How About We Blame The Protesters?

There is a lot of Monday morning quarterbacking going on today in the Canadian media, with CTV and the CBC focusing almost entirely on the protests and their aftermath, with little to no mention of the important things that took place inside the fence. Some are angry that the police overreacted to protests, others are angry that they didn't do enough to prevent the destruction. How's about we put the blame where it is due, with the clowns who were aggressively confronting the police officers? People have the right to assemble in protest, but they don't have the right to throw punches at police officers and destroy property. It baffles me that after a bunch of hooligans go on a rampage; and here our major news networks are blaming the police for the insanity of others???

Shouldn't we be talking about what was accomplished at this Summit? On the "global bank tax" where many CBC pundits were criticizing the Prime Minister for being against it when Europe wants to do it. Basically it isn't a bank tax, so much as it bank insurance. A proposed global insurance fund that the developed world pays into and banks who fail can get bailed out. That's right, get carried away with bad loans, and we will save their asses. In economics there is a term called "moral hazard" which is the effect of an insurance policy that actually increases the probability of incurring a loss. If you eliminate the downside risk for financial institutions, then they will engage in more high risk transactions increasing the probability of catastrophic failure.

Why was it so critically important for Canada to host the Summits? Because Canada's financial system has weathered this "Great Recession" better than pretty much every other G20 partner. We absolutely should have been the one country setting the agenda on discussions, because our banks are the shinning example for the rest of the world to follow. The answer is bank reform, not bank insurance. It is important for the world's major economies to reduce their government deficits that are running a high risk of public debt crashing their currencies and thus their financial systems. Obama wants to keep spending, duh, no surprise there. The policies he's looking to pass are going to cost a lot of money, making deficit reduction impossible.

Sharing the Canadian model with the rest of the world is very important to avoiding another serious downturn. Now hopefully they will listen and make the necessary policy measures to reduce the probability of a second global catastrophic collapse. I doubt that many G20 partners will have the testicular fortitude to make the necessary budget cuts (it is easier to spend money than give it away), but if they take our Prime Minister's advice the world will be better off. Time will tell.