Tag Archives: Canada

Canadian success story…

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Doesn’t look like Canada was all that immune from the crisis to me?

Ok, their banks didn’t fail or need data transfered from one account at the Bank of Canada to another to keep them open for business.

So what? Look what happened to unemployment- real life for real people.

And it’s still a good 2% higher than it was only a couple of years or so ago.

And we are in a resource boom.

Yes, unemployment benefits are said to be generous, so out of work people maybe don’t suffer as much financially as in other places. But taking them at their word, and if history is any guide, they would take a job at reasonable pay and produce useful output if there were jobs available.

Yes, their federal budget deficit remains too small/ unemployment too high.
And they aspire to sustaining a federal budget surplus and high net export revenues, which, if successful, means reduced real terms of trade and a standard of living lower than otherwise.

My proposal- offer a national service job to anyone willing and able to work that pays a bit more than unemployment, and then cut taxes or increase public spending (depending on politics/needs) until that pool of labor in that national service job gets down to maybe 3% of the labor force, which will also coincide with a pretty good measure of what the current full employment deficit is.

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Canada ready to buy $US on weakness

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From: Mario Seccareccia
Date: Sat, Oct 24, 2009 at 10:58 AM
Subject: RE: *Canada ready to buy $US on weakness
To: Warren Mosler

Warren,


I was at a conference in Quebec City on the issue of financialisation and I just got back literally during the night because of a nasty storm that caused flight delays last night.

However, the Governor of the Bank of Canada is under a lot of pressure from the export sector to do something about the high Canadian dollar because of the Dutch disease effects on the Canadian manufacturing sector. In fact, I have been invited to participate in a conference organized by the Quebec Federation of Labour and various employers’ associations in Montreal right at the beginning of December on exactly this question of the Canadian dollar.

As you know I stand with the Bank of Canada in defending a floating exchange rate but the Bank is under a lot of pressures from both those on the Right and on the Left of the political spectrum to institute some Chinese-style low (Can) dollar pegged exchange rate! This has been an on-going battle over the last few years every time the Canadian dollar is approaching parity with the US dollar. My position has always been to advocate fiscal (and monetary) policy to keep the economy on its full-employment path and I have proposed interregional transfers to deal with the problem of the Dutch disease. But it is very difficult for them to think in those terms because of their fixation with deficit spending and also because of the high constitutional fragmentation of the country that makes a policy of interregional transfers via the taxation of provincial natural resource revenues a political hot potato in Canada. Indeed, there have been even supreme court challenges from Newfoundland and others over the system of equalization payments because of the inclusion of provincial oil revenues in the formula for calculating the current regional transfers.

In any case, as you can see, given the current downward evolution of the US dollar, this might trigger competitive devaluations much as in the style of the 1930s.

Best,

Mario


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Carney Says Intervention Needs Policy to Back It Up to Work

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CIBC Says Canada Should Consider ‘Bounded Float’ of Currency

This would help support exports. (But my first choice would instead be funding an $8/hr job for anyone willing and able to work and a tax cut to sustain domestic demand and optimize real terms of trade.)

Carney Says Intervention Needs Policy to Back It Up to Work

Oct. 27 (Bloomberg) — Bank of Canada Governor Mark Carney said today that central banks that try to affect the level of their currencies through market actions need to back the transactions with monetary policy to be effective.

Speaking to lawmakers, Carney said the bank could use tools, including quantitative easing, to implement policy with

the bank’s key interest rate as low as it can go.

Selling your own currency is the back up to your other, export oriented policy.

There is no limit to the amount of your own currency you can sell into a bid at that level.

The (operational) limit is how much the rest of world wants to buy at your selling price.

Quantitative easing has nothing to do with this.


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Canada ready to buy $US on weakness

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While he’s a bit shaky on his understanding of monetary operation his intentions are clear enough:

Bank of Canada talks tough on rising dollar

By Kevin Carmichael

Oct. 3 (The Globe and Mail ) — Bank of Canada Governor Mark Carney is done with nuance. His new message for those who doubt he’s prepared to weaken the dollar if Canada’s recovery veers too far off track: Just watch me.

Despite stronger than expected growth in the second half, the central bank has actually reduced its outlook for the next two years, saying that’s when the current appreciation of the currency will show up in growth figures.

Given that backdrop, Mr. Carney said he would have no choice but to act if international investors continue to push the dollar higher – something they’ve been quite willing to do, in part because most analysts and investors are skeptical a central bank that hasn’t intervened in currency markets since 1998 is willing to back up its talk with action.

But if the currency continues to surge, Mr. Carney stressed that he retains “considerable flexibility” to stoke the demand required to get inflation back to the 2-per-cent target. His options would include creating money to buy U.S.-dollar denominated assets or direct intervention in foreign exchange markets.


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Re: Globe & Mail – Canadian Propaganda

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(email exchange)

Yes, thanks.

I just saw a replay of the Obama comedy routine of a few days ago.

It wasn’t at all clever or funny, but sarcastic, mean spirited, cheap shots and arrogant self glorification, etc. and delivered as such. The shots against Clinton, Summers, and Biden- who I criticize perhaps more than anyone- were particularly cruel and tasteless, and unthinkable that their ‘boss’ would publicly humiliate them like that unless he intended to fire them. And the hostile undertone was similar to that of his attacks on the Chrysler secured lenders and corporations with legal untaxed offshore earnings.

The progression is getting worse. Wouldn’t surprise me if he starts losing support from some of the more intellectual Democrats before the end of the year.

>   
>   More on the theme of who could have predicted that a mainstream Canadian
>   newspaper could be on this side of the debate ?
>   

Amid the rhetoric, a profound threat to capitalism

by Avner Mandelman

May 9 (Globe and Mail) —


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Canada has it right

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Flaherty seems to have the fiscal aspects right today.

Anyone know who his advisors are?

Pace of bank remedies too slow, Flaherty says

by Eric Reguly

Apr 3 (Globe and Mail) — “Running large deficits is inflationary, eventually,” Flaherty said. “The spending will end. It is a use-it-or-lose- it proposition.”

Flaherty’s Conservative Party government is facing pressure from opposition parties and business groups to take additional measures to bolster growth in the world’s eighth-largest economy, on top of a two-year, C$40 billion ($32.3 billion) stimulus plan he announced in January.

Flaherty reiterated he’s in no rush to add to his stimulus plan and that Canada, along with other Group of 20 economies, is looking to see the impact of measures already taken. The Finance Ministry and the Bank of Canada will act together against the risk of inflation, Flaherty said.

In an interview with Business News Network today, Prime Minister Stephen Harper said the size of the stimulus is less important than the speed at which money flows into the economy. He said new government spending could end up “crowding out” investments by businesses if it takes place in the middle of a recovery.

“The real issue with stimulus is less size than whether these various stimulus packages are actually going to get out the door,” Harper said.


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Canada News | Ottawa to guarantee inter-bank lending

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Excellent move!

Someone finally understands that the CB demanding collateral from its own regulated banks is redundant for ‘local currency’ lending to member banks.

The Fed should have done this long ago and saved a year of financial turmoil, as I’ve been proposing for a long time.

This means bank failures will be due to solvency, and not liquidity.

Ottawa to guarantee inter-bank lending

By Kevin Doherty

OTTAWA — Canada’s government will guarantee the lending the country’s banks do with other financial institutions.

Finance Minister Jim Flaherty said Thursday the government is establishing the Canadian Lenders Assurance Facility on a temporary basis to backstop wholesale lending.

Mr. Flaherty said he is establishing the lending facility to ensure Canadian banks aren’t left at a competitive disadvantage. More than a dozen countries have pledged hundreds of billions of dollars to guarantee interbank lending.

Banks will access the insurance from the facility on commercial terms. Mr. Flaherty said there will be no cost to taxpayers.

“This is a proactive step,” Mr. Flaherty told reporters. “There is this concern that our institutions could be disadvantaged competitively.”


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2008-06-19 Canada News Highlights

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Highlights

Canada Inflation Rate Rises More Than Forecast in May on Gasoline Costs

   

Canada Wholesale Sales Rise Twice as Much as Expected

   

Canadian Dollar Strengthens as Report Shows Inflation Accelerated in May

Gotta love these kinds of headlines. Latin America had the strongest currencies in the world with their past inflations???

Statistics Canada Says Second Straight GDP Decline Won’t Prove Recession

   

Canada Stock Index Extends Record as Energy Shares Surge; TD Bank Declines

   

U.S. economy keeps Canada on edge


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