Yesterday I wrote a post about how our debt is privatized so that we can play in the IMF's game. I've pretty well said everything I think I need to about it there and so please keep this post in mind as this analysis will not reiterate the points. We will return to the IMF in a future post when we cover Annex 3.
This will be the first in a series of posts covering the budget contents. There are many layers to this budget to peel back and a lot of ground to cover.
If I had to sum up this budget, I'd call it "a strategy" more than a budget. The most notable portion for me (believe it or not) is that we are dropping the penny. I will be dedicating a post to that subject. The second most notable are the changes to OAS.
The one that threw me most for a loop were cuts to defense. I will be looking at those cuts closely, with Harper's recent Iran war mongering and the (until recently) absolute commitment to the F-35 there seems to be a rapid departure from military buildup on the part of Canada. I have some theories about this I need to flesh out, but to get your own critically thinking minds rolling why don't you consider this, this, this and then finally this (especially notes about China). To say the least Canada may be caught in a growing conflict of interest and for now I'll leave it at that.
This budget wasn't the austerity shocker many were expecting, outside of the cuts to OAS. Baby boomer's are now playing down these cuts. A recurring theme has been that the extra 2 years is ok because our generation lives longer. Whatever makes you sleep better at night I guess.
I'm 27. If OAS has already become a problem, I wonder how many more "resets" it will be getting in the 40 years it will take me to get to 67? The so-called gradual approach is pointless. Every one telling you that these cuts are needed coincidently doesn't have the cuts happen to them. Can anyone explain to me why if the cuts are needed the current generation to receive OAS can't handle them? They were the primary beneficiaries of the debt we'll have to pay back. What exactly is the difference between a baby boomer at 67 and a person from my generation at 67? The baby boomer generation loves to talk up how much they have given us. Keep talkin', it sure seems easier than leading by example.
Speaking of leading by example, MP pension reforms are delayed.
Which brings me back to the lack of harsh austerity in the so-called austerity budget. You'll notice in yesterday's post the "Austerity is here" link was about provincial politics yet my post was mostly federal in nature. This is because monetary policy is federal in nature and negative effects from federal monetary policy causes austerity locally first. The larger government will always defer excess costs to smaller governments first to protect itself.
If you look at the debt situation in the U.S. since even before 2008, you'll notice it was small municiples crying for debt relief first. It's now affecting their states as U.S. federal monetary policy externalizes extra costs at local levels. The difference between the way the U.S. debt crisis has worked out and the way ours will work out is that the U.S. can print the global currency, and we can't. We can not monetize our debt as the U.S. is doing to externalize cost, again refer to yesterday's post on Canadian austerity in regards to our private bank loan method.
At the moment I am pleased with investment in research for small/medium business. I have not looked at the details closely yet but I am hopeful it is in line with what I see as being required for local smaller scope economies to flourish and for truly innovative and localized energy solutions to be created.
Energy brings us to our final point in part 1 of this analysis. The title of this budget is "JOBS, GROWTH AND LONG-TERM PROSPERITY". I am saddened that this title is a commitment to a dying form of an economy. Growth and long-term prosperity at this point in time are at odds. The rules around economic growth have changed. We need to change with them.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading.