When humans face unthinkable choices, the tendency is to behave like the choice doesn’t exist, which is how we got here.
Martin Wolf, Ottawa, September 26, 2011
Have ended up thinking a fair bit about what he was saying.
Martin Wolf is chief economics commentator at the Financial Times, London. He was awarded the CBE (Commander of the British Empire) in 2000 “for services to financial journalism”. Mr Wolf is an associate member of the governing body of Nuffield College, Oxford, honorary fellow of Corpus Christi College, Oxford University, an honorary fellow of the Oxford Institute for Economic Policy (Oxonia) and a special professor at the University of Nottingham. He has been a forum fellow at the annual meeting of the World Economic Forum in Davos since 1999 and a member of its International Media Council since 2006. He was made a Doctor of Letters, honoris causa, by Nottingham University in July 2006. He was made a Doctor of Science (Economics) of London University, honoris causa, by the London School of Economics in December 2006.
He was in Ottawa in late September, sponsored by the Canada 2020 organization. I attended his presentation. His topic: “A Bridge Too Far? Averting another Recession in Europe and the US”.
Stimulus spending did not have a lasting effect, and the lack of procedures and accountabilities associated with such spending, across nations, had only previously been seen in wartime spending.
An economy that is primarily based on residential housing construction and related financing is not sustainable.
We should not be talking about a global recession. We should be talking about whether a global depression can be contained.
A more complete overview of his talk may be found here.
I keep thinking about the $75 billion (or more?) in loans bought from the Canadian banks by the Canada Mortgage and Housing Corporation in the middle of the 2008 election. The stated reason being that the banks had liquidity problems. I thought the Bank of Canada addressed liquidity issues. How healthy is a financial sector that needs a $75 billion (or more?) cash infusion from government, thereby transferring the risks associated with its worst loans to government? A Crown Corporation is still a component of government financial risk…no?
Then some reality. Canadian government has committed to buying back up to $125 billion in mortgages. As of March, 2009, it had bought back about $55 billion, with its buyback offerings having been undersubscribed, to that point, four times in a row.
So I guess things are much better…?