Earlier this month, Flaherty announced the government's $25-billion takeover of bank-held mortgages to ease a growing credit crunch and free up money for financial institutions to lend to Canadians.

On Thursday, Canada’s Finance Minister Jim Flaherty announced that the federal government will provide a "backstop" to the country's banks, offering insurance on their wholesale term borrowing.

In layman’s terms, this is a loan guarantee that permits this country's banks to make loans to each other without risk. In theory, it also removes a competitive disadvantage in global markets as relates to the global credit squeeze. By providing this insurance or guarantee, Canada is following the actions of more than a dozen countries, including the U.S., the U.K., Australia, Spain, Ireland, Germany and Sweden.

How strange that just a few weeks ago, our Prime Minister assured us that Canada was in great shape, our banking system was sound and Canadians should not be concerned with the meltdown in U.S. financial circles and the resulting crisis in global markets.

Mr. Flaherty rationalized his intervention on the grounds that "Our actions will help Canadian financial institutions secure access to longer-term funds so that they can continue lending to consumers, homebuyers and businesses in Canada". Flaherty said the insurance will be offered to federally-regulated deposit-taking institutions on commercial terms, with no expected cost to taxpayers. He told reporters that the program is only temporary, lasting from November to April.

The measures are aimed at helping Canadian banks weather the storm during the global financial crisis sparked by the collapse of the credit market in the United States. Flaherty continues to insist that Canada's financial institutions are still healthy. "The government of Canada will never allow Canada's financial system, which has been ranked as the soundest in the world, to be put at risk by global events," he said.

On Thursday Canada's Bank of Canada Governor Mark Carney said Canada’s economic performance is expected to be sluggish through the first quarter of next year. Asked if Canada was headed for recession, Carney would only say that economic performance will be sluggish for the next few quarters. Meanwhile the Canadian dollar fell below 80 cents U.S., pushed down by a drop in oil prices and a rally in the U.S. dollar.

Finance Minister Jim Flaherty characterized the Bank of Canada’s assessment as "near the line" of a recession. Bank of Nova Scotia economist Derek Holt believes both the finance minister and central bank governor are overly optimistic. He says the Governor’s prediction is not credible in current market conditions, that Canada is not an island in the global economy and that if the world goes into recession, Canada will feel the impact.

TD Bank chief economist Don Drummond said the state of the economy is far too fluid to put much faith in anybody's forecast.
To hedge against a downturn, the Government of British Columbia has embarked on a tax-cutting and investment spending binge. With declining revenues, Ontario has decided to run a deficit to maintain government spending.

Meanwhile, Prime Minister Harper will attend a “Meltdown” summit (a “fitting metaphor” for the Bush Administration) in Washington to be hosted by the U.S. President. Meanwhile the federal government braces for a deficit. According to Canadian Press, the Conservatives are looking for ways to share the blame with opposition leaders.

During the election, the Prime Minister said he understood the consensus among economic theorists that running the occasional deficit is not a bad thing in tough economic times. He also said that deficits are addictive – once you start, they can spin out of control. The post-war Keynesian economic model subscribed to the notion of deficits in hard times and surpluses in good times.

I remember the great deficits of the 1970s and 1980s. Canada was spending almost a third of its revenues on interest payments related to a swelling national debt. Conventional wisdom is to spend your way out of difficulty but I don’t believe we should go back to the days of huge deficits and runaway inflation – the kind that destroys the value of saving accounts and drastically reduces the purchasing power of people on fixed incomes.

In my view, that would be irresponsible. I have to agree with Prime Minister Harper, deficits are addictive and deficits are debilitating. In my view, the federal government should restore the federal sales tax (GST) to its pre-election (2006) level of 7%. This would add tens of billions of dollars to government coffers and create a surplus that could be directed to segments of the economy that stimulate growth. It could also provide support for those most vulnerable to recession or economic slow-down, whether they are provinces or individuals.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

On Tuesday night, the Conservative Party won enough seats to form its second consecutive government without winning a single seat in any of Canada's three largest cities (Toronto, Montreal and Vancouver). Newfoundland and Labrador was also missing in action.

Premier Danny Williams vowed to run the federal Conservatives out of his province and he succeeded.

The Conservatives picked up seats almost everywhere outside Quebec but it has been 20 years since they took a single one of the 20-odd seats representing Canada's largest city. Tuesday’s results extended the shutout to six elections. The Tory record in Toronto over that time period is 0 for 120.

Three of the winners in Toronto including Michael Ignatieff, Bob Rae and Gerard Kennedy, all losers to Stéphane Dion in the last Liberal leadership campaign, will most likely campaign again to succeed him.

There were signs of life in Quebec for the Liberals. The Conservatives failed to win any of the new seats they had hoped for while the Liberals gained a couple in Montreal winning with Justin Trudeau and Marc Garneau (former Canadian astronaut). Otherwise, the electoral map looks pretty much the same as it did before the election.

Le Devoir’s Michel David concluded rightly that Quebec “without a doubt” denied Stephen Harper a majority government.

Voter turnout in this election was the lowest (59.1%) in recorded history. In New Brunswick alone, 217,000 eligible voters stayed home. The record low turnout was one way to express dissatisfaction with the national leaders as well as their policies. Liberal Paul Zed lost nearly 4,000 votes while the Conservative winner recorded nearly 2,000 fewer votes than the losing candidate did in 2006. In Miramichi, Liberal Charlie Hubbard dropped 3,300 votes while the winning Conservative gained only 800 votes.

Predictably, the knives are out for Stéphane Dion. He is already under pressure to resign his leadership and let the machinery of selection start rolling to replace him. A significant majority of the Liberal’s parliamentary caucus have apparently made it clear that Mr. Dion, unlike former leader John Turner, will not be given a second chance to lead the Liberals in an election campaign.

British Columbia's Liberal Premier, Gordon Campbell, said voters in his province clearly were not impressed by Mr. Dion. Our own Premier, Shawn Graham was more kind. He blamed results on the Liberals Green Shift plan and its proposed carbon tax on industrial polluters and said the election outcome has been noted by his government. The Liberals ended up with just three seats in New Brunswick, their worst showing since 1984.

An un-named Atlantic MP was particularly blunt saying: “We gotta change the sheets.” An Ontario MP referred to Mr. Dion as the “leader of Toronto” because that was the party's only bastion of strength in Ontario. The MP said Mr. Dion should quit immediately.

I wouldn’t be too anxious to push Mr. Dion out just yet. Mr. Harper will have his hands full in the next few years managing the war in Afghanistan and a declining economy. As national columnist Chantel Hebert said earlier this week “Canadians may have handed Conservative Leader Stephen Harper a poisoned chalice under the guise of a second minority mandate. Over the next few years, it will be his dubious honour to steer the country through the first period of deep economic turmoil of the new century”.

To underline her point, note that stock prices on the Toronto exchange have been falling on fears of an impending recession, with oil below $70 (U.S.) for the first time since August, 2007. Yesterday gasoline prices in Toronto dropped below $1.00 a litre. In the U.S., the Dow Jones industrial average was off 39% from its high a year ago.

Massive intervention by governments around the world to bail out struggling banks – including a $700-billion plan in the United States and co-ordinated interest rate cuts by central banks – may not be enough to stave off a wider recession.

All the above would support the preference for an interim opposition leader with strong economic credentials. In a couple of years, Canadians may want to change to someone new who can excite the young people of our nation and lead us into a new era of prosperity. A leader selected in the heat of this week’s loss may not be that person.

If Dion should choose to leave sooner rather than later, a Ralph Goodale or a Michael Ignatieff would make a good interim leader, if he agreed not to run for the leadership.

That would leave the door open for a generational shift that would attract younger people like Dominic LeBlanc, Gerard Kennedy or Justin Trudeau to challenge more seasoned players like Bob Rae, John Manley or Frank McKenna.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

For years, I thought Mike Duffy, the infamous, national CTV newscaster from Prince Edward Island was a passive (small “l”) liberal. On Thursday, he re-positioned himself as a biased, anti-French, anti-Dion news-commentator.

Here’s the situation. ATV (an affiliate of CTV) newscaster, Steve Murphy asked Stéphane Dion this week (in a pre-taped interview in Halifax)

“If you were Prime Minister today, what would you have done that would be different from Stephen Harper in respect to your reaction to the current U.S. and global financial crisis”.

Dion started to reply and then asked for clarification of timing in respect to the question. Murphy repeated the question and Dion rightly asked if he was asking the question in context of having been Prime Minister for the last two years or in the context of being Prime Minister in the future.

Tapes were stopped and the question was asked a third time without clarification or modification in respect to timing. Mr. Dion responded in terms of what he will do when he becomes Prime Minister, not in terms in what he might have done if he had been Prime Minister for the last few years.

CTV reporters and Conservative commentators pounced on Dion’s language skills and attributed them to “hearing impairments”, the implication being that he has a disability that makes him unfit to be Prime Minister i.e. his English language comprehension (in terms of tense) is less than their own.

Their message was that if Dion couldn’t understand the question, he’s not healthy enough to be Prime Minister. That’s BS. The question was both hypothetical and without context. It should have been “If you had been Prime Minister for the last few years, how would you have responded to the financial meltdown in the United States?” or “If you were elected Prime Minister today, how would you respond to the economic crisis”.

There is another issue and that relates to integrity. When an individual tapes an interview, there is an assumption that mistakes, interruptions or retakes remain in the studio. That did not happen. CTV broadcast and re-broadcast the re-takes and the questions for clarification.

Who in their right mind will ever trust a CTV taped interview again?

Learning of the situation, Prime Minister Harper immediately characterized Dion’s television stumble as proof that his pollution tax will destroy the Country. How stupid and how revealing of Mr. Harper’s vacuous attempt at policy formulation and leadership!

My guess is (without benefit of today’s polls) that the Conservative response to CTV’s violation of privacy and its attempt to paint Dion as English-language deficient will create significant reaction in Quebec and may indeed result in the wipe-out of Conservatives in that province.

All of this is set against a backdrop painted by Finance Minister Jim Flaherty who continues to insist that Canada is in good financial shape, even as the Bank of Canada announced it was making an extra $12 billion available to ensure credit does not dry up in the Canadian economy.
Flaherty says problems in the U.S. clearly need fixing but he argues that "the situation in Canada is quite different."

He says “the U.S. government is running deficits while Canada has surpluses".

Hold on Mr. Flaherty, did you know that Canadian housing prices have begun to drop?

Did you know that the value of our stock market investments (including mutual funds and pension plan savings) have diminished in value by upwards of 25% in just a few weeks?

Did you know that 75% of Canada’s exports go to the United States?

Did you know that most of our lumber and fish exports go to the United States? If the Americans feel pain, we will feel pain. Indeed, we could find ourselves in the emergency room, perhaps on the operating table.

Speaking to reporters on Parliament Hill in Ottawa on Thursday morning, Flaherty finally acknowledged that the "unprecedented" economic turmoil is "getting worse". He sought to reassure Canadians that the government understands their growing fears and that their financial system is "well-positioned" to weather the global turmoil.

The statement was a far cry from last week's leaders' debates, in which Harper refused to acknowledge that Canadians were worried about their job security and their homes, instead saying Canadians were focused on problems in the stock market.

The Conservative Party of Canada, a rag-tag collection of Progressive Conservatives and right-wing Reformers have spent the last few weeks attacking the character of Stéphane Dion.

On Friday, they joined with CTV in harpooning the Opposition Leader on his language skills, not his policy offerings. On Friday, the Toronto Globe & Mail endorsed the Conservatives as their choice for the future.

God help us if voters listen to them.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

On Tuesday, I watched a CBC political game show where representatives from
each party (including Liberal Scott Bryson and Conservatives Finance Minister Jim Flaherty) took questions from a live audience in a Toronto television studio.

The audience was pre-selected according to voting intention and weighted to early week poll results i.e. 36% Conservative, 26% Liberal, 17% NDP and 9% Green. Six subjects. were addressed by way of questions from the audience. Each candidate replied to the questions and then debated the subject matter with the other candidates. The audience was equipped with individual electronic voting devices and voted after each subject was discussed. Liberal Scott Brison won five of the six debates.

Most significantly, when they voted at the end of the show, the audience’s voting intentions had flipped. The Liberals went from 26% to 52%. Conservatives went from 36% to 29%. The NDP dropped to 16% and the Green went from 9% to 3%.

A similar thing happened after the Wednesday night’s “Leader” debate in French. According to an Ipsos Reid poll, Liberal Leader Stéphane Dion emerged as the clear winner of the debate with 40% of voters who viewed it saying he won, compared with 24% who felt that Bloc Leader Gilles Duceppe had won. Only 16% felt that Conservative Prime Minister Stephen Harper emerged victorious.

In the English language debate Conservative Leader Stephen Harper emerged as the winner with 31% of Canadian voters who responded to the survey but ironically, the only party leader to have overall impressions worsen was Stephen Harper (a net loss of ten points), despite the fact that more viewers thought he won the debate. The English language survey had an estimated margin of error of +/- 2.0 percentage points, 19 times out of 20 had the entire English-speaking adult population in Canada been polled.

Based on these results, it appears that language is playing a big part in leader preference. Most significantly, the French results suggest that Harper could lose votes and seats in Quebec, thus denying him a majority. The flip side is that he might be able to win a majority in English Canada with as little as a third of the vote because his opposition is splintered among the four other parties. The idea that 33% of voters could elect a majority government in Canada is a frightening prospect, particularly as a crashing American economy lurks in the background.

Prime Minister Harper continues to deny that the U.S. situation will affect Canada because our “fundamentals are sound”. That is poppycock. Anything that affects the American economy in a negative way will ultimately affect Canada.

In the English debate, Harper brushed aside repeated criticism that he's failed to produce an economic plan. Throughout the two-hour session, the Conservative leader was quizzed on how he proposes to address Canada's financial situation in light of the U.S. crisis.

It was at Harper's request, that the amount of time devoted to the economy was increased to 30 minutes in both the English and French debates. Green Party Leader Elizabeth May questioned why Harper would request more time to debate the economy and then fail to make use of it.

"Both nights, I waited to hear what you thought you should do about the situation but you spent your time attacking the policies of others," she said.

NDP Leader Jack Layton agreed. "Where's the platform, under the sweater?" he asked Harper, making fun of the Conservative leader's new wardrobe of sweaters being used in his party's ad campaign to soften his image.

Instead of responding to the accusations, Harper attacked Stéphane Dion, accusing the Liberal leader of panicking under pressure by unveiling an economic plan during the Wednesday’s debate. That’s the Harper way – attack your opponent rather than debate the issues.

South of the border, the two U.S. vice presidential candidates Sarah Palin and Joe Biden squared off in debate opposite our leaders. Republican vice-presidential nominee Sarah Palin has been mocked for her inexperience and shortage of credentials. She’s been under fire for not being accessible to the media and for delivering tightly scripted speeches.

In Thursday’s debate, according to a CNN/Opinion Research Poll of debate watchers, the Alaska governor exceeded expectations as 84 percent of the debate watchers said she did better than expected. However 57 percent chose Joe Biden as the winner in their debate while only 36 percent gave the nod to Palin.

By the end of the week, nothing much had changed. Obama and Biden lead in the United States and Harper continues to lead in Canada albeit with a lower percentage of the popular vote. The U.S. financial situation may change all of that next week. It should be interesting.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com