ABCP Smackdown: Mark Carney vs Jim Flaherty

CAITI Online Poll On Asset Backed Commercial Paper (ABCP) Bailouts.

Bank of Canada Governor Mark Carney:

The response to the recent turbulence in financial markets should reaffirm that market participants are fundamentally responsible for their actions. For example, investors must understand the price dynamics and liquidity risks of the products they buy, rather than relying solely on credit-rating agencies. The market is beginning to lead many of the necessary changes, as institutions are improving their liquidity management and credit discipline and as originators and distributors of new loans are beginning to adjust their products to standardize terms and, importantly, align incentives. At the same time, accurate and timely information about underlying risks is essential for the market to differentiate and properly price risk. Thus, as Governor Dodge highlighted in September, enhanced disclosure and transparency remain crucial. Standing Committee on Finance December 5, 2007

In comments following an address to a business luncheon in Toronto on Wednesday, Mark Carney said the Canadian economy is strong enough to withstand the collapse of the massive restructuring, which has come under huge pressure as a result of the financial crisis. National Post December 17, 2008

Conservative Finance Minister Jim Flaherty:

Finance Minister Jim Flaherty said in Saskatoon that he and some of his provincial counterparts are discussing a plea from the investor committee overseeing the restructuring for as much as $9.5-billion in backstop credit lines, but no decision had been made.

The fact that Mr. Flaherty is even considering the request is a significant development, given that until recently his position was hands-off. Globe and Mail December 18, 2008

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BoC Governor Mark Carney said "There was not going to be any public money put behind any of this [ABCP rescue plan] because these are decisions of financial market participants." Jim Flaherty now proposes to rescue these same financial market participants.

Don't panic! Conservatives working on aid to future Conservative Senators.

See ya on January 26!

Panicking in the face of crisis would devastate Canadian economy: Flaherty

General Motors is shutting down every one of its operations in North America for the entire month of January

Harper vows to name 18 new senators

18 Senators X $130,400.00* = $2,347,200.00

*Basic Sessional Indemnity - Senators who occupy certain offices and positions are entitled to additional remuneration in accordance with the Parliament of Canada Act as listed. Indemnities, Salaries and Allowances - Senators

Conservatives scared into earlier action

Opposition parties force Conservatives to move up budget 2 months earlier


The intent of the Opposition was to help Canadians this winter with an economic stimulus package and they were partially successful.

The Conservatives did not plan to introduce any new measures to stimulate the economy until the next budget is tabled in March 2009. Flaherty says no economic stimulus package to come in economic update Nov 24, 2008

Why scaring the Conservatives into action is a good thing for Canada:

One of the key forecasters that the federal government depends on to crunch its budget numbers says Finance Minister Jim Flaherty's update last week would extend the country's recession and exacerbate the threat of deflation.

In last week's fiscal update, Mr. Flaherty argued that his previous tax cuts are stimulating the Canadian economy by about $31-billion - and that's why he didn't have to take additional measures right away, even though his own forecasts show the economy is set to contract this quarter and the first quarter of next year.

That's faulty math, counters the Centre for Spatial Economics, one of four firms the Department of Finance depends on to provide thorough economic forecasts upon which the government's budget track is based.

"This is a fantasy," said Robert Fairholm, the centre's director of economic forecasting. "Most of the short-term stimulus from these measures have already boosted economic activity, and so will not continue to provide [a] short-term jolt to growth."
Flaherty's plan prolongs the pain, forecaster says - Report alleges minister's math is flawed Heather Scoffield, Dec 4, 2008

Canadians lost 71,000 jobs in November – almost triple expectations – and the unemployment rate crept up to 6.3 per cent, Statistics Canada said Friday. That's the biggest month of job losses since the recessionary period of 1982, and puts the unemployment rate at its highest point since November 2006. Canada loses most jobs in 26 years Heather Scoffield, Dec 5, 2008

FU from JF

Where is the support Jim?

Flaherty's instinct to cut out of step with world

As the rapidly worsening global recession pushes governments around the world to step up spending, Ottawa's first official response is to cut back.

The fiscal update presented yesterday by Finance Minister Jim Flaherty will suck $6-billion out of the economy next year. Heather Scoffield, Globe and Mail

Professors give Flaherty a failing mark

Desai said there must be across-the-board spending on infrastructure that has been systematically dismantled in Canada for 20 years. She argued the Harper government allowed partisanship to trump doing what was right for the country.

The Economic Forum has argued for massive economic stimulus, largely by investing in the country's infrastructure. Instead, Flaherty offered what McMaster University economist Atif Kubursi called the "window dressing" of minor changes in pension rules, previously announced tax cuts and selling as-yet-undetermined public assets. Linda Diebel, The Toronto Star

Harper plays chess… while Rome burns

The real outrage of yesterday’s economic “update” is not that it seeks to impose on most parliamentarians a change to funding rules that most of them would never ordinarily accept; it’s that it accomplishes nothing else. It’s that in the most dangerous economic times Canada has faced in 20 years if not far longer, this prime minister can’t wipe the smirk off his face and grow up a little. Paul Wells, Macleans

The Commons: Gaming the system

First Dion, then Duceppe, then Layton with a crescendo. “Mr. Speaker, later today Canadians are going to be looking for bold leadership and dramatic and immediate action. They are going to be looking to see EI reform. They want to see strong action to protect their pensions. They want to see credit guarantees for businesses that are on the edge. The jobs of those workers are on the edge literally this afternoon. Canadians want to see investments in infrastructure to create work,” he cried.

His caucus rose to cheer, his voice swelled to yell over them. “Instead of an immediate stimulus package to attack the recession, the government is apparently going to attack democracy,” he continued, the Conservative benches clucking at this. “I ask the Prime Minister how such an attack is going to create one job or protect one pension?” Aaron Wherry, Macleans

Quotes then and now: Harper, Flaherty

Canwest News Service

Wednesday, November 26, 2008

Then and now quotes comparing what Prime Minister Stephen Harper and Finance Minister Jim Flaherty said during and after the campaign for the Oct. 14 election about recession and a deficit.

"This country will not go into recession next year and will lead the G7 countries."
- Prime Minister Stephen Harper (Oct. 10)

"If you don't want a carbon tax and tax increases and a deficit and recession, the only way to ensure that is the case is to vote for the Conservative party."
- Prime Minister Stephen Harper (Oct. 12)

"We may well be in a technical recession."
- Finance Minister Jim Flaherty (Nov. 23)

"The most recent private-sector forecasts suggest the strong possibility of a technical recession at the end of this year and beginning of next."
- Prime Minister Stephen Harper (Nov. 23)

"I know economists will say well, we could run a small deficit but the problem is that once you cross that line as we see in the United States, nothing stops deficits from getting larger and larger and spiralling out of control."
- Prime Minister Stephen Harper (Oct. 6)

"We will not run a deficit."
- Finance Minister Jim Flaherty (Oct. 9)

"If we do short-term deficit spending as a deliberate policy we will have to be able to demonstrate to Canadians that those deficits will genuinely be short term."
- Prime Minister Stephen Harper (Nov. 15)

"The government of Canada today is not planning a deficit. But if the government of Canada decides . . . that we do have to engage in fiscal stimulus, that government spending is essential not just to shore up economic activity but investment markets, that would be the occasion we would go into what would be called a cyclic or a short-term deficit."
- Prime Minister Stephen Harper (Nov. 23)

Can you afford to trust a Conservative government with your retirement savings?

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"We are not facing a deficit," Flaherty said after a speech to the Canadian Association of New York at the New York Yacht Club. Jim Flaherty April 24, 2008

"If we have to run a deficit, we'll run a deficit." Jim Flaherty November 19, 2008

Conservatives drained coffers: Watchdog

Budget officer Kevin Page concluded the federal Conservatives are likely to run budget deficits "in the near term," possibly beginning this year, and that the fault lies as much with Finance Minister Jim Flaherty as it does with the weak economy. Page's report projects a budget deficit of $3.9 billion in 2009-10. But it adds that, if the economic downturn proves worse than expected, next year's federal deficit could hit $14 billion.


Canadians have lost billions because of bad Conservative policy. None of this is new. October 8, 2007



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Deficit Jim gets thumbs down

Think-tank slams Ottawa for 'imprudent budgeting'

Eric Beauchesne , Canwest News Service
Published: Friday, October 31, 2008


OTTAWA - The federal Conservative government abandoned prudent budgeting just when it was needed, an economic think-tank involved in helping this and previous Liberal governments prepare their budget projections charged Friday.

Not only did the government, against the advice of private sector economists, eliminate the annual multi-billion dollar cushion against the impact of an unexpected economic slump in the last budget but has let spending get out of control as well, Global Insight said in one of the most damning analyses to date of the current government's handling of its finances. MORE...

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Cabinet change was needed in finance: Ignatieff

Updated Fri. Oct. 31 2008 8:45 AM ET
CTV.ca News Staff

Liberal party deputy leader Michael Ignatieff said the government doesn't have a grasp of the gravity of the situation.

He said it's difficult to trust Flaherty.

"Before the election he kept saying 'No problem, everything's fine, we're not going into deficit.' When the storm hit during the election they said 'Everything's fine, no big problems.' Now they're aware, now they're fessing up that in fact we're going through the most serious economic crisis in 30 years -- and putting Mr. Flaherty in there is saying basically our economic policy is just fine," Ignatieff told Canada AM. MORE...