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?
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.