Recession's over because we're deeper in debt, printing more money, and because a man on TV said so

OTTAWA—The recession is over.

The Bank of Canada said so.

A few skeptics stopped short of celebration.

"Troubled? Stressed? Turn to prayer," the Western Catholic Reporter advised readers. Good Times, a magazine for retirees, published a list of "Top 10 Retirement Savings Tips." No. 8 said get a job. The labour periodical Our Times asked, "When the bank talks about growth, what kind of growth are they talking about?"

Good question.

Few media personalities bothered to ask—certainly not Peter Mansbridge, chief anchor of CBC-TV. Mansbridge hosted a Sept. 21 end-of-recession interview with Bank of Canada Governor Mark Carney. "Exclusive," he said. It was embarrassing:

CARNEY: "Growth started in June. We expect it to pick up this quarter and at the end of this year, but we're unlikely to see any movement on unemployment unfortunately, any downward movement on unemployment. That growth that we are seeing is largely the result of policy—monetary policy, fiscal policy, the measures to stabilize the financial system. So, we have a ways to go before we're really going to see true growth, self-sustaining, private sector growth."

[Note: Here Carney made two admissions, (a) more people will lose jobs; (b) gain in GDP of 00.10 per cent reported in June was not "true" but due to the fact the government printed more money and increased the national debt at the rate of $1-billion a week.] The interview continue]:

MANSBRIDGE: "But how tenuous is the growth? And I ask that because, you know, I mean, traditionally you tend to look at sort of recession-recovery as a kind of 'V' shape. There are those who are, are worried that this one could end up as a 'W,' that it, you know, goes down to recession, starts to come back, falters, goes back down into recession, then originally comes back up. I mean, do you worry about those things or have you seen enough now to think we are clearly on the road towards a recovery?"

[Note: Here Mansbridge failed to pick up either point on job losses or "true" growth and instead used hand gestures to make the letter 'W'.]

CARNEY: "Well, I think we're clearly on the road."

Throughout the interview Carney used the word "growth" eight times. In his last Monetary Policy Report the bank governor mentioned "recovery" 13 times. If you repeat anything often enough, people are bound to take the hint. Media did, and told Canadians the "recession is over" (Montreal Gazette) or "may have bottomed" (National Post) or at least was "weathering well" (New Glasgow News), but definitely the "sting was easing" (Summerside Journal Pioneer) since "the worst is over" (Vancouver Sun).

Still the question remained: What kind of growth was the bank talking about?

Here it became truly embarrassing.

Part of the "growth" came from a hot-tub tax giveaway, the government's 15 per cent Home Renovation Tax Credit financed with borrowed money and used to subsidize private projects homeowners needed to do anyway. Other "growth" came in federal grants to upgrade hockey rinks, tennis courts and theatres at a cost of the largest annual deficit in Canadian history.

The "growth" was in gross domestic product, a subterranean and near-meaningless statistic. It records a win every time a dollar changes hands regardless of why, what or how. GDP never calculates circumstance; a dollar is a dollar.

With this strange calculation, borrowing money to upgrade somebody's bathroom is recorded as a statistical achievement. A poor job of installing the Jacuzzi is even better since you must borrow more and do it twice. Even disasters are economic bonanzas. A house fire would reap a GDP windfall in overtime pay for firefighters and time-consuming insurance claims.

Applying disasters to whole countries is better yet.

In the weird math of GDP the most dysfunctional nations have the "best" growth rates. Angola is forecasting 13 per cent "growth" this year due mainly to police corruption and power blackouts that last two months. Other world-leading GDP rates are 12 per cent in Ethiopia (drought), 11 per cent in Rwanda (cholera) and 10 per cent in Niger (kidnapping). By comparison, placid Sweden is mired in recession and carefree Denmark has fallen off a GDP cliff (see CIA World Factbook: National Product Real Growth Rates).

This distortion is the reason the Buddhist kingdom of Bhutan in 1972 introduced its own measure GNH, Gross National Happiness, to calculate actual benefits of economic activity. The New York Times reported in 2005, "A growing number of economists, social scientists, corporate leaders and bureaucrats are trying to develop measurements that take into account not just the flow of money."

People who are serious about economic statistics cite the GDP mainly for entertainment value. Before announcing an end to recessions they consult more meaningful data like employment (now down in Canada), loan defaults (up), value of goods in transit (down) and investment in machinery (way down).

Yet the GDP, the most dubious statistic, dominates news coverage. And the GDP says amid one of the most dreadful years in postwar Canada, things are looking up.

The recession is over because we are deeper in debt.

The recession is over because we are printing more money.

The recession is over because a man on TV said so.

The Hill Times

http://hilltimes.com/page/printpage/political_reporting-10-5-2009