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QE is “Not on the Table,” says Joe Oliver
QE is “Not on the Table,” says Joe Oliver
In a world where central banks are given free rein over the supply of money and credit, and where any examination of these secretive institutions is considered interference with their “independence,” Finance Minister Joe Oliver’s comments about QE have not gone unnoticed. The other week Oliver was quoted as saying that quantitative easing was “not on the table” as a tool to combat the “economic downturn.”
Economic professors and commentators around the country criticized the Finance Minister, saying that he overstepped his power. Ian Lee of Carelton’s University’s Sprott School of Business said, “You may think that, you may privately say that, but that’s not the sort of thing I think the minister of finance should be saying.” Stephen Gordon, an econ professor at Laval University, agreed, calling the comments “worrisome.”
Because, you know, the Finance Minister is not supposed to comment on the country’s finances. Especially when the federal government is the sole shareholder of the Bank of Canada.
In October 2013, the late Jim Flaherty told reporters something similar. He did not support the US Fed’s bond-buying program known as QE. At the time, Flaherty’s stance was at odds with Bank of Canada Governor Stephen Poloz’s. However, Poloz has stated that a QE decision would be a joint-effort between the Bank and the federal government’s finance ministry.
Quantitative easing, for those who don’t know, is when the central bank prints money and then uses the fiat to purchase government bonds. The new money, once circulating in the economy, appears as a liability on the central bank’s balance sheet, whereas the new bonds are supposed to resemble interest-earning assets. Central bankers do this when they can’t push interest rates any lower. Often it’s after a solid hour of head-scratching when they decide that the problem is that they simply haven’t created enough inflation.
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Forget politics, here is what the economy needs: Don Pittis
Try seeking a recovery as if Canada weren’t in election mode
If Prime Minister Stephen Harper could wave a magic wand and make the Canadian economy boom, you’d think he would do it now.
It’s well-known that one of the main barriers for an existing government to get re-elected is a sagging economy. And despite Conservative Finance Minister Joe Oliver’s boasts on job creation and growth, there are plenty of signs that Canadians are hurting.
Oil and the loonie are plunging. And while Bank of Canada governor Stephen Poloz would prefer us not to use the word “recession” because it is “unhelpful,” it seems clear that Canada is in or close to that.
- Recession talk looms over federal election campaign planning
- Bank of Canada’s Poloz calls R-word ‘unhelpful’
The fact that governments cannot snap their fingers and fix the economy is in some ways reassuring. It shows that the conspiracy theorists who think the world is being controlled by powerful cliques in smoke-filled rooms really are just wacky.
Part of the problem is that politics is complicated. Despite his government’s ability to pass practically any legislation, in so many ways, Harper’s hands are tied by external forces and those created by his own party.
That is why an imaginary government that did not have to worry about politics might do things differently.
One of the most obvious things to do when an economy is weakening is to spend. While it may be smart to run surpluses when the economy is booming, you don’t have to be a fanatical Keynesian to think it’s good to spend that surplus when the private sector economy is shrinking.
In this case, Harper is partly restricted by his own ideology. Switching from a balanced-budget, small-government focus to Keynesian largesse would seem like a flip-flop and could alienate a neo-conservative core.
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Is Canada Next? Recession Is “Quite Contained”
Is Canada Next? Recession Is “Quite Contained”
“In the current context, if you look at the growth numbers, the recession is effectively in the goods sector, it’s in the oil industry, it’s weak growth in manufacturing, weak growth in construction,” explained Kevin Page, Canada’s former parliamentary budget officer, a watchdog role charged with analyzing the state of the economy and government finances.
“It’s quite contained,” he told CBC radio, with an eerie echo of the Fed’s description of the US housing bust in the early stages of the Financial Crisis. There’s “still lots of growth in the service sector,” he said.
That’s what everyone is hoping. And it would just be a technical recession – two consecutive quarters of negative growth – rather than an official recession.
There wasn’t a lot of room for optimism. The economy shed 6,400 jobs in June, according to Statistics Canada, with gains in full-time jobs and losses in part-time jobs. The unemployment rate remained at 6.8%, same since February. But there are numerous indications that contractors, which do much of the work in the oil patch, are still working, but a lot fewer hours, and that this deterioration, in Calgary for example, hasn’t been fully captured by unemployment statistics.
“If you look at the job picture, it’s gotten progressively weaker through the summer,” Page said. “I think that would be a concern for the government and a concern for the overall strength of our economy.”
“The economy’s weak, you can’t deny that,” Page added. “It will be pretty hard for Minister Oliver to keep that line that we’re not in a technical recession.”
Which is exactly what Finance Minister Joe Oliver has been “adamant” in denying, according to CBC. He referred to the 96,000 full-time jobs created so far in 2015 and cited, of all things, the IMF, which “confirmed what I and numerous independent analysts have been saying – the Canadian economy will grow this year.”
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Canada’s economy isn’t in recession, despite report, Joe Oliver says
Private sector economists warn of possibility of recession this year
Despite an economy that’s shrunk every month for which we have data this year, the federal finance minister says Canada is not in a recession and is poised for growth later in 2015.
At an event in Toronto on Friday, Finance Minister Joe Oliver told reporters that the economy will avoid recession this year, despite newdata from Statistics Canada earlier this week that shows GDP has contracted in each of the first four months of the year — two-thirds of the way toward the technical definition of a recession.
“First off, we’re not in a recession,” Oliver was quoted by Bloomberg as saying. “We don’t believe we will be in a recession.”
Technically, economists define a recession as two consecutive quarters with negative GDP growth. Oliver said it’s too early to say the country is in a recession because we don’t have economic data for the entire January to June period.
“We expect solid growth for the year, following a weak first quarter.”
Economic slowdown
Finance Minister Joe Oliver’s April budget projected an economy that would grow by about two per cent this year. (Darren Calabrese/Canadian Press)
April’s federal budget assumed an economy that would grow by about two per cent this year. So far, the numbers show the economy shrank by 0.6 per cent in the first three months of the year, and another 0.1 per cent in April.
The Finance Department’s optimism is far from a universal view. Bank of America economist Emanuella Enenajor raised eyebrows with a report on Thursday, in which she said the GDP report for April, which showed the economy shrank by 0.1 per cent, caused her to revise her expectations downward for the entire April to June quarter.
That would be enough to bring a dirty economic word into the discussion: recession.
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Jobless Folks, Working Moms, and More Left Out of Canada’s Budget
Jobless Folks, Working Moms, and More Left Out of Canada’s Budget
Facing economic trouble ahead, Conservatives offer bouquet of tax breaks for the wealthy
Wasn’t it always the student who kept asking for extensions on homework who always wound up turning in the poorest quality work? Finance Minister Joe Oliver tabled the 2015 federal budget on Tuesday, using some “creative” accounting to scratch out a small surplus. But despite taking a two-month extension, everyone from mainstream economists to First Nations to the YWCA to unions and ordinary Canadians are giving Mr. Oliver a failing grade on his first federal budget.
Packed with tax breaks for wealthy Canadians, and back-loaded with promises that won’t pay out until four or five years from now, Tuesday’s budget is entirely an election document and little more. Nothing new or unexpected, and perhaps this is why Mr. Oliver’s first budget, in returning to balance, is so disappointing.
It’s a missed opportunity.
Mr. Oliver’s balance comes after six consecutive slash-and-burn deficit budgets, $14 billion every year in cuts from the services Canadians rely on from their government. These are cuts to the CBC, to policing, to veterans, to oil spill response, to healthcare, to food and rail safety, and the list goes on.
Meanwhile, Canada’s economic outlook is anything but rosy. The price of oil is forecast to remain low, while the Conservatives continue to bet the farm on raw oil exports. Unemployment is on the rise, job quality is the lowest in a generation, and pay inequality is increasing. The governor of the Bank of Canada recently referred to the effect of the oil price slump on our economy as “atrocious.” Almost three-quarters of children under five have no access to affordable, quality childcare. Eleven million Canadian workers have no access to a workplace pension, and we’ve lost 400,000 manufacturing jobs since Mr. Harper was elected.
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Joe Oliver’s Budget Numbers Are Thoroughly Cooked
Joe Oliver’s Budget Numbers Are Thoroughly Cooked
That, or he’s been drinking his own Kool-Aid.
No wonder they’re spending $7.5 million in public money to advertise Joe Oliver’s budget. Bernie Madoff couldn’t have come up with a sneakier sell than this.
Still, no one should be surprised. This misbegotten government’s modus operandi is about much more than information control. It’s about soaring, jet-propelled skullduggery in a never-ending political campaign. It’s a power fantasy. It’s Steve’s way.
Armed with his narrative of convenience, Harper programs the electorate with fictions of prosperity, compassion and prudence. In the real world, he acts quite differently. There, he underfunds Coast Guard stations, veterans’ offices, First Nations tribal councils, railway inspections, scientific research and Employment Insurance processing.
And don’t forget health care — $36 billion in cuts over ten years and still no Health Accord. Next step? Transfer tax credits for health to the provinces (after all, they administer health don’t they?) and get the gum of medicare off Ottawa’s shoe for good — just like the founder of the National Citizens Coalition (once led by Steven Harper) advocated.
Numbers have a wonderfully elastic quality to them; like Harper cabinet ministers, they say what they’re told to say. Numbers are the favourite tool of fraudsters and politicians alike. One swindles money, the other swindles votes.
Here are some examples of rubber numbers from Harper’s past. When he wanted to buy F-35 fighter jets without a competitive bid process, he told Parliament the sticker price was $70 to $75 million per plane — in the crazed world of death machines, a bargain. The real price was 40 per cent higher and the Harper cabinet knew that back in 2010 long before it started lying — during an election, no less — about the actual costs to the tune of $10 billion.
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Canada’s truthiest election campaign begins: Don Pittis
True or not, politicians defend their promises with passion and confidence
The Harper Conservatives are the balanced-budget party. You might as well get that into your head now, because you are going to be hearing it repeated till election day.
This is also the economic stewardship party, the spending-on-transit party and the party fighting for the poor and middle class. Yesterday, Finance Minister Joe Oliver even implied they were the fight-against-climate-change party.
An independent analyst might dispute those statements. In fact, independent analysts in newspapers and columns across the country have been doing just that this week following Oliver’s federal budget. But in what is shaping up to be Canada’s “truthiest” election campaign, scientific evidence doesn’t strictly matter.
Truthiness, as coined by U.S. comedian Stephen Colbert, is something expressed as a truth because it is a feeling from the heart without evidence or logic.
After reading a wonderful piece by Oxford economist John Kay called “How beliefs became truths for the political establishment,” it struck me that this is exactly what we are seeing in our own Canadian (pre-) election campaign.
As well as claiming a balanced budget, Oliver promised spending on transit and other infrastructure and tax breaks that would stimulate the economy. But there may be less substance to these boasts than appear.
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Blame Oil: Opportunistic thinking amid the oil price collapse
Blame Oil: Opportunistic thinking amid the oil price collapse
The wisdom of Winston Churchill, who once quipped that you should never let a good crisis go to waste, clearly hasn’t been lost on federal Finance minister Joe Oliver, who’s already made considerable hay out of falling oil prices.
Mr. Oliver’s finance department won’t table a budget until April, due to the uncertainty created by lower crude prices, which have thrown the budgeting process into limbo—or at least that’s the claim. Even though commodity prices matter much more to the provinces, which are where oil and gas royalties accrue, Mr. Oliver knows a gift horse when he sees it. Ottawa’s oil price assumptions are hardly relevant enough to most federal revenue projections to necessitate such a delay, but so it goes. If eventually it turns out the promised budget surplus will turn into a deficit or provincial transfer payments will need to be cut, it’s safe to say that oil will be the first place Mr. Oliver looks when it comes time to assign blame.
Over at the Bank of Canada, the same type of opportunistic thinking is just as apparent. If lower oil prices can be used as a convenient reason to reshape fiscal policy, why shouldn’t monetary policy follow suit as well? After all, the Bank of Canada has had plenty to say about the country’s oil ambitions in recent years.
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Joe Oliver concerned about a Canada divided over energy – Business – CBC News
Joe Oliver concerned about a Canada divided over energy – Business – CBC News.
Finance Minister Joe Oliver says he is concerned that divisions within Canada over the energy sector will eventually hold back the country’s growth.
In a year-end interview for The Exchange with Amanda Lang, Oliver cited opposition to fracking and to pipelines in some provinces as potential points of conflict.
“It’s important to communicate with Canadians that we’re not just missing out on a new opportunity. We’re potentially also looking at a decline which would adversely affect the Canadian economy and degrade the standard of living of Canadians across the country,” Oliver said.
New Brunswick recently announced it would impose a moratorium on fracking and Quebec and Ontario have set conditions for the development of the Energy East pipeline within their borders.
Pipelines critical to economy
Oliver terms the need to get Canadian oil to tidewater so it can be shipped overseas a “critical strategic imperative” for the country.
