Month: March 2009

22 Minutes misfires …

Every comic knows that timing is everything.

And usually, the timing of the comedians on the CBC hit This Hour Has 22 Minutes is pretty good.

But this morning, 22 Minutes performer Geri Hall misjudged things badly.

Hall wanted to crash a scrum of Ontario Premier Dalton McGuinty ostensibly to poke some fun at a new rule McGuinty's press handlers laid down that the premier wants five feet of space around him in a scrum.

Not a bad idea but Hall tried to burst into the scrum to have a bit of fun while real reporters were quizzing the premier on a very serious issue: The shutdowns of steel mills in Hamilton and on Lake Erie. McGuinty giggled awkwardly when Hall burst in because he realized this was not the kind of day for him to be seen goofing around. The idling of these steel mills is awful news for a province that just this week announced deficits would total $18-billion over the next two years.

NDP MP Peter Kormos actually shooed Hall away, “Shame on you! 2,000 workers just lost their jobs. We're trying to hold the premier accountable. Why don't you get the hell out of here?”, according to Global Television Queen's Park correspondent Sean Mallen, who was in on the scrum.

You'll remember that Hall, with wig on, was once arrested by Stephen Harper's security guards when she crashed a press conference the PM was giving during the election. All turned out well (in fact, better than well) when Harper's handlers quickly realized the error and got her a one-on-one in Harper's hotel suite. Hall turned that moment into some pretty good comedy.

This time around, though, no one was in the mood for any foolin' around and Hall packed up and left.

“I'm going to go,” she said. “Good luck. Bye.”

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Would you eat less in a recession?

Apparently you would not. And, because of that, The Conference Board of Canada — an independent economic think tank based in Ottawa – concludes that food manufacturing may in fact be a recession-proof industry. It believes that profits for food manufacturers in 2009 will come close to the record-high levels of profits made in 2008:

“Demand for everyday products such as food is not particularly sensitive to economic conditions, so the food manufacturing industry in Canada is expected to come through the economic turmoil without suffering too much,” said Valerie Poulin, Economist.

Food is one of the most overlooked components of the Canadian economy. Food and beverages are the single largest component of retail sales, and food processing is the largest component of Canada’s manufacturing sector in terms of jobs.

Food processors may be affected by changing tastes and diets, and consumers may choose cheaper products over premium ones, but total food consumption is not expected to drop significantly due to the recession. Production of food products is expected to decrease by less than 1 per cent in 2009. Profits are expected to fall from their peak of $4.6 billion in 2008 to $4.3 billion this year and remain close to that level throughout the next four years.

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If the interest rate was zero, would you borrow more?

The Bank of Canada hopes the answer to that question is a resounding yes. But here's the funny thing about borrowing money: Whether your rate is zero per cent or 10 per cent or 50 per cent, you still have to pay the money back …

The Bank of Canada made a bet Tuesday that, if interest rates were virtually zero, businesses might be more inclined to borrow to build new factories, buy new equipment, and put unemployed Canadians back to work.

The central bank lowered its key overnight rate Tuesday to 0.5 per cent — a record low — and many observers say the bank could even take the rate as low as it could go, to zero, in all all-out effort to make it cheaper and easier for commercial banks to lend money and spur economic growth.

Several commercial banks did lower some of their interest rates within hours of central bank's announcement.

But the new, lower rates are unlikely, by themselves, to get the economy moving again.

“You can have the cheapest money in the world, but if people keep reading about the layoffs and falling housing prices, that takes away confidence and makes people much more cautious about borrowing, and leaves all the stimulus that you're trying to put in place basically on the sidelines,” said Warren Jestin, chief economist at The Bank of Nova Scotia. [Read the rest of the story]

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April Fool's for budget spending

The Liberals have been spending the last 2 days in the House of Commons debating the budget bill, the legislation that, once passed, can trigger billions in new spending and tax cuts aimed at reviving the economy.
Last week, the NDP kicked the bill around the Commons finance committee.
The Conservatives have been loudly demanding that the opposition stop the delays and pass the budget.
To which Liberal finance critic John McCallum just said, in the House of Commons a few minutes ago, “It'll be passed in plenty of time!”
That's because the budget bill affects the federal government's next fiscal year which doesn't begin until April 1.
So even if MPs passed the budget today, it would not come into effect until the end of the month.

Creating jobs – a half-dozen at a time

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This winter, for the first time in a decade, Sheri Doornekamp (left, with husband Hank) had to lay people off from her Kingston, Ont., construction company.

She was thrilled, then, to be able to call up six of those laid-off employees last week and tell them they were going to back to work — fixing a bridge — thanks to some federal government infrastructure spending.

“When you can get a job in our business in the middle of winter, you are keeping guys employed. Absolutely,” said Doornekamp.

For the federal government, that's six down and 189,994 to go.

Finance Minister Jim Flaherty, in the 2009 federal budget, said it was Ottawa's intention to “create or maintain close to 190,000 jobs.”

But how does a federal government actually go about creating a job? How does one measure a government's job-creation success or lack of it?

These are not academic questions. In the first place, between November and January alone, more than 234,000 Canadians have lost their jobs and many of those will be looking to the federal government for help. Economic forecasters believe another 250,000 could be out of work before year's end … [Read the rest of the story]

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Reaction to Canada's dismal 4th quarter GDP

Gross Domestic Product or GDP is the sum total of a country's economic activity. It should always be getting bigger. When GDP shrinks, that's a bad thing. When it shrinks a lot — as the U.S. and Canadian economies did for the three months ending Dec. 31, 2008 — that's a really bad thing:

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It’s almost as if someone turned out the lights on Canada’s economy after October. November saw a 0.7% monthly drop in real GDP, and December followed up with a 1.0% decline. The cumulative two month decline was by far the worst since that particular series began in 1997, but also eclipsed the worst two month plunge in the early 1980s recession under the measure used at that time. Only the public sector was still growing in December. Financial markets have every reason to be concerned by the very steep pace of decline.
– Avery Shenfeld, CIBC Capital Markets

While the Canadian economy succumbed to the global pressures in the last quarter of 2008, it still remains amongst the best performing countries across the globe, and managed to outstrip a 6.2% decline in the U.S. However, the fourth quarter marks just the beginning of Canada’s recession. As producers attempt to correct for the unintended inventory build up, and as falling income puts further downward pressure on the domestic economy, we expect at least a 5% decline in the first quarter of 2009, to lead an overall annual decline of 2.2% in 2009.
–Diana Petramala, TD Bank

One would be stretched to find any good news in today’s dismal GDP report, with the economy recording its biggest quarterly retrenchment since the recession of the early 1990s (-3.4% q/q annualized). Moreover, the much larger-than-expected drop in December GDP (-1.0% m/m), the biggest monthly decline since the recession of the early 1980s, points to an accelerating pace of deterioration into the New Year. We now expect an output decline in the first quarter which is at least as large, if not larger, than in the fourth.
– Adrienne Warren, Scotia Capital


The decline in Q4 GDP was well in excess of the 2.3% drop projected by the Bank of Canada in its January Monetary Policy Report Update. They had suggested that the first quarter might even show a greater decline of -4.8%, which does allow the central bank to argue that the weakness in growth may be hitting the economy sooner than anticipated. However, the steady decline in monthly growth through the fourth quarter suggests little indication that the pace of decline is poised to reverse going into 2009. As a result, we expect that the Bank of Canada will opt to cut the overnight rate another 50 basis points to 0.50% following tomorrow’s policy-setting meeting.
– Paul Ferley, RBC Economics Research

“My own belief is if we were going to have some kind of big crash or recession, we probably would have had it by now.”
Prime Minister Stephen Harper speaking in Ottawa, Sept. 15, 2008, just two weeks before the beginning of that now-infamous fourth quarter.

May wants a re-match vs. MacKay – maybe

Conservative blogger and activist Stephen Taylor tweets that Elizabeth May is ready to run again in Central Nova, the riding currently held by Defence Minister Peter MacKay. Taylor thinks that is the very definitation of insane.

The Toronto Star sent Ottawa-based reporter Joanna Smith to Pictou, N.S. where the Greens had their annual meeting and Joanna reports that while May is indeed committed to running against MacKay again, she is willing to be persuaded to run elsewhere if someone's got some decent numbers:

May placed second with 32 per cent of the vote, but party analysis showed about 6,000 of those ballots – just under half her result – came from Liberal voters, because she struck a deal with former party leader Stéphane Dion not to run candidates in each other's ridings.

Would new Liberal Leader Michael Ignatieff repeat the favour?

“Not a chance,” May says when asked if Ignatieff would repeat the favour in a general election.

Ignatieff left no doubt of that at a speech in Halifax last night, where he said the Liberals will run candidates in every riding, including Central Nova.

May insists she is committed to running in Central Nova again, but she also promises to listen when organizers come back with the numbers they are currently crunching.

“I've told them I am willing to look at the case they might make for me to run somewhere else,” May says after admitting that she did not view winning her riding as a priority in the last election, at least no more than other Green candidates winning theirs.

“They know that I'm really reluctant to look anywhere else but here, because I love living here and I don't want to go anywhere. But I have to be a good team player about getting the Greens into the House.”

National campaign chair Greg Morrow welcomes the flexibility.

“The commitment that we've made is that we will run our best candidate in our best possible riding,” he says. “It's really just being driven by what the data is telling us and where we can make the strongest case that Green issues matter,” Morrow adds.

May has been on an election ballot twice now — once in a byelection in London, Ont. and once in a general election. For most parties, a leader that loses two elections is a former leader. But, in my experience, the Greens, for better or worse, hold themselves and May apparently to a completely different standard, one that's difficult for political parties, political journalists and, perhaps, mainstream voters to grasp. The essence of the Canadian Green Party's standard is this: You will NOT be judged by electoral success. Getting MPs elected or winning more votes than the last time is not the objective. The objective is to change things. And if Green Party activism forces change, it matters not which party gets the credit for the change so long as there is change.

Like I said, it's a weird concept to get your head around if you're used to measuring political success by votes and seats. The trick for the Green Party is that as it grows, it's going to start attracting disillusioned voters from those old mainline parties – and, from talking to many of them, I get the sense that they're kind of partial to success measured in votes and seats.

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Credit crisis touching ordinary Canadians

Whenever he’s pressed, as he was last week in the House of Commons, Finance Minister Jim Flaherty loves to thunder at Opposition politicians that the top priority for the federal government is to make sure Canada’s financial system is working.

“We will deal with the most important problem facing Canadians today, which is access to credit,” Flaherty said, in response to Opposition attacks last week in the House of Commons.

Rick Abbott, the owner and operator of a log-hauling rig in Thunder Bay, Ont. would surely agree with Flaherty’s diagnosis of the problem but he doesn’t see much evidence that Ottawa is, in fact, dealing with his credit problem.

Abbott is on the verge of losing his truck trailer because, though he’s paid off four years of a five-year government-backed small business loan, his bank says the federal government won’t let him refinance the loan to help tide him over a layoff of a few months this spring.

“I didn’t ask for a handout. I’m not asking to get out of my next 10 payments or anything like that,” Abbott said. “It’s just, if I’m not working can I just pay the interest? And the answer is no.”

Abbott is facing the kind of problems facing thousands of business owners across the country. His story illustrates how the collapse of banks in other countries and the global financial crisis those failures caused is hurting ordinary Canadians far from the epicentre of the crisis on Wall Street. [Read the rest . . .]

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