Brace Yourself....A Deficit is Imminent

As a fiscal conservative and potential libertarian, I feel that free markets are best dealt with through the efficiencies in the marketplace. As the current market conditions have led to much government intervention; the economic ideas of 20th century British economist, John Maynard Keynes have come to fruition. Keynes theories are based on the fact that the state should stimulate economic growth and improve stability in the private sector - through, for example, taxation and public projects (wikipedia.org).

Finance Minister Jim Flaherty is set to deliver the budget on January 27th for the upcoming fiscal year beginning on April 1st. However, today an unnamed source indicated that the budget will include a $64B deficit erasing 11 consecutive years of surpluses. According to Bloomberg.com, "In addition to new infrastructure spending,the government has indicated its fiscal plan will make it easier for workers to qualify for unemployment insurance and provide tax relief in a bid to spur consumer demand". 

Is it safe to stimulate the economy through forced measures such as tax relief? I would argue, NO. It is irresponsible to promote tax relief when it is obvious that the government cannot afford them because eventually the burden will be placed back on the shoulders of the taxpayer through income taxes or VATs. 

Is it our responsibility to provide TARP-like funds to dwindling industrial sectors? NO. Wake up people these are cyclical sectors. They call it the economic CYCLE for a reason. Peaks and trough, expansion and recession are necessary to the growth of our markets. 

Without corrections we would be stuck with inefficient corporations forever. I think we can all agree that we are better off without corporations such as Enron or Worldcom.  In the long-run, will we be so much worse off that we cannot allow GM, Ford, or RBS to fail today. Highly unlikely. 

Remember , in 1929 the DJIA was 381.2.