Canada will be in a recession – The fundementals are not sound?

Posted: October 06, 2008, 8:01 AM by Jonathan Ratner
Market Call

Declining GDP in the fourth quarter of this year and the first quarter of 2009 will bring the Canadian economy into an official recession, UBS predicted Monday.

“The Canadian economy, which has been only barely above water for nearly a year, does not escape the global undertow…” strategist George Vasic told clients.

He cited weakness in exports and sharp reductions in commodity prices as where the impact is being felt most. While domestic demand has held up, UBS expects weaker confidence will put activity on hold.

Scotia Capital is also forecasting Canadian and U.S. recessions, along with 100 basis point cuts from the Bank of Canada and U.S. Federal Reserve “that could come at any time.”

But for the first time in a long time, the underpinnings of the Canadian economy are sound going into the downturn, Mr. Vasic said, highlighting historically average consumer debt service ratios and a balanced budget.

“…it is not always the case that when the U.S. catches a cold, Canada gets pneumonia,” he added, predicting that consumer sentiment should hold up better.

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Is change in the air for Canada? Is it time for Prime Minister Jack Layton or a new voice for an opposition leader?

Prime Minister Jack Layton?

With Liberal leader Dion faltering and lagging behind Jack Layton in the polls, one has to wonder if change is in the air? We are already seeing old Liberal tactics; telling people not to split the vote, and cause a majority Conservative government. One has to ask, if this is the ONLY tactic they have to remain as the official opposition than maybe it is time for change? The Liberals are getting old and there is a sense amongst voters that it is “time for change” in Canada. Elizabeth May was seen as a possible alternative, however there is the feeling that they are in league with the Liberals, tainting the green image. Who knows what will happen on October the 14th, but one thing is clear, change is in the air. I am not sure if Canada is really ready to have an NDP government in Canada. The experience in Ontario maybe scaring individual voters, however I guess it does not matter since Bob Rae is now a Liberal? Maybe Bob Rae was never truly an NDP backer and we have never really seen what an NDP government can do. The question is, can Jack Layton deliver? Is it time for change? Is it time to for the new world of NDP Orange? Is it time for Prime Minister Jack Layton?

By: Andy MJ / a.k.a The G.T.A Patriot

Read more about the NDP Party of Canada below.

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Through three decades of public service, and as Leader of Canada’s New Democrats since 2003, Jack Layton is delivering the kind of change that can make life better for you and your family.

Months after taking his place in Parliament, Jack Layton successfully rewrote the 2005 federal budget. In place of $4.6-billion in corporate tax giveaways, Layton secured investments in better priorities—affordable housing, training, public transit, energy efficiency, development assistance and wage protection.

At last: this was policy from the kitchen table, not the boardroom table, and ordinary Canadians responded.

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Why the Conservatives and the PM need an election now to save themselves.

Elections for Canada - October 2008

Some high profile Conservatives are not seeking re-election. Do they see the title wave coming? Are they afraid? The real reason the federal Conservatives are calling for an election now is that they really do not have a choice. What do I mean by that? Let’s make just a few points.

1. The longer they wait, the better chance they will loose even more seats next year, pending the coming downturn in the economy. In case your head is stuck in the sand somewhere, the economy is not doing well.

2. The numbers for the Conservatives are still strong in Quebec and they have a chance to grab some seats in Ontario. The election may affect the Liberals more than the Conservatives.

3. The Honourable Stéphane Dion polling numbers are not strong. However, that is slowly changing and they need to go to the polls now, rather than later. The longer they wait, the more “sympathy” for Dion. I believe that the Conservatives will stay away from poking fun at Dion, because this stragedy does not help. They will will HAVE TO focus on making the PM more personal to win.

4. Prime Minister Stephen Harper is betting that their low-profile governance will help them at the polls. To be honest, there is not much news and “substance” to go on. People tend to figure, if it is not broken why fix it, to be frank.

5. The overall view is, when the economy is in a downturn, you need a “fiscally conservative” approach. That is a perception that has not changed much. This is probably what did in the government of Bob Rae in Ontario, leading to the extreme right in the Harris “common sense revolution. Again, I have already said it, but the PM does not want to have the stain of being the government that caused a ressession. Even though it would not be true, it does not really matter. Its all about perception.

6. The western provinces are doing well, so “milk it while we have a chance to”, because the Greens are coming!

7. The George Bush factor! Need I say more, as November approaches? If people believe that they have become a bit too “neo-conservative”, than the Conservatives are in trouble, especially in Ontario and Quebec. So go now while we are “a sleep at the wheel”.

8. The PM needs an election fast, before the historic election in the U.S. It is a fact the a huge amount of Canadian’s are watching the American election. No matter what you think the Conservatives “DO NOT” want to be caught in the “change title wave” that is approaching. If they do, they will basically drown in the possible Obama factor, no matter what side of the fence you are on.

The fact is the only point the Conservatives are riding is the fact that they can say “the Green Shift is not a prudent policy for the coming economic downturn”. While, offering no option of their own, they are “fear mongering” people into thinking that this is all about raising taxes. This is a dangerous gamble, seeing that people list the environment as an important factor, despite economics. Now make no assumption, I am not a Liberal member. To be honest, if there was a viable Libertarian Party I would go down that route (albeit I do like the Greens a bit). But that is besides the fact! There is a burning ship in parliament, and the Conservatives are doing what ANY party would attempt to do. Get a few more years and hope, you can ride the possible recession out. Maybe even a possible Liberal, NDP leadership review and like magic call another election. We will probably see another Conservative minority. Who really knows? This election may end up hurting the Liberals, more than the Conservatives and the NDP or Green Party may make substantial strides in politics this time around. The question is, at who’s expense? What will happen if Canadian’s want change? Can any leader capitalize on this? Or is this a bit of Russian roulette? I welcome your comments!

By Andy MJ
a.k.a the G.T.A Patriot