* and the economy

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Alex.Mackay
* and the economy

Hello everyone,

I'm new to babble but I have been following the US economic meltdown for some time now and I've been wondering what types of policy the ** party of Canada have been running on. The main reason for the meltdown in the US was fraud, which unfortunately has not been cleared from their system (along with the bad debt); as a result another more serious explosion is growing in the United States and the current administration there has made it more than clear that they have no intention of stopping it (I will be glad to qualify all comments on the US economic situation). This has direct implications for the Canadian economy so I wanted to get an idea of what our political stance is. It has become fairly confusing recently with the conservative party putting out liberal economic policy in the form of stimulus spending - I am worried this is just an attempt to keep in step with American policy which will prove to be quite dangerous. I believe Canada needs to be very fiscally conservative in the comming months because what is happening in the US is not going to be nice when it blows up.

Canapathy Canapathy's picture

I think Canadian finances are in some trouble.  Ultra cheap money designed to stave off a recession has created another housing bubble which is about to burst.  With interest rates likely to rise as governments compete for buyers of their massive defecits housing prices will fall putting a lot of recent buyers in a negative equity position.  Housing prices will continue to fall over the coming years as boomers start selling.  The largest demographic has far too much of their wealth they will very soon need to live on tied up their homes.

Plus jobs will continue to be shed for some time and we'll face higer taxes going forward. 

Record high personal debt, higher taxes, higer interest rates and falling house prices seem like a receipe for bad news to me, but don't worry the Conservative government has told us everything is fine.  They plan to fight this by adding billions in new debt, ultimately driving rates higher and making it easier for corporations to ship Canadian jobs abroad.

Doug

The ** party? I remember for a brief moment there might have been the CCRAP party, but I don't recall any other parties that have such bad names. Laughing

Anyway, I can't say I agree. We did need a fiscal stimulus from our federal government, just not so large of one as the United States did. Even with that, unemployment is expected to get to 10% next year.

Alex.Mackay

We are in some agreement Canapathy. I was looking for the stance of any of the primary parties in Canada - I'm looking for both their policy approach as well as the policy differences between parties. My primary focus has been the US crisis as it has provided valuable insight into the workings of their economy.. my hope is to apply what I have learned to the Canadian context - which is why I wanted the background information. We are going to be in for tough times soon and I want to know if any politicians are even looking.

janfromthebruce

I think some are. Personally, overconsumption is killing us - increased personal debt and risk to the environment (we are already there). As for corporations, well small and medium size businesses actually create the most jobs and sustain communities, so why focus on global corporations, and also why give them "sweet heart deals"?

That said, workers' pension money is tied into many of these corporations (auto, forestry workers and so on). I think, and I am no economist but from my small world, I'd like to see their pension money operated outside of the corporation so that what happens to the corporation does not effect retirees.

As I see in the states, as in Canada, corporations got welfare and their business practices and govt regulation didn't change - ditto in Canada. Who is operating our govts are the "same few" who sunk the economy and are still running the ship [into the ground].

George Victor

jan:

"That said, workers' pension money is tied into many of these corporations (auto, forestry workers and so on). I think, and I am no economist but from my small world, I'd like to see their pension money operated outside of the corporation so that what happens to the corporation does not effect retirees."

 

Right on jan. And the head of the Canada Pension Plan Investment Board, David Denison, says the CPP should e the model for new programs. Right now the CPP's aim is to give retirees an income of 25 per cent of the average industrial wage, with the rest coming from personal saving and company pensions. But the Canadian Institute of Actuaries found only a third of Canadians are saving enough to cover basic necessities down the road.

 

Denison says RRSPs aren't used enough (he did not say how many earn enough to use them), and 11 million working Canadian hav e no access to company pension plans, which are. outside of government employment, available only as "defined contribution" plans, with nothing certain at retirement, even if the company survives. New regional or national pension plans are needed, based on the CPP model.

 

The insurance companies such as Manulife Financial Corp. operate two-thirds of all the corporate defined-contribution plans in Canada and are arguing that their aproach is best, but Denison said that's not going to be enough.

Pierre C yr

Most people cant afford to save. Unless we want to mandate a 30$ an hour adult minimum wage personal savings are not gonna happen. The big problem with saving vs consuming is the result. More unemployment and more pressure on wages and benefits.  The next couple years will be historic because while the oil shock and the 5% default rate for residential mortgages has been bad it might just be a prelude to the fact about 50% of commercial mortgages are in or near default.

 

While the answer to all this seems to be some form of socialism my preferred way to call it is professionalism.  We need better professionalism to establish what is realy effective for an inclusive society and certainly some more social democracy is a start.

 

George Victor

"While the answer to all this seems to be some form of socialism my preferred way to call it is professionalism.  We need better professionalism to establish what is realy effective for an inclusive society and certainly some more social democracy is a start."

 

 

What does this mean?

Pierre C yr

Its a rewording for social democracy in order to spark a constructive debate . Its being honest about what works best. And we already know that we ignore or avoid socialized things that work much better than their private sector counterparts. But in the debate it would also mean being clear about what in the private sector does work well. At least when not perverted by cronyism or scams...

Words are loaded and when we use the same old terminology you can see the eyes glaze over... If we reword a social democratic message in the right way that gives  an indication that we are both able to change and that we mean what we say with words that carry weight such as professionalism we might get some edge in future debates.

 

NDP isnt so much at war with neo cons or laissez faire liberals as it is with the increasing cynicism with all things political in the population at large.

George Victor

"NDP isnt so much at war with neo cons or laissez faire liberals as it is with the increasing cynicism with all things political in the population at large."

 

 

Cynicism is not limited to the "population at large". And I would say that the need for "realism" is equally important, hereabouts.

janfromthebruce

thanks George.

I remember a few years ago, I believe before the tech bubble burst that there was a real push to have pension moneys used or played with in global ways, thus earning alot higher returns on the moneys invested.

Anyways, as you well know, that bubble went pop and lots of retirements funds took a beating, and talk of allowing pension fund managers to play with people's pension funds in that way all of a sudden became a non-issue.

Basement Dweller

This

http://www.theglobeandmail.com/report-on-business/crash-and-recovery/fla...

is going to cause much saddness and pain.

I wish somebody up in Ottawa would speak out against it. Cry

George Victor

Government support allowing banks to maintain mortgage lending "is going to cause much saddness and pain" ?

 

How so, BD? Maybe I've read it wrong.

Basement Dweller

George, this is throwing gasoline on the fire. At least, here in Vancouver. But its now frenzied in other parts of Canada too.

If you want to see where this is going, look south to Nevada, California and Florida. We are creating our own subprime. The people who are buying this year are only doing so because interest rates are artificially low. When interest rates inevitably increase to much higher levels, we will all hear the tragic stories of financial ruin.

The difference is the Canadian government, so therefore all of us, are backing this mortgage lending. When the market crashes, we will all be on the hook. Even those of us who acted prudently.

George Victor

I see pictures of weird, tiny houses in Vancouver selling for a half million$  and I wonder at the state of things in lotus land. A friend had to move to the islands for work but could not buy, and is renting a shack. I don't believe the lenders are into U.S. subprime lending here, one has to be employed, at least, and something down. But, yes, if the economy does not recover and mortgage holders cannot hold jobs, we're in deep dung anyway, eh?