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Friday, May. 22, 2015 11:49AM EDT
It is almost amusing. The world’s central bankers face a classic prisoner’s dilemma. Yet all those master economists are proving as inadequate at solving one of the great puzzles of game theory as the pitiful rational actors that appear in the textbooks.
A quick review: The prisoner’s dilemma illustrates how normal people, acting in their self-interest, can actually make their situations worse. Two suspects from a gang are held by the police in isolation. Investigators lack evidence for a conviction, so offer each prisoner an opportunity to rat on the other in return for his or her freedom. The optimal thing for the prisoners to do is keep quiet: Both would be set free because the cops would have no case. But Prisoner A and Prisoner B have no idea what the other will tell the police. The self-interested response therefore is to squeal on the other. And then both go to jail.More »
Friday, May. 22, 2015 5:00AM EDT
Everyone remembers the Occupy Wall Street movement of a few years ago. While the disgruntled 99 per cent could have honed their message a bit, the lightning rod of anger was the growing inequality of income distribution. The tent villages and drumming circles may have vanished, but the widening gap between the rich and the poor has not – and it’s almost certain to return to public-policy debates in the near future.More »
Wednesday, May. 20, 2015 5:40PM EDT
Stop me if you’ve heard this argument before: Canada’s international trade footprint barely sticks a toe beyond the United States. And while that has often served us well (if you’re going to rely on one trading partner, why not the world’s biggest economy?), it’s not healthy. For our own long-term good, we have to diversify into more foreign markets.More »
Wednesday, May. 20, 2015 5:00AM EDT
It has taken a while, but the global economy is finally showing signs of responding positively to the sharp drop in oil prices in the past 12 months. Most of the world’s major economies import millions of barrels of oil each day, so it is reasonable to expect the global economy to benefit from a half-price sale for oil.More »
Tuesday, May. 19, 2015 5:58PM EDT
Rachel Notley had to put up with a lot of “oilmansplaining” after she smashed through the gates of the Progressive Conservative dynasty in Alberta.
The days following her New Democratic Party’s election victory coincided with a number of oil company quarterly conference calls, during which top executives said they looked forward to helping the incoming NDP premier understand the importance of the energy industry to Alberta.More »
Monday, May. 18, 2015 6:16PM EDT
What are we to make of Goldman Sachs Group Inc.’s new, and surprisingly low, oil price forecast?
In a fresh report, Goldman predicted that prices for Brent crude, the main international benchmark, will fall to $55 (U.S.) a barrel in 2020. (Monday’s price was $66, down 1 per cent.) Its previous forecast was $70. If the forecast proves accurate, a whole lot of high-cost producers, among them the Alberta oil sands, are going to be in a whole lot of pain.More »
Sunday, May. 17, 2015 5:19PM EDT
This is part of a Globe series that explores our growing dependence on credit – from the average household to massive institutions – and the looming risks for a nation addicted to cheap money. Join the conversation on Twitter with the hashtag #DebtBinge
Everyone knows that Canadians are sinking deeper into debt. What no one knows is exactly why.More »
Friday, May. 15, 2015 11:48AM EDT
If Canada found itself in the economic wilderness in the first quarter of this year (and all evidence says it did), it’s in no small part because the manufacturing sector lost its sense of direction. But March’s rebound in manufacturing sales signals that the sector may finally be poised to lead us out of the woods.More »
Friday, May. 15, 2015 11:43AM EDT
In this world nothing can be said to be certain, except death and taxes. Benjamin Franklin’s puritan aphorism suggests that our fate is indeed sorry: The grim reaper will each year take a tithe of our harvest before his scythe eventually chops off our heads. After 2 1/2 centuries, we still can’t seem to shake off mortality, but the founding father from Pennsylvania might be surprised by the universal popular political will to exempt very large numbers of people from income tax.More »
Friday, May. 15, 2015 5:00AM EDT
BRIAN LEE CROWLEY
What a brave new natural resource world it is that has such players in it.
What else but the Bard’s Tempest could be brought to mind by the storm of consternation and controversy surrounding the decision by one B.C. First Nation to turn down more than $1-billion for their agreement to a liquefied natural gas project on their territory?More »
Thursday, May. 14, 2015 4:41PM EDT
It’s that time. A year ago this week, Indian Prime Minister Narendra Modi and his Bharatiya Janata Party romped to landslide victory, positioning themselves to form India’s first majority government in a generation. The reviews of Mr. Modi’s first year have begun – and they are less enthusiastic than those that were written in the wake of his astonishing electoral triumph.More »
Thursday, May. 14, 2015 5:02AM EDT
Andrew Jackson is an adjunct research professor in the Institute of Political Economy at Carleton University and senior policy adviser to the Broadbent Institute
There has been a great deal of recent media commentary on inter-generational unfairness, much of which misleadingly argues that affluent older Canadians are benefiting from current economic and social arrangements at the expense of youth.More »
Wednesday, May. 13, 2015 11:10AM EDT
The surprise was not that European growth is speeding up after years of zombie-like performance. The surprise was the source of that growth, which was not the continent’s traditional, recession-busting powerhouses – Germany and Britain.
Instead, it was the laggards – France, Italy and Spain – that seemed to have got their acts together as consumers opened their wallets again. These countries’ recovery lifted growth within the 19-country euro zone (which excludes Britain) by 0.4 per cent in the first quarter of the year, according to a flash estimate Wednesday from Eurostat, the European Commission’s statistics agency. The reading means that the euro zone is outperforming the United States even though there were pockets of weakness, notably Greece, whose economy is back in recession.More »
Wednesday, May. 13, 2015 5:00AM EDT
It has already been nine years since the last rate hike by the U.S. Federal Reserve. This means that there are currently a significant portion of investment professionals who have never experienced rising overnight rates and their effect on the stock market. A question we often get is: What should investors expect when the Fed starts a new hiking cycle?More »
Monday, May. 11, 2015 10:36AM EDT
The phony war is over. Greece has to get a new bailout signed and sealed in a hurry because its debt repayment schedule is going from the merely painful to the outright traumatic.
On Monday evening, only hours ahead of deadline, Greece confirmed it made a €750-million ($1.01-billion) loan payment to the International Monetary Fund in spite of pressure from some members of the ruling Syriza party to withhold the transfer unless the European Union acknowledged that some progress had been made on the bailout talks.More »
Sunday, May. 10, 2015 7:21PM EDT
Only a few months ago, oil prices were plunging and a few of the usual suspects predicted they would keep plunging. Citigroup Inc. said prices could hit $20 (U.S.) a barrel, proving that investment banks never met a trend they didn’t love.
The rout now appears to be over, with oil prices up more than 50 per cent since January, taking the international price close to $70. Of course, the forecasts are now being furiously rewritten because the trend is your friend. The bears have moulted into bulls with amazing speed.More »
Friday, May. 08, 2015 12:13PM EDT
After such a political upheaval, a massive defeat for the British Labour Party unpredicted by any opinion poll before last night’s ballots were counted, you might be tempted to believe that it was just about the economy. It’s true – the English voted in droves for another five years of the Tory economic plan of paying back debt. U.K. financial markets are today celebrating an unexpected but welcome defeat for the old British Labour Left – the FTSE100 is up and sterling is up. But that would be to ignore a subtle but more interesting development. This is the first British election that was truly made and won by the power of women.More »
Friday, May. 08, 2015 10:13AM EDT
United States Federal Reserve Chair Janet Yellen’s observation this week that U.S. stock prices had become dear was immediately challenged. No more so than the two previous business cycles, countered RBC Capital’s Tom Porcelli, citing the average ratio of equity price to reported earnings. Many others were equally dismissive. The actual market reaction to the Fed chair’s comments was muted, suggesting most traders still think U.S. stocks are priced for profit.More »
Wednesday, May. 06, 2015 4:44PM EDT
In turfing a government that has reigned for the better part of two generations, Alberta voters have signalled a taste for radical new thinking to address the provincial government’s chronic fiscal addiction to oil. Will premier-designate Rachel Notley pick up that mandate and run with it? That depends on whether she has the nerve to impose a provincial sales tax.More »
Wednesday, May. 06, 2015 5:00AM EDT
GLEN HODGSON AND DANIELLE GOLDFARB
Many Canadians and much of the world continue to view Canadian trade through the rear-view mirror, focusing on exports of natural resources and advanced manufactured goods, such as autos and airplanes. These traditional export sectors have struggled recently. However, there is an important but underappreciated bright spot in Canada’s trade picture. Canadian companies have been quietly and steadily increasing their international sales of services.More »
Tuesday, May. 05, 2015 4:00PM EDT
Tyler Cowen is an economics professor at the George Mason University and one of the most widely respected public intellectuals in the United States. In a recent interview, Mr. Cowen made a prediction about the Canadian economy that gets more disturbing the longer I consider it.
“[Technology] has been evolving in a pretty clustered way; I don’t mean simple software support, which is more like dentistry, but big, grand projects – the next Google, the next Facebook, Uber. We see those come out of quite a small number of places … I think any location, not just Canada, has to ask itself, ‘are we going to be one of those clusters or not?’ And the correct answer may be ‘no’… I guess at this point that seems likely – that Canada will not be a huge, innovative part of the knowledge economy.”More »
Tuesday, May. 05, 2015 5:00AM EDT
A few weeks ago, Ontario’s Premier announced her government’s intention to introduce a cap-and-trade system to reduce greenhouse gas emissions. Although many have applauded this announcement, there are still many critics – and they are only now beginning to gather their forces. Kathleen Wynne should recognize that the political road ahead will be anything but smooth.More »
Monday, May. 04, 2015 5:00AM EDT
If Caterpillar Inc. chief executive Doug Oberhelman wasn’t paid some $17-million (U.S.) in 2014, you’d feel sorry for him. His company is taking it from all sides and there apparently is nowhere to hide.
“We are seeing a very competitive marketplace right now,” Mr. Oberhelman told analysts on a conference call after the release of the company’s first-quarter results. “I will tell you, with a yen that’s off over 50 per cent in three years, euro, Brazilian currency, pound currency off 20 per cent to 30 per cent in the last year; you know all of our competitors aren’t in the U.S. So it really is a competitive environment out there …”More »
Friday, May. 01, 2015 5:00AM EDT
BRIAN LEE CROWLEY
Andy Pedersen is a pretty unusual guy.
Mr. Pedersen works in the communications division of a trade union. He got my attention because he wants his family to be treated unfairly by the taxman and he thinks Ottawa can spend his money better than he can himself. Clearly an original thinker.
Okay, he might not have characterized his thinking in quite the way I have, at least on the first point. Mr. Pedersen discovered he had the option of refusing the income splitting the recent budget introduced for working couples. He got in the media spotlight by posting his intention on Facebook to turn this tax break down, despite it being worth $1,500 to the Pedersens.More »