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Post #2951 by AD » Wed Feb 04, 2015 9:21 am

I think they can. And if they can't, it shouldn't be that difficult to deal with Ottawa on this issue.
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Post #2952 by Puck » Wed Feb 04, 2015 9:47 am

Thomas Malthus wrote:....Harper's approach is simply to treat all deficits as bad and he should know better as an economist.

Best cutting one-liner last week came from Liberal MP John McCallum discussing the new JTF2 mission: "We are still not sure if Harper is a real economist but we are sure he is not a General."
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Post #2953 by Puck » Wed Feb 04, 2015 10:07 am

The current budget deficit might be small but there is a much bigger funding deficit. You can create the short run illusion that the deficit is small or balanced by putting off procurements, infrastucture investments and cutting programs but those items come back down the road later to haunt a subsequent government. When things aren't getting done they still pile up on another balance sheet.
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Post #2954 by Craig » Wed Feb 04, 2015 10:26 am

Big#D wrote:I agree with both points that the structural deficit is small and that deficits in and of themselves aren't bad. My issue, which it appears you agree with it, is that there was no need for creating one other than to appease the oil lovers out west.

Also Stevie PM has shown time and time again that he's a shitty economist... and fiscal manager. He's a savvy politician and a decent piano player though and that's what gets him by (with a little help from his friends).


I think it was more about appeasing the doofuses in Ontario, to be honest with you. He used the GST cut to win an election. He was winning the oil lovers regardless, it was all about Ontario.
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Post #2955 by Craig » Wed Feb 04, 2015 10:35 am

While I agree that deficits aren't inherently bad and I would be alright with infrastructure spending, I don't mind eliminating the deficit either. We're in a growth period with low interest rates, this is a great time to pay down the debt a bit. Yes, the debt to GDP ratio isn't that bad, but it's still better if it's lower. If I were in charge, I'd probably do a mix of spending and debt reduction. Probably not nearly as much spending as it seems like Malthus wants though. The nice thing about a tidy little surplus and paying down the debt is it braces us pretty well to handle it when interest rates go up on our $600 billion debt.

What I absolutely would not do is look at a temporary surplus like this when things are going good and figure it's time for some marginally effective tax cuts. Harper really does enact economic policy almost entirely for political reasons.
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Post #2956 by Puck » Wed Feb 04, 2015 10:44 am

Thomas Malthus wrote:Yeah, that's a good point. And the longer the wait for procurement and infrastructure investments, the more expensive they're going to be (ideally they should have done this shit when the dollar was strong, but at least interest rates are still low).
Also tricks like finding ingenious ways not to fund vet programs, and saving a billion, it doesn't make the problem really go away. Re-funding science programs will cost money. The CPC also did not cut many regulatory laws off the books (to avoid court challenges) they merely cut the regulators and public servants staffing those programs. If a subsequent government decides to staff again, and do the regulatory enforcement it will cost money. A lot of the programs will never come back, but some will.
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Post #2957 by AD » Wed Feb 04, 2015 10:53 am

I hate this government SO much!!

:why:
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Post #2958 by AD » Wed Feb 04, 2015 11:00 am

Dog wrote:No you don't. They are giving you a grand or two in tax breaks. Such astute fiscal managers!


Well I like that. But I'd probably like it better if they splurged for a new train to the airport and better funding to the provinces for roads and schools.
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Post #2959 by Sturminator » Wed Feb 04, 2015 11:04 am

Image
If a man were permitted to make all the ballads, he need not care who should make the laws of a nation.
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Post #2960 by Puck » Wed Feb 04, 2015 11:05 am

Also looks like interest rates won't go up until the third or fourth quarter so that will help the CPC on keeping the good managers byline a bit longer, from the cries of mortgage and real estate anguish. Whenever world interest rates rise that won't help the stock market and people's retirement stock portfolios (if we go back to the 70's stock market doldrums). Anyway, the CPC seem to be going from Plan A (good managers) to Plan B (leadership on security and the fear of terror card) to fight the next election.
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Post #2961 by Craig » Wed Feb 04, 2015 11:06 am

Big#D wrote:i'm assuming they'll sell off some assets as well (one time gains).

but look at us. we're good fiscal managers.


They can't do that to balance the books this year, can they? Count the profits from sales that haven't taken place yet?

I think they think the contingency funds will cover it. Which means calling it balanced is a bit of a stretch, but not entirely unfair. For me, the big question is what you do when the surplus hits 5 billion+ a year in a year or two. That's more like 8 when you count the contingency money. That's a big enough chunk to embark on major policy of some sort, be it tax cuts, handing Toronto a subway, or serious debt reduction. Luckily, there's an election between now and then so hopefully someone will run on sane fiscal policy and win.
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Post #2962 by AD » Wed Feb 04, 2015 11:19 am

I hate them so...

Wait. Never mind. I, for one, respect our political leadership and oppose subversive views.
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Post #2963 by Puck » Wed Feb 04, 2015 11:27 am

AD wrote:
Wait. Never mind. I, for one, respect our political leadership and oppose subversive views.
Too late. CSIS knows who you are I'm sure from reading your posts. You'll never be allowed on a plane to go anywhere even if they don't pick you up (too expensive to throw us all behind bars). At least you won't catch measles going to Disneyland with your tax refund.
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Post #2964 by AD » Wed Feb 04, 2015 11:44 am

I would like to congratulate Malthus on generating meaningful discussions with his links, summaries and arguments in the last days.
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Post #2965 by Craig » Wed Feb 04, 2015 12:08 pm

AD wrote:I would like to congratulate Malthus on generating meaningful discussions with his links, summaries and arguments in the last days.


Discussion. Singular. Let's not get carried away.

Thomas Malthus wrote:Despite the serious mistake in Rienhart and Rogoff's paper, the point still remains that having a high debt to GDP ratio is associated with much slower growth. But that's only when the ratio is really, really high. Canada (federally) is nowhere near other developed countries, but when you add in the provinces the total debt-to-GDP is 112% (luckily Canada's borrowing rate isn't determined by the debt of the provinces but just its own). Considering that infrastructure is mostly a provincial thing it would make sense to use the federal government's borrowing power to help keep the provinces healthier and stimulate demand via these projects.

You want to pay down the debt? So do I, in the long term. But I also want to ensure that fiscal and monetary policy are working together. Sure, because of the low interest rates debt servicing charges are low but let's not also forget that servicing your debt can be affordable at higher interest rates provided that they increase more slowly than GDP does. And if stimulating demand and investment in these projects can boost growth in a time where interest rates are likely to continue staying low for while longer, then it's a good bet to me that debt servicing will become more affordable (even if we increase the debt by deficit financing the infrastructure projects).


I'm not particularly concerned with the current debt to GDP ratio either, I'd just rather pay less than 30 billion a year servicing debt. Part of why we weathered the recession better than other countries is we went into it with a surplus and not that much debt. Since then we've added like 50% to our debt across all levels, for good cause mind you, but I'd like to get back down to that level.

GDP growth should outpace interest rate hikes most years. But there's always going to be those years where it doesn't. Interest rates can jump 5% in a year when your GDP is flat. That's extreme, but I'd still rather have a little cushion. I mean if we're borrowing lots to spend lots and then things go sideways, do you really want to dump austerity on top of that? I'd rather save the borrowing for when things are bad and pay it back when things are relatively good. I think, despite the recent oil plunge, things are relatively good right now, so we should focus on paying back. I'm a simple Keynesian at heart, TM.

Thomas Malthus wrote:I would like to thank everyone for being straight up and telling me that I was being annoying. I appreciate your candor. True friends, all.

:celtic2_1barca:

And to be clear, because I feel as though it's not in my previous posts, I don't consider infrastructure investment to be a panacea. That would be incredibly stupid. But, I do consider it a step in the right direction. And, considering that many of the options that used to exist for stimulating the economy are no longer options, it makes sense to try everything that seems like it might work.


Sometimes doing nothing works pretty well too.
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Post #2966 by Craig » Wed Feb 04, 2015 12:09 pm

That said, if the feds want to buy Toronto a downtown relief line, that would be terrific. Please do that.
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Post #2967 by Craig » Wed Feb 04, 2015 12:27 pm

Thomas Malthus wrote:I don't really think that things are relatively good right now and I'd rather take my car in for maintenance than and drive it around until the engine blows before taking it into the shop.


GDP is growing at 2.5% or so a year and real GDP growth is about 1%. Our largest trading partner is growing even faster and our numbers normally lag theirs by a little. We've also got a balanced budget and unemployment is going down by about 0.5% a year over the last 5 years. Heck, even productivity is up and trending higher over the last 5 years. Boom times? Not really, but I think we're comfortably in a "relatively good" sort of space.

Even if your car has just spent half a decade in the shop? At some point you have to drive the fucker.
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Post #2968 by Puck » Wed Feb 04, 2015 12:27 pm

I wouldn't over-react on the debt to GDP ratio either, the ratio will go down in the long run as GDP rises.

But Martin had it more right by keeping a buffer IMO but the CPC saw 'over-taxation' and it gave them ammo to come up with quicker tax cuts. Martin was doing the tax cut operation slowly anyway. If the CPC hadn't blown that, quickly, the debt would be much lower today. Going Keynesian later also gave them room to spend CPC cheques in Ontario buying votes on deficit spending. The deficit then gives them the big excuse to cut government programs. for the next round of tax goodies.

We are never going to see surpluses or a buffer again IMO. Politically if the CPC can't keep one and prefer cutting taxes deep, the other parties won't be in any mood to impose sacrifices to create a new surplus so the CPC can go on their next election spree with it. Buffers or trust funds for the future (saving during a surplus to pay for the next recession's deficit) are out of the question now IMO. It's either spend it on a social program right away (NDP) or give tax breaks right away (CPC) or something in between for the Liberals. Buffers, and contingency funds will be spent faster than shoppers at a Thanksgiving Day sale.
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Post #2969 by RTWAP » Wed Feb 04, 2015 12:54 pm

Thomas Malthus wrote:Except that I'm pretty sure the provinces with HST can't unilaterally change their PST component, can they?


I can't see why any province would agree to sign away one of their constitutionally mandated powers just for a bit of efficiency.
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Post #2970 by Craig » Wed Feb 04, 2015 1:08 pm

Thomas Malthus wrote:Most forecasts are already in real terms Craig, so the IMF is forecasting 2.3% real growth in 2015 and 2.1% in 2016.


Even better!
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Post #2971 by Puck » Wed Feb 04, 2015 2:22 pm

I wonder when the CPC pulls out the 4th or 5th signing ceremony with the EU. We should be due for another before the election.

They haven't been able to get the Keystone pipeline through for their base but they will vote CPC anyway.

Duffy is coming up but unless Mike pulls a magic e-mail rabbit out of his hat, or Wright turns on his buddies (doubtful) and only Duffy is found guilty, the CPC spin machine will go into overdrive that Harper is exonerated because no paper trail was found (even though it means nothing of the sort).

Hurting Trudeau on reefer madness went nowhere for last Summer's CPC ad trial balloon, so making him look weak on jihadists seems a better option. NDP will always be the dreaded Socialists, so any poll gains on their part can be used to scare the right flank of the Liberal Party to vote CPC.

CPC figures it owns 'the Economy' (can't figure that one out but what the heck). If anything goes south there, expect more screaming about terror and jihadists.
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Post #2972 by AD » Wed Feb 04, 2015 2:52 pm

Trudeau better fucking get his ducks in a row and propose a simple, easy, populist economic message/plan.

Or all is lost.. :why:
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Post #2973 by Craig » Wed Feb 04, 2015 3:39 pm

I'd rather leave healthcare policy decisions up to the provinces.

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