The Bank of Canada increased the interest rate by 25 basis points on Tuesday, which was expected after it was revealed that the Canadian economy grew by 6.1% in the first three months. However, there was considerable caution injected into the announcement due to the uncertainty surrounding the global recovery from the financial crisis. This move is widely seen to be more symbolic than anything else. There is doubt as to whether interest rates would be hiked for the rest of the year and if so, would probably be modest. See the following article:
Interest Rate Hike
Much depends on how the crisis in Europe plays out and the recovery in the US.
Wednesday, June 2, 2010
Saturday, May 29, 2010
Household Debt in Canada
While Canada has a sound banking system and generally avoided the subprime mortgage meltdown that nearly brought the US to its knees, it is not without its' problems as revealed in a lengthy article in today's Toronto Star: According to the article:
"Canada ranks first among a list of 20 countries of the Organization for Economic Co-Operation and Development — including the United States — when consumer debt-to-financial-assets ratios are compared. That’s just a taste of the dour revelations in a report released earlier this month by the Certified General Accountants Association of Canada."
This article is at this link: Canadian debt
As alluded to in a previous post, there has been speculation as whether the Bank of Canada will increase the interest rate next Tuesday. If it does, it will increase the pressure on those with considerable debt. There is still some mixed signals as to whether it will happen or not. Stay tuned.
"Canada ranks first among a list of 20 countries of the Organization for Economic Co-Operation and Development — including the United States — when consumer debt-to-financial-assets ratios are compared. That’s just a taste of the dour revelations in a report released earlier this month by the Certified General Accountants Association of Canada."
This article is at this link: Canadian debt
As alluded to in a previous post, there has been speculation as whether the Bank of Canada will increase the interest rate next Tuesday. If it does, it will increase the pressure on those with considerable debt. There is still some mixed signals as to whether it will happen or not. Stay tuned.
Wednesday, May 26, 2010
Canadian Economy
It’s been interesting to read the paper articles regarding what the Canadian government should do during these interesting economic times. While the Canadian economy has been doing relatively well, it is not totally insulated from the volatility of the world economic and market conditions. The condition was neatly reflected last week when, on the same day, two different papers had different opinions with respect to what the Bank of Canada should do. The Toronto Star opined that the Bank of Canada should raising interest rates in light of the fact that inflation increased by 1.8% in the month of April. On the other hand, the Globe and Mail opined that, due to the Greek debt crisis and its effect on the rest of Europe, the “chances of an interest rate hike has dramatically decreased.” I’m guessing that the world stock markets have essentially delivered their verdicts in the past week, reflecting a lack of confidence in the Euro currency and financial and economic conditions in Europe. As the papers have pointed out, the Chinese and the North Americans have a fair percentage of exports going to Europe. A slowdown in exports naturally will have an effect on world economic conditions. Call me a pessimist but I think that the current recession is far from over. With regard to interest rate hikes, we shall find out on June 1st as that is when the Bank of Canada will decide whether to raise the interest rate or not.
Friday, May 21, 2010
Overview
So a lot has happened in the past couple of years, foremost is the financial meltdown, resulting in the "Great Recession." It will have been two years this coming fall when the crisis hit full force. As a few writers have pointed out, the roots of this crisis go back further than 2008. I got a sense of foreboding in the summer of 2006 when Mary-Anne and I start readying the Columbus home for sale. From the time we decided to put it on the market to the time we actually sold it, the value of the house dropped substantially. To be sure, I thought that it was a localized phenomenon. In hindsight, it probably was not.
In any case, we are still feeling the effects of the global financial meltdown. They range from the unprecedented bailout of Wall Street, the emergence of the Tea Party movement, the worst unemployment statistics since the Great Depression, a hung Parliament in UK, the crisis among Portugal, Spain, Ireland, Italy and Greece, the threat to the euro, wild fluctuations on the stock market and many other things. It is pretty clear that the effects of the Great Recession will linger for many many years.
The recession has not been as severe here in Canada, largely due to a sound banking system. It was recently ranked as one of the soundest in the world. However, there are troubling signs. There are worries up here about the debt load taken on by the average Canadian household. One would think that, during these tough economic times, folks would retrench, cut down on spending and reduce their debt load. Instead, Canadians have assumed more debt than ever before. The irony is that the low interest rates have made it easy for people to justify racking up debt. So Canadian economists are voicing some worries about the effect of a rate hike on the debt load of Canadians. Who knows where this might be going?
More to come as I get back into the swing of this particular blog!
In any case, we are still feeling the effects of the global financial meltdown. They range from the unprecedented bailout of Wall Street, the emergence of the Tea Party movement, the worst unemployment statistics since the Great Depression, a hung Parliament in UK, the crisis among Portugal, Spain, Ireland, Italy and Greece, the threat to the euro, wild fluctuations on the stock market and many other things. It is pretty clear that the effects of the Great Recession will linger for many many years.
The recession has not been as severe here in Canada, largely due to a sound banking system. It was recently ranked as one of the soundest in the world. However, there are troubling signs. There are worries up here about the debt load taken on by the average Canadian household. One would think that, during these tough economic times, folks would retrench, cut down on spending and reduce their debt load. Instead, Canadians have assumed more debt than ever before. The irony is that the low interest rates have made it easy for people to justify racking up debt. So Canadian economists are voicing some worries about the effect of a rate hike on the debt load of Canadians. Who knows where this might be going?
More to come as I get back into the swing of this particular blog!
Wednesday, May 19, 2010
Update
I know I know, I've been such a slacker with regard to this particular blog and I plan to post more regularly here as well as my Bamboo Spirit martial arts blog. I'm going to tinker with this blog and change some of the looks and make some other updates as well.
On to our lives: we are now well settled into the house in Oshawa and all is well. The martial arts business has progressed since I started teaching up here in February 2008. The growth has been slow though, owing to the fact that I had no professional or social network in Oshawa when I started teaching. In addition, the economic recession of the past two years didn't help matters either. Still, I'm teaching a class in Ottawa, four hours from here on a regular basis and may have a possibility in Barrie, which is about one hour from here. As for Oshawa, we are slowly adding a student here and a student there. It's taking time.
My contract job with the Law Foundation of Ontario comes to an end on July 31st and I have been looking for employment to start soon thereafter. I had a good run at the Law Foundation as my original assignment was for 4 to 6 weeks and they ended up offering a contract to me. I'd like to think that I did well by turning a 4 to 6 week assignment into something that last almost 2.5 years. Not too shabby.
All the while, I've been taking hearings on a part time basis for the City of Oshawa and that is challenging. As of this juncture, I am unsure where this is going to lead. I'd like to work in Oshawa or at least in the Durham Region, which is basically the part of Ontario where we live.
Will write more as I ease myself back into this blog!
On to our lives: we are now well settled into the house in Oshawa and all is well. The martial arts business has progressed since I started teaching up here in February 2008. The growth has been slow though, owing to the fact that I had no professional or social network in Oshawa when I started teaching. In addition, the economic recession of the past two years didn't help matters either. Still, I'm teaching a class in Ottawa, four hours from here on a regular basis and may have a possibility in Barrie, which is about one hour from here. As for Oshawa, we are slowly adding a student here and a student there. It's taking time.
My contract job with the Law Foundation of Ontario comes to an end on July 31st and I have been looking for employment to start soon thereafter. I had a good run at the Law Foundation as my original assignment was for 4 to 6 weeks and they ended up offering a contract to me. I'd like to think that I did well by turning a 4 to 6 week assignment into something that last almost 2.5 years. Not too shabby.
All the while, I've been taking hearings on a part time basis for the City of Oshawa and that is challenging. As of this juncture, I am unsure where this is going to lead. I'd like to work in Oshawa or at least in the Durham Region, which is basically the part of Ontario where we live.
Will write more as I ease myself back into this blog!
Tuesday, May 18, 2010
I'm Baaaaack!!!!
It's been far too long since I've posted here on this particular blog as I have devoted most of my blogging energy on my martial arts blog. But there are many things that I'd like to say and post on here that doesn't quite belong on the Bamboo Spirit blog. Therefore, I will soon be posting on here again. Alot of it is just sheer laziness and some of it is that I don't have a lot of time. Really, it comes down to more efficient time management and coming up with timely topics for this blog.
See you in a few days!
See you in a few days!
Thursday, April 2, 2009
World Economy
There was a nice article by Time regarding one of the underlying causes of the current economic recession (other than the subprime mortgage problem, the banking problem...the financial industry problem) and that is the world trade imbalance. In summary, too many countries adopted an economic strategy that was heavily reliant on exports. As a result, when the U.S. economy tanked, their economies tanked as well. See here for the article.
It’s evident that this recession is much more than a short term problem. It’s more than injecting liquidity into the financial markets. It’s much more than enacting tighter regulation of the financial industry. As the article points out, it also means re-jiggering much of the economic thinking of the past 30 or 40 years. The Chinese apparently have come to realize that reliance on exports to grow their economy is not a long term sustainable strategy and that they will have to pursue policies that encourage their own people to spend. Like wise the US will have to pursue policies that encourage more savings and less spending among the populace. It’s no secret that Americans have been terrible at saving their money. That has to change.
As the U.S. is waking up from the awful, wasteful, profligate spending spree of the past 25 years and start adopting policies (more savings, going green, higher fuel efficiency standards for cars, and less spending), the world is going to realize that they cannot depend on exports to the US to grow their own economy. I think that this transition is going to take decades.
I’m interested to see how this transition affects three areas:
(1) China: the conventional wisdom has been that the Chinese economy needs to grow at 8%. Anything below that means layoffs and unemployment. Millions have already been laid off from factories that make products for export to the U.S. and other countries. The increasing number of unemployed people is going to pose very difficult challenges to Hu Jintao and the Chinese Communist Party. Pretty ironic that just a few months ago, the world was marvelling at the show China put on during the Beijing Olympics. It seems such a distant memory.
(2) Oil from the Middle East: the past week has seen moves by the Obama administration that is unprecedented, unusual and necessary. I’m speaking of President Obama’s decision with regard to GM and Chrysler. In particular, what he was telling them “your proposed restructuring plans are not enough” and conditioned further government aid on revised restructuring plans from GM within the next 60 days and for Chrysler to complete merger talks with Fiat within the next 30 days. In a stunning and bold move, Obama proceeded to sack Rick Wagoner, the CEO of GM. The message is loud and clear: mediocre performance and failure are not options. GM had lost $80 billion under Wagoner. Abysmal performance indeed. Implicit in all of this is the administration’s desire for the Detroit manufacturers to produce more fuel efficient green vehicles.
This leads to the question of how that will affect the oil markets. Probably not much in the short term. However, if the auto industry can improve their mileage efficiency, say, 3 or 4% per year, the numbers will surely add up over the long term. That is bound to have some effect on the oil markets.
As Thomas Friedman of the NY Times and many others have pointed out, major oil producing countries such as Russia, Nigeria, Venezuela, Iran, and Middle Eastern countries are (a) corrupt; (b) authoritarian; (c) anti Western or some variation thereof. These countries are so awash in petro dollars that they don’t feel the need to impose taxes on their citizens. That means that they are not responsive to their citizens. Most often they funnel the money to state or internal security organizations.
What would be the long term effect of reducing the U.S. reliance on oil through the pursuit of green technologies ? That is going to be interesting to watch.
(3) Canada: The Canadian economy is heavily dependent on the U.S. economy and the effects of the recession in the U.S. is being felt up here, particularly in the auto industry here in Ontario. The ironic aspect of the global downturn is that Canada and the US may become more interdependent than ever. As has been noted, Canadian banks now occupy the list of the 15 largest banks in North America, due to the spectacular flameout of the financial industry in the U.S. Indeed, the Canadian banking industry has been rated as the soundest in the world by Time Magazine recently. PM Harper has been hailing the soundness of the Canadian financial industry in interviews with US news outlets (CNN and Fox). As a result, Canadian banks such as TD (Toronto Dominion) and RBC (Royal Bank of Canada) are poised to move into the U.S. and acquire or merge with U.S. banks.
At the same time, as noted above, the auto industry is hurting up here. A good example is the GM plant in Oshawa and its uncertain future in light of Obama’s recent moves. The Canadians are moving in the same direction as Obama as far as conditioning further government help on a sound restructuring plan. In any case, many GM plants manufacture vehicles for export to the U.S. and naturally, they have been hurt by falling demand in the US, starting last summer. I think that it’s safe to say that the manufacturing sector of Ontario is going to suffer a long term decline as it did in Michigan and in Ohio.
To be continued in next entry.
It’s evident that this recession is much more than a short term problem. It’s more than injecting liquidity into the financial markets. It’s much more than enacting tighter regulation of the financial industry. As the article points out, it also means re-jiggering much of the economic thinking of the past 30 or 40 years. The Chinese apparently have come to realize that reliance on exports to grow their economy is not a long term sustainable strategy and that they will have to pursue policies that encourage their own people to spend. Like wise the US will have to pursue policies that encourage more savings and less spending among the populace. It’s no secret that Americans have been terrible at saving their money. That has to change.
As the U.S. is waking up from the awful, wasteful, profligate spending spree of the past 25 years and start adopting policies (more savings, going green, higher fuel efficiency standards for cars, and less spending), the world is going to realize that they cannot depend on exports to the US to grow their own economy. I think that this transition is going to take decades.
I’m interested to see how this transition affects three areas:
(1) China: the conventional wisdom has been that the Chinese economy needs to grow at 8%. Anything below that means layoffs and unemployment. Millions have already been laid off from factories that make products for export to the U.S. and other countries. The increasing number of unemployed people is going to pose very difficult challenges to Hu Jintao and the Chinese Communist Party. Pretty ironic that just a few months ago, the world was marvelling at the show China put on during the Beijing Olympics. It seems such a distant memory.
(2) Oil from the Middle East: the past week has seen moves by the Obama administration that is unprecedented, unusual and necessary. I’m speaking of President Obama’s decision with regard to GM and Chrysler. In particular, what he was telling them “your proposed restructuring plans are not enough” and conditioned further government aid on revised restructuring plans from GM within the next 60 days and for Chrysler to complete merger talks with Fiat within the next 30 days. In a stunning and bold move, Obama proceeded to sack Rick Wagoner, the CEO of GM. The message is loud and clear: mediocre performance and failure are not options. GM had lost $80 billion under Wagoner. Abysmal performance indeed. Implicit in all of this is the administration’s desire for the Detroit manufacturers to produce more fuel efficient green vehicles.
This leads to the question of how that will affect the oil markets. Probably not much in the short term. However, if the auto industry can improve their mileage efficiency, say, 3 or 4% per year, the numbers will surely add up over the long term. That is bound to have some effect on the oil markets.
As Thomas Friedman of the NY Times and many others have pointed out, major oil producing countries such as Russia, Nigeria, Venezuela, Iran, and Middle Eastern countries are (a) corrupt; (b) authoritarian; (c) anti Western or some variation thereof. These countries are so awash in petro dollars that they don’t feel the need to impose taxes on their citizens. That means that they are not responsive to their citizens. Most often they funnel the money to state or internal security organizations.
What would be the long term effect of reducing the U.S. reliance on oil through the pursuit of green technologies ? That is going to be interesting to watch.
(3) Canada: The Canadian economy is heavily dependent on the U.S. economy and the effects of the recession in the U.S. is being felt up here, particularly in the auto industry here in Ontario. The ironic aspect of the global downturn is that Canada and the US may become more interdependent than ever. As has been noted, Canadian banks now occupy the list of the 15 largest banks in North America, due to the spectacular flameout of the financial industry in the U.S. Indeed, the Canadian banking industry has been rated as the soundest in the world by Time Magazine recently. PM Harper has been hailing the soundness of the Canadian financial industry in interviews with US news outlets (CNN and Fox). As a result, Canadian banks such as TD (Toronto Dominion) and RBC (Royal Bank of Canada) are poised to move into the U.S. and acquire or merge with U.S. banks.
At the same time, as noted above, the auto industry is hurting up here. A good example is the GM plant in Oshawa and its uncertain future in light of Obama’s recent moves. The Canadians are moving in the same direction as Obama as far as conditioning further government help on a sound restructuring plan. In any case, many GM plants manufacture vehicles for export to the U.S. and naturally, they have been hurt by falling demand in the US, starting last summer. I think that it’s safe to say that the manufacturing sector of Ontario is going to suffer a long term decline as it did in Michigan and in Ohio.
To be continued in next entry.
Subscribe to:
Posts (Atom)
