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Economic Insight

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Entry archive:

How housing could become government’s last great tax grab

CARL MORTISHED

Carl Mortished is a Canadian financial journalist based in London.

Home ownership is probably the most powerful political totem among voters in free-market and democratic countries. Politicians mess with it at their peril, but we are coming to a wealth and demographic pinch point where even conservative lawmakers can contemplate mining the domestic real estate gold mine.

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Montreal’s financial sector tested by the black-hole pull of Toronto

KONRAD YAKABUSKI

The 2,250 delegates from 80 countries who arrived in Montreal for this week’s Global Public Transport Summit landed at an airport plagued by logistical bottlenecks. They took cabs along an expressway so decrepit it is literally crumbling. Once downtown, they navigated an obstacle course of orange pylons testifying to an aging infrastructure in a chronic state of disrepair.

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Canada’s manufacturing rebound shows signs of sticking around

DAVID PARKINSON

Despite a mildly disappointing March, the manufacturing sector has been a big engine for Canada’s economic growth in the first quarter of 2017 – and its swelling order book and a cheap Canadian dollar suggest it could stay that way for a while. But the maturing of the U.S. economic expansion could throw some twists into how that plays out.

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Jeffrey Jones: Changes to energy regulator won’t protect from political criticism

Jeffrey Jones

The National Energy Board’s identity crisis won’t be fixed easily.

It’s a problem that’s snowballed over at least a decade, to the point where pipeline hearings have become noisy skirmishes and the board’s decisions are routinely criticized for ignoring some environmental impacts, notably climate, or excluding voices.

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Canada’s debt levels are relatively healthy, but some provinces are worrisome

GLEN HODGSON

With budget season across Canada now over, it’s a good time for a regular debt check-up for all governments. The prognosis: Canada’s debt is still manageable, but we’re in poorer health than a decade ago, and some of the provinces have flashing warning signs.

Economic history teaches that countries and jurisdictions face increased health risks when their debt-to-GDP ratio rises beyond 80 per cent of GDP. Debt service payments eat up a significant share of the national budget, pushing governments to undertake fiscal austerity through budget cuts and tax increases. Financial markets become nervous about the capacity and willingness to pay. Credit ratings get marked down and the cost of carrying the debt rises due in part to higher bond risk spreads.

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The ‘green economy’ is a marathon, not a sprint

TODD HIRSCH

With all of the chatter about it lately, you’d think that the “green economy” replaced hamburger flipping as the fastest-growing sector of the economy. Yet for all the press it receives, the green economy is ill-defined and poorly understood – few Canadians are sure of what it means or how large it is. That makes it a prime candidate for misuse, especially in political speeches where the more it gets mentioned, the better the response.

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The totalitarian capitalism of tech giants should trump your fears of populism

CARL MORTISHED

Carl Mortished is a Canadian financial journalist based in London

Of all the worrying things about populism, the most disturbing of all is that it doesn’t really exist. This terrifying anti-intellectual, anti-immigrant, protectionist ideology that is sucking up votes like a giant vacuum cleaner is merely a phantom that obscures our view of the new corporate tyrants that govern our world.

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Ottawa, provinces would be smart to heed Poloz’s warning on trade-war dangers

BARRIE McKENNA

The thing about trade wars is that they rarely happen.

There is a good reason for that. A war typically requires an action, and a reaction. And in the world of trade, retaliation is the nuclear option.

As Bank of Canada Governor Stephen Poloz put it in a recent speech: “With protectionism, everybody loses eventually, including the country that puts the policies in place.”

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Bank of Canada has good reason for silence on Home Capital

DAVID PARKINSON

There is no shortage of opinions in Canada’s financial community about Home Capital Group Inc. So when are we going to hear the Bank of Canada’s?

Last week, Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce, issued a report suggesting it was high time the central bank say something about the embattled mortgage company, to calm concerns in international markets that Home Capital might be some sort of canary in the coal mine for Canada’s financial system. Those fears have contributed to a sell-off in the Canadian dollar, which has been trading near 15-month lows over the past couple of weeks.

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Who’s hot and who’s not ahead of the ‘mini G7’ in Italy

ERIC REGULY

One of the joys of watching a Group of Seven meeting is determining who’s hot, who’s not, who’s up and who’s down. It’s all good sport and, this year, at the mini G7 of finance ministers and central bankers, some of yesterday’s losers are today’s winners as powerful economic and political tsunamis come out of nowhere and wash up on G7 beaches.

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B.C.’s election result will only aggravate Alberta and Saskatchewan’s economic woes

BRIAN LEE CROWLEY

Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent, non-partisan public-policy think tank in Ottawa.

Geography distributes its bounty capriciously and the results can be extremely painful for those who end up penalized by their place on the map. The outcome of the recent election in British Columbia may be about to deliver a lesson in this principle to this country’s only two landlocked provinces: Alberta and Saskatchewan.

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BC Liberals’ economic feat may be coming to an end

DAVID PARKINSON

British Columbia’s Liberal government has overseen the strongest provincial economy in Canada, by a long shot, over the past two years. It has produced five balanced budgets in a row. It has given birth to a sovereign wealth fund that, for the first time, builds up a savings account for the province’s financial future. The province is, by many measures, the economic envy of the rest of the country.

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The oil patch has one reason to toast another price slide

JEFFREY JONES

Jeff Hanna figured it would be a fun, short-term promotion for his restaurant and bar in downtown Calgary.

It was January, 2015, when Mr. Hanna advertised a special at Barcelona Tavern on 8th Avenue: Customers could get 20-per-cent off the price of any bottle of wine in his cellar, between 11 a.m. and 7 p.m. on weekdays, until oil returned to $70 (U.S.) a barrel.

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Canada-China trade agreement no deal for middle class, blue collar Canadians

ANDREW JACKSON

Andrew Jackson is Adjunct Research Professor in the Institute of Political Economy at Carleton University, and senior policy adviser to the Broadbent Institute.

Global Affairs Canada is conducting public consultations on a possible Canada-China free-trade agreement. Based on the record since China joined the World Trade Organization in 2001, further liberalization of trade and investment on the current model would not benefit most Canadians.

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Macron’s weighty win does not mean European populism is dead

ERIC REGULY

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Europe’s risk profile dropped a notch or two last night, when Emmanuel Macron won the French presidential election. But it did not disappear. To declare populism dying or dead in the long term is wildly premature.

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Angry about U.S. duties on Canadian lumber? Blame B.C.

BARRIE MCKENNA

Buried in the 124 pages of the U.S. trade case against Canadian lumber is a surprising revelation about how the Trump administration tallied its duties.

The prevailing narrative is that the U.S. hit Canada with duties of up to 24 per cent because the provinces are selling their timber too cheaply to lumber companies – thus, a subsidy, so the Americans say.

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Home Capital’s struggles point to financial sector consolidation

BARRIE McKENNA

A charismatic founder of a once high-flying subprime lender is dogged by scandal. Potential buyers circle the distressed company as regulators probe allegations of securities violations and risky mortgage practices.

Gerald Soloway and Home Capital Group Inc.?

Nope. California-based Countrywide Financial Corp., circa 2007.

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Three economic policy issues raised by latest census data

DAVID PARKINSON

Looking at Statistics Canada’s five-yearly census statistics is kind of like looking at the candles on your birthday cake. It is no secret we are getting older, but this puts the uncomfortably big numbers in unavoidably bright lights.

The national statistical agency has rolled out its report on age- and sex-related components of the 2016 census, and it confirmed that Canada’s population is rushing headlong into senior citizenship, a function of the huge baby-boomer generation passing the traditional retirement age of 65 in ever-growing numbers. In just five years, the number of 65-plus Canadians swelled by a gaudy 20 per cent.

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How to manage diverging Canada-U.S. climate-change ambitions

Glen Hodgson

Ambitious greenhouse gas (GHG) reduction targets have been set on both sides of the Canada-U.S. border. But climate policies in Canada and the United States are beginning to go in very different directions. Canada need not change its overall course on GHG emissions, but it will likely need to make adjustments for the duration of the Donald Trump administration, while remaining on course for shaping a low-carbon economy.

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African cities are urbanizing without globalizing

BRIAN LEE CROWLEY

According to Harvard’s Edward Glaeser, “Cities are the best path we know out of poverty.”

This is echoed by prominent economist Paul Romer, who has made the richly documented case that humanity’s urbanization over the past 10,000 years has been the main driver of human progress.

He argues that the present century is the one in which the urbanization trend finally reaches into every corner of the globe, and the world’s population will stabilize at 10 billion to 11 billion people, with 70 per cent to 80 per cent of them living in cities.

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Ottawa has no Plan B if Trump comes after dairy supply management

Barrie McKenna

Donald Trump isn’t alone in taking aim at Canada’s dairy industry.

Maxime Bernier, the apparent front-runner to become the next Tory leader, has made dismantling supply management a centrepiece of his campaign.

And Dominic Barton, who is advising the Trudeau government on how to rev up the economy, similarly worries that the regime is thwarting vast food-export opportunities.

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Basic income is an opiate for the masses, not a sustainable solution

ERIC REGULY

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If a group of undiluted communists and capitalists were to join forces and concoct a recipe for a Utopian society, they might produce a socio-economic system anchored by a basic, or guaranteed, annual income.

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