It's the economy stupid

(Took a thread a little off topic, but wanted to continue the discussion so branched it off)

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Originally Posted by terrym

Then why did your Liberals throw a hissy during the global recession and demand he double the deficit or they would overthrow his government with that pathetic coalition attempt? You wanted twice the debt but now you rant about what he did? Too funny.

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What did he do?
I don't follow or understand as much as some on this forum and this is meant as an honest question, not rhetoric. Not looking for "whatever he did is better than what party X would have done" and I understand it's based on my keen hindsight.
BUT
The sound bite message that I remember from the last government was "steady hand on the tiller". Now unfortunately the ship was pointed right at the low oil iceberg and as a result we are sinking (?)..

(realistically) Is there something that could have been done by the federal government to diversify Canada's economy? Would investing in the manufacturing sector have helped? Was it unpalatable due to the fact that manufacturing is mainly in "liberal" provinces? Did the climate created by the provincial governments make this too difficult or futile?
Why are we still a one trick pony?

Terry is referring to early in the recession Rugger. Don't recall the specific year, might have been 2009. The Cons were doing a little stimulus spending, the Liberals, and NDP wanted him ramp it up large (plays well with the electorate). They wanted quarterly updates on how much, how fast he was spending and if he wasn't spending enough they threatened to bring him down.

In the last election the Cons had the "steady as she goes" message. The NDP as usual wanted to spend large (lots of promises). The Liberals sort of in between. We will run small manageable deficits (10b/year).

What might have Harper have done differently? Not sure myself. Hindsight is always 20/20, but even if with the benefit of hindsight today, there are many things the left don't say.
1) The Oil boom carried Canada for years. Where would Ontario be without all the money from ALTA? Well if healthcare is bad now (and it is), can only imagine how much worse it would be.

2) How many unemployed people from Eastern Canada who lost jobs fled West....tens of thousands. No heavy investment, no job there, no jobs for them. Which means here at home unemployment is higher, families struggle etc. Something the left doesn't like to weigh when attacking Harper. How many of them sent money home to families, where the families spent on kids, the economies in Not, QUE, Atlantic provinces? Well lots Im sure. Its well documented many....many found work out West.

And please I hope no-one mentions well if he had invested in.......what.....Green Energy as the Liberals did here, promising tens of thousands of jobs and spinoffs....um, so much for that, their investments in green went down the toilet faster than Oil is

3) Manufacturing? Well even if wages etc didn't drive some or a lot out. Hydro certainly did, is or added to the exodus. When has it ever been a good idea to throw good money after bad.....

4) when they attack Harper over his record..Funny they never mention Harper had Ontario sinking Canada...Will be interesting to see how JT juggles both Ontario and Alberta now.

So what could Harper have done differently?
Well Id love to see any of the left, demonstrate where jobs could have been created as fast. Good paying jobs...and not pie in the sky seasonal like the movie industry (one industry the Left dangling as good) or green energy (fail)...etc.

Not saying there aren't prices being paid now, but for all the attacks on Harper (some merit to them) funny you never hear viable alternatives or talk about the problems faced during the teeth.

Same old left Canada. Just as we are quick to slam the US for this/that....we sure do enjoy reaping the benefits. And the fact is Alberta has carried Canada for many years

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Originally Posted by Rugger

Why are we still a one trick pony?

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We aren't. Resources are @ 20% of economy and oil is part of that 20%. Yes of course it has been a very important part of our economy as the crash in the dollar confirms. But just because the sitting PM didn't try and restrict the oil sands ( for mostly misplaced ideology like the left) doesn't mean he tried to make us a 1 trick poney. Oil is probably the single most valuable commodity on the planet. Everybody needs and consumes it either directly or indirectly. Should Harper have got in the way and slapped on restrictive tariffs to make the oil sands bitumen even less competitive compared to OPEC oil? Why would we not capitalize on a resource while it was selling at crazy prices? Should we have left it in the ground until the market prices made it unprofitable to exploit? Enabling one sector to thrive doesn't mean restricting other ones. Enabling the oil sector gave the Feds the money for transfer payments that nobody was too proud to refuse on ethical grounds. Quebec and Ontario liked to Krap on Alberta but never refused the transfer payments, funny that. You could make the argument that oil helped finance education and in turn helped us crank out the Engineers, Doctors, tradesmen needed to diversify the economy. It takes money to do all that, it had to come from somewhere and I don't think maple syrup and potatoes was going to cover it.
So what did Harper do? Like every other industrialized democracy in the world he ran deficits during the crisis. The left demanded he run twice as much to make sure nobody actually had to tighten the belt. When he refused they tried to overthrow his minority but he outmaneuvered them and was awarded a majority in the next election. It is not government that diversifies the economy. Government is not a provider of goods or exports. It's governments job to not get in the way with restrictive tariffs, taxes and noncompetitive energy costs.

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Originally Posted by JBen

I seem to recall that during the same time frame, Harper was ripped for pursuing trade deals with China, Indo China, and while he wasn't ripped, the EU.

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Excellent point Jben.
Harper secured trade deals with EU and TransPacific accords during his time in office. Neither Cretien or Martin achieved this expansion and diversification of our economy and trade and both of these guys were finance ministers before becoming PM. In fact I can't really think of anything Cretien did to position us better in the world and he hypocritically reaped the benefits of the GST which he swore to repeal. We know how that went.

Sad thing is Terry, my uneducated guess is that, it might take 3-5 years before we really any benefits. Not sure but I think the EU deal is green lighted on both sides.

Which means if we start exporting and the ports on the East Coast boom and it adds to our growth. Especially on the East Coast ( funny Harper only cared about the west)

We might start seeing benefits in 1-2 years. The Liberals will point to that growth and crow about "their record"

If predictions of our dollar staying low for the next 2 years are right, I would expect export trade to ramp up quicker. And yes JT will reap the positive feedback for it.

JBen, I agree with what you're saying. My point is, before, Ontario was an economic driver of Canada. Then the recession hit and the economy in Ontario went into the crapper; good thing Alberta was there to support the country. Now that Alberta is struggling what's our back up?

I'm sure I don't have to tell you how important diversification is. Again, I'm not interested in pointing fingers at various political parties. What could have been done and what can we do to be a little less resource reliant?

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Originally Posted by terrym

We aren't. Resources are @ 20% of economy and oil is part of that 20%. Yes of course it has been a very important part of our economy as the crash in the dollar confirms. But just because the sitting PM didn't try and restrict the oil sands ( for mostly misplaced ideology like the left) doesn't mean he tried to make us a 1 trick poney.

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Yes! I agree with your numbers. What I don't understand is: Given that, why is our economy (using the dollar and markets as an indicator) so strongly tied to the price of oil?

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Originally Posted by terrym

Why would we not capitalize on a resource while it was selling at crazy prices? Should we have left it in the ground until the market prices made it unprofitable to exploit? Enabling one sector to thrive doesn't mean restricting other ones. Enabling the oil sector gave the Feds the money for transfer payments that nobody was too proud to refuse on ethical grounds. Quebec and Ontario liked to Krap on Alberta but never refused the transfer payments, funny that. You could make the argument that oil helped finance education and in turn helped us crank out the Engineers, Doctors, tradesmen needed to diversify the economy. It takes money to do all that, it had to come from somewhere and I don't think maple syrup and potatoes was going to cover it.

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Can the same not be said about the times when Ontraio's manufacturing was the driving force? Now that Alberta's in trouble who's going to help out?

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Originally Posted by terrym

So what did Harper do? Like every other industrialized democracy in the world he ran deficits during the crisis. The left demanded he run twice as much to make sure nobody actually had to tighten the belt. When he refused they tried to overthrow his minority but he outmaneuvered them and was awarded a majority in the next election. It is not government that diversifies the economy. Government is not a provider of goods or exports. It's governments job to not get in the way with restrictive tariffs, taxes and noncompetitive energy costs.

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I still don't know what Harper did... Not restricting the oil sands is still doing nothing...
The US certainly did not stay out of the economy and they seem to be rebounding better than us. Is it just scale of economy or were they more proactive as opposed to steady on the tiller?

edit: Just so we're clear, I'm not saying that what the left was proposing is right. I'm just not convinced that what the last government did was right (again with the benefit of hindsight)

Alberta is in trouble because they rely heavily on the oil sands. That doesn't mean that governments there have deliberately run interference on other sectors. If any other sector like pharma for example wanted to set up shop in Alberta the government would also have created favorable conditions "within it's control" to welcome them. The government can't control the price of real estate but do have a say in taxes for example.
Ontario had started it's decline from manufacturing strength before the slide in oil. High energy ( GEA), high taxes, high minimum wages, offshore competitors, mushrooming public service ( Legacy costs ) all had a part in it.
Harper limited the stimulus spending. That allowed us to return to balanced budgets quicker than most other countries. The USA is ramping up and it's sheer size ( 10x what we are) has an enormous impact on us. They are nowhere near balancing a budget and failure to do that just kicks the can down the road. The debt will only grow as will costs of servicing it. Interest costs come out of available money for services. At some point ( as the USA recovers ) interest rates will climb and then debt will be crushing to us as opposed to a talking point now.

Thanks for the clarification Rugger.

What's our "back-up", that is the million dollar question.
I'm not as "anti" JT or "Liberal" as some here, or people might think. What I am, is utterly sick of Governments, that for whatever reason start crushing the "peons". Harper did some questionable things, things that obviously are hurting "now". Not sure any of them really caused the peons grief. As with most admins (Fed or Prov), the vast majority in my life do some good, do some bad, and only rarely cause quantifiable harm/grief to the lowly tax payer.

I have some serious concerns about JT. He's naïve and a fool. He has already shown that on some things, and has indicated some measures, Im not sure ( comfortable) will prove to be wise. More chasing of Green Energy? Well we can see what that's done for Ontario. Secondly, given what's gone on, going on here, can the lowly tax payers here afford more hits over and above the body blows being felt here now?

Yesterday, he sang a pretty little ditty about how intellectual Canada is. Well if he is our poster child, that's not very comforting. Im sure the world business elite see through his bad stchick as easily as most of us. Then to, we can look at Ontario to see how its worked here. Im thinking about MaRs, sold to us as a shinning beacon to draw the worlds brightest...Fail, they cant even lease the floor space let alone pay people to come here.

Re diversification. Oh, quite agree. Pointing out the trade deals Harper got done, was just to counter the typical noise from the left that he put all our eggs in one basket, Oh contraire.

I can tell you straight I am very leery about JT growing PS, kowtowing to the Unions. The left might gripe about the 1% and corporate greed ( Hey lets overlook whose getting rich off all the Green Energy stuff) , but really in ways at least here in Ontario they are no better, Robber barons as well and the only losers are again the lowly tax payer who is getting it from both ends.
Sluggish growth in the economy, Corporate Robber barons who see only profit and bottom lines, and big nanny and her servants..Hydro, taxation, etc.

Early indications and good for him, he's sticking to the trade deals Harper worked hard for.TPP, the EU and yes, even the arms deals with the Saudis. I'm sure the people of SW Ont who have been hit hard, and largely ignored by their provincial government could use a shot in the arm. That said, there are very fair shots being taken at him over that one given his "hug the world nonsense" and selling Canada as humanatarians etc....Can only imagine what others think of him and Canada...

One way or another we need to attract businesses here. If the trade deals start firing (exports and lots of work), the more businesses producing goods and servicings....the more we reap...The trade deals wont do Ontario a lot of good if..........

The left doesn't like the sounds of corporate tax breaks and incentives. I don't see viable alternatives in the near future. Not with whats going on globally, and especially here in Ontario and now Alberta.

It's all fine and dandy to say we are open for business but the world has changed. A clerk can be sitting at his desk in Northern Ontario and monitor inventory in real time in Indonesia from a supplier and communicate at the click of a keyboard. We will never be able to compete with emerging economies on a wage cost basis, ever. So you have to work with what you have to a large extent. For Canada that quite often means natural resources. By all means try and diversify but to cave to the enviro nuts and knife the resources sector will kill us all. JT scares me. He is too idealistic and likely to run with the green idiots who would bankrupt us.

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The company also said it had reduced its workforce by 12 per cent, eliminating nearly 1,800 jobs last year, as shipments dropped three per cent. The railway said the job losses take into account changes to labour agreements in the United States that alter scheduling rules, allowing for fewer railroad workers.

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Sounds like Labor, just axed a bunch of jobs

http://www.msn.com/en-ca/news/canada...gNb9&ocid=iehp

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Originally Posted by Rugger

What I don't understand is: Given that, why is our economy (using the dollar and markets as an indicator) so strongly tied to the price of oil?

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It's a good question and I recently went looking as to why myself. This is a simple explanation but more detail and good graphs are at the link.

The high positive correlation between the Canadian/US dollar exchange rate and oil prices is due, in large part, to the large portion of the nation’s total foreign exchange earnings that is garnered through crude oil sales. Crude oil is the largest single contributor of foreign exchange to Canada, and its share has been increasing with the growth of oil sands. (See: Understanding The Economics Of Canadian Oil Sands.) Presently crude oil constitutes over ten percent of Canada's total current account receipts -- which represents all foreign exchange earned from the sale of goods and services, from financial and employment income,and from grants, and there is no other single service or single income source that generates as much foreign exchange as crude oil.

http://www.investopedia.com/articles...dollar-cad.asp

I clearly see it differently than everyone else… High oil prices gave the Big Oil companies the funds needed for exploration and opening new fields of supply.

Keystone was fought buy Obama to protect the Saudis oil flowing to US friendly Gov.

As soon as Canada was ready to enter the Market with giant oil reserves from oil sands, it became necessary to devalue cost of a barrel of oil to keep the Saudi flow going (US Policy)

Saudis are flooding the market to make our oil too costly to refine…thus keep Saudi oil coming (US Policy)

With weak oil prices, big oil (western Canada) can lay off oil workforce now that they have a 20 yr supply open and have steady cash flow (all though less profit…possible???)

Low dollar means Ontario will reemerge as a manufacturing base (to be seen with high electrical overhead).

Wynne will take credit for “improving jobs” and get another majority

Lastly, those who are old enough will remember that, that is cyclic with Ontario/Alberta boom and bust…jobs and no jobs, oil collapse, as well as jobs losses in Alberta. Second time in my 52 years I have seen this.

The ironic part is..each it collapsed…Liberals were in Power…lol

The Suadis are flooding the market to put Russian and US oil producers out of business. Rarely are the oil sands mentioned. We are caught in it, but we aren't the target. Most producers are operating at losses and have been, for sometime. If they scale back production, they give up cash flows (even when selling at losses, cash is still needed) and the creditors don't like that. Keep in mind, there are very very few Cdn owned producers there. But many Cdn workers, families.

While we've seen similar in the past with respect to cycles. Have the same global dynamics/forces been present? Not sure using the past as an indicator for the future applies.

While the loonie will help with respect to exports, our trade balance will mean it hurts (buying power) more than it helps (sales).
A few economists I've read are making the case that the optimum level should be around .75 to .80.

Wages, taxation, hydro.
Very few are betting on manufacturing returning to levels akin to yesteryear. That's not to say we can't produce goods and services, but rather what those are will need to be different.
And perhaps to a small degree even the Loonie. Many industries import parts and raw materials. So.......

In essence, we (loose term) have priced ourselves out of business

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Originally Posted by JBen

The Suadis are flooding the market to put Russian and US oil producers out of business. Rarely are the oil sands mentioned.

While we've seen similar in the past with respect to cycles. Have the same global dynamics/forces been present? Not sure using the past as an indicator for the future applies.

While the loonie will help with respect to exports, our trade balance will mean it hurts (buying power) more than it helps (sales).
A few economists I've read are making the case that the optimum level should be around .75 to .80.

Wages, taxation, hydro.
Very few are betting on manufacturing returning to levels akin to yesteryear. That's not to say we can't produce goods and services, but rather what those are will need to be different.

In essence, we (loose term) have priced ourselves out of business

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During the 08-09 crunch, oil producers (including opec and Russia) agreed to cut production to prop up the price of crude. Then Russia reneged on that agreement, opened the taps and stole a huge chunk of the Saudi's market share. The Saudi's are trying to get that market share back and view the current low prices as the cost of regaining that market share. The US wasn't a major producer in 08-09, but they are on the cusp of becoming one now. The Saudis want to nip that in the bud as well.

Came across a decent article from
1 year ago
http://www.theglobeandmail.com/repor...ticle22073819/