[andyt]

Quote:

OTTAWA - Bank of Canada governor Mark Carney says the U.S. economy could take years to recover from its current weak state _ and may never return to its glory days.
"The nature of the U.S. recovery, it's going to take a number of years before they get back to the U.S. that we used to know," Carney told CTV's Question Period.
"In fact, they are not in our opinion ultimately going to get back fully to the U.S. we used to know."
The weakness south of the border is costing the Canadian economy $30 billion annually in lost exports, according to Carney.
And while the central bank is predicting a 0.6 per cent hit to the Canadian economy _ worth about $10 billion _ from the European economic crisis, Carney says consumer spending and business investment will prevent Canada from sliding backwards.
Those two sectors will be key in countering the slowdown outside Canada and government austerity measures at home, said Carney.
"We see (growth) coming from the household sector, consumption continuing to grow around two per cent, more activity in housing than we previously had thought," he said.
"And then, importantly... is business investment still growing at a solid pace."
Carney also echoed warnings from Ottawa that measures could be taken to reduce risks of a housing price bubble in Canada.
Last week, federal Finance Minister Jim Flaherty warned that he could take action to prevent prices from skyrocketing, particularly in the Toronto and Vancouver markets.

http://ca.news.yahoo.com/bank-canada-go ... 00313.html

Consumer spending will keep Canada from sliding backwards. How long can we play the mug's game of shipping our raw materials to Asia and buying back cheap crap from them before the whole consumer spending pyramid scheme collapses? I mean consumers ain't spending on Canadian made products on the whole.

[Proculation]

As long as we have oil.

[andyt]

If the US economy doesn't fully recover, and China starts having it's own problems, as well as those in Europe, we may well have oil that isn't worth all that much.

[Proculation]

Bombing Iran should help in that case.

[andyt]

We don't have that capability.

[raydan]

I don't believe that the economy collapsed in a short time span, so of course it should take at least that many years to recover. This has been years in preparation, the only things that held the economy up for so long are what I like to call "artificial economic stimulus", like government spending, keeping rates low, easy home ownership and even easier credit.

Lemmy can correct me if I'm wrong, and I'm sure I am. The only thing he won't convince me of is that the government must spend when the economy is down. Like the old adage, to fix it, just throw as much money as you can at it just doesn't work.

[Lemmy]

You're doing just fine.

[Proculation]

You are right raydan. One word: debt.

[Scape]

It's the housing crisis. Something that big isn't going away overnight or just keep chanting it's all Obama's fault. Seems a lot of people feel better by doing that.

[Thanos]

The massive wave of personal debt and student loan defaults that are coming in the US is going to be the equivalent of dropping a nuke onto the wreckage the 9.0 earthquake of the housing/mortgage catastrophe left behind.

[Proculation]

Scape wrote:

It's the housing crisis. Something that big isn't going away overnight or just keep chanting it's all Obama's fault. Seems a lot of people feel better by doing that.

Actually, I saw a poll some days ago and most Americans think the economic crisis is GWB's fault, not Obama's.

Both are wrong in my opinion. The housing bubble, and more generally the debt bubble, was going on before GWB became President. His administration only perpetuated it.

But, again in my opinion, Obama's handling of the crisis is wrong since he is also perpetuating the crisis doing exactly the opposite that what should be done. I think that's what Mark Carney is saying.

[andyt]

Just watching Bill Moyers - big banks earned more under first 2 years of Obama than in 8 years of GWB. A pox on all their houses.

Just throwing money at the problem won't work. Just taking away from the poor and giving to the rich won't either.

[Caelon]

I am surprised at Carney's assessment. Corporate profits are up significantly, but the marekt is still focused on the big negative news stories like the EU monetary issues. When you look at various economic 'crisis' in the past that caused a major market down turn there has always been a major recovery afterwards. Look at major events like the Arab oil embargo of the 70's, the huge interest rates in the 80's, Iraq invasion of Kuwait, Russian debt default and so on. The best performing market in the world for 2011 was the US. So to say the US economy may never recover seems odd in hind sight.

There is a pent up investor demand that will unleash as good news stories happen that will drive market up at a rewarding rate. 2012, 2013 and 2014 may just be great bull market years.

[andyt]

raydan wrote:

Lemmy can correct me if I'm wrong, and I'm sure I am. The only thing he won't convince me of is that the government must spend when the economy is down. Like the old adage, to fix it, just throw as much money as you can at it just doesn't work.

Quote:

In Europe, austerity is now the order of the day. Is that the right approach? Or would it be wiser to pursue growth and then, later, begin budget cuts?

Yes, while fiscal austerity could be necessary over time, in the short run it makes the recession worse. As it is, they are raising taxes, cutting transfer payments, and cutting government spending. One is reducing aggregate demand and the others reduce disposable income.

Without economic growth, the debt is not sustainable. It becomes a vicious circle. Markets force you into austerity, which makes the recession worse, which deepens the fiscal deficit, requiring more austerity.

So Europe today needs policies and strategies to restore growth. Pure austerity alone will be severely recessionary and eventually will produce a depression.

Can you guess who said that? (Hint: he's got something that Lemmy doesn't).

http://www.theglobeandmail.com/report-o ... 900/page2/

[PublicAnimalNo9]

Paul McCartney? I'm pretty sure Lemmy doesn't have a Knighthood