SEPTEMBER 6TH BRIEFING FOR JOURNALISTS ONLY: A FEW QUESTIONS
On September 2nd, the Department of Finance announced that there would be a telephone briefing on the upcoming meeting of G-7 and G-8 Finance Ministers and Central Bank Governors on September 6th. This briefing is for journalists only.
We are not journalists, and therefore are not invited to participate in the briefing. It is unfortunate that the government would not allow this briefing to be available to the general public. Nevertheless we do blog on public policy on a regular basis and do submit pieces to the print media, which have been published.
We are, therefore, offering some questions to journalists that they may wish to use.
1. Mr. Flaherty, in a recent submission to the Globe and Mail and the Financial Times with some of his international finance colleagues, said that the problem in the EU and the US is lack of “political leadership and courage”. Will he stress these failings in his meeting and what advice would he give to his G-7/8 colleagues to be more courageous?
2. The situation in the US and the EURO countries has worsened dramatically since the budget. There is a good chance the US is already in a recession. Recently, the Toronto Dominion Bank (TD) released a detailed report concluding, “That the risk of technical recession has undoubtedly risen in Canada. If the US economy contracts, the chances that Canada will follow suit are high”. The TD report also warned that the growth performance of the Canadian economy in 2011 is seriously worsening and there is only likely to be “moderate strengthening in the pace of growth as 2012 progresses”.
Output in the second quarter declined by 0.4 per cent at annualized rate. Mr. Flaherty said he would act “pragmatically” if there two quarters of decline. What does this mean?
3. The Federal Reserve Board has reduced its estimate of potential growth in the US. What is the Department’s assumption with respect to medium term economic growth for the US in updating its economic and fiscal forecast for Canada? Will the upcoming Economic and Fiscal Update contain a discussion of Canada’s potential economic growth and the structural issues facing Canada?
4. Some experts have argued that in order for the EURO to survive there will have to be greater political and fiscal integration within the EURO. What is Mr. Flaherty’s view on this and what will he say to his EURO colleagues, particularly the German Finance Minister?
5. President Obama has said that he wants a balanced approach to solving the US deficit and Debt problem. This would require both expenditure cuts and tax increases. Mr. Flaherty has said that he would never raise taxes to deal with a deficit problem. Lower taxes are needed for growth. This sounds very Republican if not Tea Party. What advice will Mr. Flaherty tell the Secretary of the Treasury regarding taxes to reduce the US deficit?
6. The Prime Minister claims great success for his leadership at the G-20 in getting countries to commit to reducing their deficits in half by 2013. What has happened to that commitment?
7. Finally, what is the point in having this meeting, since nothing will come out of it? Doesn’t this risk creating more uncertainty and market instability?