As I write this I’m eating a sub I bought from across the street. While it was being prepared I chatted with the young woman making it, and she told me about moving from the Canadian Maritimes to Toronto, to, in essence, get a job that pays a little more than minimum wage. Because out in the Maritimes she had trouble getting even that.
I thought to myself that her experience is one that politicians need to have. Many politicians, of course, have never ever had a bad job. They went straight to a good university and from there to a good job or internship. They probably worked hard for it, and think they deserve what they have, never really seeing all the people whose feet were never on that road, who never had the same shot they did.
Then there are a fair number of pols, though less and less every year, who will tell you about the lousy jobs they had as teenagers, or maybe in their early twenties. But in most cases something is different between them and many working class and even middle class folks.
They knew they weren’t staying there.
When I was poor and working in lousy jobs I used to look in the mirror and see myself at 50, or 60. I expected to still be working at grindingly hard jobs, being treated badly by bosses (because there is no rule more iron than that the worse you are paid the worse your employer will treat you), and still being paid little more than minimum wage. That was the future I saw for myself.
And when I was on welfare, after having failed to find a job for 6 months, and even being turned down by McDonalds (in the middle of the early nineties recession) I wondered if I’d even ever have a shitty job again. I ate cheap starchy food, turned pasty and put on weight. My clothes ran down. When my glasses broke beyond the point where tape would keep them together I literally had to beg the optometrist to make me his cheapest pair and I’d pay him later. (I eventually did.) My life was a daily grind of humiliation.
And that’s what I expected my life to be.
When politicians participate in one of those “live on Welfare for a week/month” programs I’m happy, but I’m also dubious. The difference is that they know they’re getting out in a week or a month. They know it’s going to end. Much as I applaud someone like Barbara Ehrenreich, who lived for months working at lousy jobs, again, she knew it was going to end. She knew that, if push come to shove and she became seriously sick, she could opt out. She knew that if she really couldn’t eat for days, that was her choice.
Living without that safety net, knowing that if something goes wrong, that’s just too bad, changes you. Living without any real hope of the future, knowing that the shitty job you’ve got now is probably about as good a job you’re ever going to have, changes you.
And it changes your sense of what hard work is, of what it means to be deserving. I remember working on a downtown construction site as temp labor, and I’d watch all the soft office workers with their uncalloused hands come out for lunch, and I’d wonder why they got paid two or three times what I did for work that was so much easier (and which, of course, I could do, even if I didn’t have a BA.) At the end of the day they might be stressed, but I’d go home physically exhausted from hard labor and so would my co-workers.
Of course, I got out of that. I’d say “I went back to university”, but even though that’s true, it’s not what got me out, since I never finished my BA. Instead what got me out is that I finally got a couple chances to prove what I could do—I got a temp job in an office, and was one of their most productive workers (they measured it.) Later I got invited to blog, and hey, I can write, even if I don’t have a BA. I got lucky. Like most people who get lucky in work, that luck involved a lot of hard work, but it also involved luck.
But a lot of folks never get lucky despite the fact that they work hard. Perhaps they aren’t really all that bright (half the population, after all, is below average intelligence.) Perhaps they’ve got some personality issues or weak social skills. Perhaps there’s something not quite right in their brain chemisty. Or perhaps they just never catch a break because they aren’t lucky and their parents weren’t well enough positioned to help them get those breaks.
But still, most of them work hard and earn their money, whether it’s barely more than minimum wage or they did get a bit of luck and got one of the few remaining good blue collar jobs.
But when they look in the mirror, they know that the guy or gal looking in the mirror ten or twenty years from now is probably going to be doing the same thing. And they know that they’re one bad break away from losing even the little they have—one illness, one plant closure, one argument with their boss.
They don’t have a lot of hope for the future, except that it won’t get worse. The life they live now is the best it’s probably gonna get.
Living like that changes you. It makes you see people differently. You understand that there are a lot of bad jobs out there, and that someone’s going to be stuck with them. You know that most of those jobs are either hard or humiliating, and often both. You know that for too many people, a shitty job where they’re abused by their boss is as good as it gets.
This all comes to mind because of how Congress and other politicians have acted throughout the auto bridge loan debate. Folks who passed a bill giving their sort of people: wealthy people who went to good colleges, who work with their minds and not their hands in the financial industry, 700 billion dollars without any real oversight wanted to force a cram down of wages and benefits on auto workers. Journalists on TV who were sympathetic to the bailout, dripped with palpable contempt for the idea of “subsidizing unprofitable companies”, something that didn’t bother them when it was soft-handed professionals like themselves on the dole.
The narrative of the GI generation was “first person in my family to go to college”. They came up from poverty, they probably expected to live in poverty all their life, but when the world changed so changed their chances.
It was a generation of opportunity, but what has happened since them is the “closing of the American elite”. Every generation the odds of someone born poor making it into the elite decrease. At this point about 80% of the working class don’t get degrees. The US now has the least intergenerational social mobility in the Western world (it used to have the most). The elites have become self-perpetuating, and they never had to stare in a mirror and know that they may never have more than minimum wage job; that probably this is as good as it gets.
As a result they have no real empathy or understanding of the vast majority of the middle and working class. The elites know they worked hard to be where they are, what they don’t see is that their feet were put on the path from birth, and that every opportunity was given to them. Opportunities that were not so open to those below them, who have to virtually bankrupt themselves to go to university and whose schools were completely broken, even as the value of BA declines to multi-generational lows. Put yourself in debt for 20 years, and it may still not buy you the good life.
That existence, hand to mouth, with no hope, is something America’s elites have never experienced and don’t understand. For them there’s always another opportunity, always another chance: always hope. And what matters to them is when the “deserving”, which is to say, their own class, is in trouble. So they’ll bail out the financial sector, even though it hasn’t made any more profit than the Big 3 in the past 8 years, and unlike the financial sector, didn’t bring down the world economy, but they won’t help out the undeserving whom they don’t understand.
America has become the most class ridden society in the Western world, far worse than Britian. Congressional seats are passed on to family members and friends like corrupt boroughs in 18th century England. The rich are bailed out and ordinary people left to sink. Responsibility is enforced on the least in society while the privileged are allowed to skate. Sell a gram of pot, go to jail; but kill hundreds of thousands in an illegal war and it’s no big deal.
The elites don’t live in the same world as ordinary people. They have become completely disconnected from that world. This is entirely logical on their part, because for 30 years they’ve gotten rich, rich, rich at the same time as ordinary people haven’t had a single raise. When you’re sitting on the top it’s very clear that all boats don’t need to be lifted and that Americans aren’t all in it together. The elites have done just fine, for over 30 years, while the rest of society went to hell.
So there’s no empathy born of shared experience, of the knowledge that sometimes life sucks and no matter what you do, it’s going to suck, and that that’s the way many people live. And there’s no acknowledgment of a need to make America work for everyone, because for the elites, that’s simply not true: America doesn’t need to work for everyone for things to be good for them.
This then, is how they’ve acted. Plenty of help for themselves, for the people they see as part of their group. And very little help for everyone else. Because the elites aren’t like ordinary people, they don’t believe they have many shared interests with you, and they no longer have any real shared experience.
Expect to eat a lot of cake over the next few years if this attitude doesn’t change. The elites, of course, are wrong. At the end of the day a nation without a solid working and middle class always falls into steep decline.
But, as Adam Smith once said, “there’s a lot of ruin in a nation.”
Nonetheless, as many nations have discovered, that amount isn’t infinite.
Netanyahu states that if the US doesn’t deal with Iran’s “nuclear program”, Israel will.
Neither Netanyahu nor his principal military advisers would suggest a deadline for American progress on the Iran nuclear program, though one aide said pointedly that Israeli time lines are now drawn in months, “not years.” These same military advisers told me that they believe Iran’s defenses remain penetrable, and that Israel would not necessarily need American approval to launch an attack. “The problem is not military capability, the problem is whether you have the stomach, the political will, to take action,” one of his advisers, who spoke on condition of anonymity, told me.
This is like saying “if Russia doesn’t stop its program to create apocalyptic fairies, we will attack them”. That is to say, while Iran certainly has a nuclear program, there is no credible evidence that it is trying to get nuclear weapons, only civilian nuclear technology.
And while Iranian defenses may be “permeable”, who, exactly, is going to give Israel overflight rights to get its planes to Iran? Add to that the fact that Israel will need multiple sorties, unless it wants to use nuclear weapons itself (which would be somewhat ironic) and there’s a fair chunk of bluster going on here.
And then there is Netanyahu’s apocalyptic hysteria:
In unusually blunt language, Netanyahu said of the Iranian leadership, “You don’t want a messianic apocalyptic cult controlling atomic bombs. When the wide-eyed believer gets hold of the reins of power and the weapons of mass death, then the entire world should start worrying, and that is what is happening in Iran.”
This is just propaganda, or if not that, self-delusion. There is no credible evidence that Iran is willing to accept certain nuclear annihilation in order to use nuclear weapons on Israel. Nukes come with return addresses, even nukes given to terrorists. Iran having nukes just means it can’t itself be nuked without retaliation, what Israel is concerned about is not the possibility of pre-emptive nuclear war started by Iran, but the fact that if Iran was to get nukes (again, there is no evidence they are trying, but Israeli decision makers don’t appear to care about evidence) then Israel would loose its Middle Eastern nuclear monopoly.
If the US greenlights an Israeli attack on Iran it risks having both Iraq and Afghanistan go up in flames, and having Iran shut down the Strait of Hormuz, which would send the price of oil through the roof and put intolerable pressure on the world economy.
In no way is an Israeli attack on Iran in America’s interests. In no way is it in Israel’s interests. However, like the Israeli attack on Gaza, it may serve domestic Israeli political needs, by making Israelis feel tough and as if they are doing something for their security. Like the attack on Gaza, however, all it will accomplish is to make the rest of the world trust and like Israel even less. And it may make Iran decide that it does actually need nuclear weapons.
Israeli decision makers are abominably bad. After failing to achieve their goals in Lebanon (destroy Hezbollah) or Gaza (end smuggling and missile attacks) they now claim they want to attack another country for doing something there is no evidence it is doing.
George Bush would approve, I suppose.
On a grander scale, Israeli complaints of continued Palestinian (Hamas) smuggling of supplies and munitions are a validation of the analytic comments I made here and on television to the effect that the Israeli effort at Gaza (Cast Lead) would be a total strategic failure if the Palestinians did not submit to the Israeli collective will as a result of that punitive campaign.
They have not submited and so it is fair to say that “Cast Lead” was strategically a total failure that served once again to demonstrate the impotence of Israeli arms in dealing with the essence of their “problem” with the Palestinians. What is next, forced “re-locations,” a first strike against Iran as a relief from having to deal with the truly existential issue of Palestine? How about face to face negotiations with the Palestinians as equal human beings? How about that?
The Palestinian problem only as three solutions—real negotiation leading to a single state or two state solution with the settlers withdrawn, or full on ethnic cleansing. The Israelis need to cut bait and decide if they are monsters or human beings and which one they’d prefer to do. In the meantime, until they decide that, perhaps they should stop with the deliberate war crimes:
Well, the photograph above is of white phosphorus shell fired from either artillery or mortars. It is bursting over an upscale civilian apartment development. There are a lot of pictures like this. Any old soldier, including ones from the IDF, knows that this is white phosphorus shell.
White phosphorus (a metal) burns on contact with air. It burns under water. If you get it on you, it will burn through your arm, leg, etc., until the burning phosporus comes out the other side. Your only real recourse is to cut it out of you with a knofe before it does so. White phosphorus shell is legally used for generating smoke on the battlefield. It used to be common in aerial bombs. Germany and Japan were heavily bombed with this among many other things for the specific purpose of burning down their towns.
So. The IDF spokeman is a liar. The question of whther and to what extent the IDF also shot civilians deliberately I leave to the conscience of IDF soldiers who seem unwilling to shut up about it. God bless them.
Saying this sort of thing is one of the last taboos, where you can get real pressure to stop. But I don’t imagine Pat Lang cares much what people tell him to do and I think the worm is slowly turning. The Israelis deliberate decision to commit premeditated war crimes during the Gaza incursion turned a lot of stomachs. It was different mostly in degree, not kind, to the sort of thing they’ve done before but just people have a threshold beyond which evil becomes too hard to ignore.
Hopefully Americans and, more importantly, the arbiters of American discourse in the media and politics, are beginning to be tired of covering up Israeli atrocities.
Hopefully.
And meanwhile the Israelis are 0 for 2. Neither their war against Hezbollah nor against Gaza achieved the goals they themselves declared were the victory conditions.
A lot of folks are beginning to notice that Obama isn’t a liberal in economic terms. His policies and the advisers he’s surrounded himself with make that increasingly difficult to ignore.
Democrats, liberals and progressives have no excuse not to know this. It was clear during the primaries. No lesser person than Paul Krugman noted it repeatedly, as did lesser comenters like myself.
Next time Paul Krugman tells you something like “Politician X is the least economically progressive of the 3 major candidates”, please listen. Or if I tell you, consider at least listening.
Yes, saying “I told you so” is bad manners, but frankly, I’m a little bitter about this. I don’t know if Clinton or Edwards would have been noticeably better, but I do know that their concrete, actual policy proposals at the time were more progressive than Obama’s were, so the odds were at least slightly better.
Oh well, maybe we’ll get another chance to do it right in 4 to 8 to 12 years. In the meantime we are reduced to hoping that dear leader will have a change of heart and that Congress will still be cooperative enough if or when he does for it to matter.
The saddest thing is that it was a Democratic year. Odds are that almost any of the Democratic candidates could have won the general. So the candidate could have been more progressive and still been elected.
Well, well, well. I see Obama has pulled out another card from the Bush playbook. Not only has he forced GM’s CEO to resign, he’s threatening to send them into bankruptcy if they don’t get enough concessions from workers and bondholders (Tom Bratwaithe, FT, not online as of this writing):
Officials said on Sunday night that Chrysler would be given 30 days and GM 60 days to reach agreement with debtholders and unions, with new tougher targets for cost cutting, or they would lose their last chance for a government bailout, almost certainly sending them into bankruptcy.
Wow. Tough talk, maybe even tough action. I’m impressed. Impressed by his willingness to talk this way and act this way towards non-financial companies that is. Somehow when it comes to banks and brokers Obama’s practically begging them to keep the money they’ve been given, and assuring everyone that they won’t be forced into bankruptcy or nationalized. Somehow his words of outrage at bonuses don’t include forcing companies like AIG, Bank of America and Citigroup to renegotiate thier compensation contracts by saying “do it or you go down”.
Nope, it’s not people making high 6 figures, or 7 figure salaries and bonsues who are forced to take a haircut. It’s not bondholders of financial corporations like Freddie and Fannie who are forced to share in the pain. It’s only workers and bondholders of industrial companies. Imagine that.
There are a ton of cynical things I could say about this, but I’m going to point out something more fundamental: long run the US needs its industrial sector healthy and strong more than it needs an overpriced, overpaid financial sector. One major long term problem the US has is its trade deficit. Financial companies don’t noticeably help that, what they do instead is package up paper assets for sales to foreigners, but those assets are almost all debts. Everytime the US sells a collateralized debt ogligation, it’s selling its future to foreigners. Every time it sells a car, it’s getting money now for a real item now.
Smart restructuring of the economy would mean figuring out how to create a car industry and an industrial sector that stays in the US and doesn’t move all its production and R&D overseas, rather than trying to restart the paper for money financial economy, an economy which caused this financial meltdown and which has been partially responsible for stagnant wages for Americans for 30 years now.
I will also note that a real bankruptcy for the Big 3, would cause in excess of two million job losses and worsen the US’s trade deficit.
Tough love isn’t necessarily a bad idea, but I hope Obama is playing chicken and isn’t entirely serious. Because if the Big 3 go under, well, this economic downturn will get a lot, lot worse. And perhaps, just perhaps, he might somehow find whatever it takes to apply some of this tough love to the financial companies who caused this crisis, rather than the car companies who are largely collateral damage?
Because I find it very hard, as a matter of basic fairness, and a matter of basic policy, to stomach seeing workers earning 5 figures being forced to take wage cuts while bankers are still making huge 6 and 7 figure salaries.
Image by J. McPherson
Here’s a partial scorecard for looking at the administration’s regulation plans next week. What Obama should, in my opinion, of course, do, along with notes on how likely I think it is.
Is Obama going to regulate Collateralized Debt Swaps like insurance, meaning that you can’t insure something if you can’t pay it back and you have to use government mandated tables, make sure there’s insurable interest, not allow over-insurance and so on?
Will Obama do this? He may do some of it, but I doubt he’ll do all of it.
Is he going to limit leverage properly, by which I mean not just not allowing leverage rations above 10:1, for anyone, but not allowing leverage on leverage – not allowing someone to use a leveraged asset to leverage off of.
Will Obama do this? Maybe, maybe not.
Is he going to properly regulate securitization? By which I mean not allowing securitization of already securitized assets, full reform of the ratings agencies so they have no incentive to over-rate securities, not allowing collateralized assets to have higher ratings than the underlying securities, and not allowing financial innovation which is not approved by regulators?
Will Obama do this? We’ll see.
Move to highly progressive taxation. If he doesn’t do this executives will always have an incentive to create bubbles because they will be able to make so much money in a few years that it doesn’t matter what happens to their companies in the long term.
Will Obama do this? No.
Is he going to move to a financial transactions tax like the Tobin tax in which every transaction is taxed a little bit so that if the government gets stuck with the bill again, it’s been collecting cash for the job of cleaning up banker’s messes?
Will Obama do this? Hardly.
Is he going to break up the “too big to fail” banks and other financial firms so that in the future failed financial firms can just be put into receivership and can’t hold the economy bankrupt?
Will Obama do this? Don’t make me laugh.
Is he going to reinstitute the Glass-Steagall provisions to not allow brokers, investment banks, commercial banks and insurance companies to conglomerate?
Will Obama do this? Hardly.
Is he going to tell his Attorney General to engage in widespread fraud investigations as to whether mortgages were sold fraudulently, Collateralized Debt Obligations were created fraudulently, and Debt Swaps were sold fraudulently?
Will Obama do this? Probably a few prosecutions, but nothing wide ranging.
Is he going to try and pass anti-usury laws?
He’ll try. But somehow they won’t pass.
Is he going to spend as much money, or even half as much money, helping homeowners and people who lost their jobs as has been given to banks and financial firms?
Will Obama do this? No.
I’m hoping to be surprised on the upside here. Of course, any regulations are only as strong as the regulators will and resources to enforce them, so the other question will be “is this all for form?”
We’ll see.
So very, very tiresome:If populist outcries over bank compensation continue, no company will touch “any other government program with a ten-foot pole,” Stephen Stanley, chief economist at RBS Greenwich Capital Markets, wrote in a March 19 note.
This is what happens when firms are too big to fail and they know that the government doesn’t have the guts to nationalize them or really look hard at their books and make them go into bankruptcy if they’re, well, bankrupt.
No bank which doesn’t need the money should have the money. But because there has been an unwillingness to really look hard at bank books and to evaluate them, we don’t actually know if they need it. The “stress” tests which are underway don’t count since they don’t include hard looks at the loans and securities real values, and use an overly optimistic economic scenario.
But assuming that real financial audits had been done, you’d know whether banks need money. If they did, you give them two options:
1) Take it.
2) We’ll put you in receivership or nationalize it.
It shouldn’t be a goal to force money on banks that don’t need it. Either they need it, or they don’t. If they don’t, by all means, let them go about their business.
As for getting lending again, the simplest solution is still nationalization and using the banks nationalized to lend, since once the government controls them it controls whether they lend. The second easiest is to have the Fed just lend directly to consumers and businesses, rather than trying to do it through unwilling banks.
Instead we have this silliness where the banks, who have had trillions of losses, say they don’t need help but will take it for the good of the country.
Of course, it’s getting more and more true. Once the Treasury, Fed and FDIC take all their bad bets off their hands at prices which are more than they could get in the real free market, then they’ll be able to go back to paying themselves ridiculous bonuses for being incompetent fools who blew up the entire world’s financial system. Until that happens, they’ll whine, but do enough of what they’re told to not upset the gravy train.
And that’s because neither Bush nor Obama had the guts to toss the vast majority of them out on their ears. Because of that we will have another crisis, guaranteed.
In poker they say “bet the people, not the cards” and I’m willing to bet these incompetent greedy fools have another disaster in them. It may take another 4 to 8 years, but having gotten away with this one, they’ll do it again.
Bet on it.
Image by Admit One
Repeat after me: “The market is not the economy. The market is not the economy.”
Of course the market is doing well. Geithner, Bair and Bernanke promised to put around $2-$3 trillion more into the market in various forms. Everyone now knows that the Obama administration will do whatever it takes to turn the market and financial sector around— even if that means trillions of dollars of risk for taxpayers.
Rule #1 of Investing: when the government puts its full muscle behind something, be sure to ride it, and don’t get in the way.
What you want to watch now are:
- Currency Rates
Does the dollar go up or down? The government printing and borrowing tons of money may not look so good to foreign debtors. Or they may decide it’s the only game in town. - The Treasury Market
Same thing. Are private investors and foreign governments willing to buy? Or will the Fed have to buy more treasuries? - Oil prices
All of this money is going to show up somewhere, and a lot of people are (literally) betting on it showing up in energy prices.
What’s probably going to happen is a technical recovery that shakes apart based on unacceptable inflation before the recovery has reached a lot of people at the middle and bottom of the economy. Unless Geithner’s plan fails in absolute rather than relative terms, in which case there isn’t enough lube in the universe to make what will occur even tolerable, let alone pleasant.
In the meantime, remember that the market isn’t the economy, and unless you’re connected to the financial sector, odds are you aren’t going to see much of all this money. The banks are being bailed out, not you.
Image By Ennor
I have become increasingly concerned that some in the Obama administration are treating this economic crisis as a Black Swan event. Nassim Nicholas Taleb coined the term to describe an event that is very rare, random and unpredictable. The imporant thing about Black Swans is that, because they are random and unpredictable, you can’t stop them from happening; you can only create your systems able to handle Black Swans if they occur. For example, a flu pandemic that kills tens of millions might be a Black Swan, and it’s one that we’re completely unprepared for, as we don’t have the excess medical capacity to handle it.
The most recent event which made me think of Black Swans is the news thatnew SEC Chair Mary Schapiro doesn’t plan on reforming ratings agencies. Now, ratings agencies were one of the key actors in this mess—they certified mortgage backed securities and other toxic derivatives as AAA quality. If they had not done so, almost no one would have bought them.
The ratings agencies are paid by the companies whose securities they rate. I trust you see the problem.
If you think that the current economic crisis is just random, a once in a century disaster (or at least once every few decades), then you won’t think making major changes is necessary. Get through the problem, go back to how you were doing things before, and everything will be fine.
But, of course, the economic and financial crisis unfolding right now was not random. This crisis was predicted by multiple people, and it was predicted because of policy steps taken by government and widely-known private actions.
We could all read the charts showing a bubble in housing prices and sales. We could all see that derivatives were also in a bubble. We knew that leverage was out of control, ballooning to 30X or in many cases even higher numbers. We knew that with financial deregulation firms had started being involved in multiple types of businesses, putting retail banks at risk from their insurance or brokerage or investment banking arms. We all knew that the US savings rate had hit unsustainable lows and that the trade deficit was too high. We knew that the carry trade was introducing tons of hot money to the system (borrowing for nothing in Japan and using that money for leveraged plays elsewhere).
And, perhaps most importantly, we should have known that executives in the financial sector paying themselves huge bonuses were concentrating on short term gains and did not care about long term viability of their companies or even care about the honesty of what they were doing, because hey, by the time it all fell apart, they’d be rich, rich, rich and never need to work again.
All of which is to say the crisis was caused by a number of factors. It was not random. It was predictable and predicted. If we just muddle through this current meltdown—spend a lot of money bailing out the banks, throw some stimulus around—and don’t fix the fundamentally-flawed incentives and structures of the system, it will likely happen again.
Alas, Mary Schapiro’s actions imply that there was nothing really fundamentally wrong with how business was done.
At the very least, the US needs to make the following changes:
- Reduce executive compensation—significantly,
- Bring all securities under regulation (i.e. Credit Default Swaps must be regulated as insurance including reserve requirements and the necessity to use government approved actuarial charts),
- Reduce overall leverage to 10X for everyone,
- Break financial companies back into functional firms (i.e. break brokerages and insurance companies and investment banks off of retail banks),
- Disallow financial innovation which is not expressly approved by regulators and is not then fully regulated,
- Fix its trade imbalances,
- Fix its savings rate,
- Move off of the oil economy,
- Ensure that lending is done responsibly and at relatively low markups from the Fed Funds rate, and
- Enact anti-usury laws.
If these changes aren’t made, then you can bet dollars to the donuts that a financial crisis will happen again in some form. This crisis is a structural problem, not a random mess caused by bad luck.
Originally Posted at FDL, February 19th, 2009. I’d say nothing has changed, but in fact it has, we now know pretty much for certain that the Obama administration thinks this is a Black Swan event. The Geithner plan makes that very clear.
So yeah, more jobs have already been lost that the 40 billion stimulus bill was expected to create by rather optimistic estimates. For reference for Americans, the general rule is to multiple everything by 10, so an equivalent stimulus in the States would have been 400 billion. In other words, the Canadian stimulus was about half Obama’s stimulus.
Ouch.
Ontario in particular is in a world of hurt, because Southern Ontario, Canada’s manufacturing heartland, has been in recession for years. First it was because of the high Canadian dollar, then it was because of the Big 3 auto companies woes, but either way it’s turning into an industrial wasteland. The Harper government has no real idea what to do about it (hint: small motors are good for micro generation, lads. Get on it.) Nor has the Ontario government been all that useful, though to be fair they don’t have 40 billion to throw at ths solution (about 20 billion of which should have gone to Ontario, since Ontario is taking about half the job losses.)
The US isn’t losing jobs at quite the same rate, but the fate of the American stimulus bill will be essentially identical, since just like the Canadian one it’s too small and put together very badly, because neither Harper nor Obama believe in liberal economic policies in any significant fashion.
