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Thursday October 24, 2024

October 24, 2024 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday October 24, 2024

Brief Ray of Sunlight in Canada’s Stormy Economic Sky

June 6, 2024

Canada’s economy feels a lot like a rainy autumn day where, just as the clouds momentarily part to let in a sliver of sunlight, the dark skies quickly swallow it again. The Bank of Canada’s recent interest rate cuts are that fleeting patch of blue—a welcome break for mortgage holders and consumers facing high borrowing costs. But the broader economic forecast remains stormy, with clouds of weak productivity, strained public services, and a widening prosperity gap between Canada and its peers gathering overhead.

The temporary relief from interest rates being lowered offers some households a reprieve, much like the sun warming your face just long enough for you to think, maybe the worst is over. But that moment of optimism is short-lived when you realize the downpour hasn’t stopped—it’s just getting started. Canada’s structural problems—stagnant GDP per capita, high immigration without sufficient infrastructure, and sluggish business investment—continue to drench any hope for sustained economic growth.

News: Bank of Canada cuts its key interest rate by a half-point to 3.75%

March 5, 2024

Despite the IMF projecting 1.3% growth in 2024 and better numbers in 2025, these figures barely keep pace with Canada’s population boom. The pie may grow a little, but the extra mouths at the table are taking bigger bites. Meanwhile, across the border, America’s economic engine is humming at full throttle, widening the wealth gap between the two countries to levels unseen in decades. Australia and the UK are pulling ahead, too, leaving Canadians wondering how a once-wealthy nation ended up falling behind even in the pack of its Commonwealth cousins.

To some, it feels like Canada’s economic ship is springing leaks faster than we can plug them, weighed down by interprovincial trade barriers, rising taxes, and regulatory red tape. Meanwhile, businesses are keeping billions in capital idle like passengers clutching lifeboats, unwilling to dive in and invest under such uncertain conditions. And the government, focused more on redistributing wealth than creating it, continues to prioritize social spending over pro-growth policies that could set the country on a more prosperous course.

Analysis: Tepid economic growth, combined with a population boom, has hit Canada’s standing among rich countries

May 2, 2020

The sun may peek out from time to time—like this rate cut—but until deeper reforms address the underlying structural problems, it’s clear we are sailing into rough waters. Canada can’t simply count on the clouds to part. The country must act decisively to boost productivity, ease immigration pressures, and attract investment—before we find ourselves stranded in an economic fog we can’t navigate out of.

Because if there’s one thing worse than a storm, it’s getting so used to the clouds that you forget what clear skies look like. (AI)

Catch the animated version of this cartoon posted as a note to my *all new* and experimental Substack Page. It’s at the early experimental stage (at the time of it’s posting,) and presented in the form of notes as I figure out how to integrate it into my daily routine. Find out what’s swirling in my head as I come up with my ideas. It’s free and will continue to be, as will this carefully curated WordPress website which I’ve maintained obediently since 2012… until the traditional structure that has sustained me a livelihood collapses on top of me as it has for so many of my peers. Please take a look, and if you want to continue following/subscribe to my work, please subscribe, and thank you!

In Canada, today’s interest rate cut from the Bank of Canada—a pretty significant half-point reduction—offers a glimmer of hope amid an otherwise turbulent economic landscape. A family straddles on the roof of their home during a flood, taking respite from the storm as Tiff Macklem unveils the “Rate Cut” document. Around them swirls the rising tides and debris of debt, wreckage of lost innovation, stagnant wages, and soaring living costs, a stark reminder that this relief is temporary and the underlying issues still loom ominously beneath the surface.

A curious irony arises when we look southward to the United States. Despite robust economic growth, many Americans grapple with a sense of pessimism, fixating on income inequality, political instability, and inflation. Former President Trump’s exaggerated claims (aka lies) about the economy being in disarray only serve to amplify this narrative.

In contrast, many Canadians cling to the comforting illusion that our economy is stable, even as GDP per capita declines and our living standards lag behind not only the U.S. but also countries like Australia and the UK. This disconnect underscores a crucial point: Canadians may be too quick to celebrate fleeting moments of good news, such as interest rate cuts, while neglecting the mounting economic challenges that surround them.

Before dismissing this perspective as aligning with Pierre Poilievre’s “everything seems broken in Canada” rhetoric, it’s essential to recognize that the economy has been trending downward for decades. Federal fiscal policies—whether under Conservative, Liberal, or Liberal/NDP leadership—have all played a role in shaping the current disappointing state of the Canadian economy compared to similarly sized nations. Sloganeering will not lift Canada out of its economic malaise, nor will a complacent status quo. Forget the adversarial bunk that makes working across the aisle to get things done for the benefit of all in the long term. Setting aside partisan politics, we must demand real solutions to steer Canada back on the right path.

Friday October 28, 2022

October 28, 2022 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday October 28, 2022

Freeland warns of ‘difficult days ahead’ as Canada’s economy shows sign of weakness

Finance Minister Chrystia Freeland issued a warning to Canadians Wednesday — the coming months won’t be pretty as rising interest rates slow a once red-hot economy and force some people out of their jobs.

June 17, 2022

The Bank of Canada’s recent rate hikes to tame sky-high inflation will increase borrowing costs for businesses and consumers alike, which will send shockwaves throughout the economy, Freeland said.

Speaking at an auto industry conference in Windsor, Ont., Freeland said she would be honest with Canadians about the roadblocks that lie ahead and the threat of higher unemployment and mortgage rates — developments that could hurt many households.

“Our economy will slow. There will be people whose mortgage rates will rise. Businesses will no longer be booming. Our unemployment rate will no longer be at its record low. That’s going to be the case in Canada. That will be the case in the U.S. and that will be the case in economies big and small around the world,” Freeland said.

“There are still some difficult days ahead for Canada’s economy. To say otherwise would be misleading.”

January 27, 2022

The Bank of Canada — like other central banks, including the U.S. Federal Reserve — has been aggressively raising rates this year to establish price stability and achieve its 2 per cent inflation target.

With inflation so sticky, economists are expecting more rate hikes to reduce demand and cool the economy. That could prompt a recession sometime in 2023.

While inflation has slowed somewhat in recent months as energy prices have stabilized, Freeland said the government will not be able to help everyone ride the inflationary wave.

“We cannot compensate every single Canadian for all of the costs of inflation driven by a global pandemic and Putin’s invasion of Ukraine,” Freeland said.

But she promised relief for the poorest Canadians who are most vulnerable to sudden spikes in the cost of food and rent.

June 22, 2021

During question period in the House of Commons on Wednesday, Conservative Party leader Pierre Poilievre said the federal Liberal government’s “half-trillion dollar inflationary deficits” over the past two fiscal years are responsible for the higher costs.

Pointing to the planned low-income supports, Poilievre said the prime minister has done “nothing for the vast majority of struggling families.”

“Even the small minority who do [receive the supports] will find it gobbled up by increased inflation,” he said, citing a recent RBC Royal Bank report that found the average family will lose $3,000 in purchasing power this year as a result of higher prices and interest rates.

He called on the government to scrap planned hikes to the federal carbon levy — something Poilievre has called a “triple, triple, triple tax” that will drive food prices higher because it will impose added costs on all parts of the supply chain.

August 12, 2022

In the face of Tory criticism, Freeland said the federal government will continue to tighten its belt in the coming months so that Ottawa doesn’t inadvertently drive inflation.

“Canadians are cutting back on costs and so too is our government. That’s our part … to not make inflation worse and more enduring,” she said.

Asked later by reporters if the government has more inflation relief planned, Freeland said now is a time for fiscal restraint. (CBC)

Friday December 11, 2015

December 10, 2015 by Graeme MacKay

By Graeme MacKay, Editorial Cartoonist, The Hamilton Spectator – Friday December 11, 2015

Payday loan industry comes under microscope

The province is moving to protect vulnerable people from cash stores and collections agencies — but a local councillor calls the efforts “half-hearted.”

If passed, new legislation by the Ontario government promises to increase protections under the Payday Loans Act, Consumer Protection Act and the Collection and Debt Settlement Services Act. The aim is to provide safeguards such as a cap on the rates charged by cheque-cashing services, a grace period for repayment for customers of rent-to-own services and reasonable costs for optional insurance on instalment loans.

It would also offer longer repayment periods for repeat payday loan borrowers, and expanded rules against unfair collection practices from businesses that purchase and collect overdue debts.

But Ward 3 Coun. Matthew Green says the legislation “doesn’t go nearly far enough in terms of really tackling the core elements and the predatory nature of this industry.”

There are 813 licensed payday lenders in Ontario — more than there are McDonalds restaurants. Roughly 35 of those are in Hamilton, according to the ministry’s online database.

For starters, Green wants to see the “ridiculous” interest rates on payday loans slashed.

Green put forward a motion this summer to limit and regulate these stores at a municipal level, which would have made Hamilton the first city in the province to do so.

Staff is now looking into the feasibility of that.

In the meantime, he and a working group made up of local agencies, including credit unions, are actively researching a model for a market alternative low-cost loan service.

Tom Cooper, director of Hamilton’s Roundtable for Poverty Reduction (HRPR), says he’d like to see provincial legislation that enables municipalities to license lenders at the local level.

He agrees there’s more work to do on this.

“At the end of the day … these services are predatory by nature and they’ll continue to take advantage of people who run into desperate financial situations,” he says.

According to a survey of 500 Ontario payday loan users earlier this year, more than half of the borrowers surveyed said they are using the service for recurring expenses, not crisis situations.

Of those surveyed, 27 per cent reported making less than $30,000 a year. (Source: Hamilton Spectator)

Friday September 11, 2015

September 10, 2015 by Graeme MacKay

By Graeme MacKay, Editorial Cartoonist, The Hamilton Spectator – Friday September 11, 2015

Hamilton looks to crack down on payday loan industry

Hamilton councillors unanimously approved a motion seeking from the province the ability to limit the locations of payday loan and cheque cashing outlets, while also strengthening the Payday Loans Act.

“This is predatory economic violence,” said Ward 3 councillor Matthew Green, who introduced the motion at council’s Sept. 9 meeting. “(They) are targeting our most vulnerable, indebted people. It’s legalized loan sharking.”
Green’s motion targeting the industry, which was revealed earlier this summer, includes forcing these businesses to post their rates on their walls, provide information about debt counselling, and having Hamilton staff identify all the payday loan businesses in the city.

Also contained in the motion was a request to the province to toughen the Payday Loans Act.

The act regulates the industry allowing outlets to charge $21 for every $100 people borrow. Green says desperate people use these businesses, and they end up having to go to another payday loans outlet to pay the loan of the first one.

“This is usury, this is criminal,” said Green. “I’d love to see (the places) outlawed.”

Tom Cooper, director of the Hamilton Roundtable for Poverty Reduction, says municipalities need the power to regulate a business that is taking advantage of vulnerable people.

“We deem the industry as predatory in nature because its practices and slick marketing campaigns lure vulnerable consumers into transactions where there is nowhere else to turn in a financial crisis,” said Cooper.

Based on the payday industry’s own information, for every new customer loan, 15 are repeats, said Cooper.

Stan Keyes, president of the Canadian Payday Loan Association, headquartered in Hamilton, stated in an email letter sent to councillors Sept. 8 that “council should not pass bylaws to ban industries providing services that consumers demand.”

He said the province does enforce the existing regulations, including levying fines, and revoking licenses “which they have done with non-compliant lenders.”

Keyes, a former Liberal MP, stated the industry is already heavily regulated since 2009. In 2012 there were 42 outlets in Hamilton, now there are 34. (Source: Hamilton Spectator)