Tag: Economics

Canada, Economics, Political EconomyLeave a comment

“Spending” Fundamentals

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Canada’s Finance Minister, Bill Morneau, donned his new pair of designer shoes last Tuesday and delivered the government’s budget. For clarity it ought to be called the government’s spending plans, larded with lots of “feel good” spending initiatives that have nothing to do with practical finance or economics. To many of us the hoopla that surrounds the government’s budgeting process and the endless commentary that follows release of the budget itself is mind-boggling. Lawyers, accountants, journalists and various pundits on television are engaged in analyzing the government’s budget. It is easier to understand what’s going on if you identify and … Continue reading “Spending” Fundamentals

Canada, Political Economy, PoliticsLeave a comment

Out Damned Euro!

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I would go a bit further than Canadian Finance Minister Jim Flaherty in commenting that “maybe Europe should give up on the eurozone”. Europe should definitely give up on the eurozone, that collectivist-inspired effort at central control of disparate nations and disparate lives. The attempt to have a common currency—the Euro—among 17 different economies was always doomed to failure. It is just another essentially useless fiat currency. It is legal tender because central authorities say it is. The conduct of trade between 17 competitors using the same currency cannot work because no adjustment can be made in a member country … Continue reading Out Damned Euro!

Political EconomyLeave a comment

AAA Tax Rating

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Moody’s credit rating agency has maintained the U.S. government’s credit rating at “AAA”. Its review, which began on July 13, was coincidentally completed today with the following public statement: “We have confirmed the AAA government bond rating now that the statutory debt limit has been raised.” (Emphasis added.) The agency need not have bothered with the charade of an independent review during the eleventh hour political bickering in Washington if all it was going to do was sanction an increase in borrowing capacity once it was passed by Congress. Bond investors look for safety in the “full faith and credit” … Continue reading AAA Tax Rating

Ethics, Political Economy2 Comments

Appoint a Receiver

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Five months ago I encouraged you to keep an eye on the Statutory Debt Limit in the United States. My premise is that the “debt ceiling” indicates how seriously members of the US Congress and Obama Administration take fiscal responsibility. Since then the partisan bickering has escalated while a general consensus is not whether the limit will be raised but by how much and under what conditions. It is clear that the majority of political participants cannot be entrusted further with finding a resolution. It is time to appoint a Receiver. Debt Caused By Excessive Spending First, consider why law-makers want the … Continue reading Appoint a Receiver

Canada, EconomicsLeave a comment

Stamp Out Canada Post

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There is relatively little news coverage of the rotating strikes and lockouts involving Canada Post and the Canadian Union of Postal Workers (CUPW). It appears that because few Canadians care about it the major media provides only cursory reportage. Fatigue over the troubled labour history of the institution probably has much to do with the disinterest. Now might be a good time to wind up the Crown Corporation and make its assets available to the private sector in an orderly liquidation. In other words: stamp out Canada Post. Sympathy for Postal Workers Very little sympathy exists for postal workers paid … Continue reading Stamp Out Canada Post

Canada, Economics, EthicsLeave a comment

Inflation, Prices and Money

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Many economists continue to demonstrate their confusion about the subject of inflation. While ordinary people clearly feel the effects of monetary inflation in the form of higher prices for most goods and services, elite pundits labour under a misapprehension of the law of cause and effect. Most recently, economists are surprised by the fact that Canada’s rate of inflation for March 2011 was higher than expected. Of course, they are referring to the effects of monetary inflation: higher prices. Once again, they confuse and obscure cause and effect relationships. The Bank of Canada has now raised its inflation rate forecasts, … Continue reading Inflation, Prices and Money

Economics, Government, PoliticsLeave a comment

On Government and Other Looters

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On March 23 an opposition non-confidence motion was passed by a margin of 11 votes in the Canadian House of Commons. Parliament was subsequently dissolved and another Canadian election will be held on May 2. On April 4, US President Barack Obama announced his intention to seek re-election in November 2012. Meanwhile, gridlock in the US Congress over negotiations to cut government spending threatens shutdown of the US government. In June of last year, the New Flemish Alliance, a Dutch separatist party emerged as the largest following elections in Belgium. The various political parties could not form a governing coalition … Continue reading On Government and Other Looters

Economics, Political Economy1 Comment

Economic Alchemy: Spinning Death and Destruction into Gold

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Economist Paul Krugman, who writes a progressive political column for the New York Times sees some gold in the death and destruction in Japan. The rebuilding, he suggests, will be an economic boost. He admits it sounds like a “crazy” notion but points out that “…liquidity-trap economics is like that”. The observation is stupid on its face. Taken to its logical extension, if death and destruction have hidden economic benefits why not keep on destroying and rebuilding things? Only government elites and their advocates could come up with such cynically stupid ideas. The hidden costs, the things that could have … Continue reading Economic Alchemy: Spinning Death and Destruction into Gold

Canada, Government, Political EconomyLeave a comment

Oil Prices, Gas Prices and Government

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Every spring it seems we hear the same old refrain about higher oil prices and higher gas prices. Government and media advise that the price of fuel at the pump is going up; there may be shortages in oil supplies leading to higher gas prices just as we head into the summer driving season. In the wake of this noise comes a chorus of calls for more government regulation of the oil industry and of oil traders, paying particular attention to “obscene” oil company profits and speculators. Cutting through the fog of political rhetoric and media hype, the fundamental issue … Continue reading Oil Prices, Gas Prices and Government

Economics, PoliticsLeave a comment

The Paper Ceiling

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The economic bellwether to watch this year is the US “Statutory Debt Limit”. Also known as the “debt ceiling,” it represents the limit the government may borrow to continue funding operations. The present limit was set at $14.3 trillion on February 12, 2010. Congress is considering another increase to accommodate spending which could press against the ceiling by April or May. Given the reliability of government estimates this could happen sooner rather than later. Before 1917 Congress needed to specifically approve each debt issue. For efficiency, legislation was passed allowing debt to be issued funding government operations, provided total debt … Continue reading The Paper Ceiling