Harper May Have to Break Pledges With Budget Deficit, Bank Aid

[Alta4ever]

So just like every other snap election called by a minority government, we finally have the reason why Harper wanted to get an election out of the way before the public realized how bad things are!

Tories face $10B deficit, report suggests `Fiscal hole' from credit crisis may result in higher taxes, spending cuts next year, Merrill Lynch warns

Aren't you Tories glad now that elected the guy who will bring us spending cuts combined with tax increases? Tory times are once again hard times!

And Meryll Lynch should know, I thought they were in a bit of a pickle a just a little while ago.

Edited October 16, 2008 by Alta4ever

[Smallc]

And Meryll Lynch should know, I thought they were in a bit of a pickle a just a little while ago.

I wouldn't trust a word they say as they couldn't even keep themselves afloat.

[Alta4ever]

I wouldn't trust a word they say as they couldn't even keep themselves afloat.

I was being sarcastic, you post is what I was refering to.

[Smallc]

I was being sarcastic, you post is what I was refering to.

I know, I was just agreeing with you....but I wasn't being sarcastic. Sorry for the confusion.

[OddSox]

Heh!

http://careers.ml.com/index.asp?id=76716_7...008_84574_85835

"Merrill Lynch is experiencing a period of sustained growth across virtually all its businesses around the world. Toronto is an ideal location..."

[drewski]

we have the strongest banking system in the world

http://www.reuters.com/article/ousiv/idUSTRE4981X220081009

I don't even wanna imagine how bad things would have to be for us to need to start buying into the banks

[Peter F]

we have the strongest banking system in the world

http://www.reuters.com/article/ousiv/idUSTRE4981X220081009

I don't even wanna imagine how bad things would have to be for us to need to start buying into the banks

Things are so bad the healthiest banking system in the world was pulling back on the lending business and needed 25 billion dollars to encourage them to please please please keep lending money.

[capricorn]

Things are so bad the healthiest banking system in the world was pulling back on the lending business and needed 25 billion dollars to encourage them to please please please keep lending money.

Let's hope they don't grant loans to consumers and businesses on the brink of bankruptcy.

[Peter F]

Let's hope they don't grant loans to consumers and businesses on the brink of bankruptcy.

Well, it's their money now. They get to do whatever they want with it,

[jdobbin]

Well this is the catch. If Mr. Harper has to cut programs and money in order to have a balanced budget many would be lambasting him for that.

The Tories restored programs that the Liberal cut. Why would they be protesting?

If the PM were to spend on social programs and run a deficit many would scream about that as well.

I think Liberals have shown they care more about the deficit, don't you thinL

Basically anything that the PM does either way will be not good enough because the is a member of the CPC and not a Liberal.

We cannot have it both ways.

Then don't. Don't go into deficit. Do what is necessary to avoid that.

Edited October 17, 2008 by jdobbin

[jdobbin]

You act as if it is somehow shocking that a politician would make promises that he doesn't/couldn't keep.

I'm not surprised with Harper. He makes changes faster than Chretien ever did.

"...but Harper said!" is not a good argument against what is generally considered the wisest course of action by economists. Your esteemed Don Drummond indicated a deficit is probably the best and an unavoidable course of action. The economy has been slowing for over a year now. Increased spending, like I said, is GOOD policy, as long as a surplus in a good year would more or less erase a deficit in a bad year. It's called stablization policy, and every economist worth a lick advocates for smoothing short term shocks to the economy.

I disagree with Drummond on the deficit. Harper can't control his spending. He has a proven record of not being able to cut.

Your consistent and repeated declarations that Harper is bad because he breaks his election promises is noted. We are filing it along with the broken promises of every PM we've ever had.

You are consistent in saying whatever he does is okay.

Harper is a politician. Thus far, I'm finding his decisions to be entirely pragmatic and mostly beneficial to me. That's how I vote. I prefer to leave emotion out of the equation because it generally makes fewer good decisions.

Harper has been pragmatically spending his way to the position we are in now which is on the brink of deficit. It may not matter to you but it matters to a lot of Canadians.

If he couldn't make the decision to rein in spending when things were good, I can only imagine how it will be now.

[Peter F]

The government isn't buying our banks at all. They're buying specific investments the banks hold and giving the banks cash for it. That equates to 0% new government control over the industry.

Moonbox is right. The government is not buying a dime of the banks. The CMHC will buy a bunch of mortgage derivatives from the Sellers (who are not necessarily the banks) to the tune of 25 billion dollars. Today they bought up the first installment of 5 billion

NHA MBS Purchase Operation Results: October 16, 2008

Auction Date: October 16, 2008

Settlement Date:October 23, 2008

Maturity Date: October 15, 2013

Amount: $5 billion

High Yield: 4.679%

Low Yield: 4.041%

Average Yield: 4.241%

Canada Mortgage and Housing Corporation reverse auction

The Canadian government issued/will issue 25 billion in bonds to finance these purchases by CMHC. I have no idea what the interest rate on Canada Bonds are but the CMHC auction rules are that offers must have a return of 1% above the Canada Bond rate.

Thus Flaherty's statement that the exchange will be at no cost to the taxpayer and probably result in a modest return.

[capricorn]

I would bet the qualifying criteria for mortgages transferred to CMHC's books will be very stringent, i.e. no second or third mortgage loans will qualify.

[Moonbox]

I'm not surprised with Harper. He makes changes faster than Chretien ever did.

That's your opinion. Harper has to contend witht the fact that he's still running a minority.

I disagree with Drummond on the deficit. Harper can't control his spending. He has a proven record of not being able to cut.

You can disagree all you want with Drummond, but he's one of the finest economists in the country and I'd love to hear why you disagree with spending in an economic slowdown. You regularly cite him as support for your opinions but you tend to leave out the full story of what he's actually saying....such as with the Green Shift...but we've already gone over that at length.

You are consistent in saying whatever he does is okay.

No, and that's the difference between you and I here. I have agreed that a great many things Harper has done have not been good policy. I preferred an income tax cut to a GST cut. It's simple math that makes me feel this way. I find his personal views on abortion and gay rights narrow-minded and stupid. I'm dissapointed in some of the hypocrisy he displays and I shake my head at how he's been throwing money

at Quebec in attempt to procure more votes. In that sense he's showing he's no better than the Liberals have been for 30 years.

The reality, however, is that I disagreed more with the policies of the other party. I'm not a hard-core Tory. I have voted Liberal in the last 4 years. I voted for McGuinty (who I despise) in the last provincial election because I felt John Tory was a buffoon. I see the story both ways. I have admitted on many occasions Harper has made mistakes.

You seem to be of the opinion that EVERYTHING he does is wrong.

If he couldn't make the decision to rein in spending when things were good, I can only imagine how it will be now.

Things weren't good for very long. The economy has been slowing for over a year. He ran a 9 Billion surplus last year. Like I said, I think he could reign in spending a little, but I would not at all be upset if he ran a deficit this year, because I know how an economy works.

[Mr.Canada]

The Tories restored programs that the Liberal cut. Why they be protesting?

I think Liberals have shown they care more about the deficit, don't you thinL

Then don't. Don't go into deficit. Do what is necessary to avoid that.

So I guess there are Blue Liberals as well as Red Tories, who knew.

[Peter F]

I would bet the qualifying criteria for mortgages transferred to CMHC's books will be very stringent, i.e. no second or third mortgage loans will qualify.

You misunderstand. These are not mortgages being transferred to CMHC. These are mortgage derivatives - not the mortgages themselves.

I have a mortgage with TD bank which the TD bank could well have bundled up with a bunch of other mortages of similar term and interest rate to create a derivative called a Mortgage Backed Security. The mortgages involved are still in the hands of TD bank. However, it is the income flow from these MBS's (the mortage payments I and others are making to TD) that are being bought up by CMHC.

It is the income flow that makes the MBS attractive to investors. TD bank will be paying out the mortgage payments that I and others make to TD to the MBS buyers (CMHC in this case). The attraction to TD bank to issue these things is they get the money they lent me for my mortgage now and don't have to wait 20 years for me to pay the mortgage off....and they would be waiting that long thats for sure.

So bundled up in the MBS is all kinds of mortgages, first second or third - it really doesn't matter because its not the mortage that is changing hands but the promised mortgage payments. The strength of MBS in Canada is that they are required by law to be derived from mortgages that are guaranteed by CMHC. So if I should fail my mortgage requirements to TD Bank, CMHC will pay out whats owing on my mortgage to TD Bank. That has the same effect of guaranteeing the MBS that my mortgage is part of, and no default on the MBS by TD bank will occur.

Its safe as houses. In Canada anyways...

[jdobbin]

That's your opinion. Harper has to contend witht the fact that he's still running a minority.

Is that why he flipped so fast on floor crossing, appointing Senators, cancelling the income trust?

You can disagree all you want with Drummond, but he's one of the finest economists in the country and I'd love to hear why you disagree with spending in an economic slowdown. You regularly cite him as support for your opinions but you tend to leave out the full story of what he's actually saying....such as with the Green Shift...but we've already gone over that at length.

Drummond assumes the same spending.

http://www.ctv.ca/servlet/ArticleNews/stor...hub=CTVNewsAt11

Toronto Dominion Bank chief economist Don Drummond is forecasting a deficit of $10.4-billion in the 2009-2010 fiscal year as well as a $9.9-billion deficit in 2010-2011.

He does predict a balanced budget for this fiscal year. He forecasts assume that government spending and taxing remain at their current level.

Why does Harper have to keep up that level of spending? Does it make sense in bad times to fund a UFO museum?

No, and that's the difference between you and I here. I have agreed that a great many things Harper has done have not been good policy. I preferred an income tax cut to a GST cut. It's simple math that makes me feel this way. I find his personal views on abortion and gay rights narrow-minded and stupid. I'm dissapointed in some of the hypocrisy he displays and I shake my head at how he's been throwing money at Quebec in attempt to procure more votes. In that sense he's showing he's no better than the Liberals have been for 30 years.

But then you say it is pragmatic.

The reality, however, is that I disagreed more with the policies of the other party. I'm not a hard-core Tory. I have voted Liberal in the last 4 years. I voted for McGuinty (who I despise) in the last provincial election because I felt John Tory was a buffoon. I see the story both ways. I have admitted on many occasions Harper has made mistakes.

You seem to be of the opinion that EVERYTHING he does is wrong.

I couldn't disagree more on his tax decisions or on his spending. His bullying and making every vote a vote of confidence was brinkmanship that polarized the nation to such a fine point that he wasn't able to break the logjam and now unless there are olive branches all around, we are headed straight for dysfunction once again.

Things weren't good for very long. The economy has been slowing for over a year. He ran a 9 Billion surplus last year. Like I said, I think he could reign in spending a little, but I would not at all be upset if he ran a deficit this year, because I know how an economy works.

Come on. The Canadian economy save for the manufacturing sector was bubbling along. All of the spending Harper was doing in those years previous wasn't to shore up that area. It was for VIA Rail, a military college and UFO museums.

Corporate tax rates brought in huge amount last year because many were doing great.

The spending was excessive and unnecessary. It wasn't needed to shore up a slumping economy.

[jdobbin]

So I guess there are Blue Liberals as well as Red Tories, who knew.

I think we have seen that there plenty of fiscal conservatives in the Liberal party. Huge cutbacks ended the deficit.

[Mr.Canada]

I think we have seen that there plenty of fiscal conservatives in the Liberal party. Huge cutbacks ended the deficit.

I really like Martin as a Finance Minister but as a PM not so much.

He was always waffling on almost everything which drove me crazy.

Make a decision and stick with it, don't bend to the loudest minority and do what is right.

[Smallc]

The spending was excessive and unnecessary. It wasn't needed to shore up a slumping economy.

So I have to ask, (and let it be known, I really liked PM PM) do you think that Paul Martin would have done any different? I can pretty much tell you right now that he would have spent just as much if not more.

[Smallc]

He was always waffling on almost everything which drove me crazy.

Make a decision and stick with it,

Are you referring to Income Trusts or Senate appointments? Maybe your referring to eliminating the GST on gas above $0.85?

[jdobbin]

So I have to ask, (and let it be known, I really liked PM PM) do you think that Paul Martin would have done any different? I can pretty much tell you right now that he would have spent just as much if not more.

I was concerned about his spending. It was widespread and unfocused in 2005. While I supported Kelowna, I opposed so much money going to the Pacific Gateway Initiative. And so it went.

One thing I don't think he would have done was cut the GST. A cut to income taxes would have been far more effective and I think that is what his approach would have been. I much preferred Martin's tax choices.

Would Martin's next three budgets have had the same excessive spending? I guess we'll never know. A lot of his promises in 2005 were mutli-year spending.

I know some fiscal conservative Liberals were disappointed in Martin. Some even voted for Harper on the idea that he would not blow the same amount of money that Martin seemed to to want in 2005. I think very few would have thought that Harper would exceed Martin's spending.

[Smallc]

I was concerned about his spending. It was widespread and unfocused in 2005. While I supported Kelowna, I opposed so much money going to the Pacific Gateway Initiative. And so it went.

Funny, I feel the exact opposite.

[jdobbin]

I really like Martin as a Finance Minister but as a PM not so much.

He was always waffling on almost everything which drove me crazy.

Make a decision and stick with it, don't bend to the loudest minority and do what is right.

I think what killed him was the Gomery investigation. It dragged on and although he personally remained popular until the election, it took a toll on his focus.

He was thinking about what legacy he would leave and while he was able to do some innovative things, it lacked focus and ended up being multiple funding projects.

I think the assumption was that the huge surplus warranted that type of spending but I have always been of the opinion that when times are good, you try to limit the urge to spend on numerous projects. One significant project might have made sense, two a possibility. For each of the big projects, I would have been looking at capping or reducing spending elsewhere.

[Smallc]

For each of the big projects, I would have been looking at capping or reducing spending elsewhere.

He did find a great deal of efficiencies within government...something that the current government should be doing.