Photo from www.draplin.com

Seemingly lost amidst the Olympic shuffle last week was an announcement by the Harper government on reaching an agreement with the United States that allowed for Canadian exceptions to the highly contentious “Buy American” regulations. The regulations, imposed last-year by the U.S. government, blocked Canadian manufacturers from bidding on almost $800-billion worth of contracts tied to stimulus spending by the U.S. government.

Given the high-profile nature of the spat and the political capital such an agreement should generate, it seems strange that the Harper government would downplay the announcement by burying it amidst Olympic fever. A closer look at the details of the agreement, however, indicate why this might be the case.
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Finance Minister Jim Flaherty
Photo Credit: CBC

Let’s get straight to the point. The deficit is an economic problem, but it is not as serious as many make it out to be. What may surprise many people is the fact that many business leaders and almost all neo-conservative politicians secretly agree. Don’t be fooled by Finance Minister Jim Flaherty’s recent rumblings about the deficit. His main concern is tax cuts and smaller government, not the deficit. In fact, a large deficit plays right into his plans for smaller government.

Let’s rewind our discussion back to the events in Ontario during the early 1990s when there was a severe recession and Mike Harris, who worked closely with Flaherty, was not quite yet Premier. Ontario was actually deficit-free for several years just before the recession of 1990. Recessions usually cause deficits, because the unemployment levels significantly reduce government revenue and because of the large costs of helping the unemployed. Based on the ideas of Keynesian macroeconomics, some governments try to end recessions by simulating growth through spending, further increasing the deficit. Ontario Premier Bob Rae, the leader of a socialist NDP government, tried this and so have most governments, including Mr. Harper’s, during this most recent global recession. Bob Rae eventually stopped spending and started reducing the deficit when he started receiving a lot of flak for the increased deficit. When Neo-conservative Mike Harris came to office, the deficit was already significantly way down. Mr. Harris and Mr. Flaherty continued the policy of deficit reduction, but not at a rate faster than Rae and that of other Canadian governments. The economy improved, not because of Harris tax cuts or deficit reduction, but because of low U.S. interest rates that created a large market for Ontario exports.
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Premier Gordon Campbell with a bad case of Olympic fever.

A friend of mine recently used her Facebook status to pose the following question: Can some one please explain the harmonized sales tax in layman’s terms? The first comment she attracted was a sincere attempt to explain the details of BC’s newest tax structure without any criticism of the hike. My irritated brain immediately commanded my fingers to type – “Everyone in BC starts to pay 12 percent tax on everything. The government gives themselves raises with the extra money and the rest of it gets mismanaged on things like useless projects that lines the pockets of their friends who own big development companies.” There, I thought to myself after posting my contribution, that should incense a few people, perhaps prompting some serious discussion on the topic and awareness of how little taxpayers know of what is actually going on with their money behind the proverbial closed doors. My self-satisfaction lasted as long as it took for two more comments to appear after my own. The first one read “I like glitter and bunnies.” The second? “I like glitter and bunnies too!”
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In a stunning move this week, Jack Layton, slammed the government over a leaked memo that revealed the government’s interest in cutting the number of environmental impact reviews it conducts. The leader of the New Democrat Party, “Uncle” Jack Layton, said it spoke of the government sacrificing the environment for the economy. Perhaps even more stunning was Layton’s suggestion that the opposite of a green economic recovery was a “brown” one.

Until now, political leaders in Canada have traditionally abstained from weighing in on opposite-colour contraversies. The last time it had happened was in 1967 when Lester B Pearson suggested the opposite of burgundy was magenta; a move which grew widespread protest from members of the PWFCIM (People Who’s Favourite Colour Is Magenta) who claimed Pearson’s assertion was reckless and inaccurate. That was a different time however, and Layton’s modern-day assertion is drawing its share of supporters, as well as speculation that “brown” may actually enter the books as the colour of anything un-eco friendly. This comes much to the dismay of the PWFCIB (People Who’s Favourite Colour Is Brown), who lament that the colour brown has been through enough denigration already, having previously been stigmatized as the colour of ‘poop’.
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Remember when you used to trade marbles? Or baseball cards? Or whatever else you had that someone else saw value in.

How about carbon credits?
Bartering is still going on between countries though you don’t hear much about it. Probably because it falls outside the realm of the global financial order i.e. the IMF, OPEC, and other oligopolies and their various taxing authorities. They probably would not be amused at the growth of the bartering concept.

Recently I was speaking to some college students. We were talking about global bartering as a possible solution to unlocking the stuck banking system that is fueling the recession. After all, a small business can barter just about any product or service on the internet now. Why not countries?

One of the students is Venezuelan. He pointed out that their notorious leader Mr. Chavez was already well into the international barter game. Apparently his country’s oil barters Cuba’s advanced medical services along with a few other key necessities from other South and Central American countries. Makes sense to me.
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History is filled with change. Hopeful ideals have led the way to not only different philosophies and political regimes, but also radically progressive ways of thinking. From the French revolutionary period to the American revolution and even the baby boomer’s sexual revolution, certain instances have popped up where those young and old banned together to challenge the status quo put forth by those in power. We are now currently going through another of those times.

The baby boomers are slowly retiring giving way to new generations with different ideologies, separate perspectives, and new goals to reach. Cynicism can no longer be tolerated; where there is a will, there is always a way. Our guiding light throughout these times must be the hope we all share for a better tomorrow. The tomorrow we seek will be different from yesterday’s, but to understand the steps it will take, we must first look back and carefully analyze certain catalysts for today’s world. By doing so, we will not only understand where our society has gone wrong, but to what direction our path must be laid in order to reach the goals we all so desperately need.
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Speaking at a Chinese New Year festival near Toronto this weekend, Prime Minister Stephen Harper said he hopes that the Year of the Ox will also be the year of the return of the bull market. Our major banks would have to disagree with this statement. Both TD Bank and the Bank of Nova Scotia predict our economy will continue to shrink and will loses hundreds of thousands jobs (in addition to the hundreds of thousands already lost) by year end. US analysts predict the economy will not recover until 2010 at best.
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The budget was approved today by a 211 – 91 vote. As anticipated, the NDP and Bloc both voted against the budget. As well, the 6 Liberal MPs from Newfoundland and Labrador voted against the budget. Liberal Leader Michael Ignatieff allowed these 6 MPs to vote against their own party as a one time protest vote to bring attention to the fact that the new budget is cutting out $1.6 billion in federal transfer payments to their province.

As decided upon yesterday, Prime Minister Stephen Harper will be required to provide updates and reports on the budget’s progress in March, June and December. At any of these points, if the opposition expresses non confidence in the government, Canada will have another election.

MPs voted 214 to 84 in favour of the Liberal budget amendments today. As expected, the NDP and Bloc voted against these changes.

Michael Ignatieff must be jumping for joy.
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Finance Minister Jim Flaherty Presents Government Budget

Today, the federal government revealed its highly anticipated budget and stimulus plan for pulling our sagging economy out of recession. To sum up in one sentence, the Tories are going to spend tens of billions of dollars to try and pump money into the economy, and Canada will have to weather large deficits along the way. Whatever it takes to keep our economy moving was the message from Finance Minister Jim Flaherty.

A deficit of $33.7 billion for the 2009-10 fiscal year and $29.8 billion the following year is predicted. For 2011-12, the red ink would diminish to $13 billion, followed by a deficit of $7.3 billion for 2012-13. Keeping the Conservatives’ track record regarding their forecasts of budget deficits/surpluses in mind, it seems like these numbers could turn out to be much, much larger. Just months ago, Harper was predicting small surpluses for the coming years, then altered his forecast to small deficits, and now massive ones. That leads me to believe these deficits could turn out to be much larger that we think. If the economy worsens beyond what is expected, this would certainly be true. “If they get worse, we will do more,” said Flaherty, speaking about economic conditions in Canada.

The budget dealt with many different aspects of the economy and Canada, but here is an overview of the major categories:
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