Stimulated yet?

I certainly haven’t been very productive with this blog lately… where does the time go? Perhaps it’s part of the winter mentality, where we just hunker down and hold our breath, waiting for spring.

At least spring seems to be coming to our area of the Maritimes. Snow only exists in the woods or sheltered areas, and the sun has been shining brightly the past few days (though sometimes it isn’t as warm outside as a view from the window would suggest). Officially, spring is supposed to arrive in less than a week, so I guess we’re entitled.

For the last two months, as we worked our way through the worst of winter, we have been treated to never-ending talk of economic “stimulus”. Provincial stimulus talk lately (perhaps only as pre-election promises); before that, federal talk and legislation. We even hear international stimulus talk and see changes as nations struggle with getting out of this quagmire of recession.

And will it work? Perhaps, but I have my doubts if it will cooperate with the schedule that is promised, at least in Canada. We have enjoyed the luxury in Canada of having governments that seldom go to extremes, though in our limited experience we might at times think they do. I can’t recall the last time that armed men strode into the House of Commons and announced they were taking over the government, fed up with the rule of those in power—though it might be welcome much of the time. We are accustomed to little moves, the tweaking and adjusting of the nation’s business, a government that just muddles about, always ready to pull back if voters get too offended.

It’s this kind of fiddling government that is not ideal for the times. In the States, Obama seems ready to ruffle feathers all around, even rip a few feathers out here and there. Perhaps Canadians are too civilized for that, but from my view it seems to be the time for bold moves, not for just tweaking. Under the guise of “stimulus” our governments are prepared to spend money left and right, something any government always wished to do anyway, but now become very acceptable, and the success of that for long term is questionable.

I can’t see that the federal response is adequate. They’ve laid money on the table for infrastructure spending: roads, bridges, buildings, etc., but those in the know say that most of the money requires contributions from provinces and municipalities, and those bodies have little money available to take advantage of it. Provincial governments may go into deficit financing to get money, causing more trouble for already debt-ridden places like Nova Scotia. Municipalities are generally not allowed to spend what they don’t have and will have limited ability to take part, as much as they might like new buildings. Similar federal plans in the past have apparently enjoyed only partial success because of the cost-sharing provisions– they look good when announced, but fall short of their promises.

And income tax changes? Are they serious? Putting more money in the hands of the people to stimulate the economy? I think my family benefit from the new tax regulations amounts to something like $133 a year of saving. Woooo! Call up the tradesmen… a new addition to our house! Perhaps a more reasonable result from this might be a few extra coffees and muffins at Tim’s over the course of the next year. Stimulus? I think not, except for the additional caffeine.

On the auto front, the Big Three come begging for billions, and then start talking about pulling out of Canada if they don’t get exactly what they want. Who’s in control here anyway?

And the Bank of Canada cuts the federal lending rate to bare bones, something like 0.5%— almost free money, to “stimulate” the economy. But, as pointed out by three CEO’s of the large Halifax auto dealerships last week on TV, car loans are still going at 8 – 10%! The banks are reaping the benefit and not passing it on to consumers!

What got the world into this mess in the first place? The cause is complex, and something I talked about a while ago, but an overriding aspect of it can be summed up in one word—Greed. Greed was largely behind the whole mess happening, and greed is one of the main hindrances to coming out of it. Greed for votes sways governments that don’t want to take the hard decisions that might turn influential people against them (notice Harper condemning the Obama increases in tax on the wealthy—can you believe it?). Greed for profit sways the banks (did you really expect them to turn away from easy profit?). Greed sways executives who want to protect their golden parachutes of salaries and pay-out benefits. Greed is exhibited in all areas of the economy.

Lately, economists have been suggesting that we are not going to come out of this situation as quickly or as easily as some had thought. I have little doubt that this is true. Much of the fuel for the situation we are in came from the belief that we were all entitled to a lifestyle far beyond what our ancestors had enjoyed.

It could be that was in error.


3 thoughts on “Stimulated yet?

  1. I’m as pessimistic as the next guy on this but do believe the mess won’t be fixed by much of what I see as “stimulus”. Instead, we will come out of the mess IN SPITE of what governments do!
    The early talk of stimulus, especially in the States, was about spending on infrastructure needs. You could hardly find an economist who didn’t say that infrastructure spending was a very productive way to keep people working and do common good for the country. But, when push came to shove, something got lost in the translation! Almost anything can be called infrastructure spending — and almost anything was! (example: $50,000. to some company in Oregon to make and export wooden arrows to China!) Pork barrel politics at its best (think worst). The US stimulus package is said to have less than 10% of the funds alloted to infrastructure.
    One thing that politicians love to do is spend. They see that as doing some good. But, you and I don’t have a say in the choices made. These are dangerous times and we will be dead and buried and our children paying for decades for the debt incurred here.

  2. Yes. Greed. Is it the most destructive of the deadly sins? Certainly it is the hardest to avoid, and that goes for Governments, banks, princes, Popes and right down to our obscure personal levels.
    It’s hard to give up good things and easy to convince oneself of need.
    Our bishop, Crispian, has us all on a “live simply” campaign…yet we see the Pope has custom made Prada shoes, and robes heavy with gold embroidery are coming in again.
    Many years ago, when I lived in beautiful Canada, Pierre Trudeau warned us about what is now happening. If we don’t share, the needy south will march north. Well, in Britain that’s come true – and still we spend and hoard.
    I have nothing useful to say and no head for economics. I only watch with apprehension, and quietly ask myself, do I need another pair of shoes?

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