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"We can't allow things that are inaccurate to stand." — The Word of Our Dan, February 19, 2008.

Sunday, January 11, 2009

Guessing game (I)

The following is an excerpt from the Premier’s year-end interview with Debbie Cooper of CBC Here and Now on December 26.

Sorta.

One of the two statements — either the clip from the Premier, or the follow-up question from Cooper — is genuine. The other is a complete fabrication. It is up to you, gentle reader, to figure out which one.
PREMIER WILLIAMS: Well, you know, we’ve gone from a $147, approximately, of oil down to as low as one point in the market $33 last week. It’s unbelievable that in a, six-month period or a nine-month period that could actually happen. Forecasts are varying now.

My personal feeling is that oil will eventually come back in the 75 to 80 range, at least, because Iran and Venezuela and the tar sands and Saudi Arabia all feel that those prices have to be up in that range. If it stays low, we will incur deficits. We’ve already projected out that if, if oil is below $60 a barrel, we will incur multi-hundred-million-dollar deficits.

But, you know, the good thing is, is that all during this past period as we were having surpluses, we were paying down debt. And we were criticised at times, they’re saying, oh, you’re paying down debt you shouldn’t just put it, you know, on the account. But when you do that you, you increase your borrowing capacity because if you or I, you know, depleted our line of credit and paid it off, well, then we have the ability to draw back on that when we need it and that’s exactly where we are.

COOPER: OK, wait, wait, wait, hold on just a cotton-pickin’ second here, Premier. Are you telling us, are you seriously telling us, that we have paid off the borrowing of the past, in order to make it easier to borrow again today or in the future? Come on, now! Really? Are you telling the people out there in Here and Now Land tonight that the virtue in paying down the provincial debt is that it makes it easier for us to go back into debt? Are you out of your gourd? Isn’t that the same sort of fiscal tomfoolery and incompetence that Ross Wiseman used, ostensibly, to justify crossing the floor to your party back in 2001?

2 Comments:

At 8:53 AM, January 11, 2009 , Blogger Edward G. Hollett said...

You musta been under a rock. Williams has been saying this for two years at least. We will borrow our way to prosperity.

We don't need a heritage fund like ALberta or Norway because we are paying down debt so we can rack it up again.

There's no sense to it let alone logic. There's also no fact to it either. The government has reduced accumulated borrowings by a paltry sum, probably no more than $500 million against a total of $9 billion, not including unfunded pension liabilities.

What Williams talks about when he says every penny of surplus goes to debt is something else. In the past few annual budgets, the government has projected horrendous deficits. One was $1.2 billion.

It's a farce though, because they deliberately low-ball the revenues. The spending is closer to what they figure the revenue will really be. Then low and behold in flows the cash and these gigantic "surpluses" appear.

What happens to them? They get spent on the annual budget. They replace the gigantic borrowing with cash spending. That is only going against the debt in the most technical of definitions or, to make it worse, only in the minds of people who really don't understand the finances in the first place.

 
At 12:57 PM, January 11, 2009 , Blogger WJM said...

You musta been under a rock. Williams has been saying this for two years at least. We will borrow our way to prosperity.

I know that. You know that. But not one political (or other type of) journalist in the province seems to know that, even when Our Dear Plan To Borrow To Pay For Annual Operations Let Alone Capital Projects (On A Go-Forward Basis) is laid bare before them.

And Here and Now is not the only offender...

 

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