February 2010
- Thread starter Ally
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How Governments drive sky-high house prices
"Governments at all levels have conspired to drive up housing costs through taxes, fees, levies and restrictive land use policies," says my colleague Harvey Enchin in a Vancouver Sun column on how government`s contribute greatly to the astronomical cost of homes in the city.
His prescription goes farther into the realm of land-use policies than I have delved, and not quite so far on taxes. In recognition of what he thinks is practical, for example, he suggests dropping the property transfer tax on new homes; I think we`re long overdue for having it done away with altogether. But he adds an interesting perspective to the discussion, not to mention some fascinating analysis of just how far out of line the city`s housing prices have become. You can read what he has to say by clicking here.
Read the full article here.
"Governments at all levels have conspired to drive up housing costs through taxes, fees, levies and restrictive land use policies," says my colleague Harvey Enchin in a Vancouver Sun column on how government`s contribute greatly to the astronomical cost of homes in the city.
His prescription goes farther into the realm of land-use policies than I have delved, and not quite so far on taxes. In recognition of what he thinks is practical, for example, he suggests dropping the property transfer tax on new homes; I think we`re long overdue for having it done away with altogether. But he adds an interesting perspective to the discussion, not to mention some fascinating analysis of just how far out of line the city`s housing prices have become. You can read what he has to say by clicking here.
Read the full article here.
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Canada`s Economy picks up speed in November
OTTAWA — Canada`s economy grew more than expected in November as the wholesale, oil and mining sectors helped accelerate the pace of recovery.
Gross domestic product rose 0.4 per cent during the month, the third consecutive monthly increase, Statistics Canada reported Friday. It also revised GDP for October to 0.3 per cent from 0.2 per cent and September`s growth to 0.5 per cent from 0.4 per cent.
"As was the case in September and October, most major industrial sectors increased their production," it said.
"Mining and oil and gas extraction, and wholesale trade accounted for about 60 per cent of the overall growth," the agency said.
Economists had expected growth of between 0.1 and 0.3 per cent in November.
"The Canadian economy does indeed appear to be gathering momentum, despite some recent disappointments on the employment front," said Douglas Porter, deputy chief economist at BMO Capital Markets.
"While much of the growth in November was concentrated in a few sectors, most industries were on the plus-side as the recovery broadens and puts down firmer roots."
Read the full article here.
OTTAWA — Canada`s economy grew more than expected in November as the wholesale, oil and mining sectors helped accelerate the pace of recovery.
Gross domestic product rose 0.4 per cent during the month, the third consecutive monthly increase, Statistics Canada reported Friday. It also revised GDP for October to 0.3 per cent from 0.2 per cent and September`s growth to 0.5 per cent from 0.4 per cent.
"As was the case in September and October, most major industrial sectors increased their production," it said.
"Mining and oil and gas extraction, and wholesale trade accounted for about 60 per cent of the overall growth," the agency said.
Economists had expected growth of between 0.1 and 0.3 per cent in November.
"The Canadian economy does indeed appear to be gathering momentum, despite some recent disappointments on the employment front," said Douglas Porter, deputy chief economist at BMO Capital Markets.
"While much of the growth in November was concentrated in a few sectors, most industries were on the plus-side as the recovery broadens and puts down firmer roots."
Read the full article here.
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The Battle to unlock the housing market
One day in 2002, a self-professed computer nerd named Glenn Kelman scratched his head. Why was it, he wondered, that he could get more information about a $20 book for sale at Amazon.com than he could for a $500,000 home listed on the national Multiple Listing Service
?
Later that year, Mr. Kelman founded Redfin.com. He describes the site as a cross between Century 21 and E*Trade. A more pointed description would be to call Seattle-based Redfin a dart aimed at the heart of the real estate
industry. Internet-savvy companies like Redfin are breaking MLS`s lock on listings data, which the industry uses to ensure that consumers buy and sell houses the traditional way: through real estate agents who are paid hefty commissions.
The move hasn`t endeared Redfin to the real estate industry.
"I get death threats," Mr. Kelman says. "I gave the finger to an industry that only exists to charge a commission on the most important buying decision you`ll ever make. We save people money by automating most of the process."
The battle to free real estate data is well advanced in the United States. Now, it is coming to a head in Canada as the technological attack on the old order is bolstered by both industry rebels and government: The federal Competition Bureau accuses the industry of dampening competition and consumer choice. To consumers whose houses often sell in a few days – but still net agents tens of thousands of dollars in commissions – Canada`s real estate boom has made MLS`s monopoly on information seem all the more anachronistic.
Read the full article here.
One day in 2002, a self-professed computer nerd named Glenn Kelman scratched his head. Why was it, he wondered, that he could get more information about a $20 book for sale at Amazon.com than he could for a $500,000 home listed on the national Multiple Listing Service
? Later that year, Mr. Kelman founded Redfin.com. He describes the site as a cross between Century 21 and E*Trade. A more pointed description would be to call Seattle-based Redfin a dart aimed at the heart of the real estate
industry. Internet-savvy companies like Redfin are breaking MLS`s lock on listings data, which the industry uses to ensure that consumers buy and sell houses the traditional way: through real estate agents who are paid hefty commissions. The move hasn`t endeared Redfin to the real estate industry.
"I get death threats," Mr. Kelman says. "I gave the finger to an industry that only exists to charge a commission on the most important buying decision you`ll ever make. We save people money by automating most of the process."
The battle to free real estate data is well advanced in the United States. Now, it is coming to a head in Canada as the technological attack on the old order is bolstered by both industry rebels and government: The federal Competition Bureau accuses the industry of dampening competition and consumer choice. To consumers whose houses often sell in a few days – but still net agents tens of thousands of dollars in commissions – Canada`s real estate boom has made MLS`s monopoly on information seem all the more anachronistic.
Read the full article here.
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Recovery points to summer rate hike
Canadians should be preparing for higher interest rates
sooner rather than later.
With the North American economy growing significantly faster than expected at the end of 2009, and with mounting evidence that Canada is pulling clear of recession, economists are increasingly of the view that central bank Governor Mark Carney will pull the trigger on an interest-rate hike this summer, rather than wait until later in the year.
In Washington, the Commerce Department
estimated Friday that the world`s largest economy and Canada`s biggest trading partner grew at an annual rate of 5.7 per cent, the fastest in six years. In Ottawa, Statistics Canada said gross domestic product expanded for the third consecutive month in November, and that growth in October and September was stronger than initially stated.
Read the full article here.
Canadians should be preparing for higher interest rates
sooner rather than later. With the North American economy growing significantly faster than expected at the end of 2009, and with mounting evidence that Canada is pulling clear of recession, economists are increasingly of the view that central bank Governor Mark Carney will pull the trigger on an interest-rate hike this summer, rather than wait until later in the year.
In Washington, the Commerce Department
estimated Friday that the world`s largest economy and Canada`s biggest trading partner grew at an annual rate of 5.7 per cent, the fastest in six years. In Ottawa, Statistics Canada said gross domestic product expanded for the third consecutive month in November, and that growth in October and September was stronger than initially stated. Read the full article here.
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U.S. construction spending falls more sharply than expected
WASHINGTON - U.S. construction spending dropped sharply in December to its lowest level in more than six years as new home building fell by the steepest amount in seven months, evidence that housing remains a weak spot in the economy.
The Commerce Department says spending on new homes, office buildings and highways fell by 1.2 per cent, much worse than analysts` expectations of a 0.5 per cent drop.
November`s figures were revised down to also show a 1.2 per cent decline, below the 0.6 per cent drop initially reported.
Read the full article here.
WASHINGTON - U.S. construction spending dropped sharply in December to its lowest level in more than six years as new home building fell by the steepest amount in seven months, evidence that housing remains a weak spot in the economy.
The Commerce Department says spending on new homes, office buildings and highways fell by 1.2 per cent, much worse than analysts` expectations of a 0.5 per cent drop.
November`s figures were revised down to also show a 1.2 per cent decline, below the 0.6 per cent drop initially reported.
Read the full article here.
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Olive: is the world awash in oil?
There is a growing consensus among world oil experts that the planet has an abundance of oil – "enough oil for at least 100 years," claims a top executive at Italian oil giant ENI SpA. Enough to fuel the industrial revolutions in China, India and elsewhere in the developing world. Enough to supply North America after it recovers from a recession in which oil consumption dropped 9 per cent.
The thesis is based on an unusually large number of recent major discoveries and on enhanced recovery techniques that have breathed new life into oilfields once thought to be tapped out.
While there`s still an argument about oil`s long-term future, there`s no denying the evidence of newly abundant oil.
In November 2007, Brazil announced a massive offshore discovery of five billion to eight billion barrels of oil. A year later, oil major BP confirmed a Gulf of Mexico discovery of three billion barrels.
Read the full article here.
There is a growing consensus among world oil experts that the planet has an abundance of oil – "enough oil for at least 100 years," claims a top executive at Italian oil giant ENI SpA. Enough to fuel the industrial revolutions in China, India and elsewhere in the developing world. Enough to supply North America after it recovers from a recession in which oil consumption dropped 9 per cent.
The thesis is based on an unusually large number of recent major discoveries and on enhanced recovery techniques that have breathed new life into oilfields once thought to be tapped out.
While there`s still an argument about oil`s long-term future, there`s no denying the evidence of newly abundant oil.
In November 2007, Brazil announced a massive offshore discovery of five billion to eight billion barrels of oil. A year later, oil major BP confirmed a Gulf of Mexico discovery of three billion barrels.
Read the full article here.
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What`s next for China`s hot economy?
China has begun moving at the margins to withdraw excess cash from the financial system
, as a spike in lending in the first few weeks of the year prompted concerns that credit growth was getting out of hand.
The moves, which have included increasing banks` required reserves as well as additional punitive reserve requirements for some banks, have prompted jitters in global markets
as investors worry that tightening in the world`s third-largest economy could drag down growth both in China and elsewhere.
Following are some possible next steps Beijing will take, together with their likely ramifications:
Gradual ramping up of tightening measures
Most likely.
Many analysts expect the People`s Bank
of China to follow up on its recent steps by continuing gradually to push up money market rates, to drain cash from the financial system through its open-market operations, and to carry out so-called window guidance to tell banks to pace their lending.
Read the full article here.
China has begun moving at the margins to withdraw excess cash from the financial system
, as a spike in lending in the first few weeks of the year prompted concerns that credit growth was getting out of hand.The moves, which have included increasing banks` required reserves as well as additional punitive reserve requirements for some banks, have prompted jitters in global markets
as investors worry that tightening in the world`s third-largest economy could drag down growth both in China and elsewhere.Following are some possible next steps Beijing will take, together with their likely ramifications:
Gradual ramping up of tightening measures
Most likely.
Many analysts expect the People`s Bank
of China to follow up on its recent steps by continuing gradually to push up money market rates, to drain cash from the financial system through its open-market operations, and to carry out so-called window guidance to tell banks to pace their lending.Read the full article here.
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Consumer confidence reports release mixe messages
OTTAWA — Two surveys released Monday provided two very different views of Canadian consumer confidence in January, with one saying confidence took a hit, while the other saying sentiment was at nearly a two-year high.
RBC`s Canadian Consumer Outlook Index for January showed consumer confidence took a hit in the first month of the year as consumers delayed major purchases, were less positive about the Canadian economy and showed increased job anxiety.
"While the jobless rate in Canada remained steady at 8.5 per cent in December, 2,600 jobs were lost that month," Craig Wright, senior vice-president and chief economist at RBC wrote in a statement. "Canadians were likely reacting to those numbers and expressing some insecurity. Nonetheless, over the course of 2010, we expect to see a sustained improvement in the labour market."
The index, which is based on an online survey of 1,014 Canadian adults between Jan. 8 and 14 and is benchmarked as of Nov. 2009, dipped two points to 106. The results showed that 26 per cent said a member of their household is worried about losing their job or being laid off — up from 21 per cent in December — with the highest levels of anxiety being felt in British Columbia at 32 per cent and Alberta at 31 per cent.
Canadians were also more negative regarding the overall state of the economy, with 52 per cent describing it as bad in January, up from 49 per cent in December. Only 56 per cent expect the Canadian economy to improve over the next year in January compared to 60 per cent in December.
Read the full article here.
OTTAWA — Two surveys released Monday provided two very different views of Canadian consumer confidence in January, with one saying confidence took a hit, while the other saying sentiment was at nearly a two-year high.
RBC`s Canadian Consumer Outlook Index for January showed consumer confidence took a hit in the first month of the year as consumers delayed major purchases, were less positive about the Canadian economy and showed increased job anxiety.
"While the jobless rate in Canada remained steady at 8.5 per cent in December, 2,600 jobs were lost that month," Craig Wright, senior vice-president and chief economist at RBC wrote in a statement. "Canadians were likely reacting to those numbers and expressing some insecurity. Nonetheless, over the course of 2010, we expect to see a sustained improvement in the labour market."
The index, which is based on an online survey of 1,014 Canadian adults between Jan. 8 and 14 and is benchmarked as of Nov. 2009, dipped two points to 106. The results showed that 26 per cent said a member of their household is worried about losing their job or being laid off — up from 21 per cent in December — with the highest levels of anxiety being felt in British Columbia at 32 per cent and Alberta at 31 per cent.
Canadians were also more negative regarding the overall state of the economy, with 52 per cent describing it as bad in January, up from 49 per cent in December. Only 56 per cent expect the Canadian economy to improve over the next year in January compared to 60 per cent in December.
Read the full article here.
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Ebbing U.S. home sales hint prices may fall
NEW YORK - A recent decline of U.S. home sales is swelling the supply of houses and may push prices down, adding to losses from an earlier three-year slide, said rating agency Standard & Poor`s in a statement Friday.
"While home prices have been trending up since spring 2009, existing, new and pending home sales are waning, which suggests that lower prices are on the horizon," said the statement.
Market analysts and policy-makers at the Federal Reserve are closely watching the battered housing sector and the weak jobs market to gauge whether the U.S. economy can go on growing and to determine when the central bank may start raising interest rates.
Recent data showed U.S. existing home sales dropped by a monthly record of 16.7 per cent in December, while new home sales fell by 7.6 per cent, S&P noted.
U.S. home prices increased in June 2009 in seasonally adjusted terms for the first time in nearly three years and prices continued rising through November, S&P said.
But in non-seasonally adjusted terms, the S&P composite index of home prices in 20 metropolitan areas slipped 0.2 per cent in November.
Read the full article here.
NEW YORK - A recent decline of U.S. home sales is swelling the supply of houses and may push prices down, adding to losses from an earlier three-year slide, said rating agency Standard & Poor`s in a statement Friday.
"While home prices have been trending up since spring 2009, existing, new and pending home sales are waning, which suggests that lower prices are on the horizon," said the statement.
Market analysts and policy-makers at the Federal Reserve are closely watching the battered housing sector and the weak jobs market to gauge whether the U.S. economy can go on growing and to determine when the central bank may start raising interest rates.
Recent data showed U.S. existing home sales dropped by a monthly record of 16.7 per cent in December, while new home sales fell by 7.6 per cent, S&P noted.
U.S. home prices increased in June 2009 in seasonally adjusted terms for the first time in nearly three years and prices continued rising through November, S&P said.
But in non-seasonally adjusted terms, the S&P composite index of home prices in 20 metropolitan areas slipped 0.2 per cent in November.
Read the full article here.
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Flaherty urged to keep spending taps open
Canada`s leading private economists are urging Finance Minister Jim Flaherty to tread a cautious path in his March budget and keep spending flowing in a fragile recovery.
At a meeting in Ottawa on Tuesday, the economists will suggest Mr. Flaherty look past some of the better-than-expected data in Canada and the United States and resist moving too quickly to rein in the deficit.
The economists have boosted their projections for the economy, which Mr. Flaherty uses to shape his own assessments. They now see average economic growth
of 2.7 per cent this year, according to a Bloomberg survey. That`s higher than the 2.3 per cent Mr. Flaherty projected in his September fiscal update, but still well below the 5 per cent to 6 per cent that typically follows a deep slump.
"The dominant theme here is that unlike recoveries from previous recessions this one`s going to be fairly slow and drawn out," said Craig Alexander, deputy chief economist at Toronto-Dominion Bank. "I don`t think the government should be tightening fiscal policy before the recovery has gained greater traction."
In the U.S., President Barack Obama
is facing intense political pressure to start taming a deficit on track to reach a record $1.6-trillion (U.S.), even as a stubbornly high unemployment rate forced him to ask Congress on Monday for another $100-billion to create jobs.
Read the full article here.
Canada`s leading private economists are urging Finance Minister Jim Flaherty to tread a cautious path in his March budget and keep spending flowing in a fragile recovery.
At a meeting in Ottawa on Tuesday, the economists will suggest Mr. Flaherty look past some of the better-than-expected data in Canada and the United States and resist moving too quickly to rein in the deficit.
The economists have boosted their projections for the economy, which Mr. Flaherty uses to shape his own assessments. They now see average economic growth
of 2.7 per cent this year, according to a Bloomberg survey. That`s higher than the 2.3 per cent Mr. Flaherty projected in his September fiscal update, but still well below the 5 per cent to 6 per cent that typically follows a deep slump. "The dominant theme here is that unlike recoveries from previous recessions this one`s going to be fairly slow and drawn out," said Craig Alexander, deputy chief economist at Toronto-Dominion Bank. "I don`t think the government should be tightening fiscal policy before the recovery has gained greater traction."
In the U.S., President Barack Obama
is facing intense political pressure to start taming a deficit on track to reach a record $1.6-trillion (U.S.), even as a stubbornly high unemployment rate forced him to ask Congress on Monday for another $100-billion to create jobs. Read the full article here.
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The risks of longer life
The odds of living to a very old age are increasing. Data from Manulife Financial actuaries show that one member in a couple, each of whom is 65, has a 99% chance of living to age 70, a 94% chance of living to 80, a 63% chance of living to 90 and a 36% chance of living to age 95.
What would appear to be a statistical marvel is a financial irony, for inflation can devastate lives as readily as healthy lifestyle choices and modern medicine can sustain them. Further data from Manulife Financial shows that inflation running at just 3% per year will reduce the purchasing power of $1,000 to $739 in 10 years, to $545 in 20 years and to $402 in 30 years.
In financial terms, these are the numbers seniors have to beat.
The dilemma of planning for retirement thus becomes one not just of saving for a life based on goalposts established 10 or 20 years ago, but of keeping up with goalposts that are being pulled upward by science. Today, the risk is growing that those who reach their 90s will live the last years of their lives in poverty.
Additional data show that while life expectancy is growing, the period of freedom from serious illness is also increasing. The process, dubbed "compression of morbidity" by Stanford University School of Medicine professor James F. Fries, means it is increasingly likely the old will be relatively healthy until the last few years of life, when costly illness may take over.
For those planning their financial futures, the phenomenon of extended years of health followed by a relatively few years of serious illness is a challenge. Lee Anne Davies, head of retirement strategies at RBC Royal Bank in Toronto, notes that the group with the longest life expectancy -- women -- are less likely to have saved for their later years than men.
"When we asked, `Are you saving for retirement?` the answer was that women are less active savers. Overall, 32% of persons 18 and over have not started to save for retirement. But 37% of women have not started to save."
Read the full article here.
The odds of living to a very old age are increasing. Data from Manulife Financial actuaries show that one member in a couple, each of whom is 65, has a 99% chance of living to age 70, a 94% chance of living to 80, a 63% chance of living to 90 and a 36% chance of living to age 95.
What would appear to be a statistical marvel is a financial irony, for inflation can devastate lives as readily as healthy lifestyle choices and modern medicine can sustain them. Further data from Manulife Financial shows that inflation running at just 3% per year will reduce the purchasing power of $1,000 to $739 in 10 years, to $545 in 20 years and to $402 in 30 years.
In financial terms, these are the numbers seniors have to beat.
The dilemma of planning for retirement thus becomes one not just of saving for a life based on goalposts established 10 or 20 years ago, but of keeping up with goalposts that are being pulled upward by science. Today, the risk is growing that those who reach their 90s will live the last years of their lives in poverty.
Additional data show that while life expectancy is growing, the period of freedom from serious illness is also increasing. The process, dubbed "compression of morbidity" by Stanford University School of Medicine professor James F. Fries, means it is increasingly likely the old will be relatively healthy until the last few years of life, when costly illness may take over.
For those planning their financial futures, the phenomenon of extended years of health followed by a relatively few years of serious illness is a challenge. Lee Anne Davies, head of retirement strategies at RBC Royal Bank in Toronto, notes that the group with the longest life expectancy -- women -- are less likely to have saved for their later years than men.
"When we asked, `Are you saving for retirement?` the answer was that women are less active savers. Overall, 32% of persons 18 and over have not started to save for retirement. But 37% of women have not started to save."
Read the full article here.
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Ottawa boosts economic forecast
OTTAWA -- Finance Minister Jim Flaherty said Tuesday the government revised upward its economic forecast for Canada, but suggested budget cutting would not commence until there was evidence of a sustained recovery in private-sector demand.
"The first thing is to make sure that the economy has recovered. That is imperative," Mr. Flaherty said following a meeting of private-sector economists, at which time he unveiled the Department of Finance`s latest economic outlook.
Based on a survey of private-sector analysts, Ottawa now anticipates 2.6% growth in 2010, as opposed to 2.3%. Growth is expected to peak in 2011, at 3.2%, but then tail off over the next three years, to 2.6% in 2014.
There was no indication as to how these revisions would affect the budget balance, and that would come in coming budget on March 4.
Other issues the Minister and the economists touched upon included the state of the domestic housing market and potential spillover effects from Washington`s dire fiscal position.
Read the full article here.
OTTAWA -- Finance Minister Jim Flaherty said Tuesday the government revised upward its economic forecast for Canada, but suggested budget cutting would not commence until there was evidence of a sustained recovery in private-sector demand.
"The first thing is to make sure that the economy has recovered. That is imperative," Mr. Flaherty said following a meeting of private-sector economists, at which time he unveiled the Department of Finance`s latest economic outlook.
Based on a survey of private-sector analysts, Ottawa now anticipates 2.6% growth in 2010, as opposed to 2.3%. Growth is expected to peak in 2011, at 3.2%, but then tail off over the next three years, to 2.6% in 2014.
There was no indication as to how these revisions would affect the budget balance, and that would come in coming budget on March 4.
Other issues the Minister and the economists touched upon included the state of the domestic housing market and potential spillover effects from Washington`s dire fiscal position.
Read the full article here.
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U.S. Housing Market headed for double-dip decline, CIBC says
U.S. housing prices are headed for a double-dip decline that will hurt related equities which have already priced in a recovery in the sector, CIBC warns.
"Many companies will be affected," said Benjamin Tal, senior economist of CIBC World Markets, who declined to mention specific names but argued that sectors from forestry to banking could be dragged into the downturn.
The reason, he said, is that any current stabilization in U.S. housing is more a function of a badly damaged market and the distorting affect of temporary tax incentives than evidence of a sustainable rebound.
"We anticipate further weakness ahead as supply continues to outpace demand, mortgage rates head higher and the government`s generous homebuyers` tax credit finally expires," Tal said.
The "shadow inventory" of housing is what worries Tal most, and has him calling for another decline in prices of five to 10 per cent over the next two years.
Read the full article here.
U.S. housing prices are headed for a double-dip decline that will hurt related equities which have already priced in a recovery in the sector, CIBC warns.
"Many companies will be affected," said Benjamin Tal, senior economist of CIBC World Markets, who declined to mention specific names but argued that sectors from forestry to banking could be dragged into the downturn.
The reason, he said, is that any current stabilization in U.S. housing is more a function of a badly damaged market and the distorting affect of temporary tax incentives than evidence of a sustainable rebound.
"We anticipate further weakness ahead as supply continues to outpace demand, mortgage rates head higher and the government`s generous homebuyers` tax credit finally expires," Tal said.
The "shadow inventory" of housing is what worries Tal most, and has him calling for another decline in prices of five to 10 per cent over the next two years.
Read the full article here.
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2010 growth expected to hit 2.6%, Flaherty says
Finance Minister Jim Flaherty said Tuesday the government revised upward its economic forecast for Canada, following a meeting with the country`s top private-sector economists.
Ottawa now anticipates 2.6-per-cent growth in 2010, as opposed to 2.3 per cent. Growth is expected to peak in 2011, at 3.2 per cent, but then tail off over the next three years, to 2.6 per cent in 2014.
There was no indication as to how these revisions would affect the budget balance.
"While there have been encouraging signs in recent months that the economy continues to stabilize, the global economy remains fragile," Flaherty told reporters in Ottawa.
In its most-recent fiscal update, Ottawa estimated Canada would add roughly $164 billion to the national debt by the end of the 2014-15 fiscal year. Further, budget deficits would gradually shrink over the medium-term horizon, from $56 billion this year to $5 billion in 2015, if the economy grows and Ottawa controls its spending.
Read the full article here.
Finance Minister Jim Flaherty said Tuesday the government revised upward its economic forecast for Canada, following a meeting with the country`s top private-sector economists.
Ottawa now anticipates 2.6-per-cent growth in 2010, as opposed to 2.3 per cent. Growth is expected to peak in 2011, at 3.2 per cent, but then tail off over the next three years, to 2.6 per cent in 2014.
There was no indication as to how these revisions would affect the budget balance.
"While there have been encouraging signs in recent months that the economy continues to stabilize, the global economy remains fragile," Flaherty told reporters in Ottawa.
In its most-recent fiscal update, Ottawa estimated Canada would add roughly $164 billion to the national debt by the end of the 2014-15 fiscal year. Further, budget deficits would gradually shrink over the medium-term horizon, from $56 billion this year to $5 billion in 2015, if the economy grows and Ottawa controls its spending.
Read the full article here.
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`Draconian` measures not needed: Economists
Despite a chorus of concern that a balanced budget cannot be achieved without tax hikes, economists said yesterday Ottawa`s fiscal plan is workable as long as policy makers live up to their pledge to restrain spending growth.
After a meeting with Finance Minister Jim Flaherty in Ottawa as part of pre-budget consultations, the private-sector analysts said Ottawa might have to wait an extra year or two before the country returns to surplus, as uncertainty remains over the pace of growth once stimulus from around the world are removed.
But still, a budget balance is doable, a number of them added, and might not require such "draconian" measures as the tax hikes some have feared.
"I would put a very low priority on tax increases. I think that should be almost a desperation move," Douglas Porter, deputy chief economist at BMO Capital Markets, told reporters after the meeting ended.
The outlook from economists led Mr. Flaherty to bump up yesterday Ottawa`s forecast for economic growth this year, to 2.6% compared with the previous expectation of 2.3%. That`s still below the Bank of Canada`s projection for expansion of 2.9% this year. This comes on the heels of GDP data released on Friday that indicated growth last November surpassed market expectations, putting Canada on pace to record expansion of roughly 4% for the final three months of 2009.
More important, the revised federal outlook includes a significant jump this year in nominal GDP levels -- which is key as this is the base from which government taxes. Hence, the higher the nominal GDP level, the more revenue Ottawa can collect. Ottawa now anticipates a 4.9% increase in nominal GDP in 2010, compared with the previous expectation of a 4.1% jump.
Read the full article here.
Despite a chorus of concern that a balanced budget cannot be achieved without tax hikes, economists said yesterday Ottawa`s fiscal plan is workable as long as policy makers live up to their pledge to restrain spending growth.
After a meeting with Finance Minister Jim Flaherty in Ottawa as part of pre-budget consultations, the private-sector analysts said Ottawa might have to wait an extra year or two before the country returns to surplus, as uncertainty remains over the pace of growth once stimulus from around the world are removed.
But still, a budget balance is doable, a number of them added, and might not require such "draconian" measures as the tax hikes some have feared.
"I would put a very low priority on tax increases. I think that should be almost a desperation move," Douglas Porter, deputy chief economist at BMO Capital Markets, told reporters after the meeting ended.
The outlook from economists led Mr. Flaherty to bump up yesterday Ottawa`s forecast for economic growth this year, to 2.6% compared with the previous expectation of 2.3%. That`s still below the Bank of Canada`s projection for expansion of 2.9% this year. This comes on the heels of GDP data released on Friday that indicated growth last November surpassed market expectations, putting Canada on pace to record expansion of roughly 4% for the final three months of 2009.
More important, the revised federal outlook includes a significant jump this year in nominal GDP levels -- which is key as this is the base from which government taxes. Hence, the higher the nominal GDP level, the more revenue Ottawa can collect. Ottawa now anticipates a 4.9% increase in nominal GDP in 2010, compared with the previous expectation of a 4.1% jump.
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Mortgage demand at six-week highs on refinance wave
NEW YORK -- Demand for home loans rose to a six-week high on a mini refinance wave, with borrowers pushing to lock in rates before they climb later this year, the Mortgage Bankers Association said on Wednesday.
Applications to buy homes and refinance loans jumped last week to mid-December levels as average 30-year mortgage rates held near 5 percent.
The industry group`s mortgage index jumped 21 percent last week, fueled by a 26.3 percent leap in demand for refinancing as purchase loan requests increased 10.3 percent.
The 30-year mortgage rate dipped 0.01 percentage point to 5.01 percent.
But this borrowing cost was 0.40 percentage point above the record low set last March and seen headed higher throughout the year.
"Rates continue to hover around 5 percent, quite low by historical standards, but are well above the record lows seen in 2009 and hence are not generating substantial refi volume," said Michael Fratantoni, MBA`s vice president of research and economics.
Read the full article here.
NEW YORK -- Demand for home loans rose to a six-week high on a mini refinance wave, with borrowers pushing to lock in rates before they climb later this year, the Mortgage Bankers Association said on Wednesday.
Applications to buy homes and refinance loans jumped last week to mid-December levels as average 30-year mortgage rates held near 5 percent.
The industry group`s mortgage index jumped 21 percent last week, fueled by a 26.3 percent leap in demand for refinancing as purchase loan requests increased 10.3 percent.
The 30-year mortgage rate dipped 0.01 percentage point to 5.01 percent.
But this borrowing cost was 0.40 percentage point above the record low set last March and seen headed higher throughout the year.
"Rates continue to hover around 5 percent, quite low by historical standards, but are well above the record lows seen in 2009 and hence are not generating substantial refi volume," said Michael Fratantoni, MBA`s vice president of research and economics.
Read the full article here.
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- Mar 24, 2009
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Volcker lauds Canadian banks
NEW YORK -- Paul Volcker, the former U.S. Federal Reserve Board chairman who`s now a key economic advisor to the White House, told U.S. lawmakers Tuesday they ought to learn from Canada`s banking system as they seek to overhaul rules governing the biggest U.S. banks.
Speaking at a hearing to tout his proposal to rein in risky investing activities by large U.S. commercial banks, Mr. Volcker said the life`s work of Canadian banks is retail banking: "That`s no longer true of great big American banks."
With just five or six banks dominating the industry, Canada`s banks benefit from having less competition, Mr. Volcker said. "It`s a stable oligopoly."
Canada`s banking system also has been shielded by the fact that it has less government interference in its mortgage market, unlike in the United States, where banks have been pressured by the government to make low-cost loans to the economically disadvantaged, he said.
Mr. Volcker`s endorsement of Canada`s banking system - the only Group of Seven nation that didn`t need taxpayers to bail out its banks - came two days after The New York Times published a piece by Nobel Prize-winning economist and columnist Paul Krugman that said the United States should emulate Canada`s financial regulatory regime.
Read the full article here.
NEW YORK -- Paul Volcker, the former U.S. Federal Reserve Board chairman who`s now a key economic advisor to the White House, told U.S. lawmakers Tuesday they ought to learn from Canada`s banking system as they seek to overhaul rules governing the biggest U.S. banks.
Speaking at a hearing to tout his proposal to rein in risky investing activities by large U.S. commercial banks, Mr. Volcker said the life`s work of Canadian banks is retail banking: "That`s no longer true of great big American banks."
With just five or six banks dominating the industry, Canada`s banks benefit from having less competition, Mr. Volcker said. "It`s a stable oligopoly."
Canada`s banking system also has been shielded by the fact that it has less government interference in its mortgage market, unlike in the United States, where banks have been pressured by the government to make low-cost loans to the economically disadvantaged, he said.
Mr. Volcker`s endorsement of Canada`s banking system - the only Group of Seven nation that didn`t need taxpayers to bail out its banks - came two days after The New York Times published a piece by Nobel Prize-winning economist and columnist Paul Krugman that said the United States should emulate Canada`s financial regulatory regime.
Read the full article here.
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- Mar 24, 2009
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Ottawa says no cuts before recovery
Finance Minister Jim Flaherty said Tuesday the government revised upward its economic forecast for Canada, but suggested budget cutting would not commence until there was evidence of a sustained recovery in private-sector demand.
"The first thing is to make sure that the economy has recovered. That is imperative," Flaherty said following a meeting of private-sector economists, at which time he unveiled the Department of Finance`s latest economic outlook.
Based on a survey of private-sector analysts, Ottawa now anticipates 2.6 per cent growth this year, as opposed to 2.3 per cent. Growth is expected to peak in 2011, at 3.2 per cent, but then tail off over the next three years, to 2.6 per cent in 2014.
There was no indication as to how these revisions would affect the budget balance, and that would come in the budget on March 4.
Flaherty said he has "serious concerns" about the size of the U.S. deficit. As for the red-hot housing market, the minister said there was "no substantial concern" raised at the meeting.
Read the full article here.
Finance Minister Jim Flaherty said Tuesday the government revised upward its economic forecast for Canada, but suggested budget cutting would not commence until there was evidence of a sustained recovery in private-sector demand.
"The first thing is to make sure that the economy has recovered. That is imperative," Flaherty said following a meeting of private-sector economists, at which time he unveiled the Department of Finance`s latest economic outlook.
Based on a survey of private-sector analysts, Ottawa now anticipates 2.6 per cent growth this year, as opposed to 2.3 per cent. Growth is expected to peak in 2011, at 3.2 per cent, but then tail off over the next three years, to 2.6 per cent in 2014.
There was no indication as to how these revisions would affect the budget balance, and that would come in the budget on March 4.
Flaherty said he has "serious concerns" about the size of the U.S. deficit. As for the red-hot housing market, the minister said there was "no substantial concern" raised at the meeting.
Read the full article here.
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Buy American exemption for Canada confirmed
OTTAWA — The federal government confirmed Friday it has struck a deal with Washington that would protect Canadian companies from Buy American provisions.
International Trade Minister Peter Van Loan and Foreign Affairs Minister Lawrence Cannon made the announcement at a news conference in Ottawa.
"Preserving and creating jobs is the Canadian government`s top priority," Van Loan said. "Our government stood up for Canadian businesses and workers in resolving this issue with our U.S. partners."
The Financial Post first reported Thursday that a deal had been reached.
The crux of the deal will see Canada agree to provide U.S. suppliers with access to a range of construction contracts across Canada`s provinces and territories, as well as in a number of municipalities.
In return, the United States has agreed to provide Canadian suppliers with access to state and local public works projects in a range of programs funded by the American Recovery and Reinvestment Act of 2009.
Read the full article here.
OTTAWA — The federal government confirmed Friday it has struck a deal with Washington that would protect Canadian companies from Buy American provisions.
International Trade Minister Peter Van Loan and Foreign Affairs Minister Lawrence Cannon made the announcement at a news conference in Ottawa.
"Preserving and creating jobs is the Canadian government`s top priority," Van Loan said. "Our government stood up for Canadian businesses and workers in resolving this issue with our U.S. partners."
The Financial Post first reported Thursday that a deal had been reached.
The crux of the deal will see Canada agree to provide U.S. suppliers with access to a range of construction contracts across Canada`s provinces and territories, as well as in a number of municipalities.
In return, the United States has agreed to provide Canadian suppliers with access to state and local public works projects in a range of programs funded by the American Recovery and Reinvestment Act of 2009.
Read the full article here.