Thursday, November 26, 2009

Stimulus Funds in Canada to Become Permanent?

Much has been written these last few months about the effects if the recession, or whatever term one may wish to call the global economic situation since last year. Some countries have weathered the storm better than others. Certainly, Canada, while by no means having fully recovered, is on much stronger financial footing as compared to our neighbours to the south. Experts have attributed many factors to Canada's relative strength. But, putting aside the past, the questions that still remain unanswered pertain to the future.

One factor that is contributing to Canadian recovery is the strength of public confidence. As the belief in the stability of the economy grows stronger, the recession and its effects recede that much more. However, what will be if the global economy takes a nosedive once again. Are we prepared for that?

The Canadian government has been a major player in managing the recession and orchestrating the country's recovery. A large factor has been the availability of federal funds available through a variety of programs tailored to the various needs of the business community. While these programs were designed as a temporary stopgap to help weather the storm and keep the business sector liquid, government officials are now asking themselves whether it might be wise to make a basis of liquidity permanently available.

On one hand, officials see the inherent benefit of providing funds to facilitate the continuous functioning of core markets. On the other hand, researchers for the Bank of Canada are concerned that these "permanently available" funds might induce investors to take on excess risk, secure in the knowledge that there will always be a bail out plan ready.

While the debate continues, the government and the central bank have learned that they must maintain sufficient flexibility and readiness to respond to any future liquidity problems.

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  2. mikemccart@rogers.comDecember 7, 2009 at 12:50 PM

    As a small business owner I can tell you that this fictional liquidity and available credit is a farce! The government only has funds available for big business regardless of monies invested and they are driving small business into the grounds by making funds impossible to obtain by average Canadians. I'm getting sick of seeing these booster articles that don't have a shread of truth to them!

  3. Future stability in North America will only occur if dramatic changes to our economic model is made. We are no longer the dominant force in the world but now merely only a player. If you examine carefully the products made in China, you will see that it is not based on cheap labour but on affordable automation, straight-forward corporate infra-structures and high raw material conversion rates.
    We again must change our system to become knowledged based if we are to remain competitive and survive. Higher education must be a goal of effort and ability, not affordability.
    We will be facing an enivitable demise if we continue with the mentality that gave us GM, Chrysler, Nortel and Eatons and our banks having duty to shareholders, not the country.
    Bailouts are merely bandaids, perhaps we should invest in the skills that prevent us from being hurt in future.


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