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*Morneau, third left, and fellow finances chiefs gather in Canada*

Seemingly unable to grasp that Trump would dare break with decades of politically correct tradition and turn his back on allies who continue to impose tariffs on US exports yet balk when the US retaliates in kind, Le Maire said on Saturday that Washington has just a few days to take urgent measures if it wants to avoid unleashing a full-scale trade war with its European allies.

“We still have a few days to avoid an escalation. We still have a few days to take the necessary steps to avoid a trade war between the EU and the US, and to avoid a trade war among G7 members,” Le Maire told journalists after the conclusion of the G-7 meeting, according to Reuters.

*French Finance Minister Bruno Le Maire*

He added that it is up to the US to make the first move:

“The ball is in the camp of the United States, it is up to the American administration to take the right decisions to smooth the situation and to alleviate the difficulties.”

…click on the above link to read the rest of the article…

FM Meeting in Toronto: G7 Engaged in Frenzied Anti-Russia Hysteria

April 27, 2018

FM Meeting in Toronto: G7 Engaged in Frenzied Anti-Russia Hysteria

The G7 foreign ministers’ get-together took place in Toronto on April 22-23 ahead of the group’s two-day summit in June, at which time Charlevoix, Quebec will host the leaders of the United States, Britain, Canada, Germany, France, Italy, and Japan. No decisions were made on the Iran nuclear deal, Syria, or North Korea. As usual, the US decides what’s right or wrong while others countries sing the chorus. The final communiqué is a very voluminous document filled with turgid words and phrases that have little practical meaning. Actually, the event produced few, if any, results worth talking about. This casts some doubt on the prospects for the top-level event this summer.

Russia was in the crosshairs and the language was tough. “The Russophobic connotations there are obvious,” as Russian FM Sergey Lavrov noted. So what? Wasn’t it tough before? Has this “toughness” changed anything about Moscow’s behavior? “If you want to be treated as a great power, then work with us,” they say. If joining the G7 means sacrificing one’s independence to become one of “us,” then who needs such membership?

The decision to create a working group to address Russia’s “detrimental behavior” had been expected. The G7 members have already raised a hue and cry about it. Another “working group” to fuel the hysteria does not change much. The ministers agreed to keep the sanctions in force and to introduce new ones if Russia refuses to cave. This decision had been expected. It’s the US that calls the shots with the others obediently following its marching orders.

Ukraine was invited to attend for the first time. If the aim was to irritate Russia, the shot missed its target. Inviting the poorest country in Europe, known for its inefficiency and corruption, does no reflect well on them.

…click on the above link to read the rest of the article…

Merkel Furious With Trump After “Unprecedented” G-7 Failure To Reach Consensus On Climate Change

May 27, 2017

Merkel Furious With Trump After “Unprecedented” G-7 Failure To Reach Consensus On Climate Change

In the end it was not mean to be. As discussed on Friday, during Trump’s first G-7 summit, world leaders including German Chancellor Angela Merkel and new French President Emmanuel Macron, had hoped to persuade the the US president to endorse the Paris Agreement climate pledge to fight global warming. By the end of the summit – held at a luxury hotel in Taormina, Sicily that was once a Dominican monastery and base for the Nazi air force during World War Two – they realized they had failed, as Trump “underscored his determination to break the global mold” by refusing to follow the Group of Seven line not only on global warming but also by resisting measures on trade.

Furthermore, in what was described as an “unprecedented step“, the final G-7 communique gave the U.S. its own section to say that it is “undergoing a review process” and is unable to join in the discussion, an official cited by Bloomberg said. As a result while the US will remain excluded from the final affirmation, the other six, call it the G-6, will recommit to the Paris Agreement on climate change, which Trump tweeted Saturday he’d come to a decision on next week.

Needless to say, Merkel who had hoped to leave the Saturday summit with the G-7 agenda endorsed by everyone, including Trump, was furious at the US president.

“The whole discussion about climate has been difficult, or rather very unsatisfactory” German Chancellor Angela Merkel told reporters Saturday. “Here we have the situation that six members, or even seven if you want to add the EU, stand against one. That means there are no signals until now whether the U.S. will remain in the Paris Agreement or not.

…click on the above link to read the rest of the article…

Toxic Politics Versus Better Economics

October 16, 2016

Toxic Politics Versus Better Economics

NEW YORK – The relationship between politics and economics is changing. Advanced-country politicians are locked in bizarre, often toxic, conflicts, instead of acting on a growing economic consensus about how to escape a protracted period of low and unequal growth. This trend must be reversed, before it structurally cripples the advanced world and sweeps up the emerging economies, too.

Obviously, political infighting is nothing new. But, until recently, the expectation was that if professional economists achieved a technocratic consensus on a given policy approach, political leaders would listen. Even when more radical political parties attempted to push a different agenda, powerful forces – whether moral suasion from G7 governments, private capital markets, or the conditionality attached to International Monetary Fund and World Bank lending – would almost always ensure that the consensus approach eventually won the day.

In the 1990s and 2000s, for example, the so-called Washington Consensus dominated policymaking in much of the world, with everyone from the United States to a multitude of emerging economies pursuing trade liberalization, privatization, greater use of price mechanisms, financial-sector deregulation, and fiscal and monetary reforms with a heavy supply-side emphasis. The embrace of the Washington Consensus by multilateral institutions amplified its transmission, helping to drive forward the broader process of economic and financial globalization.

Incoming governments – particularly those led by non-traditional movements, which had risen to power on the back of domestic unease and frustration with mainstream parties – sometimes disagreed with the appropriateness and relevance of the Washington Consensus. But, as Brazilian President Luiz Inácio Lula da Silva demonstrated with his famous policy pivot in 2002, that consensus tended largely to prevail. And it continued to hold sway as recently as almost two years ago, when Greek Prime Minister Alexis Tsipras executed an equally notable U-turn.

…click on the above link to read the rest of the article…

Traveling Circus

September 24, 2016

Traveling Circus

After Wednesday’s policy statements by the Fed and Bank of Japan, a harsh light is being shined on the incredible nature of their communications. It would be wise in the current environment to structure investment portfolios with a pro-volatility bias.

Central banks in G7 economies have been carrying a heavy load for a very long time, especially noticeable to all since 2009. Zero and negative sovereign interest rates, asset purchase programs and whack-a-mole currency devaluations have avoided a counterfactual that would have included credit exhaustion, debt deflation and economic contraction.

Their now conventional unconventional monetary policies have been overlaid by communications policies that have fostered a narrative of economic normality and cyclicality. It all seems rather disingenuous given their successful coup de marché, and maybe a bit delusional too given their serious demeanors discussing Philips curve stuff in the face of balance sheet time bombs.

And now…central banks seem exhausted too, not only in terms of being able to stimulate consumption and levitate asset prices, but also in terms of their communications policies that suggest they can.

The BOJ may have jumped the shark when it embarked on a new program called “QQE with yield curve control” whereby it will pin 10 year JGB yields at 0%. The BOJ also signed on to a new program called “inflation overshooting commitment” whereby it will keep creating sufficient base money until CPI inflation exceeds 2%. Let there be no mistake: this is formalized QE Infinity.

It was a tacit admission that lowering funding rates further would have no stimulative impact on the Japanese economy, and that all it can do at this point is expand the size of its balance sheet. BOJ watchers do not understand why more attention wasn’t paid to the short end of the curve, which would be easier to manage.

…click on the above link to read the rest of the article…

Canadian Oil Slammed By Low Prices, Pipeline Woes

March 2, 2016

Canadian Oil Slammed By Low Prices, Pipeline Woes

Canada has been particularly hit hard during the downturn in oil prices. A major oil-producing country, Canada rode the commodity wave upwards over the past decade, but has suffered from the downturn.

The economy briefly dipped into a recession in 2015. Even after growth resumed, Canada’s GDP slowed the most out of all G7 nations. The unemployment has rate ticked up, especially in Alberta where most of its oil and gas production is concentrated. And the Canadian dollar has plunged in value to its lowest level in over a decade.

The problems for Canada’s oil industry are compounded by several factors. First, Canada’s oil is more costly to produce than other regions, particularly when compared to oil produced in United States where Canada competes for pipeline capacity and market share. Similarly, Canada’s oil sector is also struggling to build enough pipelines to get their oil to market. With elevated levels of production in the U.S., Canadian producers have very few options to move their product. Pipeline routes to the east and west coasts for export abroad are limited, vexing Alberta producers.

That has led to a third problem that puts Canadian producers at a disadvantage to some of their peers: Canadian crude oil sells at a steep discount to more widely recognized benchmarks like WTI. In mid-January, for example, when WTI dropped to $30 per barrel, heavy tar sands in Canada traded at just $8 per barrel temporarily. Canada’s oil, at a lower quality and produced at a higher cost, needs to be discounted in order to entice buyers.

Job losses have proliferated across the oil patch. Earlier this week, Nexen Energy, a Calgary-based subsidiary of China’s Cnooc, announced that it would lay off another 120 workers because of low oil prices.

…click on the above link to read the rest of the article…

Cristina Takes on Financial Times in Multi-Platform BRICS Tirade

September 12, 2015

Cristina Takes on Financial Times in Multi-Platform BRICS Tirade

Cristina has been on the media warpath against a perceived attack on emerging markets.

This Monday, Cronista republished (in Spanish) an article from the Financial Times titled, “Emerging Markets: Fixing a Broken Model.” The article is long, a bit on the dry side, hardly sensational and difficult to construe as an attack on anyone.

The article does not mention Argentina even one time. Nevertheless, Argentine President Cristina Fernández de Kirchner exploded onto the Twittersphere with close to 100 tweets, shot back with twoblog posts and drove her point home at an electoral rally where she somehow connected the BRIC issue with European nations turning away migrants.

I have to preface this by saying that a few years ago, I liked Cristina enough. I disagreed with her, but at least could respond to her policy moves and statements as a professional with reasoning based in economics. In this case, her violently emotional reaction to a newspaper article reads like a crazy person writing a stream of consciousness. You disagree with Cristina or want to suggest she has misread an article? Too bad! You’re a racist who hates the poor and celebrates genocide.

Before attempting to decipher why an economic assessment of emerging market growth happens to grind Cristina’s gears, it’s important to have a bit of context concerning emerging markets and the terms BRIC and BRICS.

BRIC is an acronym for Brazil, Russia, India and China that was coined in 2001 by a Goldman Sachs investment bank paper to describe these big, rapidly growing countries. Over the ’00s, BRICs was used to describe the shift in global economic power away from the historically rich economies to the developing world. Back then, economists debated projections of the future power of the BRIC economies, with estimates ranging from overtaking the G7 economies by the middle of the 2020s to the 2050s.

…click on the above link to read the rest of the article…

Zero Carbon Emissions: The New Language Of Climate Change

July 1, 2015

Zero Carbon Emissions: The New Language Of Climate Change

This is a guest post by David Suzuki.

If nothing else, the G7 countries’ recent agreement to end fossil fuel use for energy by 2100 signals a shift in the way we talk and think about global warming. Previous agreements were about reducing carbon emissions from burning coal, oil and gas. This takes matters a step further by envisioning a fossil fuel–free future.

There are reasons for cynicism: the long time frame means none of the politicians involved in the commitment will even be alive, let alone held accountable, for meeting the target in 2100; Canada and Japan watered down Germany’s proposal to end fossil fuel energy by 2050; and many governments, including Canada’s, haven’t met even their current weak commitments. But in calling for deep emissions cuts by 2050 and an end to fossil fuel energy by 2100 — “decarbonization” — the non-binding pledge at least shows governments recognize the need to confront climate change.

Canada could show it takes the commitment seriously by heeding the advice of 100 scientists (including 12 Royal Society of Canada fellows, 22 U.S. National Academy of Sciences members, five Order of Canada recipients and a Nobel Prize winner, from a range of disciplines) who released a statement with 10 reasons why “No new oil sands or related infrastructure projects should proceed unless consistent with an implemented plan to rapidly reduce carbon pollution, safeguard biodiversity, protect human health, and respect treaty rights.”

According to Simon Fraser University energy economist and statement co-author Mark Jaccard, “Leading independent researchers show that significant expansion of the oil sands and similar unconventional oil sources is inconsistent with efforts to avoid potentially dangerous climate change.”

Another author, Northern Arizona University ecologist Tom Sisk, said it’s not just about climate: “Oil sands development is industrializing and degrading some of the wildest regions of the planet, contaminating its rivers, and transforming a landscape that stores huge amounts of carbon into one that releases it.”

…click on the above link to read the rest of the article…

Fighting Extinction

June 16, 2015

Fighting Extinction

“This is a true challenge. If the story is told as one of avarice, private gain and exceptionalism, the human race will go extinct.”

At the G7 last week, the leading industrial nations agreed to cut greenhouse gases by phasing out the use of fossil fuels by the end of the century. While that seem to many, ourselves included, as whistling past the graveyard, the mainstream press and many climate organizations are hailing the diplomatic triumph of German Chancellor Angela Merkel in bringing fossil foot-draggers Australia, Japan and Canada to a “Jesus, the climate!” moment.

On the final day of G7 talks in their Bavarian castle, and before rushing off to the secretive Bilderberg Group meeting, Merkel said the leaders had committed themselves to the need to “decarbonize the global economy in the course of this century.” They also agreed on a global target for limiting the rise in average global temperatures to a maximum of 2°C over pre-industrial levels, oblivious of the contradiction in those two positions.

Two weeks ago, at the St. Petersberg Climate Dialogue, Chancellor Merkel called upon the overdeveloped countries to draft a roadmap of how to meet the $100 billion bribe Hillary Clinton offered underdeveloping countries to acquiesce to President Obama’s stalling strategy in Copenhagenin 2009. For five years now, Obama has declined to present such a plan, and not having one has undermined trust in both the UN process and the United States. At home, Obama’s popularity ratings are now below those of George W. Bush in his final year. The President’s legacy is likely to be that his name becomes synonymous with loss of trust. Merkel’s is likely to be associated with loss of ambition.

…click on the above link to read the rest of the article…

Nuke Russia?

June 16, 2015

Nuke Russia?

The warlords of Washington haven’t ruled it out

The War Party is a veritable propaganda machine, churning out product 24/7. Armed with nearly unlimited resources, both from government(s) and the private sector, they carpet-bomb the public with an endless stream of lies in order to soften them up when it’s time to roll. In the past, their job has been relatively easy: simply order up a few atrocity stories – Germans bayoneting babies, Iraqis dumping over babies in incubators – and we’ve got ourselves another glorious war. These days, however, over a decade of constant warfare – and a long string of War Party fabrications – has left the public leery.

And that’s cause for optimism. People are waking up. The War Party’s propaganda machine has to work overtime in order to overcome rising skepticism, and it shows signs of overheating – and, in some instances, even breaking down.

One encouraging sign is that the Ukrainian neo-Nazis have lost their US government funding …

In a blow to the “let’s arm Ukraine” movement that seemed to be picking up steam in Congress, a resolution introduced by Rep. John Conyers (D-Michigan) and Rep. Ted Yoho (R-Florida) banning aid to Ukraine’s Azov Battalion, and forbidding shipments of MANPAD anti-aircraft missiles to the region, passed the House unanimously.

This is significant because, up until this point, there has been no recognition in Washington that the supposedly “pro-democracy” regime in Kiev contains a dangerously influential neo-Nazi element.

…click on the above link to read the rest of the article…

China Mocks G7 As “Gathering Of Debtors”, Warns “Confrontation Will Be A Disaster For Europe”

June 16, 2015

China Mocks G7 As “Gathering Of Debtors”, Warns “Confrontation Will Be A Disaster For Europe”

Vladimir Putin didn’t get an invite to the Angela Merkel-hosted G7 Summit in Bavaria last week, which means the Russian President not only missed out on two days at the scenic Castle Elmau, but also on lederhosen shopping with US President Barack Obama who, judging from eyewitness accounts and a variety of amusing photo ops, channeled his inner Clark Griswold upon touching down in the Bavarian town of Krun. The G7 isn’t pleased with Russia’s ‘behavior’ in Eastern Europe and so, Moscow has been expelled from the cool kids club until such a time as the Kremlin agrees to uphold Western democratic values.

(Obama in Krun)

But the G7 is an equal opportunity exclusionist which means it’s not just former superpowers that aren’t welcome, but rising superpowers as well, which means you won’t be seeing Xi Jinping at the table either.

But “Big Uncle Xi” (as he is affectionately known in China) likely isn’t losing any sleep because in the eyes of Beijing, the G7 — much like the IMF and the ADB — is a relic of a global economic and political order that is well on its way to obsolescence if it isn’t there already.

(Xi Jinping; illustration: The New Yorker)

The Global Times (which, it should be noted, is owned by the ruling Communist Party’s official newspaper, the People’s Daily) has more on why the G7 is largely irrelevant in the modern world.

Via The Global Times:

The G7 summit concluded in Germany last week. Chinese scholars and media barely showed any interest to this outdated informal institution, except for a Declaration on Maritime Security issued by G7 foreign ministers. The declaration expressed their concerns on “unilateral actions” in the South China Sea, with China as the obvious target.

Judging from the agenda and outcomes of this year’s G7 summit, it has run counter to the global trend of peace, development and cooperation and become mere of a geopolitical tool.

…click on the above link to read the rest of the article…

Climate change will push Canadian business onside

June 10, 2015

Climate change will push Canadian business onside

Companies seem conservative today, but just watch when they reach the profitable tipping point

Until he lost his shirt in the Dirty Thirties, a relative of mine was an influential businessman in southern Saskatchewan. Among his interests was a livery stable, with a blacksmith, harnesses, buggy whips and everything you needed to keep horses on the road and in the field.

Horses are still with us, of course, but today it is hard to realize what an enormous industry they supported only a hundred years ago.

As skeptics scoff about Prime Minister Stephen Harper’s grudging concession on the G7 agreement to end the use of fossil fuels, I think it is useful to remember how quickly businesses can completely transform an economy once they get the bit between their teeth.

“If we can get companies putting their innovative genius to work on solving environmental problems, we’re going to find solutions that we can’t even imagine today,” says Stewart Elgie, a professor of law and economics at the University of Ottawa.

He is confident that when it comes to fighting climate change, business will pull its share of the load. But we have to get over a hump.

Horse sense

A hundred years ago, the saddlery and harness business had its own industrial journals, well worth perusing. United States Leather, making a product essential to harnesses, was one of the 12 founding companies in the Dow Jones Index.

An inspection of one of world’s biggest monthly harness trade magazines, produced in Walsall, England — a world hub of harness and saddle making — shows that to a large extent, the industry did not see the end coming.

“Whilst some commentators (quite correctly) predicted disaster for the saddlery and harness trade,” says a commentary published by Walsall Council, “others were more complacent, dismissing the motor car as an unreliable and expensive plaything which would never catch on.”

…click on the above link to read the rest of the article…

The G7 and its 85–year carbon pledge

June 9, 2015

The G7 and its 85–year carbon pledge

The G7 gives itself a lifetime to fulfil its climate change promise

If you thought it was hard to keep up your New Year’s resolution, try keeping an 85-year pledge.

That’s exactly what Canada and the other G7 countries are committing themselves to as they try to get control of global greenhouse gases. While Canada failed on its Kyoto agreement and won’t meet its 2020 Copenhagen target, that’s not stopping Prime Minister Stephen Harper from making even more long-lived environmental pledges.

First, a deep cut in carbon emissions by 2050 and second, an eventual end to fossil fuel use by 2100.

At first glance, it’s praiseworthy. The world’s leading economies commit to decarbon the world economy. Some environmental groups were quick to call the G7 announcement “groundbreaking,” although not everyone is as supportive and approving.

“It’s not groundbreaking. It is politically cheap to pledge a non-binding commitment that falls way behind someone’s time in office,” said David Keith, an engineering professor at Harvard University and former University of Calgary professor who was one of Time magazine’s “heroes of the environment” in 2009.

“What we really need is specifics in the next few years or decades.”

Vague on execution

The pledges do add weight to the movement to get off of fossil fuels, but how the G7 countries achieve their goals is unclear.

That shouldn’t come as a surprise considering how vague Canada has been in the past about achieving its emissions targets. Just last month, the federal government promised a 30 per cent cut to emissions below 2005 levels by 2030. It gave little indication how it exactly planned to do it. Eliminating all cars for a year would only put a dent in carbon emissions.

…click on the above link to read the rest of the article…

Washington Blinks: Will Seek Partnership With China-Led Development Bank

March 23, 2015

Washington Blinks: Will Seek Partnership With China-Led Development Bank

Don’t look now, but Washington just blinked. As we’ve documented exhaustively over the past week, pressure has been building steadily for the US to strike some manner of conciliatory tone towards China with regard to the Asian Infrastructure Investment Bank, a China-led institution aimed at rivaling the US/Japan-backed ADB. Britain’s decision to join China in its new endeavor has prompted a number of Western nations to throw their support behind the bank ahead of the March 31 deadline for membership application. Because the AIIB effectively represents the beginning of the end for US hegemony, the White House has demeaned the effort from its inception questioning the ability of non-G-7 nations to create an institution that can be trusted to operation in accordance with the proper “standards.” Now, with 35 nations set to join as founders, it appears Washington may be set to concede defeat. Here’s more, via WSJ:

The Obama administration, facing defiance by allies that have signed up to support a new Chinese-led infrastructure fund, is proposing the bank work in a partnership with Washington-backed development institutions such as the World Bank.

The collaborative approach is designed to steer the new bank toward economic aims of the world’s leading economies and away from becoming an instrument of Beijing’s foreign policy. The bank’s potential to promote new alliances and sidestep existing institutions has been one of the Obama administration’s chief concerns as key allies including the U.K., Germany and France lined up in recent days to become founding members of the new Asian Infrastructure Investment Bank.

…click on the above link to read the rest of the article…

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