Econowatch
By Jason Kirby - Friday, October 30, 2009 - 4 Comments
A weekly scorecard on the state of the economy in North America and beyond
Forget what economists have told you about how stimulus programs are supposed to function during a recession. You can learn a lot more from watching a master illusionist at work.
Take America’s US$8,000 tax credit for first-time homebuyers. Like any stimulus measure meant to jolt the economy out of recession, the tax credit was always more about smoke and mirrors than economic theory. When Washington created the program eight months ago, its aim was to conjure the illusion of stability in the housing market. Until the free fall in house prices could be halted, a broader economic recovery could never take hold. Continue…
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Inside the meeting that saved the world
By Andrew Coyne - Tuesday, October 13, 2009 at 1:45 PM - 30 Comments
ANDREW COYNE: How the seven richest nations went all in on a plan that brought the global economy back from the brink
The meeting was not going well.On Friday, Oct. 10, 2008, finance ministers and central bankers from the Group of Seven leading industrial economies had gathered in Washington for their regular fall meeting. The circumstances, of course, were anything but routine. Four weeks after the collapse of Lehman Brothers, the 158-year-old Wall Street institution, the financial world was in a state of escalating panic. With banks toppling one after the other, stock markets in a death spiral, credit markets all but disabled, the meeting had taken on crucial significance.
Around the world, investors were looking to governments for salvation—only they could provide the kind of rock-solid assurances that might put a floor under the markets. A strong, united statement from the G7, and there was some hope of restoring sanity to the situation. A weak statement, or worse, a failure to agree, and the entire world financial system might well tip over the edge. Continue…
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Was bailing out Fannie and Freddie the right thing to do?
By Duncan Hood - Monday, September 8, 2008 at 6:12 PM - 13 Comments
Okay, hear me out. I understand that if the U.S. government hadn’t stepped in…
Okay, hear me out. I understand that if the U.S. government hadn’t stepped in and taken over Fannie Mae and Freddie Mac (I still can’t get over those names), then the mortgage giants would have exploded. Given that they back about half of America’s $12-trillion or so in home mortgages, that would be a very bad thing. But here’s the thing: By stepping in a bailing Fannie and Freddie out, the government didn’t solve the problem, they just diluted it.
Now, instead of the misery being concentrated among those folks who knowingly placed a bet on Fannie and Freddie — such as the bondholders who lent them money — the misery will be spread out among American taxpayers from coast to coast. Is that really fair? Should regular citizens who acted prudently and tried to avoid this mess by not investing in Fannie or Freddie, not loaning them money, and not taking on ridiculous mortgages of their own, now be forced to help bail out the people who did? Because that’s what this amounts to. The money’s going to have to come from somewhere. Continue…
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Megapundit: Pierre Poilievre redeemed!
By selley - Friday, July 18, 2008 at 12:08 PM - 0 Comments
Must-reads: …Colby Cosh and Richard Gwyn on Fanny Mae and Freddie Mac; Peter Worthington
Must-reads: Colby Cosh and Richard Gwyn on Fanny Mae and Freddie Mac; Peter Worthington on the Israeli prisoner exchange; Daphne Bramham on addictions treatment.
The Friday miscellany
Among other things, Ottawa is: too profligate, too callous, too bereft of tourists, and too scandal-obsessed, or possibly not obsessed about the right scandals.Lorne Gunter, writing in the Edmonton Journal, has about ten different ways to say the Conservative government is spending too much damn money—and probably more than the 3.4 per cent increase, representing a total of $208 billion, at which Jim Flaherty promised to draw the line. Stephen Harper’s government is actually ramping up spending faster (gasp!) than Paul Martin’s, says Gunter, citing the Canadian Taxpayers Federation. And while he’s somewhat sympathetic to the entreaties of Tory MPs, who say ” their spending has been of real value”—as opposed, say, to funding a rutabaga farm in Papineau—he says $46 million for Quebec’s quadricentennial and $300 million for Bombardier “to build a plane for which there are no firm orders yet” are definite red-flag issues.
Lorne Gunter doesn’t exist, L. Ian MacDonald argues in the National Post—well, not really. But his statement that “for once, the English-and French-language media have been on the same page, celebrating Bombardier as the Canadian world champion it is” in the wake of its C-series announcement, has been sadly tarnished. But we should all be on the same page, he believes, since government lobbying and financial input are, like it or lump it, an intrinsic part of the plane-building business. It’s interesting too, he suggests, that “the auto industry in Ontario and the oil patch in Alberta have never been held to the same standard” as Bombardier.
