NDP points out economic facts? cant be true. Except they are..

[MiddleClassCentrist]

The MSM view of Muclair's position on Dutch disease is laughable because it was only criticized for coming from a socialist party.

But anyone who has taken economics 101 could have pointed out the idiocy that the Conservative government was spewing to protect their big oil supporters.

After waiting for his comments to subside and drop to the back of our minds as Canada gets a RECORD TRADE DEFICIT to $2.34-billion in July. Now... yes now... apparently the MSM and Conservatives understand that simple fact of "oh yeah, a high dollar does kill exports."

http://www.theglobeandmail.com/report-on-business/economy/this-is-about-as-bad-as-it-gets-for-canadian-exporters/article4536025/

A strong currency and global slowdown are choking Canada’s trade-dependent economy.

The merchandise trade deficit swelled in July to $2.3-billion, the largest since Statistics Canada began tracking the data in 1971, driven wider by sharp declines in virtually all of the country’s major exports.

“This is about as bad as it gets for Canadian exporters,” Bank of Nova Scotia economist Derek Holt warned.

Exports are a key driver of Canada’s economy. In an annual report Tuesday, the Department of Foreign Affairs and International Trade portrayed trade as the lifeblood of the economy, accounting for one in five jobs and 63 per cent of gross domestic product. Last year, exports of goods and services climbed 11.8 per cent to a record, helping to narrow Canada’s current account deficit, the broadest measure of trade and investment flows.

But in recent months, exporters have been slammed by the powerful combination of the strong dollar – now above par with the U.S. currency – and weaker prices for some commodities.

Particularly worrying is the fact that both the value and volume of exports and imports are falling simultaneously, suggesting global economic weakness is now seeping deep into the Canadian economy.

“It’s never encouraging to see a deteriorating trade balance, but it’s really bad news when the weakening is sparked by falling two-way trade,” said economist Emanuella Enenajor of CIBC World Markets.

The weak trade performance could knock as much as a full percentage point off economic growth in the third quarter, BMO Nesbitt Burns chief economist Douglas Porter said.

“This is not a flash in the pan,” he said. “We’re going to be saddled with weak trade for a while.”

Exports of energy, autos, agricultural products, forest products and machinery and equipment all declined in July, compared with June. The overall drop was 3.4 per cent, paced by an even larger 5-per-cent decline in exports to the United States, Canada’s largest customer.

And despite the strong dollar, which has risen even higher since July, Canadian shoppers and businesses are consuming and importing less. Imports fell 2.2 per cent in July.

The high dollar allows Canadian businesses to buy foreign-made equipment more cheaply. But with the global economy slowing, businesses are increasingly leery of investing. And heavily indebted consumers are increasingly tapped out.

CIBC’s Ms. Enenajor worries that Canadian businesses aren’t taking advantage of the high dollar to invest in productivity-enhancing equipment and machinery.

She said there’s no guarantee the dollar will stay this high for long. She pointed out that foreign capital has been flooding into the Canadian dollar in the face of uncertainty in much of the rest of the world. With Canada running a large current account deficit, foreigners could quickly repatriate those funds in the face of a sudden shock, such as a sharp drop in the price of oil.

“That’s a fickle flow, a risky flow, that might at any moment reverse itself if foreign investors take that capital back home,” she said.

At $2.3-billion, the trade deficit narrowly eclipsed the old mark, set in September of 2010. The gap has grown steadily in each of the last four months. Until the 2008 recession, Canada had generally been running large surpluses. Since then, it has been running more monthly deficits than surpluses.

The largest contributor to the drop in July exports was energy, where exports fell 8.5 per cent, in part due to several refinery shutdowns and other production disruptions. On the import side, crude oil imports were roughly unchanged, but coal and refined products fell sharply.

Nonetheless, economists expect energy and auto exports to fare better in future months, but not likely enough to erase the trade gap. In spite of a 5.3 per cent drop in auto exports from June to July, the industry continues to do relatively well over the longer haul. Auto exports are up more than 21 per cent since July of last year.

Edited September 12, 2012 by MiddleClassCentrist

[PIK]

The MSM view of Muclair's position on Dutch disease is laughable because it was only criticized for coming from a socialist party.

But anyone who has taken economics 101 could have pointed out the idiocy that the Conservative government was spewing to protect their big oil supporters.

After waiting for his comments to subside and drop to the back of our minds as Canada gets a RECORD TRADE DEFICIT to $2.34-billion in July. Now... yes now... apparently the MSM and Conservatives understand that simple fact of "oh yeah, a high dollar does kill exports."

And we all know most of those manufactoring jobs lost are in ONT, can anyone say dalton's green energy plan. And look how the dutch faired out.

[cybercoma]

look how the dutch faired out.

So you recognize Dutch Disease now. Good for you. I'll email you the socialist handbook, so you can be properly orientated into your new position as Commie Pinko.

[Tilter]

Most of the stuff that the NDP says is funny.

[waldo]

And we all know most of those manufactoring jobs lost are in ONT, can anyone say dalton's green energy plan. And look how the dutch faired out.

comrade... good on ya for finally acknowledging the existence/impact of 'Dutch Disease'!

as for your, "can anyone say"? You mean, other than you? Why not step-up and breakout those manufacturing number losses... by manufacturing sector. Make sure to attach them to your described "Dalton's green energy plan", hey? Better yet, why not show a view on recent manufacturing job growth, particularly in relation to a pre-recession benchmark. You could do that, right? And since you've now accepted the impact of Dutch Disease, it would most helpful if you could address your manufacturing numbers in that regard, hey?

[waldo]

Most of the stuff that the NDP says is funny.

most of the stuff that you say, about what the NDP says, is funny - not funny 'ha ha'; rather, yours is funny 'peculiar'.

carry on...

[Moonbox]

The article you posted has NOTHING to do with Dutch Disease. In the link quoted even shows:

The largest contributor to the drop in July exports was energy, where exports fell 8.5 per cent,

and

She pointed out that foreign capital has been flooding into the Canadian dollar in the face of uncertainty in much of the rest of the world.

and then finally

In spite of a 5.3 per cent drop in auto exports from June to July, the industry continues to do relatively well over the longer haul. Auto exports are up more than 21 per cent since July of last year.

So you're stating that an article discussing JULY'S large trade deficit, which was accompanied by a huge drop in oil exports is somehow proof that Mulcair isn't completely clueless about the economy? The part about the currency being affected by the flood of foreign money into Canada for its perceived safehaven status has nothing to do with it? The mention of the auto-industry's 21% increase y.o.y. is also being ignored?

Doesn't the article also explain that a high dollar should be taken advantage of to invest in productive assets (equipment etc)? Isn't Ontario's capital investment tax one of the highest in the world, which discourages these investments? Yep! Isn't the NDP completely against cutting these taxes? Sure is! Didn't Mark Carney, Canada's #1 economist, only just recently COMPLETELY debunk Thomas Mulcair's statements? Absolutely.

It doesn't look like you actually read the article. You just took the article title and maybe the first couple sentences and tried to use it to prove a hack opinion.

Edited September 12, 2012 by Moonbox

[madmax]

And we all know most of those manufactoring jobs lost are in ONT, can anyone say dalton's green energy plan. And look how the dutch faired out.

Don't worry, Mcguinty will be toast.

that however...is

No reason to ignore the recent Conservative Denial of basic trade economics.

[Moonbox]

No reason to ignore the recent Conservative Denial of basic trade economics.

The only thing that Mulcair was right about is that oil exports increase the value of the dollar which erodes the crutch Ontario's manufacturing industry has relied on for decades. I'm not sure who was arguing against that...

[madmax]

Doesn't the article also explain that a high dollar should be taken advantage of to invest in productive assets (equipment etc)?

That is a benefit of a high dollar. You can purchase the equipment with Canadian dollars and ship it to Mexico, China, Or Central America etc. However even if the equipment is solid, more productive and remains in Canada, it productivity has to offset the decline in demand of a good caused by the high the dollar. It makes sense if a company plans long term, however, many companies plan for the short term. Just an observation. There are exceptions.

Isn't Ontario's capital investment tax one of the highest in the world, which discourages these investments? Yep! Isn't the NDP completely against cutting these taxes? Sure is!

Before I comment, exactly what are you talking about? could you clarify.

Didn't Mark Carney, Canada's #1 economist, only just recently COMPLETELY debunk Thomas Mulcair's statements? Absolutely.

He could have..... It doesn't mean he is correct. I don't believe he debunked anything, but if he did, its would go against the governments own reports on the effects of the dollar on manufacturing and the % of effect attributed to the dollars rise and Dutch Disease.

[madmax]

The only thing that Mulcair was right about is that oil exports increase the value of the dollar which erodes the crutch Ontario's manufacturing industry has relied on for decades. I'm not sure who was arguing against that...

crap, I should have seen this post first...

[Moonbox]

That is a benefit of a high dollar. You can purchase the equipment with Canadian dollars and ship it to Mexico, China, Or Central America etc. However even if the equipment is solid, more productive and remains in Canada, it productivity has to offset the decline in demand of a good caused by the high the dollar. It makes sense if a company plans long term, however, many companies plan for the short term. Just an observation. There are exceptions.

You're right, but there's a fairly large productivity gap between Canada and even just the USA, which has only been accelerating. Since the 80's at least, we've used our currency advantage as an artificial crutch, and now that this has disappeared, we need to improve productivity. I can't think of many reasons why the USA has such a large productivity advantage over us, especially considering how tightly integrated our economies are and our vast natural resources.

Before I comment, exactly what are you talking about? could you clarify.

Upon looking it up, I think the information may be dated. It goes back to when Flaherty and McGuinty were bickering about the Ontario economy during the recession. One of Flaherty's criticisms was how high Ontario's taxes were on new business investment. The government phased out the capital tax in 2010 it appears, however, so it doesn't look like I had that quite straight. Regardless, the main point still stands. I'm not sure what part of the NDP's platform, specifically corporate tax increases, would be considered investing in productivity. Equally puzzling is how making EI more available and more generous would help.

He could have..... It doesn't mean he is correct. I don't believe he debunked anything, but if he did, its would go against the governments own reports on the effects of the dollar on manufacturing and the % of effect attributed to the dollars rise and Dutch Disease.

As you know, I'm not arguing that oil money hasn't hurt Ontario manufacturing. I'm arguing that it's not the catastrophe that people like Mulcair are proposing it is. We shouldn't be competing artificially based only on the weakness of the dollar. We should be competing based on productivity and all this money pouring into the economy should allow us to make this transition. The federal and provincial governments need to make sure the extra tax revenue goes towards things that can actually make us more competitive. There also needs to be stronger incentives to keep corporations from hoarding their cash. Pay it back in dividends to people who will use it or invest in the business, particularly on the manufacturing side.

Carney was fairly explicit on the topic of Dutch Disease as well. He may be right, he may be wrong, but I'd be FAR more inclined to side with one of the world's most respected economists than with Thomas Mulcair, whose economic credentials are pretty dubious.

Carney calls oil 'unambiguously good' for Canada

Edited September 13, 2012 by Moonbox

[PIK]

So you recognize Dutch Disease now. Good for you. I'll email you the socialist handbook, so you can be properly orientated into your new position as Commie Pinko.

Like I said this so called dutch disease it did not destroy the dutch, just my elm trees.

[Tilter]

most of the stuff that you say, about what the NDP says, is funny - not funny 'ha ha'; rather, yours is funny 'peculiar'.

carry on...

I would expect that attitude from a dyed in the wool socialist.