GOVERNOR POLOZ CUTS THROUGH CONSERVATIVE DENIAL
The Governor of the Bank of Canada, Stephen Poloz, is developing quite a knack for graphic turns-of-phrase that ...debunk the misleading "talking points" of the Harper government.
The Governor of the Bank of Canada, Stephen Poloz, is developing quite a knack for graphic turns-of-phrase that ...debunk the misleading "talking points" of the Harper government.
While the Conservatives downplay youth unemployment stuck at recession-like levels, and cut their support for summer jobs, Governor Poloz sounds the alarm about 200,000 jobless and under-employed young Canadians. He highlights the hard truth that far too many are still living in their parents' basements because the economy isn't strong enough to let them get started on their own.
The Conservatives try to fudge the impact of a 50% drop in the value of oil markets. Harper Ministers claim it will help manufacturing and ease Alberta's problem with "temporary foreign workers". But Governor Poloz is blunt -- he says the impact of the lost investment, jobs and exports is "unambiguously negative", and he surprises everyone by cutting interest rates.
When the Conservatives boast about their "jobs and growth" record using stale data from four and five years ago, Governor Poloz punctures their balloon by describing Canada's most recent economic performance as nothing less than "atrocious". He also says we're staying out of another recession right now only because the Bank of Canada is providing "considerable monetary stimulus".
Which leads directly to this question: Why is the austere fiscal policy of the Harper government contradicting the accommodative monetary policy of the central Bank?
Governor Poloz has reduced interest rates to stimulate the economy and drive growth, but Mr. Harper is all about hacking and slashing federal budgets which pushes in the opposite direction.
Surely Canada's most urgent economic imperative is greater growth. We haven't seen much since 2008. Economic growth is essential to lift the well-being of the middle-class and all those working so hard just to get there. It's also the key to balancing the federal government's books on any sustained and durable basis.
But the latest figures from Statistics Canada show an economy that's not just slowing down. It's actually shrinking. That's what Governor Poloz is worried about. And he uses strong language -- "unambiguously negative", "atrocious" and "falling back into recession" -- for good reason.
A paltry 121,000 new jobs were created in the whole country in all of 2014. Employment generation is thus down by more than 60% from two years earlier. Joblessness is up and getting worse. Job quality is at its lowest ebb in 25 years.
The country has just posted yet another monthly trade deficit. Business confidence is headed down toward recession-like levels. Consumers are carrying record household debts at 165% of disposable incomes. In the retail sector, sales are down and many major stores have disappeared or down-sized -- Target, Zellers, Sears, Mexx, Smart Set, Jacob, Sony, Future Shop, and on it goes.
Based on these realities, it's clear that Canada needs a new economic plan.
Mr. Harper's plan has failed. For years, he has contorted everything toward one main initiative -- a large, expensive tax break which pays-off most of all for the most wealthy. The late Jim Flaherty warned against it because it's too costly and unfair. The Parliamentary Budget Officer says it does nothing for growth.
Meanwhile, real instruments of growth -- like investments in public infrastructure, higher education and skills, scientific research and innovation -- are left idle.
And one final point -- as the master of monetary policy, the Bank of Canada really has only one tool to help drive growth, and that's lower interest rates. But that carries with it the very real risk of adding to what is already record-high levels of consumer debt. Should the central Bank encourage households to go even further in debt? Perhaps not, but that's what you get when a worn and derelict federal government sits idle, leaving the whole burden to be carried by the Bank of Canada alone.
The Conservatives try to fudge the impact of a 50% drop in the value of oil markets. Harper Ministers claim it will help manufacturing and ease Alberta's problem with "temporary foreign workers". But Governor Poloz is blunt -- he says the impact of the lost investment, jobs and exports is "unambiguously negative", and he surprises everyone by cutting interest rates.
When the Conservatives boast about their "jobs and growth" record using stale data from four and five years ago, Governor Poloz punctures their balloon by describing Canada's most recent economic performance as nothing less than "atrocious". He also says we're staying out of another recession right now only because the Bank of Canada is providing "considerable monetary stimulus".
Which leads directly to this question: Why is the austere fiscal policy of the Harper government contradicting the accommodative monetary policy of the central Bank?
Governor Poloz has reduced interest rates to stimulate the economy and drive growth, but Mr. Harper is all about hacking and slashing federal budgets which pushes in the opposite direction.
Surely Canada's most urgent economic imperative is greater growth. We haven't seen much since 2008. Economic growth is essential to lift the well-being of the middle-class and all those working so hard just to get there. It's also the key to balancing the federal government's books on any sustained and durable basis.
But the latest figures from Statistics Canada show an economy that's not just slowing down. It's actually shrinking. That's what Governor Poloz is worried about. And he uses strong language -- "unambiguously negative", "atrocious" and "falling back into recession" -- for good reason.
A paltry 121,000 new jobs were created in the whole country in all of 2014. Employment generation is thus down by more than 60% from two years earlier. Joblessness is up and getting worse. Job quality is at its lowest ebb in 25 years.
The country has just posted yet another monthly trade deficit. Business confidence is headed down toward recession-like levels. Consumers are carrying record household debts at 165% of disposable incomes. In the retail sector, sales are down and many major stores have disappeared or down-sized -- Target, Zellers, Sears, Mexx, Smart Set, Jacob, Sony, Future Shop, and on it goes.
Based on these realities, it's clear that Canada needs a new economic plan.
Mr. Harper's plan has failed. For years, he has contorted everything toward one main initiative -- a large, expensive tax break which pays-off most of all for the most wealthy. The late Jim Flaherty warned against it because it's too costly and unfair. The Parliamentary Budget Officer says it does nothing for growth.
Meanwhile, real instruments of growth -- like investments in public infrastructure, higher education and skills, scientific research and innovation -- are left idle.
And one final point -- as the master of monetary policy, the Bank of Canada really has only one tool to help drive growth, and that's lower interest rates. But that carries with it the very real risk of adding to what is already record-high levels of consumer debt. Should the central Bank encourage households to go even further in debt? Perhaps not, but that's what you get when a worn and derelict federal government sits idle, leaving the whole burden to be carried by the Bank of Canada alone.
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