Gov't Stimulus Package - correct thing to do?

[dutchca]

I don't agree with the government spending billions on a "Stimulus
package" and running a deficit. If I had financial problems the last
think I would want to do is go further into debt. I think the
government should be cutting spending and taxes, not running up the
deficit.

But, I agree that a deficit may be required, but I think it should be a result of cutting taxes, not increased infrastructure spending and other "stimulus" spending.

Why does government think they can "fix" the economy? The only people that are going to fix this are the tax payers themselves, by going and spending more. Pay increases are very low, the only way for people to be able to spend more is through lower taxes.

Another point - infrastructure and other stimulus spending creates inflation IMO. There are only so many contractors and firms out there to do this type of work. In order to get the work done over another project is to pay a premium to the place providing the service.

What are your thoughts?

[brunes]

I don't agree with the government spending billions on a "Stimulus
package" and running a deficit. If I had financial problems the last
think I would want to do is go further into debt. I think the
government should be cutting spending and taxes, not running up the
deficit.

But, I agree that a deficit may be required, but I think it should be a result of cutting taxes, not increased infrastructure spending and other "stimulus" spending.

Why does government think they can "fix" the economy? The only people that are going to fix this are the tax payers themselves, by going and spending more. Pay increases are very low, the only way for people to be able to spend more is through lower taxes.

Another point - infrastructure and other stimulus spending creates inflation IMO. There are only so many contractors and firms out there to do this type of work. In order to get the work done over another project is to pay a premium to the place providing the service.

What are your thoughts?

The government should expand spending and potentially run deficits during time of economic hardship (ie, NOW)

The government should contract spending and pay down the debit during times of economic prosperity.

It's Keynesian economics 101, and has been proven to work. People who argue against a deficit right now really have no idea what they are talking about WRT macroeconomics.

http://en.wikipedia.org/wiki/Keynesian

[NUTS]

I don't agree with the government spending billions on a "Stimulus package" and running a deficit.

What are your thoughts?

Radical rant:

Spend spend & keep on spending - all of the taxpyers money

Take every government reserve pi$$ pot and spend it

Make Canadian's take all of the money out tax free from their hoaded away bank accounts, RRSP's & coffers and spend it

Reduce interest rates to zero

Increase taxes by 10% minimum

Do away with EI, OAS, GIS, Welfare payments & free health care for those whose gross income is above $20k/year

- or simply -

Sit tight - follow the leaders in the USA, Europe & Asia doing zip till 2010, it will all flush out in the end

[oIIIIIo]

Smart and carefully targetted stimulous can work, but arbitrary plans that are pulled out of thin air to bailout inefficiently run companies that are bleeding billions of $ while at the same time paying out millions in bonuses are a huge waste of tax $. :mad:

With a combination of Dion, Layton & Duceppe running the show, prepare for a huge deficit, a low dollar, increasing inflation and a tanking stock market. :mad:

[asdfvcx]

But, I agree that a deficit may be required, but I think it should be a result of cutting taxes, not increased infrastructure spending and other "stimulus" spending.

Why does government think they can "fix" the economy? The only people that are going to fix this are the tax payers themselves, by going and spending more. Pay increases are very low, the only way for people to be able to spend more is through lower taxes.
Tax cuts are too slow. It takes a while for the new money to filter it's way through the economy and create new jobs. While the new money is working through the economy, unemployment remains high and those with jobs tend to reduce their spending and hoard money.

Money spent on projects such as infrastructure tends to have a quicker impact. It reduces unemployment which makes it more likely for consumers and businesses to spend.

At least this is the theory. It's not perfect and it's difficult to show exact evidence that it works, but it's widely believed by most economists.


Another point - infrastructure and other stimulus spending creates inflation IMO. There are only so many contractors and firms out there to do this type of work. In order to get the work done over another project is to pay a premium to the place providing the service.
While it's possible (see the 1970's and stagflation), if the economy is not operating at full steam inflation is much less likely to be a problem. In theory there should be plenty of potential employees and plenty of competition from businesses who aren't operating at full capacity, lowering the chance of inflation.

[asmielia]

Sit tight - follow the leaders in the USA, Europe & Asia doing zip till 2010, it will all flush out in the end

I guess you haven't been reading the news much have you. Everyone is injecting countless billions into their respective economies. The US combined bailout money is in the trillions, ie more than the total economic output of Canada over several years.

Tax cuts won't work in times of economic hardship. All they'll do is make people save more cause there's no confidence in the market.

Government spending on public projects like infrastructure is the main thing they can do to get economic activity moving again.

[oIIIIIo]

Government spending on public projects like infrastructure is the main thing they can do to get economic activity moving again.

That's conventional wisdom that gets repeated over and over without much thought, but the problem is that the unemployment rate in construction industries is not particularly high - so who will benefit from increased infrastructure spending? Certainly not the thousands of laid off auto workers.

[CCCC3333]

I have a weird feeling that most or perhaps even all of the 30 billion dollars will be used to fund projects in Quebec.

[AllWheelDrift]

I agree stimulus is a good thing, but throwing billions into companies that have fundamental problems due to liabilities that will remain until they collapse is just delaying the inevitable.

I've seen a lot of arguments that spending on infrastructure takes too long to work itself through the system as well. Unless the project is already approved there's permits, enviromental studies, etc... Those things can take years and by the time the project starts we may already be out of a recession.

Similarly, the one time stimulus package to US tax payers ended up being barely a blip in the grand scheme of things. Most people saved it or used it to pay down debt. Even if they spent it, it's a one time thing that only helped the numbers for that quarter.

To me, lower taxes makes the most sense, and our taxes already are somewhat lower. Throwing money from helicopters and trying to prop up lost causes will only lead to higher taxes and the whole mad rush claiming these things need to be done ASAP is nothing more than a political game.

[dealguy2]

Taking money from the productive to give it to failed companies is wrong headed and will help nothing.

[asdfvcx]

I have a weird feeling that most or perhaps even all of the 30 billion dollars will be used to fund projects in Quebec.
Yeah sure, every single cent may be spent in Quebec.

Do you have to practice to allow your mind to reach this level of paranoia?

[dark169]

the government should buy 15000 of each car model made in Canada, crush those cars and sell the scape steal to China, its good for the auto industry and good for the environment becuase we're recycling the steal :lol:

Building roads in areas where people don't have jobs is building roads exactly where they are not needed.

Perhaps we need a federal national wide project like doubling the capacity of the trans-canada highway, all able bodied men on EI are put to work on work camps, theres a scary idea.

The fast solution out of any problem is typically the worst of the long term.

Want to know what not to do? Undo the corporate tax cuts and give that money to select NDP friendly industries. When times are good or bad you need to create a healthy business environment, its businesses that create jobs. Saving jobs that are on the move out of the country just makes it more expensive and painful for all over a longer time.

[asmielia]

I think there are several points of contention being thrown around in this thread. The OP was referring to a stimulus plan similar to the one being devised in the US to rebuild infrastructure, and has nothing to do with the auto industry bailout.

My view is that cutting taxes at a time like this is a bad idea. All this will do is exacerbate the effect of falling government tax revenues due to reduced economic activity. If people start thinking that they can just wait longer and prices will keep dropping, they won't spend any money they save with a tax cut. This might lead to a dangerous debt-deflation problem that we saw in the 1930s.

Increased spending on infrastructure will also compound the falling revenue issue, but the effect of increased economic activity will be seen almost immediately. And although the construction industry doesn't seem to be doing too badly, that data is already out of date. With the housing bubble popping in Canada, construction is most likely in free fall right now, just like what's happened in the US.

Spending money on projects (like roads, public transit, power plants) that have been long delayed and will aid in future economic recovery is a great idea IMO.

[brunes]

That's conventional wisdom that gets repeated over and over without much thought, but the problem is that the unemployment rate in construction industries is not particularly high - so who will benefit from increased infrastructure spending? Certainly not the thousands of laid off auto workers.

It all funnels. You pay for infrastructure, the construction company pays construction workers, they have more disposable income and buy more stuff at retail, retailers have more money so they don't have to lay off so many workers, more workers have money for their families, etc.

[oIIIIIo]

It all funnels. You pay for infrastructure, the construction company pays construction workers, they have more disposable income and buy more stuff at retail, retailers have more money so they don't have to lay off so many workers, more workers have money for their families, etc.

The theory makes sense in times of prolonged & widespread economic downturn with high overall unemployment, but I'm not yet convinced that this economic problem is widespread. Sure, our investments are all sucking right now, but the big doom and gloom seems to be focused on specific industries and geographical areas. Judging by how bloody crowded the shopping malls are, it doesn't seem like there is a big shortage of consumers out there.

[dash riprock]

I think there are several points of contention being thrown around in this thread. The OP was referring to a stimulus plan similar to the one being devised in the US to rebuild infrastructure, and has nothing to do with the auto industry bailout.

My view is that cutting taxes at a time like this is a bad idea. All this will do is exacerbate the effect of falling government tax revenues due to reduced economic activity. If people start thinking that they can just wait longer and prices will keep dropping, they won't spend any money they save with a tax cut. This might lead to a dangerous debt-deflation problem that we saw in the 1930s.

Increased spending on infrastructure will also compound the falling revenue issue, but the effect of increased economic activity will be seen almost immediately. And although the construction industry doesn't seem to be doing too badly, that data is already out of date. With the housing bubble popping in Canada, construction is most likely in free fall right now, just like what's happened in the US.

Spending money on projects (like roads, public transit, power plants) that have been long delayed and will aid in future economic recovery is a great idea IMO.


I agree that now is a great time to spend on infrastructure, materials and labour are less expensive than they were a year ago. Problem I have is that it takes a long time for a new public infrastructure program to start. Think of the RFP's, consultations with different levels of Gov't and interest groups etc. If the projects are not on the books today, you won't see construction anytime soon.

Our history of having politicians spend money to get the economy moving usually ends up with the money being spent for partisan projects. Previous infrastructure programs have seen money go to community centres, bocce ball courts, fountains etc. The coalition has 1 1/2 years to spend 30 billion dollars and buy your vote. I doubt they will replace sewers, as they are a poor photo op, and there is no plaque in the lobby with a politicians name on it. Get ready for huge waste, and more dysfunction in Ottawa.

[asmielia]

[/COLOR]
I agree that now is a great time to spend on infrastructure, materials and labour are less expensive than they were a year ago. Problem I have is that it takes a long time for a new public infrastructure program to start. Think of the RFP's, consultations with different levels of Gov't and interest groups etc. If the projects are not on the books today, you won't see construction anytime soon.

Our history of having politicians spend money to get the economy moving usually ends up with the money being spent for partisan projects. Previous infrastructure programs have seen money go to community centres, bocce ball courts, fountains etc. The coalition has 1 1/2 years to spend 30 billion dollars and buy your vote. I doubt they will replace sewers, as they are a poor photo op, and there is no plaque in the lobby with a politicians name on it. Get ready for huge waste, and more dysfunction in Ottawa.

My arguments are aimed more at the US than Canada. Canada will go into a recession simply because the US and the rest of the world is. People are still shopping because there hasn't been any real job loss here yet so the doom and gloom is mostly limited to what people see in the news. The biggest problems Canada has are an overvalued housing market and the slow decline of western manufacturing.

The US has real and severe economic problems, so I think there's an immediate need there for a stimulus plan which is what Obama is promising.

Regarding your point, I think the solution is to fix Ottawa, and not to just say the hell with any government action since the dollars will be wasted anyway. Easier said than done I'm sure.

[dash riprock]

[.

Regarding your point, I think the solution is to fix Ottawa, and not to just say the hell with any government action since the dollars will be wasted anyway. Easier said than done I'm sure.[/QUOTE]

To clarify, I am not saying to hell with any action, I am just tired of politicians(all parties) spending tax dollars with such cynical purposes in mind. The prime goal of all parties(except the bloc who are at least open about their raison d'etre) is to get elected, the long term well being of Canadians always seem to be secondary. I don't have the solution, but I think that party politics is a large part of the problem.

[Punisher77]

To clarify, I am not saying to hell with any action, I am just tired of politicians(all parties) spending tax dollars with such cynical purposes in mind. The prime goal of all parties(except the bloc who are at least open about their raison d'etre) is to get elected, the long term well being of Canadians always seem to be secondary. I don't have the solution, but I think that party politics is a large part of the problem.

This is exactly why I find the idea of a coalition government so interesting. It's been established over the past few years that minority governments don't work and that Canadians won't accept the rule of a single party.

[dash riprock]

This is exactly why I find the idea of a coalition government so interesting. It's been established over the past few years that minority governments don't work and that Canadians won't accept the rule of a single party.

At a conference and Preston Manning is set to speak, wonder what he'll be talking about

[Newbieinvestor]

Yeah sure, every single cent may be spent in Quebec.

Do you have to practice to allow your mind to reach this level of paranoia?
Sometimes being a realist is tough.

I had people like you flaming me earlier when I wrote about the coming US crash:lol:

Quebec won't get ALL the money. It will only get about 60%. Ontario will get lots of corporate welfare, because the Libs need to show Ontario that they will feed the province in order to prevent Conservative strength based on the general dislike of the pathetic Dullton Mcquinty.

[blahing]

Increasing spending on infrastructure provides jobs and the stimulus package does a similar thing, it increases spending in the economy. The Vancouver city hall was actually a public works project which was built partly because people needed jobs. Sometimes the only way to stimulate the economy is increased government spending. Even if it means deficits. The last great depression where no country could could escape from was ended because of WWII. There was almost an instant change in the economy because of government spending to manufacture equipment and vehicles for the war. But the reason why world war brought countries out of depression was that no country was willing to drastically increase spending. The economic theories at that time were totally new and the governments did not want to become even in worse economic states.
It will be interesting to see what Obama does in the next few years. He wants to get rid of the NAFTA agreement. It might actually benefit Canada, I wonder if Canada would agree.

[gman]

If the government spend $1, hopefully, it generate $5 or more in economy when that $1 changes hands. For that $5, hopefully, there is $1 tax coming back to the government.

[gman]

It will be interesting to see what Obama does in the next few years. He wants to get rid of the NAFTA agreement. It might actually benefit Canada, I wonder if Canada would agree.

Certain sectors agree and certain sectors will not. Domestic economy will agree. Exporters will not.

[Newbieinvestor]

If the government spend $1, hopefully, it generate $5 or more in economy when that $1 changes hands. For that $5, hopefully, there is $1 tax coming back to the government.
If only that were true.

In reality, dollars get directed to ineffecient industries, with high paid / high perk bureaucrats doing the directing, keeping incompetent industry and government managers from being axed, and the national debt goes up.

It would have been wise to see what Obama does, and then coordinate with the new US administration.

Did you see the 'fire' and 'lust' in the eyes of Jack and Dion yesterday? This has nothing to do with economics.:twisted:

[Thalo]

The government should expand spending and potentially run deficits during time of economic hardship (ie, NOW)

The government should contract spending and pay down the debit during times of economic prosperity.

It's Keynesian economics 101, and has been proven to work. People who argue against a deficit right now really have no idea what they are talking about WRT macroeconomics.

http://en.wikipedia.org/wiki/Keynesian


Problem is that they usually screw it up by doing tax cutting during times of prosperity, spend huge amounts on infrastructure (which is at its most expensive at that time) and only pay off small amounts of debt. No government in Canada, at least in recent memory, practices Keynesian fiscal policy. Look at what King Ralph did when Alberta's prosperity was near its peak: he mailed out $400 cheques to every man woman and child.

In regard to Canada's current situation, we are not at the point of needing a stimulus package, yet. Better to tighten the belt now in preparation for having to run deficits in 2009-2010. The proposition of a stimulus package by the "Coalition of Losers" (henceforth CoL in all of my posts) is a knee-jerk reaction that they try to justify through fear-mongering.

[Thalo]

If only that were true.

In reality, dollars get directed to ineffecient industries, with high paid / high perk bureaucrats doing the directing, keeping incompetent industry and government managers from being axed, and the national debt goes up.

It would have been wise to see what Obama does, and then coordinate with the new US administration.

Did you see the 'fire' and 'lust' in the eyes of Jack and Dion yesterday? This has nothing to do with economics.:twisted:

That's the problem. Every economics text book will tell you that government expenditures do more for aggregate demand than reduced taxes, as the tax savings aren't 100% spent on consumption or investment and some of it might leave the country for imports. However, government expenditures are usually not spent in the right places and in the most efficient way. I agree with what someone else said about building an actual TransCanada highway or spending it some other way for infrastructure, but the money probably won't all go toward the blue collar economy, a good portion of it will stay in Ottawa, in bureaucrat's pockets.

[CeoOfKFC]

Regarding the US:
Bail outs are a disaster. The govt should 1) cut capital gains tax rate to 7.5% 2) Lower top corporate tax rate from 35% to 15% 3) eliminate draconian "mark to market" accounting rules on investment assets held 4) pass balanced budget EVERY year and 5) allow free market to operate as normal, i.e. allow those that failed (business or individual) to FAIL - NO BAILOUTS. A year or so of tough times is better than decades of tough times, which is what the govt intervention will cause.

Peter Schiff predicted this economic collapse (well mainly the US) for 2 years now. Everyone laughed at him but he proved them all wrong. Those idiots probably lost more then most people.

You can't print trillions of money and increase inflation when your already trillions of dollars in debt. The value of the US dollar will eventually go to the sh1tter and then consumer goods will increase in price (milk etc) causing a decline in purchasing power.

The video is below.

http://www.youtube.com/watch?v=2I0QN-FYkpw

Well he actually predicted stocks crashing 6 years ago

http://www.youtube.com/watch?v=B0XJu9l3Mfk&feature=related

He also forecasts that there is more pain ahead:

http://www.youtube.com/watch?v=jmFvnAqweyI&feature=related

[M-e-X-x]

But, I agree that a deficit may be required, but I think it should be a result of cutting taxes, not increased infrastructure spending and other "stimulus" spending.

wasn't that how germany got of their hole after the first world war and depression? spending tons on infrastructure... the autobahn?

also, cutting taxes may not work... at least we know sales tax cutting only "helped" so much

[Newbieinvestor]

One near certainty is that if Dion becomes PM and oil doesn't jump up, the Canadian West will feel the consequences of a huge power shift towards Quebec and Toronto.

[M-e-X-x]

Look at what King Ralph did when Alberta's prosperity was near its peak: he mailed out $400 cheques to every man woman and child.

and cutting spending to hospitals, schools, etc. during times of hardship...

i remember my jr. high and high school days, under 2 conservative regimes... 1 phrase to sum it up... work-to-rule

but unfortunately, most albertans don't remember those tough times, just their $400 cheques...

[Caillo]

Yeah sure, every single cent may be spent in Quebec.

Do you have to practice to allow your mind to reach this level of paranoia?

I will 100% guarantee you that a disperportionate amount of that money WILL] go to Quebec. You would have to know very little about politics to think otherwise.

Facts: The new PM will be from Quebec and Ducepe didn't accept to be part of the coalition for nothing.

[Newbieinvestor]

I will 100% guarantee you that a disperportionate amount of that money WILL] go to Quebec. You would have to know very little about politics to think otherwise.

Facts: The new PM will be from Quebec and Ducepe didn't accept to be part of the coalition for nothing.
100% correct.

Jacques Perrizeau will be writing in the Montreal Journal about why he supports the "colition" and why it's "good for Quebec."

I think Dion is on the verge of destroying the Liberal Party due to his lust for power.

[i6s1]

There should be no stimulus package, just expanded spending on infrastructure. Deficit spending is ok. They might as well spend the money when labour gets cheaper.

[Thalo]

100% correct.

Jacques Perrizeau will be writing in the Montreal Journal about why he supports the "colition" and why it's "good for Quebec."

I think Dion is on the verge of destroying the Liberal Party due to his lust for power.

Agreed. Who in their right mind could ever vote for them again after they have aligned themselves with a party that Dion himself (when he was of saner mind) said has policies that will destroy the economy and the decrepit separatists?

Seriously, the best strategy for the Liberals at this point would be to keep up the rhetoric until Monday, then have a bunch of MPs abstain from the vote, leave the government as it is, elect Ignatieff their leader next year, then roll to solid Liberal majority in the next election. I'm pretty much a die-hard conservative and will vote for them no matter what and keep donating money to them (as I just did today), but I fear the day the Liberals elect an actual good leader, like Ignatieff, and obliterate the Conservatives at the polls. Him leading the country, with a majority or minority, I would tolerate. A Liberal-NDP minority coalition, propped up by the Bloc is unfathonable.

[Sepiraph]

The government should expand spending and potentially run deficits during time of economic hardship (ie, NOW)

The government should contract spending and pay down the debit during times of economic prosperity.

It's Keynesian economics 101, and has been proven to work. People who argue against a deficit right now really have no idea what they are talking about WRT macroeconomics.

http://en.wikipedia.org/wiki/Keynesian

Generally, you are right BUT it depends on HOW you plan to spend that money. Exercising prudence is advised.

[pitz]

There should be no stimulus package, just expanded spending on infrastructure. Deficit spending is ok. They might as well spend the money when labour gets cheaper.

+1

I say, let's build state-of-the-art infrastructure in Canada. Provide every house in urban Canada with 100mbit/sec or 1Gbit internet connections. Rebuild all the transit systems. Expand the TTC out to Mississauga and deeper into Scarborough and up to the airport. Do the same in Vancouver (train to North Vancouver, and all the way east to Chilliwack), Calgary (cover a major portion of the city), and Montreal.

The only 'stimulus' package I'd like to see, directly, is to increase payments to families that have kids and only one income. If mothers (or fathers) could stay at home and raise their kids, there would be less deflationary pressure in the labour market (reduced supply of labour = higher wages). Rising salaries for the smaller labour pool would help pull us out of deflation. And ostensibly, kids that are raised at home have better societal outcomes. Two-income households, IMHO, are social disasters, and have led to much of the current societal downturn and disintegration in standards of acceptable behaviour that we've witnessed.

[hagbard]

I don't agree with the government spending billions on a "Stimulus
package" and running a deficit. If I had financial problems the last
think I would want to do is go further into debt. I think the
government should be cutting spending and taxes, not running up the
deficit.

But, I agree that a deficit may be required, but I think it should be a result of cutting taxes, not increased infrastructure spending and other "stimulus" spending.

Why does government think they can "fix" the economy? The only people that are going to fix this are the tax payers themselves, by going and spending more. Pay increases are very low, the only way for people to be able to spend more is through lower taxes.

Another point - infrastructure and other stimulus spending creates inflation IMO. There are only so many contractors and firms out there to do this type of work. In order to get the work done over another project is to pay a premium to the place providing the service.

What are your thoughts?

They should be good Keynesians and run the economy into the dirt so the state falls and we have Libertopia!

Now, if they don't want a Soviet style collapse, they need to stop feeding the poison that got us into this mess. They need to drastically cut spending, control inflation (best way to do this is a gold standard), let businesses and individuals go bankrupt. And Canadians need to spend less and save more. The above changes should encourage that. The gov't (regardless of what gov't we get) won't do that, so we can look forward to an economic collapse. It was Keynesianism that keep us in the Great Depression for over ten years.

Taking money from the productive to give it to failed companies is wrong headed and will help nothing.

Once again (pretty rare actually), I agree with Dealguy.

Worth reading about the Broken Window Fallacy:

http://en.wikipedia.org/wiki/Parable_of_the_broken_window

**

[oIIIIIo]

Worth reading about the Broken Window Fallacy:

http://en.wikipedia.org/wiki/Parable_of_the_broken_window

**

Very interesting read.

[brunes]

Worth reading about the Broken Window Fallacy:

http://en.wikipedia.org/wiki/Parable_of_the_broken_window

**

The argument however falls apart when talking about a federal government, because the money they are spending on "the broken window" is not "money they could spend on something else" in the first place - they are spending taxpayer money, and giving it to taxpayers. It is just forced capital distribution to jump-start the economy, because if all are left to their own devices in a recession they tend toj just hoard, which does no one any good in the long run. That is why Keynesian theory works, it circumvents the natural hoarding.

[hagbard]

Hording is also known as "saving". Savings, unless stuffed into a mattress, goes into savings institutions were its loaned out to build businesses and industries (in an efficient manner, unlike money distributed by gov't). Keynesianism is full of fallacies.

The money could remain in our pockets rather then being taken, and usually wasted, in the hands of the state bureaucracies. It doesn't have to vanish as taxes. It can go for buying those things we need and want, as determined by us as individuals, or placed into savings which are then used to provide necessary liquidity to industry. Keynesianism, like Marxism, died long ago but the politicians like to dig up his bones whenever they totally mess up the economy in a vain effort to "fix" it. It won't work, but will backfire.

[at1212b]

It all funnels. You pay for infrastructure, the construction company pays construction workers, they have more disposable income and buy more stuff at retail, retailers have more money so they don't have to lay off so many workers, more workers have money for their families, etc.

So who are these 'people' that are supposed to get the jobs?

Unionized employees? Perhaps in addition, also throw in the classic government spending recipe too... some nepotism, cryonism and overpaid contracts.

Or the workers that do have construction/trade jobs available, but now, they can get that higher paying job building that bridge to nowhere, so their spending on necessity items do not increase as much (if they know contracts are short-term, it is unlikely that noticeable spending on more 'luxury' goods will increase) vs if it were more (not all!) directed to a group such as laid off factory workers to get these jobs.

Government spending does work but its not a simple textbook definition that should be followed for every scenario. I mean how do we know infrastructure is the best way to go? If so, what spending and where will have the less wasted short-term effect?

How long should this spending 'spree' last given the uncertain economic outlook? IMO, as a country that largely relies on exports, there is only so much government spending can do. If it is a bridge to recovery, that is fine, but if the fundaments are hollowed out, its just going to cause more pain later on.

[dealzuser]

So who are these 'people' that are supposed to get the jobs?

Unionized employees? Perhaps in addition, also throw in the classic government spending recipe too... some nepotism, cryonism and overpaid contracts.

Or the workers that do have construction/trade jobs available, but now, they can get that higher paying job building that bridge to nowhere, so their spending on necessity items do not increase as much (if they know contracts are short-term, it is unlikely that noticeable spending on more 'luxury' goods will increase) vs if it were more (not all!) directed to a group such as laid off factory workers to get these jobs.

Government spending does work but its not a simple textbook definition that should be followed for every scenario. I mean how do we know infrastructure is the best way to go? If so, what spending and where will have the less wasted short-term effect?

How long should this spending 'spree' last given the uncertain economic outlook? IMO, as a country that largely relies on exports, there is only so much government spending can do. If it is a bridge to recovery, that is fine, but if the fundaments are hollowed out, its just going to cause more pain later on.


I do agree with infrastructure spending. Especially in major city centers, roads and highways need expansion badly. The GTA transportation infrastructure is atrocious. The public transportation needs major work. This is INVESTMENT. Sadly, I don't trust our Toronto city government to implement these plans. These socialists will simply line the pockets of unionized workers and not have open and fair bidding practices.

Let's be frank here. The coalition government's only reason for uniting is to fights against the cut to party subsidy. They should drop the pretense that it's for the people or anything else. There is no reason for major spending announcement as the Canadian economy, while slowing, is not as dire as the rest of the G-8. Especially our banks are not in failing positions as they are in US or UK.

Let's also drop the argument that they have more votes than the Conservatives. The Canadian people did not vote for the Liberal+NDP+BLOC. They voted for Liberal OR NDP OR Bloc.

[at1212b]

I do agree with infrastructure spending. Especially in major city centers, roads and highways need expansion badly. The GTA transportation infrastructure is atrocious. The public transportation needs major work. This is INVESTMENT. Sadly, I don't trust our Toronto city government to implement these plans. These socialists will simply line the pockets of unionized workers and not have open and fair bidding practices.

Let's be frank here. The coalition government's only reason for uniting is to fights against the cut to party subsidy. They should drop the pretense that it's for the people or anything else. There is no reason for major spending announcement as the Canadian economy, while slowing, is not as dire as the rest of the G-8. Especially our banks are not in failing positions as they are in US or UK.

Let's also drop the argument that they have more votes than the Conservatives. The Canadian people did not vote for the Liberal+NDP+BLOC. They voted for Liberal OR NDP OR Bloc.

That's the sad thing, the infrastructure spending that will have the most sound effect will likely be poltically squandered. I also see no way how this supposed new 'governement' that's supposed to take over will spend on the big cities and city spending.

It'll probably be spend on some road to a new art center in Quebec.. ok, bad joke. But in any case, the concept is relevent, but practice implementing it will be far from it IMO.

[brunes]

Hording is also known as "saving". Savings, unless stuffed into a mattress, goes into savings institutions were its loaned out to build businesses and industries (in an efficient manner, unlike money distributed by gov't). Keynesianism is full of fallacies.

No, it does not, because of banking reserve. If I put $100 into savings, the bank can only loan out let's say $90. It has to keep $10 in reserve (not by law anymore, but by internal policy enforced by the shareholders that don't want to see the bank go under)

So that $10 of extra cash that is held in reserve, is just sitting there. It is doing nothing to grow the economy at all.

The money could remain in our pockets rather then being taken, and usually wasted, in the hands of the state bureaucracies.
Taxation is not "taking money". It is just redistributing it. If you think that the money is better served in the hands of individuals, then you're just debating about something that may or may not be true, but is highly likely not in the aggregate.

One of my favorite excerpts from The West Wing:


Donna: "There's a $30 billion budget surplus."
...
Donna: "Republicans in Congress want to use this money for tax relief, right?"
Josh: "Yes."
Donna: "So, essentially what they're saying is they want to give back the money."
Josh: "Yes."
Donna: "Why don't we want to give back the money?"
Josh: "Because we're Democrats."
Donna: "But it's not the government's money."
Josh: "Sure it is, it's right there in our bank account."
Donna: "But that's only because we collected more money than we ended up needing. "
Josh:"Isn't it great?"
Donna: "I want my money back. What's wrong with me getting my money back?"
Josh: "You won't spend it right."
Donna: "What do you mean?"
Josh: "Let's say your cut of the surplus is $700. I want to take your money and combine it with everybody else's money and use it to pay down the debt and further endow social security. What do you want to do with it?"
Donna:"Buy a DVD player."
Josh:"See?"
Donna:"But my $700 is helping employ the people who manufacture and sell DVD players. Not to mention the people who manufacture and sell DVDs. It's the natural evolution of a market economy."
Josh:"The problem is, the DVD player you buy might be made in Japan."
Donna:"I'll buy an American one."
Josh: "We don't trust you."
Donna:"Why not?"
Josh:"We're Democrats."
Donna:"I want my money back!"
Josh:"You shouldn't have voted for us."

[dealzuser]

It'll probably be spend on some road to a new art center in Quebec.. ok, bad joke.

This isn't too far from the truth. Bloc is seeking up to $500 million in post-secondary education transfers in the first budget of a proposed Liberal-NDP coalition government. How does the "coalition" say NON to that?



Great... This is going to be a 4 headed monstrocity.

"Elizabeth May discusses Senate seat with Dion"

While Ms. May stressed that her exact role with the coalition remains hypothetical, she confirmed that she has spoken with Mr. Dion about the possibility of her being appointed to the Senate.

"I'd be the only senator, in the Senate, that received a million votes," she said.



If the government does fail, I rather they call another election instead of this 4-headed Team. If the people do choose the "Coalition Party", then so be it. But I really don't think that's what the people had in mind when they voted the way they did... Even if the election costs $300 Million, it's better than trusting this team with $30+ Billion without a clear mandate from the people.

[AllWheelDrift]

The argument however falls apart when talking about a federal government, because the money they are spending on "the broken window" is not "money they could spend on something else" in the first place - they are spending taxpayer money, and giving it to taxpayers. It is just forced capital distribution to jump-start the economy, because if all are left to their own devices in a recession they tend toj just hoard, which does no one any good in the long run. That is why Keynesian theory works, it circumvents the natural hoarding.
Also, we're not talking about breaking windows to stimulate the economy, we're talking about fixing windows that already need replacing. I suspect only a few people would argue against a need to upgrade infrastructure.

Sure, it can be done during times of economic prosperity when it's more expensive to do because of higher demand for labour and supplies, or you can do it during a downturn when the stimulating effects slow or prevent decline rather than contributing to inflation.

Sure you may have to run a defict to complete a project in a downturn, but the overall cost of the project will be less and it will contribute to economic recovery. Seems like a win win situation to me.

[at1212b]

This isn't too far from the truth. Bloc is seeking up to $500 million in post-secondary education transfers in the first budget of a proposed Liberal-NDP coalition government. How does the "coalition" say NON to that?



Great... This is going to be a 4 headed monstrocity.

"Elizabeth May discusses Senate seat with Dion"

While Ms. May stressed that her exact role with the coalition remains hypothetical, she confirmed that she has spoken with Mr. Dion about the possibility of her being appointed to the Senate.

"I'd be the only senator, in the Senate, that received a million votes," she said.



If the government does fail, I rather they call another election instead of this 4-headed Team. If the people do choose the "Coalition Party", then so be it. But I really don't think that's what the people had in mind when they voted the way they did... Even if the election costs $300 Million, it's better than trusting this team with $30+ Billion without a clear mandate from the people.

Very good points. And I'm not a Harper 'fan' by any means, but I definitely do agree, that at the very least, that Harper should be allowed to present a budget, then the House should be given a chance to vote for or against it. This craziness on something that was said by the government but actually not acted upon, for something nobody voted for is absurd.

Some will say it has happened, but only ONCE at the Federal Level during a WORLD WAR. This situation as dire as it is, does not call for such drastic, irresponsible actions. I do not absolutely see how Stephen Dion has any sort of mandate, when he as leader had lost a considerable number of seats in the last election.

[hagbard]

No, it does not, because of banking reserve. If I put $100 into savings, the bank can only loan out let's say $90. It has to keep $10 in reserve (not by law anymore, but by internal policy enforced by the shareholders that don't want to see the bank go under)

So that $10 of extra cash that is held in reserve, is just sitting there. It is doing nothing to grow the economy at all.

Its providing security (insurance) and liquidity to those who invest their money in the banks. It serves that purpose much better than gov'ts can. Stating the obvious here.

Taxation is not "taking money". It is just redistributing it. If you think that the money is better served in the hands of individuals, then you're just debating about something that may or may not be true, but is highly likely not in the aggregate.

Its shifty money from productive enterprises to unproductive paper shifty, largely for political and not economic gains. I'd rather get a tie in any colour I choose than get a 1/4 of a tie in red only from the government.

One of my favorite excerpts from The West Wing:

Getting your economics lessons from West Wing? Glad I sold me TV eight years ago. :) Try this instead:

http://www.lewrockwell.com/

Or here's two great videos of Peter Schiff talking about the bailouts:

http://www.youtube.com/watch?v=cScoT1JpnSA

http://www.youtube.com/watch?v=bUB_0csvFf0

[asdfvcx]

http://www.lewrockwell.com/

Of course if you do a quick search of Lew Rockwell, one of the first links you get is this essay (http://www.lewrockwell.com/orig8/spielberg6.html) he hosts on his site (not authored by him, but he chooses to host it) entitled, "Don’t Call the Cops. Ever." And yes, the title is pretty descriptive of what the essay suggests.

This is the person you want me to take economic lessons from?

[dash riprock]

It'll probably be spend on some road to a new art center in Quebec.. ok, bad joke. But in any case, the concept is relevent, but practice implementing it will be far from it IMO.[/QUOTE]

The joke as usual will be on us. The 30 billion stimulas package will have as the main purpose, the election of Liberal, NDP, and, Bloc politicians. Money will go to projects and communities they target for their short term gain. They may throw in the occasional sewer for optics.

Another poster said Gilles Duceppe wants $500 million in transfers for post secondary education. Quebec already has the lowest tuition rates in Canada thanks to billions in transfer because of its "not have" status. With the Bloc holding great influence, you don't think bushels of dollars will be spent in Quebec to protect its unique culture? If those dollars come from the knuckle dragging rednecks out west (who elected a total of 5 liberals sask - bc) all the sweeter.

[asdfvcx]

If those dollars come from the knuckle dragging rednecks out west (who elected a total of 5 liberals sask - bc) all the sweeter.
They elected 7 Liberals, not 5. Along with 14 NDP. And if you do the math, the Conservative vote in those 4 provinces was only about 52%. Meaning 48% voted for others.

The massive majority of Conservative voters that some people like to believe exists in the West, really isn't that massive.

[dash riprock]

They elected 7 Liberals, not 5. Along with 14 NDP. And if you do the math, the Conservative vote in those 4 provinces was only about 52%. Meaning 48% voted for others.

The massive majority of Conservative voters that some people like to believe exists in the West, really isn't that massive.


Ok, not a party person so I worked off memory. Sask - BC, Liberals won 6 seats. If you include Manitoba it's 7. The massive majority is there as the Cons won 71 out of 92 seats available. That is why the coalition will give the riches to Quebec and Ontario(to a lesser degree) and the green weiner to the west(and to alta to a greater degree). Gov'ts are not elected on popular vote % but on seats, so they tailor there message to where they will get the biggest bang for our 30 billion bucks.

p.s. our new liberal pm earned the following percentage of popular vote in the west

bc 19.43
ab 11.4
sask 14.9
man 19.1

this amount of "popular support" gave them 7.6% of the seats available.

[AllWheelDrift]

They elected 7 Liberals, not 5. Along with 14 NDP. And if you do the math, the Conservative vote in those 4 provinces was only about 52%. Meaning 48% voted for others.

The massive majority of Conservative voters that some people like to believe exists in the West, really isn't that massive.
I'm one of the Westerners that voted for others, but I don't approve of the clown posse claiming to represent my "other" vote. I'd rather have the Conservatives hold power give any support to two of the three parties in the band of misfits.

[brunes]

I

Getting your economics lessons from West Wing? Glad I sold me TV eight years ago. :) Try this instead:

http://www.lewrockwell.com/

Or here's two great videos of Peter Schiff talking about the bailouts:

http://www.youtube.com/watch?v=cScoT1JpnSA

http://www.youtube.com/watch?v=bUB_0csvFf0

So, I post an insightful non-biased conversation from a great TV show that clearly shows both sides of the argument, and you respond by posting a bunch of libertarian propaganda links?

[Newbieinvestor]

If Dion wants to become PM thanks to the support of the seperatists, he needs to go before the people. However, he's a coward and knows he is unelectable.

Anyone who doesn't thing the following will be in for a shock:

1. the Block will be the key "decider" in all economic decisions. And they are big government and only want to support Quebec. Just imagine the back room deals that will happen:-0:evil::mad::!:

2. Ontario will benefit with lots of cash coming to the Auto Sector.

3. I'd hate to have a new home in Alberta. Sell!

[PHANTOMPHOENIX]

The problem is that this is how the system works. We can't pick and choose whatever part of the system we like to get the result we want. That is when a democracy falls apart.

Harper has no one but himself to blame for this mess. Now its all just fear mongering from both sides.

[Newbieinvestor]

The problem is that this is how the system works. We can't pick and choose whatever part of the system we like to get the result we want. That is when a democracy falls apart.

Harper has no one but himself to blame for this mess. Now its all just fear mongering from both sides.

FEAR MONGERING:
spreading discreditable, misrepresentative information designed to induce fear and apprehension
Having economic decisions decided by the seperatists should have you fearful.

It's amazing how Canadians are so distant from the political process. Can you imagine if your company had a competitor suddenly running it? Would you invest in it's stock?

BoC says the economy grew by 1.3% in the third quarter. Hmmmmm. Curious.

Let's see what Carney does next week with rates.

[PHANTOMPHOENIX]

FEAR MONGERING:
spreading discreditable, misrepresentative information designed to induce fear and apprehension
Having economic decisions decided by the seperatists should have you fearful.

It's amazing how Canadians are so distant from the political process. Can you imagine if your company had a competitor suddenly running it? Would you invest in it's stock?

BoC says the economy grew by 1.3% in the third quarter. Hmmmmm. Curious.

Let's see what Carney does next week with rates.

I don't like the Bloc...but they were elected and you can't just prevent them from becoming part of the government because you feel like it.

Harper had no problem doing this in 2004 but now its apparently illegal because the shoe is on the other foot.

All this separatist jibber jabber is fear mongering.

There is a system...follow it. If people are not happy with the system, might as well tear up the constitution and start over.

[hagbard]

Of course if you do a quick search of Lew Rockwell, one of the first links you get is this essay (http://www.lewrockwell.com/orig8/spielberg6.html) he hosts on his site (not authored by him, but he chooses to host it) entitled, "Don’t Call the Cops. Ever." And yes, the title is pretty descriptive of what the essay suggests.

This is the person you want me to take economic lessons from?

Haven't read the article, but sounds like a good idea. And yes, you could learn a lot from Lew Rockwell. Well, one could anyway. Anway, feel free to believe what you want. The gov'ts will bail out every large industry that comes begging, they'll "stimulate" the economy (which is what got us in this mess to start with) and we'll go the way of the Soviet Union. Have fun!

[hagbard]

So, I post an insightful non-biased conversation from a great TV show that clearly shows both sides of the argument, and you respond by posting a bunch of libertarian propaganda links?

West Wing? :lol:

[dealzuser]

I don't like the Bloc...but they were elected and you can't just prevent them from becoming part of the government because you feel like it.

Harper had no problem doing this in 2004 but now its apparently illegal because the shoe is on the other foot.

All this separatist jibber jabber is fear mongering.

There is a system...follow it. If people are not happy with the system, might as well tear up the constitution and start over.


This is the system, but is it what Canadian voters expected when they voted only 6 weeks ago? The system is in place to protect the voters from bad unpopular government. How did they government show that in 6 weeks with an economic update statement? ONE ITEM - END of Party Subsidies.

Harper actually did not do it in 2004. He proposed a coalition government because the Liberal at that time was also not governing but only trying to hold on to power. If you recall, that's when Martin did not see a vote buying policy he didn't like, such as sending troops to Darfur with a 2(?) week notice because it would buy the vote of an independent MP. I would hate to be a soldier going there just to be a political pawn. Anyways, it was not implemented.

You cannot blindly say that because Harper proposed it in 2004, then Coalition Government is free for all anytime. What is the motivation of this one? ONE POLICY - End of government subsidy for political parties.

Now, with the possibility of short term power, everyone wants a piece of bacon.

- Bloc wants money for Quebec. (I've never seen so much spending promises than the current Quebec election. I thought we were in an economic downturn with lower tax revenues. I guess not for Quebec.)

- Greens wants to influence policy with a senate seat but does not want to influence the coalition (talking out of both sides of the mouth.)

- NDP wants to run their socialist agenda by spreading money to all unionized industries. (No surprise here. At least they are true to their colours.)

- Liberals just want power to survive for another day since they are almost bankrupt and aren't used to the lost privileges since emptying their coffers during the election and being swept out of power.

[Newbieinvestor]

Current leader of the Parti Quebecois, Pauline Marois,boasts that Quebec will be $1 billion better off thanks to the coalition agreement.

There goes some of Alberta's oil money.

[heymike]

No, it does not, because of banking reserve. If I put $100 into savings, the bank can only loan out let's say $90. It has to keep $10 in reserve (not by law anymore, but by internal policy enforced by the shareholders that don't want to see the bank go under)

So that $10 of extra cash that is held in reserve, is just sitting there. It is doing nothing to grow the economy at all.




Do you have this the right way? If you deposited $100 in a bank, that bank would call your $100 a reserve, then proceed to lend out $1000.

Then now have $1000 in Liabilities, and a 10% reserve of $100.


But, all in all bailouts are not working, for them to work you need to give them enough to have a surplus to reinvest but the amounts in question only go to fill the hole. Ultimately, I don't know why we are trying to avoid the recession/depression to begin with; you have to complete the entire boom/bust cycle; we all want the next boom, but before that can occur we NEED the bust to clear the balance sheets. Seems that everyone is willing to sacrifice Canada's balance sheet for the promise of someday having their personal sheet improve. We and our worldwide neighbours asked for this recession, now we are getting it.

I enjoyed that broken window argument, thanks for that post.

Also, deficits to not fix anything, in and of themselves; only good investing does. Those two ideas are mutually exclusive. Think of it this way, if deficits fixed ressesions then the US would not be in a depression at the moment because they have been running deficits ever since 2000.


So, lets bailout the auto part manufactuers... not too handy when cars are not selling. (they will be faling apart soon enough I suppose)

So, lets bailout the foresty industry....so they can sell wood to the, um, ?

So, lets bailout people who can afford their mortgages....(****, I should of got a mortgage I couldn't afford) They will be the same before and after (IE, no money in their account) and property values will be artifically inflated (hey, that won't cause more issues)

Better yet, lets have goverment re-training programs instead of general increases to school funding; just like the 80's. Then you can have almost retired tree-fallers sitting in classrooms trying to figure out how to mail-merge in work for their new job as an office temp.


What would make more sense is to outlaw digital music and CD's; simply mandate everyone must go back to records and 8 tracks. That is a lot of employment for stereo installers, new media manufacturing plants will need to be built, vinyl production will be booming, you would need to hire thousands of police officers and lawyers to uphold the mandate. ****, this is a solid plan, imho.


Serioulsy, however, let the chips fall; it will be ugly and political suicide, but at least the bad will come so we can move one. But instead, we will spread the pain from the few, to the many, so we can be like Japan and we can all be discussing this same topic in 2023. /rant

[Newbieinvestor]

Of course if you do a quick search of Lew Rockwell, one of the first links you get is this essay (http://www.lewrockwell.com/orig8/spielberg6.html) he hosts on his site (not authored by him, but he chooses to host it) entitled, "Don’t Call the Cops. Ever." And yes, the title is pretty descriptive of what the essay suggests.

This is the person you want me to take economic lessons from?

Very interesting article.

[Ryan]

Politics. Lock.