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Our uncomfortable ride with central bankers who can’t take us home again: Neil Macdonald

September 24, 2016

Our uncomfortable ride with central bankers who can’t take us home again: Neil Macdonald

The great post-Great Recession money-printing bonanza was supposed to be temporary

Chair Janet Yellen decided this week to keep the U.S. Federal Reserve's interest rate where it is, saying the U.S. economy isn't yet ready to withstand a modest increase.

Chair Janet Yellen decided this week to keep the U.S. Federal Reserve’s interest rate where it is, saying the U.S. economy isn’t yet ready to withstand a modest increase. (Gary Cameron/Reuters)

We can all, more or less, put a dollar amount to what we’re worth.

The value of that money is another question.

Money is the ultimate confidence game; $10 is worth $10 because we all agree it is worth $10, and for no other reason.

Common sense would seem to dictate that creating unimaginable amounts of new money, the way central banks have been doing since the Great Recession, would erode the value of a dollar, or a euro, or a yen.

The U.S. Federal Reserve alone has printed about $3.8 trillion since 2009. That’s enough to buy 38 million million-dollar homes.

DOLLAR/

The U.S. Federal Reserve has printed about $3.8 trillion since 2009. (Reuters)

Put another way, the American central bank has printed more money than the entire Canadian economy generates in two years. Most of it was spent buying U.S. government treasury bonds — basically creating money with one hand of government and handing it to the other to spend.

Of course, the money printing distorted everything. As intended, it drove down interest rates to nearly zero, punishing old-fashioned, “virtuous” behaviour, robbing savers of return on their investments, while rewarding those who live beyond their means and bailing out scoundrels.

Risky behaviour

As intended, the creation of that money encouraged even more risky behaviour. Stock markets set new records, floating on all that cash. People bought homes they probably couldn’t afford (to a point that has scared the government of Canada; our central bank has pursued low interest rates, too).

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

U.S. interest rate hike will be tough medicine for indebted Canada

December 16, 2015

U.S. interest rate hike will be tough medicine for indebted Canada

America has had its housing market ‘correction,’ ours is yet to come

Federal Reserve Chair Janet Yellen at the Economics Club of Washington earlier this month. She is widely expected to raise the Feds main interest rate today, for the first time in nine years.

Federal Reserve Chair Janet Yellen at the Economics Club of Washington earlier this month. She is widely expected to raise the Feds main interest rate today, for the first time in nine years. (Susan Walsh/Associated Press)

Let’s look at the unfortunate facts for a moment.

The U.S. Federal Reserve appears ready to raise interest rates slightly today, because it believes an American recovery is well underway. The U.S. economy is now at what economists would call full employment — about five per cent.

Good for them. An American recovery cannot be anything but good for Canada.

And yet.

The Canadian economy is weak enough that Bank of Canada governor Stephen Poloz is now actually talking about the possibility of going the other way, all the way to negative rates, which means you’d be better off stuffing cash into a mattress.

That would penalize savers and push people to take risks in search of return. (It also means an even lower Canadian dollar; what a difference a few years make.)

The unemployment rate here is now 7.1 per cent.

Americans, having been terrified out of their wastrel-grasshopper lifestyle back in 2008, when it looked as though their financial world was coming to an end, have been trimming back debt and actually saving.

As a result, American household finances haven’t been in this good shape for many years.

But Canadians, addicted to the cocaine of nearly free money, keep setting records for household debt. The average Canadian household now owes $1.64 for every dollar of income.

Canadian debt, to put it plainly, is increasing a lot faster than Canadian incomes.

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

After Paris, there will be no stopping the surveillance state now

November 19, 2015

After Paris, there will be no stopping the surveillance state now

Public surveillance increasing at an ‘accelerating rate,’ researchers say, with Europe leading the way

CCTV footage of three British girls catching a flight to Turkey in February to join ISIS dominated the news media for days and likely contributed to the public thirst for answers.

CCTV footage of three British girls catching a flight to Turkey in February to join ISIS dominated the news media for days and likely contributed to the public thirst for answers. (Metropolitan Police/Associated Press)

An old acquaintance who spent years in Canada’s secret world, where he developed a you-don’t-know-the-half-of-it smile, regularly sends me taunting emails and links.

The general theme is that thanks to all the whinging in the mainstream media about civil liberties, and the cavilling by politicians who disagreed with Stephen Harper about the imminent danger posed by Islamic terrorism to Canadians everywhere, our security agencies are unnecessarily hobbled.

After the mass murders in Paris this week, he passed on an article by the conservative writer Mark Steyn, who wrote that instead of meeting about climate change, “a problem that doesn’t exist,” Western leaders should be doing something about the millions of Muslims who now live in Europe, most of whom “at a certain level either wish or are indifferent to the death of the societies in which they live — modern, pluralist, Western societies.”

My friend the ex-spy — who, like a number of security professionals I’ve met over the years, holds an advanced degree — clearly believes the only sensible remedy is increased powers for state security organs.

And that anyone who refuses to accept that premise, or who wants to debate root causes, is quite simply advocating self-destruction.

John Brennan, the CIA director, used the Paris massacre to make essentially the same point this week, denouncing “a lot of hand-wringing over the government’s role in the effort to try to uncover these terrorists.”

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

Bombardier’s strange chokehold on the public purse

November 3, 2015

Bombardier’s strange chokehold on the public purse

In today’s lexicon, government ‘investment’ means spending your money on someone else

Bombardier's new, much-delayed CS300 aircraft made its first test flight in February, but some investment analysts are wondering if the longer, narrow-bodied jet has missed its moment.

Bombardier’s new, much-delayed CS300 aircraft made its first test flight in February, but some investment analysts are wondering if the longer, narrow-bodied jet has missed its moment. (Christinne Muschi/Reuters)

Has anyone noticed how the word “spend” vanished at some point from the political vocabulary?

Governments simply don’t spend anymore, they “invest” on behalf of grateful taxpayers who put up the capital.

The political appeal of this semantic shift is obvious: “investing” has a virtuous ring; it implies prudent choices and a handsome return.

Put it this way, you might actually pay someone to invest your money, but do you really want anyone else spending it?

As for “bailout,” well, that term is about as politically acceptable nowadays as a racial slur. You bail out the weak and incompetent. You invest in winners.

So, this week, Bombardier is — once again — a “winner.”

“This will be a profitable transaction for everybody,” declared Quebec’s minister of the economy, Jacques Daoust, as he confirmed his government’s decision to “invest” $1 billion in the floundering airplane maker, which has been hemorrhaging money and missing delivery deadlines.

In addition, Daoust made it clear he expects “everybody” to include Canada’s new prime minister, Justin Trudeau, just as soon as he officially takes possession of the federal vault this week.

“I can assure you,” said Daoust, that upon learning the name of Trudeau’s new industry minister, “I’ll get his or her phone number and put in a call.”

Daoust is counselling a nice round “investment” figure for Ottawa, too. Say, another billion or so.

Trudeau hasn’t made any commitments, but Daoust’s message is pretty clear: You won with Quebec’s help, and it’s time to help Quebec.

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

Free speech on the run, even in the home of the brave

May 25, 2015

Free speech on the run, even in the home of the brave

You can offend, sure, and the courts will protect you, but there are consequences

Legally protected speech, no matter how offensive, is a glorious and uniquely American invention, a gift to the marketplace of ideas and an example to the world.

Coming from a journalist — me — that statement should not be even mildly controversial.

Increasingly, though, such a statement is being reviled even here in the U.S. as archaic, revanchist, bigoted, paternalistic, reactionary, sexist, probably tinged with racism or just out of tune with modern thought.

That would be no surprise in Canada or European nations where the impulse to regulate real or imagined insult, using hate speech laws, human rights commissions and the like, can trump free speech.

But in today’s America, the domain of constitutionally protected expression, anti-free-speech forces are stepping up co-ordinated attacks.

Most of these freelance censors seem to be politically left of centre, and range from the “social justice warriors” to — and I’m ashamed to say this — many in the mainstream media, which once celebrated the right to offend established norms and ideas.

There are bags of examples in a new book by Kirsten Powers, the columnist and longtime Democratic Party operative, titled The Silencing: How the Left is Killing Free Speech.

Powers argues that left-of-centre activists (she calls them the “illiberal left”) are leading a “forced march towards conformity,” striving to control and punish anyone who disagrees with the groupthink in which they wallow with such certainty.

The academic and writer Fredrik DeBoer has called it the “We Are All Already Decided” phenomenon.

 

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

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