Saturday, June 26, 2010

The Harper Plan for a Global Depression

At the G8 and G20 Summits, the Harper government is touting its plan for governments around the world to cut their deficits in half by 2013 and to stabilize their debt-to-GDP ratios by 2016. In a letter sent to G20 leaders on the eve of the summit, Harper declared that “advanced countries must send a clear message that as their stimulus plans expire, they will focus on getter their fiscal houses in order.” It’s a plan, which if enough governments actually signed on, would plunge humanity into a global depression.

In the autumn of 2008, as financial institutions in the United States, the U.K. and other countries crashed, the world came very close to a descent into depression. What pulled the global economy back from the brink was the willingness of governments, led by the United States, to inject vast amounts of capital into the economy. Without the direct spending begun by the Bush administration and continued by the Obama administration, we would have seen a repeat of the 1930s.

And the global economic crisis is far from over. Alarming signs in both the United States and Europe make it clear that major economies are flirting with the danger of a second major crash. After a tax credit expired, housing purchases have plunged in the United States. New home sales in the U.S. dropped by 32.7 per cent in May, to an annual rate of 300,000, the lowest level since record keeping began. In Europe, the lesson being learned from the Greek calamity and the general risk of countries being unable to meet their debt payments, is that governments must adopt severe austerity regimes. Germany’s Chancellor Angela Merkel is a major proponent of this is as Britain’s new prime minister David Cameron.

It’s not that debt doesn’t matter. At the heart of the U.S. economic malaise are three interconnected layers of debt: the national debt of about $12 trillion; the indebtedness of individual Americans of about $11 trillion; and the rising net indebtedness of the United States to other countries, a debt that now totals several trillion dollars. The current economic crisis in which these debts are the elephant in the room is forcing the repositioning of the United States to play a smaller role in the global economy.

That repositioning will continue for many years to come. But if the U.S. and other major countries slam the brakes on government spending, the world will be pushed into a deflationary downward spiral. Unemployment will rise and many countries will be pushed back into recession. The U.S. needs to deal with its debt problems in such a way as not to convert the current economic malaise into a catastrophe. Over time, the U.S. will need to sharply raise taxes for the rich and the affluent, refashion its trade relationships with China and other countries, and re-launch its crumbling manufacturing sector.

Massive skepticism about whether the U.S. political system and culture can successfully manage the transition is in order.

In the meantime, though, the potential consequences of the rush to austerity that Stephen Harper and others are championing are all too obvious.

Harper and Finance Minister Jim Flaherty have never had a clue about the economy. Two weeks after the October 2008 federal election, while financial institutions and markets around the world were crashing, Flaherty assured a business audience that Canada would not need to run a government deficit at all. A couple of months later, the intrepid minister of finance unveiled a budget that announced that Ottawa would have the highest deficit in history.

Now the Harper government is back to putting ideology ahead of economic thinking. The Conservatives plan to continue lowering tax rates for corporations and the wealthy and they are determined to slash government spending, except for military outlays. Bash public servants, hold down their incomes, and cut social spending---that’s the recipe. If adopted by a large part of the world, it’s a recipe for depression.

On the bright side, nobody outside Canada much cares what the Harper government thinks on this or any other subject. Recent polls show that in the U.S., Britain, France and Germany, most people take little account of Canada and Canadians and think of us as a minnow not a shark.

That’s cool.

This week, Stephen Harper is playing the twin roles of manager of the Deerhurst Inn and director of the paramilitary occupation of Toronto.

Personally, I look forward to the G8 and G20 getting the hell out of here as quickly as possible. Future summits should be held online, or if the massive egos that lead these countries insist on meeting in person, let them do so on an aircraft carrier in the middle of the Pacific Ocean. That’s more their speed.

Reducing the normally vibrant city of Toronto to a comatose vegetable has not been a pretty sight. We have been treated to the methods of a police state where there is no connect between the people and their supposed leaders. This must never be allowed to happen in our country again.

Let’s declare Canada a Summit Free Zone.

Friday, June 25, 2010

Aging Agitator James Laxer Enters Red Zone

Aging Agitator James Laxer, who is constantly on the look out for a demonstration to attend, entered the red zone of the G 20 summit this morning.

He rose early to be sure to make it to downtown Toronto before day’s end. Much to his surprise as he pointed his ten-year-old vehicle southward, traffic was exceptionally light. He later reported that he had never seen such non-existent traffic in the city. “It looked like downtown Calgary,” he uttered. “That’s one more achievement the Harper government can claim. They’ve killed Toronto, long regarded by them as a menace.”

Laxer’s car sped past Queen’s Park where he hoped to find some fellow mal-contents. On the south lawn of the legislature with heavily armed policemen, wearing flack jackets, standing by, he saw a tiny group of people waving their arms rhythmically. His hopes were dashed, however, when he realized they were doing Tai Chi.

The drive down University Avenue was even faster. Hospital employees at Mount Sinai were sitting outside drinking coffee (and puffing on cigarettes, oh dear) and serious looking spooks in bullet proof vests with ear pieces in place were standing at the ready in front of the U.S. Consulate.

At every intersection, the cops were in place, as Laxer sailed toward the Fake Lake. He noted a sign that warned that traffic would be halted south of King St. Not deterred, he drove south of King and then Wellington and found himself surrounded by chain fences on all sides. At Front St., he turned right and drove down a corridor with chain fences on both sides. Heavily armed police and paramilitary watched warily as his vehicle passed. Laxer later said it looked like they were prepared for anything, except maybe an earthquake or a tornado. A great weekend for donuts and overtime for thousands in uniform, he figured.

As he drove past the front door of the Convention Centre where world leaders will meet, he muttered to himself that with the fence in front it looks like the air force base at Plattsburgh, New York. “Shit,” he exclaimed. “The Guardian newspaper is going to make mincemeat of Canada again.”

Having carried out his one-person protest inside the red zone with the slogan----Workers of the World, Give Me a Call----he drove up Spadina still on the hunt for action. He parked on Bloor, no problem finding a parking spot, and went to Book City, where many revolutionary screeds are for sale. A woman in her forties was the only other customer. She said she loved the ease of getting downtown today and hoped there’d be many more summits held here.

Laxer went for a coffee, spied some Brazil fans, and shook his head in disbelief. “Well at least I got past the fence,” he told anyone who would listen.

(Photo above: Laxer stands in the centre of deserted Bloor St. and gestures to no one.)