OTTAWA—The tentative Buy American deal fails to gain a meaningful exemption for Canadian suppliers from provisions in the U.S. stimulus package while permanently curtailing provincial and municipal procurement sovereignty, says a new analysis of the deal from the Canadian Centre for Policy Alternatives (CCPA).

“The agreement is highly unbalanced and provides significantly better access for U.S. suppliers to the Canadian procurement market than for Canadian suppliers to U.S. stimulus projects,” says senior CCPA trade researcher Scott Sinclair.

According to the analysis, Canadian suppliers have a brief opportunity to compete for an estimated $4 to 5 billion US of federally funded stimulus projects, representing less than 2% of the approximately $275 billion US of procurement funded under the Recovery Act. In return, Canada has guaranteed U.S. suppliers access to a range of provincial and municipal infrastructure spending projects until September 2011, estimated to be valued at more than $25 billion Cdn.

“Most significantly, Canada has bowed to U.S. pressure to permanently bind purchasing by Canadian provincial and municipal governments under the WTO agreement on Government Procurement,” says Sinclair. “This proposed deal will prevent Canadian provincial and municipal governments from preferring local goods or suppliers while leaving Buy American policies almost fully intact.”

“The Harper government has taken advantage of the economic crisis to justify what it has wanted for a long time—more private access to public sector resources and further restrictions on the ability of all levels of governments in Canada to negotiate local benefits when the procure goods and services.”

James Travers has a very good article.  Here’s a quote:

"There’s no such thing as free trade"

In theory, American states are bound by international treaties negotiated through Washington. But in practice? Would U.S. President Barack Obama dare to let a NAFTA trade dispute panel penalize a state government acting to protect American jobs?

Recall that even in the best of times, the U.S. refuses to accept elements of trade treaties that it finds inconvenient, the most obvious example being the long-running softwood lumber saga, wherein Washington – in violation of NAFTA – continued to discriminate against Canadian producers until Ottawa agreed to even more concessions.

Read the full article, click here

Ellen Brown, Global Research.ca  April 9, 2009

Excerpt:

Lincoln’s Monetary Breakthrough

The bankers had Lincoln’s government over a barrel, just as Wall Street has Congress in its vice-like grip today.  The North needed money to fund a war, and the bankers were willing to lend it only under circumstances that amounted to extortion, involving staggering interest rates of 24 to 36 percent.  Lincoln saw that this would bankrupt the North and asked a trusted colleague to research the matter and find a solution.  In what may be the best piece of advice ever given to a sitting President, Colonel Dick Taylor of Illinois reported back that the Union had the power under the Constitution to solve its financing problem by printing its money as a sovereign government.  Taylor said:

“Just get Congress to pass a bill authorizing the printing of full legal tender treasury notes . . . and pay your soldiers with them and go ahead and win your war with them also.  If you make them full legal tender . . . they will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution.”

The Greenbacks actually were just as good as the bankers’ banknotes.  Both were created on a printing press, but the banknotes had the veneer of legitimacy because they were “backed” by gold.  The catch was that this backing was based on “fractional reserves,” meaning the bankers held only a small fraction of the gold necessary to support all the loans represented by their banknotes.  The “fractional reserve” ruse is still used today to create the impression that bankers are lending something other than mere debt created with accounting entries on their books.¹ 

Lincoln took Col. Taylor’s advice and funded the war by printing paper notes backed by the credit of the government.  These legal-tender U.S. Notes or “Greenbacks” represented receipts for labor and goods delivered to the United States.  They were paid to soldiers and suppliers and were tradeable for goods and services of a value equivalent to their service to the community.  The Greenbacks aided the Union not only in winning the war but in funding a period of unprecedented economic expansion.  Lincoln’s government created the greatest industrial giant the world had yet seen.  The steel industry was launched, a continental railroad system was created, a new era of farm machinery and cheap tools was promoted, free higher education was established, government support was provided to all branches of science, the Bureau of Mines was organized, and labor productivity was increased by 50 to 75 percent. The Greenback was not the only currency used to fund these achievements; but they could not have been accomplished without it, and they could not have been accomplished on money borrowed at the usurious rates the bankers were attempting to extort from the North.

Lincoln succeeded in restoring the government’s power to issue the national currency, but his revolutionary monetary policy was opposed by powerful forces.  The threat to established interests was captured in an editorial of unknown authorship, said to have been published in The London Times in 1865:

“If that mischievous financial policy which had its origin in the North American Republic during the late war in that country, should become indurated down to a fixture, then that Government will furnish its own money without cost.  It will pay off its debts and be without debt.  It will become prosperous beyond precedent in the history of the civilized governments of the world.  The brains and wealth of all countries will go to North America.  That government must be destroyed or it will destroy every monarchy on the globe.”

Lincoln was assassinated in 1865.  According to historian W. Cleon Skousen:

“Right after the Civil War there was considerable talk about reviving Lincoln’s brief experiment with the Constitutional monetary system. Had not the European money-trust intervened, it would have no doubt become an established institution.” 

The institution that became established instead was the Federal Reserve, a privately-owned central bank given the power in 1913 to print Federal Reserve Notes (or dollar bills) and lend them to the government.  The government was submerged in a debt that has grown exponentially since, until it is now an unrepayable $11 trillion.  For nearly a century, Lincoln’s statue at the Lincoln Memorial has gazed out pensively across the reflecting pool toward the Federal Reserve building, as if pondering what the bankers had wrought since his death and how to remedy it. 

Read the complete essay, click  here

Maybe Federal Finance Minister Jim Flaherty is just trying to make the many thousands of people who have lost their jobs feel better.  Comparing the current global collaspe to recessions in the past is a bit of a stretch.  The economic policies implemented by previous US governments over the past 8 years, based on the phoney "Chicago" school of economics theory, to which Mr. Flahety and Harper subscribe cannot be compared to any historical recession.

…

"Liberal finance critic John McCallum, a former Royal Bank chief economist, said the comparison has little utility.

"I don’t see the point … we’re lucky because we’re not starving?" Mr. McCallum said. "Next he will be telling us that Canadians are fortunate because they are better off than during the 19th-century Irish potato famine."

Read the full article at the Globe and Mail

The deepening global financial crisis, the decline in world commodity prices, and the growing possibility of global recession are exposing worrisome weaknesses in Canada’s economy.  Complacent expressions of faith in our “fundamentals,” and other varieties of economic denial, will not protect Canadians from the coming storm.

Canada’s Economic Fundamentals are Anything but Strong

Macroeconomic performance has weakened dramatically since the current government came to power at the beginning of 2006.  Economic growth has largely stalled.  Productivity has declined. The recent expansion was largely propelled by high commodity prices and a housing bubble – both of which are now ending.

Labour markets have weakened, and employment is poised to decline further as the slowdown takes hold. Some sectors have already been badly hit. Over 300,000 jobs in manufacturing have been lost. Yet less than 40% of unemployed workers qualify for Employment Insurance benefits.

Excluding petroleum and minerals, our international trade performance has deteriorated. Incomes for corporations, governments, and some households have been inflated for a time by record global commodity prices.  But over-reliance on resource extraction is not a sustainable basis for our future economic progress.  Meanwhile, in large part as a consequence of this growing resource reliance, Canada has failed miserably to do its part in the urgent global effort to limit greenhouse gas emissions.

Although Canadian financial institutions did not engage as aggressively in risky practices as their U.S. counterparts, the Bank of Canada has already had to step in to provide many billions of dollars in short-term liquidity. Credit conditions in Canada are becoming more uncertain, restricted, and costly, and this will inevitably constrain spending and output in the months ahead.

Canadian households are more indebted than ever, with $1.25 of debt for every dollar of disposable income. Amid gloomy headlines, falling stock and housing prices, and precarious household finances, Canadians are starting to cut back on consumer spending.

Many Canadians did not benefit much during the good times:  poverty rates in Canada did not meaningfully decline and real wages have barely increased, even while corporate profits surged to all-time highs.  But the prospect of recession now threatens all of us with hardship – whether we shared in the good times or not.

Crisis Demands an Active Government Response

The general approach of Canadian economic policy in recent years has been to reduce the scope of government (through tax cuts, deregulation, and privatization), ratify the growing resource orientation of Canada’s economy, and squander the chance to use revenue from the resource boom  to enhance long-run productivity, prosperity, and stability.  Some politicians wish to further reduce the size and influence of the public sector.

The dramatic events of recent weeks have destroyed the idea that markets are best left to their own, unregulated devices.  The enormous costs of this complacency have been clearly demonstrated.  Government and its institutions must now show leadership and play a more active role in stabilizing financial markets, stimulating real investment, and maintaining employment and incomes.

The spreading downturn in both the financial and the real sides of the economy is likely to undermine spending and employment levels in many regions and sectors of Canada’s economy.  Income support measures, employment insurance in particular, should be strengthened.  In addition, public infrastructure projects, including those aimed at reducing Canada’s greenhouse gas emissions and expanding affordable housing, should be ramped up to maintain employment and production (as private-sector activity declines).

The federal budget is narrowly balanced, and may slip into deficit (especially if real GDP begins to decline).  The current government has pledged to prevent such a deficit at all costs, and this will mean significant cuts to public spending as the budget balance deteriorates.  But that course of action would worsen the economic downturn and job losses.  It is far better to maintain public programs to support employment and incomes, even at the cost of a cyclical deficit.

The Bank of Canada must continue to support the financial industry with liquidity, and should reduce interest rates to stimulate borrowing. But the government must also explore other avenues (including the use of public institutions, like the Canada Mortgage and Housing Corporation, the Business Development Bank of Canada, Export Development Canada, and other conduits) to expand lending to households and businesses.  At the same time, the financial industry must be re-regulated to prevent the unproductive speculative excesses that caused the current crisis.

The global economy is heading into a challenging, dangerous period – perhaps the worst crisis since the 1930s.  Canada cannot expect to be immune from those global developments.  Economic history teaches us that government intervention is essential in times of crisis: both to stabilize markets and to shorten downturns with counter-cyclical measures.

To see the 88 signatories click here

Originally published by: The Progressive Economics Forum