What planet do Canada’s Minister of Finance Jim Flaherty and Prime Minister Harper live on?

In a speech, just one week ago to about 1,000 chief executives of companies from the 20 Pacific Rim countries that make up Asia-Pacific Economic Co-operation (APEC), Harper called on governments to increase spending, maintain open trading relationships and support financial institutions and struggling industry sectors.

A week earlier he agreed with members of the G20 to stimulate the Canadian economy.

Speaking at the APEC summit in Lima last week, Prime Minister Harper said ‘The world is entering an economic period unlike and potentially as dangerous as anything we have faced since 1929 and the world must avoid repeating history by recognizing the Great Depression was caused by bad government policies.

“Let us remember what led to the Great Depression. It was not caused by a stock market crash. That was only the beginning. Governments of the time made a number of serious mistakes, including attempting to balance the books at all costs, raising taxes and cutting spending at a time when a fiscal stimulus was “absolutely essential” said Mr. Harper.

The Prime Minister said policymakers erred in allowing their banking sector to contract. They let deflation take hold, attempted to balance government budgets when fiscal stimulus was needed, and closed doors to trade in an effort to protect jobs within their own boundaries.

This week, Mr. Harper’s Minister of Finance, Jim Flaherty flipped that notion on its head. In his “economic and fiscal update” the Minister announced that he will tighten his belt by cutting spending to avoid deficits and ignoring the need for fiscal stimulus measures.

Flaherty’s moves are exactly opposite to what many economists recommend in times of recession. In most developed countries, governments are ramping up spending with multi-billion programs from infrastructure-spending to food stamps for the poor

Earlier this week, former U.S. President, Bill Clinton, speaking in Moncton said that public spending and public policies can and should address declining global economies. He said the U.S. government should spend hard cash on modernizing rail networks, electricity grids, putting medical records online and conducting a "sweeping overhaul" of broadband so rural communities can gain Internet access”.

He talked about the auto industry and its impact on the Canadian economy. "The biggest short-term threat to Canada in the current economic crisis is the large numbers of people in this Country who are working directly or indirectly for the auto companies" Clinton said Canadian and U.S. governments need a co-ordinated strategy to get the three struggling auto giants, GM, Ford and Chrysler out of the red.

They are asking for U.S. $25 billion in emergency financial assistance from the American government to bail them out of their financial difficulties. In Canada, they are asking for as much as $6.5 billion worth of loan guarantees.

Finance Minister Flaherty’s economic update offers nothing for the auto industry. Instead, he promises a $15 billion restraint program that includes: a three year suspension of the right to strike for civil servants (saving $5.1 billion), a $10 billion sale of government assets in a down (buyers) market, elimination of $27 million in election funding for political parties and a cap on “Equalization” program.

Clinton suggested that governments should encourage automakers to launch fuel-efficient cars and give consumers up to $10,000 in tax credits to buy electric cars for the first three years until prices come down. "Think of what it would do if the U.S. and Canada could beat Japan and Korea to the global electric car market at competitive prices," he said.

With other countries moving quickly to offer specific relief packages, and economists like Sherry Cooper, from BMO Nesbitt Burns calling on Ottawa to implement a stimulus package as soon as possible, the Conservatives appear not to have a plan and more significantly, to be speaking out of both sides of their mouths.

The classic way for a government to stimulate a flagging economy is to pump money into infrastructure. Road-building and government-funded construction can create jobs through one-time projects that increase spending on local materials and provide the country with something it actually needs - without creating a long-term spending problem. That's the way Ottawa should go, economists say.

In its Throne Speech a few weeks ago, the Government promised infrastructure spending to pump money into the economy. It would appear that Minister Flaherty has forgotten that promise.

As a result, we may be facing another election or the possibility of a coalition government led by the Liberals and the NDP. I’m told that former Prime Minister Chrétien and former NDP Leader Ed Broadbent are already discussing the terms. We should know more on Monday.

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

The national media appears to have declared Michael Ignatieff the next leader of the Liberal Party, even before a single delegate has been chosen.

They have disqualified Bob Rae on the basis of his economic performance as Premier of Ontario and declared Dominic LeBlanc the “next-time-around” candidate.

Mr. LeBlanc should take solace in the infamous words of Mahatma Gandhi “First they ignore you, then they laugh at you, then they fight you, then you win”.

It was reported in one of our local newspapers recently that LeBlanc plans to offer bold new ideas to delegates to attract attention to his campaign and to distinguish himself from his better known rivals, Rae and Ignatieff.

While it would be easy to applaud the promise of new ideas, it’s important to note that they need to be framed by large purpose. Change for change sake is not good enough. Change, designed only for differentiation is not good enough.

Barack Obama had a number of natural constituencies in his election: the 46 million Americans who live without healthcare; the thirty nine million black Americans who were solidly behind him; the millions of Americans who oppose the war in Iraq, the millions of Americans who are frightened by the American financial crisis and all those Americans who were fed up with George W. Bush.

In Canada, the situation is a little different. We have just re-elected Stephen Harper, albeit with minority status and a financial crisis that has yet to become tangible except for pensioners and those with investments in the stock market.

Delegates to the next Liberal convention will be looking for a leader who promises hope, someone who will rebuild the Liberal Party, someone who will bring ideas to the table that will resonate in a financial crisis as well as in an environment of prosperity.

In the short term, one should assume that all three candidates will be measured in terms of their experience and ability to manage the country in times of economic crisis. They will be measured in terms of their ability to unite the country from east to west, from north to south and from generation to generation. They will also be measured as alternatives to Stephen Harper and they will be measured against each other.

There is a clear separation of generations in this race. Rae and Ignatieff belong to one, LeBlanc to another. If an election is deemed to be imminent, the odds could favour Rae or Ignatieff. If people are looking ahead to an election in two or three years, the odds could favour LeBlanc.

For Stephen Harper and indeed for Canada, the implications of economic turmoil are pressing and profound. The economic chaos circling the globe changes almost everything. Some have suggested that small “c” conservatives determined to remake the country in ideological terms will now be forced to wait before they can effect change.

I’m not convinced that is the case. A government pinched by deep revenue losses and significant deficits could use the circumstance to move to the right, shrink government, cut programs and forestall the introduction of new ones.

A me-too Ottawa, forced by global circumstance to backstop the Canadian economy could find itself unpopular with the Canadian public in the next few months. A force for change could create the perfect storm to propel an early underdog to power.

The flip side is that if the Government responds to the economic crisis in a way that proves successful, there will be no demand for change and a leadership candidate who seems appropriate today may be irrelevant tomorrow. Remember Winston Churchill? He was a great war-time leader. When the Second World War ended, British voters dumped him.

One of the criticisms of Obama during his campaign was that he lacked “executive experience”. Technically, that may be true but he oversaw the development of a new kind of political organization with a tightly controlled executive, surrounded by self-organizing cells of volunteers, donors, contributors and others. That would suggest that his executive skills served him more significantly than his experience.

A second learning from the Obama campaign was its inclusiveness. Some marketers divide and target markets in tiny bits or winnable segments, ignoring others in the interests of efficiency. No group, no state, no region of the country was exempt from contact or communication from Obama’s campaign. His goal was total inclusion and unification.

Obama has proven Ghandi’s premise “that a small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history”.

If Dominic Leblanc can articulate a purpose for his candidacy that is more than generational, he may give lie to the declarations of an Ignatieff win.

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

Yesterday, leaders of the world’s top 20 economies gathered in Washington to talk about the global financial crisis and ways to reform financial markets.

The meeting was called by U.S. President George W. Bush. In advance of the meeting, Bush delivered a speech in New York defending the free market system, continued investment and increased trade. He said “the aim should not be more government but smarter government.” No more government is code for no more regulation, the absence of which was one of the underlying causes of the U.S. financial crash.

Last month, Congress passed a $700-billion U.S. financial bailout intended to buy bad assets from banks. Treasury Secretary Henry Paulson said Wednesday that now it won't do that, hoping instead to buy stakes in banks and encourage them to resume more normal lending practices.

In Europe, some governments have said they will purchase equity in banks and provide government loan guarantees. Yesterday, the European Union reported that the 15 countries that use the Euro as currency have entered into recession. In recent days, Japan and China announced economic stimulus packages to help jump start their weakening economies.

Here in Canada, the Federal Government announced that it will buy another $50 billion in residential mortgages to free up cash for Canadian banks to make it available for consumer, student and corporate loans and lines of credit. Then on Thursday, Finance Minister Flaherty mused about selling Crown assets as a way of balancing the budget and avoiding a deficit.

How did this happen?

Why should Governments have to shore up our banks’ lending capacity if they are so healthy?

I’m neither a banker nor an economist so I probably shouldn’t try to answer those questions but what the heck. The current financial crisis was not created by some external shock like OPEC raising the price of oil or some country defaulting on its credit line. The root cause is to be found in the excesses of the subprime mortgage market in the United States where lax lending practices allowed people to borrow 100 percent of their inflated housing prices with no money down.

When housing prices peaked in 2006, subprime mortgage lenders began declaring bankruptcy. The crisis spread rapidly to other markets. Some highly leveraged hedge funds collapsed and some lightly regulated financial institutions including two of the largest lenders in the United States, Countrywide Financial and CitiGroup, the world's largest financial institution, collapsed or sought balance sheet protection from other institutions.

Confidence in the creditworthiness of many financial institutions was shaken and interbank lending ground to a halt. A variety of credit markets including the municipal bond market collapsed. Earlier this year, a rogue trader triggered the demise of Bear Stearns, then the largest savings bank in Los Angeles slid into receivership and by September, the infamous Lehman Brothers went into bankruptcy causing thousands of their short-term paper holders to lose their money.

American and European governments made commitments to not allow another major financial institution to fail. Guaranteeing that banks at the centre of the global financial system would not fail precipitated a new crisis. Governments in emerging market economies in Eastern Europe, Asia and Latin America could not offer similar guarantees and capital started fleeing to the centre. This threatened to happen in Canada even though our economy is strong.

One problem with the credit crunch is that banks’ solvency positions can change overnight. As banks force the sale of assets to recover loans or shore up their cash reserves, the prices of those assets fall. As the prices fall, the amount of capital that the banks need rises, thus fuelling a vicious cycle.

Banks are required to hold an adequate amount of liquid assets, such as cash, to manage any potential withdrawals from clients. If a bank cannot meet these liquidity requirements, it borrows money in the interbank market to cover the shortfall. The interbank overnight lending market is where depository institutions buy or sell funds so they can meet reserve requirements. Low transaction volume in the interbank lending market is a major contributing factor to the current global financial crisis.

Almost all of the $700 billion in the U.S. bailout program will be used to recapitalize U.S. financial institutions including banks, insurance companies and finance companies. It’s estimated that rising credit losses will eventually require more than $1 trillion from the U.S. government.

We are in the middle of a severe global financial and banking crisis, the worst since the Great Depression and Canada can’t hide from it. We need to maintain strength in our banking system. If that requires help from the government, so be it. Nobody will benefit from a weakened, profit-less or collapsed banking system.

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

Perhaps the one great legacy of George W. Bush is the fact he helped make it possible for a black man to win the presidency of the United States.

To be fair, Obama was by far the better of the two presidential candidates. He won 52.5% of the popular vote as compared to McCain’s 46.3%. He won a huge majority in the Electoral College (349 to 162) and he generated the highest turnout of U.S. voters in history.

Exit polls on Tuesday showed that 72 percent of voters gave Bush low marks for his performance as president while Obama received strong support (68%) from young and minority voters – 98% support from the black community and 67% from the Hispanic community. He even picked up 86% of Hillary Clinton’s supporters.

Obama's victories included wins in Ohio, which has backed the winning presidential candidate since 1964, and Virginia, the former bedrock of American Confederacy and a state that hasn't backed a Democratic presidential candidate in 40 years. In California, Obama won 61.2 % of the vote, in Illinois 61.5%, in New York 62.1%, in Vermont 66.9% and in the District of Columbia a whopping 92.9%.

Obama was also victorious in the key battleground states of Ohio, Michigan, Iowa, Pennsylvania and Florida. Many will recall that Florida and Ohio were the two states that gave Bush his respective presidencies in 2000 and in 2004.

Speaking in the White House Rose Garden the day after the U.S. election, President Bush characterized Barack Obama's election victory as a "triumph of the American story" that fulfilled a dream for millions of people and made every American proud.

Bush’s speech focused on the historical significance of the victory by the 47-year-old African-American senator from Illinois. "No matter how they cast their ballots, all Americans can be proud of the history that was made yesterday” Mr. Bush said.

“This moment is especially uplifting for a generation of Americans who witnessed the struggle for civil rights with their own eyes," he said. "And four decades later, to see a dream fulfilled. Voters chose a president whose journey represents a triumph of the American story, a testament to hard work, optimism and faith in the enduring promise of our nation."

Hello, Mr. Bush this election was not about race, it was about age, it was about judgment; it was about the economy, it was about war, it was about change and it was about your record. It was also about the "vitality" of America's democracy because it showed there is still a place in American politics for intelligence and the integrity of individuals, a place much bigger than the confines of race.

It took your record to make Obama’s win possible and you should not be allowed to hide the atrocities of your record in the euphoria of a democratic triumph.

64% of registered voters in the United States went to the polls this week. That compares to just 59.1% of Canadian voters who turned up for our election a couple of weeks ago. The voter turnout in Canada was the lowest percentage of registered voters ever recorded for a national election in this country. It’s estimated that somewhere between 600,000 and 700,000 Liberals stayed home.

That number alone would account for up to a 3 point drop in voter turnout.

Given the low Canadian turnout, it was ironic that we gathered in all parts of the country this week to watch the U.S. election. When Obama was declared the winner, thousands went into the streets to celebrate. Prime Minister Harper congratulated the President-elect, saying he's looking forward to "building a strong working relationship" with Obama’s administration so that we can continue to strengthen the special bond that exists between Canada and the United States".

Outside of Canada, there was another perspective. A 29-year-old Thai man sitting at a Starbucks in Bangkok noted that Obama is the first "truly global U.S. president” the world has ever known. He had an Asian childhood, African parentage, a Middle Eastern name and an American mother.

Why is it that Canadians seem to have difficulty generating leaders that excite people? Not since 1967 has this country had a leader who could lift people out of their chairs. Coincidentally, that leader was elected in the glow of John F. Kennedy.

Maybe Barack Obama will provide a new halo or a new model for leadership that will influence the outcome of Canada’s Liberal leadership convention in May. In the meantime, we have to occupy ourselves with the election campaign of Jean Charest as he tries to recover his majority in Quebec. With all due respect he’s not an Obama.

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

A poll released by the New York Times Thursday night showed that 59% of Americans believe that Sarah Palin is not qualified to be Vice President of the United States.

It suggests that voters are moving ever closer to a Barrack Obama presidency. On Wednesday, Obama was the star of his own thirty minute commercial, as is to be expected of a presidential candidate on the cusp of a national election. This final national appeal to the hearts and souls of undecided voters - particularly working-class whites in the remaining battleground states of the upper Midwest and the Hispanic women in the southwest - was all about an economy that no longer works for tens of millions of Americans.

This was an expression of empathy, a report from Obama about what he has learned after spending the better part of two years with a hurting populace. The commercial, which aired on multiple networks at a cost of $4 million to the Democrat's campaign, was poignant and direct. It held out a measure of the "hope" that has been the essential message of the senator's once-audacious and now-presumptive candidacy.

I also listened to Obama speaking in Missouri Thursday evening. "America the time for change has come," he told a live audience. "In six days we can choose an economy that rewards work and creates jobs and fuels prosperity starting with the middle class." At a deeper level, Obama presented a chronicle of despair. Sick people are having a hard time paying for medicine. Old people are working to make ends meet. Teachers are taking second jobs to pay for food. Factory workers are watching the American dreams that they once took for granted turn into nightmares of dislocation and declining prospects. Obama represents a breath of fresh air in a country that has been seriously diminished under the presidency of George W. Bush.

Both candidates for the presidency have compelling personal stories. Mr. Obama represents the ultimate fulfillment of the American dream, the son of a black Kenyan and a white woman from Kansas. His election would help remove the stain of America's racially troubled past. John McCain's war record as a navy pilot and prisoner of war is one of bravery but it is not the essential credential of a U.S. president.

Mr. Obama has grown since he joined the race for president. Each test he has faced along the way has revealed a new depth of intelligence, judgment and humanity. John McCain has proven to be impetuous, excitable and lacking in judgment. His decision to pick Sarah Palin as a running mate can only be viewed as an act of extreme impulsiveness, an effort to put short-term political advantage ahead of national interest.

Mr. Obama, in contrast, has demonstrated that he possesses the character and the temperament necessary in a president. He has been cool throughout the long campaign, gathering authority with every passing week. He has called for a fairer tax structure for middle-income Americans and healthcare for the poorest Americans. He embodies the hope that a dispirited but still great country can regain its form. With his election the U.S. could once again become a force for good in the world.

With just three days before the presidential fight is decided on Tuesday, the chance for a game-changing moment that could reverse Obama's lead in national polls is dwindling but still alive. The final weekend is when the last of the voters who haven't been paying attention, tune in and the last of those who are undecided make up their minds. In 2004, Osama bin Laden injected himself into the campaign on the last Friday of the race with a videotape reminding people of the threat of terrorism. Democrat presidential candidate John Kerry who was embroiled in a tight battle with Bush, saw the race slip away in those final days. He later blamed the tape for erasing his hopes of victory.

In 2000, the last wrinkle in the campaign broke on the Thursday night before the election when it was revealed that Bush, then the Governor of Texas, had been arrested in 1976 for driving under the influence and had not publicly disclosed the arrest. Bush subsequently lost the popular vote but won the Electoral College to claim the presidency after a disputed judicial recount in Florida.

So far, no thunderbolts have appeared in this race's final days unless it occurred in September when the sub-prime mortgage crisis and the half billion dollar Wall Street bailout wiped out McCain's edge in opinion polls and shifted the race toward Obama.

Barring the possibility of some new crisis, one would have to guess that Obama will be the winner on Tuesday.

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