06.08.2012 06:46 AM

Yikes! Twice in one week!

“Ottawa insists the IMF exists to help the world’s developing countries, not Europe, and Canada takes the position that it is standing up for non-G20 countries that are uncomfortable with IMF funds going to the euro zone.”

If this is truly his motivation, he’s right. The Third World before should come before serially incompetent First World governments.

Now, I need a drink.

29 Comments

  1. JamesHalifax says:

    I think he means it, Warren.

    How would it look if Canadians were asked to spend Billions in bailouts to Europe when many of those countries have far more generous social programs than Canadians. Do we really want to support folks who can retire at 50 (greece) or 60 (france) when we don’t get the same benefits unitl age 65?

    Let Europe clean up their own mess.

    • CQ says:

      What’s good for our Quebec isn’t what’s good for Europe. Or maybe Ontairo-only should expand its equalization payments? Maintaining European Priviledge is Ontario’s responsibility, isn’t it?

  2. Tiger says:

    Well, if the federal Liberals choose Rae as permanent leader, we’ll make a Harperite out of you yet, Warren. :p

  3. Michael says:

    I will buy you that drink in Sudbury 😉

    I just wonder if it’s a case of cutting off his nose to spite his face. So even though the IMF may not have been created to help out Europe, if Europe’s economy tanks it is going to have massive repercussions worldwide, even in Canada.

    Sounds like a decision driven by ideology. When you get quotes like, “This Prime Minister will not force hard-working Canadian taxpayers to bail out sumptuous euro welfare-state countries” Reminds me of “the elites attending their elite galas.”

  4. kre8tv says:

    Given how painful IMF intervention in an economy can be based on its track record in the Third World, we might be doing Europe a favour here. Unintentionally.

    I always thought Bruce Cockburn sized them up right:

    “IMF dirty MF
    Takes away everything it can get
    Always making certain that there’s one thing left
    Keep them on the hook with insupportable debt”

  5. Not that Gord says:

    I think the thing that’s being ignored here is just how enormous the fallout is going to be if the Eurozone blows up. They’re now talking about Spain needing a bailout this weekend (Guardian has a story today) after that’s it’s Italy. Perhaps even France. It’s basically a bank run, and when bank runs happen, you have to recapitalize banks, or be willing to live with the fallout (see 2008, Lehman Bros, and the ensuing mayhem).
    So I suppose I view this issue entirely differently — to me it’s much more like the Tory MP who wants to take his ball and go home vis-a-vis the UN. Canada needs to be a team player right now.
    And as for those Third World countries… in the longer term, where does the money for them come from if the Western world’s economy becomes a smoking crater? And that really is what we’re talking about here. If you want to see what happens when a currency zone collapses, look at the Ruble zone in the 1990s. (Again Guardian has a story.)

    • Philippe says:

      The problem is rewarding bad governance and bad behavior. I’m a Liberal but I’m sick and tired of Politicians promising the moon when they know we can’t afford it. Our leaders got us into the mess, but the gullible voters are responsible for believing that we can keep living beyond our means. I guess something needs to implode before responsible political speak starts resonating with voters.

    • Oh my gosh, “Not that Gord”, you have GOT to be kidding?

    • ottawacon says:

      It is all well and good to be a ‘team player’, particularly when it is in your fundamental interest. But what the IMF/EC has been pushing has many of the properties of a Ponzi scheme. It has not worked to shore up confidence, and widening the circle of contributors will do nothing to change that. The IMF is hopelessly compromised, they are basically seeking international funds to allow the continued indulgence of unsustainable European policy. If they were dealing consistent with their posture in the developing world, they would not commit a single cent to Spain before their labour market, bankruptcy, bank regulation, and land tenure rules were all massively overhauled.

  6. Bill From Willowdale says:

    It’s The Emperor’s New Clothes meets Groundhog Day. Yet another Liberal leader who thinks he’s one election away from bringing the party back to it’s rightful place as “Canada’s natural governing party”. It’s politics and anything can happen but Mulcair and team seem reasonably solid and Bob Rae has real baggage that will haunt the party during the next election. The Liberals should do the right thing and make the best merger deal they can but the hubris is beyond belief. I’ll place a bet on a Rae win and the Liberal Party halfing their seats in the next election.

  7. Byron says:

    I wonder his this posture will affect the European Free Trade deal he’s trying to get done.

  8. ottawacon says:

    Two points:

    1) the rest of that article is around a German complaint. Germany has been dragging their feet on this for 4 years now, it is a bit rich for them to be complaining about anyone else’s reluctance to get involved when they are resisting Eurobonds, about the only vaguely credible solution left. it is particularly irksome, because they have been and will be the principal beneficiaries, 75% of their exports are to the EU, and it is an export driven economy. The entire structure of the monetary union has turned the Euro into easy credit for European consumers, and Germany is the principal vendor. German contribution has to be commensurate with the benefit derived, not playing at the margins – because it is a proxy for the needed structural adjustment in the EU

    2)…and out of room

    • ottawacon says:

      2) Having been in a front row seat for an IMF intervention, I am all for it and would support a Canadian contribution. But not until Europe has the same decision-making weight in the organization that every other nation that has ever been forced onto their knees to accept terms. So Lagarde has to resign, and a non-EU citizen be put in charge, all EU nations suspend their voting rights.

      The IMF has always been about harsh doctrinaire technocrats brushing aside domestic political concerns, for better or worse, often brutally. If the EU is willing to give an IMF team the normal level of outright power to dictate structural adjustment policy, there is a conversation to be had. Until then, forget it.

  9. Christian says:

    Regardless of the origin of the current economic situation the Euros created this mess let them clean it up.

    • Philippe says:

      The US is just as bad off. People have the right to be angry at the leaders who got us in this mess. There’s no easy way out, and future generations will have to pay.

  10. Conservative Socialist says:

    Perhaps the premise of our economic and banking system is flawed, and this situation was inevitable. This problem it seems to me, has been decades in the making.

    The state of North Dakota has a “socialist” banking system. And they’re doing quite well.

    http://www.huffingtonpost.com/2010/02/16/bank-of-north-dakotasocia_n_463522.html

    • Conservative Socialist says:

      From the article:

      ———————————————

      The bank had almost $4 billion in assets and a $2.67 billion loan portfolio at the end of last year, according to its most recent quarterly financial report. It made $58.1 million in profits in 2009, setting a record for the sixth straight year. During the last decade, the bank funneled almost $300 million in profits to North Dakota’s treasury.

      The bank has the advantage of being the repository for most state funds, which can be used for loans and occasional relief for private banks that need a jolt of cash during sluggish credit markets.

      “We think of ourselves as kind of a little mini-Federal Reserve,” Hardmeyer said.

      The state earns roughly 0.25 percent less interest than state agencies would get from a commercial institution. The bank also pays no state or federal taxes and has no deposit insurance; North Dakota taxpayers are on the hook for any losses.

      The Bank of North Dakota was a cornerstone of the agenda of the Nonpartisan League, a farmers’ political insurgency spawned by anger about outside control of North Dakota’s credit and grain markets.

      • Tim says:

        While Alberta Treasury Branches doesn’t call itself a bank it is effectively a much bigger version of the Bank of North Dakota. ATB is perhaps one of only meaningfull legacies of Bible Bill Aberhart.

  11. Mulletaur says:

    Prime Minister Harper’s statements on the European debt and financial crisis have been utterly solid. He’s done a great job on this file so far, there’s no denying it.

  12. IMHO the problem is fundamental. The Euro was an economic policy that was sold to the member states as a political policy. To whit, the European member states would be drawn into closer association, thus banishing War from the European continent. Simplistic, but that is it in a nutshell. Naturally, the Economics did not have to make sense did it? This was all in the cause of closer political integration.
    The Economics however were fucked. Hold out carrots in the form of massive subsidies that each receiving country believed they would not have to pay for. (Look at Ireland). Every fringe actor was delighted, and learned that they were small enough to spend spend spend without restraint, because the big boys would be forced to bail them out if it went badly.
    A Currency union between members states that have vastly different economies is already doomed to have structural issues (Look at Canada with Albertas Oil economy leaving Ontario gasping for breath). Add into that the fact that any Nation that decides to be a free rider is, well, free to do so. Now the chickens are coming home to roost, and Europe is desperately trying to preserve the PROBLEM, the currency union, and not surprisingly there is not enough money in the world to foot an open ended and ever growing commitment like that. Sooner or later the Euro is going to tank permanently, and I believe that Canada’s contributions will be swallowed up without a blink when that happens. Better they start weaning themselves away from the Euro, and working on the transition back to national or regional currencies. Now that would be a ‘bailout’ worth assisting.

  13. Tim Sullivan says:

    I this not an opportunity to explore “the third way”, which I had understood to be an alternative to North American continental intergration? We’ve been shut out before and shat upon by Europe on a number of trade issues.

    The Harper government generally sucks at international relations unless it involves alienation of us or placating Isreal at any opportunity, but this open door could be used, with a deft hand, to advance Canadian interests.

    It’s not like Canada has been steller in its foreign aid work, assistance or contributions. Harper’s objection is ideological, not economic, developmental or practical.

  14. Danny says:

    The Germans & the French are looking for the world to bail them out of their dumb decisions. They are like drug dealers who kept giving their junky clients smack on credit and are now having trouble dealing with the fact they are not going to get paid. In the case of Germany they have kept their unemployment at 5% by lending money to Greece, Italy, Spain, etc to buy their stuff. And now instead of taking the haircut they need to take, they want the rest of the world to buck up.
    Two thumbs up to Harper for telling Angela to pound sand.

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