Budget maintains status quo

Jim Flaherty's latest budget apparently contains little in the way of dramatic moves:

When he delivered the last federal budget, dubbed Canada's Economic Action Plan, in January 2009, he pitched it as a two-year plan to pull Canada out of the recession. The latest budget stays largely true to that, continuing to roll out the stimulus spending already announced while winding down other temporary measures and taking initial steps to tackle Canada's first budget deficit since the mid-1990s.

On top of the $37 billion in economic stimulus funding spent last year, the new budget outlines the specifics of the additional $19 billion that is to be spent this year, which will be beefed up with $6 billion from provinces, territories and municipalities. By the time it's wound down in 2011, the stimulus plan will have funded more than 16,000 projects across the country, more than 12,000 of which have begun construction or have been completed within the past year, the budget document says.

Source. Not surprising; they don't want to rock the boat at this time. In particular, they're not cutting transfer payments as some feared. I guess they figured that much as they might like to stick it to Manitoba and Nova Scotia, they can't do that without sticking it to Quebec as well, and they need to satisfy Quebec if they're ever to win a majority.

Incidentally, Margaux Watt just interviewed the slithy Toews a few minutes ago; she asked him how the budget might differ if the Cons had a majority. Amusingly, he said with a straight face that it would be no different. Sorry Vic, but a lot of us find that a bit hard to believe.

In any case, the Liberals have said that they won't bring down the government over this one.

Calls grow to supplant dollar as global currency

Interesting:

The call to find an alternative to the U.S dollar as the global reserve currency is gaining momentum as France joined calls by China, India and Russia for a review of the world's currency practices.

French Finance Minister Christine Lagarde challenged the dollar's supremacy “in a world that has changed because of the crisis and the growing role of emerging countries.”

The questioning of the U.S. dollar as the key currency for central banks by a leader of a major European economy gives renewed life to the issue at this week's Group of Eight summit meeting in L'Aquila, Italy. The U.S. dollar has long served as the dominant medium of exchange, and tends to dominate the official money reserves that countries hold through their governments and at their central banks.

In the first quarter of 2009, 65 per cent of the world's allocated foreign exchange holdings were held in U.S. dollars, according to the International Monetary Fund. That's the highest in seven quarters.

The push for an alternative is being driven in large part by concern over the weakened state of the U.S. economy.

The country is forecasting fiscal deficits for the next decade.

That's leading large holders of U.S. debt such as China to worry that the U.S. dollar may not be as safe as it once was. In addition, the dollar has been volatile on international currency markets, and the U.S. is running ongoing trade deficits.

Diversification would likely take years, because unwinding large reserve positions of U.S. dollars too quickly would devalue them. And despite concerns about the greenback, it has maintained its international appeal, in part because investors need the value of their U.S. dollar holdings to stay high.

From the Globe and Mail. Predictably, though, our Yankee-loving government is having none of it:

The U.S. dollar as the global reserve currency of choice has been a stabilizing force during the current financial crisis, Canada said on Friday, downplaying calls to debate the greenback's dominant status.

Canadian Finance Minister Jim Flaherty told reporters he did not know whether the U.S. dollar's role as the global reserve currency would be included in the final communique of a meeting between the Group of Eight leaders and a heads of emerging nations in Italy next week.

"It's an issue that we have not addressed other than to say that, in the midst of what is still a significant global recession, it's important that we aim for stability, and stability has been based on the U.S. dollar as the global currency," Mr. Flaherty said via teleconference from Chile.

From the National Post. To be fair to Flaherty (gasp! Did I just say that??) the transition away from the US dollar would be rather difficult for Canada, particularly if it happened quickly. I think we're going to have to consider this, though; the US can't get away with their irresponsibility forever.

Harper running deficit?

Mike Watkins thinks so:

Conservative leader Stephen Harper continues to claim that Canada is enjoying a surplus, yet his Minister of Finance Jim Flaherty this calendar year has racked up an operational deficit in six of the past seven reported months, totaling over $23 billion dollars, or $20.3 billion for this fiscal year to date. In either case these amounts are unprecedented during this decade.

So much for the Tories' superior financial management skills. It's been suggested that this may be the reason why they're delaying the release of this year's Canada Savings Bonds, because the interest rate that the bonds would have to pay would reflect things about the nation's finances that the Tories don't want public before next week's election is safely out of the way.