Category: Economy

Canada, Economy

The impact of global fiscal stimulus is good for Canada | Bank of Canada

Colin Henderson

Canada has been receiving kudos for a job well done throughout the crisis of the lest 2 years.  This analysis from Bank of Canada has a telling paragraph (highlighted) that suggests there are good classic economic reasons for Canada being where it is, and over-confidence would be a bad idea. The Power of Many:  Assessing the impact of Global Fiscal Stimulus | Bank of Canada Table 4 shows that, on a regional basis, the United States, as a large and relatively less open region, benefits the least from a global stimulus. Moreover, the impact of different measures depends on its … Continue reading The impact of global fiscal stimulus is good for Canada | Bank of Canada

Economy

Thoughts on ‘The End Game’ and ‘This Time is Different’

Colin Henderson

My weekly newsletter from John Maudlin, cross posted here on The Business Insider is valuable to me in setting context for the longer view in the economy for North America, Europe and Japan.  This week is no exception.  Having spent 2009 reviewing inflation, and deflation prospects, he has now turned to thinking about what the economy will look like in the mid term future – The End Game. Over the next several months, we are going to start to explore various aspects of the end game. Whither Japan? Are they actually, as I think, a bug in search of a … Continue reading Thoughts on ‘The End Game’ and ‘This Time is Different’

Economy, Japan

JAL imminent bankruptcy is yet another indication of a changing world economic landscape

Colin Henderson

I continue to be of the view that we are in the early stages of a revolutionary period and that the companys which survive will not be the ones that composed the DOW/ FTSE/ Nikkei indexes of the last 30 years. There is a shift occurring and the economic crisis is only a symptom, as global balances shift and move in ways we cannot even comprehend today. Anyhow, in related news, yet another bastion of the old economy is in dire straits. JAL (Japan Air Lines) began in 1951, first flew to San Francisco in 1954, and in 1987 became … Continue reading JAL imminent bankruptcy is yet another indication of a changing world economic landscape

Economy

Bank of Canada joins other Central Banks is calling for caution

Colin Henderson

In the regular Monetary Policy Report the Bank of Canada keeps their focus on a low interest rate environment right through 2010. On inflation the view is mixed … The main upside risks to inflation relate to the possibility of a stronger-than anticipated recovery in the global economy. A stronger global recovery would be transmitted to Canada via trade, financial, confidence, and commodity price channels. There is also the risk that Canadian domestic demand could be more robust and have a more sustained momentum than projected. On the downside, a stronger-than-assumed Canadian dollar, driven by global portfolio movements out of … Continue reading Bank of Canada joins other Central Banks is calling for caution

Economy

The Real Cause of the Financial Crisis | Global Labour Supply Shifts

Colin Henderson

Over at Econbrowser Menzie highlights this new paper from two Profs, and someone from the NY Fed (no title). It closes the loop for me on something thats been bothering me about economists and the financial crisis. The debate about the cause of the crisis vacillates between Greenspan and loose credit, versus, global imbalances and Chinese who save too much. Neither of these resonate much, appear as reactions to a situation, and are therefore more symptomatic than causal. From the abstract to Why are we in a recession? The Financial Crisis is the Symptom not the Disease!, by Ravi Jagannathan, … Continue reading The Real Cause of the Financial Crisis | Global Labour Supply Shifts

Economy

Trends that lead to lower growth, lower profits and lower volatility for banks than during the past few decades | Deutsche Bank

Colin Henderson

This paragraph from the report below, succinctly summarises the growth prospects for Banks, and the backdrop to planning. Again, a plan that looks like the plan for 2007 is destined to fail. This is the time for breakout product design, and a dramatic cost reduction through shift to reliance on internet and online banking for a far greater breadth of service delivery. Global banking trends after the crisis | Deutsche Bank Research Lean years lie ahead for US banks. Performance improvements during the last 15 years have often been due to strong lending growth and low credit losses. As private … Continue reading Trends that lead to lower growth, lower profits and lower volatility for banks than during the past few decades | Deutsche Bank

Economy

Canadian Banks have a Productivity Gap relative to the US

Colin Henderson

Following up on the previous post covering the Bank of Canada’s view that Canadian Banks do not have a productivity gap [pdf 19 pages] relative to US Banks, here is the basis for that contention within a 2006 report. The conclusion copied here in whole is in my view, woefully misleading and contradictory. It reads to me like someone with political motivations has turned facts into something that meets policy objectives. Analysis to follow. This work examines the efficiency and productivity of Canadian and U.S. banks in three ways. First, we compare key performance ratios and find that (i) the … Continue reading Canadian Banks have a Productivity Gap relative to the US

Economy1 Comment

The Canadian Economy Beyond the Recession | Bank of Canada

Colin Henderson

In this talk at Kingston last Tuesday, Tim Lane, Deputy Governor Bank of Canada lays out a quite lucid view [ 9 pages] of the opportunities and challenges facing Canada in recovery. Highlights: labour productivity and output is the fundamental challenge that existed before and will continue post recession the size of the working population is to decrease significantly for demographic reasons, and neither immigration nor baby boomers remaining longer in the workforce will significantly alter that prediction the financial services industry is critical to Canada at 20% of the economy Canadian producivity has been dropping because of insifficient investment … Continue reading The Canadian Economy Beyond the Recession | Bank of Canada

Economy1 Comment

Financial markets did not detect the deterioration of structural productivity trends in the early 2000s early enough

Colin Henderson

A fascinating analysis of economic conditions prior to 2007, sugesting that dropping productivity and the concurrent increase in asset prices contributed at least in part to the economic crisis, yet was not picked up by the market. Productivity and the crisis: Revisiting the fundamentals | Vox Most narratives of the crisis start with problems in the financial sector that then spilled over into the real economy. This column looks at the real side first and shows that labour productivity growth declined significantly in the years prior to the crisis, particularly in the US construction sector. Financial markets may have failed … Continue reading Financial markets did not detect the deterioration of structural productivity trends in the early 2000s early enough

Economy

Is China the next Lucent?

Colin Henderson

This is an interesting article over at Foreign Policy. It is interesting because it fits in the meme of what recovery looks like. Regular readers will by know by now I am firmly in the space that recovery will be framed by a smaller economy, and slower growth of that smaller economy. This piece compares the Chinese economy to Lucent during the dot com bubble. Lucent were selling to dot com company’s which disappeared. China was selling to US and to a lessor extent European consumers who have … disappeared. The minor distinction is that the consumers actually still exist, … Continue reading Is China the next Lucent?