June 2010

[Amber]

Foreign bank tax won`t hurt Canada

Canada`s banks could benefit as other countries such as Britain and Germany push ahead with a bank tax, said Mark Carney, governor of the Bank of Canada.

Canada has staunchly opposed proposals by other G20 members for a levy on banks as a way to pay for government bailouts of the financial system, arguing that such a move would be counterproductive.

Mr. Carney said the bank tax now being imposed in other countries would only reinforce the idea that financial institutions will always get rescued when they get into trouble.

"It just reeks of moral hazard ... The end-game [of financial reform] is to take the moral hazard out," he told business leaders in Toronto yesterday.

Mr. Carney said Bay Street could end up with a competitive edge, since the federal government has made it clear it won`t follow suit.

Read full article here

 

[Amber]

U.S. ECONOMY FALTERS

NEW YORK - Disastrous home-sale figures and persistently high unemployment make it clear the U.S. economy is still struggling. What`s not so apparent is what new efforts U.S. President Barack Obama might seek to tackle the problem.

While he urges allies of the United States not to sacrifice economic growth to pay down ballooning deficits at this weekend`s Group of 20 industrial and developing nations summit in Toronto, Mr. Obama is coming under stiff resistance back home against turning any sort of stimulus taps back on.

"He`s very skilled and articulate, but he really lost control of the debate on stimulus," said Dean Baker, co-director of Center for Economic Policy and Research, a left-leaning think-tank in Washington, D.C.

"Polls show most Americans think the stimulus package didn`t create jobs, [although] most economists think it did. The word stimulus has become a dirty word."

Mr. Baker, who has been advocating for more stimulus money beyond the US$787-billion the administration approved at the height of the recession, said the Obama administration is probably weighing its options at this point, with some in favour of more money being pumped in to revive the economy, while others worry about the country`s ballooning deficit.

Read full article here

 

[Amber]

U.S. ECONOMY FALTERS

NEW YORK - Disastrous home-sale figures and persistently high unemployment make it clear the U.S. economy is still struggling. What`s not so apparent is what new efforts U.S. President Barack Obama might seek to tackle the problem.

While he urges allies of the United States not to sacrifice economic growth to pay down ballooning deficits at this weekend`s Group of 20 industrial and developing nations summit in Toronto, Mr. Obama is coming under stiff resistance back home against turning any sort of stimulus taps back on.

"He`s very skilled and articulate, but he really lost control of the debate on stimulus," said Dean Baker, co-director of Center for Economic Policy and Research, a left-leaning think-tank in Washington, D.C.

"Polls show most Americans think the stimulus package didn`t create jobs, [although] most economists think it did. The word stimulus has become a dirty word."

Mr. Baker, who has been advocating for more stimulus money beyond the US$787-billion the administration approved at the height of the recession, said the Obama administration is probably weighing its options at this point, with some in favour of more money being pumped in to revive the economy, while others worry about the country`s ballooning deficit.

Read full article here

 

[Amber]

U.S. Housing data hints U.S. recovery losing steam

WASHINGTON - Sales of new U.S. homes dropped a record 32.7% in May to the lowest level in at least four decades as the boost from a popular tax credit faded, adding to worries over a slowing economic recovery.

Single-family home sales tumbled to a 300,000 unit annualized rate, the lowest level since the series started in 1963, the Commerce Department said yesterday.

The gloomy report was the latest to imply the economy`s recovery from the worst downturn since the 1930s might be losing strength, but few analysts expect a double-dip recession.

"This tends to reduce expectations for second-quarter growth. We are going to go through a period where home sales are extremely depressed before we see a recovery take hold, probably late this year," said Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, N.C.

Not only did sales in May miss market expectations for a 410,000 unit-pace, figures for the prior two months were revised down sharply. That indicated the lift from the homebuyers` tax credit was not as large as previously thought.

Read full article here

 

[Amber]

Payrolls continue to rise in April

OTTAWA — Canadian non-farm payrolls rose in April for the third straight month, with jobs added across the services industries, Statistics Canada reported Friday.

Payroll employment rose by 35,600 during the month, bringing the total increase to 166,900 since the start of the upward trend in August 2009, the federal agency said.

"April`s increases were widespread among services industries, with the largest gains in retail and wholesale trade; amusement, gambling and recreation; professional, scientific and technical services and administrative and support services," the agency said.

"There were also gains in the goods sector in April, as the number of jobs continued to grow in construction and in mining, quarrying and oil and gas extraction."

Meanwhile, average weekly earnings rose 3.3 per cent to $845.25 in April, up 3.3 per cent from a year earlier. That was the biggest year-over-year increase since April 2008, the agency said.

Read full article here

 

[Amber]

EI rolls unchanged in April

OTTAWA — The number of people receiving regular employment insurance benefits in April was mostly unchanged from the previous month, Statistics Canada said Friday.

There were 667,400 EI beneficiaries during the month, with the number in Alberta falling by 2,500 to 49,900, while Ontario saw recipients rise by 2,600 after six straight months of declines.

The agency earlier reported the national unemployment rate in May was 8.1 per cent, which was unchanged from the previous month, even as the economy added 24,700 jobs for the fifth-straight monthly gain.

The number of people receiving regular EI benefits has declined by 161,900, or 19.5 per cent, since a peak of 829,300 in June 2009, the federal agency said, while the number of claims has declined by 30.5 per cent "since the start of the downward trend in May 2009, with the fastest rate of decrease in Alberta (-41.1 per cent), Ontario (-27.9 per cent) and British Columbia (-23.6 per cent)."

There were 227,800 initial and renewal claims in April, down slightly from the previous month.

Read full article here

 

[Amber]

Here comes the HST

On July 1, government will introduce a tax on retirement products. Here what you need to know

On July 1, government will introduce a tax on retirement products. Here comes the HST ...

Even as Ottawa seeks ways to help under-saving Canadians put away more for retirement, the shortfall will only be exacerbated when the harmonized sales tax comes into effect next week in Ontario and British Columbia.

Managed money -- professionally managed investment portfolios--is subject to HST. That means mutual funds, wrap accounts, hedge funds, segregated funds, charitable trusts and even passively managed index funds and exchange-traded funds -- the basics of most retirement portfolios-- will see increased fees.

And the fee hikes won`t be felt only in the two provinces ushering in the new HST on July 1. Ontario is the centre of the financial industry and B.C. is also a major player. Clients in other provinces served by financial firms in Ontario or B.C. will also experience tax hikes on their retirement savings as result of harmonization.

The new tax on retirement products, combined with the current government hand-wringing over pension reform (such as policy proposals to hike payroll taxes so that workers can get higher Canada Pension Plan benefits), just don`t add up, the financial services industry says.

The Investment Counsel Association of Canada (ICAC) says European nations using value-added tax (VAT) impose it on the consumption of goods and services, but don`t consider investment management as consumption.

Read full article here

 

[Amber]

Daw: Woman stung by mortgage fraud sold her signature

Stranger offered "help" in a coffee shop


A Toronto woman is paying pay dearly for failing to wake up and smell a mortgage fraud.

The fraud also went undetected by a major bank, and by a mortgage broker, a realtor and a lawyer, who had each received what a judge has called "exceptionally large fees" for handling an unusual, two-stage home sale.

But a judge has ordered Angela Isaacs of Toronto to pay the Royal Bank of Canada`s $95,000 loss, interest of 6.3 per cent a year from June 26, 2008 until the debt is paid and, within 30 days, $13,500 of the bank`s legal fees.

Her mistake? Accepting $6,000 to co-sign a stranger`s mortgage, then signing other documents without reading them.

"She took the risk and she got stung," Madam Justice Anne Molloy of the Ontario Superior Court of Justice chided in a ruling. "That is her own responsibility, not the fault of the bank."

Read full article here

 

[Amber]

Consumers edgy in Canada, U.S.

ven ordinary Canadians have noticed that the economy is not recovering as many hoped it would.

The Conference Board says its consumer confidence index fell 5.7 points this month and now sits 13 points below where it stood at the beginning of the year.

Coincidentally, the index in the U.S. also fell sharply in June – by about 10 points – over concerns that unemployment remains high despite better economic news in the last six months. It was the first setback since February.

In Canada, consumers expressed increased pessimism on all four measurements in the index – current finances, future finances, employment expectations and purchase intentions.

"The drop cancels out all the gains realized in May," said the Ottawa-based think-tank.

"However, the pessimism is not spread across the country. The drop in confidence was concentrated in two regions (Ontario and British Columbia), while the remainder of the country fared much better."

The drop in the index reflected more cautious economic data in the past month or so after six months of robust growth.

Read full article here

 

[Amber]

Calgary named top real estate town in Canada

The Real Estate Investment Network (REIN), a national group whose 3,000 members own more than $3 billion worth of property in Canada, assesses markets by long-term potential – five to seven years – based on solid economic fundamentals. The Ontario towns of Kitchener Waterloo-Cambridge are in second spot, while Edmonton helps round out the top three.

Top Canadian Investment Cities

1) Calgary

2) Kitchener-Waterloo-Cambridge

3) Edmonton

4) Surrey, BC

5) Maple Ridge, BC

6) Hamilton

7) St. Albert, Alta.

8) Barrie-Orillia, Ont.

9) Red Deer, Alta.

10) Winnipeg

Calgary, after having experienced one of its best economic and real estate periods in Canadian history, entered a strong but necessary correction, according to REIN. Following the economic downturn over the last couple years, Calgary`s market is making a predictable correction resulting in slightly more affordable housing compared to recent years. It was economically impossible for the market to continue at the pace at which it was heading, and now finds itself adjusting to market realities.

This adjustment period, as the market searches for its new foundation from which to build, should continue in 2010 as the provincial economy is poised for another growth spurt, REIN says. The in-migration pace continuing to lead the nation combined with the renewed affordability will help propel the market over the coming years.


Read full article here

 

[Amber]

Canadian economy stagnates in April: StatsCan

OTTAWA — Canada`s economy saw no growth or contraction in April, Statistics Canada said Wednesday.

That compared to a 0.6 per cent expansion of gross domestic product reported for March. Economists were expecting 0.2 per cent growth in GDP for April.

It marked the first month in eight the Canadian economy has not expanded.

Statistics Canada said a "large decline" in the retail sector, and lesser contractions in manufacturing and utilities, which were offset by gains in mining, wholesale, the public sector and construction.

Retail trade was down 1.7 per cent in April, as demand dropped sharply for items such as automobiles and clothing.

Manufacturing output fell 0.3 per cent in April, the federal agency said, the first decline since August last year. Non-durable goods, such as pharmaceuticals and food, were cited as the main cause of the lagging factory figures. Durable-goods manufacturing industries, such as machinery, vehicles and automotive parts, saw increased activity.

Oil-and-gas extraction output was up 0.5 per cent in April and potash mining also saw gains, though output in mining sectors such as gold, silver and diamonds declined.

Read full article here

 

[Amber]

Canadians have a lot to celebrate on our nation`s birthday

We have some of the highest world rankings in life expectancy, education and livable cities, which bodes well for Harper

Not many 143-year-olds can boast of being in as good shape as Canada is in 2010, a condition that bodes well politically for the governing Conservatives.

The country celebrates its big day Thursday, coming off a stunningly successful showing at its February Olympics, and just days after competently hosting the G8 and G20 international summits in Ontario.

While Canadians doubtless can find issues to grumble about domestically, such as today`s introduction of an HST in Ontario and B.C., the country continues to do remarkably well in international rankings of freedom and well being.

The United Nations Human Development Index, measuring life expectancy, education and per-capita GDP, this year placed Canada fourth -- down from our No. 1 spot from 1994 to 2000 but well ahead of the U.S., in 10th spot.

With 178 countries ranked, fourth certainly isn`t a bad place to be.

The New York-based Heritage Foundation, meanwhile, ranks Canada seventh in economic freedom, and tops among the three North American nations.

In its latest report, the foundation notes that Canada has "moderate tax rates," the lowest debt to GDP ratio among wealthy G7 nations and our inflation rate is low.

Read full article here

 

[Amber]

Canadian, BC consumer confidence plunges in May

Conference Board`s index hit by labour market sentiments on west coast

OTTAWA — Consumer confidence is falling across Canada, with B.C. recording one of the sharpest drops.

That`s one of the key findings of the Conference Board of Canada`s Index of Consumer Confidence for June, which also showed the province recording a "roller coaster" ride since the start of the year as confidence levels fluctuate each month.

A separate Angus Reid Public Opinion poll, also released Tuesday, found confidence slipping across the country with a greater proportion of British Columbians believing the economy will decline over the next six months.

"Regionally, two regions were responsible for most of this month`s less-than-stellar results," the Conference Board index concluded in finding that pessimism isn`t evenly spread across the country but is centred in B.C. and Ontario.

"British Columbia continued its roller coaster ride, dropping 11.3 points [to 91.5], led by a severe drop in positive sentiment towards labour markets."

Ontario`s index fell 11.9 points to 73.9, and the Prairies moved back into top spot in consumer confidence at 98.5 despite increasing just 0.8 points. Elsewhere, Atlantic Canada saw its index rise 4.3 points to 90.8, while Quebec pushed its index up another 1.8 points to 83.

Read full article here

 

[Amber]

Household debt growth rate is slowing

Credit normal in a functioning market, economist says

Despite worries about the rise of household debt in Canada, a CIBC World Markets report says the rate of growth has recently slowed down.

Economist Benjamin Tal, the report`s author, said it`s a positive thing that the rate of household debt is slowing. He said the rate at which it grew during the recession and the early stages of the recovery were beyond what was healthy in the long term.

"That`s fine," he said of the previous growth in debt, which helped mitigate effects of the recession in Canada. "That`s exactly what the Bank of Canada wanted to do. ... The Bank of Canada cut interest rates during the recession to encourage you and me to go and spend, and that`s how you get out of recession."

But the pace of growth in consumer credit is now slowing, said Tal, who pointed out the rise in Canadians` credit for the six months ended in March was slower than the expansion of nominal gross domestic product, which include the effects of inflation, and it`s the first time in more than seven years that`s happened.

The CIBC report said mortgages are expanding at a rate of 0.6 per cent per month, the slowest since 2003. Lines of credit are expanding at less than one per cent on a monthly basis, the most sluggish pace since 2007, it said. It added that the level of direct loans has flattened.

Read full article here

 

[Amber]

Carney named to head central banker forum

OTTAWA (Reuters) – Bank of Canada Governor Mark Carney will chair a committee of global central bankers tasked with detecting and responding to threats of instability in the global financial system, the bank announced on Tuesday.

For three years starting July 1 Carney will preside over the Committee on the Global Financial System (CGFS), replacing U.S. Federal Reserve Vice-Chairman Donald Kohn, who is retiring.

The CGFS is one of the committees within the Bank for International Settlements (BIS) in Basel, Switzerland. It serves as a hub for central banks to discuss and share research and policy ideas.

"I look forward to maintaining the excellent reputation that this committee has built under Don Kohn`s leadership," Carney said in a written statement.

"Its work will contribute importantly to identifying systemic trends and vulnerabilities and to advancing global financial system reforms," he added.

Carney is a rising star in the world of central banks, overseeing a famously resilient banking system and an economy that has recovered so swiftly from recession that he became this month the first central bank chief in the G7 advanced economies to start hiking interest rates after the recession.

Carney was named one of the world`s most influential people by Time magazine earlier this year, and the former Goldman Sachs investment banker`s appointment reflects a vote of confidence from 30 of his peers at a weekend meeting in Basel.

Carney received a baptism by fire after taking the helm at the Bank of Canada in 2008, just in time for the global credit crunch to hit.

Read full article here

 

[Amber]

Lack of financial literacy will lead to problems later

Lifestyle decisions are really monetary decisions

Our savings rate is near an all-time low and our debt is at an all-time high.

Are we underestimating the ramifications of this spend-now-save-later scenario? Or do Canadians really not understand simple budgeting?

Craig Alexander, chief economist with TD Bank Financial Group, believes Canadians would make different choices if they were better informed

"I write a literacy report every year and have been doing this for the last three or four years," says Mr. Alexander. "I`ll be honest, when I was asked to do the report I couldn`t imagine Canada could have a literacy problem. We are a modern, knowledge-based economy with well-developed primary, secondary school and university system."

International studies have found about five in 10 adults Canadians don`t have adequate literacy skills, the economist says.

When it comes to numeracy skills, six out of 10 Canadians don`t make the grade. The federal government has set up a task force on financial literacy, to which Mr. Alexander has made a 14-page submission.

Read full article here