The Public Service Alliance of Canada (PSAC) has gone into the theatre of the absurd business.

The union has launched a social media campaign, featuring an "absurd" giant, grey squirrel, which is designed to engage Canadians in a conversation about this country's fiscal deficit and the future of public services.

In a video posted last Friday, we see PSAC's giant squirrel-of-the-absurd invade what looks like a Service Canada office and wreak havoc, preventing a government worker from serving a young woman holding a baby.

Thanks to Arthur Donner's Economic Comment for bringing this to my attention.

The official line we hear everyday is that the Canadian fundamentals are great, while other countries are in deep trouble because they are spending beyond their means and borrowing too much from the rest of the world.

Yet IMF projections show that Canada's Balance of Payments deficit on current account is now just about the worse among the advanced economies -- worse than the U.S., and set to be even worse than Italy and Spain in 2012.

Andrew Watt has written an especially cogent piece on why the balanced budget rule proposed for the Euro area by Merkel and Sarkozy is a very, very bad idea.

It also makes relevant reading for Canadians.

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.

The major economic problem faced by Canadians is a very slow recovery and weak job market, not government deficits or rising debt. But public spending cuts at the federal and provincial level will make the real problem even worse.

And, government spending cuts in Canada seem set to be even greater than in other advanced industrial countries, even though our overall deficit and debt situation is much better. (The data for this post are taken from the tables attached to the May 2011 OECD Economic Outlook.)