CA Economic Fundamentals 2008 (07,08)

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The power and peril of credit cards

On Aug. 19, 1968, Canadian banks launched the first all-purpose credit card. They called it Chargex, a name that was dropped in 1979 in favour of Visa.

They launched a memorable advertising campaign – "Will that be cash or Chargex?" – which led to the adoption of 6.3 million cards in Canada by the late 1970s.

The were four founding members of Chargex: Royal Bank of Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Banque Canadienne Nationale; Scotiabank joined in 1973, says Tania Freedman, a Visa spokesperson.

Bank of Montreal was the only major bank to try something different. It introduced Mastercharge (now MasterCard) in 1973.

Credit cards have expanded beyond the wildest dreams of issuers.

http://www.thestar.com/Business/article/479980

 

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Be prepared to pay extra for local produce, or watch it disappear

VANCOUVER ISLAND -- Fresh, locally grown vegetables and berries are two of the great things about summer, and August is the time when produce stands spring up on country roads across Canada. But if you look beyond the bucolic fields, there are two troubling issues threatening many of our produce growers: suburban development and a severe shortage of farm workers.

Runaway sprawl has already claimed large swaths of agricultural land around most Canadian cities. Elected officials have reacted with policies designed to protect designated farmland from development. Examples include the Greater Toronto Area Greenbelt, the Ottawa Greenspace plan, and the Greater Victoria Regional District Agricultural Reserve. Unilateral rezoning policies are often bitterly resented by owners who believe it is unconscionable for government to take away a property right without compensation.

http://www.theglobeandmail.com/servlet/sto...Story/TPComment

 

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Made in Canada gaining favour

High oil prices and increased environmental awareness are combining to change our shopping habits and the origin of goods available in stores.

Not only are Canadian-made goods more popular and more affordable, but there`s some evidence that consumers are starting to shop closer to home.

The trend to Canadian-made goods is much in evidence at the Canadian Gift and Tableware Association`s fall trade show in Toronto last week, where 52 per cent of retailers polled said they plan to increase the number of Canadian-made products in their stores, compared to only 34 per cent were of the same opinion last year.

http://www.canada.com/saskatoonstarphoenix...99-1164fbfec433

 

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Canadians deeper in the red

OTTAWA - The debt of Canadian households is now rising faster than their wealth in the wake of the stock-market correction and a housing-market slowdown, a major financial institution said Monday.

And with the slowdown in the economy, personal bankruptcies -- especially in Ontario and Quebec -- and mortgage arrears are starting to rise, CIBC World Markets said in its quarterly review of Canadian credit markets.

"The cumulative number of consumer bankruptcies rose by 3.8 per cent during the year ending June 2008, with Ontario and Quebec leading the pack," it said. "With the economy slowing, look for the number of bankruptcies to continue to rise."

http://www.canada.com/edmontonjournal/news...34-7d37b403eaf6

 

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A magic number to predict the future

It`s time to dust off the rule of 72. That`s because 72 is a magic number, like pi. You do remember your high school geometry, don`t you?

Using the rule can bring you good news and bad news. First, it will tell you and your clients approximately how long it will take for your money to double if invested and reinvested at compound interest.

Just take the rate of growth you expect and divide it into 72. So at 3%, it will take roughly 24 years, which seems a long time.

http://www.nationalpost.com/todays_paper/s....html?id=732707

 

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U.S. `liar loans` threaten to prolong mortgage crisis

NEW YORK

In the U.S. mortgage industry, they are called "liar loans`` -- mortgages approved without requiring proof of the borrower`s income or assets. The worst of them earn the nickname "ninja loans,`` short for "no income, no job, (no) assets.``

The struggling U.S. housing market, already awash in subprime foreclosures, is now getting hit with a second wave of losses as homeowners with liar loans default in record numbers. In some parts of the country, the loans are threatening to drag out the mortgage crisis for another two years.

http://news.therecord.com/Business/article/401192

 

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Execs see GST as friendly tax

OTTAWA -- Canada`s once "hated" goods and services tax has been ranked by business executives as one of the most user-friendly sales taxes in the world.

But it could it be friendlier, the global survey results released Tuesday by accounting firm KPMG also suggest.

Canada`s GST system ranks seventh easiest for businesses to deal with among value-added indirect tax systems in 32 countries including the U.S., according to the survey of senior finance professionals at more than 500 large corporations.

http://www.canada.com/saskatoonstarphoenix...06-440144bc075b

 

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Be ready for fall election, Harper warns

OTTAWA AND HAMILTON — Prime Minister Stephen Harper set a collision course for a fall election on Tuesday, indicating he has given up on the fixed date his government wrote into law and will decide in a few weeks whether to call a national vote. Delivery of an ultimatum when the Commons resumes sitting next month could send Canadians to the polls as early as Oct. 27, or even sooner if Mr. Harper decides to call off the session entirely to go straight to the hustings.

He said his own fixed-date election law is no longer relevant because of the election talk from the opposition.

Liberal Leader Stéphane Dion said the Prime Minister`s comments show Mr. Harper is willing to break his word and his law for political convenience. Mr. Dion said he has not decided whether he will move in the Commons to bring down the government in the fall, but added, "It is something that we may do."

http://www.theglobeandmail.com/servlet/sto...y/National/home

 

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Economic weakness helps home buyers

OTTAWA - The Canadian economy may have escaped a recession so far but it exited the spring and entered the summer with a whimper not a bang, the latest reports on consumer spending and leading economic indicators show.

But the good news, at least for homebuyers, is that the weakness in the economy has made housing more affordable and should continue to do so, according to a separate report by a Canadian financial institution.

Retail sales rose 0.5 per cent in June, the fifth-straight monthly gain, Statistics Canada reported Wednesday, with all parts of the country posting gains.

http://www.canada.com/edmontonjournal/news...f3-1a2a5ed06f85

 

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Understand the uses and abuses of in-trust accounts

Education is a wonderful thing. Well, I guess it depends on what the subject happens to be. Country western line dancing, for example, is a course that I never took. Interestingly, the government of France has decided that, because of the popularity of line dancing, it`s time to regulate the teaching of the pastime. So, starting in 2009, those teaching line dancing in France will require a licence after 200 hours of instruction. Maybe this is an attempt to limit the number of people that learn how to line dance.

As for the education of my kids - line dancing is not going to happen. Well, not as a career choice anyway. I don`t know how to ensure that, but I`ve got some time to think about it. One thing is for sure, however, and that is that the cost of a postsecondary education is going to be significant.

http://www.theglobeandmail.com/servlet/sto...ory/TPBusiness/

 

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Supplies of fresh water at rsik, federal report says

OTTAWA -- Canada`s supplies of fresh water are not as plentiful as once thought, and water shortages threaten to pinch the economy and pit provinces against each other, a newly released document says. An internal report drafted last December by Environment Canada warns that climate change and a growing population will further drain resources.

"We can no longer take our extensive water supplies for granted," says the draft report, titled A Federal Perspective on Water Quantity Issues.

The Canadian Press obtained the 21-page report under the Access to Information Act.

http://www.theglobeandmail.com/servlet/sto...PStory/National

 

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Infrastructure investment needed

OTTAWA -- Canada needs an estimated $200-billion investment in public infrastructure and getting it will help keep the country`s private sector competitive, according to a new study that warns the state of Canada`s infrastructure is reaching a critical stage.

In a report released Thursday by the Institute for Research on Public Policy, University of Waterloo economist James Brox analyzed the condition of Canada`s infrastructure and its impact on productivity, specifically within the manufacturing sector.

http://www.canada.com/reginaleaderpost/new...5f-35dd6e23ccd1

 

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Melting Beaufort Sea an international hotbed

Canada`s latest bid to assert sovereignty in the Arctic -- a sea floor mapping mission in the Beaufort Sea -- got under way yesterday amid unprecedented activity in the melting polar ocean.

Currently, icebreakers from China, Japan, Germany and the U.S. are cruising waters off Canada`s northern coast to gather geological data and conduct climate research.

Dr. Jacob Verhoef, the federal geoscientist who is heading the Canadian government`s attempt to secure new seabed territory in the Beaufort region north of the Yukon-Alaska border, told Canwest News Service that his survey team is heading into waters that have become "a very busy place" this summer, as various countries explore new scientific and economic opportunities in an Arctic Ocean increasingly unlocked by warming temperatures.

http://www.canada.com/theprovince/news/sto...71-38f7ff7e4045

 

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Carney wants derivatives trading addressed

OTTAWA — The Bank of Canada urged a federal panel studying securities regulation to include derivatives trading as part of its deliberations. In a submission to the Expert Panel on Securities Regulation, Bank of Canada Governor Mark Carney said that it is "generally recognized" that regulators have failed to keep pace with rapid mutations in the types of derivatives offered and the ways in which they are bought and sold.

Derivatives, such as currency swaps, are different than securities, such as bonds, in that cash doesn`t necessarily change hands at the outset of the transaction. An explosion in the trading of the instruments, which tends to occur outside the spotlight shone on stocks and bonds, is raising concern that derivatives pose a growing threat to the financial system.

http://www.reportonbusiness.com/servlet/st...y/Business/home

 

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Slow growth plagues Canada

Canada has avoided a recession so far, but just barely, figures being released this coming week are expected to show.

But we`re not out of the woods, analysts warn, including one financial institution that says Ontario will go into recession while Quebec will just skirt one.

"The Canadian economy likely managed to eke out a trace of growth in the second quarter, just avoiding a second consecutive quarter of declining GDP and averting a technical recession -- for now," says BMO Capital Markets economist Douglas Porter, projecting Friday`s report will show growth was at an anemic annual pace of just 0.6 per cent.

http://www.canada.com/calgaryherald/news/c...43-a119bfbd8c40

 

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Lower-than-expected growth fuels speculation about interest-rate cut

OTTAWA - The Bank of Canada has set the stage to cut interest rates this fall, analysts said Tuesday, after it suggested economic growth in Canada has fallen below expectations.

Evidence of whether the central bank`s pessimism is warranted will emerge on Friday when Statistics Canada releases second-quarter economic results for the country. Warnings about second-quarter growth may also provide a clue as to why Prime Minister Stephen Harper is keen to hit the election trail as soon as possible, his political opponents charged.

http://www.canada.com/edmontonjournal/news...ea-8a49b361b1fb

 

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Stephen Harper set to call fall election

OTTAWA–Prime Minister Stephen Harper is sending his clearest signal yet that Canadians will be heading to the polls this fall, saying that "fundamental differences" with the opposition parties make it impossible for his government to tackle looming economic woes.

"The country must have a government that can function during a time of economic uncertainty. If it`s not this ... Parliament, the public will have an opportunity to decide whom," Harper told a news conference yesterday.

http://www.thestar.com/News/Canada/article/486184

 

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Industry sees higher gas prices as inevitable

OTTAWA - Energy industry experts say consumers will pay more for gas at the pump, regardless of whether Conservative or Liberal policies are adopted to cut the greenhouse gas emissions that cause climate change.

The costs to consumers to cut greenhouse gases is expected to be a major issue in the federal election campaign that could be underway as soon as next week.

Prime Minister Stephen Harper has described the Liberal plan, which involves a carbon tax to encourage business and consumers to reduce energy consumption, as "insane" and "crazy."

http://www.canada.com/edmontonjournal/news...20-32a3c78e51b1

 

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Manufacturer labour shortage predicted

OTTAWA -- The labour crunch that has hit the energy, resource and construction industries is set to wreak havoc where it`s least expected -- manufacturing, according to a report from the Conference Board of Canada.

Manufacturers have shed more than 200,000 jobs this decade and seen their contribution to GDP drop, to 15.2 per cent in 2007 from 18.4 per cent in 2000. Nevertheless, a "significant" labour shortage threatens the parts of the industry that have the potential to expand, said a Conference Board report released Thursday.

One reason, the report suggests, is because the young skilled workers needed are being turned off by manufacturing`s battered image.

http://www.canada.com/reginaleaderpost/new...d2-fdd1190ef310

 

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Canada`s surplus rises to $6.8-billion

OTTAWA - Canada`s surplus in its dealings with the rest of the world rose for the third straight quarter in the spring to $6.8-billion, padded by higher prices for resource exports, which offset a surge in the deficit on services trade to nearly $6-billion, Statistics Canada reported yesterday.

That surplus in the current account was up from a downwardly revised $4.5-billion in the first quarter and from a marginal $778-million in the final quarter of last year.

http://www.nationalpost.com/todays_paper/s....html?id=755980