Never Mind the Dutch

[Keepitsimple]

Good article by Preston Manning....cutting through Mulcair's attempted Machiovellian crap. Quebec is the canary in the coal mine for Canada. Their Greek-like love of social programs and entitlement has them knocking at the door of Fiscal Destitution. The Left should heed the situation in Quebec - because that's the road they would have us head down. The rest of Canada shields the true nature of Quebec's fiscal ineptitude through transfer payments but make no mistake, Left on their own, the student demonstrations of today would pale with what would take place tomorrow. The NDP, politically indebted to their large base in Quebec has a vision that would drag the country down to the lowest common denominator.

According to Mr. Mulcair, the strong demand for petroleum produced from oil sands is largely responsible for the high dollar and the decline in manufacturing jobs, especially in Central Canada.

The facts, however, (as pointed out in a recent study by the Institute for Research on Public Policy) are this:

• Exchange-rate movements are being driven by high demand for all commodities, not just oil, including strong demand for the output of the mining sectors of Ontario and Quebec.

• Fifty-five out of 80 factory sectors in Canada are either unaffected by or even benefit from the high dollar, with no appreciable damage being done by a strong dollar to the food, auto, aerospace or heavy-industry sectors.

• The decline in manufacturing jobs in Canada is primarily a result of low multi-factor productivity and intense international competition, particularly from Asia.

Far more worrisome for Canada than the Dutch disease Mr. Mulcair is focusing on is the fact that some provinces, especially Quebec, are beginning to show symptoms of the “Greek disease,” of which the NDP is a primary carrier.

Evidence of the Greek disease taking hold in Quebec is unfortunately not hard to find. The Quebec government has accumulated deficits of $12.4-billion since 2008-09 and its net forecast debt of $178.5-billion (51.5 per cent of GDP) for 2012-13 makes it Canada’s most heavily indebted province.

Because Quebec’s population is aging more quickly than that of the rest of Canada, the Quebec pension plan and health care system (which is already consuming over 50% of the provincial budget) are not sustainable in the long run unless drastically reformed. And now, when the Quebec government has determined that it cannot continue to subsidize higher education at previous levels and has called for increases in student fees, what has been the reaction? Riots in the streets, just as in Greece, and Quebec-based politicians like Mr. Mulcair, whose party has been in the forefront of advocating social-entitlement expansion without regard for economic sustainability, diverting attention from these symptoms of the Greek disease by misguided ramblings about the Dutch disease.

Link: http://www.theglobeandmail.com/news/opinions/opinion/never-mind-the-dutch-we-need-a-cure-for-greek-disease/article2447643/

Edited May 31, 2012 by Keepitsimple

[Fletch 27]

Yup, TYPICAL NDP tactics.... "Look! Whats over there!" "Ohh no, thats not a fire in my back yard, thats my eco-heating system".. Mulcair is out to lunch on all his comments and is simply looking to keep Quebec happy.. Regardless of the repurcussions in the rest of Canada.

This boy has been found out... "Outed" shall we say.. And Canada (Well all but QC) has seen this. Mulcair is nothing more than Quebec's little scout out to collect as much benefit for QC from the rest of Canada. Larger transfer payment from the Oil-sands, Larger transfer payments from the Lumber industry in BC, Larger trasfer payments on the backs of any money-making venture within Canada. I find it ironic that he has not lambasted his own belle provance with the Ecosystem killing Hydro-dams? Naaahh thats Internal to Quebec and shouldnt be commented on.... Jack Layton taught him well..

Edited May 31, 2012 by Fletch 27

[mentalfloss]

Our Debt to GDP ratio is nowhere near Greece.

/thread.

[Signals.Cpl]

This is an interesting read about the Quebec debt. And it could speak not just for Quebec but Canada in general.

http://www.montrealgazette.com/opinion/Henry+Aubin+Strikers+should+fear+provincial+debt/6255769/story.html

[waldo]

Our Debt to GDP ratio is nowhere near Greece.

/thread.

clearly... but don't let that stop the great right-wing uniter, 'Preston Manning'!

=> Canada's combined 2010-2011 federal and provincial debt-to-GDP ratio @57.9%

=> Greece's 2011 debt-to-GDP ratio @164%

[Signals.Cpl]

clearly... but don't let that stop the great right-wing uniter, 'Preston Manning'!

=> Canada's combined 2010-2011 federal and provincial debt-to-GDP ratio @57.9%

=> Greece's 2011 debt-to-GDP ratio @164%

So you agree that the conservatives are handling the situation very well.

[waldo]

So you agree that the conservatives are handling the situation very well.

is Greece... your Harper Conservative reference bar?

[waldo]

Good article by Preston Manning....cutting through Mulcair's attempted Machiovellian crap.

oh really... did you actually read the study?... which is but one study of many. It would seem the great right-wing uniter, 'Preston Manning' is quite selective in what he pulls from that study.

as was stated recently in the other concurrently running MLW 'Dutch Disease' thread, it's accepted Canada is being subject to 'Dutch Disease' - the only question is a matter of subject degree. To which, the IRPP study Manning selectively gleans from states:

On balance, the evidence indicates that Canada suffers from a mild case of the Dutch disease, which warrants a commensurate policy response. It is difficult to implement national policies to directly counteract the rising exchange rate (policies such as investing resource revenues in foreign assets, as Norway does), because resource revenues are under provincial jurisdiction. However, Ottawa can use additional federal tax revenues stemming from natural resource booms to invest in infrastructural and other activities that bolster the competitiveness of the manufacturing sector as a whole.

The resource-rich provinces would also be well advised to adopt policies to ensure that neither public finances nor the economy becomes too dependent on natural resources, because history has shown that prices and demand can fluctuate widely and suddenly. Avoiding such dependence will help ensure that the resource blessing currently enjoyed by some regions does not become a curse for the country.

the IRPP study also draws reference to an alternate study approach looking at 21 manufacturing-industry groups across Canada... concluding that energy price increases accounted for 42% of the Canadian dollar appreciation over the 2002-2008 period... also concluding that the 'Dutch Disease' is most serious in Canada's textile, machinery and computer-products industry groups.

[punked]

I agree lets start by where the greeks went wrong, collecting fair taxes from everyone and every company. As everyone knows the Greeks biggest problem was no one paid taxes.

Edited May 31, 2012 by punked

[CPCFTW]

oh really... did you actually read the study?... which is but one study of many. It would seem the great right-wing uniter, 'Preston Manning' is quite selective in what he pulls from that study.

as was stated recently in the other concurrently running MLW 'Dutch Disease' thread, it's accepted Canada is being subject to 'Dutch Disease' - the only question is a matter of subject degree. To which, the IRPP study Manning selectively gleans from states:

the IRPP study also draws reference to an alternate study approach looking at 21 manufacturing-industry groups across Canada... concluding that energy price increases accounted for 42% of the Canadian dollar appreciation over the 2002-2008 period... also concluding that the 'Dutch Disease' is most serious in Canada's textile, machinery and computer-products industry groups.

So the suggested policy response is to invest in infrastructure that benefits manufacturing? Pretty sure that's already being done. Unfortunately we can't invest too much though or Mulcair will cry "corporate subsidies! What about welfare and investing more in free health care!?"

[Evening Star]

I agree lets start by where the greeks went wrong, collecting fair taxes from everyone and every company. As everyone knows the Greeks biggest problem was no one paid taxes.

Yeah, it's so tedious when people try to use Greece as an example of social democracy's failure when Greece's biggest problems are clearly not based in the sort of social democratic initiatives that anyone proposes here. Somehow, the same people never want to consider Germany, Norway, or Sweden as examples, although they are the most stable and prosperous European countries.

[WWWTT]

Here we go again.

Mulcair and Quebec are essentially evil!Or wrong.

Classic reform party policy-attack Quebec!

WWWTT

[WWWTT]

Yeah, it's so tedious when people try to use Greece as an example of social democracy's failure when Greece's biggest problems are clearly not based in the sort of social democratic initiatives that anyone proposes here. Somehow, the same people never want to consider Germany, Norway, or Sweden as examples, although they are the most stable and prosperous European countries.

It is beyond me how some people can believe that Canada could be compared to Greece?

Here's a fact,Canada is the 2nd or 3rd largest country in the world.Greece is 97th!

Canada ranks 35th in pop.Greece at 76th.

WWWTT

[mentalfloss]

is Greece... your Harper Conservative reference bar?

If it's not Harper, it's Greece, so Mulcair must be Greece.

Greece is the new WMD.

[Signals.Cpl]

So wait, we cannot compare ourselves with Greece? You mean the Greeks magically went from financially sound to where they are right now? There are 3 kinds of people and this applies to countries as well... First, those who learn from the mistakes of others, second are those who learn from their own mistakes, and third are those who never learn. If we ignore what is happening in Greece we can end up like them, they ignored their own finances and hid from their issues for years and look where it led them. We can look at Greece as a case study and learn from their mistakes in order to avoid those mistakes, or we can look at the more successful nations while ignoring what is happening in Greece, Portugal, Ireland and potentially a number of larger European Economies and keep on telling ourselves how well we are doing until we hit a similar brick wall to Greece.

I prefer to use Greece as an example, study them and avoid the actions that brought them to the place they are today rather then ignore them and have to face the same or similar problem in 5,10 or 20 years.

[madmax]

So you agree that the conservatives are handling the situation very well.

He's doing worse then Mcguinty. Only difference is McGuinty's word is not to be trusted.

Harper has provided the highest deficits this country has ever seen.

Thats worse then Trudeau and Worse then Mulroney.

There are strong Provinces over the term of Consersative Government

NFLD, Man, NS, Sask, to name a few doing well.

Non with a Conservative Government, or none willing to use that name publicly because of the horrendous record of previous governments with Conservative in their name.

[madmax]

is Greece... your Harper Conservative reference bar?

Greece is the rightwing Red Herring

I am disappointed by Preston. He is usually better then this.

The first part is not bad.

the latter part about Greece is a joke.

Edited June 1, 2012 by madmax

[August1991]

This is an interesting read about the Quebec debt. And it could speak not just for Quebec but Canada in general.

http://www.montrealgazette.com/opinion/Henry+Aubin+Strikers+should+fear+provincial+debt/6255769/story.html

Signals, that article contains this quote:

(The Montreal Economic Institute estimates Quebec's public debt at $245 billion today.)

The last time I checked, the Caisse de dépôt had assets around $130 billion and the (gross) assets of Hydro-Quebec are around $70 billion. Greece (or the US) can only envy Quebec`s situation.

----

As much as I would like to agree with Manning about the need to curb the size of government, the bond vigilantes simply don`t have a legitimate argument in the case of Quebec.

The effects of the world oil price on the value of the Canadian dollar is another question. This is particularly relevant when we consider the royalty regime in Alberta and the environmental costs associated with the oil sands.

Mulcair has a legitimate case to make. Manning less so.

Edited June 1, 2012 by August1991

[punked]

So wait, we cannot compare ourselves with Greece? You mean the Greeks magically went from financially sound to where they are right now? There are 3 kinds of people and this applies to countries as well... First, those who learn from the mistakes of others, second are those who learn from their own mistakes, and third are those who never learn. If we ignore what is happening in Greece we can end up like them, they ignored their own finances and hid from their issues for years and look where it led them. We can look at Greece as a case study and learn from their mistakes in order to avoid those mistakes, or we can look at the more successful nations while ignoring what is happening in Greece, Portugal, Ireland and potentially a number of larger European Economies and keep on telling ourselves how well we are doing until we hit a similar brick wall to Greece.

I prefer to use Greece as an example, study them and avoid the actions that brought them to the place they are today rather then ignore them and have to face the same or similar problem in 5,10 or 20 years.

Yah you better look at what you mean by "Financially sound".

If you mean a Conservative Greek government Cooked the books (any idiot can look up the history on this one) to get into the EU. Then when they were in the EU they continued to cook the books to get huge loans which could only be repaid if what those cooked books said was real (which it wasn't) only to have that bubble burst when everyone found out Greece was cooking its books. Then yes they went from Magically sound to unsound.

If however you mean Greece cooked their books for years, pretended to collect taxes they never collected and never had the money they said they had. Then might be close to the truth. Get out of your right wing bubble and do some research on Greece. Their biggest problem was and always has been no one and no companies pay taxes. Sounds like an awfully Conservative country to me.

I suggest before taking about the situation in the EU you read Boomerang. Great book that lays most of the problems out in a clear well researched way because your right wing blogs are making you look stupid on this board repeating talking points we all know aren't true. I know you aren't stupid I know you are better then the effort you are giving. You may have a real point but this is not it.

Edited June 1, 2012 by punked

[madmax]

Signals, that article contains this quote:

The last time I checked, the Caisse de dépôt had assets around $130 billion and the (gross) assets of Hydro-Quebec are around $70 billion. Greece (or the US) can only envy Quebec`s situation.

----

As much as I would like to agree with Manning about the need to curb the size of government, the bond vigilantes simply don`t have a legitimate argument in the case of Quebec.

The effects of the world oil price on the value of the Canadian dollar is another question. This is particularly relevant when we consider the royalty regime in Alberta and the environmental costs associated with the oil sands.

Mulcair has a legitimate case to make. Manning less so.

I am agreeing with August1991...what is the world coming to....

I only wish I had said it as well.

Edited June 1, 2012 by madmax

[Smallc]

I agree too...pretty scary, eh?

[August1991]

If however you mean Greece cooked their books for years, pretended to collect taxes they never collected and never had the money they said they had. Then might be close to the truth. Get out of your right wing bubble and do some research on Greece. Their biggest problem was and always has been no one and no companies pay taxes. Sounds like an awfully Conservative country to me.

Huh? Conservative?

Conservatives generally prefer the status quo or at most incremental change. Progressives always want to redesign the system, typically from the top down.

If anything, the European Union (and Greek membership) has been a progressive project. (How does tax compliance fit into that story? Dunno.)

----

Conservative/progressive differences aside, IMHO, Greeks are at present overpriced. (Call this the Greek disease.) Moreover, with the euro, the Greeks have no easy way to lower their wages/prices across the board. Instead, Greeks must simply wait for their euro prices to fall willy-nilly - as various Greek governments re-negotiate "wage/pension contracts".

If Greece still had a drachma, a 20% devaluation (for example) would amount to an immediate 20% wage cut in all public employees/State pensions. Problem solved.

[in general, I agree with progressives - quick solutions are better than long, convoluted solutions. If the world is to change, the sooner the better. I just disagree with the progressive instinct to use the State for the change.]

----

So, if you've been paying attention: the Greek disease is really a version of the Dutch disease. And Mulcair has a point: Quebec (nor Ontario, nor Newfoundland before Hibernia) has its own currency.

As Greece uses the euro, Quebec/Ontario/PEI/NS use a petro dollar.

Edited June 1, 2012 by August1991

[August1991]

I am agreeing with August1991...what is the world coming to....

I only wish I had said it as well.

At current interest rates, any government not running a deficit would be crazy.

The US government borrows at 3.2% and the Japanese government at 1.2% - these are fixed 10 year terms.

The Canadian federal government borrows (10 year fixed term) at about 1.6%. Link

Hydro-Quebec recently borrowed $500 million with a fixed 40 year term at 3.9%. (The bond is payable in February 2050.) Link

---

First question to ask, why are (long run) nominal interest rates so low now?

Second question to ask, why are (some) governments raising taxes/fees? IOW, what is your mortgage rate/terms, compared to the government's borrowing rate/terms? (IOW, why are you paying higher taxes/fees?)

Third question, how can we make government smaller?

Edited June 1, 2012 by August1991

[eyeball]

Huh? Conservative?

Conservatives generally prefer the status quo or at most incremental change. Progressives always want to redesign the system, typically from the top down.

That's just plain false. There's no need to redesign the system at all. Simply put cameras and microphones in the highest office in the land and let the effects of that thrifty almost parsimonious 'change' trickle down through the rest.

This mere little bit of moral engineering at the top is about the farthest thing away from the whole scale re-engineering of society you typically imagine us lefties are always contemplating.

[westguy]

Good article by Preston Manning....cutting through Mulcair's attempted Machiovellian crap. Quebec is the canary in the coal mine for Canada. Their Greek-like love of social programs and entitlement has them knocking at the door of Fiscal Destitution. The Left should heed the situation in Quebec - because that's the road they would have us head down. The rest of Canada shields the true nature of Quebec's fiscal ineptitude through transfer payments but make no mistake, Left on their own, the student demonstrations of today would pale with what would take place tomorrow. The NDP, politically indebted to their large base in Quebec has a vision that would drag the country down to the lowest common denominator.

Quebec knows how to play "profitable federalism" at the expense of the rest of the country - especially Alberta.

Link: http://www.theglobeandmail.com/news/opinions/opinion/never-mind-the-dutch-we-need-a-cure-for-greek-disease/article2447643/