What it really boils down to is that political distraction has
horribly prevented any form of economic leadership been established
in the USA and also to a lesser degree in Europe. That by the way
has been Obama's clearest and most serious failure. The problem that
faced him on day one of ten million newly unemployed has not been
properly addressed, nor has the related collapse of personal
creditworthiness. It was his task to address.
Poverty may be bracing but far too many voters thought that was
behind them. Now we have simply lost four years.
Obviously this is a real threat to the Canadian economy also that can
still bite us. However. It is my contention that Canada has a
solution that could well take the fog out of even the eyes of
Americans.
Canada can unilaterally extend the full faith and credit of Canada to
facilitate Canadian dollar lending in the Great Lakes Watershed. This captures an
additional 20 to 30 million people to the Canadian currency banking
universe.
It also provides Canada a leading role in the ongoing development of
this watershed but can also also allow active ecological management through application of certain protocols that I have developed. Both
are highly desirable to populations in both Countries.
This naturally doubles the natural audience of Canada's banking system and possibly other institutions as well without trampling on local political toes at all.
Deficit deal
crucial for U.S. to avoid another recession, IMF chief tells The
Globe
DEREK DECLOET
TORONTO — The
Globe and Mail
Published Thursday,
Oct. 25 2012
The United States is
in danger of falling back into recession if its politicians cannot
agree on how to avoid a “fiscal cliff” of tax increases and
spending cuts, warns the head of the International Monetary Fund.
In an interview with
The Globe and Mail, Christine Lagarde said that a failure by the
leaders of the world’s largest economy to come up with a fiscal
plan would have “dire economic consequences” – and is a major
risk to a Canadian economy that has outperformed most other
industrialized countries.
Her comments
underscore the high stakes in the Nov. 6 election, which is shaping
up as a tight race between President Barack Obama and Republican
challenger Mitt Romney. The two have offered sharply different
visions of how to solve the country’s fiscal mess, which has seen
Washington run budget deficits of more than $1-trillion (U.S.) every
year since the devastating financial crisis of 2008-09.
The term “fiscal
cliff” refers to a series of tax hikes and budget reductions that
would automatically come into effect at the end of the year unless
Congress and the White House can come up with an alternative plan for
the budget. Most economists agree that the result would be a sudden
loss of momentum for an economy that has been slow to recover from
the crisis, and that only recently has been able to drive its
unemployment rate below 8 per cent. About 12 million Americans remain
out of work.
The IMF’s own
projections suggest that hitting the fiscal cliff would reduce U.S.
economic growth by 2 percentage points – a drop that would wipe out
all of its potential growth next year, said Ms. Lagarde, the former
French finance minister who left that post in 2011 to become the
IMF’s managing director.
“It’s [an issue]
that can be resolved and addressed politically. But it has dire
economic consequences,” she said during a brief visit to Toronto,
where she was presented with an award by the Canadian International
Council.
Asked if those
consequences included a serious recession, Ms. Lagarde said: “Yes.
Yes. Or certainly a recession.”
Many experts still
believe that whatever the results of the election, Republicans in
Congress and the Obama administration will be able to cut a deal to
forestall an economic disaster. Even if Mr. Romney wins, he will not
become president until Jan. 20, 2013. But the dramatic events of the
summer of 2011, when the two sides fought until the last moment over
an agreement to raise the federal government’s debt limit, shook
the public’s faith in the ability of Washington’s major parties
to find compromise.
Ms. Lagarde said that,
along with the long-running sovereign debt crisis in Europe, the U.S.
fiscal situation remains her chief concern about the world economic
outlook. The IMF this month cut its forecast for global growth for
2012 to 3.3 per cent, the slowest rate since 2009.
“Will the debt
ceiling be addressed? Will [the U.S. government] make payroll at the
end of the January? And what is the medium-term credible plan for
that country to reduce its deficit and to change its debt trajectory?
I think those are big questions as well.”
Canada’s reliance on
the United States as its major trading partner “clearly exposes it
to the potential downside or the risk of a recession in the United
States of America.”
The IMF has also
expressed worry about the record levels of household debt in Canada;
the average is 1.63 times income and has been rising steadily as
consumers borrow more in order to buy increasingly expensive homes.
But while those risks
are real, the IMF chief stressed that Canada is an “anomaly”
among developed nations because of its relative economic health.
“If I look at Canada
and the anomaly that it constitutes compared to other countries –
because it’s growing pretty well, because its banking system is
solid and growing, because its inflation is under control, because
its fiscal deficit is also pretty much under control and its level of
indebtedness is reasonable – you know, it’s not bad as a
scorecard.”
But residents of the
world’s major economies will probably have to be satisfied with
slower growth rates than they are accustomed to, Ms. Lagarde hinted.
And they are already responding by changing their behaviour, which is
changing the nature of their economies.
\
“We’re seeing the
pattern evolve. If you look at the savings rates of the U.S.
consumers, for instance, it is changing. They are more into saving
and less into consumption.”
