The early reaction by Canada’s economists is that they are mystified by the basic conclusions and forecasts put forth in Flaherty’s economic update.
With the global recession worsening our government’s first move is to cut back, which is exactly the opposite of what most economists recommend.
From BMO Nesbitt Burns
On balance, it's quite the opposite of supporting growth.Another economist from U of T who worked on Flaherty’s update can’t believe the government’s conclusions.
Under the current circumstances, it's unusual, to say the least, given that almost every other major country in the world is moving to stimulate the economy.
I just can't imagine that this document will have any shelf life at all.From Bank of Nova Scotia
His own detailed forecast was central to the federal government's case for showing a surplus, but only because Ottawa took his numbers and changed them to assume government cost-cutting, Mr. Murphy said.
My cynicism has reached new heights. What else can I say?
The government's oil forecast is far too high.From the OECD
Scotia Bank is forecasting that 2009 growth will contract by 0.2 per cent, a number that will likely be revised lower today.
Ottawa sees the oil price averaging $72 (U.S.) a barrel next year, while Scotiabank sees it at $60 which would make the government revenues will be much lower than Ottawa hopes
The Organization for Economic Co-operation and Development sees a 0.5 per cent decline for Canada next year, not an increase.From Merrill Lynch
Merill Lynch is forecasting a decline of 0.3 per cent next year, which will also be revised even lower next week.And now to the point.
Although the less than accurate forecasting is confusing to the countries economists, the political challenge put forth yesterday seems to be understood by some political and constitutional experts.
Michael Behiels, University of Ottawa political historian and constitutional expert.
Behiels is convinced Harper is determined to trigger his own defeat to take another stab at winning a majority before a deep recession sets in.While a majority of Canadians are now starting to be concerned about the economy, cutting back on spending and worried about loosing their jobs, Harper has put forth a fiscal update that is not only contrary to common accepted logic, but one that contains key funding cutbacks intended to provoke an unwanted and unnecessary constitutional crisis.
He's got the Liberals on the ropes and he's using the funding of political parties as a way to provoke the crisis," he said. "I think he's angry he didn't get the majority.
He came so close, and now the longer he waits and the deeper the recession gets the chance of coming out smelling like a rose is diminished.
So it's best to catch all the opposition off guard, force them to defeat the government and browbeat the governor general into giving him another election as soon as possible.
This is politics at its highest form of gambling. Harper is going for broke. He's going to play all his chips, all his cards," Behiels said.
This is not what our country needs right now and is certainly not leadership.
See previous post.
References: Globe and Mail on economists here , and CNEWS on Behiels here .