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Entry archive:

The digital economy will not power a recovery

ANDREW JACKSON

Economists and pundits are at odds over medium-term prospects for the global economy. Pessimists see stagnant growth, rising inequality and growing unemployment and underemployment, widely held to be responsible for the rise of right-wing populists such as U.S. president-elect Donald Trump.

Meanwhile, techno optimists such as Erik Brynjolfsson and Andrew McAfee, the authors of The Second Machine Age, argue that the digital economy will drive rapid productivity growth and underpin the gradual emergence of a post-scarcity economy capable of providing prosperity for all.

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Canadians about to see yet again that approvals don’t end pipeline battles

Jeffrey Jones

If there’s one thing that’s become clear over the past decade of pipeline battles, it’s that approval doesn’t beget acceptance. Canadians are about to get more proof.

For those executives and politicians with big dreams of sending batches upon batches of heavy Canadian crude oil to the Pacific and onward to Asian markets, that’s good reason to keep any victory dances to a minimum. These fights are far from over.

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A new Cuba has the same old obstacles for Canadian business

IAN McGUGAN

The last of the fatigues-wearing Marxist revolutionaries may finally have shuffled off the stage, but Fidel Castro’s death doesn’t mean Cuba is poised to become a capitalist playground any time soon.

The Cuban leader’s passing has removed only one impediment to doing business in the island’s antiquated economy. Dilapidated infrastructure, from crumbling highways to wonky phone systems, remains an obstacle.

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How political chaos in Italy is affecting global bonds

ERIC REGULY

At some point, the gorgeous, three-decade-long bond rally had to come to a close, since all good things must end. But who would have thought Italy would join Donald Trump as the agent of its destruction.

On the day after the Nov. 8 election, U.S Treasury bonds took their biggest plunge in five years. Until then, bonds had gained 3.8 per cent in the year. In the summer, the yield on benchmark 10-year Treasuries was 1.3 per cent. By Friday, their yield had climbed to 2.38 per cent as investors hammered the sell button. Their fear is that Mr. Trump’s pledge to stimulate the economy with thumping great tax cuts and $1-trillion (U.S.) in infrastructure spending will trigger higher deficits and stoke inflation, and they’re probably right.

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Canada’s next trade pact should focus on Japan and India

BRIAN LEE CROWLEY

Assuming that president-elect Donald Trump follows through on his promise to scuttle the Trans-Pacific Partnership, what should Canada put in its place? Here’s the case for making the emerging Japan-India axis the cornerstone of Canada’s Asia policy.

First the economics. India is Asia’s emerging high-growth economy and population behemoth. China is increasingly yesterday’s story, with its economy losing steam, the looming crisis of an aging population and its Potemkin infrastructure. India under dynamic Prime Minister Narendra Modi, by contrast, is gathering powerful momentum every day. Not only is it the world’s second-most populous country, its economy is going gangbusters (its growth rate is now consistently higher than China’s – and its statistics are more reliable). Its increasing self-confidence and insatiable appetite for investment mean barriers to investment are falling all the time.

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In Britain, a small group of high earners pay most of the tax bill

CARL MORTISHED

There is not much money, so we shall just have to manage as best we can.

That was pretty much the message from Philip Hammond, the new man in charge of the U.K. Treasury, delivering his Autumn budget statement. No one expected good news with Brexit looming in the background (except a few hysterical Europhobic Tory MPs) and he duly obliged with a hideous prognosis of a widening public sector deficit and soaring government borrowing.

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Alberta’s wage-growth problem is dragging down the rest of Canada

DAVID PARKINSON

It’s not quite accurate to say that Canada has an income-growth problem. Alberta has the income-growth problem. Canada has an Alberta problem.

It has been one of the great disappointments of Canada’s ongoing economic recovery that even as the economy has achieved modest growth, wages have been left behind. And the problem has been getting worse rather than better: A Statistics Canada report last week noted that Canadians’ average year-over-year earnings growth has slipped from 2.6 per cent in 2014 to a tepid 1.8 per cent in 2015, to a puny average of 0.4 per cent in the first half of 2016. Its a distressing signal about the health of the labour market and the well-being of Canadian households. But while this trend may pose a national dilemma, it’s far from a national phenomenon.

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Trump’s rejection of TPP could be a gift to Canada

DAVID PARKINSON

As Donald Trump fine-tunes his isolationist trade agenda, maybe Canadians should be thanking him. He may be about to grant Canada a four-year window to build crucial overseas market share while the United States cedes ground on the international playing field.

In a video released Monday, the U.S. president-elect indicated that on “Day One” of his administration he will pull the United States out of the Trans-Pacific Partnership, a trade deal concluded earlier this year among 12 Pacific Rim countries (including Canada and the U.S.) but not yet ratified by U.S. Congress.

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Too early to tell if the Saudis have won this oil price war

ERIC REGULY

Oil prices reached almost $50 (U.S.) a barrel on Tuesday, a gain of more than 10 per cent in the past week, as oil traders bought into the theory that the OPEC free-for-all is about to end. But if OPEC heavyweight Saudi Arabia succeeds in pushing up prices, and they stick at $50-plus levels, will it be a winner or a loser?

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Retailers seek optimistic signs ahead of holiday season

JOHN HEINZL

As U.S. retailers prepare for what could be one of the busiest Thanksgiving shopping weekends in years, Canada would be happy just to snap out of its retail sales funk.

Even with the federal government sending out enhanced Canada Child Benefit cheques during the summer, retail sales were flat in May and slipped on a month-to-month basis in each of June, July and August as debt-strapped consumers tightened their belts.

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On cutting debt, Ontario ought look to Quebec

DAVID PARKINSON

As Ontario inches toward at long last eliminating its deficit, the biggest obstacle it faces in getting there and staying there may be the massive debt it accumulated by, well, running deficits. This conundrum is a reminder that tackling the deficit isn’t enough without a plan to tackle the debt, too – something about which Ontario could take a lesson or two from the country’s fast-reforming debt basket case, Quebec.

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Trump promise of return to the past is a threat to the future

CARL MORTISHED

Coal is a dying industry and Donald Trump’s promise to put miners back to work is incredible. He might as well promise to restore the horse as America’s primary mode of transport and create thousands of jobs for blacksmiths.

For more than two decades since the 1980s coal was the fuel of choice in power stations, accounting for more than 50 per cent of generating fuel until 2005. Over the last decade, it has suffered a dramatic collapse and the U.S. Energy Information Administration (EIA) is forecasting that this year, natural gas will for the first time exceed coal-fired generation, accounting for a third of the power-generation market.

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Canada may be finally seeing a revival of business investment

DAVID PARKINSON

The recent flow of Canadian economic data has had a distinct just-okayness to it, and the September manufacturing statistics were no exception. But hidden in the so-so numbers is a sign that one of the holy grails of a healthy, sustained Canadian economy – the resurgence of business investment, by now near-mythical in its elusiveness – may finally be ready to emerge.

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TPP is dead, so what is Canada’s Plan B for trade?

GLEN HODGSON

The U.S. election results bring additional uncertainty to an already uncertain economy. The need for growth-oriented Canadian economic policy has not gone away; expanded trade and investment access to other markets is a cornerstone of that strategy. Canada has just signed the Comprehensive Economic and Trade Agreement (CETA) with the European Union. But the future of an even bigger agreement – the Trans-Pacific Partnership (TPP), a broad free-trade deal involving 12 Pacific Rim countries – is dead in the United States.

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Trump awakens the bond vigilantes. Is danger ahead?

ERIC REGULY

Beware what you wish for, Mr. Trump.

On Labour Day, Donald Trump, then a long shot for the White House, now president-elect, decried ultralow interest rates. They have created a “false economy,” the Orange One bellowed, and that “at some point, the rates are going to have to change.”

They’re changing, fast, maybe faster than Mr. Trump wants.

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Leaders scramble for window into Trump’s White House

BRIAN MILNER

Coming into the watershed U.S. election, most foreign governments were expecting Hillary Clinton to defeat Donald Trump and continue on roughly the same policy trajectory as the Obama administration. Now, presidents and prime ministers are scrambling for face-time with a victor about whom they know little, beyond his bellicose declarations and intemperate outbursts on the campaign trail.

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New foreign investor policy must continue to measure takeovers by ‘net benefit’ yardstick

ANDREW JACKSON

The federal government heeded the advice of the business-dominated Economic Advisory Council and set out a new welcome mat for foreign investors in the recent Economic Statement. The threshold for review of foreign takeovers of Canadian companies will be raised to $1-billion from $600-million (up from just $369-million in 2015); a new agency, the Invest in Canada Hub, will be set up with a mandate to woo foreign corporations; and reviews of the security implications of foreign takeovers are likely to be limited.

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Canada doesn’t have to love Trump – it just needs to work with him

BRIAN LEE CROWLEY

Repeat after me: President Donald Trump.

That wasn’t so hard, was it? Like it or not, you’re going to be hearing that phrase a lot over the next four years and possibly longer. So let’s move beyond the gnashing of teeth and start thinking about how Canada can turn the arrival of the new administration to its advantage.

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Fed chair’s job complicated by Trump’s victory

DAVID PARKINSON

Of the many adjectives that will be used to describe Donald Trump’s presidency – and we can be sure there will be some colourful ones – one that has emerged even before the shock of his election victory fades is “inflationary.” And that’s the one that has suddenly complicated the job of the Federal Reserve Board, and may eventually put its chair, Janet Yellen, on a collision course with the soon-to-be president.

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Trump presidency will test shared values with Canada, Britain

CARL MORTISHED

Donald Trump promised it would be Brexit but even bigger. And he was right. The pockets of secret Trump supporters duly turned up on the day, just as they did in the U.K., when Britain voted to leave the European Union.

Having won, president-elect Donald Trump finds himself in the same boat as Theresa May, the British Prime Minister. Mr. Trump has to explain what Brexit, or in his case “Make America Great Again,” really means. His policy ideas are a grab bag of hates – he is against immigration, free trade, multinationals that export jobs, expensive health care, Washington bureaucrats and whiny liberals.

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Trump’s economic plan: More mystery than disaster

ERIC REGULY

The markets delivered their opinion on Donald Trump’s probable victory in the U.S. presidential race hours before Hillary Clinton admitted defeat, and it wasn’t pretty. The numbers said the American and global economies were about to enter the House of Pain and stay there.

But shortly before Mr. Trump delivered his victory speech and promised economic stimulation measures, the markets started to recover. A few hours later, the markets, amazingly, won back all their lost ground and then some. In London, the FTSE-100 index closed up 1 per cent. The S&P 500 rose, too, and the euro gave up its early safe-haven gains against the dollar.

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Trump’s win is a worst-case scenario for Canada’s economy

BARRIE McKENNA

Donald Trump’s stunning upset over Hillary Clinton is a worst-case scenario for Canada’s trade-dependent economy.

The New York real estate mogul’s surprise victory unleashed turmoil in global financial markets early Wednesday. The Canadian dollar fell by about a cent against the U.S. dollar. The Mexican peso plunged by more than 13 per cent. Investors fled for the relative safety of U.S. government bonds and gold.

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Like Brexit, a Trump day-after shock could be delicious for brave investors

ERIC REGULY

Donald Trump’s prediction last week of a “Brexit times 10” electoral upset in Tuesday’s U.S. election rattled investors. The polls were already tightening, suggesting that the impossible – a Trump victory over Democratic rival Hillary Clinton – was not so impossible after all. Investors took risk off the table, delivering a nine-day losing streak to the S&P 500, its longest in more than three decades.

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Regardless of who wins the U.S. election, free trade will be under attack

GWYN MORGAN

Whatever the outcome of the tumultuous U.S. presidential election, it’s evident that the North American free-trade agreement (NAFTA) will come under negative pressure. Republican nominee Donald Trump has asserted that NAFTA has caused the loss of many thousands of manufacturing jobs to Mexico. And concessions made to Bernie Sanders, the socialist runner-up in the Democratic primaries, have pushed Hillary Clinton to take a less-than-supportive position on free trade.

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Mixed signals: Canadian economic data reveal uneven story

DAVID PARKINSON

Friday’s two A-list Canadian economic releases capture the current state of the country’s economy in a hard-to-crack nutshell. Uneven. Inconsistent. Contradictory.

Spectacularly so-so.

Despite the excitement generated by the bottom-line numbers for Statistics Canada’s October employment report (much, much better than expected) and the September merchandise trade report (much, much worse than expected), both reports failed to live up to the wow factor promised in the initial headlines. The details were encouraging in places, discouraging in others.

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‘Nice’ Canada needs to toot its own horn on the world stage

TODD HIRSCH

“Canada?” The response was always one of surprise when I revealed that, no, I’m not American. “Oh, we get lots of Canadians here. Nice folks.”

Nothing brings into focus more vividly what the rest of the world thinks about Canada than travelling abroad. Having spent the past 10 days in Ireland, I was once again reminded that when others think of Canada, they usually think good things. The problem is, beyond that, they tend not to think of us at all.

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