Two things ...

There are two things Harper isn't: an economist nor a statesman.


Be clear on one thing. Everything Harper is doing now, on any file to which he actually pays attention, is for a single purpose - to retain power at all costs. And he will pursue any cynical course to make that happen, including the destruction of the Canadian middle-income sector.

Harper has mismanaged the economy to the point of ruination. With Canadians reeling at rising unemployment levels and shrinking wages, Harper touts himself as the only true financial manager on offer. Worse, there are media types who actually swallow that and regurgitate as though it is somehow true ... because Harper's spin machine said so.

Yet, by any metric, Harper's performance on the economy has been a dismal failure. With paltry job growth and a December 2013 loss of 60,000 jobs, Harper's claims become evidence of self-delusion.

The Canadian dollar is being intentionally weakened, not because it benefits the country as a whole, but again, it serves Harper's purposes. And, yes, they're lying about it.

Harper will stomp the economy to the ground if it means he can produce a 2015 budget that appears "balanced" or better yet, has an imaginary surplus. To achieve this goal he will ignore the economic wisdom of the better-educated and wildly more experienced and follow a course which has crushed much more robust economies than Canada's.

For years, the government’s strategy has been to cut the deficit it created and hope that exports and investment would fill in the gap. This hasn’t worked.

Despite this, Mr. Flaherty’s still believes the answer to insufficient aggregate demand is to eliminate the deficit by 2015-16. Even the International Monetary Fund thinks he’s wrong. It has recommended that, in the absence of a strong recovery in growth and job creation, the date of deficit elimination could be delayed.

Which economies have succumbed to amateur processes followed by the Harper/Flaherty lot? Owen has the answer to that.

As for Harper's statesmanship, aside from the groin rub he shared with Benjamin Netanyahu, there will be no awards arriving on his desk. Harper gushed all over Netanyahu in an embarrassingly unprofessional and unstatesmanlike manner. It became clear to everyone watching, in Canada and around the world, that Harper had stepped into something personal and was not speaking for Canadians. He was speaking purely for himself and the entourage of select right-wing religious freaks that you paid to go with him.

Why would he do that? Again, an attempt to retain power. Whether Harper is a true believer or not, his performance was intended for his right-wing religious base. It's right out of the Karl Rove playbook.

The Harper entourage was the largest such travelling road show that anyone can remember. The group nicely reflects core elements of the coalition that Harper has built with the intention of placing him in power and keeping him there. Key to the religious wing of that coalition is a collection of socially conservative evangelicals, Jews and conservative Catholics. Mainline Protestants and progressive Catholics need not apply and they were not represented on the junket.

Harper will blather on about this trip for months, as he blathers on about the economy. In the end he hopes that, on election day, you stay home, (or go to a non-existent voting place), while his energized Christian Zionist, Rapture seeking base swamps the polls.

On the economy he'll continue to paint a false picture of astute economic wisdom by presenting a "balanced" budget in 2015. (Whether it actually balanced or Flaherty had to diddle with the finance projections the way he did in Ontario). With that, the mysterious "risk" the Canada Revenue Agency says exists awaiting the decision of the prime minister in summer 2015 will become obvious: Harper will attempt to buy your vote with the offer of "income splitting".
 

Harper read up on Afghanistan... or so he says.

The best part about watching Fareed Zakaria interview anybody is that you know the following:

1. Zakaria doesn't presume to know the answer to the question he's asking. He lets his guests do the talking after asking direct questions;
2. His big toe can out-think the average politician in under a second;
3. He's done his homework;
4. Because of the above, he makes pure political animals nervous.

This is Zakaria's interview with Stephen Harper. Rather than quote or paraphrase bits of it, it's best if you watch it yourself. If you want to go directly to the Harper interview you'll have to go to about half way through the podcast, though, if you have the time, the whole program is worth watching.



Much is being made on both sides of the political spectrum about the Harper line "We'll never defeat the insurgency in Afghanistan". And, quite rightly, it's being thrown back in the faces of those who smeared anybody and everybody who said exactly the same thing years ago. They were, as usual, wrong.

But, there is a stronger point to be made - maybe more than one.

Harper's admission was qualified with, "Everything I've read on Afghanistan suggests they've had an insurgency in one form or another, probably forever."

Yes. And if Harper had taken the time to do a little research, if he'd been a little more up-front with the population of his own country, we would have heard that from him long ago. The fact that we didn't suggests he didn't understand the chronic condition that is Afghanistan. That is a failure in leadership.

If one is going to make an expenditure of blood and treasure to the degree we have in Afghanistan, one should read the history of the place before making such costly commitments. And if he, up to the time of his admission, ignored the fractured past of Afghanistan, then his qualifying reason is little more than a weak excuse for engaging in an ideological neocon extravagance which is now sticking in the craw of Canadians.

Another point which came out of the interview was the difference with which Harper now apparently views the United States. Gone is the "We're your best and most trusted friend" mantra of the Bush days. There was a time when, if the US president mused over the idea that he needed a nickle, Harper would fall all over himself running around the room taking a collection.

Now, instead of offering anything and everything we pulled out of the dirt to his "bestest buddy" he's talking about resources as "leverage". If the US president were to come to him and ask for an extension in Afghanistan Harper insists he would have to see a plan. An actual plan! When did he ever ask for one of those from Bush?

Fareed Zakaria could have trapped Harper, but it would have served no pupose. When Zakaria brought up the Canadian banking system Harper couldn't say much. It's not something he could take credit for. In fact, if he'd had his way, in the way he would have preferred, the Canadian banking system would have collapsed right along with the rest of the world's financial institutions. The only reason they didn't was because of the regulatory framework built by governments before Harper's time - something he would have dismantled with a majority government.

If Zakaria made one mistake it was this comment leading into a question: "You're an economist."

No. Harper has a degree in economics. He is no economist.

Back to Afghanistan for a moment and the howling over his "We can't defeat the Taliban" line. While many of us already knew that, it triggered a question in my mind which I was going to post. I thought better of it.

I spent a lifetime in uniform in some of the worst places in the world. The kids who came behind me need every chance to believe that, no matter where they're sent, or why, despite the extreme danger, that they will come out of it with their bodies and minds intact. Every single one of them. To ask a question which would only plant a seed of fear in their minds in order to rub Harper's nose in the dirt would be a betrayal of them. They already know what it is anyway; there is no need for me to put it in print.

It's Constitution Day in the US

And George W Bush has issued a proclamation:

Americans are united by the ideals of equal justice, limited government, and the rule of law. On Constitution Day and Citizenship Day and during Constitution Week, we remember the vision and determination of the Framers to build a free society, and we celebrate the historical document they created to achieve that goal.

Vision. Right. Except they never saw Bush coming, did they?

The Constitution forged the American creed of liberty and equality and has lifted the lives of countless individuals. Whether they are citizens by birth or by oath, Americans share a great tradition of enjoying liberty protected by a constitutional government of their choosing.

Unless the US Supreme Court chooses it for you.

I encourage Federal, State, and local officials, as well as leaders of civic, social, and educational organizations, to conduct ceremonies and programs that celebrate our Constitution and reaffirm our rights and responsibilities as citizens of this great Nation.

And please, just ignore the illegal wiretaps on your phones, the interception of your email, the No-Fly lists, the firemen taking notes about a book they saw on your coffee table while supposedly checking your smoke detectors and the suspension of Habeus Corpus in cases where it becomes inconvenient.

Today, (and for the rest of the week), Bush wants you to decorate the town, maybe even have a parade. Just ignore this.

The problem on Wall Street won't only affect small businesses and investors. It will also effect state, county and city governments. Its not uncommon for them to borrow money as well.

Maybe have a bake sale or something.

Welcome to the America George Bush made for you. Where the Constitution was an inconvenience to be ignored, major corporations are sucking of your tax-teat and you're retirement funds are sitting in the offshore bank accounts of former CEOs who, after their failing companies boards led them to the door, received massive "severance" packages.

Perhaps you could go window shopping.

The Bank of Canada's strange behaviour

Jim Stanford, Chief Economist with the Canadian Auto Workers' Union, national columnist with the Globe and Mail and past chair of the Progressive Economics Forum has written an excellent post on the strange behaviour of the Bank of Canada in dealing with the current financial crisis brought on by the US sub-prime-mortgage-meltdown credit crunch.

Oh. You thought that was just a US problem? Not hardly. Stock exchanges and financial markets from Shanghai to Frankfurt and, Toronto in between, are being torn to shreds as speculators with collateralized securities watch the value of the paper they hold shrink like a wet angora sweater in a hot dryer.

Honestly, it's their fault and I have no sympathy for them. It's just that the damage they will wreak as a result of their attempt to sell the poor something they could not afford in the first place, and then sell the paper those mortgages were written on at inflated values will come back to bite all of us while leaving the working class in even worse condition.

The surprize was the sudden decision by the Bank of Canada to suddenly defend its interest rate by adding liquidity to the financial markets. What makes this even more surprizing is that the Bank of Canada has made the same statement over the years: Regardless of conditions, the central bank (meaning David Dodge) has made it very clear to all of us that the sole purpose, of that supposedly apolitical institution, is to defend the inflation rate.

The Bank of Canada has stood by while the exchange rate of the Canadian dollar has edged to near par with the US dollar and caused the Canadian manufacturing sector to dump 400,000 jobs. We are told by the central bank that we have to live with that. It's an adjustment and the Bank of Canada is not in the business of defending the exchange rate - it simply defends the inflation rate.

Except that isn't what the central bank is doing. Stanford does an excellent job of lighting up the scene on the Bank of Canada's behaviour and, while you might think he objects to bailing out a bunch of greedy chartered banks and speculators, he actually approves of the Bank of Canada's actions. He can explain it, but before you head over there, this is a sample of his latest column in the Globe an Mail:

What’s got me irked is the obvious contradiction between the Bank’s willingness to ride to the rescue of banks, hedge funds, and private equity dealers, versus its tough-love response to the dislocation of 400,000 factory workers.

[...]

If real businesses use cheap credit to invest in too much real production, create too many jobs, and strengthen incomes too rapidly for the Bank’s liking, then it cracks down hard. But if speculators use cheap credit to fuel a frenzied inflation in paper valuations, that’s no problem. An average worker can’t get ahead. But a speculator gets a free pass – even though the “wealth” they create is no more real than the turrets of Hogwarts Castle.

Go read. It's good and it's understandable.

Richistan. Taking too much from the company store.

Warren Buffett is documented as the third richest man in the world. On an income of $46 million he is taxed at a rate of 17.7 percent. His secretary, who earns $60,000 annually, is taxed at a rate of 30 percent.

Who's complaining about this? Warren Buffett.

Even he and people like Bill Gates can recognize that such a tax system and such a misalignment of wealth in a developed country like the United States is a recipe for disaster.

Mr Buffett, who runs the investment group Berkshire Hathaway and is widely regarded as the world’s most successful investor, said that he was a Democrat because Republicans are more likely to think: “I’m making $80 million a year – God must have intended me to have a lower tax rate.”

None of this is passing without notice. As the gap between the rich and the poor widens, the jungle is beginning to get a little noisy, and as the rich get very rich, it is becoming obvious that they are eating a hole in the all important middle class and driving the poor further down the human scale of mere existence.

Defenders of low tax for the very rich point to the theory of trickledown economics - the spending power of the rich benefiting the poor. But while the super-rich have boomed, the earning power of the average and poor citizen has not nearly matched the performance of the elite. In 2005 the top one per cent of earners in the US gained 14 per cent in income in real terms, while the rest of the country gained less than one per cent. The situation is especially bad for the severely poor - those living at half the poverty level - whose numbers are at a 32-year high. The rich are getting richer but are not bringing everyone else with them. 'If you look at the impact of the last 20 years it seems pretty clear that trickledown just does not work,' said Paul Buchheit, economics professor at Chicago's Harold Washington College.

It doesn't take a genius to build a quick picture of how the system is working in favour of the rich. The middle class is literally awash in debt. And for every credit card purchase which will not be paid off within 30 days, some bank, or hedge fund manager drags in more money than the value of the original purchase - for doing virtually nothing.

A common but misplaced assumption is that the growth in debt among middle-income families — those with incomes roughly between $25,000 to $70,000 a year — is the result of over-consumption through increased credit card debt. Rather, growth in debt is primarily due to heavier borrowing for investments in homes or education, both of which saw dramatic price increases in recent years. The cost of a college education, for example, grew by 24.6% between 2001 and 2004, after adjusting for inflation.

Then we have the George W. Bush system of taxation which, as anyone with a functioning synapse can see, will never favour those without pre-exisiting bags of money. Banks have now developed reputations which rival that of used-car dealers. A customer walks out the door knowing he/she has been stiffed.

And while the wealthy get richer and spend their money on items not generally considered useful for the majority of working people, those who are attempting to buy the staples of life in a developed country, (a home; childrens' education; a chance to retire eating something other than cat food}, spend more than they earn. The beneficiaries of that spending are the same wealthy few who created the situation for the middle-class in the first place.

Declare bankruptcy? Not in the US. The banks, whose earnings are going though the financial roof, pushed for legislation which put a crimp on that type of consumer protection. If you owe, you pay - for the rest of your life, if necessary.

What everyone seems to be missing is that it cannot last. The death of the middle-class, as Warren Buffett is well aware, means the death of the wealthy. If the middle-class, enmasse, becomes so overwhelmed in debt they will eventually just stop paying. Then the yachts, the mega-mansions and the $1000 omelettes will also end. And with the end of those luxuries will end the economy generated by those items. The rich will lose their goodies and those who provide them will lose their jobs.

It will be the end of the second Gilded Age. It will also spell the death of the conservative movement, but not without taking the entire economy with it.