Economics
Bubble, Bubble…Canadian Debt Trouble
By Robert Presser on February 11, 2010
Canadians can rarely feel smug when comparing themselves to their US
neighbors, but when it comes to our banking sector our airs of
superiority are justified. While the Obama administration contemplates
an overhaul of financial industry regulation and punitive taxation of
banking executives’ bonuses, Prime Minister Harper announced in Davos
that Canada has no intention of “micro-managing” Canada’s banks.
Copenhague: Une grande douleur pour peu de gain
By Robert Presser on January 7, 2010
Plutôt que d’analyser tous les détails de l’accord, l’objectif de cet article sera d’adopter une perspective à plus long terme fondée sur l’hypothèse que l’accord non-contraignant conclu à Copenhague doit être transformé en un accord contraignant et vérifiable pour la réduction des émissions à long terme. L’entente conclue entre les États-Unis, la Chine, l’Inde, le Brésil et l’Afrique du Sud contient des engagements pour que la réduction des émissions limite le réchauffement climatique à un maximum de 2 degrés Celsius, mais que veut dire cela en termes de vraies cibles ?
Do you know who the real bankers are?
By Robert Presser on December 3, 2009
This year has been a seesaw for the Canadian Dollar. Plunging to the 80 cent USD range during the onset of financial crisis of 2008 and retesting those lows in March of this year, our currency has recovered to trade in a relatively tight range of 92 to 97 cents US over the past two months. The recovery in our dollar has paralleled the recovery in stock markets and commodities, especially oil. Sadly, Canadians don’t look at the broader currency picture – while our Loonie is stronger against the US greenback, the USD continues to fall to ever deeper lows against a broader index of international currencies. The US is pursuing a weak dollar policy despite public statements to the contrary and Canada is along for the ride.
Canada at the G20: power, but do we have a plan?
By Robert Presser on November 4, 2009
In 1976, French President Valery Giscard d’Estaing decided that it would be a good idea to invite the leaders of the major western economic powers (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States of America) to an informal summit at a chateau outside of Paris to discuss their current common economic problems, giving birth to the G7. Later expanded to include Russia (G8) this intimate grouping of world powers dominated the international economic and trade agenda until the Asian currency crisis of 1997 had ripple effects around the world, making a broader consultative forum a priority to encourage cooperation with the developing world. That body was christened the G20, and today it represents nearly 85% of worldwide economic output (GDP) though 90% of the world’s countries are not at the table.
Are we as good as we think we are?
By Robert Presser on October 1, 2009
According to the latest statistical data, the Canadian recession ended
sometime over the summer and we will see slow growth in the third and
fourth quarters of 2009. While this is likely to be a jobless recovery
until sometime in 2010, Canadians believe that our conservative banking
culture coupled with greater financial market regulation spared us the
mortgage melt-down and destruction of consumer wealth that devastated
other first world economies. While that may be the case, it does not
mean that Canada is perfect on all major economic and government policy
issues. This article takes a look at some major issues facing western
economies and what international organizations like the World Bank have
to say about Canada’s success in managing them.
Lack of regulation you say?
By Mischa Popoff on October 1, 2009
Some claim the global financial crisis was caused by a lack of
regulation. But it was overregulation and community activism that
caused the American mortgage crisis which precipitated the global
financial meltdown.
The American mortgage industry is overseen by Freddie Mac and Fannie
Mae. They are roughly equivalent to our Canada Mortgage and Housing
Corporation, the big difference being that unlike CMHC they participate
directly in the mortgage market. Now hold that thought…
An older society does not mean a poorer one!
By Vincent Geloso on September 2, 2009
Economists, pundits and public policy makers have been trying to convince us for sometime now that the economy will soon face a very difficult challenge: that of an aging population. The concern is two-fold. As Canada’s new grey-haired population retires, the labour force will shrink thus slowing down economic growth. A recent study by the Caisses Desjardins in Quebec declared that the “growth of potential GDP (the economy’s long-term average growth rate) would drop substantially by 2021”. The problems is that the rising share of Canadians above 65 years old who consume services will rise from 13.7% in 2006 to 23.4% in 2031 according to Statistics Canada. Some provinces like Quebec could get close to 30%. Thus there will be more elders for every worker left. Globe & Mail columnist Jeffrey Simpson concluded from similar studies that “government finances will weaken: few tax revenues, more spending, chronic deficits, more debt. Health-care and education budgets will be squeezed”.
Statistical recovery masks suffering millions
By Robert Presser on August 6, 2009
One could be forgiven for being optimistic these days. The stock markets are up 30% from their lows of March 2009, even taking into account the recent correction; housing starts and new home purchases showed surprising strength in Canada in June; job losses in the US and Canada seem to be slowing; lower mortgage rates and gas prices have freed up cash in consumer’s pockets and allowed more people to keep their homes; auto sales seem to be bottoming out
No value in paper-based organics
By Mischa Popoff on August 6, 2009
I’m the first and only organic inspector to blow the whistle on the organic industry. My story was first covered by The Western Producer and then picked up by the CBC, CTV, Maclean’s and Barron’s. I paid a high price for going public, but it was the right thing to do.
Now comes news about a study by the London School of Hygiene and Tropical Medicine saying organic food is no more nutritious than regular food. The immediate response from top representatives of the organic industry has been that they never said organic food was more nutritious, only that it contains fewer harmful chemicals.
The Unintended Consequences of Buy American
By Robert Presser on July 2, 2009
Last October this column reviewed the possibility of a trade war between the US and Canada if Obama were to take the White House. While the exact form of the dispute was not known at the time, some form of economic nationalism was inevitable as the US rustbelt demanded payback for delivering the electoral votes required to secure a decisive victory in the Electoral College. Congress crafted a stimulus package designed to create US jobs related to infrastructure and manufacturing, and in their expedient haste to curry political favour with their constituents they created the Buy American (BA) provision that related to municipal investment projects...
Stimulate this! (DATE DE PARUTION 5 FÉVRIER 2009)
By Beryl Wajsman on June 18, 2009
The current frenzy of economic stimulus packages sweeping around us like so many forest fires will not — and more importantly, should not — work. The reasons are threefold. First, they are stimulating the perpetuation of a false economy that has caused nightmares for tens of millions. Second, the packages are based on outdated Depression-era models without taking into consideration today’s much different realities. And third, they provide insufficient protection to get people through the tough three to seven years that are to come...
Is debt the new slavery? (DATE DE PARUTION 15 MAI 2008)
By Anthony Philbin on June 18, 2009
The principles by which all western financial institutions are currently operated permit them to loan vast sums of money that they don’tactually have. This disconnect between reality and currency is a necessary evil if you posit that a growing economy is a healthy economy, but when the rules that control just how much the banks can pull out of their magic hats become lax or under-applied, there are some very real implications both for the health of society and the freedom of its borrowers...
Government’s misguided attempt to end the economic cycle (DATE DE PARUTION 13 NOVEMBRE 2008)
By Robert Presser on June 18, 2009
Late last week, General Motors and Ford announced a combined third quarter loss of $7.2 billion US. In other years, this would be considered catastrophic as an annual loss figure, but in the current economic context it was expected since new car purchasing in the US has fallen to a 25 year low with no sign of immediate recovery. GM has put its potential acquisition of Chrysler on hold and now all three major US automakers are appealing to the US government for $25 billion in low interest loans on top of the $25 billion handout they were previously offered for retooling their product lines...
La relance économique ne passe pas par l’État (DATE DE PARUTION 18 DÉCEMBRE 2008)
By Jean-François Minardi on June 18, 2009
Le modèle québécois donne depuis un certain temps déjà des signes d’essoufflement. Ces problèmes sont aujourd’hui comme hier : un État trop interventionniste, une fiscalité trop lourde et une législation du travail qui fait obstacle à l’embauche de travailleurs jeunes et talentueux...
The Next Phase of the Banking Crisis
By Robert Presser on May 28, 2009
Relaxing the mark-to-market rules means we will never know what the banks are really worth
The Federal Reserve’s stress test results are in and to no one’s surprise, all the big US Bank Holding Corporations (BHCs) passed. Getting a passing grade in the stress test, more formally known as the Supervisory Capital Assessment Program (SCAP) was a lot like getting a passing grade in gym class – just because everyone gets by, this does not mean that all the subjects are equally capable and robust. The SCAP report indicates that 10 of the 19 largest US banks should collectively raise an additional $75 billion USD in tier-one capital in order to bolster their reserves to face a protracted recession. The report outlines the various types of assets held by the banks, including toxic assets like securitized mortgages, commercial loans and mortgages originated in-house, consumer loans and revolving credit card debt.
China Targets Canada!
By Robert Presser on May 6, 2009
International Trade Minister Stockwell Day has returned from a goodwill trade tour of China making all the right gestures and remarks; a commitment to fight protectionism, two new Canadian trade offices to promote our goods and services in China, and kind words for Chinese officials in an effort to improve bilateral relations. There is even talk of a visit by Prime Minister Harper at a later date, a change of heart from his failure to attend the 2008 Olympics...
Stressing the banks!
By Robert Presser on March 19, 2009
Investors around the world could be forgiven for expressing some optimism given the stock market results for the week ending on March 13th 2009: US markets posted the biggest gains in twenty years, with the Dow up over 9%, with similar gains on the broader S&P 500 index and the Canadian TSX. One of the catalysts for this surge of optimism was an announcement by Citigroup that after receiving $45 billion in government assistance, the bank was able to post an $8 billion dollar profit in their current fiscal quarter...
Surfing the Kondratieff Economic Long Wave
By Robert Presser on February 26, 2009
As the world collectively suffers the hangover of economic excesses propagated by excessive debt, greed and deregulation, many wonder if all or any of this could have been avoided. Fans of Nikolai Kondratieff will tell you that this era of falling prices, deleveraging of excessive debt and increased unemployment was both predictable and unavoidable. We are suffering through the Winter, or final season of an economic long wave that lasts from forty to sixty years, and that we can expect that it will last for years to come...
Quel avenir pour l’agriculture québécoise ?
By Jean-François Minardi on February 26, 2009
L’agriculture québécoise est étouffée par un certain nombre de politiques publiques mal conçues qui ne servent en définitive ni les intérêts des agriculteurs, ni celui des consommateurs, ni celui des contribuables. ..
Madoff’s Montreal effect
By Jessica Murphy on February 26, 2009
Among the victims of Bernie Madoff's alleged Ponzi scheme were a number of prominent Canadians, including former Westmount resident Phil Robinson.
Robinson, part-owner of the Gray Rocks and Mont Blanc ski resorts, lost about $4 million to the accused Wall Street swindler, according to a report by The Globe and Mail newspaper. His extended family lost upwards of $13 million...
Les « plans de relance » ne sont pas le bon remède
By Kherridin et Veldhuis on February 5, 2009
La plupart des groupes d’intérêts, des économistes, des politiciens et des journalistes appuient des hausses massives de dépenses publiques afin de « stimuler » l’économie. Le gouvernement du Québec ne fait pas exception, le premier ministre Jean Charest préconisant des dépenses accrues pour les infrastructures et la formation des travailleurs et s’opposant à des baisses d’impôts.,,
Secteur automobile : une aide éhontée
By Vincent Geloso on January 15, 2009
Depuis plusieurs mois, les accusations à l’effet que le marché serait incapable de se corriger seul se multiplient et appellent à l’intervention massive de l’État. L’accusation est ridicule puisque, depuis des mois, les gouvernements multiplient les interventions qui empêchent le marché de se corriger...
Quebec at the crossroads: the recession as Charest’s Odyssey
By Robert Presser on January 15, 2009
Many Quebeckers remain fixated on the economic problems in the United States and their spillover effect into Canada, notably the potential bankruptcy of one or more of the Big Three US automakers and the devastation this would wreak on central Canadian manufacturing...
La relance économique ne passe pas par l`État
By Jean-François Minardi on December 18, 2008
Le modèle québécois donne depuis un certain temps déjà des signes d’essoufflement. Ces problèmes sont aujourd’hui comme hier : un État trop interventionniste, une fiscalité trop lourde et une législation du travail qui fait obstacle à l’embauche de travailleurs jeunes et talentueux...
Who’s afraid of the big bad debt?
By Robert Presser on November 27, 2008
What a difference two weeks makes; our federal government has moved from calling a budget deficit in fiscal 2009-2010 “irresponsible” to “likely”. Mr. Harper and Mr. Flaherty divulged ever more pessimistic prognostications for our economic future in order to soften up the public for what is likely going to happen whether we plan for it or not: a couple of years of federal deficits...
Government’s misguided attempt
By Robert Presser on November 13, 2008
Late last week, General Motors and Ford announced a combined third quarter loss of $7.2 billion US. In other years, this would be considered catastrophic as an annual loss figure, but in the current economic context..
The Cascading Crisis of Confidence
By Robert Presser on October 30, 2008
There is not enough money in the world to give everyone who is suffering through hard times some kind of bailout. Be they individuals, small businesses or corporations, some will have to be allowed to fail...
Bailout robbery
By Anthony Philbin on October 30, 2008
U.S. Treasury Secretary Paulson hasn’t clearly explained why the U.S. needs to bail out the Wall Street millionaires, and he has even gone on record saying that the $700 billion figure in the bailout package is completely arbitrary. He has further admitted that the $700 billion number is “not based on any particular data point”. In other words he doesn’t have a clue...
À qui appartient l’or bleu ?
By Jean-François Minardi on October 16, 2008
La Commission des transports et de l’environnement de l’Assemblée Nationale du Québec vient de tenir des auditions publiques sur le projet de loi 92. Déposé au mois de juin dernier, ce projet de loi déclare, entre autres choses, que « …. l’eau de surface et l’eau souterraine, dans leur état naturel, sont des ressources qui font partie du patrimoine commun de la nation québécoise et qui ne peuvent être appropriées, sauf dans les conditions définies par la loi, dont le Code civil. »...