Economy

Tuesday June 21, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday June 21, 2022

Freeland defends budget after Scotiabank accuses feds of ‘doing nothing’ on inflation

A cut in planned government spending could help tame rampant inflation and reduce pressure on the Bank of Canada to hike interest rates, according to a report from Scotiabank.

June 17, 2022

The report from the bank’s chief economist Jean-Francois Perrault and modelling director René Lalonde claims that Canadian fiscal policymakers are “doing nothing of any significance to slow inflation at the moment.”

The authors argue that cutting government spending will take some of the burden to cool inflation off of the Bank of Canada and the private sector.

Scotiabank’s analysis came as Canada’s Deputy Prime Minister and Minister of Finance Chrystia Freeland is met with the head of the U.S. Treasury Janet Yellen in Toronto on Monday to discuss cooperation between the nations and the global inflation concerns.

January 27, 2022

The report cites the Bank of Canada’s renewed mandate from December of last year, which said tackling inflation is a “joint responsibility” between the feds and the central bank.

While the war in Ukraine and ongoing supply chain pains tied to the COVID-19 recovery have been cited as major causes of higher-than-expected inflation so far in 2022, Perrault told Global News in an interview Monday that prices were on the rise before Russia’s invasion.

That was tied to stimulating fiscal policies from governments around the world, which sought to protect households from the pandemic’s downturns, he said.

Though he said efforts to trim the government’s deficit in the spring’s federal budget were “going in the right direction,” Perrault said the latest Liberal spending plan is still contributing to the economy and fuelling demand.

May 10, 2022

“In normal circumstances, that’s fine. The challenge in the current circumstance is we have inflation that is a huge issue from the perspective of Canadians. It’s well outside what the Bank of Canada wants. It’s exceptional, there’s no question about it,” he said.

In this context, he said he believes the Bank of Canada “could benefit from a little help” in the form of cooling government spending.

Scotiabank projects that if the feds plan to increase their spending 2.5 per cent by the end of 2024, instead of today’s planned 4.8 per cent increase, the Bank of Canada could top out its interest rate hike cycle at 2.25 per cent, 75 basis points lower than where Scotiabank forecasts rates will hit by the end of this year.

But Freeland, speaking alongside Yellen on Monday afternoon, said she felt the feds’ latest budget does go far enough to limit government spending.

She said the rate of fiscal consolidation — the rate at which Canada is paying down its debts — is tied for the fastest in the G7, on par with the United States.

While Freeland reiterated that tamping down inflation is “chiefly the job” of the Bank of Canada, she said her 2022 spending plan was already a “very fiscally responsible budget.” (Global News) 

June 14, 2022

Meanwhile, Mr. Poilievre made headlines when he praised the controversial digital-money system. It was the answer for Canadians who wanted to “opt out of inflation,” he claimed. After all, he was a bitcoin investor himself.

The presumptive favourite to win the CPC leadership has been much quieter about cryptocurrency these days.

Perhaps it’s because the crypto world is imploding, just as Warren Buffett and his partner, Charlie Munger, had suggested it might. Two of the history’s greatest and most profitable investors have been down on bitcoin and the cryptocurrency industry almost from its inception. Mr. Buffett famously said he wouldn’t pay US$25 for all the bitcoin in the world. Mr. Munger was even more condemning, saying that in his life he tried to avoid doing anything that was evil, stupid and made him look bad in comparison to others: “Bitcoin does all three,” he said. (Continued: The Globe & Mail) 

 

Wednesday May 10, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Wednesday May 10, 2022

As cost of living soars, affordability becomes top Ontario election issue

August 14, 2014

In every Ontario election poll that’s publicly available, the number one concern of voters is the rising cost of living. 

Affordability has rocketed past the perennial top issues of health — even after two years of a global pandemic — and jobs, with the unemployment rate at record lows. 

While the Ontario party leaders are often talking on the campaign trail about making life more affordable, it’s a wonder that they’re not hammering the issue even harder, given how strongly it’s resonating with voters.

“The smart politicians won’t just talk about [the cost of living] as an issue, they will understand it’s a character test,” said Greg Lyle, a veteran pollster and president of Innovative Research Group.

Thursday January 27, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday January 27, 2022

Despite record high inflation, Bank of Canada holds interest rate steady — for now

May 2, 2020

The Bank of Canada has decided not to raise its benchmark interest rate just yet.

Like many other central banks around the world, the bank slashed its core lending rate — known as the target for the overnight rate — at the onset of the pandemic in March 2020, to ensure that consumers and businesses had access to cheap lending in order to keep the economy afloat.

But two years of rock-bottom lending rates have been a major contributor to inflation, which rose to almost five per cent in Canada last month — its highest level in more than 30 years.

Friday April 30, 2021

April 30, 2021

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday April 30, 2021

Cabinet’s ability to award Buy American exemptions ‘strenuously limited,’ Biden says

President Joe Biden set some Canadian pulses racing again Wednesday with more tough Buy American talk, telling Congress he has “strenuously limited” cabinet members from granting exemptions to the 88-year-old protectionist doctrine. 

February 23, 2021

In the same breath, however, the speech marking Biden’s first 100 days as commander-in-chief offered a measure of comfort by suggesting Buy American would not offend the terms of trade deals like the U.S.-Mexico-Canada Agreement. 

“American tax dollars are going to be used to buy American products, made in America, to create American jobs. That’s the way it’s supposed to be, and it will be in this administration,” Biden declared. 

The notion of keeping U.S. government spending on American soil, a philosophy that dates back to 1933, will be the “one principle” guiding the $2.2-trillion infrastructure package dubbed the American Jobs Plan, he added. 

“I might note, parenthetically, that does not violate any trade agreement. It’s been the law since the ’30s,” Biden said through sustained applause in the House chamber, where COVID-19 allowed only a relative handful of lawmakers to attend. 

September 17, 2020

“I’ve made it clear to all my cabinet people: their ability to give exemptions has been strenuously limited. It will be American products.”

Much of what Biden said on the subject, including mention of trade agreements and cabinet members, did not appear in the prepared version of his remarks distributed to reporters before the speech. 

And it offered little solace or clarity for Canadian stakeholders still smarting from the punishing steel and aluminum tariffs imposed by Biden’s stridently protectionist predecessor, Donald Trump. 

“Those policies continue to concern us — ‘Made in America’ failed to embrace the integrated nature that we have in the steel business,” said Catherine Cobden, head of the Canadian Steel Producers Association. 

“Protectionism between neighbours and allies hurts everyone. We’re really hopeful that that’s not the way this plays out.”

The picture is likely to become more clear by midsummer, when an internal review of the existing rules — including how domestic content is defined and whether information and communication technology should be covered — is due. (Canadian Press) 

 

Thursday November 5, 2020

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday November 5, 2020

Doug Ford sold on new rating system, health experts not so much

Ontario’s new five-stage rating system for moving regions into and out of various pandemic restrictions is good news, according to many businesses. But it’s bad news according to some health authorities.

May 29, 2020

Perhaps both these things are true and the new system is good for businesses hanging on by their fingernails, and bad for others who think health outcomes are the only things that matters. 

The government is wrestling furiously with finding the right balance between efforts to flatten the curve and ways to help struggling businesses stay alive. It’s possible there is no perfect balance, and no satisfying everyone. 

According to some voices from the business sector, the colour-coded stage (green/good, yellow/less good, orange/worrisome, red/partial lockdown) approach, which also comes with specific measures that accompany each stage, will make stability and predictability possible, something that has not been the case so far. So if things are getting bad and the metrics look like they are moving in the wrong direction, businesses and individuals can step up their response before their region moves to the next stage. Or failing that they can foresee what might be coming rather than being in the dark. 

But on the public health side, there are issues. For one thing, the ceiling has been raised. For example, to take steps like closing restaurants, gyms and bars, the region would need to have a positivity of 10 per cent (100 cases per 100,000 people per week). And other factors, such as the health system and local public health authorities at risk of being overwhelmed, would have to be at play as well.

October 28, 2020

But that rate of infection has only happened a couple of times since the pandemic began. Since testing was ramped up in late spring no region has come close to 10 per cent. Doesn’t this suggest that those sorts of closures wouldn’t happen even under the worst case scenario? Has the government taken lockdowns off the table entirely in favour of protecting the battered economy?

Some health experts seem to think so. Dr. Michael Warner, head of critical care at Michael Garron Hospital in Toronto, put it this way in an interview with Torstar’s Bruce Arthur: “It’s like public health is treading water, and the premier is pushing their heads down. It’s government that makes the decisions on public health, and not public health.”

Epidemiologist Dr. Nitin Mohan told Arthur: “They’re relying on people to understand their own risk threshold, and that’s not working well, and what you’re saying now, we’re going to open up, and the perception is things are safe. Essentially, you’re inviting a disaster.”

Dr. Andrew Morris, professor of infectious diseases at University of Toronto was more pointed. “This is going to be very ugly. We’re following the European approach here. The very first question that should be asked is in the presence of ongoing growth, how can you in any way justify loosening measures? That makes absolutely zero sense. The one thing you shouldn’t do when you’ve got a losing strategy is take on a worse strategy. Which is what they’re going to do.”

These are troubling statements. You don’t expect every health expert to be on exactly the same page, but when credible experts are this far removed from government policy, it sounds like there is a central disconnect. 

Yet we are assured the government is making policy decisions based on public health input from its own advisers. How can the experts advising the government and those quoted in the media and elsewhere be so far apart? Or is the government’s approach being driven by business instead of public health? (Hamilton Spectator Editorial)