Friday, August 13, 2010

Led astray, with potentially disastrous consequences

At last notice, Deficit Jim Flaherty was still declaring that the Cons' desire to cut off any stimulus would take precedence over actual economic conditions - presumably because unlike a war, apparently anything that might unintentionally result in some social benefit has to be brought to the quickest possible end:
Mr. Flaherty also declined to speculate about possible extensions for projects delayed by extenuating circumstances such as Saskatchewan’s flooding...

“We want to end the stimulus. We need an exit strategy: It [March 31, 2011] isn’t an arbitrary date. This was, from the beginning, two years."
So let's see what kind of leftist rabble-rousers have joined the movement disagreeing that the Cons' arbitrary end date and desire to start chopping should come first:
A top Bay Street economist has waded into one of Ottawa’s hottest political debates, arguing in a report out Thursday that governments here and in the U.S. should “press on with more stimulus to ensure the recovery sticks.”

Douglas Porter, the deputy chief economist at BMO Capital Markets, said in his report that “extraordinary times call for extraordinary measures” and that for leaders like Prime Minister Stephen Harper or U.S. President Barack Obama, “the wrong diagnoses at this point could lead economic policymakers astray with potentially disastrous consequences.”
Porter concludes “there is a very strong case” for the U.S. to engage in another round of stimulus spending.

“The long-term fiscal cost from a lengthy period of sub-par growth would be much more damaging than a small down payment now — a stitch in time saves nine,” Porter wrote.

And while Porter doesn't call on Canada, at this point, to do the same, he thinks Harper and Flaherty should have something ready to go, just in case.

“Fiscal stimulus has been quite effective here,” Porter wrote. “Policymakers should keep their options open for the 2011 budget season, and not lock in a hard stop on stimulus just yet.”

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