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Empires won and lost I chuckled to myself today when I read that Brazil could help out its former colonial master, Portugal, in its darkest hour. The empires of old vanished long ago, of course, and now, in the aftermath of the financial crisis and recession, there's a new economic world order.

Today, just before Standard & Poor's slashed Portugal's credit rating again, Brazil's President Dilma Rousseff mused that "Brazil could help Portugal, just as Portugal helped Brazil economically," according to the Lusa news agency.

Portugal needs help badly, and quickly. There's a political void after the resignation of Prime Minister Jose Socrates, sparked by a parliamentary defeat on austerity measures, and the country is fast approaching the need for a bailout, similar to the handouts to Ireland and Greece.

Which brings us to the ancient Greeks, whose modern day successors also watched today as S&P downgraded their credit rating amid mounting speculation Greece will have to restructure its debts. Harsh budget measures have sparked a series of strikes and protests.

Rome? In nominal terms, Italy is the most indebted nation in Europe, though international markets aren't as soured on the country as they are on Portugal, Ireland, Greece and Spain. Italy's economy has basically stalled, and unemployment is at 8.6 per cent.

And then there's the United Kingdom, whose Office for National Statistics today narrowed the depth of Britain's economic contraction in the fourth quarter to 0.5 per cent from an earlier estimate of 0.6 per cent. That's obviously not calming nerves in a country running a deficit of about 10 per cent of GDP, and where harsh austerity measures have led to huge protests.

Maybe Canada, a fiscal model to the world now, which no one expects to change no matter who wins the election, should offer to bail out Britain? Hey, if Brazil can do it …

How Canada ranks on clean energy Canada has moved up two spots in a global ranking of countries for clean energy investments.

Canada moved to number seven in the report released today by the Pew Charitable Trusts. China, Germany and the United States continued to rank in the top three, though Germany moved to number two and the United States to number three.

"Canada realized $5.6-billion invested in its clean energy sector in 2010, a 611 per cent annual increase and ranking 7th place among G-20 members," the group said.

"Fifty-two per cent of 2010 clean energy investment was directed to the wind sector, with solar attracting 24 per cent. Canada has 7.6 [gigawatt]of renewable energy, placing it in the 12th spot among G-20 members. Canada is 4th in the world for dollars of GDP invested in clean energy.Wind and small-hydro are the leading clean energy sectors and benefit from strong support from provincial governments, which play a much more significant role in energy policymaking than the national government."

Kitchen fire hits Agnico-Eagle Shares of Agnico-Eagle Mines Ltd. dipped today after the miner cut its production outlook, largely because of a kitchen fire at its Meadowbank mine in Nunavut.

The company had earlier reported the fire, which destroyed the kitchen and some associated facilities, but late yesterday cut its forecast, saying it now expects gold production at the mine to be about 310,000 ounces for the full year, at a total cash costs of about $700 (U.S.) -- an ounce. It had earlier projected 360,000 at $600 an ounce.

Poor weather also played a role.

"Since the fire, the mine has been operating with a substantially reduced work force at a reduced production rate," the miner said.

"Over most of this period, the plant has been processing lower grade ore from stockpiles due to the reduction in work force. The company expects to return Meadowbank to normal staffing levels of approximately 450 people by the end of April. Temporary kitchen facilities have been delivered to site and are currently being prepared for use. The company expects a permanent replacement kitchen to be installed during the fourth quarter of 2011."

What lies at the core Don't let anyone tell you that core inflation is more important than the overall rise in consumer prices.

The reading of the so-called core rate, which strips out volatile items and is the operational guide for the Bank of Canada, is closely watched because it signals underlying trends in inflation. But that's not what we pay, and we don't prepare our monthly household budgets without taking into account, say, what it costs us to drive to work.

In mid-March, when Statistics Canada last reported on this key economic measure, much was made of the fact that the core rate had dipped to just 0.9 per cent in February, the idea being that there's little to worry about. The overall annual pace, or headline rate, also dipped, but it still came in at 2.2 per cent. That overall rate included an almost 16-per-cent rise in gasoline prices and a 2.1-per-cent increase in food costs.

While many observers focus on the core rate, the Bank of Canada actually officially targets the overall rate, and February's reading continued to run above its goal of 2 per cent.

As our Washington correspondent Kevin Carmichael notes in Economy Lab, Dennis Lockhart, the chief of the Federal Reserve Bank of Atlanta, gave a nod to this yesterday, telling a Rotary Club gathering that central bankers are people too as he gave his interpretation of the mandate of the Federal Open Market Committee, the policy-setting panel.

"Fed officials actually do eat and fill up their gas tanks," Mr. Lockhart said. "The FOMC's mandate, as I see it, is to control the inflation rate we all experience - so-called headline inflation. In other words, I interpret the Fed's price stability mandate as requiring the FOMC to manage the growth rate of the average of all prices, including food and energy."

But here's what he added: "It's our job to control that headline inflation over the course of time. It's not feasible to exert such control day to day or month to month or even quarter to quarter. But monetary policy can control the rate of overall inflation over the medium term. In general operational terms, I think growth in overall consumer prices at an annual rate around 2 per cent through a period shorter than the proverbial 'long term,' say, a medium-term period of three or four years, is consistent with the Fed's price stability mandate.

"While short-term measures of inflation have accelerated in the last few months, I hold to the view that this trajectory will not continue. I continue to see the Federal Reserve's inflation objective I just outlined as attainable."

Just today, the OECD reported that inflation among its member countries increased in February to 2.4 per cent from 2.2 per cent, marking the fastest pace since October 2008. The increase, it said, was driven by energy and food prices.

Like Mr. Lockhart, we eat and drive. Unlike Mr. Lockhart, we do look at a shorter time frame. Don't get me wrong, we certainly wouldn't want the central bank to react to very short-term bumps and dips, and I'm not arguing here for an interest rate hike to cool things down. I just want people to stop telling me that core is the be-all-and-end-all when gas costs more than $1.20 a litre.

Auto parts shortages a threat The rebound in the auto industry continues, though parts shortages related to Japan threaten global output, Bank of Nova Scotia warned today.

Russia is leading the charge, with sales climging 80 per cent in February from a year earlier, and gains even in western Europe after months of decline, analyst Carlos Gomes said in a report today.

In the United States, sales were 27 per cent above levels of a year earlier, while in Canada, sales dipped 4 per cent but that compares to last February being one of the strongest months of the year.

But the devastation in Japan after the earthquake, tsunami and nuclear crisis looms large on the industry, Mr. Gomes said.

"Production cutbacks are also increasingly spreading outside of Japan, as shortages of key auto parts emerge in many countries, especially in other Asian nations," he said in his global auto report.

"However, global vehicle demand remains strong and assemblies will bounce back sharply once conditions stabilize in Japan. Assembly plant shutdowns in Japan have led to losses in vehicle production of about 37,000 units per day since the earthquake, with cumulative losses approaching 400,000 units through March 25.

" ... The shutdowns in Japan represent nearly 14 per cent of global vehicle output, but the major risk to the global auto industry, including non-Japanese automakers, lies in the potential for auto parts shortages globally and its impact on the global supply chain, due to delays in the resumption of component deliveries by Japanese suppliers. Japan is the world's second-largest auto parts exporter behind Germany, and hundreds of parts suppliers are located in northeastern Japan near the epicentre of the earthquake."

Consumer confidence sinks Consumer confidence slumped in March, though for some reason people are happier in Quebec, the Conference Board of Canada said today.

The group's consumer confidence index tumbled to 83.7 from 89.3 3, with consumers most troubled by the state of, and outlook for, their finances.

"Attitudes toward current finances remain worrisome," the group said in a statement. "Despite the ongoing economic recovery, just 17.8 per cent of respondents said their family's finances had improved over the past six months - up 0.7 percentage points from February. At the same time, 23.5 per cent of respondents answered that their finances had worsened, up 2.4 points."

Quebec was the only region to see an increase in confidence, while Ontario saw the sharpest drop, driven by fears about future finances.

"The drop leaves Ontario well below other regions when it comes to relative confidence levels," the Conference Board said.

Consumer confidence also sank in the United States.

MI shareholders approve plan Shareholders of MI Developments Inc. today overwhelmingly approved a plan to transfer the company's horse racing assets to Frank Stronach and eliminate the class B multiple voting shares he had used to control the real estate and gambling company, Globe and Mail auto writer Greg Keenan reports.

Mr. Stronach, who will step down as chairman and chief executive officer, will take over racetracks in Florida, California and Oregon and MI Developments' share of a joint venture that owns two tracks in Maryland. MI Developments will continue as a real estate company.

ICD rejects 'say on pay' rules Canada's leading association for corporate directors is urging regulators to reject mandatory rules requiring companies to hold "say on pay" votes of shareholders on their executive compensation plans, The Globe and Mail's Janet McFarland reports today.

The Institute of Corporate Directors said it is the responsibility of directors to determine compensation for top executives, and shareholders should elect directors they believe will act appropriately.

UBS bumps up CN UBS Securities Canada today bumped up its 12-month price target on shares of Canadian National Railway Co. , saying the company has fared "relatively well" compared to its peers.

Analyst Tasneem Azim boosted her target to $80 from $76, citing "low-risk exposure to double-digit earnings growth."

"Although the speed of CN's network deteriorated 5.3 per cent year-over-year, this was in line with that of its peers," she said. "We believe these metrics are respectable in the face of extreme winter conditions, and are a testament to CN's continuous efforts to anticipate, prepare and execute."

Last week, rival Canadian Pacific Railway cut its profit outlook for the first quarter, partly because of the harsh winter weather.

In Economy Lab today

Are lower taxes really the same thing as higher after-tax incomes? Economist Stephen Gordon studies the evidence.

In Personal Finance today

Learn how to get a tax benefit from your mortgage like your neighbours to the south by creating a tax-deductible Canadian mortgage. Find this story and more in our Tax Centre.

Financial expert Gail Vaz-Oxlade doesn't want you to be like the over-mortgaged stars on her new HGTV show, Til Debt Do Us Part: Home Edition.

Personal Finance columnist Rob Carrick wants Ottawa to get rid of GST on mutual funds, change the rules on RRSPs, and make RESP contributions tax-deductible.

From today's Report on Business

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