2020-04-18

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Saturday April 18, 2020

Canada to keep border restrictions with U.S. for long time: Trudeau

Canada’s border restrictions with the United States will remain in place “for a significant time” as the two nations fight the coronavirus outbreak, Prime Minister Justin Trudeau said on Thursday.

Washington and Ottawa agreed last month to clamp down on non-essential travel while allowing massive trade flows to continue across their long shared frontier.

“There’s a recognition that as we move forward there will be special thought given to this relationship. But at the same time we know that there is a significant amount of time, still, before we can talk about loosening such restrictions,” Trudeau told a daily briefing.

U.S. President Donald Trump on Wednesday told reporters the two nations were “doing well” and said, “It will be one of the early borders to be released.”

The two nations’ economies are highly integrated, and allowing trade to continue avoided major problems for the auto sector as well as the transportation of food and medicines.

Although Trudeau’s government has enjoyed good relations with the Trump administration over the last 18 months, tensions still remain. Last month, Ottawa slammed a U.S. proposal to deploy troops along the border to fight the spread of the novel coronavirus, prompting Washington to drop the plan.

A total of 1,048 people in Canada had died from the coronavirus by 11 a.m. EDT (1500 GMT), slightly less than 10% higher than the death toll a day ago, official data posted by the public health agency showed.

The total number of those diagnosed with the coronavirus had climbed to 28,899. The respective figures at the same time on Wednesday were 954 deaths and 27,540 positive diagnoses.

Medical officials now expect the death toll to be between 1,200 and 1,620 by April 21, Theresa Tam, the chief public health officer, told a briefing.

She repeated comments she made on Wednesday about being cautiously optimistic the outbreak could be slowing down. (The Province) https://theprovince.com/pmn/business-pmn/canada-to-keep-border-restrictions-with-u-s-for-long-time-trudeau/wcm/b18fc5f7-80f0-4379-b791-db33ef0a0760

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It’s printing money out of thin air to fund an estimated $200-billion-plus spending-spree intended to keep the nation’s economy alive.

The best name for this historic and, frankly, alarming intervention is quantitative easing, and every Canadian should pay close attention to what amounts to a roll of the dice by their central bank.

That’s because while quantitative easing is justified under the circumstances, it’s unconventional, controversial and highly risky. Our 85-year-old central bank has never tried it before, and no wonder. It may cure what’s ailing the Canadian economy today only to infect it with new illnesses a year from now.

It all began at the end of March when the Bank of Canada announced it would spend at least $5 billion a week in the coming months to buy Government of Canada bonds on the open market. In other words, it would buy up much of the federal government’s debt.

That action was meant to ease the pressure on the federal government’s growing debt burden while injecting badly-needed cash into an economy ravaged by the COVID-19 pandemic.

And that part of quantitative easing makes sense because it works. The mind-bending part of it comes with the realization that all these billions of dollars are being created digitally.

It’s as if Bank of Canada Governor Stephen Poloz had donned a magician’s cape, put his hand into a top hat and — poof — the Canadian economy had what it needed to buy its way out of this crisis.

What Poloz did was correct, according to experts such as former Bank of Canada governor David Dodge. At the time of Poloz’s intervention, the rapid spread of COVID-19 across Canada had already triggered government-imposed business shutdowns, huge job losses and what could become the nation’s sharpest economic downturn ever.

The federal government was mobilizing its fiscal forces to prop up revenue-starved businesses and extend a financial lifeline to the newly unemployed, whose numbers could reach 2.8 million this month.

Other governments around the world were doing the same. And other central banks, most notably in the United States, the United Kingdom and the European Union, were also playing their part by making new money to ease the debt loads of their governments.

The Bank of Canada doubled down on that strategy this week when it expanded its bond-buying program to include purchases on the open market of the debts of provincial governments and corporations. They need help, too, but it will mean pulling another $50 billion in new, digitally-created money out of Poloz’s magic hat.

The sheer magnitude of all this newly manufactured cash is worrisome. If countries can get everything they want by simply printing more money, why doesn’t everyone do it all the time?

The answer is the world’s financial markets wouldn’t let them get away with it. The U.S. Fed and the European Central Bank are considered to be big and powerful enough to do what they deem necessary.

Canada, with its much smaller economy, probably won’t be cut the same slack. The value of its currency may slide if quantitative easing lasts too long. Inflation could rise to unmanageable levels even as millions of Canadians remain unemployed and the nation’s economic engines are struggling to fire on all cylinders.

This spring, the Bank of Canada had no choice but to experiment with quantitative easing. In short order, it must provide Canadians with a plan and timetable for getting out of it.

Canada, with its much smaller economy, probably won’t be cut the same slack. The value of its currency may slide if quantitative easing lasts too long. Inflation could rise to unmanageable levels even as millions of Canadians remain unemployed and the nation’s economic engines are struggling to fire on all cylinders.

This spring, the Bank of Canada had no choice but to experiment with quantitative easing. In short order, it must provide Canadians with a plan and timetable for getting out of it. (Hamilton Spectator Editorial) https://www.thespec.com/opinion/editorials/2020/04/17/editorial-the-bank-of-canada-rolls-the-dice.html?utm_source=facebook&source=the%20hamilton%20spectator&utm_medium=SocialMedia&utm_campaign=&utm_campaign_id=&utm_content=

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