The need for stimulus

I may have been a bit premature in announcing the end of our political quagmire, as the Tory capitulation on public funding subsidies will not appease the opposition. Obviously, that cannot be seen as the fundamental issue here, otherwise Harper will use it as a bludgeon later on, and be the stronger for it. Instead, the Liberals and NDP will press forward with coalition talks and keep focusing on the economy, as this is probably their best chance yet to take Harper down.

And what about the economy? Is the government really guilty of negligence in the face of crisis?

Before the election, I defended Harper on the economy, pointing out that much of Canada's troubles are completely beyond our control. We cannot help but be affected by a total meltdown south of the border; Trudeau knew what he was talking about when he made his famous comment about sleeping with the elephant.

But this "economic update" from Jim Flaherty was downright bizarre.

At a time when countries around the world are working to fight a global recession by stimulating economic activity through increased government spending, Prime Minister Stephen Harper's Tory government actually plans to put the squeeze on Canada's economy.

In its all-out effort to avoid running a deficit, Flaherty has promised that federal spending will be slashed by $5 billion in the fiscal year that begins next April, when economic conditions probably will be at their worst. Another $1 billion in windfall income will be banked, not recycled into economic stimulus, for a total squeeze of $6 billion.

"That's precisely the thing not to do," said Carlos Leitao, chief economist at Laurentian Bank Securities. Rather than a balanced budget, he believes, what we need right now is new spending of $15 billion or more to do things like bail out provincial budgets and boost benefits to the unemployed. This would translate into a deficit of about the same size, but it would prevent economic damage worth far more.

As a (possibly severe) recession looms, the government's focus appears to be on cutting spending and keeping the budget balanced. I'm as big a deficit hawk as anyone, but even I recognize the need for stimulus. Now is not the time to worry about balanced budgets. Now is the time to boost aggregate demand by injecting money into the economy. Canada is lucky to be in a position to do this with very little negative fallout, due to our debt reduction policies of the last decade.

I'm frankly a little puzzled by Harper's strategy here. I understand the caution on economic stimulus packages, but I don't understand why Flaherty would choose to focus on balanced budgets at a time of uncertainty and near panic over the economy.

I wish the grown-ups were in charge

The Liberals and NDP are threatening to bring down the Harper government and form a coalition, ostensibly due to inaction on an economic stimulus package, but it might also have something to do with a Tory plan to end a government subsidy paid to the parties for every vote they earn (with the Liberals with in debt, and the Conservatives possessing a formidable fundraising machine, this is a serious threat).

Link

It looks like Harper intentionally provoked the opposition just to see what they would do, and that they've fallen into the trap, so to speak (though his delaying of the confidence vote for a week may indicate some apprehension). If they backtrack now without any concessions from Harper, they'll just look ridiculous. But the way things are looking right now, it's very possible that Stephane Dion will be PM in a couple weeks time. The key question is whether the Liberals and NDP are serious about this or are just stamping their feet over losing their badly needed public funding. And also what the Bloc will do and what incentives the other parties will need to offer them for their support.

The opposition has undertaken an extremely risky strategy here. On the face of it, there is nothing inherently wrong with forming a coalition government. It is commonplace in other parliamentary democracies. Nor is it somehow "undemocratic", as that jerkoff Ezra Levant was arguing yesterday on Newsnet, as 63% of Canadians did not vote for Harper and the Tories, yet they form our government nevertheless.

But it all depends how this is framed. The Liberals and NDP desperately want this to be about the economy and inaction on the part of Harper and Flaherty towards a stimulus package. This argument is not entirely without merit, but it's more than a little suspect that this coincided with the move to remove the public funding subsidy. The Tories have a huge advantage in fundraising, while the Liberals and NDP are in debt. If the public sees this as nothing more than a naked attempt by the opposition to keep their public funding (meaning millions of taxpayer dollars), this could backfire in a big way.

On the other hand, this may be the best way to look at it:

If you're just tunning in now...

...here's what you've missed:

Tories want to destroy the opposition! Bring it on! Another election?Another election! Coalition government! Prime Minister Dion? A Liberal coup? Prime Minister Layton? Prime Minister Goodale? Harper blinks - election averted! Election on? Coalition on? Prime Minister Chretien? And Ed Broadbent? Je ne comprends pas anglais. Liberal non-confidence motion! WHAT THE @#&! IS GOING ON HERE??!!?!?!?

UPDATE: Harper delays the confidence vote until December 8th! What does it all mean? WHO THE HELL KNOWS! Let's just sit back and enjoy the ride!

Our politics are getting pretty crazy.

UPDATE: Looks like Harper wants to keep his job after all.

After 24 hours of peering into a yawning political abyss, the Harper
government stepped back from the brink Saturday, dropping a plan to kill public
subsidies for political parties.

"When it comes to the funding and subsidies that political parties get,
we just don't think it's worth getting into an election on that issue,"
Transport Minister John Baird said in an interview.

"We won't be proceeding."

I guess Italy gets to keep its dubious honour of being the most disfunctional Western democracy. For now.

Battlestar's coming!

New promo:



I can't wait! :)

This is very cool as well. Scifi's posting clues right up until Jan. 16, when Season 4.5 premieres.

I hate it that the show's ending, but at least it will have a proper ending. And there is still more Battlestar to come:

The Plan

Caprica

That's more like it; Pats beat Fins 48-28

New England looked very good today. Cassel just did something that even Brady has yet to achieve: two consecutive 400+ yard games. Miami looked utterly outclassed, especially towards the end when their discipline seemed to break down (though Matt Light will likely be suspended for his part in that fracas).

If Cassel keeps this up, and keeps finding Moss in the end zone, this team suddenly looks very scary. The only question marks are their beat-up defense and running game.

Liberal disappointment with Obama

Most of Obama's cabinet appointments announced thus far have been centrist Democrats, some of whom have endorsed things like the Iraq war, "harsh interrogation methods" (if not necessarily waterboarding), and other excesses of the Bush administration. One very important post, Secretary of Defense, may even stay unchanged, if Obama decides to keep Robert Gates, albeit temporarily.

Predictably, this has resulted in some consternation from the Left. Here's Chris Bowers:

I know everyone is obsessed with the "team of rivals" idea right now, but I feel incredibly frustrated. Even after two landslide elections in a row, are our only governing options as a nation either all right-wing Republicans, or a centrist mixture of Democrats and Republicans? Isn't there ever a point when we can get an actual Democratic administration? Also, why isn't there a single member of Obama's cabinet who will be advising him from the left? It seems to me as though there is a team of rivals, except for the left, which is left off the team entirely.

Of course, we don't know his entire cabinet just yet. And many of the people being discussed have not been officially confirmed. The Left may be going nuts over Robert Gates, but we only have speculation over who Obama's SecDef will actually be.

And some appointments are very encouraging. As Glenn Greenwald explains in this post, Eric Holder for Attorney General would be a huge improvement, and offers a real possibility of reversing much of Bush's assault on the Constitution (but his rape of the Justice Department may not be as easily corrected).

Finally, while Obama may be wary of starting witch hunts over torture, and prosecuting everyone involved (a process that would be satisfying, but inevitably polarizing), he has sent signals through his advisors that he may institute a bipartisan independent commission to investigate the matter and make its findings public. Not my ideal solution (I think war crimes can and should be prosecuted, no matter how important and powerful the perpetrators are), but it's in keeping with his philosophy.

The simple truth is that Obama is not a politician that will rock the boat. Despite all his talk about "change", he is, in fact, an extremely cautious and pragmatic man. He is also not a liberal ideologue. His decisions on the transition thus far are entirely in keeping with that. To this Canadian, Democrats are almost always disappointingly center-right, but I knew that about Obama from the start. Nevertheless, he was worth supporting. And he remains so. And any progressives who harbored unrealistic expectations of Obama have no one but themselves to blame. I pretty much agree with this e-mail Digby sent to Greenwald:

The villagers and the right made it very clear what they required of Obama --- bipartisanship, technocratic competence and center-right orthodoxy. Liberals took cultural signifiers as a sign of solidarity and didn't ask for anything. So, we have the great symbolic victory of the first black president (and that's not nothing, by the way) who is also a bipartisan, centrist technocrat. Surprise.

There are things to applaud about the cabinet picks -- Clinton is a global superstar who, along with Barack himself, signals to the world that the US is no longer being run by incompetent, extremist, political fringe dwellers. Holder seems to be genuinely against torture and hostile to the concept of the imperial presidency. Gaithner is a smart guy who has the trust of the Big Money Boyz, which may end up being useful considering the enormous and risky economic challenges ahead. Emmanuel is someone who is not afraid to wield a knife and if we're lucky he might just wield it from time to time against a Republican or a right wing Democrat. Napolitano seems to have a deft political touch with difficult issues like immigration which is going to be a battleground at DHS. And on and on.

None of them are liberals, but then Obama said repeatedly that he wasn't ideological, that he cared about "what works." I don't know why people didn't believe that. He's a technocrat who wants to "solve problems" and "change politics." The first may actually end up producing the kind of ideological shift liberals desire simply because of the dire set of circumstances greeting the new administration. (Hooray for the new depression!) The second was always an empty fantasy --- politics is just another word for human nature, and that hasn't changed since we were dancing around the fire outside our caves.

If you want to press for a cabinet appointment at this late date who might bring some ideological ballast, I would guess that labor and energy are where the action is. It would be really helpful to have somebody from the left in the room when the wonks start dryly parceling out the compromises on the economy and climate change. But basically, we are going to be dealing with an administration whose raison d'etre is to make government "work." That's essentially a progressive goal and one that nobody can really argue with. But he never said he would make government "work" for a liberal agenda. Liberals just assumed that.

On a related note, don't all these center-right appointments make the Right's pre-election spittle-flecked rants and nervous breakdowns over socialist left-wing firebrand Black Power Obama even more absurd? They unceasingly pushed this nonsense about him being the "most liberal senator" and a dangerous radical absent any evidence whatsoever, only the thinnest of guilt by association justifications. Does anyone think these idiots will be the least bit chastened by their pre-election rhetoric's utter disassociation from the truth? If you do, you haven't been paying attention the past 8 years.

We get a blizzard, they get plummeting space debris

Check out this video of a meteor impact in Alberta:



Awesome. Meanwhile, all we get in Nova Scotia is 30cm of snow. In fucking November. Not that I'm asking for us to get hit with meteors. But it would be more fun.

No good options for Detroit

I am of the opinion that while the executives at GM, Ford and Chrysler are total jackasses and short-sighted morons, it's quite necessary that some type of bailout take place.

In more normal times, the answer may be different. Chapter 11 bankruptcy would be a credible option. Unfortunately, these are not normal times. Chapter 11 is simply not a realistic option right now. GM is literally on its last legs. Who would run the company while things were being settled in court, and how would they keep it running with no cash, no credit, and absolutely no one willing to lend them the billions of dollars necessary to keep making and selling cars? Here's Jonathan Cohn , making this precise point:

One reason for the casual support for letting GM fail is the assumption that bankruptcy would be no big deal: As USA Today editorialized recently, "Bankruptcy need not mean that the company disappears." But, while it's worked out that way for the airlines, among others, it's unlikely a GM business failure would play out in the same fashion. In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can't build cars without parts, and it can't get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.

And for that matter, who would buy a car from a bankrupt manufacturer? What about warranty/service coverage? It's not like buying an airline ticket, which is a one-time thing; you use it to get from one place to another, and that's it. But a car is a long term investment. You don't want the maker of your new Cadillac to go out of business next week.

What would happen to the Big 3 instead is Chapter 7: total liquidation, and millions of people suddenly without jobs, health insurance, or pensions. Millions of people newly dependent on social assistance from the government, which would itself cost billions and billions of dollars. The repercussions for an already sinking economy would be devastating. Stock markets went into another tailspin today, partly because of uncertainty on this very issue. If these companies actually went under, it just might be what turns this nasty recession into a longer-term depression.

As unpalatable as it is, I think a bailout is the only option, provided that it has serious strings attached, as President-elect Obama seems to be in favor of. If American taxpayers are going to bail out these failing companies, Detroit must be given some real shock treatment, forcing them to start making cars for the 21st century. Take it or leave it.

What is wrong with Senate Democrats?

Today, Senate Democrats voted to give Lieberman a slap on the wrist, stripping him of his positions on a couple environmental subcommittees, but letting him keep his far more important chairmanship of the Homeland Security committee, which has important oversight responsibilities.

And it was a pretty decisive vote, 43-12.

It's times like these that you really have to wonder what is up with the Senate. This is hardly the first time they've let their constituents down. Whether it was voting to grant the Bush administration all the new eavesdropping powers they wanted (along with telecom immunity to cover their asses), or renewing the Patriot Act, or declaring branches of the Iranian government "terrorists", or authorizing torture, Senate Democrats have been willing participants all along. There has been no shortage of "bipartisanship".

Now, confronted with an individual who voluntarily turned against his party and became a total neo-con, lost a Democratic primary, campaigned with Republicans, spoke at the Republican convention, and happily spread fear-mongering smears against the new President elect (a President elect who actually supported Lieberman in his primary battle; big mistake, in retrospect), what do the Democrats do? They let him keep his chairmanship through an overwhelmingly one sided vote, a position that he has done an exceedingly poor job at by any objective measure, failing to exercise any oversight at all over the Bush administration's failures.

All this so he can do what? Start witch hunts against the Obama administration?

This is all quite ridiculous, and makes the Democrats look weak once again, at a time of Democratic ascendancy, with the party making gains in all branches of government and with a significant progressive mandate for change.

The Democratic leadership should have called Lieberman's bluff, and stripped him of this chairmanship. Of course they want him to stay in the caucus, and he likely would have done so. As much as Lieberman wanted this committee, he still is a Democrat on most issues, and undergoing an even more extreme ideological conversion would simply ensure his defeat in 2012. It's looking very likely that the Dems will have at least 58 seats in the Senate without Holy Joe; he's not nearly as important as he thinks he is.

More broadly, this is a symptom of this overwhelming desire for "bipartisan harmony". Apparently the desire for "harmony" even overrides the rule of law. Don't hold anyone accountable, because that would be "partisan", and "vindictive".

It is important to note that Obama is not much better in this regard. He was not present for some of the aforementioned votes, but he did eventually support the disgraceful FISA bill and seemed to wash his hands of any decision on Lieberman. His aides have also signalled that his Justice Department will not be pursuing any prosecutions of those government officials involved in the Bush-Cheney torture regime.

I understand the need for healing, but justice and accountability are integral parts of that healing process.

Quantum of Solace

I'm not dead! Just been uninterested in blogging. Post election depression or something...

Anyway, the new Bond movie.

First, let me say that I thought Casino Royale was awesome. It was a great reboot for the series, and gave it a much-needed dose of gritty realism. On top of that, Daniel Craig is the best Bond since Connery.

So it was with great anticipation that I went to see Quantum of Solace. The trailers looked cool, and I was eager to see where the filmmakers would go from CR.

In a word, I was disappointed. The story, while thin, was interesting and well-written. Craig is as good as ever, and his murderous tendencies in this film are darkly humorous. Mathieu Amalric was good as the elusive villain (his eyes totally creep me out), and Olga Kurylenko was a great Bond girl; not only is she gorgeous, but also more than capable of taking care of herself.

But where the film really falls flat is in its action sequences. Yes, this is yet another movie afflicted with the "shaky cam" disease. The opening car chase is pretty much incomprehensible, with its split-second editing and shaky camera. As is much of what follows. And there's too much of it. The pace slows down a bit in the second half, but the first hour is nothing but chases, gunfights, and fistfights.

I honestly don't know why they didn't stick with Martin Campbell as the director. Marc Forster simply doesn't have a clue how to shoot or edit action. He seems to be trying to imitate Paul Greengrass and the Bourne movies, but he fails. Not only is that style inappropriate for Bond, but this is a poor imitation. The Bournes are frantic, but not a blur.

James Bond will definitely return, but here's hoping that it will be with a director who actually understands how to shoot action scenes (and a better title song!).

So what's going on with that bailout?

Turns out that Paulson is essentially making it up as he goes:

The Treasury Department on Wednesday officially abandoned the original strategy behind its $700 billion effort to rescue the financial system, as administration officials acknowledged that banks and financial institutions were as unwilling as ever to lend to consumers.

But with a little more than two months left before President Bush leaves office, Treasury Secretary Henry M. Paulson Jr. is hoping to put in place a major new lending program that would be run by the Federal Reserve and aimed at unlocking the frozen consumer credit market.

The program, still in the planning stages, would for the first time use bailout funds specifically to help consumers instead of banks, savings and loans and Wall Street firms.

Treasury officials said they hoped to invest about $50 billion from the bailout fund into the new loan facility, with the aim of helping companies that issue credit cards, make student loans and finance car purchases. [...]

“Illiquid assets looked like the way to go,” Mr. Paulson told reporters at a news conference on Wednesday. But as economic and financial conditions declined so rapidly, he said, that he had to change gears. “I will never apologize for changing the approach and the strategy when the facts change,” he said.

The change in strategy has had only limited impact on the frozen credit markets. The biggest improvement has been in the willingness of banks to lend to each other, a change that largely caused by the willingness of both the United States and European governments to guarantee bank deposits and interbank loans.

But the market for commercial debt backed by consumer and business loans has remained at a near standstill since Lehman Brothers, one of Wall Street’s leading investment banks, collapsed in September.

So far, the banks are using the bailout money to basically cover their own losses, not make new loans. Which is good for the banks, but not so good for keeping the economy going. There's really not much anyone can do about it, since there are fewer creditworthy borrowers in November than there were in August, and most of those that can borrow are already deep in the hole, and shouldn't be taking on more debt. Here's Tim Luy:

With consumers already overextended, the room for rapid credit growth is simply limited. Moreover, with economic activity deteriorating and unemployment rising, the number of creditworthy borrowers is falling. This comes on top of the deleveraging already underway in the financial sector. The Fed and Treasury are able to do little but prevent the banking system from outright collapse.

Simply put, policies focused on housing and consumer spending are a black hole for spending – this summer’s short-lived stimulus package is a case in point. Policymakers need to come clean with the American public: Future patterns of growth will simply be less dependent on consumer spending. We are entering a period of structural adjustment, and it will be painful. We spent decades pretending that the relentless focus on producing nontradable goods and relying on a ballooning current account deficit to hide our lack of productive capacity was an appropriate policy approach. But ultimately, those policies have failed us, with stagnant income growth for median income families and the deepest recession since the 1980’s (or even worse).

As far as the changes to the Paulson plan go, it's something of a vindication to those who argued against the bailout in the first place, preferring instead that the money go to consumers instead, or have the Treasury buy up equity and inject capital directly into the system rather than buying up these toxic securities and assets backed by bad mortgages and hoping for the best.

After the stock market crash of 1929, the Hoover administration tried a variety of different responses as well, most of which just made the situation worse, ranging from inaction early on to a misguided attempt to boost domestic production by raising tarrifs on imported goods (other countries retaliated by imposing tariffs as well, drastically depressing international trade).

One would hope that the people in charge have learned a few things since then, but it's hard to say whether that's true at this point.