It’s an exciting time to be a macroeconomist in the US: sudden and large cuts in the federal funds rate, a fiscal stimulus plan, a current account deficit that may finally be unwinding: the whole nine yards.
But almost none of that is spilling over here. The Bank of Canada did cut interest rates, yes, but only by 25 bps, and it managed to wait for its regularly scheduled announcement. Nor does there seem to be any indication that it will – or should – follow the Fed’s policy direction.
And as far as fiscal policy goes, the only fiscal policy project that’s on the table is the barrel of pork that Stephen Harper, Jean Charest and Dalton McGuinty want to shovel to the usual gang of rent-seekers manufacturing sector. The only thing that’s stopping them is that they can’t agree on who gets to claim the credit for the initiative. With any luck, they’ll decide that it’s better to let the whole thing drop and content themselves with blaming each other.
We’re almost certainly facing a scenario that is less rosy than the one we were looking at six months ago. But we don’t have the same problems that the US does: employment levels are still at record-high levels, commodity prices are still high, and the housing market looks nothing at all like theirs. Instead, we have meta-problems: our problem is that the US has problems.
Once again, we find ourselves at the fringes of the main event, watching and waiting. Happily, that’s not a bad place to be just now.
Worthwhile Canadian Initiative 
Also on the fiscal policy front: we have a nice little fiscal stimulus (the January GST cut, worth about half a percent of GDP), the timing of which (through sheer dumb luck) could not have been better.
this blog stinks
Every once in a while I notice it on the side of Economist’s View, and think to myself “Hey, I’m Canadian, I’m interested in Worthwhile Initiatives, I’d like to read an “exciting” economics blog.”
… then I click the link and it it all comes back to me. “Oh yeah, this is the fool who called the Globe & Mail mercantilists for advocating reciprocal trade agreements.” It’s like reading a Canadian Ben Stein, but with 10% more stupidity and triple the boring.
ddt: It’s your comment that stinks!
This blog rocks!!!
It’s the rare left of center blog I can say that about, but you argue for your point of view intelligently and you take into account the reality that the law of supply and demand is inviolable, regardless of how many politicians, journalists, or snarky commentators wrongly believe otherwise.
On the stimulus front, a large cut in the corporate income tax rate (not to mention that funky capital tax thingy you Canadians should simply abolish) would be radically better than a cut of any size in the GST. Somewhere in the archives is a nice explanation (if memory serves!!!) of why.
I’d be interested to hear how the complaints of our manufacturing sector are all imaginary, but that nevertheless, there will be some “blame” to assign when no assistance is provided to it.
Oh, the blame will be imaginary, too. But politicians don’t generally see the point in distinguishing between real and imagined problems if there’s an opportunity for political hay to be made.
“Once again, we find ourselves at the fringes of the main event, watching and waiting. Happily, that’s not a bad place to be just now”
Please explain this to the Canadian meida, in particular the Globe. I am sick of the US election already, as I am not an American.
In aprticular, the Lawrence Martin “Democrat = Liberal” schtick is getting tiring. Canadian politics does not line up with US politics in any way shape or form. For example, the main three US contenders (Hillary, Obama, and Clinton) are all war mongers. In Canada we have only one war monger, one waffler, one isolationist and one supporter of the USSR during the cold war. Too bad for Jack the USSR does not exist anymore, but they might be back.
So enough with the US politics.