Friday, February 20, 2009


Spend to Save? Only in Alberta...

I'm glad that Ed Stelmach isn't a financial advisor. Today I was reading Don Braid's latest column in the Calgary Herald, where Braid writes:

When Liberal Leader David Swann scolded the premier Thursday for not saving more, Stelmach said the government was right not to, because the money would just have been lost on the markets.

Swann looked like he'd been socked by a rhetorical Whoopee cushion.

I wanted to read the actual text of the exchange in the legislature, so I looked it up in Hansard:

Dr. Swann: Thank you, Mr. Speaker. Today the finance minister gave a news conference that repeated previously announced economic initiatives to cloud the fact that this government has mismanaged the Alberta economy. For years this government has ignored the advice of experts to save during times of plenty, and now, once again, Alberta is in trouble. A former Premier admitted there was no plan for the boom. Will this Premier admit there is no plan for the bust?

Mr. Stelmach: Mr. Speaker, the hon. Treasurer today delivered a report that shows that our savings fund, the heritage savings trust fund, has taken a loss, but I would submit that if we would have listened to the advice of the member across, we would have lost even more money through this unbelievable economic turmoil...

Doesn't the Premier understand that a loss isn't locked in unless the securities are sold? Nobody's disputing that the value of the Heritage Fund is down on paper, but if that money is invested for the long term in accordance with the intentions of the fund, there will always be gains in the long term. To hear Stelmach tell it, I'd be better off had I not saved a dime over the past few years because the markets have since tanked. What kind of financial literacy is that?

The opposition should have been gnashing their teeth over such an ignorant response, but these are the Alberta Liberals, so they just say, "Oh," and sit back down.


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