One of the reasons I won't be voting for Harper: Economic record

[Smallc]

If it's such a small part of the overall economy, then the recession can't be all because of such a minor part of the economy....

It was a very (as in extremely) mild recession. Government revenues didn't even go down.

Edited September 19, 2015 by Smallc

[cybercoma]

It was a very (as in extremely) mild recession. Government revenues didn't even go down.

Was nothing. By the Conservatives own definition, we're in a recession until two quarters of growth are posted. So we'll find out sometime in February if we're out of a recession.

Hey, it's stupid, but those are Harper's rules. Not mine.

[Smallc]

Was nothing. By the Conservatives own definition, we're in a recession until two quarters of growth are posted. So we'll find out sometime in February if we're out of a recession.

Harper does a lot of stupid things. I'll stick with the definition used by most economists. I haven't heard any of them say that we're still in recession.

[cybercoma]

Harper does a lot of stupid things. I'll stick with the definition used by most economists. I haven't heard any of them say that we're still in recession.

Actually Harper's definition is sound. If we're in a recession and have a quarter of recovery but go back into negative growth the following quarter, it's not accurate to say we're out of a recession.

This whole recession business is nonsense though. The economy should more properly be called stagnate. The negative growth was small and the positive growth has been small too. The economy just isn't moving much at all despite similar economies growing.

[WIP]

WIP, the economics of most things in life are as you say. Whether you are digging for gold, building an apartment building or paying someone to clear snow. It usually gets harder and more expensive as you go farther.

I also think of the old saying: the cure for high oil prices is high oil prices When the price goes up it becomes more profitable to develop other areas and supply increases, and price goes down. Supply and demand actually. And it is not a new phenomenon that some companies will still produce when price is low, there is no need to specify oil industry when discussing that principle. If grain prices are down i am not going to sit on my butt, i will, as you say, do what i do and see how things go.

And what happens when there are no new lands to conquer and new resources to exploit? the point I was trying to make before is that a time comes when nothing's left in the jar! Even before it's all gone, it gets harder and takes longer to get more out, and it doesn't matter whether we're talking about peanut butter or oil or iron or exotic metals like neodymium, the costs of exploitation keep going up as developers have to go after the resources they ignored or avoided when more profitable supplies were available. Tar sands is a good example, because everyone knew it was out there in Alberta even before the oil was discovered! But until the real oil started running out, all they used that tarsands crap for was paving roads. Now they try to turn it into oil products out of sheer desperation!

So, using the oil example again, when the EROEI on oil was 100 to one, it was easy to serve as the lifeblood for an energy-intensive and energy-wasting economy. But, what happens when the EROEI drops to 10 to one, or three to one as some tarsands estimates indicate? Eventually a point is reached when a resource can't even raise the capital to keep digging or pumping it out of the ground! This is why many of the tarsands operations are still producing at a loss. Because if they shutdown, there may be no money coming in to restart these big expensive operations. The supply and demand curve only functions as long as supply is elastic and can be increased to meet a rising demand. If supplies can't be increased....or are increased only at too great a cost for the consumer, then the whole globalized monstrosity we're living through today starts grinding to a halt.

[Argus]

If it's such a small part of the overall economy, then the recession can't be all because of such a minor part of the economy...

Sure it can. That's why it was such a brief, localized and minor bit of a recession, already likely past.

[69cat]

Very valid cyber, i would agree with you. Whether we are in a recession or not is not really the issue if it is that subtle. In my opinion it becomes an issue if it extends a few years because, if i am a business owner, i should have held back a few dollars to help me ride through a "short" recession. The year after year ones is when people are out of work.

[69cat]

Yes WIP, i agree 100% with you. But you have not presented an alternative or explained why, for reasons of known economic principles in play regardless of which government is in power, do you feel Harper has a bad economic record.

Absolutely resources will be used up. You want your shelter, food and some sort of quality of life other than eat, sleep repeat. Its cold here so my shelter requires more than the guy in Cuba.

To get totally away from inflation (things being always harder to develop) is impossible. Even on the farm, there is no way i am going to give away my grain for free and neither would you. So, even if someone invented a way to do away with any form of payment for services rendered i guess i may as well simply only produce for myself. And so everyone on the planet must do the same.

I still fail to see how you have a solution in mind. You have laid out the basics of how anyone gets rewarded for their efforts and imply it is a bad thing. If your issue is simply with oil then fair enough. My opinion is that people are smart and, i for one will put up solar soon. Because oil will keep getting more expensive, this is no secret. And soon fuel cells will be available.

Government can certainly aid in developing new technology and getting businesses off the ground and it has always been that way. But companies are more likely to do it faster and better. Do you think Tesla would exist if only because of government control? And who is most likely to develop the next break through in battery tech, a company specifically in r&d with gov backing or a free market company like Tesla that exists because it can make a profit and be rewarded for its efforts.

The free market will solve a lot of things, the government controlled market has much less interest in doing anything other than existing for the sake of existing.

Edited September 19, 2015 by 69cat

[dre]

It was a very (as in extremely) mild recession. Government revenues didn't even go down.

The problem we have isnt this mild recession, its a much deeper and longer recession thats on its way.

Im not one of those guys that goes on and on blaming Harper or any other politician for poor economic performance or crediting them for good economic performance. The Harper governments economic record is a textbook example from the Keynesian playbook... when a recession hits you ease credit, dump a mountain of new synthetic money into the economy by lowering interest rates, and hope that consumers borrow and spend to keep things afloat or at least lessen the impact.

Thats what Harper did, and thats what ANY prime minister would have done. Its a very conventional approach.

If anything my knock on the current government is not that they presided over this mild recession, its that they tried too hard to prevent one. People are looking at the wrong things... The problem for Canada isnt this mild recession, is that the government and central bank has put us in an extremely precarious position moving forward.

The central bank has fired nearly all its guns, and interest rates have been pegged at historical lows. Heres a graph showing the BOC's overnight rate for the last decade or so...

What this shows is that the central bank has shot its wad... if theres problems in the economy now it has nowhere left to go... no more big moves to make. Interest rates have been too low for too long.

And what happens when interest rates are too low for two long? Two things...

1. People go much deeper into debt...

2. Asset bubbles form in the economy... Canada now had the most overvalued realestate market in the worl.

Now... lets get back to all that household debt because these things are interconnected. A lot of that debt accumulated as a result of Canadians borrowing against the equity in their homes, which of course there was plenty of because we have been in the middle of a massive realestate bubble. Note that in 2007 the American realestate bubble began to deflate.. the US took its medicine. But our bubble just kept on getting bigger because of all that cheap easy credit.

So Canadians have to ask themselves... what is going to happen when the inevitable correction comes? Most of their home equity is going to vanish, leaving them either unwilling, or unable to borrow money to spend on consumption - and this is a huge problem in an economy that is based so heavily on domestic consumption. New housing starts will slow to a crawl which could decimate the construction industry.

People credit the Canadian central bank and government with avoiding most of the great recession but all we did was kick the can down the road a bit. Theres a good chance its still coming. Canada looks a lot like the US did in about 2005 before the crash hit... we have short sighted monetary policy, rates way too low for way too long, and a gigantic realestate bubble.

Edited September 19, 2015 by dre

[dre]

Very valid cyber, i would agree with you. Whether we are in a recession or not is not really the issue if it is that subtle. In my opinion it becomes an issue if it extends a few years because, if i am a business owner, i should have held back a few dollars to help me ride through a "short" recession. The year after year ones is when people are out of work.

Yup, and a much deeper and longer recession is probably a forgone conclusion.

[69cat]

Dre, excellent post. I think there is a world of hurt coming and it is going to get ugly. People can blame our gov for everything but i think there has been some encouragement to save. Though i mention and defend the TFSA everytime i can, it is because i think it is important. This "credit is cheap, spend, spend" is going to hurt a lot of people.

I am pro-Harper and your post is exactly why. Years ago i voted Liberal and i may again someday. But you look at the big picture and you have said what i see. People can attack Harper all they want but i really thinkhe has done the best he can for the country, cut excessive spending, and encouraged people to save.

I am no economist so i dont have all the answers but the government is going to have 8ts hands full pretty soon and i am picking my horse who i think will cause the least damage.

I had a chance to buy more farmland a few years ago but i expect it to be worth 1/3 of what it is now before i retire. Only question is how bad things get, and if Harper is out no one can blame him, but the crap will hit the fan regardless.

[Argus]

So Canadians have to ask themselves... what is going to happen when the inevitable correction comes? Most of their home equity is going to vanish, leaving them either unwilling, or unable to borrow money to spend on consumption - and this is a huge problem in an economy that is based so heavily on domestic consumption. New housing starts will slow to a crawl which could decimate the construction industry.

I think you're being unnecessarily alarmist. The Canadian real estate market IS definitely overblown, but not all of it. Toronto and the lower BC area certainly are, especially the condo markets. But this is being driven as much by overseas (Chinese) money pouring in to buy condos as investments as by Canadians with their cheap credit. Housing prices in other parts of the country aren't nearly as elevated. The US crash, where half the value of houses disappeared, was also driven by local circumstances, including heavy loans to people who should never have gotten them, and the ability of US consumers to 'walk away' from their mortgage and house, something which builds on itself by lowering housing prices still further as more houses come onto the market, prompting otheres to walk away in turn. There is no such ability in Canada. If your million dollar home is now only worth $500k that's tough noogies for you. You still owe the bank a million dollars, and the only way out is bankruptcy.

A bigger danger, I think, is what happens when historically low interest rates start rising. A lot of people who didn't plan properly and took chances aren't going to be able to afford their mortgages. And perhaps worse is that the debt paymments by both the federal and provincial governments are eating up a substantial percentage of their revenues even with low rates. If rates double or triple, which they likely will over the coming several decades, the amount of our debt payments could rise to unsustainable levels. Almost 10% of Ontario's budget goes to debt servicing, for example, with that number being 11% for Canada, and 12% for Quebec. With normalized rates that would quickly rise to 20-25%%. The federal government and the provinces collectively spend over $60 billion every year on debt service costs. That's just the interest, not paying it back.

[69cat]

Argus, my thinking is that the rise in interest rates will cause the devaluation in property, for my farmland reference anyway, so you and dre are both correct.

If i stick to my farmland example, it will take probably 20 years to pay it off at typical profit per acre in my area. Better off putting money elsewhere. But guys have the opinion that "it will always be worth more than i paid" and that seems to drive the housing market thinking too. So people borrow beyond what would be reasonable because of that beleif. Once interest rates rise, cost of borrowed money is more and my farmland is a longer payback. Guys may need to sell to pay for borrowing, land prices drop because more is available and costs more to finance. Those who bought with cash or borrowed less are less troubled but still have less equity to borrow against as needed. So there will be a correction when interest rates rise.

What i dont know is what causes an interest rate rise. But the guy maxed out on credit will be hurting more than the guy with some savings. May not be doomsday material but also the wrong guy at the helm can cost the average joe $1000s of dollars in equity with a few bad policies.

And as dre says, i would fault Harper for not getting interest rates up more but i have no idea what that would entail or what other circumstances may prevent it so best i should say on that is 'i think higher is better'.

Edited September 19, 2015 by 69cat

[WIP]

Yes WIP, i agree 100% with you. But you have not presented an alternative or explained why, for reasons of known economic principles in play regardless of which government is in power, do you feel Harper has a bad economic record.

I can't get all hyped up with campaigning for my favourite party (like some here do) because I see Harper mostly as the worst of a bad lot....not that there's an alternative who will set thing right on environment and all of our other pressing issues. I would even trade our Green Party for the US Green Party run by Jill Stein, which being so far marginalized in an undemocratic duopoly system, does not play any games to win support or boost poll numbers. So, right in the US Green Party platform is a plank supporting "Steady State" or no growth economics, because of the unresolvable conflict of trying to cut carbon production while spurring more economic growth that mostly benefits a small minority of the rich. Even our Elizabeth May will talk about Green Jobs and Green Technologies, but she is not willing to question any of the pillars of capitalism...or at least not yet!

When it comes to the big three on environment policy, we have one party (Conservatives) which is directly at war with the environment...trying to slow down any international carbon targets, and continue tar sands expansion. So, Harper's crew is far worse than his two rivals, but there's not a whole lot to brag about with the NDP or the Liberals today.

Absolutely resources will be used up. You want your shelter, food and some sort of quality of life other than eat, sleep repeat. Its cold here so my shelter requires more than the guy in Cuba.

Okay, and the carbon footprint of northern nations will be a little higher than in the global south, because of the need for heating during the winter; but my main attack is against 1. consumer capitalism - which devotes excessive wastes of resources on frivolous product needs created by sophisticated advertising schemes. some controls on advertising would bring a little sanity to the process. And 2. globalization has greatly expanded transportation links unnecessarily, and the carbon costs of transporting stuff half way around the world gets added to the global commons.

I still fail to see how you have a solution in mind. You have laid out the basics of how anyone gets rewarded for their efforts and imply it is a bad thing. If your issue is simply with oil then fair enough. My opinion is that people are smart and, i for one will put up solar soon. Because oil will keep getting more expensive, this is no secret. And soon fuel cells will be available.

Some of these problems might work themselves out, as big power utilities for example, are going to have a hard time competing when people start providing most of their electricity needs off-grid with solar, geothermal and windpower. But, a lot of solutions are going to depend on people becoming a lot better informed about the problems and deciding how they want to deal with them. So far, it's been a competition between capitalist deadenders in denial, and liberal half-measures that try to make a little money on the side promoting "green solutions." That might be a big part of the reason why so many people aren't taking these issues seriously yet.

[cybercoma]

I think you're being unnecessarily alarmist. The Canadian real estate market IS definitely overblown, but not all of it. Toronto and the lower BC area certainly are, especially the condo markets.

The Toronto and Vancouver census metropolitan areas account for nearly 25% of the country's population. It's going to be a big deal when it happens.

[69cat]

WIP, i understand where you are coming from now. I was still talking about the economics of today and you have been talking about a different ideal completely. Try to take not too much offense to what i write next, but i can only say what i beleive. If i say i hit my hand with a hammer and it hurts, it is just my opinion. I dont have proof, i dont have charts or studies, i simply say consider that it may be a bad idea.

In Saskatchewan what you speak of is the No Damn Progress party. Been there, done that, got the t-shirt. I am sure someone will argue that our parents were idiots and next time around smarter people will be there but, as i have said numerous times, i have more faith in people.

How was this model working in Sask, well it should be all about quality of life for the citizens. I would say look at data of people leaving Sask during that period for your answer. Sure, it could be argued they left because we dont change our clocks, but my opinion is different.

May as well bring back the CWB but this time put ALL grains under its mandate so the entire farm sector can be controlled for the colective good. I got that t-shirt too. That comes back here and there will be a for sale sign and i am off to Thailand, i brother lives there and its nice. Add me to the stat of people who left Sask because i we dont change our clocks.

The theory of government controlling all facets that you suggest i understand. What happens is, in the BIG picture, the gov must control everything, not just some. If only some then some people do well and others suffer. This model requires equal sufferring for all. I mentioned this in a post along time back, it is great if the gov controls everything and you are happy with the decisions and choices made, what if you start to have different opinions or think a different action should be taken? You are screwed.

So yes, i understand what you say, i understand the worthiness, i understand the morality, i understand the utopian idea. But i understand that when things are not moving in the direction of the ideals that drive yourself, then your utopia is your prison.

As i say, dont mean to offend, i am simply saying that when i hit my hand with a hammer there are some consequences to consider. You may try anyway, heck things may even work out ok, but with what you speak of i have seen a glimpse and i see some flaws. Not saying the track we are on wont lead to our doom but as i always keep saying, people are smart and will find a solution, it does not require government to solve everything.

[marcus]

You lefties all read from the same hymn book on this, but even the CBC the other night acknowledged how ridiculous the claim was.

Canada's mining, quarrying, oil and gas industry COMBINED make up just over 8% of our economy.

http://www.investorsfriend.com/canadian-gdp-canadian-imports-and-exports/

The unavoidable conclusion is that much of the country’s economic health is tied to Alberta whose overwhelmingly dominant industry is oil. Oil prices go down, Canada's economy follows.

The reliance on the oil and gas has gone up under Harper. The simple reason is that he's been pushing it more than any other industry with tax incentives.

Why are you trying so hard to deny the facts?

IMF Pegs Canada's Fossil Fuel Subsidies at $34 Billion

In such giveaways we're a world leader, a fact rarely noted when federal budgets are debated.

In comparison to other countries, Canada provides more subsidies to petroleum as a proportion of government revenue than any developed nation on Earth besides the United States and Luxembourg.

You want more facts that you're going to deny?

Okay. How about a chart showing the trade balance between oil/gas vs everything else?

StatsCan’s latest numbers on Canada’s trade balance, released Thursday, look positive on the face of it: Exports and imports both grew, and Canada’s trade deficit with the world shrank by more than half, to $435 million.

But dig a little deeper into the data, and what you see is a story of two different export sectors. As BMO chief economist Doug Porter put it in a client note Friday morning, “there is energy (doing just fine) and there is everything else (doing anything but fine).”

While energy exports have seen a $63.6-billion surplus for the past 12 months, everything else has seen a $72.9-billion deficit.

Check out this chart of Canada's trade balance for energy (blue) and everything else (red).

[WIP]

WIP, i understand where you are coming from now. I was still talking about the economics of today and you have been talking about a different ideal completely. Try to take not too much offense to what i write next, but i can only say what i beleive. If i say i hit my hand with a hammer and it hurts, it is just my opinion. I dont have proof, i dont have charts or studies, i simply say consider that it may be a bad idea.

My core principle is that reality may not be convenient, but it still has to be dealt with. When reality is ignored, problems like those associated with environment and resource depletion don't go away....they actually tend to get worse than if they were dealt with early on in a concerted effort. In the long term we could end up with a future looking like the past....the era before modern civilization, when everything was made by hand out of renewable resources.

Reminds me of a series of "World Made By Hand" dystopian novels written by a pessimistic investment analyst - James Howard Kuntsler over the past 15 years. His best case scenario for the future is everything grinding down in a chaotic unorganized mess, and the survivors rebuilding/but forgetting the world that once was,and baffled by the decaying artifacts of modern civilization.....it's as good a projection of a likely deep future as any!

The theory of government controlling all facets that you suggest i understand. What happens is, in the BIG picture, the gov must control everything, not just some. If only some then some people do well and others suffer. This model requires equal sufferring for all. I mentioned this in a post along time back, it is great if the gov controls everything and you are happy with the decisions and choices made, what if you start to have different opinions or think a different action should be taken? You are screwed.

I didn't say everything has to be centrally planned and organized to ensure fairness and equal distribution of resources. That wasn't even part of Karl Marx's plans when he wrote the Communist Manifesto. He foresaw the workers in a business or industry taking ownership and deciding collectively on future plans. What and how much was produced would have to be assessed according to need, but the actual operation of the business would look more like the cooperative corporate models of the Mondragon Corporation in Spain, than they would the Soviet industries run by hiearchies of communist party officials.

A no-growth or steady state economy doesn't have to be socialistic....though it's still a fierce debate whether any market economies can function well without steady increases in production. The concept of some Rothbard followers of "Full Reserve" banking would remove the main cause of growth for the sake of growth in modern capitalist economiies. Rothbard opposed "Fractional Reserve" banking which causes a steady and constant increase in both debt levels and money supplies as the years progress. This system we have can only function as long as the new money and increased debt can be absorbed by growing economies. If they cannot, the system will crash or fall apart as investors start questioning whether they will get the returns on investment they are expecting.....sort of like we had a preview of in 08. But, can full reserve actually function without cheating by bankers (that's a primary reason why fractional reserve was adopted to begin with) or will there be any capacity to fund major capital investments in such an economy?

I don't know, but the kind of economies we have today did not always exist. Prior to about 200 years ago, there wasn't much economic growth of any kind. Now, it's something that's expected by the vast majority of liberals through conservatives, and there will be a gradual slowdown or there will be a real crash, and a lot of people aren't going to get what they want or what they expected!

[Argus]

The unavoidable conclusion is that much of the country’s economic health is tied to Alberta whose overwhelmingly dominant industry is oil. Oil prices go down, Canada's economy follows.

Do you speak English much? 8%. EIGHT PER CENT!

The reliance on the oil and gas has gone up under Harper.

Cite? Evidence? What percentage of our economy was it in 2006 and what is it now? I bet you haven't a clue.

[in comparison to other countries, Canada provides more subsidies to petroleum as a proportion of government revenue than any developed nation on Earth besides the United States and Luxembourg.

Almost all of that money, according to this clearly very, very Left wing study, comes in the form of "Uncollected taxes on externalized costs". What the hell is that? Well, apparently they feel the oil and gas industry should be taxed for " traffic accidents, carbon emissions, pollution and road congestion" ! :lol:

But dig a little deeper into the data, and what you see is a story of two different export sectors.

Exports != the economy or GDP. And we can only export what people are willing to pay for.

Edited September 20, 2015 by Argus

[ToadBrother]

\

Almost all of that money, according to this clearly very, very Left wing study, comes in the form of "Uncollected taxes on externalized costs". What the hell is that? Well, apparently they feel the oil and gas industry should be taxed for " traffic accidents, carbon emissions, pollution and road congestion" ! :lol:

What's the problem with taxing fossil fuels for carbon emissions?

[Argus]

What's the problem with taxing fossil fuels for carbon emissions?

And traffic accidents and congestion and pollution?

If you want to tax power, which is what a carbon tax is, fine. Ontarions already have some experience with what happens when you increase power costs. But I have a feeling almost no Canadians have any clue what cap and trade or 'carbon taxes' are going to cost them, mostly because the proponents have refused to put any kind of figure on their proposals. Most people seem to feel it will be a minor tax on business, and thus not their problem at all. They get to feel good and noble but at no cost! Puuurfect!

Tell them how much it's going to add to the price of gasoline, natural gas and home heating oil, how much their power costs will rise, and how much businesses are going to increase their fees to pay for this new tax and they'll probably have a lot more doubts.

Edited September 20, 2015 by Argus

[ToadBrother]

And traffic accidents and congestion and pollution?

If you want to tax power, which is what a carbon tax is, fine. Ontarions already have some experience with what happens when you increase power costs. But I have a feeling almost no Canadians have any clue what cap and trade or 'carbon taxes' are going to cost them, mostly because the proponents have refused to put any kind of figure on their proposals. Most people seem to feel it will be a minor tax on business, and thus not their problem at all.

I think fossil fuels should be taxed to reflect the negative effects of using them as power. So yes, power should be taxed.

[Argus]

I think fossil fuels should be taxed to reflect the negative effects of using them as power. So yes, power should be taxed.

You're entitled to your opinions, which are likely in line with your circumstances.

People who have to drive a long distance, who live in rural or semi rural areas, people struggling to pay their already doubled electricity costs in Ontario, might feel quite different. Auto manufacturers have already told Ontario's Liberal government that power costs are already rising so high they won't be expanding any more in this province. Ontario's response was to increase power costs further by slapping on its own carbon trading scheme and then slapping on a new pension scheme. Who cares what manufacturers say, right? I mean, it's not like they can leave...

Edited September 20, 2015 by Argus

[ToadBrother]

You're entitled to your opinions, which are likely in line with your circumstances.

People who have to drive a long distance, who live in rural or semi rural areas, people struggling to pay their already doubled electricity costs in Ontario, might feel quite different. Auto manufacturers have already told Ontario's Liberal government that power costs are already rising so high they won't be expanding any more in this province. Ontario's response was to increase power costs further by slapping on its own carbon trading scheme and then slapping on a new pension scheme. Who cares what manufacturers say, right? I mean, it's not like they can leave...

In the end not shifting away from fossil fuels is going to make whatever cost manufacturers and rural residents pay now seem like peanuts. If you had a multi-jurisdictional carbon tax or some pricing scheme, that would solve some of the "unfairness" problem.

Carbon pricing is coming, hopefully sooner, but certainly eventually. Everyone but the Heatland shills know it, and I suspect even the Heartland shills know it, though their job is to put it off as long as possible.

We can either pay for it now while, in general, economic conditions are favorable enough to absorb the cost, or wait until we hit the proverbial wall when the costs will be many times greater.

[Argus]

In the end not shifting away from fossil fuels is going to make whatever cost manufacturers and rural residents pay now seem like peanuts.

I've been hearing that for some years now. I'm sure it's a lot of consolation to those whose jobs drift south to where energy prices are half what they are here, there's no carbon tax, and no special pension tax. I'm sure it will be even more consolation to those shivering in the dark unable to pay for heat.

The world will go with whatever is cheapest, because those nations which have the cheapest power will have an economic advantage over competitors. Solar power will never provide us with the kind of cheap energy places closer to the equator get, and those most adamant about the need to get rid of fossil fuels tend to also the most adamantly opposed to nuclear power.