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James J. Jackson, a specialist in international trade and finance with the U.S. Congressional Research Service, takes a close look at Canada's system of financial regulation with an eye towards adopting some new policy recommendations for the United States. “Canada’s financial system, in particular is garnering attention, because it seems to be more resistant to the failures and bailouts that have marked banks in the United States and Europe. In particular, some observers are assessing the merits of the way Canada supervises and regulates its banks, as one possible model for the United States,” Jackson writes.

Canada, of course, is the only G7 country whose banks have not required any equity investment or bailout from any government.

Some random excerpts from Jackson's report:

the IMF concluded that Canada’s system is highly mature, sophisticated, and well-managed. In addition, the system is characterized by strong prudential regulation and supervision and a well-designed system of deposit insurance and arrangements for crisis management and resolution of failed banks.

Unlike the United States and some European countries, subprime mortgages account for fewer than 5% of Canadian mortgages, which sharply limited Canada’s direct exposure to the meltdown that occurred in the subprime mortgage market. Although Canada’s mortgage markets are somewhat less innovative than in the United States, Canadian consumers seem to be well served and home ownership rates are comparable with those in the United States.20 In addition, Canadian law requires that all bank-held mortgages above a loan-to-value ratio of 80% be insured, which has curtailed the securitization of mortgages by banks in Canada. About one-third of mortgages are securitized in Canada, about half as much in percentage terms as in the United States.21 In addition, prepayment penalties and the lack of interest deductibility reduces the demand for longterm mortgages, so the maturity of most mortgages generally does not exceed 5 to 10 years.

However, the smaller scope of Canada’s financial system and its economy likely lessen the transferability of systems or procedures used in Canada to the vastly more complex U.S. financial system. In addition, it can be argued that Canada’s supervisors and regulators can take a more conservative approach than their U.S. counterparts as a result of Canada’s proximity to the U.S. capital markets. Nevertheless, Canada’s financial supervisory system and regulatory structure have proven to be less susceptible to the bank failures that have loomed in the United States and Europe and may offer some insight for U.S. policymakers. Canada’s reliance at the federal level on a unified supervisor and regulator appears to have some merits as compared to a more decentralized approach.

Canada’s approach does have some drawbacks. Specifically, Canada’s system of regulating securities markets at the provincial level means that regulations regarding market participants and investor protection differ by province, creating inefficiencies in the system and raising costs to providers and consumers. Differences between provinces also mean that coordinating policy approaches across the 13 provinces can be slow and cumbersome.

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AREVA Canada, which could very well end up owning the CANDU business of Atomic Energy of Canada Ltd. once the federal government finishes its privatization program for that Crown corporation, has a new CEO and he is a Canadian. Outgoing CEO Armand Laferrère, who, like Areva, was from France, is off to head up Areva's business in Russia.

He will be replaced by Canadian Roger Alexander. The press release from Areva is below, with information about Alexander. Also of note: I'm interested to see how Areva now describes itself. It is not a “nuclear power company” or a “nuclear” anything — the term “nuclear” can be one that makes certain environmental types nervous. Instead, Areva is now “a world leader in CO2-free power generation”. Now it's certainly correct to say that electricity produced from nuclear power does not produce the CO2 emissions that cause climate change. But you could also say that Newfoundland and Labrador Hydro is also “a world leader in Co2-free power generation.” Indeed, if N&LH could ever run a power line through Quebec, the power that could be generated from its Lower Churchill Dam would be enough to replace Ontario's Nanticoke power plant. Coal-fired Nanticoke is responsible for one-fifth –that's right one-fifth — of all the greenhouse gas emissions produced by Ontario businesses and consumers. In other words, Ontario takes a big leap towards its Kyoto target simply by replacing Nanticoke – with “Co2-free power generation” from N&LH Hydro (or any hydro, for that matter). For now, N&LH is busy running undersea power lines to Nova Scotia to take that province's coal-fired plants offline.

All of which is something to think about as Ontario reconsiders whether or not it should spend mega-billions on nuclear power …

I'm just sayin', here, by the way, not advocating …

As I mentioned, here's Areva's press release:

Toronto, July 22, 2009 – AREVA, a world leader in CO2-free power generation, today announced the appointment of Roger Alexander as President of AREVA Canada Inc. Alexander succeeds Armand Laferrère who served as CEO since 2006.

Prior to his appointment, Alexander served as Vice President of AREVA NP Canada Ltd. and was responsible for leading AREVA’s growing Canadian

nuclear energy business.

“I am excited to assume the role of President of AREVA Canada at such an important time in the Canadian and global nuclear energy markets,” said Alexander. “Armand has made tremendous progress in building AREVA’s businesses in Canada. I look forward to working closely with my colleagues to build on his success.”

A Canadian, Alexander brings more than 25 years of varied experience to the position. Prior to joining AREVA, Alexander held senior leadership positions at Siemens Canada where he was responsible for various business units and all manufacturing and engineering related matters. He is a graduate of Ryerson Polytechnic University with a diploma in Electrical Technology and is a Certified Engineering Technologist (Industrial Control). Alexander holds a Master’s of Business Administration from the University of Western Ontario’s Richard Ivey School of Business.

In his new role, Alexander is responsible for strategic leadership of AREVA Canada’s nuclear plants and services, uranium mining, and transmission and distribution businesses.

Jacques Besnainou, President and CEO of AREVA Inc., welcomed Alexander’s appointment as the next logical step for AREVA in Canada saying, “I’m confident this move will accelerate our leadership in nuclear energy globally and contribute to the nuclear revival under way in North America.”

Auto analyst Dennis Desrosiers published his monthly scorecard of the top-selling vehicles in Canada.

With the exception of the Hyundai Elantra and the Ford Escape, all 20 vehicles on the Top 10 passenger car list and the top 10 light truck list are showing year-to-date declines. In other words, the first six months of 2008 was better for everybody than the first six months of this year. Not that's a surprise.

Here's Desrosiers' take on the big picture for June:

“… small entry level vehicles are hurting as much as any other size of vehicle. These are much lower priced obviously so one would think that they would be drawing in consumers from other segments. This may be true but these vehicles also play to the lower quartile of consumers from an economic perspective and these are the consumers most hurt from the recession and therefore are not buying. The best performing segments are the large/luxury/sport segment which are down 12.6 percent YTD but still much better than the market which is down by 18.3 percent. Mid-sized family vehicles are the worse performing sector down 26.8 percent on the month and 22.3 percent on the year.”

Here's the top-ten selling passenger cars in the country in June, ranked according to the number of units sold. In brackets is the percentage change in sales in June 2009 compared to June 2008:

1. Honda Civic 5,883 ( -24.40% )
2. Toyota Corolla 4,789 ( -20.10% )
3. Mazda3 4,276 ( -22.00% )
4. Hyundai Elantra 3,244 ( 187.10% )
5. Ford Focus 2,851 ( -8.80% )
6. Hyundai Accent 2,575 ( -34.10% )
7. Chevrolet Impala 2,297 ( 30.70% )
8. Ford Fusion 2,130 ( 12.90% )
9. Toyota Matrix 2,008 ( -26.10% )
10. Nissan Versa 1,974 ( 10.60% )

Here's the top-ten selling light trucks, SUVs and minivans in the country in June, ranked according to the number of units sold. In brackets is the percentage change in sales in June 2009 compared to June 2008:

1. Ford F-Series 8,487 ( 38.50% )
2. Ford Escape 4,917 ( 41.30% )
3. Ford Ranger 3,067 ( 50.20% )
4. Toyota RAV4 2,615 ( 49.90% )
5. Dodge Ram 2,531 ( -26.10% )
6. Hyundai Sante Fe 2,254 ( 104.20% )
7. Honda CR-V 2,238 ( 54.70% )
8. Chevrolet Silverado 2,016 ( -10.60% )
9. GMC Sierra 1,958 ( -21.10% )
10. Ford Edge 1,662 ( 23.30% )

TD Economics releases its latest forecast for provincial economic performance [PDF] and, if there's anything encouraging about it, it's that things are not likely to get worse. Are they getting better? Not much, according to TD economist Pascal Gauthier.

Some excerpts:

“A slumping U.S. economy, weak commodity prices and increasingly cautious consumers across the nation have meant there has simply been no place to hide [but] the major pieces of the economic and financial puzzle seem to be falling into place for a recovery, albeit modest, to start taking hold late this year..”

“While Ontario, British Columbia and Alberta have already been hit with significant job losses, we believe Québec and the Atlantic region might have some unfortunate catch up with further losses to come in the months ahead.”

The real gross domestic product or the sum of all provinces is forecast to shrink this year. (TD chart on the left) Real GDP is the sum of all economic activity in a region after adjusting for the effects of price inflation.

Manitoba's economy will shrink by just 0.7 per cent while Newfoundland and Labrador's economy will shrink by 4 per cent.

Next year, TD says, it will get a bit better with all provinces seeing real GDP provinces, led by B.C. which should post 2.1 per cent GDP growth. Every economist has a different view of what they consider healthy GDP growth but most would say that, for Canada, healthy growth is in the 2-3 per cent range. TD believes Canada's GDP growth in 2010 will be well below that at just 1.4 per cent. And, with the exception of B.C., no province is expected to see growth of two per cent.

All of which adds up to what could be long, slow, tepid recovery.

“All said, we do not find potent enough drivers that would convince us there will be significant regional differentiation during the initial economic recovery phase. Following a severe recession in most parts of the country, the foundation for a more robust and sustained recovery will be laid from coast to coast. Among other factors, we will look to local housing markets, net migration flows, consumer, business, and government investments and balance sheets to see which regions build a firmer foundation than others, which will drive wedges in performances beyond next year.:

Most economists thought the job numbers released this morning by Statistics Canada would be terrible, that they would show that the Canadian economy shed another 35,000 to 40,000 jobs last month.

In, fact, Statistics Canada found that just 7,400 people lost their jobs last month, the statistical equivalent of zero per cent change from May to June. The unemployment rate did rise from 8.4 per cent to 8.6 per cent but that's because more than 30,000 people entered the workforce. So while the number of jobs remained relatively stable, there was an increase in the number of people looking for jobs and that bumped the unemployment rate.

Here's a snippet of reaction from Bay Street to the numbers:

Doug Porter at BMO Capital Markets says: “Today’s job report, while hardly a walk in the park, compares favourably to the dire U.S. news from the same month. Still, even if the job losses are gradually easing, it’s obvious that recession has yet to let go its steely grip on the Canadian economy, with the squeeze remaining particularly intense in manufacturing. On balance, while this report is not as friendly as the headline would suggest, it’s also not shockingly weak—a relief.

Dawn Desjardins at RBC Economics Research: “The labour numbers are consistent with the economy continuing to contract in the second quarter, although the slowing pace of decline suggests that conditions are becoming less dire. We look for the unemployment rate to continue to drift higher, rising by 0.1% to 0.2% each month rather than the large 0.3% to 0.6% jumps recorded earlier in the year. We also expect the rate to peak at 9.2%, portending an easing in price pressures as the amount of economic slack grows. Against the backdrop of a rising unemployment rate, growing economic slack and lessening price pressures, the case for the Bank of Canada to keep to its conditional commitment of maintaining a 0.25% policy rate looks solid.”

Aron Gampel at Scotiabank, speaking on BNN this morning: ” It surprised everyone.. the trend shows the pace of job cutting has clearly slowed and that's the transition phase from recession to recovery. You know what? You could have a much bigger rate of growth and some renewed job creation by later this year in some key sectors. It may not prevent the unemployment rate from continuing to move higher, but employment is typically, at best, a coincident but probably a lagging indicator.”

I'll update with more as I see them to day …

I can publish these because I'm a Leafs fan (living, I might add, almost next door to the arena where Dany Heatley and Alexei Kovalev will be playing their home games next year) and because of that, I'm happy to prove that I can take a joke by publishing the following, passed on to me today by an old friend:

Q: What do the Leafs and the Titanic have in common?

A: They both look good until they hit the ice.

Q: What's the difference between the Toronto Maple Leafs and a cigarette vending machine?

A: The vending machine has Players!

Q: What do the Toronto Maple Leafs and whales have in common?

A: They both get totally confused when surrounded by ice.

Q: Why are the Toronto Maple Leafs like Canada Post?

A: They both wear uniforms and don't deliver!

Q: Why doesn't Hamilton have an NHL team?

A: Because then Toronto would want one.

Q: What do the Toronto Maple Leafs, Toronto Argonauts and the Toronto Blue Jays all have in common besides being based in Toronto?

A. None of them can play hockey.

Q: What do you call 30 millionaires around a TV watching the Stanley Cup Playoffs?

A. The Toronto Maple Leafs.

Q: What do the Toronto Maple Leafs and Billy Graham have in common?

A. They both can make 20,000 people stand up and yell 'Jesus Christ'.

Q: How do you keep the Toronto Maple Leafs out of your yard?

A. Put up a goal net.

Q: What do you call a Toronto Maple Leaf with a Stanley Cup ring?

A. A thief.

Q: What do the Toronto Maple Leafs and possums have in common?

A. Both play dead at home and get killed on the road.

Q: How many Toronto Maple Leafs does it take to win a Stanley Cup?

A. Nobody knows … And we may never find out.

Thank you. Thank you very much. I'm here all week. Try the veal, I hear it's great …

CIBC economist Benjamin Tal releases his homemade index of metropolitan economic activity.[PDF] Tal takes nine macroeconomic variables like employment growth, housing activity, bankruptcy rates and so on and comes up with an index ranking for the 25 largest metropolitan areas in the country.

As Tal cautions, this approach allows econometricians to track the relative economic strength of various cities and not the absolute strength. For example, Edmonton, Calgary, and Vancouver (ranked 9, 12, and 13) show worse in this latest index, an indication, Tal says, of weakening economic momentum in Western Canada. And yet, as he notes, absolute levels of activity in those cities remain above average.

Regina and Saskatoon placed 1 and 4 on the list, a sign of Saskatchewan's new title as economic wunderkid among the provinces. Both cities have the highest population growth right now in Canada, Regina's employment growth is second only to St. John's and it has the lowest unemployment rate in the country at 4 per cent.

Toronto ranks second on the list but, as a sign of problems in the rest of the province, three other Ontario cities rank dead last on the list. Thunder Bay is in the 25 spot, Windsor is 24, and St. Catharines-NIagara in is 23. London is 19 on the list. Chalk the declines in those cities up to declines in forestry, autos, autos, and autos respectively.

St. John's is at number three and Halifax is at number 5 on this list of cities with economic momentum. St. John 's, Tal notes, has the lowest business bankruptcy rate in the country.

Canadians are crazy about the weather. It's the default topic whenever there's a lull in the conversation anywhere anytime. At many of the smaller papers, I worked, our line story on the front page would often be a weather story.

“Thunder Bay gets socked with snow” the headline of the Chronicle-Journal would blare from time to time in mid-February telilng all those in that northern Ontario city what they surely already knew. And yet, my editors at the Chronicle-Journal thought — and probably correctly so — that people would buy a paper that told them what the weather did yesterday so that we could all share in that common weather experience and have something to chat about at the coffee shop.

Now comes news supporting the thesis that weather information is, in fact, one of the things people hunger for. Mind you, it's a study by weather forecasters that say weather forecasting is really important and isn't getting the public funding it deserves. But perhaps I quibble.

The National Center for Atmospheric Research announced this morning that 90 per cent of American adults obtain a weather forecast regularly and most want their weather three times a day! (Though NCAR, a U.S. government agency, studied the weather info habits of Americans, my gut tells me that the data would be pretty similar for a Canadian survey.)

From the NCAR press release:

U.S. adults obtain an estimated 300 billion forecasts each year, says NCAR scientist and lead author Jeffrey Lazo. The study also reveals that most people are generally satisfied with weather forecasts and have fairly high confidence in forecasts with a lead time of one to two days.

“Weather forecasts equate to an enormous volume and multiplicity of information, when you account for the array of forecast providers, communication channels, and the size and diversity of the U.S. population,” Lazo says.

Lazo is an NCAR scientist and his study is based on an Internet-based survey he did in late 2006.

Lazo argues that he and other weather experts are not getting the kind of resources that their importance in the lives of Americans might deserve.

First, he asked his survey respondents — more than 1,500 — how many times a day they used a weather forecast and then he asked them how much they'd pay, if they had to, for each forecast. Answer to the last one — about a dime.

So Lazo then makes the jump that, if 300 billion forecasts are served up each year in the U.S. and they're worth a dime each, that means weather forecasters are serving up something with a market value of $31.5 billion:

In comparison, the cost of providing forecasts by government agencies and private companies is $5.1 billion, according to the paper.

“Our estimates indicate that Americans are getting a good deal on weather forecasts,” says Lazo. “While it's hard to precisely estimate the value of the forecasts, it is clear that there is a significant difference between the cost of forecasts and the value that people place on them.”

Where do people get their forecasts? The scientists asked about that and here's their response:

The most common source for forecast information is local television stations, with individuals obtaining forecasts 33.7 times per month on average. Cable television and radio are the next most popular sources. Web pages and newspapers were less common sources overall, but both are a daily or more frequent source of forecasts for 27 percent of respondents.

The press release also has this paragraph which I'm quite sure even a non-scientist could have concluded:

Many people use forecasts for planning specific activities, such as vacations, and routine daily activities, such as deciding what to wear and how to get to work or school. The peak periods for accessing forecasts are the early morning, early evening, and late evening, says (Lazo's co-author Julie) Demuth.

Turns out TD Bank is more of a bear than the World Bank when it comes gloomy economic forecasts. And yet, its the World Bank that apparently has the power to make investors around the world simultaneously jump off a cliff.

The Washington-based World Bank said today that the global economy is going to contract next year by 2.9 per cent. Seconds later, everyone everywhere apparently yelled “Sell!”. The benchmark TSX Composite Index was down 450 points today or 4.4 per cent. The Dow Jones Industrial Average was off about 2 per cent.

TD, though, promptly looked at the World Bank's forecast and noted that, hey, the World Bank's forecasters aren't nearly as gloomy as Don Drummond [PDF}and his band of merry econometricians on the 21st floor of the TD Tower in downtown Toronto.

In fact, according to the TD number crunchers, when it and the World Bank uses the same forecasting model, the World Bank has the global economy shrinking by just 1.7 per cent next year compared to 1.9 per cent for the TD guys.

Feel better now?