family which traced its ancestry back 10 generations to Hercules, according to Plutarch. Aristocratic beginnings did not prevent him from fearing that someone of his class would try to become tyrant. In his reform measures, he pleased neither the revolutionaries who wanted the land redistributed nor the landowners who wanted to keep all their property intact. Instead, he instituted the seisachtheia by which he canceled all pledges where a man's freedom had been given as guarantee, freed all debtors from bondage, made it illegal to enslave debtors, and put a limit on the amount of land an individual could own.

Plutarch records Solon's own words about his actions:
"The mortgage-stones that covered her, by me Removed, -- the land that was a slave is free;
that some who had been seized for their debts he had brought back from other countries, where
-- so far their lot to roam, They had forgot the language of their home;
and some he had set at liberty, --
Who here in shameful servitude were held."

Bailouts

Here's a question: Under what circumstances should government provide financial assistance to firms that are facing bankruptcy and/or liquidation?

Some upsides to providing financial assistance to firms in trouble:

1) May save the government money if investments in troubled firms have greater value at a later date when the firm recovers
2) Can prevent or minimize the human toll (job loss, pension loss, etc.) from economic events outside their control
3) Prevents the loss of economic capacity caused by breaking up firms
4) May prevent wider damage, chain reactions ('too big to fail')
5) Can promote more entrepreneurial behaviour by firms that believe they may be bailed out if their gambles do not pay off

Some downsides to providing financial assistance to firms in trouble:

1) May cost the government money
2) Unfair to other market participants
3) Promotes reckless behaviour on the part of other market participants who will expect a similar rescue.
4) Allows a poorly run business to continue instead of being replaced by a better run business
5) Prevents reduction of overcapacity or over-competition in an industry

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It seems to me that the government certainly has a role to play when a large industry faces serious problems. The question, in my mind, is in deciding whether there are structural problems of such a magnitude that the best that can be done is simply to cushion the shock and inevitable decline or whether there is action that can be taken such that a government ownership stake taken as part of a financial assistance plan could be reasonably expected to turn a profit at some point within a reasonable (say 5-10 years) timeframe - in which case financial assistance that could keep the form/industry operating as a going concern would be more justifiable.

Consider the problems in the beef industry when the mad cow crisis occurred. Government could simply have ignored farmers pleas for help, but given the likely temporary nature of the situation, and the reasonable expectation that the problems in the food supply chain could be solved and that demand for Canadian beef would eventually be restored, it was only logical to provide assistance so that a temporary crisis didn't cause unnecessary human suffering and liquidate economic organizations that would likely return to viability once the crisis had passed.

Government doesn't generally take ownership stakes in farms, but they could have done so and made a profit in this case had they been so inclined.

As a second example, take the problems with GM and Chrysler. These are very large employers and a sudden, disorderly collapse of one or both these organizations could easily lead to a chain reaction collapse of other market participants such as the other auto manufacturers, parts suppliers, local governments, local service industries, and so on. Furthermore, with the threat currently posed by deflation, the demise of such large organizations could greatly accelerate the economic downturn, possibly pushing it past a tipping point from recession to depression.

Given the situation, it would be highly irresponsible for government not to at least provide enough short term funding to these firms to ensure they do not collapse while a deal is being worked on. And the government definitely needs to at least take action to minimize the potential fallout if one or both of the firms goes into bankruptcy and faces liquidation.

The trickier question, in my mind, is whether it is possible to construct a deal which meets the test I outlined above, i.e. one where the government would take an ownership stake in Chrysler and GM and could be expected to make a profit on this investment within the next 5 to 10 years.

If one believes that the only problem the automakers face is the current economic downturn, then it might be enough to simply providing enough funding so that these firms can survive this sharp downturn, and resume activity once the downturn has passed.

However, this interpretation is belied by the need for government assistance for these firms in earlier years prior to the current downturn, their weak performance relative to other automakers and the fact that capacity for auto production in North America is well above most estimates of likely demand over the foreseeable future.

This means that providing financial assistance to these firms in a manner that might see a return on that assistance likely requires a deal that eliminates some of the structural problems faced by Chrysler and GM such as high debt levels, higher cost structures, and industry overcapacity. Can such a deal be made? I'm not really sure, but I think that is the right question to ask.

Anyway, I don't envy politicians dealing with the problems in the auto industry (or any of the other industries currently struggling) - not many easy answers in this situation.

Repeating Myself

Specifically, what I wrote on September 13:

"I was somewhat surprised to see Stephen Harper say the other day that the Liberals proposed shift of taxes from incomes to carbon would "wreak havoc on Canada's economy, destroy jobs, weaken business at a time of global uncertainty."

Sadly, no reporters were on hand, to ask, if increasing taxes on carbon and reducing taxes on income would destroy the economy, shouldn't Harper be raising income taxes and slashing carbon taxes in order to create an economic boom? If he truly believes what he says, isn't he showing gross negligence with respect to the Canadian economy. Given that the economy is currently struggling - couldn't he fix this with a reverse green shift, e.g. black shift?

* * *

Looking forward, the following scenario seems plausible:

1) Conservative party forms the next government
2) Canada goes into recession (we're pretty much in one already)
3) Conservative apologists explain that only a moron would blame the recession on the Conservatives because the federal government's policies are not so influential that they can change the course of the whole economy.

If you're childish like me, it will be fun to throw Harper's comment in the face of Conservative supporters when that time comes."

So if you see anyone arguing that Harper can't be blamed for the unfolding downturn because the Federal government is not that influential, just point out to them that Harper himself has argued the opposite quite recently.

Of course Harper was argued a lot of opposites quite recently. In other news, I see that Harper finally decided today to stop lying about the economy and admit that things don't look very good. Seems like only yesterday he was opining on how it was a good time to buy stocks and in his opinion, if we were going to have a severe economic downturn we would have had it by now.

Fallin' / Time to Recalibrate my Cynicism Levels

Said where i would stop before i even started
When i get to one brick, then The Game i will depart with
Got to one brick then i looked to the sky, said
Sorry God, i lied, but give me one more try
Got to two bricks, new cars, new whips
But niggas never learn til' they end up in the newsclip
The irony of selling drugs is sort of like i'm using it
Guess its two sides to what 'substance abuse' is
Can't stop, won't stop, nigga since new shit
Brand new convertibles, i'm so ruthless
Front row, fight night-see how big my tube is?
Fuck HD, nigga see how clear my view is?
(FALLING)
But there's a price for overdoing it
Doin' it this big'll put you on the map
Stick-up kids is out some tax
Plus the FBI Boys with the cameras in the back, DAMN!

I know i shouldnt've did that
I know its gon' come right back
I know its gon' destroy everything I made
Its probably gon' get ya boy sent away
But this game I play, ain't no way to fix it
Its inevitable -

(Lyrics from Jay-Z's Fallin')


Up until last week, I would have said that a rap song about the pitfalls of being a drug-dealing American gangster would likely apply quite well to any Wall Street investment types.

But after reading about Bernie Madoff and the $50 billion + ponzi scheme he's been running on Wall Street for decades despite numerous newspaper articles pointing out the dubious nature of his investment strategy and returns, and how he was done in in the end not by any regulators but simply by a shortage of cash during the economic downturn, it turns out that the Fallin' lyrics are nothing short of hopelessly naive when applied to Wall Street.

No need to worry about attracting police attention by growing too large there. If a $50 billion fraud doesn't get the attention of regulators, one wonders what would.

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Update: More on Madoff, Red Tory links to an old video of Madoff pontificating on life on Wall Street, and how he goes down to the SEC and complains that Wall Street is over-regulated, and how now that they can't make money from commissions any more, the big money is made by taking risks, and how the public doesn't understand that "in today's regulatory environment is is impossible for a violation of the rules to go undetected, particularly over a long period of time". Great stuff!

Winter Hits Vancouver

Always nice to get a little snow here on the West Coast...

Better Late Than Never, I suppose

The Globe and Mail posts a decent article on "How High Risk Mortgages Crept North"

It's really a pretty simple story. Used to be, government rules said that if you wanted to buy a house and make a down payment less than 25%, you had to get it insured by the government. The government required a minimum down payment of 5% (already lowered in 1990 from the previous requirement of 10%) and a maximum amortization period of 25 years and charged a fee to cover the increased risk from these low down payment loans.

The purpose of down payments and limited amortization schedules is to avoid situations where people owe more on their house than it is worth( in case of price declines) and generally to ensure that people who buy houses can actually afford them.

This system worked reasonably well for a number of decades.

Starting in 2006, faced with sky-high housing prices, home ownership rates well above long term norms and an economy overheating due to excess demand driven by fast-rising and unsustainable debt levels, the Conservative government*, in its wisdom, decided that the time was right to push housing prices and consumer debt levels even higher so that when the inevitable crash came, people and industry could get hit that much harder.

As part of this plan to ensure Canada was able to participate in the sub-prime debacle, three changes were undertaken:

1) The minimum down payment needed to avoid buying insurance was reduced from 25% to 20%

2) The maximum amortization period was increased from 25 years to 40 years.

3) The minimum down payment rule was removed for insured mortgages.

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In the summer of 2008, finally listening to the various ministry of finance and industry voices that had advised against this folly, the government partially backtracked on these rule changes, limiting amortizations to 35 years and reinstating a minimum 5% down payment rule. Of course, these rules are still looser than they were in 2006, and these rule changes take effect after the housing bubble has peaked so they can't do much to limit the size of the bubble, and we've now got two years worth of mortgages on the books under the zero down payment rules, but again, like the Globe writing a good article on the housing industry, it was better late than never.

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* To be fair to the Conservatives, I don't recall that any of the other parties opposed these rule changes much

Asset Sales

One of the many bad ideas in the recent fiscal update proposed by Jim Flaherty and the Conservatives, that I've been meaning to get back to was the idea of asset sales. To appreciate why I consider asset sales a bad idea at this time, consider the following:

Let's say that you think the current economic fears are overblown and that things will be back to good times and growth soon enough. If that is what you believe, then you might suggest, as Stephen Harper did during the election campaign, that this was a good time to buy assets while prices are low. But if Harper really believed it was a good time to buy assets in October, surely it is an even better time to buy them now that asset prices have fallen so much further since he made his initial comments.

But naturally, if buying assets is such a good idea, then surely selling them is a bad idea, no?

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Fair enough, let's say that Harper and Flaherty have admitted they were wrong and that they now think the financial crisis really is serious. Well, in that case, with interest rates already approaching zero, if you think a serious financial crisis is coming, then you must be worried about deflation and a possible liquidity trap, wherein the economy remains depressed because there's just not enough money circulating to get it going again.

Given this scenario, it is imperative that government introduce a stimulus package to increase the amount of money circulating in the economy. And indeed, in the countries where people believe this is what is happening, governments are doing just that. Of course, one the primary ways that governments can stimulate the economy is by buying assets. For example, see this story of the U.S. purchasing $600 billion in mortgage backed assets.

So the consensus is that, if the crisis is serious, then government should be out there buying assets, which in turn suggests that the last thing government should be doing at this time is selling assets.

Finally, consider Flaherty's time as part of the failed Mike Harris government, when he tried to hide a deficit by selling assets, including the misguided sale of unlimited tolling rights on a freeway across the busiest corridor in Canada for 99 years, a mistake that will be with the people of Ontario long after you and I are both dead. Is this the person we want selling our assets, given his record?

So, while various establishment pundits spent the last couple of weeks hyperventilating about the damage to our economy that would surely be done to our economy if the NDP were allowed to have a few cabinet seats for a while (without really explaining what damage might actually occur), few have commented on the near certain damage that would occur simply by letting the Conservatives carry out their proposed fiscal plan. I mean, if Flaherty could only get 50% of the estimated value of the 407 when he sold it in 1999 during an economic boom, imagine how much we will get shortchanged if we let him sell off a bunch of assets during a global crash.

This and That

First of all, Harper explains how our system of government works:






Secondly, James Bow explains how the first past the post electoral system is tearing our country apart by fostering regional parties and exaggerating what regional differences exist.





Finally, Paul Willcocks explains how the B.C. Liberal party first lied about being opposed to gambling and is now lying about receiving donations from the gambling industry.

Speaking of gambling, if we accept that our impending financial woes are driven by too much debt and too much consumer spending, not enough saving, and too many people living on the edge financially, then it seems clear that the massive expansion of government sanctioned gambling has likely played in role in bringing us the trouble that now approaches.

Dion Steps Down

I just wanted to make note of Stéphane Dion's stepping down as Liberal leader.

Dion was one of the most intelligent and honourable party leaders that we've had in Federal politics in Canada during the period I've been old enough to follow such things, and his proposed policies would have done more to make this a peaceful and prosperous country now and into the future than any other party leader I have known.

Unsurprisingly, few Canadians were willing to vote for him, choosing instead to pursue their restless, never-ending quest for 'leadership'. God help us if they ever find it.

As Expected

Offered without comment, ok maybe one (at the bottom of the post)....

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From the CBC, October 19, 2006:

"Economy seen cooling till 2008: Bank of Canada - The 2008 growth forecast remained unchanged at 2.8 per cent."

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From the CBC, October 10, 2007:

"Economic growth is expected to cool to 2.3 per cent in 2008 — down from its previous forecast of 2.6 per cent"

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From the CBC, January 24, 2008:

"Bank of Canada lowers 2008 GDP estimate: Growth to pick up later in the year and into 2009 ... In its latest monetary policy update issued Thursday, the central bank now says GDP will rise by 1.8 per cent in 2008, down from its October estimate of 2.3 per cent. "We will come through 2008 fine," Bank of Canada governor David Dodge said at a news conference."

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From the CBC, July 15, 2008:

"...the bank said it expects economic growth in Canada this year of only one per cent. Growth is expected to rise to 2.3 per cent in 2009 and 3.3 per cent in 2010.

That is down from the lowered outlook the central bank offered in April, when it said it expected 1.4 per cent growth for this year. In January, the bank said it was looking for 2008 growth of 1.8 per cent.

The bank also sounded a warning over its outlook for inflation, saying that commodity prices continue to outstrip expectations.

"Assuming energy prices follow current futures prices over the projection period, total [Consumer Price Index] inflation is projected to rise temporarily above four per cent, peaking in the first quarter of 2009," the bank said."

The bank sees energy prices subsequently stabilizing and inflation is projected to return to its two per cent target in the second half of 2009.

Many economists see the central bank remaining on the sidelines for several months."

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From the CBC, October 23, 2008:

"the Bank of Canada said growth is expected to pick up over the remainder of 2009 and to shoot to "above-potential" in 2010 ...

Asked if Canada was headed for recession, Carney would only say that economic performance will be sluggish for the next few quarters.

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From the CBC today:

"While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity," the bank [of Canada] said.

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As expected!! You can take these clowns seriously if you like, but you do so at your own peril, they certainly don't take their audience very seriously...

Question Answered

After the federal election, I asked, "Can the Conservatives keep chasing the Quebec nationalists without alienating their rural anglophone supporters in the rest of the country? Or will they refocus on the 905 region which could also provide them enough extra seats to form a majority?"

I guess we know the answer to that one!

On the other hand, in the same post I predicted that the Liberals, "seem likely to elect Ignatieff as their new leader and swing to the right in an attempt to regain the ground they have lost to the Conservatives over the last two elections."

Which is going as predicted so far, and I suspect having Ignatieff in charge of the LIberals will make it harder for the Conservatives to make inroads into the 905 area.

No Wait, Please Do Quit

Speaking of bad financial advice, since Stephen Harper's suggestion on, if I recall correctly, October 8, that it was a good time to buy stocks, the TSX has gone from 10,055 to 8,117 - a drop of almost 20% - ouch! Normally, I'd say don't quit your day job, but in this case....


Meanwhile, I keep writing posts about our current media and political and economic problems, but as I dig around for links to stories, I keep seeing reminders that there are other stocks that are more important, and in even more trouble.

Media Failure #3

OK, last bit of media-bashing for a while, Vancouver Condo Info reminds of this article from the CBC on the Vancouver Housing Market. Of course there are any number of articles like this one, but this one stands out for its timing (it was published right at the top of the market) and the lack of any balance to the bullish predictions.

Says the CBC, "

B.C. house prices forecast to keep rising: Anyone looking for a dip in the British Columbia real estate market before buying a home might reconsider their strategy.

A report by the Credit Union Central of British Columbia predicts housing prices will continue to rise by as much as 10 per cent this year and as much as seven per cent in 2009.

The report predicts that in 2009 multi-family units such as condos and townhomes could exceed single-family homes in B.C.The report predicts that in 2009 multi-family units such as condos and townhomes could exceed single-family homes in B.C.

Lower mortgage rates, a tight labour market, high income growth and rising in-migration all point to continued high sales volumes and price rises, according the CUCBC's chief economist Helmut Pastrick.

The Economic Analysis of British Columbia released Monday says the current housing boom is unlike previous market cycles that ended with a large oversupply of homes, causing a sharp drop in prices.

In the current market, sales have reached a plateau and the supply of houses is only gradually catching up with demand. And with the recent drop in mortgage rates, the CUCBC expects the number of home sales will pick up once again.

It's almost like they are trying to parody a typical bullish media article from the top of a bubble. There's the classic 'this time is different' reasoning ("the current housing boom is unlike previous market cycles"), there's the reliance on 'experts' who work at institutions with a vested interest in rising prices, the discounting of data that doesn't fit the happy storyline, and so on.

And I can laugh, because I didn't buy a house this year, but anyone who did after reading this article would have to be pretty pissed off since the price of an average detached house in Vancouver has dropped over $100,000 since May. I guess the CBC was right, anyone looking for a dip in the B.C. market *should* have reconsidered their strategy - since far worse than a dip was coming.

Media Failure #2

Headlines from today's Globe and Mail business section (one of these things is not like the others):

"Oil Plummets on Dire U.S. Job Figures"
"Closed Mines, Broken Dreams in the town that nickel built"
"Worst Canadian Job Losses in 26 years"
"Abitibi axes Nfld. Paper Mill"
"Crisis, What Crisis?"

Naturally, the last story is the one that is different, the others were all just news stories recounting facts, the last one was the Globe's business columnist applying their insight to give an opinion on the facts.

Here's the closing from Madeline Drohan's fodder for laughter in the not-too-distant future column on how there's nothing to worry about here in Canada,

"This deluge of bad news and catastrophic predictions eventually seeps into the public consciousness, frightening people into spending less and saving more, thus helping to create a real crisis. That said, it was heartening to see an Ipsos-Reid* poll this week in which 56 per cent of respondents said they thought doomsday predictions of severe recession in Canada were exaggerations.

There is still common sense to be found in Canada, just not among our political, business or opinion leaders."

The first commenter says it best, "You really do not understand what is coming down the pipe, do you Ms. Drohan?"

I also liked the comment, "Lets first give Madeline the benefit of the doubt;
Ms. Dohan were you forced to write this piece of crap under duress?"

The people like Drohan who think that the business cycle could be avoided and we'd never have a recession again if only the media would pretend that all is well are almost as crazy as the ones who think that global markets are driven by Canadian politics.

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* God only knows what biased question Ipsos asked this time - they probably even threw in the pejorative 'doomsday' just like Drohan did!

Media Failure

The front page of today's Vancouver Sun trumpeted the results of a poll showing that:

"Results of the wide-ranging survey, conducted exclusively for Canwest News Service and Global National, paint a picture of a population gripped by fear that is largely giving the Conservatives the benefit of the doubt -- for now -- to lead the country in such uncertain political and economic times. "Overall, this is breaking quite clearly to the government as opposed to the coalition," said pollster Darrell Bricker.

Fully 60 per cent of those interviewed said they opposed replacing the government with Liberal-NDP coalition supported by the Bloc Quebecois, compared with 37 per cent who favoured the idea."

In case you're wondering what the wording of the question was, it asked if Harper should remain in government"because of the severe economic situation the country faces and the fact the Liberals and NDP have entered into an 'unholy' deal with the Bloc separatists."

The other alternative offered was that it was "proper that a smooth transition of power to the coalition take place if it is apparent the government will be defeated and that the economic policies brought forward by the coalition, and the agreement of support and stability from the separatist Bloc Quebecois, will be good for the country."


More of the standard right wing media (and polling) bias in this country.

Perhaps even at 58 cents, CanWest is overvalued.
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A postscript, memories of the last time I mentioned Ipsos Reid

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Hat tip to BigCityLib

With a Whimper

So, the latest round of political nonsense, well summarized here by The Economist, ends with the proroguing of Canadian parliament.

The thing that surprised me was to hear that the request Harper made of the Governor General - to shut down parliament rather than lose a confidence vote - was literally unprecedented in the history of parliamentary democracies. All those different parliamentary democracies out there, and all the hundreds of years they've been around and Stephen Harper is the first leader to cling to power so tightly, and respect tradition so little, that he would hide behind the Governor General instead of standing like a man to face a vote in the house.

I don't know whether to be impressed by such a long run of honourable behaviour by politicians, or to be saddened that it came to an end in this manner, at this time, in this place.

CAtO vs. the Globe and Mail

The Globe and Mail, before the election, endorsing Harper:

"Indeed, the most important characteristic Mr. Harper has shown over 33 months in office is a capacity to grow. There is no reason to think he won't continue along the same trajectory if re-elected — a good thing, too, since there is much more for him to learn.

Instead of carping about a dysfunctional Parliament, for which he holds much responsibility, Mr. Harper should throw out his previous playbook and try making the institution work. It would mean displaying the confidence to operate outside his comfort zone of near-absolute control, but it is a mission built for a true conservative. And, no, Senate reform is no substitute for getting the House of Commons operating well."

Me, before the election, not endorsing the Conservative party:

"in my opinion, the Conservative party wishes to remake this country into one much more similar to the U.S., as opposed to the 'second tier socialistic country' (in Harper's words) that it is now (in their opinion).

But in pursuing this goal the Conservatives see the traditional institutions, the checks and balances as things that stand in their way. So, far from wanting to reinforce the strength of Canada's independent institutions that check the government's power and to work within the system, the Conservative's want to weaken those institutions and remove anything that prevents them from remaking the system as they wish.

In government we have seen the Conservative party at war with the media, at war with Elections Canada, in a battle with the nuclear energy safety regulator and further Conservative government will lead, in my opinion, to more attacks on and more weakening of, the independent institutions that provide a check on the government."

So here we are, faced with a serious economic crisis, and Harper decided that it was a good time to try and weaken some of the institutions (unions and opposition parties) that keep the Conservatives from unfettered rule, and now, when he has obviously lost the confidence of the House of Commons as a result, Harper vows to 'use all legal means' to resist bowing to the will of the majority of our elected representatives, and we see newspapers articles seriously considering having Harper fire the Governor General rather than give up the reins of power.

I'd score this CAtO 1, Globe 0.


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On the other hand, when I wrote that, "Harper has a de facto majority for at least the next two years since nobody will want to trigger another election." I wasn't predicting that Harper's second vote would be a confidence motion on bankrupting all three opposition parties, so I missed that one.

Not Partisan

One of my recurring themes here on the blog is that one of the problems with right wingers these days is that they have no ability to distinguish between things that are partisan in nature and things that aren't. See here or here for a couple of examples.

Just in case there are any right wingers out there who want to change this habit, here's a tip for the future. When a serious economic crisis threatens the country*, that is not the time for partisan games.


* On the off chance someone wants to try and argue we're not facing a serious economic crisis, save it. The prices of our main exports are plunging, our major trading partners are in recession and facing worse, some of the largest employers in the country are on the verge of bankruptcy, with many more of the country's biggest most stable companies needing to raise funds at distress prices and trading at levels that suggest very high risk, our housing markets are falling fast, government budgets are coming under increasing strain, and we're only getting started. Just because the coyote hasn't looked down yet doesn't mean we haven't run off the cliff.

P.S. What's wrong with Andrew Coyne these days? For someone who supports proportional representation he seems awfully bent out of shape at the idea of having a government that actually represents a majority of the votes cast for once.

And he's making all sorts of crazy arguments of the sort you'd normally associate with loony national post types (such as Colby Cosh who actually sees a day of trading in which the TSX dropped less than U.S. markets (comparing like sector to sector, e.g. financials were down 9% in Canada, 17% in the U.S.) and thinks that this proves that 'Money has cast a vote' against the coalition. People who have yet to realize that the TSX is heavily weighted in commodities and that on a day when commodities do poorly, the overall TSX index will do poorly, really shouldn't be commenting on the stock market, but that's what I get for reading the national post where the only qualification required is ideology not actual knowledge.