Modeling Journey

When running against the hapless Senator John McCain, Obama pooh poohed McCain's policy of giving homeowners who were underwater some relief reducing their amount they owed on their mortgages, in recognition of the drop in home prices after the financial meltdown of 2008.

Now it seems that the same problem is even bigger, and the president is faced with doing exactly what McCain proposed, because Obama's first stab at the problem has been unsuccessful.


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The MYM movement is gathering more support in the USA, with the latest salvo coming from Maher:

"That's right, I'm talking to all of you that keep doing your banking at the giant, too big to fail, Wall Street banks that brought our economy to the brink of disaster, were rescued by trillions of dollars of our taxpayer money, then paid us back by using that money to hire lobbyists to convince our lawmakers in Washington to kill financial reform.

They took our money... but cut back on lending.
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This I believe: a mountain of synthetic (that is, artificial) wealth was created over the past two decades, which artificially boosted the north American and world economies. The 2008 financial collapse and the following real recession wiped out most of the artificial wealth. The recovery from the recession will take years.

Now we have a learned analysis by Michael D. Intriligator and R. Kyle Martin (let's call it the M&K Paper) in Huffington Post which deals with these issues, and forecasts a long, slow and painful recovery:

"Christina Romer, Chair of the White House Council of Economic Advisors, said she is "incredibly confident" the U.S. economy will recover within a year. We disagree… The projections presented in this paper estimate that the GDP of $14.26T achieved in 2008 will not be achieved again until 2013 and that unemployment will not fall back to a level of 6.25% until 2016."

Michael Ignatieff, take a cue: order each and every Liberal MP to read the M&K Paper from beginning to end, and then sit down with your caucus and discuss the impact of their forecasts on the Canadian economy over the next four years.

I believe the M&K Paper is one of the most significant analyses yet made of the downturn, and that their forecast of the pace and shape of the recovery is correct.

I believe that the slow recovery in the USA will also mean we face an equally slow recovery in Canada, given that a big portion of our economy is founded by exports, mostly to America. This means that we can expect more Canadians to lose their jobs, and that the ranks of the unemployed in Canada will remain at very high levels for the next 4 to 6 years.

And what that means is that the changes to the EI system which the Liberal and Conservative task force is supposed to be considering, are critically important.

Our EI system needs to spend billions over the next four years to support the millions of Canadians who will not be fully employed during the four year recovery period.

The chances of the Tory government agreeing to such changes are slim. Their worldview is that of the strict father of the George Lakoff analysis, which simply means that they are rigidly opposed to increasing in any meaningful way the financial support offered to unemployed or underemployed Canadians. Their visceral reaction is that any Canadian who loses his or her job probably deserves this, and should not be taken care of by the state.

And that means that we need to vote this government out of power in September, and ensure that we have a Liberal or Liberal-NDP government replacing them.

We cannot in conscience sacrifice the well being and dignity of jobless Canadians on the altar of rightwing lack of compassion and so-called free market principles.

What is especially ironic is that this same Tory government has committed the country to massive deficits (over $80 billion and counting), with much of it arising from misguided stimulus spending, and yet Harper is prepared to quibble over helping those who are hurting because they have lost their incomes.

Read the M&K Paper carefully, and let's guide our actions in parliament accordingly.