Tories face $10B deficit, report suggests

[HeresyLives]

Tories face $10B deficit, report suggests

`Fiscal hole' from credit crisis may result in higher taxes, spending cuts next year, Merrill Lynch warns
Oct 16, 2008 04:30 AM
RITA TRICHUR
BUSINESS REPORTER

Canada risks running a $10 billion deficit in the 2009-2010 fiscal year if the re-elected Conservative government fails to stitch a "looming fiscal hole" that is already raising the spectre of higher taxes and possible spending cuts, a report suggests.
That stark prediction was made yesterday by Merrill Lynch economist David Wolf, hours before Prime Minister Stephen Harper unveiled a six-point economic plan and vowed to keep government spending "focused and under control."
Merrill Lynch's report suggests Ottawa may succeed in eking out a small surplus this year, but it is on track to recording its first deficit since the 1990s – a political anathema for Canadians.
Wolf is known for his pessimistic views. His analysis in this case assumes no change in fiscal policy. Nonetheless, some of his contemporaries agree the growing likelihood of a deficit will force the Harper government to make some difficult spending decisions if it intends to live up to its no-deficit pledge.
At least one other economist is taking Wolf's argument to the next level. Don Drummond, TD Bank's chief economist, said a multi-billion dollar deficit is not only possible, it is unlikely to be "a one-year wonder."

http://www.thestar.com/Business/article/518196

[HeresyLives]

1. To add to that:

BMO projects Canadian recession

HEATHER SCOFFIELD
Globe and Mail Update
October 16, 2008 at 2:20 PM EDT

OTTAWA — A second big Canadian bank is now calling for a recession.

Bank of Montreal said Thursday Canada's economy will contract in the final quarter of 2008, and the first quarter of 2009, meeting the popular definition of recession.

“Canada cannot escape the knock-on damage of not only the U.S. recession, but also the wealth destruction arising from the plunge in our stock market and the slowdown in our housing markets,” chief economist Sherry Cooper said in a commentary.

Since commodity prices are being pulled down by a drop in global demand, Canada's energy sector can no longer be counted on to support the Canadian economy, she said.

“The boom has turned to bust. Canada, too, is headed for recession and our government will awaken to the need for deficit spending.”

http://www.reportonbusiness.com/servlet/story/RTGAM.20081016.wrecession1016/BNStory/Business/home

[IntravenousDemilo]

2. "A second big Canadian bank is now calling for a recession."

Yes, and they'll jump up and down and pout until they get one, too. Then the Bank of Montreal can snap up a whole bunch of property, as they did to our family farm back in the late 1980s.

[HeresyLives]

3. Oh I think it's a given

that we'll have a recession no matter what the BOM says about it.

It's just that Harper never mentioned a word about a large deficit, or a recession in all this time. We only hear about it AFTER the election.

[Grey]

4. Time to close some 'loop holes'?

Said He wouldn't raise taxes so I want to see some tightening of regulations?