Month: May 2009

And apparently, we've got his attention because we're so darn boring! But, hey, that's OK with me. Nothing wrong with being boring. Here's an excerpt of an interview President Obama gave to David Leonhardt, the economics columist for The New York Times. The interview was published today in The New York Times Magazine:

THE PRESIDENT: You know, I’ve looked at the evidence so far that indicates that other countries that have not seen some of the problems in their financial markets that we have nevertheless don’t separate between investment banks and commercial banks, for example. They have a “supermarket” model that they’ve got strong regulation of.

Like Canada?

THE PRESIDENT: Canada being a good example. And they’ve actually done a good job in managing through what was a pretty risky period in the financial markets. (Akin's note: A footnote in the Leonhardt article notes that Canada's banks now rank in the top 50 but a better footnote would have been to note that not a single Canadian bank has collapsed, is in danger of collapsing, or has required a penny in government bailouts or equity. Some U.S. banks and banks in most of our G7 peers have required government money to avoid collapse.)

So — that doesn’t mean that, for example, an insurance company like A.I.G. grafting a hedge fund on top of it is something that is optimal. Even with the best regulators, if you start having so much differentiation of functions and products within a single company, a single institution, a conglomerate, essentially, things could potentially slip through the cracks. And people just don’t know what they’re getting into. I mean, I guarantee you that the average A.I.G. insurance policyholder had no idea that this stuff was going on. And in that sense I think you can make an argument that there may be a breaking point in which functions are so different that you don’t want a single company doing everything.

But when it comes to something like investment banking versus commercial banking, the experience in a country like Canada would indicate that good, strong regulation that focuses less on the legal form of the institution and more on the functions that they’re carrying out is probably the right approach to take.

In the first quarter of this year, 69,451 Canadians contributed a total of $7.1 million to a federal political party.

Both those numbers were down significantly compared to the fourth quarter of 2008, a quarter which saw political tension in Ottawa raised to new heights as a Stephane Dion-led coalition threatened to unseat Stephen Harper's Conservatives.

Still, when compared to the first three months of 2008, overall political financial activity was off but by much less. Year-over-year contributions fell by 0.6 per cent and the overall number of contributors fell by about five per cent.

But there were some substantial changes so far as individual parties go.

Though the Conservative Party is absolutely dominant — continuing to raise more money than all other parties combined from more contributors than all other parties combained — the Liberals appear to be finally seeing some results in fundraising efforts that have trailed all other parties while the NDP has show a sharp drop.

More than 39,000 Canadians kicked in a combined $4.36 million dollars to the Conservatives in the last quarter, a drop of 31 per cent from the previous quarter and a drop of 12 per cent from the same quarter a year ago.

And while the Liberal haul of $1.83 million in the first quarter of this year was down about 20 per cent compared to the last quarter, it was more than double or up 117% compared to the same period last year. More than 15,000 people cut a cheque to the Liberal. Just two years ago, in the first quarter of 2007, fewer than 4,400 Canadians were contributing to that party.

Meanwhile, the NDP's financial haul at just $595,611 dropped by 47 per cent year-over-year and 66 per cent quarter-over-quarter. There were just over 10,000 Canadians contributing to the NDP.

The Green Party raised $211,269 from 2,868 people in the quarter, about the same as the same period last year, but that was down 61 per cent from the last quarter.

The Bloc Quebecois raised $122,842 from 1,600 people, down 35 per cent quarter-over-quarter but up substantially from the $37,006 it raised from 463 people in the first quarter last year.

One of Canada's biggest banks added its voice to a growing chorus calling on the federal government to change the country's employment insurance system [PDF].

Economists at TD Bank said Thursday Ottawa ought to make it easier for newly unemployed workers to receive benefits and should reverse changes it made to the formula that sets the premiums to be paid by employees and employers.

TD noted that under current rules, anyone applying for employment insurance benefits must have worked for a certain number of hours prior to becoming jobless. But the amount of hours required to qualify varies from region to region in the country, depending on the unemployment rate in that region.

TD economists Derek Burleton and Grant Bishop said this variable entrance requirement (VER) ought to be flattened so that in any region of the country where unemployment is less than 10 per cent, prospective recipients would have to have worked for 560 hours prior to making a claim.

Such a change comes with a price tag of $500 million, the bank said.

In some parts of the country, potential recipients must work as much as 700 hours.

The bank says that as result of the regional differences, only about 80 per cent of those who might be eligible for benefits actually receive them.

The Canadian Centre for Policy Alternatives, in a report published Wednesday, has calculated that more than half of those who will lose their jobs this year will not be eligible for EI benefits.

“We urge the government to immediately ease the VER,” the bank said.

If the government standardized the entrance requirement — making it the same in every region of the country — at 420 hours, that would cost about $1 billion, said the bank.

“One important benefit that flows is increased fairness. The truth of the matter is that during an economic downturn, it is no easier to find a job in a region with lower prevailing unemployment than in one with a higher unemployment rate,” the bank said.

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