October 2009

[Ally]

A Hint of Life in the Job Market?

EDMONTON — Exhausted benefits and an improving job market pushed the number of Albertans receiving employment insurance down 1.8 per cent in August--the second consecutive monthly decrease, according to Statistics Canada figures released Tuesday.

There were 57,650 Albertans on EI in August. That`s down slightly from the 58,720 recipients in July.

It follows a 4.4-per-cent drop in the number of EI recipients in July, the first reversal since last fall.

Alberta`s unemployment rate also fell marginally in September to 7.1 per cent.

"Alberta`s labour markets are probably in the very early stages of a recovery," said ATB Financial economist Dan Sumner.

Read the full article here.

 

[Ally]

Don`t Loath Lofty Canadian Dollar

If there is one thing that Canadians are never happy with (in addition to their local hockey team) it is the Canadian dollar. When it was flirting near that record low of 62 cents nearly a decade ago, everyone lamented the future of the loonie. It was too expensive to buy anything that was imported, it was too costly to make that annual trip to Florida, and tickets on Broadway were prohibitively expensive. We felt poorer. We must have been doing something wrong.

But we did nothing wrong back in those days because it was 100 per cent a U.S. dollar story. The U.S. was home to the Internet mania – and all the global capital flow that came with it – and Robert Rubin, treasury secretary at the time, was carrying out an overtly strong dollar policy partly to keep inflation at bay. I recall all too well telling clients that the loonie was actually either holding its own or appreciating against the global basket of non-U.S. dollar currencies. People would just roll their eyes.

Today, Canadians are fretting about a strong currency. After all, it is going to crush our manufacturing sector, kill our export base and undermine our domestic competitiveness. Even the Bank of Canada is saying the strength in the Canadian dollar is dampening our growth prospects.

Let`s all step back and take a deep breath. For years when the Canadian dollar was trading around 60 cents, exporters did indeed reap the rewards, while importers were hit hard by rising costs. Our exports to the U.S. did improve, but we needed that source of growth as an antidote to the pain from the budget belt-tightening during the 1990s. Of course, there was no shortage of complaints from snowbirds headed south.

Read the full article here.

 

[Ally]

Share with Your Spouse and erase a Chash drain

My kids are growing up - fast. In just two years, I`ll be the father of a teenager. It seems that raising teenagers is not for the faint of heart. In my case, my parents just sealed me in a wooden barrel for six years and left an opening in the top just big enough for food and other essentials, such as hair gel.

My father told me the other day that there`s really nothing to be afraid of in raising teenagers, as long as I have my wits about me, and a long list of useful tools: night vision binoculars, jumper cables, a medical emergency kit, the phone number for 911 and a good cellphone plan.

It seems that tax planning is much the same as raising teenagers: You try to keep the cash drain to a minimum. Many tools are available to make your life less taxing. No, I`m not talking about night vision binoculars, but there`s one "tool" that`s worth dusting off annually as we approach the end of the year. I`m talking about transferring capital losses to your spouse.

Read the full article here.

 

[Ally]

Comment: Carbon Report`s Bloody Portent

Those 200 protesters who disrupted Question Period this week demanding the government pass Bill C-311 -- setting strict targets for reducing carbon emissions -- showed how dearly some people will pay to slash Canada`s carbon footprint. Six protesters were arrested; one later showed up on television with blood around his nose claiming he`d been brutalized by Parliamentary guards. "My face was smashed on the floor," Jeh Custer told a CBC audience, insisting he would not give up pressuring the government to commit to aggressive emission-reduction goals.

With the arrival yesterday of a report funded by TD Bank, prepared by the David Suzuki Foundation and the Pembina Institute, and based on economic models by M.K. Jaccard and Associates, calculating for the first time the economic impact of government climate-change policies, the rest of us are left to decide how willing we are to have our own noses bloodied in the name of atmospheric justice.

For it leaves no doubt: in meeting the government`s plan to cut greenhouse gases by 20% from 2006 levels in the next decade, there will be blood.

It portends, TD`s chief economist told reporters, "the biggest fiscal shock in Canadian history." The study shows "it can be done," as long as we`re prepared for hard-line restrictions, including steep carbon taxes and the banning of any new buildings, homes, appliances and vehicles not meeting strict environmental standards.

And since that won`t quite get us to either Ottawa`s goal, or the taller ambition of environmental groups that we cut emissions about 40% from today by 2020, Canada must also purchase loads of carbon permits from developing countries to make up our shortfall.

Read the full article here.

 

[Ally]

Peter Foster: Muddled Models

When the TD Bank`s Don Drummond agreed to spend $110,000 on a study of the impact of climate change policy on Canada, what he had in mind was to elucidate the regional impacts of such policies. This was a worthy objective, although everybody knows that it`s Alberta that stands to get hammered. But Mr. Drummond chose to channel the study, which was carried out by climate policy wonk Mark Jaccard, through the Suzuki Foundation and the Pembina Institute, organizations hardly known for their objectivity on the issue. Why do this? Mr. Drummond told me yesterday that these activist organizations have "technical expertise," while Mr. Jaccard apparently has "the models."

TD certainly got media bang for the buck. His report was leaked to The Globe and Mail, and yesterday`s Globe featured a front-page story, two columns and an editorial. However, the thrust of coverage appeared to contradict the smiley-faced conclusions of the report, which was titled "Climate leadership, economic prosperity." Or, please hobble us so that we can run faster!

Under reasons for draconian action, the report quotes the widely discredited report from British economist and climate extremist Nicholas Stern. Meanwhile, the Jaccard study claims that the Intergovernmental Panel on Climate Change is the fount of science, but then maintains that the situation is much worse than that presented by the IPCC.

The Stern report`s central flaw is a ridiculously low discount rate. If that sounds technical, what it means is that man-made climate change is claimed to be already costing us 5-20% of global GDP annually. It`s just that we can`t see where.

Lord Stern is increasingly becoming a figure of ridicule. This week, he suggested that vegetarianism might save the world, and projected that attitudes towards meat eating might become like those towards drunk driving. He has also predicted climate change would turn Europe into a desert and turn the world back in time by 30-million years. (See Simpson and the Shillers, below).


Read the full article here.

 

[Ally]

Retirees vulnerable to quirks of Federal Taxes, Savings Rules

Issues concerning which types of investments to hold inside a registered retirement savings plan or registered retirement income fund have reached the federal government`s finance committee.

I`ve written about a senior who phoned a year ago to lament that the stock market crash had decimated his RRIF, which was 100 per cent in equities, and he was upset that he would need to sell stocks and lock in losses to make his annual minimum withdrawal. It`s not necessary to sell stocks to make a RRIF withdrawal; they can be moved "in kind" to a non-registered plan, but you need funds to pay tax on the amount taken out.

The government later essentially reduced RRIF withdrawal minimums for 2008 to 75 per cent of the normal amounts.

However, reader R.P. has written suggesting there`s nothing wrong with having an RRIF almost exclusively in equities, as long as they pay dividends from which the minimum withdrawal can be made.

"If no stock sales are required, why would I be upset by price volatility?" wrote R.P. "It`s irrelevant as long as the dividends roll on! Perhaps in five years` time, when the federal government requires withdrawals at a rate greater than the 5.9 per cent my RRIF is generating, this will begin to become significant because I may have to sell some bits and pieces. Presently, I`m much more interested in `dividend volatility.` "

Read the full article here.

 

[Ally]

Ottawa breathes relief as Loonie rise pauses

TORONTO -- The Canadian government breathed a sigh of relief on Friday that the Canadian dollar had at least paused in its march towards parity with the U.S. dollar.

"Like the governor of the Bank of Canada, we are concerned with volatility in our currency. We are seeing some stability of late, which is to be desired, and so we`re all comfortable with that," Finance Minister Jim Flaherty told reporters.

He and Bank of Canada Governor Mark Carney have in the past 10 days voiced concern about too rapid a rise in the currency, which has retreated from around $1.02 to the dollar, or 98 U.S. cents, on Oct. 15 to $1.08, or 92.6 U.S. cents, on Friday.

Mr. Flaherty said that although the central bank does have the ability to try to temper the currency`s movements, there are limits to what it can do.

"There`s no question longer term that in global terms we`re seeing a lot of downward pressure on the U.S. dollar, and that affects all of the market currencies, including the Canadian dollar," he said.

"I agree with the governor...that we want to avoid volatility in the currency to the extent we can, and the tools we have are limited in that regard but there are some tools available."

Read the full article here.

 

[Ally]

Upbeat Canadian Shoppers still won`t splurge

CALGARY - Consumers plan to hold the line on holiday spending this year, despite feeling more upbeat about the economy this year, a new survey shows.

Half of Canadians say they will shell out the same amount on Christmas shopping this year, according to Deloitte`s annual survey.

"People are definitely feeling more optimistic heading into this Christmas season compared to last," said Rick Khon, a practitioner who works in Deloitte`s Vancouver office.

"Last year, they were telling us the economy was going to weaken."

Still, there were a few more consumers who planned to cut spending this year-- 44 per cent said they had smaller budgets, up three per cent from a year ago.

The survey also found that some shoppers planned permanent cuts to their holiday budgets, with 20 per cent saying they would spend less going forward. But one-third also said they would resume the spending levels when the economy improved.

Read the full article here.

 

[Ally]

Fighting Climate change may slow Economic growth, but it won`t stop it, Report claims

EDMONTON — A new report says Canada`s economy can continue to thrive while this country meets ambitious greenhouse gas emissions targets — but a significantly higher price is needed on carbon emissions by industry.

The study, done jointly for the Pembina Institute and David Suzuki Foundation, was quickly rejected Thursday by the premier whose province could be most affected by its suggestions, Alberta`s Ed Stelmach.

"There won`t be another wealth transfer to Ottawa under my watch, I can tell you," Stelmach said.

Alberta has an emissions levy of $15 per tonne for the province`s industrial sector. That cash is supposed to fund technology aimed at reducing greenhouse gas emissions.

But the report, which received funding from the Toronto Dominion Bank, says $15 isn`t enough.

It says that to hit the federal government`s target of cutting emissions by 20 per cent by 2020, a starting fee of $40 per tonne in 2011, ramped up to $100 a tonne by 2020, would be necessary.

Read the full article here.

 

[Ally]

New U.S. Home Sales drop, Durable Goods orders rise

WASHINGTON -- Sales of new U.S. homes unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery even as businesses appeared to be stepping up investment.

New single-family home sales fell 3.6% to a 402,000 until annual pace from a downwardly revised 417,000 units in August, the Commerce Department said on Wednesday. Analysts polled by Reuters had expected sales to rise to a 440,000 unit pace.

A separate report from the Mortgage Bankers Association showed demand for mortgages has fallen for the past three weeks as buyers move to the sidelines ahead of the Nov. 30 expiration of a popular home-buyers` tax credit.

"One month is obviously not a trend and I think there is plenty of evidence that things are turning around. I still believe the economy has hit bottom and is on the way up, but it will be a long, slow process," said Mark Bonhard, an investment advisor at Dawson Wealth Management in Cleveland, Ohio.

The housing data represented a road bump in a recovery that otherwise appears to be widening. Another Commerce Department report showed that new orders for long-lasting U.S. manufactured goods rose 1% in September as businesses stepped-up investment plans.

Read the full article here.

 

[Ally]

Climate Change Report `Irresponsible,` Prentice says

A landmark report on the economic impact of meeting climate-change targets has run into a storm of opposition, with Western provinces calling it divisive and the federal government saying it would spell economic disaster.

"We would be extremely opposed to any kind of a carbon tax or some other kind of tax that would result in a significant wealth transfer from our province to any other province or area of the country," said Saskatchewan Energy Minister Bill Boyd.

Federal Environment Minister Jim Prentice said there is no way Western Canadians could absorb the deep economic hit projected by the report`s environmentalist authors – the David Suzuki Foundation and the Pembina Institute.

He said their assumptions are way off: The long-term economic conditions they forecast will be avoided by working with the Americans on a continental climate-change plan.

"The conclusions [the report] draws are irresponsible," said Mr. Prentice in an interview with The Globe and Mail from Kingston, where he was meeting with provincial and territorial environment ministers. Specifically, he said Canadians will not accept the report`s advocacy of emission targets for 2020 that would reduce Canada`s gross domestic product by 3 per cent nationally and 12 per cent in Alberta from business-as-usual estimates.

The report, which was financed but not endorsed by the Toronto Dominion Bank, provides the estimated costs for Canada to meet the Conservative government`s own target to reduce emissions to 20 per cent below 2006 levels by 2020, as well as a more stringent target advocated by environmentalists.

Read the full article here.

 

[Ally]

The Question Now: Will the Rebound Last?

The U.S. economy grew in the third quarter for the first time in more than a year, raising hopes that the recovery is taking hold.

The world`s largest economy expanded at a 3.5-per-cent pace from July through September, driven by consumer spending and homebuilding, the U.S. commerce department said Thursday.

That ends the deepest recession in the United States since World War II. The U.S. economy had been shrinking for four straight quarters, hitting bottom in the first three months of this year with a 6.4-per-cent decline.

In Washington, Treasury Secretary Timothy Geithner cautioned that not everyone is benefiting from the rebound. He warned the recession remains "alive and acute" for struggling homeowners and the jobless. Unemployment is "unacceptably high," he said, referring to the 9.8 per cent of the workforce without a job.

"For every family facing foreclosure, for every small business facing a credit crunch, the recession remains alive and acute," Geithner said in testimony to the U.S. House financial services committee.

Read the full article here.