Harper’s majority and the fitful economy

[oneh2obabe]

Thomas Walkom
National Affairs Columnist

Stephen Harper is right on one score. The Canadian economy is fragile.

But the Prime Minister’s majority win on Monday isn’t likely to improve matters. In fact, if historical experience is any guide, it will probably make things worse.

Certainly, the country is not headed back to prosperity any time soon. The economy is doddering along in fits and starts. In February, the last month for which figures are available, it shrank slightly.

Job growth follows the same fitful pattern. At 7.6 per cent, Canada’s official unemployment rate is better than that of the United States. But anyone looking for work knows that good jobs are hard to come by.

And anyone looking for a raise in pay knows how difficult this is, too. There is so much competition for those jobs which do exist that employers don’t have to offer wage hikes. Quite the reverse.

Harper likes to point out how well Canada is doing compared to other nations. Up to a point he’s right. Spain’s official unemployment rate is about 20 per cent. Greece, Ireland and Portugal have effectively gone into bankruptcy protection. Even Britain is struggling.

What the Prime Minister doesn’t say, though, is that Canada’s more favourable position has a good deal to do with luck and timing.

The banking meltdown that triggered this slump occurred just as Ottawa was starting to deregulate its financial system. Had the crisis happened five years later, we would have been hit as hard as the U.S.

More important, Canada is an oil exporter. Oil has been the new gold in this crisis — sometimes literally.

But here’s the problem.

First, our manufacturing exports are being stymied by the high dollar. The surging loonie may be good news for those who want to shop in Buffalo. But it’s a job-killer for Canadian companies trying to sell goods there.

That’s not going to change soon. Canada’s booming oil sector helps keeps the loonie high relative to the U.S. dollar.

The other, more important factor is that the U.S. dollar is being gradually weakened by that country’s intractable economic and political problems.

Indeed, Mexico is so worried about the sliding U.S. dollar that it has started to fortify its foreign exchange reserves with gold. That’s a development not seen since before World War II.

Add to this the gradual rise in Canadian inflation. Prices in March were about 3 per cent higher than a year earlier.

Under normal circumstances, the Bank of Canada would hike interest rates to wring out these rising prices. But if it does so now, speculative capital will be attracted to Canada, forcing the loonie even higher.

Again, this would eat into both manufacturing exports and jobs.

The most serious danger to the Canadian economy is the mood of retrenchment that’s setting in throughout the industrial world, as governments strive to pare down deficits caused by the recession.

Britain’s Conservative-led government has already embarked on that path with devastating results for jobs. Its economy barely grew at all during the first three months of this year.

The United States, with its Republican-dominated Congress calling for massive and immediate spending cuts, seems poised to follow a similar path. The jobless rate there has already inched up to 9 per cent.

Here in Canada, Harper’s re-elected Conservative government has promised $17 billion in unspecified expenditure reductions over the next five years.

That’s not Republican-style restraint. But when so little else is going on, it promises to be extraordinarily counterproductive.

http://www.thestar.com/news/canada/poli ... onomy?bn=1

[Urbane]

Terrific. Another "Harper is just lucky" column. Even if true better to go with the lucky guy than an unlucky one!

[NAB]

LOL. "According to Jonathan Kay, Walkom is one of the most left-wing columnists in the country. As an early activist,Tom Walkom (BA 1973 UC, MA 1974, PhD 1983) and Linda McQuaig (BA 1974 UC), also helped provoke one of the largest student demonstrations on campus by printing a petition in The Varsity in 1972 to protest the exclusion of undergraduates from the new Robarts Library stacks"

http://www.magazine.utoronto.ca/feature ... f-dissent/

[oneh2obabe]

No, it's not just another "lucky Harper" column. The article says it'll be tough with the way the world economy is at the present time.

Give me a break ... forgot any article saying one word against King Harper would bring out the protectors who think anyone who disagrees with what he's doing or says anything against him is either an extreme leftist, ignorant, stupid or just doesn't understand politics. And heaven help them if they don't agree with your adoration of him.

[NAB]

Seems the left wingers are getting a little more touchy than usual as a result of this week's events. You did of course notice that was a quote, right? Try the link provided.

Nab

[oneh2obabe]

No, not touchy at all. He's been re-elected with a majority and I wish him well even though he has a tough row to hoe. It won't be a bed of roses but hopefully he's able to avoid any major disasters.

[NAB]

Not nearly as tough a row to as would have been the case had he not got his majority babe. He can now git 'r done without all the politicing nonsense. Also, not nearly as tough a row as Layton is going to have now (and I wish him well too BTW). And we won't even bother contemplating here the tough row the Liberal Party now face, if just to survive LOL.

Nab

[oneh2obabe]

Not nearly as tough a row to as would have been the case had he not got his majority babe. He can now git 'r done without all the politicing nonsense. Also, not nearly as tough a row as Layton is going to have now (and I wish him well too BTW). And we won't even bother contemplating here the tough row the Liberal Party now face, if just to survive LOL.

Nab

Ah, watch Larry the Cable Guy?

[Urbane]

No, not touchy at all. He's been re-elected with a majority and I wish him well even though he has a tough row to hoe. It won't be a bed of roses but hopefully he's able to avoid any major disasters.

If anything goes wrong it will just be because of bad luck.

[grumpydigger]

Harper will have the same mentality about the economy as Campbell did here in BC.

When things are going good it is because of planning and his leadership but when things go bad it is out of his control because of world conditions.

Meanwhile the right wing nut job who created most of the world's financial woes lives comfortably in his Texas estate

[NAB]

Harper will have the same mentality about the economy as Campbell did here in BC.

I'm not so sure about that point grumpy. Personally I see quite a difference between the two, particularly on the taxation front. Harper wants to keep taxes as low as possible for both business and individuals nationwide. Campbell only wanted to reduce taxes on businesses, ......while shifting them to / increasing taxes and fees and costs on individuals to the max degree possible.... and mostly to the benefit of the lower mainland business community rather than the province as a whole, particularly developers and investors.

...and he severely crossed the line as to what is reasonable IMO.

Nab

[UnknownResident]

This article says what I've said through the entire election... I should be a columnist.