Panicking would devastate economy, Flaherty says

[calculoso]

http://www.ctv.ca/servlet/ArticleNew...tories&s_name=

Flaherty, who's visiting New Brunswick for the launch of his pre-budget consultations, says acting too quickly and making the wrong choices would not help Canadian families or businesses.

"We know what we are up against -- worldwide economic slowdown, volatility in financial markets, sharp drop in commodity prices -- we are living in extraordinary times," he said.

"We also know that panicking and making the wrong choices would be devastating for the Canadian economy."

...

After the speech, Derek Oland, chairman of the board for Moosehead Breweries, warned there is a need for action from Flaherty to ease the economic pain that is coming.

"Despite the fact that he says Canada is in the best shape, we are going to go through some very tough times and he has to realize that despite some of the good news he talked about that they've done, they are going to have to do more," he told CHSJ radio.

....
Flaherty said the federal government is listening to a range of economic opinions on a financial stimulus package, but he didn't give any specifics on the approach he will take.

"There is no uniformity of opinion by various economists," he said.

He said he is meeting his provincial counterparts in Saskatchewan next week and the Liberal finance critics on Monday in Toronto.

The Bank of Montreal says Ottawa should move decisively on a fiscal stimulus package of as much as $16 billion next year to arrest the economy's slide into recession, but Flaherty wouldn't say if he is ready to commit the government to that kind of spending.

Flaherty said he will avoid spending that leads to permanent deficits.

Very interesting article. I agree that panicking isn't the way to go, as fear and hype can cause more problems, but I also agree that something more has to be done. The quote "There is no uniformity of opinion by various economists" shows how tough this situation is.

Is there a right answer? I don't really think so....

[calculoso]

ah crap.. didn't see the ongoing Financial discussion thread. Mod? Should this be merged or kept on its own?

http://forum.calgarypuck.com/showthread.php?t=62777

[Slava]

^^ I just wanted to say that this proves the old adage: If you put 10 economists in a room you get 11 different opinions.

[flamesfever]

"We are not going back to the '70s, to when Canada ran permanent program deficits," he said."

The big difference between now and the 70's is we had rampant inflation going on. With no hint of inflation problems today, I believe incurring a huge deficit may have a serious long term negative affect on the economy.

I think the Conservatives have a near impossible task on their hands. Everyone is going to be looking for a piece of the stimulus package, and that will be impossible to achieve.

Hopefully the voting public are wise enough to understand that the Conservatives are in the best position to do what's best for the Country at this point in time.

[CaptainCrunch]

Running huge deficits will cause inflation in the long run.

There's no point in stimulis to economic sectors that need to be made more efficient and competitive in the global and national economy.

For example, until the auto industry brings their labor costs in line and begins to produce cars at better costs and with better technology then throwing money into it is useless.

If the American's stop buying our lumber due to their support of their own industry, then there's no point in throwing money into it until becomes more competitive.

This strategy of blindly throwing money at business to save jobs in the short term is the wrong strategy, at this point in time you create programs that create training and new jobs in new sectors with potential to replace the old ones.

I hate to see our dollars going to support unions, and union positions where these people are massively over paid or given unrealistic benefits.

[flamesfever]

Originally Posted by CaptainCrunch

Running huge deficits will cause inflation in the long run.

There's no point in stimulis to economic sectors that need to be made more efficient and competitive in the global and national economy.

For example, until the auto industry brings their labor costs in line and begins to produce cars at better costs and with better technology then throwing money into it is useless.

If the American's stop buying our lumber due to their support of their own industry, then there's no point in throwing money into it until becomes more competitive.

This strategy of blindly throwing money at business to save jobs in the short term is the wrong strategy, at this point in time you create programs that create training and new jobs in new sectors with potential to replace the old ones.

I hate to see our dollars going to support unions, and union positions where these people are massively over paid or given unrealistic benefits.

While I agree with you in theory, it's the practicalities that concern me.

Do you think Harper did the wrong thing by offering a bailout to the auto industry?

In your statement "create programs that create training and new jobs in new sectors", what programs and sectors are you thinking of?

[Rathji]

Originally Posted by flamesfever

In your statement "create programs that create training and new jobs in new sectors", what programs and sectors are you thinking of?

I would rather see them invest heavily in long term renewable energy sources than dump money into a company who is not economically viable just for the sake of saving jobs.

Put all those people to work making windmills, solar panels etc for the money you would have paid the automakers. Still has the same result of saving jobs, but without needing to be the safety cushion for a set of large multinational companies who can't seem to manage their affairs properly.

Unless the goal of these proposed bailouts is for some reason other than saving jobs, I don't see there being a point to it. Of course I slept through Econ 201, so what do I know.

[Slava]

Originally Posted by CaptainCrunch

Running huge deficits will cause inflation in the long run.

There's no point in stimulis to economic sectors that need to be made more efficient and competitive in the global and national economy.

For example, until the auto industry brings their labor costs in line and begins to produce cars at better costs and with better technology then throwing money into it is useless.

If the American's stop buying our lumber due to their support of their own industry, then there's no point in throwing money into it until becomes more competitive.

This strategy of blindly throwing money at business to save jobs in the short term is the wrong strategy, at this point in time you create programs that create training and new jobs in new sectors with potential to replace the old ones.

I hate to see our dollars going to support unions, and union positions where these people are massively over paid or given unrealistic benefits.

In theory this all makes sense. But its the whole "never run a deficit because governments get addicted to them" issue for me that causes trouble. I think that governments do have a place to stimulate the economy when its in the position its in. This doesn't mean that they should interfere with business directly, but they should be doing something to stimulate confidence in the average consumer.

[flamesfever]

Quickly reviving an auto company in North America is not without precedent. Some may recall Lee Iacocca saving the Chrysler Corporation in the early 80's with his K-cars and minivans.

Perhaps one could look at the bailout as granting the auto industry time to get their house in order. I'm sure there will be strings attached to the money, including concessions from the Unions.

[Bend it like Bourgeois]

Originally Posted by Rathji

Put all those people to work making windmills, solar panels etc for the money you would have paid the automakers. Still has the same result of saving jobs, but without needing to be the safety cushion for a set of large multinational companies who can't seem to manage their affairs properly.

I'm no fan of an autp bailout, but I'd say this is not really true.

Other than feeding some union or government beast you can't really turn cheques into short term jobs. Long term sure, but short term you'd be investing in IP, technology, equipment, and productivity. No guarantee any of that starts or stays in Canada.

I think there's also an issue of geography. Too many parts of canada expect a high paying, low effort job wherever they live.

[CaptainCrunch]

Originally Posted by flamesfever

While I agree with you in theory, it's the practicalities that concern me.

Do you think Harper did the wrong thing by offering a bailout to the auto industry?

In your statement "create programs that create training and new jobs in new sectors", what programs and sectors are you thinking of?

To me instead of the Government giving money to industry, they should be working to develop international trade agreements and markets for Canadian made products.

In a constricted economy where nobody is spending money it makes little sense in giving money to the car industry because frankly there's not a market for their vehicles right now.

And while putting people into environmental or green energy is great, its a limited market place anyways unless we want to become the U.S. solar panel.

There are still high tech computer based technologies that can be exploited and are needed. Computers, robotics for manufacturing, software, space based technologies are all viable technologies. Forming better partnerships with other countries and markets.

I don't understand why we're going to support the auto industry, when the auto industry in Canada has just admitted that they're not going to manufacture even 10% of their monthly outputs in December and January, so frankly we're going to be paying salaries for people to not do anything. That's a waste of money. For the U.S. and Canadian bailouts to work it has to be predicated on countries outside of Canada and the U.S. opening their doors to U.S. and Canadian made cars for example.

The truly frightening thing for the international community is that Obama has an isolationist streak in him, and he might demand that other nations will have to address the massive trade imbalance that the Americans have suffered with for years.