Deficit coming - Duh!

Deficit predictions keep appearing like mushrooms in virgin woodland after a big storm, but most people endowed with the gift of common sense will just shrug and say "Duh!". The world economy is chin-deep in stinky goo, and solid economic foundations don't help you avoid trouble when your major customer is going down the tube and your major natural resource sheds 60% of its value almost overnight.

Who are we kidding? The progressives at the Centre for Policy Alternatives may well predict a 50 billion deficit, but anyone worth their salt will figure these guys are on crack. Being good at predicting surpluses is easy, as any government budgets conservatively. Predicting deficits involves coming off the high and sparing a thought for the government's future actions. If auto bailouts and massive "social justice" programs are included in these warped figures then we could well run a 50 billion dollar deficit. However this is no New Deal and there's no big spending party in government. Thank God!

Now we hear that trade unions will have to stop playing omnipotent and accept conditions before a bailout gets in the works. Tony Clement has the guts to say it and he's damn right. The trade unions and their perpetual strife for laziness are part of the equation that brought the demise of the auto sector. If the government has to tighten its belt, so do union bosses. Right on!

There's rumors of an additional 300-billion rescue package in the works south of the border. That adds up to the 700 billion already sent down the drain, making the total exceed $1 trillion. That's more than is required to pay off an entire year's worth of negative US balance of payments. Canada isn't going down that route, we're demanding change for cash and we'll get it.

Wishful thinking aside, running a deficit now is almost inevitable (chapeau to the Tories if they manage to break even). How big the deficit is will depend on how bold the government thinks it can be. When things get tough it's easier to push for structural change, because many inefficient organizations have close to nothing to lose (they've been wiped out) or, conversely, too much at stake (they could go bankrupt with a thud). Do we break the hair knot that hit the comb or do we just grease it up?

We'll run a contained deficit, and if we accompany it with a sound economic restructuring plan and a detailed cash flow forecast we can still show responsible management instead of the Grits' mercurial just-plug-holes approach. Even big companies are sometimes short on cash, it's normal if you know how to manage it. What's the fuss?