Economics
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. »...
Saving the bubble…with inflation!
By Robert Presser on October 16, 2008
Those readers old enough to remember the oil shock of the early 1970’s and the resulting surge in inflation across most of the world’s economies will greet with skepticism the notion of inflation as a solution to the international economic crisis. In reality, we are already well on our way to inflation with the injection of trillions of dollars worldwide into the banking system to prevent it from seizing up – every dollar created by central banks to cover massive financial losses on the banks’ balance sheets debases the value of the issuing currency, and that’s the road we’re on...
Northern Exposure: so you think your Canadian bank is safe?
By Robert Presser on October 2, 2008
Much has been written over the past week concerning the US Federal Government’s $700 billion rescue plan for the nation’s financial firms. As of this writing no plan has been passed, but in the meantime the US Federal Reserve and most central banks in the developed world have been flooding the markets with US dollar loans to meet the demand for funds from banking institutions...
The Calm Before the Trade Storm
By Robert Presser on September 18, 2008
This November will mark 20 years since the historic election of 1988, when free trade with the United States dominated the debate. The Conservatives emerged from that election with a reduced minority and proceeded to enact the agreement that had been negotiated with the US...
Getting ready for $200/barrel oil
By Robert Presser on September 4, 2008
Perhaps it seems foolish to suggest that oil will head to $200 US in the wake of a $4 per barrel decline in the price of oil (to $110) on Monday, since Hurricane Gustav caused less damage than expected to offshore oil rigs in the Gulf of Mexico...
Economic disparity: the elephant in the room
By Dr. Roger Gibbins on August 7, 2008
The provincial and territorial leaders chose a festive location for their recent Council of the Federation meeting as Quebec City celebrates its 400th anniversary. Unfortunately, there was nothing festive about the unrelenting bad economic news that confronted the premiers as stocks fell, inflation rose, and the American slump deepened...
We’ll get what we vote for
By Robert Presser on July 10, 2008
Compared to many North American cities, Montreal is an easy place to own a car. Insurance rates are relatively low, our traffic congestion problems, although growing, are not at the levels of New York, Los Angeles, Atlanta or Toronto. The baby boomer generation can remember driving downtown and finding street parking with ease; today, the parking is still available, though we are paying for it at expensive rates...
New tolls proposal could spell disaster
By Isaak Olson on June 26, 2008
On June 16, Montreal’s city council voted overwhelmingly in favor of Mayor Gérald Tremblay’s plan to revitalize the city’s transportation system – a plan that could potentially use region-wide tolls to help fund the $8.1 billion, 20-year project...
NON au catastrophisme climatique
By Nathalie Elgrably-Levy on June 12, 2008
Depuis la signature du protocole de Kyoto, les grand-messes sur le climat se multiplient. Qu’il soit question des conférences de Buenos Aires, Montréal, New-York, Nairobi, Vienne, Bali, Bangkok, ou d'autres, elles invitent les représentants de tous les pays à réfléchir sur la problématique des changements climatiques et à trouver les moyens pour réduire les émissions de gaz à effet de serre (GES)...
Le marché et ses “vertus”
By David Simard on June 12, 2008
Avec la montée de la droite au Québec, les idéologues néolibéraux se font entendre de partout. Si leurs arguments méritent d’être entendus, il faut tout de même veiller à remettre certains pendules à l’heure.Ainsi, s’il est vrai que l’État-providence doit s’adapter aux réalités nouvelles, il ne doit cependant surtout pas disparaître.
La nouvelle prohibition
By Vincent Geloso on May 29, 2008
À la fin du 19ème siècle, alors qu’autour de la prohibition de l’alcool se dresse de véritables mouvements politiques partout en Amérique du Nord, le Québec s’inscrit à contre-courant en votant à deux occasions référendaires contre la prohibition. À cette époque, même l’Église s’opposait à la prohibition prêchant plutôt la modération...
150 000 $ de plus, s.v.p.
By Niels Veldhuis on May 29, 2008
Que diriez-vous si le gouvernement canadien vous faisait parvenir une lettre laissant entendre que vous lui devez 150 000 dollars de plus?..
Is debt the new slavery?
By Anthony Philbin on May 15, 2008
Let’s imagine for a moment that you want to buy a family home. Average price in Canada today: $300,000. You go to a friend and ask them if you can borrow the money, but your friend doesn’t have the $300K—not even close. Despite the fact that they don’t have the money, your friend pulls out some official-looking forms and tells you to sign here, here and here...
Hong Kong sur le Saint-Laurent
By Vincent Geloso on May 15, 2008
Depuis plusieurs années, les voix qui s’opposent à la mondialisation crient que le capitalisme ne conduit à rien de positif. En fait, si l’on doit croire ces mêmes voix, la mondialisation entraînerait un appauvrissement de la population générale pour le seul bénéfice de quelques privilégiés. Ainsi, les riches s’enrichiraient et les pauvres s’appauvriraient...
Globalization and the New Frontier of Emerging Markets
By Albert A. Zbily on May 1, 2008
Ask a risk analyst what they thought of emerging markets five years ago and they would have responded with one word: China. Asking the same question today arouses a different response that encompasses a larger geographical perspective. Emerging market investments are on the rise, and while stalwarts such as China and other Asian countries are getting the lion’s share of the investment dollars, places like Africa are beginning to stand out...
The big muddy
By Robert Elman on May 1, 2008
There was Enron. In 2001 Enron went into bankruptcy, but not before it had claimed the title as America’s most innovative Company, six years running. Enron was instrumental bringing down one of America’s leading accounting firms, Arthur Anderson. Its directors paid millions of dollars in restitution, its CEO was convicted of fraud, along with the CFO, investors lost billions of dollars, and innocent hard working employees, lost their retirement pension, and much of their future...
Réflexions sur les revenus
By Germain Belzile on May 1, 2008
Le temps des impôts approchant à grands pas au Canada, je vous propose un « thought experience » que je mène régulièrement avec mes étudiants, dans un cours d’économie du bien-être et de la taxation...
