Global recession deepens President Obama in Ottawa

Feb.20, 2009

President Barack Obama visited Ottawa yesterday and met with Prime Minister Stephen Harper as well as other politicians, the Governor-General and Michael Ignatieff , the Liberal party leader as well as Bob Rae one of the important leaders of the party, and other parliamentary officials. The visit was short, largely symbolic but gave the Canadian government   and the Obama administration the opportunity to relaunch the Canadian American relationship. There were shared articulated commitments to co-operation on facilitating cross border trade and social exchange, environmental regulation with respect to carbon emissions and a renewed commitment to avoid unnecessary and excessive protection in the operation of NAFTA and the implementation of the stimulus programs in both economies. As a first step in the new relationship it was a good if limited beginning with some nice optics and warm and fuzzy feelings on the Canadian side, so necessary given our usual inferiority complex when we compare ourselves to our American neighbours.By all accounts and judging from the tv images Obama was charismatic, well briefed and charming , Harper competent and pleasant , Ignatieff and Rae articulate and in the case of Ignatieff   an insightful intellectual participant observer of the new President and his character. Most of   the largely shallow Canadian media were as Lina Wertmueller used to say "swept away" " by the day.

World economic circumstances refused to co-operate however. There is now a new 8 billion dollar Ponzi finance scheme that has been unmasked that affects swindled investors in Latin America and the Caribbean, the Stanford international bank headquartered in largely unregulated Antigua, the big three auto sector is in even worse shape than originally thought, growth in Japan is the lowest in 35 years, the Dow has reached new lows as bank stocks dragged the Dow and the S and P lower than previous lows and the Fed has a gloomy assessment of the next six to 12 months in the American economy.It now expects unemployment to climb to 8.8 % up from its original estimate of 7.6 % It is quite possible that it will peak at an even higher rate. New home construction in the US in January fell to its lowest level since 1959. it was down by 16.8 % from December 2008.House prices in the US have now fallen by 25 %. as unemployment rises the likely trend is for further declines.

The only bright note of the day was the smile on the President's face as he greeted Canadian well wishers and the fact that wholesale prices did not fall as much as had been expected in the latest data release in the US.  

Prime Minister Harper continues to defend the size of his stimulus package as being in excess of IMF recommendations last fall. But the circumstances are worse than then anticipated and it would be wise to consider beefing up the stimulus in the light of what is transpiring. The smiles in Ottawa were nice but they won't put bread on the table as the unemployment rate rises.