Andrew Coyne: The myth of income inequality: Since the bleak 90s, things have actually gotten better
By now the themes have been well established, through sheer repetition: stagnating real wages; the forgotten middle class struggling to keep up; the poor falling ever further behind, while the rich ` why, even they`re falling behind, if by `rich` you mean anyone besides the top 1%.
We used to think of the poor when we spoke about `inequality.` Later, it came to mean something broader, the stark division of society into haves and have-nots, without an intermediating middle class to bridge the gap. Happily, it now applies to just about everybody: 99% of the population is now considered to be in a state of relative deprivation.
No signs of interest rate thaw from Bank of Canada`s Poloz
OTTAWA ` Three years after the Bank of Canada froze borrowing costs, there is still no sign of a thaw.
As with other central banks, policymakers here have had to contend with a climate of economic uncertainty that many thought would have cleared long ago. But mild ` and often unpredictable ` growth, erratic employment data and tame inflation have kept the Bank of Canada`s trendsetting interest rate at the lowest level since the 1950s.
The last lending-rate rate change ` by a quarter of a point to 1% ` came in September 2010, when Canada had already climbed out of recession and cheap credit was expected encourage spending to keep that recovery chugging along. The outcome was not as planned, consumers piled up unsustainable debt, much of that in home purchases, while businesses have kept their cash close at hand until they see more consistent growth here and elsewhere, especially in the United States.
A decision on whether to approve the Keystone XL oil pipeline may slip into next year, giving opponents time to marshal efforts against it while offering President Barack Obama a chance to wring concessions from Canada.
The U.S. State Department is reviewing TransCanada Corp.`s request to build the US$5.3-billion link from Alberta`s oil sands to U.S. refineries in the Gulf Coast. The department said it won`t complete its environmental-impact review of the pipeline until after reviewing and publishing 1.5 million public comments it received, a months-long process that could be completed as soon as this week.
Fracking is the latest villain of the cult of catastrophe
At the age of 94, George P. Mitchell died last month. Who's that you say? Not to worry, I didn't know who he was either.
Quoting energy guru Daniel Yergin, the Wall Street Journal's obituary describes him as the man who "more than anyone else, is responsible for the most important energy innovation of the 21st century." In popular legend, Mitchell was "the father of fracking."
Technically, the proper term for fracking is hydraulic fracturing, a process that involves using high-pressure blasts of water and sand - plus a smattering of chemicals - to extract hitherto inaccessible oil and natural gas from shale rock thousands of feet below the earth's surface. To borrow a phrase from National Review's Kevin Williamson, it offers the prospect of "cheap, relatively clean, ayatollah-free energy," not to mention "thousands of new jobs for blue-collar workers and PhDs alike."
There is a housing market correction in the making and it has the banks a little worried ` but homeowners even more so. Get ready for a slew of `Told ya so` commentaries from anyone who has predicted a crash over the past decade. Cry about something long enough and eventually it`ll come true. But let`s take a step back and think about the situation.
If, say, you bought a house in Toronto 10 years ago, there`s a good chance your property has almost doubled in value, especially if it was considered `affordable` back then. A $275,000 house in 2003 is probably getting $500,000 today, maybe more in a desirable area. That`s a $225,000 gain on paper. Further, let`s suppose you weren`t foolish enough to take a 40-year amortization ` since banned for insured mortgages by the government ` and had a down payment of at least 10%.
The Royal Society, the U.K.`s once-venerable academy of science, has arguably lost its collective mind over the theory of projected catastrophic man-made global warming. Recently, its president, Paul Nurse, in seeking to avoid a meeting with skeptical experts from the Global Warming Policy Foundation, GWPF ` the think tank set up by former Chancellor of the Exchequer Lord Nigel Lawson ` linked skeptics with those who reject evolution and believe that the weather might be changed by prayer. Whatever kind of argument that is, it isn`t scientific, but it certainly invites analysis of the mindset that made it.
An even more egregious example of the Royal Society`s support for treating skepticism as the result of ignorance or psychiatric disorder came with the granting earlier this year of a Wolfson Research Merit award ` designed to attract and keep academic talent in Britain ` to Stephan Lewandowsky, an Australian `cognitive scientist,` who recently moved to Bristol University. The award was for a project titled `The (mis)information revolution: information seeking and knowledge transmission.`
Mortgage reforms on both sides of the border might stabilize markets, or might not
Business headlines flowed fast this week: Regulatory limits on government-backed mortgage security issuance kicked in and ruffled markets in Canada, and President Obama endorsed a Senate bill that would overturn housing finance mechanisms in the United States.
The U.S. first. The current in the U.S. represents fundamental reform proposals, in response to the housing bust there that Canada has, so far, avoided. Fannie Mae, Freddie Mac, and a flood of other federal agencies with funny nicknames, lend, insure and securitize trillions of dollars of home loans, and Congress and the President would like to change the system before they are overwhelmed again.
OTTAWA, Ont. ` The prime minister`s advisers have dismissed a warning by a respected think-tank that ultralow interest rates need to start rising now to avoid damage to the Canadian economy.
In a paper for the C.D. Howe Institute, economist Paul Masson argued in May that the Bank of Canada should nudge rates higher to forestall real-estate bubbles, excessive household debt, pension-fund woes and other dangers.
But a May 31 briefing note requested by Stephen Harper`s office on the controversial paper notes that Masson`s arguments are `at odds` with the views of most economists.
And it says the central bank cannot act as if Canada is an island while the United States, Europe, Japan and England continue to hold rates down to help prime their anemic economies.
Tighter mortgage rules fuel spike in rental prices, competition
Tighter mortgage rules appear to have taken an unintended victim in Canada`s largest city: the renter.
Toronto rents are on the rise due in part to increased demand from would-be home buyers, some of whom are unable to get the necessary financing to purchase a home.
A record 5,315 condo apartments were rented on the Multiple Listing Service (MLS) from April to June, a 20-per-cent spike from the same time last year, says Toronto condo market research firm, Urbanation Inc.
Average rents also jumped 4.1 per cent in the second quarter, compared to the same time in 2012, to about $1,847 per month. Renters are reporting bidding wars for apartments in downtown Toronto.
Winners and losers as Canada bids adieu to record-low interest rates
As Canadians sat on lakeside docks or headed elsewhere on vacation this summer, forces at work in the bond market have helped to reshape many of their financial futures.
Record low interest rates that sent Canadians into a binge of borrowing and home-buying are reverting to more normal levels. Still cheap by historical standards, loans are not nearly as cheap as just a few months ago.
The general consensus has always been that interest rates could not stay so low indefinitely. But the correction has been much quicker than expected. As the economist Rudiger Dornbusch once said, `in economics, things take longer to happen than you think they will, and then they happen faster than you thought that they could.`
Emerging markets, including India, China, Qatar and Chile, led the pack of countries poised for real estate investment in the next 12 months, with Canada following closely in fifth.
"Confidence is returning to the sector as credit availability and strong industry fundamentals create a more stable foundation for deal-making," says Krista Blaikie, EY's National Real Estate leader. "Companies that were focused on maintaining stability and operational efficiency are now shifting gears and looking ahead at new investment opportunities."
OTTAWA (Reuters) - The already low rate of arrears on mortgages insured by the Canada Mortgage and Housing Corp (CMHC) declined further in the second quarter, an indicator which might temper concerns about a possible hard landing for the housing sector.
The government agency said in its quarterly financial report that the arrears rate had declined to 0.32 percent as of the end of June, down from 0.35 percent both at the end of 2012 and at the end of March.
Canada did not suffer the housing crisis that triggered the 2007-2009 recession in the United States, and its government has taken steps to try to cool the Canadian market without causing a crash.
Canadian home sales are edging back toward the levels they were at before Ottawa decided to tighten the market last summer.
For the first time in a year, the number of homes that changed hands over the Multiple Listing Service last month came in higher than one year earlier, driven by rebounding markets in Vancouver and Toronto.
The large gains are partly due to the fact that last month`s sales are being compared with a weaker market. It was in July, 2012, that sales plunged after Finance Minister Jim Flaherty changed the rules, cutting the maximum length of an insured mortgage to 25 years from 30.
Tax auditors target condo sellers in hunt for `flippers`
Toronto tax lawyer is warning realtors ` and people who`ve bought and sold new condos over the past seven years ` that they could become unwitting victims of what he calls `abusive audit practices` by the Canada Revenue Agency.
Tax auditors have been targeting the once red-hot Toronto and Vancouver real estate markets, looking primarily for people who bought condos before they were built, intending to flip them for a profit as soon as the project is complete.
But other folks, including some who were forced to sell because their circumstances changed in the years it took for their new condo or home to be built, have been hit with the kind of massive tax bills usually reserved for real estate speculators.
No ugly downturn for condo market, even in Toronto: report
A new report from the Conference Board of Canada predicts that the much-watched condo sector will avoid an ugly downturn, even in Toronto.
Economists and policy-makers are keeping a close eye on condos, especially in the country`s most populous city, where cranes dot the sky. A number of economists say that too many units are being built, a development that would put pressure on prices. The Bank of Canada has highlighted the risks that this market could pose to the economy.
Condo sales plunged in most Canadian cities last year, and are expected to be down again this year.
As earnings season winds down, focus will shift away from
company specifics onto US Federal Reserve Board nuances, tapering timelines, and
interest rate fears. That`s all noise that typically triggers sentiment shifts
with an attendant spike in volatility.
Not surprisingly we are seeing signs that the US economy is
not as robust as some might have thought. Mind you, that could be seen as a
positive, because the Fed is unlikely to cut its bond buying program when the
economy is sending mixed signals. Look for more on the tapering debate in the
Canadian property prices up almost 5% year on year, latest index shows
The national average sale price in Canada has increased by almost 5% year on
year and sales are up 3.2% on a monthly basis, according to the latest data from
the Canadian Real Estate Association (CREA).
The actual, not seasonally
adjusted, national average price for homes sold in June 2013 was $386,585, an
increase of 4.8% from the same month last year.
Year on year price
growth picked up for two storey single family homes with a rise of 3% but slowed
for all other benchmark property types tracked by the index. Prices for one
storey single family homes were up 3.1% year on year in June, followed by town
house and terraced properties up 1.6% and apartment units with an increase of
The increase in sales in June was the fourth consecutive monthly
increase, with activity now running 11% above where it stood in February.