The Wild Rose Express coming round the mountain

Conservatives are mantra chant economics by introducing the false idea that this isn't a real recession. Two quarters of productivity decline is only one single number. There are other numbers that point to a reality that they know is just around on the other side of the mountain. Never dismiss just the statistic, begin by observing the economic problems in the People's Republic of China. Witness the numbers of ships sitting at anchor waiting around the globe, for cargo any cargo. The currency has declined. Stock markets kiss the bear. Interest rates are artificially too low. Take it all together. 

The 2008 recession was short and quick simply because it begun in the financial sector in the American, Fanny Mae debacle. The only reason that Canada appeared to do better was that the last set of banking regulations preserved economic stability. Harper took credit for it. In reality Paul Martin was the Liberal architect.

Thirty six thousand Albertans have been laid off. Small businesses will go belly up. Houses will stream onto the market, and worse a rapid rise in bankruptcies guaranteed early next year. Three Lake Freighters, are laid up in Toronto Harbour, you can see them from Sugar Beach. Its the first time since 1989, another stock market driven that ships were tied up. I've experienced the 1974 recession, the 1981 Reagancession, the 1988 recession which stretched through 1993 eliminated when Clinton took over the White House, 2008 blowup Fanny Mae Bushcession. I worked in pulp and paper during a localized industrial recession. That's the economic history.

I know something about recessions. And this one is far more serious than the Conservatives are willing to admit before the election. Its the same bunch of economic knuckle heads in Alberta who put that province into a very poor economic condition to line pockets by totally depending on the performance of a single natural nonrenewable resource. Worse still the incoming government is left holding the bag for a total economic disaster. It didn't matter which political party came into power in Alberta. The Harper type Conservatives literally raided the pantry and left everyone else holding the bag.

The only reason that things appear stable is because the Harper government is deliberately controlling the artificially low interest rate which shelters most people. Mark this... And mark this well. After October election, when the foppish Joe Oliver is no longer Finance Minister, regardless of which party wins the election, the base interest rates have to start rising, then that is when the real hardship on you is going to be felt for at least three probably four years.

Statistically, we are in recession but that interest rate has to come up to support, to stabilize the currency. Paul Martin is on the Liberal staff to encourage deliberate deficit spending. And that would be the same regardless. Why? Its because the Harper government rode the oil pony without making any effort to support the manufacturing sector in central and maritime Canada.

Harper has got it totally wrong. The next government has to be interventionist no matter who gets in power. He knows that the interest rates are going to rise after the end of October coming. The level of private debt in Canada is obscene right now. No politician is dealing with that as yet. The reality is that the Bank of Canada is protecting Harper by suppressing interest rates.

Raising interest rates does something to the economic situation. First it does support and stall the currency from going into a tail spin. Second it will only have positive results in the artificially obscene real estate market by causing a decline in housing prices, the correction that is coming like a locomotive pulling a train through a tunnel - you can hear it and very soon you will see it. Combined with the artificially low interest rates, the astronomically high housing prices, the collapse of the dollar, the recent downturn in stocks globally, the downturn in international industrial output, that train is coming. This isn't the end, what you are looking at is the cow catcher

Money, and Coincidence. NOT

I recall a very long time ago, one of my teachers, one of the wiser ones sort of threw away the curriculum course book in economics. Liked the guy. Very smart guy. Well he covered the topic of money despite the fact that he was supposed to be teaching Geography. Why?

Well for starters he found learning Economic Geography tied the memory plagued normal geography into a dynamic of interest. Part of this linkage was understanding money.

Originally trade involved barter. In other words trading one quantity of commodity for another adjusted for intrinsic value. The value of a specific coin or bill must either be backed by gold or an agreed marked value. The actual physical price of a coin or money bill is basically nothing. People that assign value to a currency whether its bills, or coins, not governments.

Before you totally nod off, it was important to define the issue by reasserting what you likely already knew. Observe the timing that the Canadian economic performance peaked just before two events. First was the plasticization of money from a combination cotton, special fibre and cellulose or money or certificate paper. Second was the Harper government's effort to eliminate the coin denomination of the penny.

On the one point its a perpetual source of humour to point out that the Harper Conservatives have left Canada penniless. Opposing that funny bone is the serious coincidence. Ever since the penny was eliminated the Canadian economy has declined. Ever since Canadian money was physically changed form a certificate paper into plastic fibre. Ever since the government did those two actions, the value of the Canadian dollar has declined. and the Canadian economy declined.

Certainly, the devaluation of the price of crude per barrel played a significant part. Crude oil prices do hold a significant role in Harper's configuration of the economy. Basically he was playing Alberta economic politics in a Canadian theatre. He accuses both Trudeau and in turn Mulcair as being unqualified to manage the Canadian economy. It should be pointed out acidly that his government has maintained a governmental deficit for at least eighteen years. His frying pan is considerably burnt red to call others to the grill.

The price of oil languishes around the $50 mark. It has done that now for quite a considerable time during the Harper stewardship. Regardless, his government seems stifled by indecision. Another large part of the problem seems to be his very poor selection of Finance Minister, Joe Oliver. Typical of an old style banker, his solution seems to have been not to do anything other than hijack the Canadian Pension Plan and the Employment Insurance Plan money to make up the shortfall from oil revenue.

A third problem seems to be his inability to negotiate or work with others. Notoriously a control freak, he seems unable to work well with others and his political style is a Nerf plinth for the pillar of any economic strategy. His solution during an election is to come out swinging blame for the economic situation onto others. Politically this is a normal tactic but that could backfire in Canada. Canadian voters, even the dutiful ones are in the end either politically stupid or definitely uncaring beyond their own front doors.

It is to this last point which sounds like an insult. Its not meant to be. Its an established almost universal philosophy in the smokey backrooms of all political parties in Canada. There are some issues that generate national riots and strikes in other nations but barely pulls a blink from the Canadian constituent. Worse still Canadians tend to stay quiet until some issue tweaks their anger button.

Both those aspects played into a great surprise when the Conservatives called the early election or rather the unnecessarily prolonged election costing the government and in turn, the very same taxpayers excessive amounts of money. In theory this was designed to exploit the economic power of the present manifestation of the Conservative party. Politically speaking its not the amount of money one has in a campaign its how to spend it. The longer a campaign the greater the chance there is to toppling from first place into the basement.

The most recent example of this first place arrogance was the Toronto Mayoralty campaign. In the summer, Olivia Chow, had a huge lead and a lot of campaign money. It was however the guy in third place that eventually one. It was a long terrible campaign.  Any smart politician leading in the summer time before the election should never underestimate how a lead can dissipate quickly when the people returning from the cottages or vacay sit down and try to absorb the issues that have been too long in play. A short campaign would have worked better for Harper. But what has this to do with economy?

It has everything to do with economy. If you need or rely on economic resources to run your own campaign and start losing or any slide of support whatsoever that doesn't lend itself to your ability to handle a national economy. This points to a significant flaw in modern Conservative thinking. They like the amount of money rather than appreciating the quality, the value of money.

And this is what happened to the Canadian dollar. Once the quantity of cash, generated by big oil evaporates, the present Conservative government people are unable to manage. Witness how close this problem emulates the situation in Alberta. Two governments, evolved in the very same part of the world colliding with the reality of the real world.

In some way, the modern Conservatives are sort of duplicating the source of the same problem the far more dynamic Mulroney Conservatives had. Mulroney understood business but not government. His regime introduced a federal sales tax and signed NAFTA. One or the other was good for the economy but combined as a pair worked to underscore an economic downturn. In Harper, tying the economy too tightly to oil, eliminating the penny while plasticizing the paper money bills, combined to a lack of faith in the Canadian dollar value. One choice would benefit until the next election but mixing them altogether created a toxic economic environment. So toxic that Harper, who bragged that he was an economist, seems to be standing on his head to talk about anything such as travel plans, rather than the specific most important issue which is the economy.

A terrible economy will wreck a country faster than any overseas terrorist plot can. Yet he wants Canadians to vote for him based on a fear of terrorism than the original reason that people picked him before, which was economy. He strangely devalued the feel of money. So making a coin or making a paper bill is more expensive, traditionally it adds to the perception of value. At the end of ten years, Harper's tenure hasn't added any value to Canada. Just what is he doing?