Random Thoughts March 9:
The United States is in a mess right now. Every day brings a new day in bad news. Trillion dollar budget deficits. Bailouts in the auto and banking sector. Huge trade deficits and the outsourcing of manufacturing jobs to China and other low wage nations. Older workers not able to retire. Increased unemployment and falling tax revenue. The stock market taking a hit as the largest demographic group is about to retire. A collapse of the housing market, consumer confidence and the availability of credit. Increased credit card balances with record low savings. Pensions at risk. A threatened currency. Out of control government spending. Barack Obama is not a miracle worker and these troubles are serious. At this point, what we are experiencing goes well beyond a simple recession. We are getting into depression territory and it seems the spiral is happening so fast that there isn’t much government can do at this point. The business section of any newspaper is depressing these days and it is only about to get worse in the short term. A lot of people are wondering if this will be a quick cycle that will end in early 2010. I believe what we are seeing is a change from America’s position as the sole superpower. This strikes me as being similar to the fall of the British Empire and the USSR. The elephant in the room right now is how does a country like Canada prepare for a new world order where America is no longer the dominant player in the world? I suspect when we get out of this recession, there will be several dominant economies and nations influencing their regions. Brazil, Russia, China, EU and India will see their power increase over the next few decades. Already 50 trillion in wealth has been wiped out around the world due to this financial crisis.
In terms of US politics, Barack Obama is becoming more vulnerable but the Republican party is completely lost and irrelevant right now. Unless they find that old Reagan formula, it is going to be a long time in opposition. The problem isn’t their principles at this point, it is a marketing and branding issue.
Andrea Horwath was elected NDP leader this weekend. I think the NDP made a strong choice. Watching her in question period, I think she comes across as professional and serious. I wish her all the best in her new role. The PC Party will have a much better chance of getting elected with a strong NDP. On the PC side, it is a shame what happened to John Tory. I honestly believe he would make a great premier. March 23 Conservatives will elected an interim leader. I am hearing it will either be Bob Runciman or Elizabeth Witmer. A new leader is to be elected prior to Canada Day. One of Tim Hudak, Randy Hillier, Christine Elliot or Frank Klees will most likely be that leader. I do not see Peter Van Loan, Jim Flaherty, Tony Clement or John Baird leaving their cabinet spots federally to enter this contest. I hope Bill Murdoch returns to the PC caucus.
Is Premier Dalton McGuinty running for re-election? I am sure Mr. Smitherman and Bryant would like to know. Will Jean Charest run again or his a move back to federal politics in the cards?
Ontario’s 18B deficit this year and next is larger than Bob Rae. This deficit is not a one time stimulus but an ongoing revenue shortfall in relation to spending increases under McGuinty’s watch. It looks like Ontario will be in the red for a decade. By 2011 we could need another Mike Harris Common Sense Revolution in order to cut the bleeding in this province.
In terms of federal politics, I believe we are going into an election in June or the fall. Liberals are hoping the recession will improve their poll numbers. If polling looks favorable in the next few months, expect a big Obama like speech from Ignatieff in Vancouver where he will paint his “vision” for Canada. The government will then likely fall on the confidence motion set up for June on his amendment to the budget. Otherwise expect the government to fall on the throne speech in the fall. At this point any confidence motion could result in the government falling. I would be surprised if we have the opportunity to present another budget. Ignatieff has eliminated everything Dion associated with his party. It must be quite awkward for Stephane to sit in caucus these days.
It is good to see Michael Ignatieff terminate the agreement with Elizabeth May and the Greens. I am not sure who benefited from the alliance. Frankly I think it cost both parties their credibility. May seemed like a Dion/Liberal cheerleader during the last campaign. Dion seemed that much weaker having to strike deals with a party that is nowhere close to electing an MP. I give credit to Iggy for realizing that the way back to power is not to strike deals with Greens, socialists or separatists.
Peter MacKay would make a great next secretary general of NATO but is that a better gig than future Prime Minister of Canada? I would love to see MacKay and Canada in the NATO role but am not sure if we can afford to lose Peter from the Conservative Party at this point.
I am glad to see our federal government push free trade. That is especially important given these economic times. Obviously we need to reaffirm and build on NAFTA. I hope we can secure free trade agreements with the EU, India, South Korea and Japan quickly. Given the US financial position right now, it is important that we continue to look for new markets and trade partners.
I really do not think GM or Chrysler will survive over the long term. Pension and legacy benefits will be the next major political issue. At this point I do not know if the bailout is enough to keep the status quo going for any significant period of time. The CAW agreement yesterday doesn’t give me any confidence in the big three automaker’s long term prospects for sustainability.
No one should be surprised by the fact that falling oil prices put Venezuela at serious financial risk. Everyone warned Hugo Chavez that his socialist policies would be catastrophic for his country if oil prices ever fell.
The Israeli coalition maneuvering looks to be over and Kadima leader Tzipi Livni and Labor leader Ehud Barak have put new Prime Minister Binyamin Netanyahu in a tough space. By forcing him to build a coalition consisting of Orthodox religious and settler parties; he is heading on a collision course with the United States government on issues related to the peace process and settlements. It could also turn out to be at odds with the new US administration positions on Syria and Iran as well. Do not expect this government in Israel to last very long. At some point it will be forced to chose between harming relations with its most important ally or making concessions that will split the Likud coalition. I think Barak and Livni are betting on this scenario and as a result will sit in opposition for the time being. Binyamin Netanyahu wants a broad coalition to avoid the perception abroad that he is an extremist. He has learned from his previous time as PM. Unfortunately it does not look like Livni or Barak are willing to play ball and the result is Avigdor Lieberman in the foreign affairs post. That decision could prove to be controversial based on some of his past statements and a general perception of his Israel Beiteinu party both inside and outside of Israel. I predict the coalition will last about six months. It will also likely stall the peace process as there seems to be instability on both the Israeli and Palestinian sides right now.
It is a shame what is going on with the Mexican drug wars right now. The war on drugs has clearly been an international failure.
I think it would be a shame to ban fighting in hockey. I was disappointed by this year’s trade deadline. I hope one day the NHL will consider bringing back teams to Canada. Winnipeg deserves their franchise back. Hamilton could easily support a team.
Don’t forget to sign up for the Manning Center convention this week in Ottawa! More details can be found here: http://www.manningcentre.ca/en
-Darryl
