I was in Cannes last week with CLC President Ken Georgetti for the G20 Labour Summit. (I know, tough job.)

This event was arranged by the International Trade Union Confederation with the support of the French Presidency of the G20.

The best one can say about yesterday's Economic and Fiscal Update is that it signals some very slight flexibility amid changing circumstances.

The minister said, "We will not be bound by ideology when it comes to making decisions to keep our economy strong and protect Canadians, their financial security and their jobs. We have responded to critical situations with flexibility and pragmatism, and we will continue to do so as situations dictate."

Plan A -- balancing the books by 2014-15 through deep spending cuts -- has to be rethought now that growth forecasts for 2011 and 2012 in the last budget have been cut by 0.7 per cent of GDP each year.

Governments around the world are heading down a path to economic suicide.

So said Nobel Prize-winning former chief economist of the World Bank, Joseph Stiglitz, to hundreds of well-heeled financiers and decision-makers who paid a bundle to hear him in Toronto.

With a voice as gruff as gravel, and an energy bristling with urgency, he told governments in Canada and the rest of the world now is the moment to address unmet needs, and use underutilized resources. Failure to do so would unnecessarily prolong the tough times.

Addressing the 5th Toronto Forum on Global Cities, Stiglitz challenged leaders who say it is time for government to get their fiscal houses in order by cutting.

A common refrain among political pundits has been that all of Ontario's election platforms are unrealistic given a deteriorating economic outlook. Rather than bemoaning this alleged lack of realism, we should evaluate how each party's platform would fare in a downturn.

The NDP platform is built on the fiscal framework set out in the 2011 provincial budget. The Liberal and Conservative platforms are based on slightly more optimistic private-sector forecasts. However, such forecasts have been revised down since the platforms were formulated.

A column by Stiglitz in the Financial Times makes what I think is an important point.

A short addendum to my previous post:

I checked the most recent IMF projections in the June 2011 Update to the Fiscal Monitor.

Table 1 provides estimates of changes in the general government cyclically adjusted balance in per cent of potential GDP. Basically, changes are the result of discretionary changes in fiscal policy rather than due to improvement or deterioration of the economy.

Down south, the Obama administration is in a dangerous game of chicken with Republican congressional leaders, who are cynically holding the U.S. economy hostage in order to impose a radical agenda of spending cuts. Obama has seemingly bought into the rhetoric of cutting debt, rather than focusing on the real U.S. problem of unemployment. Yet, even his foolish offer to make cuts to Social Security and Medicare as part of a deal to raise the debt ceiling have been rejected by the Republicans (military spending cuts are off limits to them as are any tax increases).

Finance Minister Jim Flaherty was unusually blunt on CTV's Question Period yesterday, saying he was worried about the possibility of another recession. (Finance Ministers are usually very cautious about using the "r" word, for fear that might worry consumers and bring about a self-fulfilling prophecy.) Maybe he had already seen today's quarterly GDP numbers from Statistics Canada, which give lots of reason to worry -- once you start poking around in the tea leaves.

The headline number seems healthy: real GDP growth of 3.9% (annualized) in the quarter. It doesn't take much investigation, however, to take the shine off that seemingly robust number.