Saturday, December 13, 2008

Flaherty's go-slow approach sowing doubt

Still making us wonder whether they know what they're doing. Flaherty spoke in Saint John yesterday arguing Canada has time to consult and come up with its own stimulus plan despite the fact that countries around the world are acting much more decisively and quickly. Look at the announcements from Japan yesterday and the direction the EU is heading in, for example. It looks like the Conservatives are prepared to leave themselves open to criticism in this regard. Some of the audience did not like what they heard from Flaherty's go-slow style and offered some pretty candid comments:
“Despite the fact that he says Canada is in the best shape, we are going to go through some very tough times and he has to realize that despite some of the good news he talked about that they've done, they are going to have to do more,” Derek Oland, chairman of Moosehead Breweries Ltd., told radio station CHSJ after the speech.
While there are plenty of executives who commend Mr. Flaherty for his calm, others think a substantial and quick jolt is warranted.

Larry Pollock, chief executive officer of Canadian Western Bank, wondered why Mr. Flaherty appears to be playing for time. “Let's see what the plan is,” Mr. Pollock said. “[It is like] somebody has dropped a nuclear bomb on us and we took a pause to try to decide where the Christmas party is going to be.”

The government has to get going because “any stimulus will take some time to work its way through the economy,” Mr. Pollock said. “I'm not sure what he's waiting for and what his strategy is.”
Flaherty's consultation efforts and his repeated warnings about not "panicking" come on the heels of his discredited economic update. In that update, they were also buying time, but under the false cover of projected surpluses out to 2012-2013. The headlines that resulted told the story the government wanted, we're presumptively in surplus. But by the way, it may not last. Now two weeks later, the surplus cover's been predictably dropped:
Speaking to reporters after addressing the Saint John Board of Trade in New Brunswick, Finance Minister Jim Flaherty said it is "likely" that the government "will now be obliged to present a budget with a deficit."
Flaherty had already said the government was prepared to go into deficit next year if a stimulus package proved necessary to support the Canadian economy.

In his economic statement released last month, Flaherty said the federal government was projecting balanced budgets and small surpluses through 2012-13, but with an allowance that world economic uncertainty might make it impossible to rule out deficits.(emphasis added)
What a waste of time that little p.r. game was.

The actions of the Finance Minister really aren't doing much to instill confidence. Hard to see how this will be changing over the next month.