Harper running scared

He's now postponing the confidence vote:

Prime Minister Stephen Harper has temporarily stymied a Liberal plan to bring down the government and propose a governing coalition with the New Democrats, delaying the opportunity for a no-confidence vote by one week.

In an address delivered from the foyer of the House of Commons on Friday, Harper said the government should be empowered by Canadians — not through deals negotiated in the shadowy halls of Parliament.

"While we have been working on the economy, the opposition has been working on a backroom deal to overturn the results of the last election without seeking the consent of voters. They want to take power, not earn it," Harper said.

The prime minister has cancelled Monday's opposition day, which the Liberals intended to use to introduce a motion to topple the Conservative government on the grounds that it has failed to recognize the seriousness of the economic downturn.

Harper said the next opposition day will be set for Dec. 8.

From the CBC. I guess he figured the Liberals would never bring down the government for fear of precipitating another election... but it seems he was wrong.

Bye bye Steve?

Let's hope so. It could happen:

Canada's opposition parties said Thursday they will vote against the Conservative government's fiscal update, sparking speculation the country could face another election in the midst of a global economic crisis.

The Liberals, NDP and Bloc Québécois said they would not support the update introduced by Finance Minister Jim Flaherty because it contained no stimulus package to spur Canada's slumping economy and protect Canadian workers during the crisis.

The update is a confidence vote on Stephen Harper's minority Conservative government and could be voted on as a ways and means motion as early as Monday evening.

From the CBC. Now I don't want another election any more than anyone else, but contrary to popular belief it doesn't have to happen, even if the fiscal update is voted down. If the opposition parties can convince the Governor-General that they can form a government, power could shift without having to go to the polls again. It happened in Ontario, when Frank Miller's minority government was defeated in 1985. I say bring it on.

And it continues...

So now the Ontario Teachers' Pension Plan's planned takeover of BCE may not go through, because BCE can't prove they're solvent:

Shares of telecommunications giant BCE Inc. remained deep under water early Wednesday afternoon, after plunging 40 per cent at the opening bell following a warning by the company that its massive planned privatization is in jeopardy.

The shares were trading at $25.09 on the Toronto Stock Exchange, down $13.26, or 34.6 per cent, from Tuesday's close, having earlier fallen as far as $23, or 46 per cent below the $42.75 price the would-be buyers, led by the Ontario Teachers' Pension Plan, agreed to pay in June, 2007.

The rout followed a pre-opening warning from BCE that its planned $35-billion privatization was in doubt because it had failed a preliminary solvency test conducted for the would-be purchasers.

So the biggest telco in the country, which you'd think would be bulletproof, is in trouble. Seems absurd, given that it seems like a can't lose business. After all, people don't stop making phone calls (or, hopefully, reading this blog), and BCE's flagship subsidiary, Bell Canada, is the gatekeeper to the phone and internet network in Canada's two largest provinces. MTS, their counterpart here, is doing fine (their stock is only slightly below where it was a year ago, though they had a temporary dip today while BCE's stock was crashing). Nevertheless, if they've invested gambled on those absurd securities in a big way, this isn't a big surprise. Strangely, the TSX is actually up today despite this (I'd have thought BCE would represent a substantial chunk of the value of the TSX).

Interesting things are arising as a result of all this chaos. Canadian Silver Bug has found an interesting site, the Free Lakota Bank:

The Free Lakota Bank is the world's first non-reserve, non-fractional bank that issues, accepts for deposit, and circulates REAL money...silver and gold. All of our deposits are liquid, meaning they can be withdrawn at any time in minted rounds.

I have mixed views on this. I like the idea; it's great to see the Lakota nation reclaiming control of their economy (and I imagine that the Mohawks and others are watching this closely). And I do see some merit in the way they're doing it; fiat currency isn't looking particularly good right now. But I can't help but thinking that if full reserve banking worked as well as many precious metal enthusiasts think it did, someone would already be doing it. Not to mention, seeing them quote Ayn Rand sort of dampens my enthusiasm for the whole thing.

Then again, if you are going to try this, it's a very good time. Precious metals are down considerably from earlier this year, but I tend to agree with those who think they will increase dramatically in value as the US dollar devalues again.

More economic and labour news

The doomsaying continues:

The global financial crisis could increase jobless numbers in OECD countries by eight million people, hit Canada with a recession and boost the country's unemployment rate to 7.5 per cent, according to a report.

The latest Organization for Economic Co-operation and Development outlook said Tuesday the world is entering the worst economic downturn in decades.

"We project that 21 out of 30 member economies of the OECD will go through a protracted recession of a magnitude which has not been seen since the early 1980s," said Klaus Schmidt-Hebbel, the OECD chief economist.

The gloomy outlook predicts Canada's economy will shrink in the fourth quarter by 1.6 per cent and in the first and second quarters of 2009 by 1.4 per cent first and 0.3 per cent respectively, meaning the country will be in recession.

From the CBC. The OECD thinks, however, that other countries will have a harder time of it. The situation in the UK, for example, is not looking good:

The Organisation for Economic Co-operation and Development (OECD) has warned of a "severe" economic downturn in the UK in 2009.

The Paris-based body has predicted that economic output in the UK will fall by 1.1% next year, more than any other major G7 country.

Unemployment in the UK is predicted to rise significantly to over 8% by end of 2009 from 5.5% in 2008.

Mr. Brown certainly has his work cut out for him; here's hoping his bold moves help. On the other hand, it looks like the "lucky country" may continue to be lucky for a while:

Australia will avoid a recession next year, one of only a handful of developed countries whose economy will continue to grow, a leading global think tank says.

As financial markets wrestle with the meaning of the latest last-ditch US bail-out - a $500 billion prop for the ailing banking giant Citigroup - the Organisation for Economic Co-operation and Development predicts the richest economies in the world will shrink by a collective 0.4 per cent next year.

"Many OECD economies are in or are on the verge of a protracted recession of a magnitude not experienced since the early 1980s," the chief economist, Klaus Schmidt-Hebbel, said.

"As a result, the number of unemployed in the OECD area could rise by 8 million over the next two years."

Australia's economy is likely to grow by a relatively healthy 1.7 per cent.

Meanwhile, a Wayne Simpson, an economist at the U of M, is being interviewed on CBC Radio as I write this. He thinks Manitoba is better poised than just about anywhere in the world to weather the downturn, because we have a fairly diversified economy that doesn't have big boom and bust cycles. He thinks we may be in for a mild recession (particularly the resource sector of our economy; have you checked commodity prices lately?) but nothing compared to most of the developed world. Of course, any or all of these claims may turn out to be nonsense; it is, after all, economists who are making the predictions.

On another note, some of you may know that CUPE 3903, at York University, is on strike. Unfortunately, the domain name they wanted to use is being held by a cybersquatter, and they need the hits to go to the right place, obviously. So here's my shout out to them. Facebook users can also show their support here. Apparently they want to link the phrase "York University Strike Information" to their site, so here it is.

Gordon Brown's approach to the economic crisis

He's taking a decidedly Keynesian direction:

Prime Minister Gordon Brown swept aside three decades of economic orthodoxy with tax increases on the rich and plans that will double Britain’s national debt.

Brown’s proposals yesterday to mitigate fallout from the global economic slump would cost 25.6 billion pounds ($38.7 billion) in the U.K.’s biggest round of stimulus since 1988.

The plan, which will result in the largest budget deficit among the Group of Seven industrialized nations, represents a retreat from policies that have shaped the British economy since Conservative Margaret Thatcher’s 12-year tenure that began in 1979. Brown’s predecessor Tony Blair called himself a proponent of “New Labour” and advocated policies Thatcher had promoted, including spending restraint, low debt and tax cuts for the rich.

“It is back to the 70s,” said Bill Jones, a political scientist at the University of Manchester. “It’s a return to the two-party divide and a temporary end to consensus politics. It’s like Labour has suddenly burst out of its straitjacket.”

Labour’s traditional union supporters backed the proposal by Brown, 57, to impose a new 45 percent tax on those earning more than 150,000 pounds a year, while opposition Conservatives accused him of irresponsibility for running up debt that will exceed 1 trillion pounds by 2014.

From here. The extra tax on the rich is long overdue; I can't comment, though, on his debt proposal. It might be a good idea, but it might also be a very bad idea, and whether it's good or bad depends partly on what international investors think. As noted previously, I suspect part of the reason why the US has gotten away with running up huge debts is that said investors are reluctant to bet against the US dollar; the fate of the pound, though, is a lot less critical on an international level, so they might well just pull the plug on the UK. On the other hand, anti-Keynesian sentiment may have declined somewhat since Bob Rae tried this approach in the early 1990s, and it might significantly mitigate the worst effects of the crisis on Britain's population. The situation definitely bears watching; the world economy is in very bad shape indeed, and if Brown can mitigate this to a noticeable degree, a lot of people will want to follow his lead.

Jewish youths jailed for neo-Nazi attacks in Israel

I think these people must have a bit of an identity crisis:

A gang of Jewish teenagers were today jailed by an Israeli court for a 12-month campaign of neo-Nazi attacks.

The sentencing in Tel Aviv, which comes over a year after the arrest of the eight youths, closed a case that has sparked revulsion across the Jewish state.

The judge, Zvi Gurfinkel, sentenced the teens, aged 16 to 19, to between one and seven years in prison for a "shocking and horrifying" year-long spree of attacks that focused on foreign workers, gay people, ultra-orthodox Jews and homeless men.

The ring posted pro-Hitler video clips and recordings of their attacks on the internet. Its members also planned to attack Arabs.

They were arrested in September 2007 and reports said that searches of their homes unearthed Nazi uniforms, knives, guns and the explosive TNT.

Gang members had tattoos popular with white supremacists – including the number 88, code for "heil Hitler", H being the eighth letter of the alphabet.

From the Guardian.

The bailouts continue...

...this time, Citigroup:

The U.S. government unveiled a bold plan Sunday to rescue troubled Citigroup, including taking a $20 billion US stake in the firm as well as guaranteeing hundreds of billions of dollars in risky assets.

The action, announced jointly by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp., is aimed at shoring up a huge financial institution whose collapse would wreak havoc on the already crippled financial system and the U.S. economy.

The sweeping plan is geared to stemming a crisis of confidence in the company, whose stock has been hammered in the past week because of worries about its financial health.

"With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy," the three agencies said in a statement issued Sunday night. "We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks," they said.

It is the latest in a string of high-profile government bailout efforts. The Fed in March provided financial backing to JPMorgan Chase's buyout of ailing Bear Stearns. Six months later, the government was forced to take over mortgage giants Fannie Mae and Freddie Mac and throw a financial lifeline — which was recently rejigged — to insurer American International Group.

From here. Just how long can they keep this up? It bewilders me that the US still has an AAA credit rating; the Rae government in Ontario was nowhere near as far in debt as the US is, yet its AAA rating was taken away early in their term. Of course, there's a difference; if the US defaults, the result could be a bigger devaluation of the US dollar than foreign investors are prepared to cope with. So maybe the bond rating agencies are reluctant to act even in the face of mounting evidence that the Yanks aren't worthy of such good credit, for fear of toppling the world economy into an even bigger mess than it's already in. It's noteworthy, though, that there may be limits to the agencies' patience:

The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

From here, via the Huffington Post.