The Canadian National Newspaper: Stephen Harper's Budget and the Economics of the unknown

Now that the Harper Budget has been presented and the critics have voiced their approval or criticism, I can safely say –“I told you so”

On 23 Jan 2009, I wrote a detailed nine-page representation that an entirely new approach to monetary crisis relief was necessary because the old fixes of tax cuts and deficit spending on infrastructures would not cut it because globalisation, outsourcing and international currency manipulations have made a shambles of the old-time national economic structures.

The needs are still the same - get money into the hands of those who will spend it and protect the disadvantaged but we have to use different methods.

This means bypassing the banks and near bank institutions (investment houses, hedge funds, insurance companies, money markets etc.) because they got us into the mess in the first place with their derivatives, asset backed paper crap and put options.

The Bank of International Settlements, LINK, has decreed that every country has to go into deficit spending together to the tune of between 5% and 10% of GDP.

Based on a Canadian GDP of $1.5Trillion this would be between $75 and $150Billion.

Mr. Flaherty took the lower limit and spread it over 5 years. Too little and too slow,

More particularly, there is no sign of innovative thinking to cope with the new, integrated, world economy where offshore forces can shatter any one national economy.

Gambling with national, financial assets in international markets has to be prohibited. This is where a Tobin style tax on international money transfers would reduce monetary turmoil.

Re-establish the firewalls between lending banks and investment institutions in order to eliminate the obvious conflict of interest when one financial interest owns both. Start working towards a National Basic Income as a % of the currently recognised poverty level. Of course there will be some freeloaders but most people will benefit.

Finance the new deficit directly with the Bank of Canada rather than chartered banks in order to save the cost of interest on the new debt. Not a whisper anywhere about this because the private banks are too deeply embedded in the pockets of all the parliamentary parties. Interest on government debt is a never ending revenue stream for private banks.

Distribute the new credit directly to all levels of government with perhaps a matching 10% rather than equal contribution from the recipients in order to get money moving more quickly and without requiring municipalities to raise property taxes.

As a last resort, start an initiative like the Drameen Banks that will provide small loans at 1% interest to the job seekers and disadvantaged until they can re-establish their lives.

On a longer term, start the national production of electric cars; create an East-West grid for power distribution and sharing; boost wind, thermal and geo-thermal research and investment. There is a whole new self-sustaining economy out there waiting for a start.

None of these new, forward looking ideas that would move us forward into the future are present in the budget and this is why it has to classed as a stick-in-the-mud, same old, same old, failure.

The proposed Liberal/NDP Coalition has an opportunity to present some innovative thinking if only they have the nerve to think outside the box.

Absent this, brace yourself, it will be a long, slow, miserable road to recovery.

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