Further to my earlier post on how creating a Euro sovereign debt bond linked to the relative weight of a member country's GDP and its rate of unemployment look at how this might play out with respect to the 4 countries currently experiencing difficulties. Spain, Portugal, Ireland and Greece.
Country GDP trillion euros % of euro area gdp debt bond allotment
based on gdp alone
Spain 1.051 trillion 11.3 % 802 billion euros
Greece .238 2.6% 183.6 billion
Ireland .164 1.8 % 127.1 billion
Portugal .164 1.8% 127.1 billion
All data from Eurostat as of April 2010. GDP data is for 2009.
Clearly if such a sovereign debt eurobond existed under the terms that I have proposed there would be no crisis in the euro area with respect to the sovereign debt of these four countries. Only Greece could not cover its total debt by Eurobond allotted allocated by share of euro area GDP alone, but with an adjustment for higher unemployment it would be able to do so.
Monday, November 29, 2010
A proposal for a Euro area sovereign debt bond
Harold Chorney | November 29,2:31 p.m. I have just posted this comment on the FT's very interesting article by Wolfgang Munchau on the problem of European sovereign debt and the crises involving the PIGS. My comment is drawn from the work which I did in the 1980s and 1990s on Canadian debt problems and the limits of a federal structure combining with a central bank that had not sufficiently developed its federal qualities. what applied to Canada can easily be applied to Europe.
Historical evidence ought to have permitted more flexible limits, particularly in times of high unemployment.
The idea of a common euro sovereign debt bond is a very good idea. Each member country ought to have access to issuing such bonds in proportion to its GDP as a proportion of the Euro area GDP and its rate of unemployment relative to the average unemployment rate that prevails in the leading three Euro economies in terms of low unemployment.
So if a given country were 5 % of the euro area GDP and its unemployment rate several percentage points above the the average in the three leading economies with the lowest unemployment it would be entitled to issue sovereign euro debt bonds backed by the whole union and the ECB up to 5 % of the total euro area issue plus some agreed upon extra percentage to account for the higher unemployment.
The ECB should then be authorised to buy and sell this debt to ensure appropriate interest rates and avoid sovereign debt crises. With a structure like this or some variant of it the Euro area could then have a flexible, modern, yet fairly constrained system for managing debt and the business cycle.
Friday, November 26, 2010
Europe Union euro area some facts to counter deficit hysteria
As usual, once deficit hysteria hits, as it has this past week in Europe, a great deal of irrational and non factually based opinions get tossed about as if they were gospel as opposed to hysteria.
Now that Ireland has been run down the hunt has turned to Portugal and Spain.
But remember both of these countries belong to the Eurozone which is an economic powerhouse with a population of over 329 million people.(All the data that I will be citing comes from Eurostat and the European Central Bank, the official source of statistics for the European union as well as the Spanish Ministry of the Economy.)
Unfortunately overall unemployment in Europe is still far too high . It is 10.1 %. or some 15.9 million people.
It is particularly a problem among young people under the age of 25. In 2009 the rates according to Eurostat for this age demographic were as follows: Spain 37.8 %; Portugal 20 %; Greece 25.8 %; Ireland 24.4 %; France 23.5 %; Italy 25.3 %; Sweden 25.0 %; U.K. 19.1 %; Germany 10.4 %
Clearly there is a need for special stimulus and employment programs aimed at young workers in Europe. austerity worshipping at the alter of debt reduction won't do the job.
Countries like Germany are doing relatively well but Spain, Ireland, Portugal and Greece all suffer from excessive overall unemployment well beyond 10 %. Their rates as of fall 2010 are as follows: Spain 20 %; Ireland 14.1 %; Portugal 10.6 %; Greece 12.2 %.
In comparison Germany has 7.3 % unemployment.
If we add up all the gross government debt in the Euro area and compare it to the GDP of the Euro area we find that it is 79.2 % of the GDP. An elevated figure but very far from the disaster it is made out to be.The Spanish debt to GDP ratio for 2010 is 62.5 % Its debt outstanding amounts to some 550 billion euros.
Also remember that is gross government debt. Net debt which subtracts out assets and is a more accurate measure of accounting is significantly less. A significant portion of this Euro area debt is held by non euro area residents including the British and the Swedes, some 42.4 % according to the data. The Spanish ratio of foreign debt holders of its debt is smaller than this.
The interest rate on ten year bonds is 3.3 % and the one year inter bank lending rate is 1.5 % The currency in circulation is 838.7 billion euros and the very broadly defined money stock M3 is 9474 billion euros with a euro area GDP that totals over 14 trillion U.S. dollars in purchasing power parity terms.
If the ECB simply did its job properly, it is perfectly feasible for it, in conjunction with the European financial stability facility, to temporarily support countries like Portugal and Spain and reverse bond market blackmail which is clearly not based on facts but on deficit hysteria.
Spain's total debt is far outweighed by the euro area GDP and its wealth of assets. Given the high unemployment of over 20 % in Spain,austerity is not a sensible policy option as opposed to European fiscal stimulus and quantitative easing. In the long run the results would be much better and considerable unnecessary hardship averted.
Now that Ireland has been run down the hunt has turned to Portugal and Spain.
But remember both of these countries belong to the Eurozone which is an economic powerhouse with a population of over 329 million people.(All the data that I will be citing comes from Eurostat and the European Central Bank, the official source of statistics for the European union as well as the Spanish Ministry of the Economy.)
Unfortunately overall unemployment in Europe is still far too high . It is 10.1 %. or some 15.9 million people.
It is particularly a problem among young people under the age of 25. In 2009 the rates according to Eurostat for this age demographic were as follows: Spain 37.8 %; Portugal 20 %; Greece 25.8 %; Ireland 24.4 %; France 23.5 %; Italy 25.3 %; Sweden 25.0 %; U.K. 19.1 %; Germany 10.4 %
Clearly there is a need for special stimulus and employment programs aimed at young workers in Europe. austerity worshipping at the alter of debt reduction won't do the job.
Countries like Germany are doing relatively well but Spain, Ireland, Portugal and Greece all suffer from excessive overall unemployment well beyond 10 %. Their rates as of fall 2010 are as follows: Spain 20 %; Ireland 14.1 %; Portugal 10.6 %; Greece 12.2 %.
In comparison Germany has 7.3 % unemployment.
If we add up all the gross government debt in the Euro area and compare it to the GDP of the Euro area we find that it is 79.2 % of the GDP. An elevated figure but very far from the disaster it is made out to be.The Spanish debt to GDP ratio for 2010 is 62.5 % Its debt outstanding amounts to some 550 billion euros.
Also remember that is gross government debt. Net debt which subtracts out assets and is a more accurate measure of accounting is significantly less. A significant portion of this Euro area debt is held by non euro area residents including the British and the Swedes, some 42.4 % according to the data. The Spanish ratio of foreign debt holders of its debt is smaller than this.
The interest rate on ten year bonds is 3.3 % and the one year inter bank lending rate is 1.5 % The currency in circulation is 838.7 billion euros and the very broadly defined money stock M3 is 9474 billion euros with a euro area GDP that totals over 14 trillion U.S. dollars in purchasing power parity terms.
If the ECB simply did its job properly, it is perfectly feasible for it, in conjunction with the European financial stability facility, to temporarily support countries like Portugal and Spain and reverse bond market blackmail which is clearly not based on facts but on deficit hysteria.
Spain's total debt is far outweighed by the euro area GDP and its wealth of assets. Given the high unemployment of over 20 % in Spain,austerity is not a sensible policy option as opposed to European fiscal stimulus and quantitative easing. In the long run the results would be much better and considerable unnecessary hardship averted.
Monday, November 22, 2010
Irish bank bailout causes political and economic turmoil
Ireland is a small country of 4.5 million people which in the years before the crash had been the favourite showcase of the European union for its new found prosperity, entrepreneurship and innovative banking sector. All of this has turned to dust with the global financial crisis , the collapse of the Irish financial sector after its bubble burst and the ensuing recession and high unemployment (13.9 %) The six leading Irish banks were heavily over invested in loans tied to the bubble and had expanded well beyond their safe limits. When they crashed and faced insolvency the Irish government, despite lacking the backing of its own central bank bailed them out and assumed the burden of their debt. But unfortunately this did not stop the hemorrhaging. Further runs on the banks deposit base have continued . Since the Irish banks are in turn indebted to the German , French, Belgium and British banks their total collapse would also destabilize a major chunk of European banking. So to prevent this the European leadership including Great Britain have offered a major set of loans to forestall the collapse and permit Ireland to recover over the course of time.
But very unfortunately and foolishly in my judgement these loans also come with major strings of austerity attached. The conditionality terms are so onerous that there has already been street demonstrations opposed to the bailout in the Irish capital. In addition the Green party has announced it will leave the fragile coalition government thereby precipitating an election which the Labour opposition party has a good chance to win. It claims to be opposed to the bailout and its onerous terms but it is not clear what its alternative policy is.
Given that Ireland is already in a deep recession imposing austerity will simply make things worse. The proposed austerity includes the introduction of a property tax (in itself not necessarily a bad idea); a water tax; a substantial cut in the minimum wage down to €7.65 an hour from € 8.65, the taxation of low paid workers who were previously tax exempt; public sector job cuts of 5000 and the elimination of 15,000 other public sector jobs through attrition; cuts to child benefits and other social welfare benefits. All of these cuts will come about because of the bad behaviour of the private banks, the flawed nature of the Irish government's initial bailout and the bad policies of the European union and central bank with respect to debt and banking crises. But it will be the general public and the poor in particular who will pay the price.
Given the small size of the Irish economy where the current net debt to GDP ratio is about 75 % it would have been quite feasible to have helped Ireland out of the troubles without imposing draconian austerity and imposing more of the burden on the banking financiers who are largely responsible for the mess in the first place. Some of the bondholders will be settling for a haircut down to 20 % of the value of the bonds they hold but more needs to be done.We shall see where this leads but it is really time overdue for a major rethink about how Europe is operating.
The €80 to 90 billion loan that the EU and the IMF are advancing is backed up by the €750 b. fund at their disposal( According to the F.T. there is 60 billion in the European financial stability mechanism, 440 billion in the European financial stability facility based in Luxembourg based on AAA guaranteed funds raised in the money markets backed by the 16 countries which use the euro as well as €250 b. from the I.M.F.)
But very unfortunately and foolishly in my judgement these loans also come with major strings of austerity attached. The conditionality terms are so onerous that there has already been street demonstrations opposed to the bailout in the Irish capital. In addition the Green party has announced it will leave the fragile coalition government thereby precipitating an election which the Labour opposition party has a good chance to win. It claims to be opposed to the bailout and its onerous terms but it is not clear what its alternative policy is.
Given that Ireland is already in a deep recession imposing austerity will simply make things worse. The proposed austerity includes the introduction of a property tax (in itself not necessarily a bad idea); a water tax; a substantial cut in the minimum wage down to €7.65 an hour from € 8.65, the taxation of low paid workers who were previously tax exempt; public sector job cuts of 5000 and the elimination of 15,000 other public sector jobs through attrition; cuts to child benefits and other social welfare benefits. All of these cuts will come about because of the bad behaviour of the private banks, the flawed nature of the Irish government's initial bailout and the bad policies of the European union and central bank with respect to debt and banking crises. But it will be the general public and the poor in particular who will pay the price.
Given the small size of the Irish economy where the current net debt to GDP ratio is about 75 % it would have been quite feasible to have helped Ireland out of the troubles without imposing draconian austerity and imposing more of the burden on the banking financiers who are largely responsible for the mess in the first place. Some of the bondholders will be settling for a haircut down to 20 % of the value of the bonds they hold but more needs to be done.We shall see where this leads but it is really time overdue for a major rethink about how Europe is operating.
The €80 to 90 billion loan that the EU and the IMF are advancing is backed up by the €750 b. fund at their disposal( According to the F.T. there is 60 billion in the European financial stability mechanism, 440 billion in the European financial stability facility based in Luxembourg based on AAA guaranteed funds raised in the money markets backed by the 16 countries which use the euro as well as €250 b. from the I.M.F.)
Wednesday, November 17, 2010
U.S. producer price index all time low
Yesterday in the middle of the debate over the wisdom of quantitative easing more hard evidence from the U.S. Bureau of Labour statistics arrived about the absence of the threat of inflation. Instead, as I and others have been suggesting for some time now the risk is on the downside, further disinflation and even perhaps deflation. Wholesale prices as measured by the producer price index for finished goods in the month of October rose only by 0.4 %. Once they are adjusted for volatile elements like energy prices and food prices they actually had declined by 0.6% . Clear evidence that inflation is nowhere near on the horizon and that concern about Q.E. somehow provoking inflation misguided.
Housing starts unfortunately also fell by 11.7 %, again not a sign of an overheating economy. The complete consequences of the burst bubble in real estate are still working their way through the system.
The one bright light is however the fact that restructured GM is making profits and will be issuing shares in a much touted IPO. Share prices are thought to be be around $32-33 and many observers, though not all expect the price to rise by 10 % or more in the first day. The IPO might even be oversubscribed. This means both the U.S. and Canadian governments and the UAW and CAW will be able to sell a significant portion of their shares acquired during the bailout of old GM and reduce their holdings substantially if they wish to. According to the Wall Street Journal the U.S. government hopes to sell off over 13 billion dollars worth of stock reducing their holdings substantially and recouping along side the 9.5 billion that GM has already paid back over 22 billion dollars of their bailout funding. The Canadian federal and provincial governments involved will be selling 35 million shares and recouping over a billion dollars of their investment in the bailout.
Housing starts unfortunately also fell by 11.7 %, again not a sign of an overheating economy. The complete consequences of the burst bubble in real estate are still working their way through the system.
The one bright light is however the fact that restructured GM is making profits and will be issuing shares in a much touted IPO. Share prices are thought to be be around $32-33 and many observers, though not all expect the price to rise by 10 % or more in the first day. The IPO might even be oversubscribed. This means both the U.S. and Canadian governments and the UAW and CAW will be able to sell a significant portion of their shares acquired during the bailout of old GM and reduce their holdings substantially if they wish to. According to the Wall Street Journal the U.S. government hopes to sell off over 13 billion dollars worth of stock reducing their holdings substantially and recouping along side the 9.5 billion that GM has already paid back over 22 billion dollars of their bailout funding. The Canadian federal and provincial governments involved will be selling 35 million shares and recouping over a billion dollars of their investment in the bailout.
Monday, November 15, 2010
Criticism of Fed's QE2 misguided
The Wall St. Journal today features a letter to the Fed signed by a number of prominent conservative economists and policy specialists attacking Ben Bernanke and the Fed for introducing a second round of quantitative easing. The critics claim that it is inflationary and counter-productive. They are wrong.
The current balance sheet of the Fed stands at almost 2.1 trillion dollars. These assets consist of Treasury bills,secured government debt instruments, federal and government sponsored enterprise mortgage backed securities, investments in foreign securities and other assets. The broadly defined money stock M2 stands at 8766 billion dollars. So the acquisition of 600 billion dollars of more government debt by the Fed financed solely from the broadening of M2 would amount to a 6.8 % increase over the coming months.Given that industrial capacity utilization currently stands at 74.7 % there is no threat of inflation.
Quantitative easing is designed to allow the Fed to create an accommodating monetary policy thereby keeping interest rates low and preventing interest rate crowding out while fiscal stimulus does its work. There is a need for substantial further fiscal stimulus but q.e. is also necessary and Bernanke is doing the right thing.
The current balance sheet of the Fed stands at almost 2.1 trillion dollars. These assets consist of Treasury bills,secured government debt instruments, federal and government sponsored enterprise mortgage backed securities, investments in foreign securities and other assets. The broadly defined money stock M2 stands at 8766 billion dollars. So the acquisition of 600 billion dollars of more government debt by the Fed financed solely from the broadening of M2 would amount to a 6.8 % increase over the coming months.Given that industrial capacity utilization currently stands at 74.7 % there is no threat of inflation.
Quantitative easing is designed to allow the Fed to create an accommodating monetary policy thereby keeping interest rates low and preventing interest rate crowding out while fiscal stimulus does its work. There is a need for substantial further fiscal stimulus but q.e. is also necessary and Bernanke is doing the right thing.
Saturday, November 13, 2010
G20 unemployment rates
The recently concluded G20 meetings in South Korea from the point of view of the media focused on the failure to secure an agreement about exchange rates and rebalancing export surpluses in some countries with chronic trade deficits in others. This remains an important area. But so too is the fact that most of the member countries who together account for 90 % of the world's GDP and 80 % of its trade are still suffering from high rates of unemployment. These rates are given below and what is striking about them is except for Australia, Brazil, Germany, Japan and South Korea and urban China the rates are very elevated.All rates except where indicated are for late summer or fall 2010.
Country Rate of unemployment
Argentina 8.7 %
Australia 5.4 (October)
Brazil 6.2 (Sept.)
Canada 7.9 (October) (7.6 Nov.)
China 4.3 (2010 est.)
France 10.0
Germany 6.7
India 10.7 (2009)
Indonesia 7.7
Italy 8.1
Japan 5.0
Mexico 5.7 (May)
Russia 6.8 (June)
Saudi Arabia 11.7 (males only)
South Africa 24
Republic of Korea 3.7
Turkey 10.5 (June)
U.K. 7.7
U.S. 9.6( 9.8 Nov.)
E.U. 9.5
Note that within the E.U. the following countries have very elevated rates of unemployment
Spain 20.8 %
Greece 14.5
Ireland 14.1
Portugal 10.7
Latvia, Lithuania and Slovakia also had rates above 10 %. In the EU 27 the total number of people unemployed exceeds 23 million people. It is also notable that youth unemployment for people under the age of 25 hoping to get started on their careers, the unemployment rates are above 20 and even 30 % in a number of European countries including 37 % in Spain, 25 % in Greece, 24 % in Ireland and 20 % in Portugal. There are over 6 million unemployed young people between the ages of 15 and 25 in the U.S., U.K,Italy, Spain and France.Lowering the rate of unemployment should be a top priority.There should be special programs targeted at people beginning their careers aiming to assist them and potential employers in engaging them for initial 6 month to one year contracts to gain both income and work experience.
So the picture is still that of world largely mired in excessive unemployment with several brighter spots where growth continues to be more robust and unemployment dropping.It is still a world desperately in need of more public sector stimulus.and private sector job creation. Austerity policies which have been foolishly adopted in a few countries and which risk being promoted in the U.S. and Western Europe are very definitely a very bad idea .
Country Rate of unemployment
Argentina 8.7 %
Australia 5.4 (October)
Brazil 6.2 (Sept.)
Canada 7.9 (October) (7.6 Nov.)
China 4.3 (2010 est.)
France 10.0
Germany 6.7
India 10.7 (2009)
Indonesia 7.7
Italy 8.1
Japan 5.0
Mexico 5.7 (May)
Russia 6.8 (June)
Saudi Arabia 11.7 (males only)
South Africa 24
Republic of Korea 3.7
Turkey 10.5 (June)
U.K. 7.7
U.S. 9.6( 9.8 Nov.)
E.U. 9.5
Note that within the E.U. the following countries have very elevated rates of unemployment
Spain 20.8 %
Greece 14.5
Ireland 14.1
Portugal 10.7
Latvia, Lithuania and Slovakia also had rates above 10 %. In the EU 27 the total number of people unemployed exceeds 23 million people. It is also notable that youth unemployment for people under the age of 25 hoping to get started on their careers, the unemployment rates are above 20 and even 30 % in a number of European countries including 37 % in Spain, 25 % in Greece, 24 % in Ireland and 20 % in Portugal. There are over 6 million unemployed young people between the ages of 15 and 25 in the U.S., U.K,Italy, Spain and France.Lowering the rate of unemployment should be a top priority.There should be special programs targeted at people beginning their careers aiming to assist them and potential employers in engaging them for initial 6 month to one year contracts to gain both income and work experience.
So the picture is still that of world largely mired in excessive unemployment with several brighter spots where growth continues to be more robust and unemployment dropping.It is still a world desperately in need of more public sector stimulus.and private sector job creation. Austerity policies which have been foolishly adopted in a few countries and which risk being promoted in the U.S. and Western Europe are very definitely a very bad idea .
Friday, November 5, 2010
Keynes and Quantitative Easing
Nov.5, 2010, 11:22 a.m.
A number of Keynesian economists have been sceptical of quantitative easing as a useful supplementary technique because they believe that in a deep slump monetary policy is like pushing on a string and will be ineffectual because interest rates are already very low and the speculative demand for cash balances very high. What this translates into is the quasi hoarding of cash balances. What is needed they argue is much more fiscal stimulus to boost investment and job creation. Well in part, of course, I agree with them that additional fiscal stimulus is very necessary to boost aggregate demand sufficiently to push employers to hire more workers and to hire more directly through additional infrastructure investment undertaken by government.
But I also advocate quantitative easing to ensure an accomodating monetary policy. I have done so since my work on it in the 1980s. The point of quantitative easing is that it helps prevent any interest rate crowding out by ensuring that rates stay low while the fiscal stimulus is financed. In disinflationary and near deflationary slumps the risk of inflation is minimal.
But in addition it is useful to know that Keynes himself approved of this approach. In March of 1930 before the Macmillan Committee in the U.K. of which Keynes was both a member and also a major witness he argued in favour of this policy as follows.
''My remedy in the event of the obstinate persistence of a slump would consist, therefore, in the purchase of securities by the Central Bank until the long term market-rate of interest has been brought down to the limiting point....(with respect to the 1930s slump) the Bank of England and the Federal Reserve Board (should) put pressure on their member banks...to reduce the rate of interest which they allow to depositors to a very low figure, say 1/2 per cent...(and) these two central institutions should pursue bank-rate policy and open market operations à outrance.''
(See Report of the Committee on Finance and Industry (Macmillan report), 1931 Vol II, p.386. cited in Benjamin Higgins,'' Keynesian Economics and Public Investment policy'' in Seymour Harris,ed. The New Economics, Keynes' Influence on theory and public policy, N.Y.:Alfred A.Knopf, 1948, p.470 note 9.See also Peter Clarke, The Keynesian revolution in the making 1924 - 1936, Oxford:the Claredon Press, 1988.pp.150ff )
Later in the General Theory developed his ideas of fiscal stimulus further and appeared to give more emphasis to fiscal policy in the context of a multiplier enhanced stimulus. But monetary policy was always part of his tool kit and it should remain part of ours.
A number of Keynesian economists have been sceptical of quantitative easing as a useful supplementary technique because they believe that in a deep slump monetary policy is like pushing on a string and will be ineffectual because interest rates are already very low and the speculative demand for cash balances very high. What this translates into is the quasi hoarding of cash balances. What is needed they argue is much more fiscal stimulus to boost investment and job creation. Well in part, of course, I agree with them that additional fiscal stimulus is very necessary to boost aggregate demand sufficiently to push employers to hire more workers and to hire more directly through additional infrastructure investment undertaken by government.
But I also advocate quantitative easing to ensure an accomodating monetary policy. I have done so since my work on it in the 1980s. The point of quantitative easing is that it helps prevent any interest rate crowding out by ensuring that rates stay low while the fiscal stimulus is financed. In disinflationary and near deflationary slumps the risk of inflation is minimal.
But in addition it is useful to know that Keynes himself approved of this approach. In March of 1930 before the Macmillan Committee in the U.K. of which Keynes was both a member and also a major witness he argued in favour of this policy as follows.
''My remedy in the event of the obstinate persistence of a slump would consist, therefore, in the purchase of securities by the Central Bank until the long term market-rate of interest has been brought down to the limiting point....(with respect to the 1930s slump) the Bank of England and the Federal Reserve Board (should) put pressure on their member banks...to reduce the rate of interest which they allow to depositors to a very low figure, say 1/2 per cent...(and) these two central institutions should pursue bank-rate policy and open market operations à outrance.''
(See Report of the Committee on Finance and Industry (Macmillan report), 1931 Vol II, p.386. cited in Benjamin Higgins,'' Keynesian Economics and Public Investment policy'' in Seymour Harris,ed. The New Economics, Keynes' Influence on theory and public policy, N.Y.:Alfred A.Knopf, 1948, p.470 note 9.See also Peter Clarke, The Keynesian revolution in the making 1924 - 1936, Oxford:the Claredon Press, 1988.pp.150ff )
Later in the General Theory developed his ideas of fiscal stimulus further and appeared to give more emphasis to fiscal policy in the context of a multiplier enhanced stimulus. But monetary policy was always part of his tool kit and it should remain part of ours.
Wednesday, November 3, 2010
BHP Bilton bid for Potash Corp blocked by Federal Government
November 4, 2010
The Canadian Minister, Tony Clement, with responsibility for foreign Investment review has acted wisely to block the bid of BHP Billiton, an Australian controlled mining company from taking over the Potash Corporation of Saskatchewan in a hostile takeover bid that would have transferred the share ownership and control outside of Canada and North America.This action which gives the company thirty days to revise its proposal and submit a new one for consideration will be very popular in the province of Saskatchewan where the resource is based and where the vast majority of the citizens favour rejecting the bid.
Foreign investment in Canada's precious storehouse of key natural resources is bound up with the country's history as a staple producing country that grew out its colonial history to be a significant middle power on the world stage in the twentieth and twenty first century. Canadian resources are a matter of pride to Canadians and it does not take much to arouse populist sentiment about who is to control and husband them. As the free trade and laissez- faire approach of the past decades has faltered it is not surprising to see these nationalist sentiments become more popular. The position of the Saskatchewan government in opposing the deal had the backing of its sister prairie provinces Manitoba and Alberta and the Government of Quebec which has its own strong tradition of national pride with respect to Provincial resources. Canada still seeks to partner with other countries in terms of trade and free flows of goods and services but like Europe, the U.S., Latin America and Asia there will be from time to time expressions of nationalist interest with respect to certain investments and resources. The fact that the Federal government is also a minority government who feared losing many of the 13 federal parliamentary seats it holds in Saskatchewan if it approved the deal undoubtedly also played a role in the decision
The Canadian Minister, Tony Clement, with responsibility for foreign Investment review has acted wisely to block the bid of BHP Billiton, an Australian controlled mining company from taking over the Potash Corporation of Saskatchewan in a hostile takeover bid that would have transferred the share ownership and control outside of Canada and North America.This action which gives the company thirty days to revise its proposal and submit a new one for consideration will be very popular in the province of Saskatchewan where the resource is based and where the vast majority of the citizens favour rejecting the bid.
Foreign investment in Canada's precious storehouse of key natural resources is bound up with the country's history as a staple producing country that grew out its colonial history to be a significant middle power on the world stage in the twentieth and twenty first century. Canadian resources are a matter of pride to Canadians and it does not take much to arouse populist sentiment about who is to control and husband them. As the free trade and laissez- faire approach of the past decades has faltered it is not surprising to see these nationalist sentiments become more popular. The position of the Saskatchewan government in opposing the deal had the backing of its sister prairie provinces Manitoba and Alberta and the Government of Quebec which has its own strong tradition of national pride with respect to Provincial resources. Canada still seeks to partner with other countries in terms of trade and free flows of goods and services but like Europe, the U.S., Latin America and Asia there will be from time to time expressions of nationalist interest with respect to certain investments and resources. The fact that the Federal government is also a minority government who feared losing many of the 13 federal parliamentary seats it holds in Saskatchewan if it approved the deal undoubtedly also played a role in the decision
Monday, November 1, 2010
Nov. 1, 2010 U.S. mid term elections tomorrow
Tomorrow, November 2, 2010 may see a major shift in political fortunes in the U.S. in their mid term elections.
Mid term elections are traditionally with one or two exceptions harsh times for incumbent administrations. The President doesn't face re-election for another two years but a third of the Senate and all the members of the House of Representatives face re-election. If the polls are correct then the Republicans re-energized by their ultra right wing immoderate base of Tea Party people are going to be the big winners. They are expected to win as many as 50 plus additional seats in the House thereby gaining a majority there and possibly as many as seven or eight seats in the Senate cutting substantially into the current Democratic party senate majority. Despite a major last minute push by President Obama aided by former President Bill Clinton and Presidential First Lady Michelle Obama and hundreds of 1000s of volunteers across the country it still seems from the polls that the Republicans are poised to make major gains tomorrow, perhaps of historic proportions.
One of the most interesting and key races is between Harry Reid the majority Democratic leader in the Senate who is seeking his fifth term having first been elected to the Senate in 1986 after having been a member of the House from 1983 to 1987 and a former Lieutenant Governor of Nevada and a right wing Tea party supported Republican Sharron Angle who is a former member of the Nevada State Assembly and a teacher. Angle is supported by Phyllis Schlafly and a range of neo-cons and assorted tea baggers. She is a very controversial figure in Nevada politics renowned for her battles with a former governor of the state over taxation and the Nevada constitution. Some more moderate Republicans consider her too extreme and are instead supporting current Senator Harry Reid. Nevertheless, Angle has raised some 21.5 million dollars to support her campaign and currently has a narrow lead among likely voters in the polls despite refusing to talk to most of the mainstream media during the campaign. Because Nevada suffers from 14 % unemployment and has many conservative voters Reid is vulnerable.
Reid, on the other hand, has the backing of key figures in state politics and business dominated as it is in Nevada by the casinos and entertainment industry. Reid has an amazing life story of rising from humble and difficult circumstances to his commanding position in the Senate. He is also a Roosevelt style liberal Democrat who has backed progressive legislation throughout his career although he is apparently a social conservative on issues like abortion and same sex marriage. He has a reputation for being a tough hardscrabble grass roots based political fighter who is well organized with a strong political machine and knows how to get his voters out. He lacks somewhat in charisma but he makes up for that in his command of the intricacies of elections and governance. If he loses it will be a major defeat for the Democrats.
If he is able to turn back the tide of Tea Party Republicans and hold on to his seat this will bode well for the remainder of Obama's first term. There are excellent pieces by Nicholas Lemann in the October 25 th New Yorker on Reid versus Angle and on the lessons to be drawn from his potential defeat and the Republican gains by Robert Kuttner in the Huffington post. The polling data on Nevada and the mid term election in general is well displayed in the New York Times. Finally, the New Republic has a very interesting guide to election night and the key races to watch as bell weathers of what is to come by the end of the count.
Nov. 3, 12:41 am CNN has just announced that
Harry Reid will defeat Sharron Angle in the Senate race in Nevada. His margin of victory 51 to 46 %. This is a major victory for the Democrats in an otherwise very bleak night for the House of Representatives and the Democratic party. It appears that the Republicans will capture 52 plus seats in the House but fortunately will be denied a comparable result in the Senate races.The Democrats will preserve their majority status in the Senate with a smaller margin than in 2008 but a majority nonetheless. Democratic senators like Harry Reid and Barbara Boxer in California have won re-election despite the Republican tide. They did so because they had strong grass roots support and a well organized machine to bring out the vote. Interestingly in both states the unemployment rate was far above the national average. So the basis of their victories need to be carefully analysed for clues that they will give to what might be an appropriate strategy in the future.
In California Jerry Brown a former Governor from decades before has won the governorship once again by decisively defeating his Republican opponent who spent a fortune on her unsuccessful campaign.
Nov.3, 3:34 p.m. both Harry Reid (Nevada)and Barbara Boxer(California) won solid victories in their Senate races and they join Democrat victors in Delaware and Connecticut against large spending Tea Party backed opponents to ensure that the Democrats preserved their majority in the Senate 51 to 47 with two more contests to be resolved in Colorado and Washington where there is a good chance that the Democrats will win both of these seats.(They did win them so the count is now Democrats 53 Republicans 47 in the Senate.) The House of Representatives so far has ended up with the Republicans taking a near record number of 60 seats from the Democrats and installing a Republican majority 239 to 185 with 11 seats still to be decided. So as President Obama has stated the Democrats got shellacked.
But there are still some saving graces for Democrats in the performance in the Senate and in the survival of a number of Democratic congressmen and women who were able to resist the surge toward the Republicans in a number of districts across the country. These include members in the northeast but also members in places like Wisconsin, Iowa, Minnesota,Missouri, Alabama, Georgia, Mississippi, Arkansas, Virginia, West Virginia, North and South Carolina, Oklahoma,Ohio,Florida, Michigan, Indiana,Texas, New Mexico, Arizona and of course the west coast states of California, Washington and Oregon. This is probably the high point of Republican fortunes. Once the uncompromising Tea baggers get to Washington they will face some hard choices that are likely to tarnish their pristine reputation. The reality is if they wish to get things done they also will have to compromise and they have told their supporters they never will. The next two years will be very interesting.
www.newyorker.com/reporting/2010/10/25/101025fa_fact_lemann
http://www.huffingtonpost.com/
http://www.tnr.com/
http://www.tnr.com/article/politics/78890/a-lost-generation?page=0,0 (This is an excellent piece by John Judis that is sharply critical of the Obama inner circle strategy and is rather pessimistic about the future consequences of these choices. It is well worth reading and thinking about.
The key problem in the next two years will be the fact that the pace of the recovery so far is too slow and too minimal to ensure a solid and steady drop in the rate of unemployment. Because the Tea Party people and many Republicans are opposed to government financed intervention to accelerate growth they will make it extremely difficult for the President and the Congress to pass appropriate additional stimulus measures that will be capable of creating faster growth and reduced unemployment. Simply slashing business taxes may be helpful but it is not likely that on its own this will be sufficient particularly if the Tea party and Republicans insist on immediate deficit reduction. The two goals are incompatible in the short run. )
Mid term elections are traditionally with one or two exceptions harsh times for incumbent administrations. The President doesn't face re-election for another two years but a third of the Senate and all the members of the House of Representatives face re-election. If the polls are correct then the Republicans re-energized by their ultra right wing immoderate base of Tea Party people are going to be the big winners. They are expected to win as many as 50 plus additional seats in the House thereby gaining a majority there and possibly as many as seven or eight seats in the Senate cutting substantially into the current Democratic party senate majority. Despite a major last minute push by President Obama aided by former President Bill Clinton and Presidential First Lady Michelle Obama and hundreds of 1000s of volunteers across the country it still seems from the polls that the Republicans are poised to make major gains tomorrow, perhaps of historic proportions.
One of the most interesting and key races is between Harry Reid the majority Democratic leader in the Senate who is seeking his fifth term having first been elected to the Senate in 1986 after having been a member of the House from 1983 to 1987 and a former Lieutenant Governor of Nevada and a right wing Tea party supported Republican Sharron Angle who is a former member of the Nevada State Assembly and a teacher. Angle is supported by Phyllis Schlafly and a range of neo-cons and assorted tea baggers. She is a very controversial figure in Nevada politics renowned for her battles with a former governor of the state over taxation and the Nevada constitution. Some more moderate Republicans consider her too extreme and are instead supporting current Senator Harry Reid. Nevertheless, Angle has raised some 21.5 million dollars to support her campaign and currently has a narrow lead among likely voters in the polls despite refusing to talk to most of the mainstream media during the campaign. Because Nevada suffers from 14 % unemployment and has many conservative voters Reid is vulnerable.
Reid, on the other hand, has the backing of key figures in state politics and business dominated as it is in Nevada by the casinos and entertainment industry. Reid has an amazing life story of rising from humble and difficult circumstances to his commanding position in the Senate. He is also a Roosevelt style liberal Democrat who has backed progressive legislation throughout his career although he is apparently a social conservative on issues like abortion and same sex marriage. He has a reputation for being a tough hardscrabble grass roots based political fighter who is well organized with a strong political machine and knows how to get his voters out. He lacks somewhat in charisma but he makes up for that in his command of the intricacies of elections and governance. If he loses it will be a major defeat for the Democrats.
If he is able to turn back the tide of Tea Party Republicans and hold on to his seat this will bode well for the remainder of Obama's first term. There are excellent pieces by Nicholas Lemann in the October 25 th New Yorker on Reid versus Angle and on the lessons to be drawn from his potential defeat and the Republican gains by Robert Kuttner in the Huffington post. The polling data on Nevada and the mid term election in general is well displayed in the New York Times. Finally, the New Republic has a very interesting guide to election night and the key races to watch as bell weathers of what is to come by the end of the count.
Nov. 3, 12:41 am CNN has just announced that
Harry Reid will defeat Sharron Angle in the Senate race in Nevada. His margin of victory 51 to 46 %. This is a major victory for the Democrats in an otherwise very bleak night for the House of Representatives and the Democratic party. It appears that the Republicans will capture 52 plus seats in the House but fortunately will be denied a comparable result in the Senate races.The Democrats will preserve their majority status in the Senate with a smaller margin than in 2008 but a majority nonetheless. Democratic senators like Harry Reid and Barbara Boxer in California have won re-election despite the Republican tide. They did so because they had strong grass roots support and a well organized machine to bring out the vote. Interestingly in both states the unemployment rate was far above the national average. So the basis of their victories need to be carefully analysed for clues that they will give to what might be an appropriate strategy in the future.
In California Jerry Brown a former Governor from decades before has won the governorship once again by decisively defeating his Republican opponent who spent a fortune on her unsuccessful campaign.
Nov.3, 3:34 p.m. both Harry Reid (Nevada)and Barbara Boxer(California) won solid victories in their Senate races and they join Democrat victors in Delaware and Connecticut against large spending Tea Party backed opponents to ensure that the Democrats preserved their majority in the Senate 51 to 47 with two more contests to be resolved in Colorado and Washington where there is a good chance that the Democrats will win both of these seats.(They did win them so the count is now Democrats 53 Republicans 47 in the Senate.) The House of Representatives so far has ended up with the Republicans taking a near record number of 60 seats from the Democrats and installing a Republican majority 239 to 185 with 11 seats still to be decided. So as President Obama has stated the Democrats got shellacked.
But there are still some saving graces for Democrats in the performance in the Senate and in the survival of a number of Democratic congressmen and women who were able to resist the surge toward the Republicans in a number of districts across the country. These include members in the northeast but also members in places like Wisconsin, Iowa, Minnesota,Missouri, Alabama, Georgia, Mississippi, Arkansas, Virginia, West Virginia, North and South Carolina, Oklahoma,Ohio,Florida, Michigan, Indiana,Texas, New Mexico, Arizona and of course the west coast states of California, Washington and Oregon. This is probably the high point of Republican fortunes. Once the uncompromising Tea baggers get to Washington they will face some hard choices that are likely to tarnish their pristine reputation. The reality is if they wish to get things done they also will have to compromise and they have told their supporters they never will. The next two years will be very interesting.
www.newyorker.com/reporting/2010/10/25/101025fa_fact_lemann
http://www.huffingtonpost.com/
http://www.tnr.com/
http://www.tnr.com/article/politics/78890/a-lost-generation?page=0,0 (This is an excellent piece by John Judis that is sharply critical of the Obama inner circle strategy and is rather pessimistic about the future consequences of these choices. It is well worth reading and thinking about.
The key problem in the next two years will be the fact that the pace of the recovery so far is too slow and too minimal to ensure a solid and steady drop in the rate of unemployment. Because the Tea Party people and many Republicans are opposed to government financed intervention to accelerate growth they will make it extremely difficult for the President and the Congress to pass appropriate additional stimulus measures that will be capable of creating faster growth and reduced unemployment. Simply slashing business taxes may be helpful but it is not likely that on its own this will be sufficient particularly if the Tea party and Republicans insist on immediate deficit reduction. The two goals are incompatible in the short run. )
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