Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Sunday, February 26, 2012

Rising oil prices fuel fears for Canada as global economy sputters

The Canadian economy likely ended the year on a stronger note than was expected only a few months back and that could have analysts, who spent last year repeatedly downgrading their forecasts, start upgrading them after seeing Statistics Canada’s annual economic report card Friday.

“If 2011 indeed turns out to have ended on a more upbeat note than we foresaw when we released our mid-December quarterly forecast, we will be inclined to upgrade our Canadian forecast for the first half of 2012,” says Jacques Marcil, economist at TD Economics.

The optimism is despite soaring oil and gasoline prices, which could slow — if not derail — the global recovery.

TD, although more bullish than most, projects the economy expanded at an annual pace of 2.3 per cent in the final quarter. That’s slower than the 3.5 per cent spurt in the third quarter but much stronger than analysts projected.

A separate report Thursday is expected to show Canada’s balance of payments deficit eased in the final quarter of the year, and in 2011 to what BMO Capital Markets projects will be $48 billion from 2010’s record $50.9 billion.

“This is not to say that the sky is cloud-free,” cautioned TD’s Marcil, pointing to the debt crisis in Europe and household debt here. “However, those risks are not new.”

High oil and gas prices are a new risk that should not be discounted, says TD economist James Marple. “Rising gas prices have preceded every major U.S. economic slowdown in the last 40 years.”

Peter Buchanan, economist at CIBC World Markets, estimates “a 25 per cent rise in oil prices, a bit more than seen so far, could shave nearly half a point from U.S. GDP over the subsequent four-to-six-quarter period.”

Higher oil prices are not an unmitigated plus for the Canadian economy, he cautions, explaining that after an initial modest lift to growth, the drag from a weaker U.S. economy and a stronger Canadian dollar would result in a net drag on growth here.

BMO economist Benjamin Reitzes calculates that a rise in gasoline prices to $1.50 a litre from an average of $1.25 a litre would “sap” consumers of approximately $10 billion a year of spending power.

Concerns about the economic influence of high fuel prices, on top of lingering worries about the debt-crisis and recession in Europe, along with evidence that Canada’s federal deficit is falling faster than projected, may explain Finance Minister Jim Flaherty’s comment last week that his budget will not impose “draconian” spending cuts.

Canadian Labour Congress economist Andrew Jackson also notes that even the International Monetary Fund is warning governments in developed countries against further spending cuts that could exacerbate a global economic slowdown and erode financial market confidence.

Concerns about a slowdown may already be a drag on business investment, which the Bank of Canada had been counting on to offset the drag on the economy from weaker spending by debt-burdened governments and consumers, and to boost Canada’s lagging productivity.

Despite last week’s news from Statistics Canada that corporate profits hit a post-recession high in the final quarter of last year, analysts suspect business investment weakened during the quarter. “The large amount of uncertainty surrounding Europe’s financial crisis likely led to more cautious hiring and business spending on investment,” says TD economist Diana Petramala.

Statistics Canada on Wednesday will issue its preliminary report on business investment last year and investment intentions for this year. The report will give a better idea of whether years of controversial corporate tax cuts are paying off in increased business investment in machinery and equipment.

Regardless, and economic risks aside, analysts expect corporate profits will rise this year, a view now shared by investors to judge by the recent surge in stock markets.

Meanwhile, reports out of the U.S. this coming week on personal income and spending, consumer confidence, manufacturing activity, auto sales and revisions to fourth quarter GDP, are expected to provide further evidence of recovery. It’s something that Federal Reserve chairman Ben Bernanke is likely to note Wednesday in the opening comments of his two-day, semi-annual monetary policy report to Congress.

That’s a look at expectations for the week to come. Now here is a review of the main economic stories of the week just passed.

Canadian Currency Reaches Four-Month High Amid Increased Demand for Risk
Bloomberg, Feb. 25
Canada’s dollar strengthened to the highest level since October against its U.S. counterpart as increased demand for higher-yielding assets bolstered stocks and currencies of some commodity-exporting nations. The Canadian currency traded within a two-cent range this week as retail sales fell while employment data improved in the U.S., Canada’s biggest trade partner

Canadian corporate profits spike
PostMedia News, Feb. 24
Canadian corporate profits reached their highest level since the recession in the last quarter of 2011, Statistics Canada reported. Fourth-quarter operating profits were up nine per cent from the previous quarter, to $71.4 billion on a seasonally adjusted basis.

Investors’ spirits, stocks rise on tide of central bank cash
The Globe and Mail, Feb. 24
In a matter of weeks, global stock markets have shot from deep anxiety to growing optimism. In one sign of investors’ ebullience in recent days, the Dow Jones industrial average briefly broke past the 13,000 mark, a number it last saw back in 2008, just before the financial panic hit. Toronto stocks rose in tandem with the Dow, as did other bourses around the globe, while prices of commodities from oil to gold rocketed higher.

Oil Caps Longest Rally in Two Years on Iran
Bloomberg, Feb. 24
Oil capped its longest rally since January 2010 as escalating tension with Iran threatens supplies and on signs of a global economic recovery. Futures advanced above $109 a barrel for the first time in almost 10 months as sanctions against the Persian Gulf nation make it more difficult to sell oil.

E.U. Forecasts ‘Mild Recession’ for Euro Zone in 2012
The New York Times, Feb. 23
BRUSSELS — The European Union lowered its growth forecast for this year and warned that the euro zone would undergo a “mild recession,” casting further gloom on the continent’s economic prospects. The new figures are likely to intensify concerns that, as European nations enact tough austerity measures to appease the debt markets, they are undermining the economic growth needed to help pull them out of financial distress.

Rising debt putting retirement on hold
Financial Post, Feb. 23
OTTAWA — Years of rising consumer debt are coming home to roost, forcing Canadians to rethink traditional plans to retire by age 65. Most Canadians now expect to work past 66, as only 30 per cent think they will be able to fully retire by that age, according to a poll conducted for Sun Life Financial Inc.

Obama Quietly Signs Payroll Tax Bill
The Wall Street Journal, Feb. 22
President Barack Obama signed legislation extending a payroll tax reduction and unemployment benefits through the end of the year, but he didn’t invite reporters to document the signing or invite members of Congress to watch. Public bill signings are typical for big legislation, and Obama had called this bill his top legislative priority.

B.C. budget promises surplus in time for 2013 election
National Post, Feb. 21
Introducing a budget laced with tax increases, asset sales and severe spending cuts, B.C. Finance Minister Kevin Falcon maintained on Tuesday that the province is on course to deliver a budget surplus by 2013. “No one is immune to what’s happening in the world today,” said  Falcon in a budget speech, adding that “the days of markets tolerating government overspending are finished.”

Conservative spending cuts could tip Canada into recession, federal union economists say
The Ottawa Citizen, Feb. 21
The Conservative government could tip Canada into a recession if it reduces federal spending by up to $8 billion, says an analysis by the union representing government economists and social scientists.

Ontario report a wake-up for all, experts say
Postmedia News, Feb. 21
damning report by a top economist on Ontario’s dire financial situation – complete with 362 recommendations on where to cut expenditures – should be a fiscal wake-up call for provincial and federal governments heading into budget season, spending watchdogs and experts warn.

Europe seals new Greek bailout deal to avert chaotic default
The Globe and Mail, Feb. 20
BRUSSELS — Euro zone finance ministers sealed a €130-billion bailout for Greece on Tuesday to avert a chaotic default next month after forcing Athens to commit to unpopular cuts and private bondholders to accept deeper losses. The agreement was hailed as a step forward for Greece, but doubts immediately emerged as to whether it would do much more than deal with its most pressing debt problems.

Canada calls out EU over oilsands
The Canadian Press, Feb 20
OTTAWA — Canada’s ambassador to the European Union (EU) has threatened to take Europe to the world’s trading body if it persists in trying to single out oilsands crude as dirty oil. The threat was contained in a letter sent by Canadian ambassador to the European Union, David Plunkett, in December, which was obtained by the environmental group Friends of the Earth.

Oilsands pose ‘significant environmental and financial risk’ to Alberta, says PCO
Postmedia News, Feb. 20
OTTAWA — Collateral damage from Canada’s booming oilsands sector may be irreversible, posing a “significant environmental and financial risk to the province of Alberta,” says a secret memorandum prepared for the federal government’s top bureaucrat.

Original Article
Source: ipolitics
Author:Eric Beauchesne

No comments:

Post a Comment