Economic Crisis 200809 Verdict on a Failed Philosophy

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Economic Crisis 2008-09 Verdict on a Failed
Philosophy
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What happened?

• Too much faith in misguided beliefs
• Government has no key role in shaping economic
  activity
• Economic policy should focus on deregulation and
  tax cuts for the wealthy
• Trade agreements should be about constraining
  governments
• Loss of manufacturing is normal maturing of
  economy

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These Ideas Encouraged Reckless Greed

• Deregulation of U.S. mortgage business led to
  shaky loans
• Deregulation of Wall Street spread toxic assets
  throughout the economy and the world
• Canadian finances better regulated, but country
  still got hit by crisis

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Wall Street Infects Main Street

• With the busting of these bubbles, the result
  was
• Homeowners in trouble
• Producers scrambling for financing
• Entire industries in jeopardy
• Millions unemployed and
• The whole world in a financial crisis

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Dont blame workers

• We didnt cause this crisis
• Workers earnings remained flat 1998 to 2006
• Top 100 Canadian CEOs doubled their income 1998
  to 2006
• In 2005, Canadas top 100 CEOs earned 218 times
  what the average worker earned

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Canadas Jobless Rate Skyrockets
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490,000 lost manufacturing jobs
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More than half of NorthAmerican Steel Capacity
idled
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Understanding the Problem

• Canadian Economy
• Trade dependant resources and automobiles are
  key
• 75 to 80 exports go to U.S.
• Oil commodities bubble popped in 2008
• Manufacturing already in decline

• Near Term Outlook
• U.S. economy in trouble
• Housing sector struggling
• Auto sector struggling
• Canadian manufacturers have failed to invest in
  new plant, equipment

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Comparing Canada U.S.

• Job losses worse in US in 2008, but Canadas
  losses now accelerating
• Less personal debt
• Fewer bad mortgages
• Tougher banking standards
• Smaller housing market bubble
• More Oil
• Commodities boom

• Outlook troubling
• U.S. primary market for Canadian exports
• More exposed to falling commodity prices
• Home and Auto sales collapsed
• Will foreign owned operations get investment or
  shut down notices?

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Harper Govt Feeble In Response to Crisis

• Some stimulus in January budget but less than
  called for by IMF, OECD
• No Buy Canadian measures
• Small improvements to Employment Insurance much
  less than needed

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Obama on the right track

• US stimulus package much bigger than Canadas,
  but the problem is huge
• For the first time since 1945, US homeowners have
  more debt in their homes than equity.
• 25 of all homes in the US have mortgages that
  exceed the value of the home.
• Foreclosure rates are higher than they have been
  since the Great Depression.

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Recovery Plan
Substantial, Strategic and Sustained

• Ottawa should get moving on second wave of
  stimulus even before the first wave of money is
  spent
• Combine with coherent manufacturing strategy
• Buy Canadian procurement
• Targeted incentives and subsidies
• Better trade laws to support jobs

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Recovery Plan
Substantial, Strategic and Sustained

• Infrastructure/Green Jobs
• Must rebuild the economy and save the planet at
  the same time
• Study shows potential for 90,000 jobs in
  renewable energy in Ontario alone
• Opportunity in construction, manufacturing,
  design, services

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Recovery Plan
Substantial, Strategic and Sustained

• Help the most vulnerable
• Expand coverage and increase Employment Insurance
  payments
• Raise Canada Pension Plan, Old Age Security
  cheques
• Protect pensions, put workers first in corporate
  bankruptcies

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Why This Will Work

• Infrastructure spending will immediately inject
  money into the economy
• Jobs will be created at home
• As jobs are created here, the money will
  multiply through the economy
• Gives money to those that will spend it
• These investments will make our entire economy
  more competitive

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It all fits together
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What should we do now?

• Demonstrations, petitions, letters to government
• Support fellow workers fighting back
• Participate in rallies organized by CLC,
  federations of labour, USW and other unions
• Your ideas??