Our Economy: Don't Worry, Be Happy - Part Trois

I wonder how many times one has to be warned of an impending crisis before A) acknowledging said coming crisis, and B) doing something to deal with it, if not actually attenuate/divert it?

Harper has received many warnings already that our economy is heading for bad days ahead, yet has essentially brushed off said warnining so far.

Well, here's yet another one:

Canada heading for recession, say economists

Canada is headed into a worse recession than anyone expected, one that could last until almost 2010, said the country's top economists on Monday.

Staid financial watchers, who usually speak in measured tones, almost screamed the r-word in two separate events Monday.

"At this point, if this kind of volatility keeps up, I think we're looking at a much more serious downturn than a mild recession that most of us are talking about," said Doug Porter, with BMO Capital Markets, at a meeting of senior economists in Toronto.

Canada faces a financial perfect storm of a sputtering U.S. economy, tumbling oil prices and falling domestic demand that will conspire to hurt the country's growth prospects for the next few months, they said.

"[We're] forecasting Canadian and U.S. recessions, plus 100 basis points of [Bank of Canada] and Fed cuts that could come at any time. This is not just made-in-U.S.A. weakness as Canada faces its own home-grown recession signals," Scotiabank economists Derek Holt and Karen Cordes said in a morning commentary.

A recession is commonly defined as two or more quarters of negative GDP growth.

If Scotiabank's forecast is correct, the Bank of Canada would cut its overnight lending rate to two per cent from three per cent and the U.S. Federal Reserve would chop the fed funds rate to one per cent from the current two per cent level.

In Toronto, these practitioners of the dismal science were decidedly more dour as to their expectations of the national economy even into the next year.

TD Bank's Don Drummond said he sees the economy shrinking until late 2009 and then only gradually recovering.

(...) Global oil prices fell below $90 US a barrel at the start of the week; other commodity prices have likewise slipped in recent weeks in the face of slowing world economic growth.

Canadian housing prices have begun to slide as well, although the country will not face a home sector deterioration along the lines of what occurred in the United States, Scotiabank said.

Finally, exports to the United States will dry up as American demand for Canadian products evaporates, economists said.

Scotiabank currently has the Canadian economy growing 0.7 per cent this year and 1.4 per cent in 2009. This prediction, however, was made on Sept. 9, before the full force of the Wall Street financial meltdown was evident.

BMO Capital Markets expects the economy to grow 1.7 per cent in the July-to-September period but then contracting by 0.4 per cent in the final three months of the year.

Along with Scotiabank, BMO has Canada's economy growing in the 2009, up 1.0 per cent.

And what, pray tell, does Harper has to say to this now?

Conservative Leader Stephen Harper acknowledged Monday that Canada could be touched by the growing financial crisis and insisted his party has a backup plan if necessary.

"Look, we're not an island. We can't pretend, and we're not pretending, that we will escape effects of world developments," said Harper at a campaign announcement in Ottawa about child care benefit improvements.

But he added that the Conservatives have put mechanisms in place to help people find jobs and hold on to much of their income.

Harper said he is watching developments around the world very closely for any possible rebound effects on Canada.

The Conservatives have a Plan B to assist the Canadian banking system if the crisis spreads here, Harper said, but insisted Canada remains in a better situation than elsewhere.

The Conservative leader was responding to news that world markets plummeted again Monday as government bank bailouts in the U.S. and Europe failed to calm fears of a global financial crisis.

Plan B? Plans? Mechanisms? What exactly, Mr. Prime Minister?

Sounds an awful lot like McCain who keeps claiming "I know how to do this", "I know how to win wars", "I know how to catch bin Laden", etc. - and yet consistently remains mute on what actually he would do.

Well, at least this time around, Harper is acknowledging finally the coming crisis and letting on that he has "plans" to deal with this - perhaps he learned something from the debates after all (namely from ... Stéphane Dion).

(Which in turn begs the question: are you now the one who is "panicking", Mr. Prime Douchebag of Canada?)

Or perhaps he is merely giving us lip service because of this?

Tories drop further in latest survey

Support for the Conservatives plunged in the days following the leaders' debates amid worries about Harper's approach to the economy, a pollster suggests.

"The economy, and to some extent the leaders' debate about what to do about the economy, have changed the dynamic of the campaign," said Harris/Decima president Bruce Anderson.

According to the latest four-day rolling Canadian Press/Harris-Decima survey, about 32 per cent of participants said they would vote for the Conservatives, yet another drop in the party's steady decline of support since its height at the start of the five-week election campaign.

Liberals rose to 25 per cent, while the NDP continued its climb with 21 per cent, the poll conducted Oct. 2-5 said.

The Green Party fell a point to 12 per cent and the Bloc held steady with eight per cent voter support.

Anderson said Harper risks being perceived as "too measured in his reaction" to spreading economic uncertainty.

It's unlikely voters reject his argument that the fiscal fundamentals are sound, he said, but Ontario and Quebec voters seem to be seeking more empathy with their economic pain due to the troubled manufacturing sector.

They want a "sense that more policy action will be taken if needed to protect Canada from fallout," said Anderson.

Some voters, he warns, are perceiving Harper's steady approach as avoiding action — a perception he must seek to counter as the Oct. 14 election date nears.

As I called it. Thank you very much.

Meanwhile:

The Toronto stock market rebounded Monday afternoon to trade at a 650 point loss after nose diving in early trading by nearly 1,200 points.

The S&P/TSX composite index initially dropped by 1,185.58 points, a 10 per cent drop, to 9,620.77. However, it has since recovered 10,164.28.

The TSX had not dropped below 10,000 points in more than three years.

Yup. From "the fundamentals of our economy are strong" to "sure, there are difficulties but we're not in a recession", to now "we have plans to watch for what's coming ahead".

I ask again, Mr. Prime Minister: what plans?

Or does this imply some kind of expedient, incompetence-driven bail out "rescue" package at our expense - as Bush's inadequacies left essentially no choice to Congress and Senate to do the same last week?

There Harper and his Harpies go again ... emulating Bushies and McCains.

But hey - don't worry, be happy eh?

Because them conservatives are so fiscally responsible and demonstrate such restraint on spending - why, they are proven true masters of the economy, right? We can therefore trust in them implicitly, right?

Ri-ight ...


(Cross-posted at NetRoots)