Saturday, October 25, 2008

Welcome to the next recession

Autumn that was

Who made this mess? (copyright reserved)

By George Epp

Are you puzzled by the current economic misery gripping people-with-money these days? Are you confused by the fact that—although the economic landscape in your neck of the woods appears much as it did yesterday—all the news on the international front is insisting that we’re in for difficult times?

In the most recent issue of The Christian Century (October 21, 2008) Economics teacher at Wheaton College, James Halteman, explains what has happened nationally in the US to cause this international economic influenza. In summary, US financial institutions have been selling bond issues backed by mortgages with sub-prime interest rates, which mortgage brokers have been peddling like magic hula hoops. Inevitably, buyers of homes with far-too-generous conditions have had to walk away from their purchases, flooding the market with unsaleable homes, driving down the values of real estate, subsequently driving down the value of the bond issues, decimating the cash flow through the various lending institutions, consequently making it nearly impossible for many developers, manufacturers and exporters/importers to do business. The resultant state of panic has decimated the value of stocks and bonds, and has resulted in widespread selling-out behaviour, the curtailing of consumer confidence and the long skid down the recession slope.

Halteman’s conclusion: “Regulation of the financial markets needs to be updated—something that has been hindered by an anti-regulatory political climate.” That may be the understatement of the week.

I was told yesterday about a well-to-do Christian who is in a blue funk these days because the economic collapse has cost him massively. One presumes that his investments have tanked and the loss is on paper and might be regained if he holds on for the long term. But I have to wonder: What is an active Christian doing in the stock market anyway? The poorly-regulated way in which those institutions function these days means that they are less about acquiring an interest in the economic engines of the country in order to further common goals, and more about getting rich through non-productive, speculative behaviour. Take derivatives, for instance, buying and selling of futures, etc. This behaviour wouldn’t be so reprehensible if it weren’t for the fact that it “bets” with the common currency that you and I depend on to feed our families and further worthwhile goals, like schools, hospitals, art galleries.

I read on my currency that it is the property of the people of Canada through the Bank of Canada. How is it that we allow the misuse of our common currency by shysters who demand the right to unregulated speculation with it?

It’s time for big changes. Halteman is right. Trouble is, we’ve just re-elected a government that is congenitally gun-shy when it comes to market regulation. Let’s see what this whole mess leads to; with any luck we’ll come out smarter on the other side.

Thursday, October 02, 2008

Election blues and some autumn-garden wonders

Election BluesÓ

by George Epp

As a kid, I and a couple or three of my siblings walked to school in the spring and fall: half a mile east, one mile south. Some years, the telephone post at the junction where we turned south was plastered with election posters. Walter Tucker was the Liberal Candidate in our constituency, and I would probably have drawn a mustache on him if he hadn’t already had one.

At the time, the only credible rivals for government in Saskatchewan were the Canadian Commonwealth Federation (CCF) and the Liberals. I clearly remember how most of our neighbours supported the Liberals, but that my father was a staunch follower of Tommy Douglas and his democratic socialism. That meant that perversions of the CCF name—as in “Crazy Cat Farmers” for instance—were taken as personal insults when hurled out as playground taunts.

Elections were serious business and volatile emotional experiences.

I think I still take elections too personally, probably in part as a result of those childhood experiences. The New Democrats have always been my team, like the Saskatchewan Roughriders or the Montreal Canadians; a Grey Cup or Stanley Cup loss for the home team still stings, although less with the passage of time.

Seeing Conservatives in office is like having a sharp stone in my shoe.

Mind you, it’s not just about loyalty to my father and his political allegiances. I’ve become convinced through my courses in university and my years of teaching in the humanities that the cooperative (socialist) model is superior to the competitive (capitalist) model as a way of doing government. The debate on this subject is certainly being reopened by the “Wall Street Crisis” going on in the US at the moment. Capitalism has made such a gigantic blunder that it can’t think of any other way to save itself except to appeal to taxpayers to rescue it. Had the US been governed after the Social Democratic model, government might long since have reined in the excesses of corporate greed and the country would have been spared the spectacle we’re currently watching.

The astounding thing is that many people still believe—apparently—that the “invisible hand” that guides the workings of an unfettered marketplace will also lead us all to the best possible world. Greed should never be allowed to drive the bus; to ride in it maybe, but under a watchful eye. It’s a government’s role to act as guardian of the public interest and to ensure that resources are distributed equitably enough to provide the basics of a reasonable life to everyone. For this, there must be controls on those who would make their living by speculating with and manipulating the economic system in order to become wealthy without actually providing any goods or services for the public.

I may vote strategically this election. My MP is a Conservative who believes that crime can be fought with harsher punishment and that day care centres cause women to go out to work when they should be raising their children. Whichever Candidate comes closest—in my opinion—to being able to deliver a challenge to this kind of thinking may well get my vote, although I may stand in the voting booth for a long time with pencil poised, struggling to look beyond old allegiances and at the big picture.