The Recession is “sooo… 2009″
This morning, on CBC Radio out of Calgary, I heard the CBC’s business reporter mention (twice) that the recent GDP numbers for Canada indicate that the recession “is sooo… 2009.” I am used to reporters, especially those who have time to fill eveyday, latching onto any available economic indicator and asking, “Is the recession over yet?” I mean, if it is your full-time job to report “the news,” then it must be difficult to have to report the news in poor economic times. But I was struck by this reporter’s seeming confidence in using Vallery-Girl lingo to dismis negtivity as somehow being passe.
At any rate, I surely didn’t buy into his exhuberance. In fact, I tend to think that we have yet to see the worst of it in the U.S. and that Canada is nowhere near being out of the woods. So, I stumbled across this report from Alexandre Pestov at the Schulich School of Business (York University) which looks at some of the fundamentals (which, of course, your average “Is the recession over yet?” reporter does not do) and comes to a very different conclusion: that a housing bubble does indeed exist in Canada and that it has yet to burst. You can access the report here:
I find the report to be pretty compelling and not really that surprising. I live in a small city in Alberta and the house that I purchased in 2003 was later valued at three times the price I paid for it only three years later. Three times! Now, that was an informal estimate (coming from two different friends who are realtors) but it didn’t seem out of line with the prices people were paying for similar properties. And while the Alberta economy was hot, I don’t think your average person was (and still is) pulling in three times their normal wage.
The other aspect of this is that I really feel many people do not fully appreciate the extent of the financial problems (the fundamentals) of Western and probably the world’s economies. If we are living in the Great Recession, or the “Second Great Contraction” as Reinhart and Rogoff call it, we need to remember that the Great Depression took many, many years to play out (and only really ended a decade later with the outbreak of World War II).
By the way, yesterday I cashed out all my (meagre) investments. I figured that before these financial advisors can completely destroy (steal) my investments, I would rather take them now and pay down debt. In the future, I will plan for my own financial future.
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Great phrase: The ‘Wall Street-Treasury Complex’
This week, I went back and re-read a couple of chapters from Chalmers Johnson’s book Blowback: The Costs and Consequences of American Empire. (It’s a great book.) He referenced an essay that I decided to locate and found a great phrase. The essay is entitled “The Capital Myth: The Difference between Trade in Widgets and Dollars” and was written by Jagdish Bhagwati (Foreign Affairs, May – June 1998). Bhagwati is supportive of free trade but criticises those that also argue that capital should also be treated in a similar fashion. In fact, Bhagwati makes the compelling case that the financial crises witness in the 1990s resulted, in part, from the unencumbered flows of financial capital, especially in terms of loans/debt (sound familiar?).
He says that the argument that free-flowing financial capital has no negative effects is a myth perpetuated by “the Wall Street-Treasury Complex.” What an apt phrase… and one that should become much more familiar to all of us.
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Obama’s garrison state
Hmmm… while reading the following article, a useful phrase came to mind: ‘Plus ça change, plus c’est la même chose.’
The more things change, the more they stay the same. I hate to say it, but that pretty much sums up what Barack Obama means for me now. His ‘fix’ for the financial crisis was to retain all the same Wall Street criminals in positions of authority over public policy (while scolding them for the TV cameras from time to time), and then he fulfilled all the wishes of idealist democrats and cynical republicans by printing money like there was no tomorrow. Then there is his, ahem, ‘belt-tightening.’ I just came across this at the Huffington Post:
Jo Comerford, “A Titanic Budget in an Ocean of Icebergs: Will the USS Budget Go Down?” http://www.huffingtonpost.com/jo-comerford/a-titanic-budget-in-an-oc_b_480060.html
Of course any defense-related spending is off the table when it comes to the new fiscal reality! I mean, how could a military empire exist without it squandering most of its resources (and, since the U.S. uses a quarter of the world’s annual output of petroleum, the world’s resources) on its military? (Yes, the sarcasm here can be cut with a knife.) So, that is why I found this passage particularly infuriating:
With a price tag now approaching $330 million per plane and a total program cost of well over $65 billion, the C-17, produced by weapons-maker Boeing, has miraculously evaded every attempt to squash it. In fact, Congress even included $2.5 billion in the 2010 budget for ten C-17s that the Pentagon hadn’t requested.
Keep in mind that $2.5 billion is a lot of money, especially when cuts to domestic spending are threatened. It could, for instance, provide an estimated 141,681 children and adults with health care for one year and pay the salaries of 6,138 public safety officers, 4,649 music and art teachers, and 4,568 elementary school teachers for that same year. Having done that, it could still fund 22,610 scholarships for university students, provide 46,130 students the maximum Pell Grant of $5,550 for the college of their choice, allow for the building of 1,877 affordable housing units, and provide 382,879 homes with renewable electricity — again for that same year — and enough money would be left over to carve out 29,630 free Head Start places for kids. That’s for ten giant transport planes that the military isn’t even asking for.
Honestly!!
My worry is that under the current government in Canada (which has, on more than one occasion, expressed its admiration of war and war-mongerism), we too will start to mould ourselves on the Garrison State that Obama seems so intent on preseving in his country. The problem with Obama is that with all the cuts that will come to various other areas of the federal budget (and by extension, state budgets), those things that make the U.S. a great country will be wittled away… leaving nothing behind but a freedum-spouting, resource-destroying, war-mongering state. So much for ‘hope’ and ‘change.’
I certainly am not one that agrees with the endless accumulation of debt. In fact, I think that Western countries will have to undertake some quite drastic belt-tightening in the 21st century once we realize that our economies are little more than giant ponzi schemes. And this will mean that we are going to have to make some very difficult choices when it comes to what it is in the future that we fund with public money. And so, it is very dishearteneing that Obama is virtually powerless to steer the U.S. peacefully from its superpower/military-empire status. Instead, as its financial power declines, it is likely to morph into something even worse: a dying yet unpredictable and even more dangerous militarized state.
God help us all.
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