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Jim Flaherty and the illusion of economic recovery

You’ve got to feel sorry for Jim Flaherty, who’s in charge of the Ministry of Magic these days.

You’ve got to feel sorry for Jim Flaherty, who’s in charge of the Ministry of Magic these days.


Oops, sorry. That’s the Finance Ministry. Although Flaherty probably wonders if Harry Potter would be better suited to the job.


Take the “recovery” for instance.


If that’s not magic, I don’t know what is. Nothing has really happened since 2008, when we woke up with the mother of all hangovers, induced by a decade-long orgy of spending money we haven’t got.


All at once, half the value we assumed was in our homes and businesses simply disappeared. We scurried under our beds and refused to come out. Until now — even though nothing has changed. Nonetheless, magicians, er, economists, now declare the recession over, thanks to Joe Consumer, back spending money he hasn’t got.


I’m not making this up. Less than a year after the world’s leaders pumped all their spare cash into the banks to keep the economy afloat, we’re watching TV commercials featuring Daddy buying Sugar a brand new Lexus for Christmas, while the Envys look on.


And Flaherty is stuck with maintaining the illusion. He has to be careful. If he’s too much like Dad ranting about credit card bills, he’ll damage “consumer confidence” and we’ll all crawl back under the bed, ending the “recovery.”


The trance is not entire. The consumer confidence index is up 3.7 in December — we’re confident in our short-term finances and employment status, but we’re still cautious about the future. Still, we’re 26.2 per cent more confident (deluded?) than we were at this time last year.


Ever the responsible magician, Flaherty is trying to manage the spell. The house of cards — a.k.a. the economy — collapsed because people defaulted on home mortgages they couldn’t afford in the first place. So if interest rates go up — and up they must go if we don’t want runaway inflation (bad magic) — people who depend on cheap money will go down and the “recovery” will be over. Flaherty says he will make it tougher to walk into a mortgage: Requiring an actual cash down payment or limiting the term of the mortgage. What? No more 30-year mortgages at two per cent?


Predictably, some magicians worry Flaherty will put a damper on the economy, which, it appears, is fuelled 100 per cent by pixie dust. So, as you sit by the warmth of the fire this holiday season, bolstering your confidence with a bowl of punch, you might spare a moment of sympathy for Tiny Jim.


And it’s a good time to count our blessings while we still can — we’re OK — at least until the visit of Christmas Yet to Come.

 
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