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Delving into the forces that shape our living standards
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Greece’s euro exit would reaffirm fragility of the currency club

IAN McGUGAN

The common currency that was intended to unite Europe’s bickering countries and carry them forward to prosperity has had precisely the opposite effect.

Now, as Greece lurches toward an unprecedented exit from the currency club, the euro project looks fragile. Its design flaws are glaring, its shortcomings are obvious.

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Greece controls: Desperate measures for desperate times

BERTRAND MAROTTE

Desperate times call for desperate measures.

The implementation of capital controls in Greece is the latest in a series of such moves by countries in financial turmoil. Cyprus, on the brink of bankruptcy two years ago, slapped restrictions on how much money could leave the island.

For Greece, capital controls have an air of inevitability about them given the European Central Bank’s decision to freeze the amount of emergency loans to the Greek banks.

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Migrants desperate for work are an embarrassing reproach to the EU

CARL MORTISHED

As if they didn’t have enough on their plates, the European leaders gathered at the Brussels summit are being asked to take on more financial liabilities. These are bigger commitments than an extra spoonful of Greek debt. Each leader will be expected to provide homes for tens of thousands of migrants, mainly Africans, who have arrived in Italy and Greece in leaky boats after a perilous journey across the Mediterranean.

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Albertans will be forced to face debt with David Dodge

DAVID PARKINSON

For the better part of two decades, Alberta’s definition of good government has been built on an aversion to debt. New Premier Rachel Notley’s choice of David Dodge to come up with a blueprint for the province’s infrastructure investment signals a major departure from that well-worn path.

Last Friday, Ms. Notley held a press conference to introduce Mr. Dodge, the professorial former governor of the Bank of Canada, as the adviser enlisted to recommend a plan to address Alberta’s considerable infrastructure needs. Of all the outsiders Ms. Notley has recruited to the province in recent weeks to help guide her conspicuously under-experienced rookie government, Mr. Dodge is undoubtedly the biggest name.

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Healthy economies need to ramp up public investment

ANDREW JACKSON

While Canada’s short-term economic prospects are pretty gloomy, longer-term projections are even worse. A major reason is that policy makers here and in all of the advanced industrial countries have been content to settle for a very slow recovery, which undermines our longer-term economic potential.

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With Greece debt deal, euro zone shows it does not negotiate – it dictates

ERIC REGULY

Imagine you are the prime minister of a European Union country perched on the edge of the 19-country euro zone. For years, you have been considering the merits of scrapping your own currency and adopting the euro. Taking the plunge would eliminate your monetary independence but thrust you into heart of world’s biggest trading area where you would be an equal among equals and enjoy the protection of its various crisis-fighting mechanisms.

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Oil price shock muddies Canada's economic waters

DAVID PARKINSON

If Canada’s latest economic indicators leave you with only a murky sense of the state of the economy, it’s because the winter’s messy oil spill is still clouding the waters.

Statistics Canada reported Friday that the year-over-year inflation rate for May was 0.9 per cent, up a hair from April’s 0.8 per cent but still a pretty depressed number – indeed, below the bottom of the Bank of Canada’s 1-to-3-per-cent target band that serves as its key guide for setting interest rates. On the other hand, the core inflation rate – which excludes gasoline as well as seven other highly volatile components of the consumer price index – was at 2.2 per cent, down only slightly from April’s 2.3 per cent, and has now been above the central bank’s 2-per-cent sweet spot for 10 straight months.

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Full engagement in the economy requires more than the basic necessities

Todd Hirsch

When economists and policy makers think about poverty, provisions of the necessities of life – food, clothing and shelter – are front and centre. Without reasonable nourishment, a shirt on your back and a place to live, it becomes difficult to actually stay alive.

But living is more than simply preventing death. Most Canadians want to fully participate in the 21st century economy and provide a better standard of living for themselves and their family. However, full engagement in the economy requires more than the basics of food, clothing and shelter. In 2015 there are three more essential elements: transportation, communication and community. Each comes with policy implications for government – especially those governments keen to address issues of urban poverty.

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Greece may be the problem child, but Europe has bigger problems

CARL MORTISHED

In this Greek melodrama, everyone is watching Angela Merkel and Alexis Tsipras, the German and Greek political leaders, seemingly racing their cars towards the edge of a cliff, daring each other to jump out first. The face-down is fascinating but if you wanted to know why it is happening you would do better to watch the other euro zone leaders, shuffling in silent embarrassment. They know that Greece is just a prelude to a long-delayed reckoning over how Europe will pay for its overburdened and over-indebted welfare states.

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Still defiant? All eyes on Putin at economic forum

Eric Reguly

When the Russian President takes to the stage Friday at his showpiece conference, the St. Petersburg International Economic Forum, the Russian and foreign business leaders in the audience will have one big question: Will he signal a rapprochement with the West for the sake of the Russian economy or remain defiant?

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U.S. Fed still not raising interest rates, despite anticipation

DAVID PARKINSON

The U.S. central bank is still inching toward its first interest-rate increase in nearly a decade, and it’s still likely coming this year. But after looking like it was speeding toward rate hikes as recently as a few months ago, the countdown to rate liftoff has turned glacial.

The U.S. Federal Reserve Board’s latest regularly scheduled interest-rate decision statement, released Wednesday, was a remarkable non-event, considering the anticipation. No change to its key federal funds rate (which has sat at a range of zero to 0.25 per cent since late 2008), and no hint that the Fed is any closer to triggering its highly anticipated first rate hike. Only a handful of words were changed from the Fed’s previous statement in April, none of them particularly meaningful. The Fed informed us of some modest improvements in the U.S. economy after a bleak first quarter, but otherwise it stuck to its policy guns word for word.

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Productivity: A missing plank in federal election platforms

Glen Hodgson

The federal election campaign is on and the political parties are busy rolling out their platforms. But there is one topic that is unlikely to be mentioned by our political leaders: Canada’s dismal track record on productivity – and what we might do about it.

For nearly three decades, growth in Canadian productivity (at its simplest, output measured in dollars per hour worked) has lagged behind productivity growth in the United States and other major industrial countries. This productivity gap, and its root causes, have been well documented in research by the Conference Board of Canada over the years. The result of lagging productivity growth is a significant gap in per capita income that has opened up between Canadians and Americans – estimated at $7,000 per capita, and rising.

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The sweet business of money transfers: Banks are losing out

ERIC REGULY

It is one of the hottest sectors in the global financial markets but rarely gets much attention: remittances.

Remittances are the small amounts of money that migrants in the rich world send to their families in the poor world – typically $200 (U.S.) a month. Until a few years ago, the remittances flow was either not measured or was measured poorly. That’s changing and the numbers associated with the market are astounding.

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Canada’s household debt stable, but overall outlook still dim

DAVID PARKINSON

If you’re worried about Canada’s household debt burden, the latest figures from Statistics Canada won’t do much to soothe your furrowed brow.

Statistics Canada’s quarterly National Balance Sheet and Financial Flow Accounts report – which covers the financial state of the country on a household, corporate and government level – showed that the closely watched household credit-market-debt-to-disposable-income ratio ticked down ever so slightly in the first quarter, to 163.3 per cent from a record 163.6 per cent in the fourth quarter.

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This is just the beginning for ‘sharing economy’ services

BRIAN LEE CROWLEY

So-called “sharing economy” services like Uber and Lyft are just giving us a foretaste of how disruptive technologies will transform the way we get around. Moreover, contrary to what you might have heard, that transformation will not stop with the destruction of the old-style taxi industry. Uber may be worth US$40-billion. That means the market sees Uber and its competitors as achieving far more than this.

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Canada’s carbon emissions cutting may be too late

CARL MORTISHED

In the end, it may not matter whether Canada signs up to tougher curbs on carbon emissions. The world is moving on, at accelerating speed, toward a world that is less energy-hungry, less polluting, more efficient and more renewable.

The evidence lies in the extraordinary story of 2014, to be found in BP’s annual statistical review of world energy. Every year the British oil company does a tally of how many gigawatts we produced, how many barrels we pumped and how many tonnes we burned. The statistics provide the data for the extraordinary tale of American shale and how it pulled the rug from under the oil price. Much more interesting, however, is what BP says is happening around the edges of the big picture. Carbon emissions increased last year by just 0.5 per cent, the slowest rate for 15 years. The reason is weak growth in energy demand, particularly in China where energy intensity is falling rapidly.

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Guarded Poloz leaves more questions unanswered as oil shock continues

DAVID PARKINSON

Stephen Poloz is doing his best to stay tight-lipped about his economic outlook at the moment. But what little he is saying speaks volumes about what’s bothering him about Canada’s uncertain economy, as it closes in on the halfway point of what has so far been a trying year.

The Bank of Canada Governor’s press conference Thursday, in conjunction with the release of the central bank’s twice-yearly Financial System Review, contained precious little for the pleading hordes hungry for new insight into how the country’s oil-shocked economy is unfolding. Mr. Poloz bobbed and weaved around reporters’ economic questions, while repeatedly stating that he’s not making any new forecasts until the bank’s next official outlook in its quarterly Monetary Policy Report in mid-July.

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Addressing inequality will take much more than tax code tinkering

ANDREW JACKSON

Andrew Jackson is an adjunct research professor in the Institute of Political Economy at Carleton University and senior policy adviser to the Broadbent Institute.

The issue of how to deal with rising inequality and the squeezed middle class has recently moved to the centre of political debate, with the various parties proposing significant policy changes. International experience suggests that a more equal Canada will require major changes to a wide range of policy levers and not just to the tax and transfer system.

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B.C. climbs out of commodity slump with U.S. export boom

DAVID PARKINSON

British Columbians have long been known for dancing to their own tune. And now, that can be said for the province’s economy, too. In Canada’s new version of a two-speed recovery, the West Coast is zooming off on its own.

The simplified story of Canada’s split-personality economy, for the longest time, was that resource-rich Alberta (and, to a lesser extent, the entire West) was thriving amid booming commodity prices, while the country’s industrial-manufacturing heartland of Ontario and Quebec (and, for geographic convenience, everything east of that) suffered amid slumping export demand and an unhelpfully pumped-up Canadian dollar.

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Canada’s ‘atrocious’ growth figures show potential risk of recession

CLÉMENT GIGNAC

Last week brought us the latest edition of the OECD’s twice-yearly analysis of the global economy, so this is a good time to take a step back and assess the economic landscape. At the same time, we will reassess our view of the Canadian economy, in particular, following the publication of what Bank of Canada Governor Stephen Poloz deemed the country’s “atrocious” growth figures in the first quarter.

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Seeds of tempered forecast sown before oil’s crash

JEFFREY JONES

The oil industry’s main lobby group garnered double takes from energy buffs everywhere by slashing its long-term forecast for crude output by 17 per cent.

No wonder. A 1.1-million-barrel-a-day drop in previously expected output 15 years out is dramatic, being equal to nearly a third of Canada’s total production today.

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Signs of better times ahead for Ukraine’s economy

BRIAN MILNER

Ever since Russian President Vladimir Putin decided to make Ukraine pay for having the temerity to oust a corrupt Moscow stooge from its presidency early last year, the country’s economic outlook has veered between bleak and hopeless. Yet flashes of light have been breaking through the gloom, signalling that better times may lie ahead.

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We’re not on a hiring spree, but labour market isn’t in dire straits, either

DAVID PARKINSON

Let’s acknowledge the obvious: Canada’s May employment report was very good. But one month does not make a trend – especially when we’re talking about Statistics Canada’s Labour Force Survey. When we look at the past six months – which, besides being a round-ish number, also captures the bulk of the oil price shock – we see a labour market that is moving at a snail’s pace, but at least in an encouraging direction.

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