May 2012 Canadian Economic Fundamentals

[Ally]

We have met the enemy and he is us





Describe the federal political par-ties in a single word. That's what Nanos Research asked Canadians to do in a recent survey.




Profanity featured in many of the descriptors. Beside these, Nanos reported that many Canadians described Conservatives as "untrustworthy." The NDP is "socialist." Liberals are "incompetent."




It turns out that we don't have much good to say about our political system. Ridiculing elected officials is now a national pastime, as is casting doubt on politicians' motivations for seeking office, and treating them as punch lines rather than persons to respect.






Read the full article here.

 

[Ally]

Coal's role as economic indicator





Depending on who you ask, the first thing that occurs to a per-son when the subject of coal is brought up is the Industrial Revolution, or per-haps what Santa Claus leaves for naughty girls and boys.




Either way, the popular perception of coal is that it's a backward energy source consigned to the days of steam locomotives and sooty Lon-don factories. But the commodity re-mains a key component of electricity generation and a useful economic indicator because of its role in steel manufacturing.






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[Ally]

Generational angst overwrought




Generational conflict abounds these days. Students in Quebec scream bloody murder at their elders over proposed university tuition increases. An anonymous 29-year-old pens a 2,000-word cri de coeur detailing the precise manner in which the Boomers prevented him from grabbing the brass ring. Other boomers send out caustic apologies for said prevention. Ink-stained wretches issue noxious screeds against their less stained, more wretched successors.




These discussions, so rooted in matters of wealth and power, tend to overlook two highly salient points. The first is that the idea of a generation is a total fabrication. Well, maybe not total ` it makes sense to speak of generations within specific families or in evolutionary biology, sure. And I suppose you could argue that the Boomers constitute a generation, kind of.





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[Ally]

Create a home reno budget that works




There are many rationales when it comes to spending money on renovations: `We`re redoing the counters, we might as well do the entire kitchen`; `This project will definitely increase the value of our home`; `Good quality comes at a high price.`




While this is in some cases true, without a solid plan and a realistic budget you`ll end up paying more than you need or expect to. If you plan to tackle a few home projects this summer here are some ways to control your renovation spending plan.





Read the full article here.

 

[Ally]

Noose tightens around donation tax schemes





In the latest blow to `donation tax shelters,` an Ontario Superior Court judge has kept alive a $300-million proposed class action that targets the promoters of one such failed scheme as well as the lawyers and accountants who gave it their seal of approval.



In a decision released last week, Mr. Justice George Strathy of the Ontario Superior Court said a full trial is required in a lawsuit launched against Toronto-based Trinity Capital Corp. The suit also blames major law firm Fraser Milner Casgrain LLP and accountancy firm BDO Dunwoody LLP for endorsing the tax shelter.





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[Ally]

Two quite different problems surrounding the labour market





What industry faces is distinctly at odds with what concerns society, both impacting on Canada`s future wellbeing. Both require a considerably increased working population, essential for building renewed prosperity. Industry badly needs more skilled labour to increase profitability while society needs more jobs to build up employment levels and an increased tax base. These are not necessarily the same people.



Despite large numbers of unemployed workers, companies appear unable to find sufficient trained people for existing openings. A Globe and Mail article May 5th highlighted the lack of skilled workers, projecting even greater shortages in the future. The author claimed that industry needs an additional million immigrants over the next 10 years to fill existing vacancies. Where are they needed? Our current economic base, especially the Golden Horseshoe, is not the answer. Do we really need that many more people in an already crowded southern fringe devoted to manufacturing?





Read the full article here.

 

[Ally]

Housing and lending risks need to be better monitored in Canada: Ex-Bank of Canada governor




OTTAWA ` Canada must improve its monitoring and prevention of systemic financial crises stemming from such things as housing bubbles and overly exuberant lending practices, former Bank of Canada Governor Gordon Thiessen said on Tuesday.




To deal with such macro-prudential risks, Thiessen and former Senior Deputy Governor Paul Jenkins said in a paper that a new policy committee should be set up, which would be chaired by the central bank chief and include the heads of other agencies.





Read the full article here.

 

[Ally]

Resource riches sap Canada's creative spirit




EDMONTON ` Canadians take great pride in the country`s history of creativity, citing Alexander Bell`s telephone, Frederick Banting`s insulin, Peter Robertson`s screw, Spar Aerospace`s Canadarm, Mike Lazaridis` BlackBerry and Louise Poirier`s Wonderbra.




Todd Hirsch, chief economist with ATB Financial, says that wealth is created by creativity. But he worries that various factors are causing Canadian creativity ` in the form of invention, innovation and design ` to dry up.




He argues that in a global economy, we need to keep pace by encouraging creativity through changes in education, plus opportunity and reinforcement in the workplace, while `we need to stop asking the government to make us productive and creative.`





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[Ally]

Household debt is 'biggest domestic risk' in Canada




Canadians` household debt levels are already at near-record levels. The Bank of Canada thinks they will swell even higher.




`Household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk,` the central bank said Tuesday as it boosted its economic growth forecast and indicated higher interest rates are on the way.





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[Ally]

Western energy vs. eastern industry




In recent weeks there has been a recurring debate on whether the economic success being felt in much of Western Canada is hurting the rest of the country. The debate has centred on the oil sands and whether they have caused so-called `Dutch disease`, specifically in the manufacturing sector based largely in Central Canada.





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[Ally]

Expanding pipeline capacity won't end oil price spread, experts say




Canadian crude producers are facing a prolonged period of discounted pricing, despite recent moves to open new pipeline capacity to the U.S. Gulf Coast.






Enbridge Inc. (ENB-T40.62----%) and its partner, Enterprise Products Partners (EPD-N49.44----%), began operations on the weekend at the revamped Seaway pipeline, which reversed the original flow and can now deliver 150,000 barrels of crude per day to Houston refineries from the oversupplied Cushing, Okla., hub. The partners plan to expand that capacity to 400,000 barrels per day by early 2013.





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[Ally]

Infation report will do little to sway Carney's rate stance




The Bank of Canada`s nuanced effort to straddle the line between acknowledging that inflation has been firm, and hinting that it will act before it creeps up much further, while asserting that it reserves the right to delay action as long as the global backdrop is shaky, appears to be working in holding expectations steady.





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[Ally]

Canada first quarter GDP seen short of central bank forecast




OTTAWA (Reuters) - The Canadian economy probably expanded at a significantly slower rate in the first quarter than the Bank of Canada had predicted in January, and in fact its spare capacity may have risen, a Reuters survey of analysts showed on Friday.




The median forecast of an annualized growth rate of 1.8 percent compared with the central bank's 2.5 percent forecast and matched the lukewarm fourth quarter rate.




The Bank of Canada has estimated that the growth in economic capacity rises by 2 percent a year, so any economic growth below that rate means a wider output gap.





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[Ally]

Small rate hike could hurt many households




Cheap borrowing costs have helped push Canadian household debt to historic highs. Mortgage and consumer-related debt reached $1.6 trillion in 2011, according to the study by Dominion Bond Rating Service (DBRS).




What's more, Canadian households have debt equal to 153 percent of their income. This is lower than in the U.S., where debt to income is as high as 167 percent. Nevertheless, DBRS says some Canadians are highly exposed should conditions change.




"Canadian households are more highly leveraged than in the past, taking on more risk and more vulnerable to economic or event shocks than before," the study says.





Read the full article here.

 

[Ally]

Home affordability in top markets deteriorates






Royal Bank of Canada (RY-T51.000.020.04%) says home ownership was less affordable in most major Canadian cities during the first quarter, although Calgary and Edmonton bucked the trend.




The latest RBC Economics report on home affordability says its index deteriorated sharply in Vancouver and to a lesser degree in Toronto, Montreal and Ottawa ` primarily due to higher real-estate prices.





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[Ally]

Is Canada's job comeback too good to be true




OTTAWA (Reuters) - Canada created a stunning 140,000 jobs in just two months this year, the most in 30 years and a source of pride for a government bragging that the economy has got its moxie back.




But scratch the surface of the official data, and stir in a few secondary figures, and the picture looks far less upbeat.




Canada is definitely creating jobs, but the figures are volatile at the best of times. There's also been an increase in involuntary part-time work, a decline in employment quality and a fall in real wages.





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[Ally]

Canada rode a second consecutive month of strong job gains in April




In the past two months, Canada has been riding an employment wave.




58,000 net new jobs were created in April, according to Statistics Canada. That`s on top of the 83,000 net increase that was recorded in March.




There are now 141,000 more positions in the work force than there were at the end of February. To put this in perspective, an annual gain of 200,000 is a quite decent figure.




The year didn`t start this auspiciously. January`s 2,000-job pick-up was offset by February`s 3,000-job loss.





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[Ally]

Where to buy in Canada now






With the amazing gains enjoyed by real estate investors in the past several years, it`s been easy for prospective home buyers to conclude that investing in real estate is easy`almost a sure thing. All you have to do to make money`or so it would seem`is to pick a property, lock in a low-rate mortgage and wait for the profits to start rolling in.




However, the dark side to the run-up in real estate prices is that finding a place that`s not overpriced is getting tricky`very tricky. And with all the recent talk of a housing bubble, you really have to ask yourself if there`s any place left in Canada where homes are still a good buy.





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[Ally]

"Oilsands fever" is clouding political judgment





OTTAWA ` In the runup to Tom Mulcair's much-anticipated Alberta visit on Thursday, a Calgary-based think-tank said Wednesday Canada is suffering from "oilsands fever," a modified version of the so-called "Dutch disease" concept cited by the NDP leader as the reason Canada is losing hundreds of thousands of manufacturing jobs.







The Pembina analysis ` which lends support to Mulcair's controversial argument that the booming oilsands sector is artificially-inflating the Canadian dollar and hurting manufacturers, especially in Ontario and Quebec ` was one of two conflicting report released Wednesday.






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[Ally]

Mulcair's fixation on 'Dutch disease' is simple-minded



EDMONTON - Between 2000 and 2010, the U.S. lost more than five million manufacturing jobs, or roughly one in three.





I`m pretty sure these losses had absolutely nothing to do with `Dutch disease` ` the ailment routinely cited by NDP leader Thomas Mulcair as the sole cause of Canada`s manufacturing woes.





Instead, the rise of China, the `offshoring` of millions of U.S. factory jobs to low-cost countries, and the worst global recession since the 1930s were more likely culprits in the precipitous decline of American manufacturing.





Read the full article here.