Thursday, 11 February 2016

Yellen keeps calm and carries on

Fed Chair Janet Yellen's testimony to the two houses of Congress comes at, shall we say, an interesting time.  Commodity prices, especially energy prices, have been in free fall for months; now equity prices seem to be following suit; and there are growing fears about the solidity of the Eurozone banking system, with Deutsche Bank squarely in the bears' sights. And all this is happening at a time when all of the major central banks, the Fed included, have fired off just about every shot in their locker just to keep things from getting completely out of hand.

In the circumstances, Yellen did just about the only thing she could: while admitting that conditions in the global economy are becoming less supportive of the US growth outlook, she accentuated the positive developments in the domestic economy. First among these is, of course, the labour market, which has recently seen the unemployment rate slip to a near 10-year low and wages moving gradually higher after a long period of stagnation.

The barrage of unprecedented monetary measures unleashed after the 2007/08 financial crisis have been kept in place for much longer that anyone foresaw at the time.  That being the case, it's hard to be surprised that businesses are unwilling to make the big investments that might get growth moving again: if the central banks are showing, by their words and actions alike, that the situation is still highly precarious, why stick your neck out?

There's no immediate evidence that Yellen's words of reason are having any influence.  Markets are lower once again, and the fear/greed pendulum remains heavily biased toward the former. All the same, it's worth remembering the old economics adage, usually attributed to Paul Samuelson, that equity markets have predicted 9 of the last 5 recessions. For now, the fundamentals aren't nearly as bad as the markets are trying to price in, but it will take care and skill on the part of central bankers and other policymakers to keep it that way.

Wednesday, 10 February 2016

Try this next time

The Jian Ghomeshi assault trial seems likely to fizzle out very soon, with all signs pointing to an acquittal on all charges.  Everyone's a loser here: Ghomeshi's career and reputation are in ruins, the complainants have lost not only the case but also their own credibility, and women everywhere may feel they have to think twice before bringing any similar accusations to the police.

But is that last point really true?  That's certainly the opinion of Heather Mallick, in today's Toronto Star.  Even by her customary standards of paranoid victimhood, this is a remarkably unhinged piece.  If the case is being lost, as it now appears, no rational person is likely to blame it on flaws in the system, or bias against women. Rather, it's beyond doubt that the case against Ghomeshi will fail because all three witnesses lied to the police and to the prosecutors, either by omission or commission.

So here's a thought. If heaven forbid, something awful like this ever happens to you, then (a) don't wait a decade to complain about it and (b) tell the truth. You never know, it just might work.

Saturday, 6 February 2016

The Ghomeshi debacle

There are at least a couple of high-profile trials on the go in Ontario right now.  Normally the so-called Tim Bosma case, in which two rich guys are accused of killing a guy more or less for the fun of it, would be dominating the front pages and the airwaves.  However, that grisly case is getting next to no coverage, because the media are fixated on the sexual assault trial of former CBC radio presenter Jian Ghomeshi.  How fixated?  Well, today the Toronto Star devoted its entire local news section to the case, with "Ghomeshi: The First Week" blazoned above a line drawing of the accused sitting in the dock.

There are certain parallels to the ongoing prosecution of Bill Cosby down in Pennsylvania.  The accusers who have come forward over the last year or so are all seeking justice for offences allegedly committed at least a decade ago.  Although there are suggestions that both men have persisted with their bad behaviour, more recent victims have declined to come forward, supposedly out of fear of getting their private lives dragged through the mud. In the Ghomeshi case, only one of the three complainants has been brave enough to allow her real name to be published.

After five days of wall-to-wall coverage, there are several surprises about the Ghomeshi case, the biggest of which is, why on earth did the Crown bring this prosecution? The two plaintiffs/victims who have testified so far have been shockingly poor on the stand.  Both have displayed highly selective memories of the alleged events, and Ghomeshi's formidable (female) counsel has had little trouble in uncovering evidence that the parts they selectively forgot seriously undermined their allegations. Both made strenuous attempts to stay in touch with Ghomeshi after the alleged assaults, a fact which, to judge from the reactions in court, they had not seen fit to mention to the prosecutors.

Another surprise, at least to this non-lawyer, is that Ghomeshi is being tried for sexual assault, because there doesn't seem to have been much sex involved.  Ghomeshi has admitted to being into BDSM sexual practices, but that scarcely seems relevant here.  As far as we can tell from the evidence presented so far,  Ghomeshi started to rough up the women during some fairly tentative necking sessions. If true it's unpleasant and illegal, but you have to wonder if simple assault charges might have been a better option for the Crown to pursue.

The Star's man-hating columnist Heather Mallick is naturally aghast at the way things are going, as you can read in this column from the Star's special section.  Remarkably, Ms Mallick believes that all women are "raised to be nice" and are "people-pleasers", facts which in her mind explain why Ghomeshi's victims didn't run a mile at the first raised fist, but instead tried to prolong the relationship.  Her solution: specialized sexual assault courts, staffed with judges with training in the psychology of sexual assault. How stacking the deck like that could ever be squared with the legal presumption of innocence is something she doesn't go into. Very likely, she doesn't care.

One thing I'll agree with Ms Mallick on, however: if the Ghomeshi trial goes the way that now seems inevitable, it will be exponentially harder in future for any woman to get a fair hearing in similar cases. That's something the prosecutors should have thought very hard about before launching this flimsy and ill-prepared case.

Friday, 5 February 2016

A tough job, Governor Poloz.

I hope nobody tried to tell Stephen Poloz that being Governor of the Bank of Canada was an easy gig. Even if you ignore all of the hectoring from the cheap seats, there's no question that it's hard right now to get a clear fix on the state of the economy.

The January employment report, released today, illustrates this very clearly.  The overall change in employment -- a loss of 5700 jobs -- was worse than analysts' expectations, and the national unemployment rate ticked up to 7.2 percent. Unsurprisingly, there was further job weakness in oil-dependent Alberta, which shed 15,000 jobs in the month and has now lost 35,000 in the course of the past year.  The province's unemployment rate has reached 7.4 percent, the first time it has moved above the national rate since December 1988.

More surprising, and much harder to analyze, are the data for the remaining provinces.  For the second month in a row, only Ontario posted any increase in jobs; more on that in a moment.  But what do we make of the fact that there were falls in employment not only in the other oil-dependent provinces -- Newfoundland/Labrador and Saskatchewan -- but also in six non-oil-producing provinces as well.  The detailed data provide few clues.

What should we (and Governor Poloz) make of the last two months' data for Ontario?  The Province added 20,000 jobs in January, almost enough to offset the losses across the rest of Canada.  Interestingly, 10,000 people returned to the Ontario workforce in the course of the month, which may be an indication of increasing optimism on the part of workers.  One possible explanation for the data is the unseasonably warm weather in both December and January, which must have played havoc with StatsCan's seasonal adjustment factors.  However, the weather was also benign in Quebec, but that Province did not show similar trends.

Maybe, then, the improvement in Ontario's job picture vindicates the Bank's expectation that the low Canadian dollar will eventually help rebalance the economy away from its dependence on resource extraction.  It would be nice to think so; but if that's the case, how should the Bank react to the recent bounce in the exchange rate, which has rallied from 68 cents (US) to 73 cents in just a couple of weeks?  Will that be enough to halt or even reverse the signs of improvement in Ontario, and if so, what can or should the Bank do about it?

Tough questions for Gov. Poloz to contemplate. At its January rate-setting meeting, the Bank left its reference rate unchanged at 0.50 percent.  Gov. Poloz's statement at the time seemed to suggest that the Bank is now looking to the Federal Government to do its part to boost the economy, through the "temporary" fiscal stimulus that it promised during last year's election campaign. In principle that seems the right thing to do; however, it's now known that the fiscal situation is much worse than the outgoing government claimed -- there's already a deficit, even before the promised spending gets started. We'll have to wait for the budget, some time in March, to see whether the new Government is spooked into doing too little on the fiscal front, thereby passing the buck back to the Bank of Canada.    

Friday, 29 January 2016

Canada's economy grew in November: ssshhh!

Statistics Canada reported this morning that Canada's GDP grew 0.3 percent in November.  That's good news, so needless to say it received next to no coverage in the media, though you can read about it here.  November's expansion comes after a decline in September and a flat performance in October, and the growth was quite broad-based, with both goods and services production moving ahead.  Manufacturing output expanded, and there was even some growth in the beleaguered oil and gas sector.

There's every reason to look for further GDP growth in December. The weather was exceptionally mild across most of the country, so the usual weather-related slowdowns in sectors like construction were probably avoided. (As an illustration, the Welland Canal, which links Lakes Erie and Ontario on the St Lawrence Seaway and carries an enormous amount of bulk freight, closed at the very end of December this year without having once frozen over. This hasn't happened for several years).  Even so, the slow pace of activity in the final months of the year has led most forecasters, including the Bank of Canada, to scale back their expectations for GDP growth in 2016 to around 1.5 percent. If the recent bounce in oil prices holds, that may be a little on the low side, but it's not going to be a banner year.

The recovery in growth in November appears to validate the Bank of Canada's decision to keep rates on hold earlier this month. At the same time, the Bank will be watching nervously to see if the recent sharp rebound in the exchange rate persists. Dollar "strength" might imperil the hoped-for growth in non-resource exports that the Bank is looking for to keep the overall economy moving ahead.

Turning back to the December outlook for a second: data for that month will be issued on the same day that the Bank issues its report on overall activity for the entire fourth quarter. Because of the fall in GDP in September, the economy entered Q4 at a lower rate of output than it had averaged in Q3. Even if growth in December matches the November outcome, it's possible that GDP for the full quarter will be slightly down on Q3. If that happens, it's dollars to donuts that the media will ignore the fact that GDP grew for two out of three months in the quarter, and again start to tout the risks of a renewed recession.  Remember you read it here first.

Thursday, 28 January 2016

Falling Star

There was carnage in the Canadian media industry while we were sunning ourselves down south. Multimedia conglomerate Rogers Communications announced yet another job-shedding restructuring; one of the country's oldest local papers, in Guelph, Ontario, will publish its last edition this Friday; and the Toronto Star, which some how combines a stridently left-wing editorial stance with ferocious focus on its own bottom line, outsourced the printing of the paper (with a loss of 200 skilled jobs) and offered buyouts to its entire newsroom.

No profession is more self-regarding than journalism, and the Star has been full of stories warning us how much we'll miss the old-style media when they're gone.  Here's an example, written by Heather Mallick. Ms Mallick is a good writer, provided you can stomach her strident, sometimes hate-filled form of feminism, and she's apparently an ace speller, since she won the Star's in-house spelling bee this year.  But she's not a journalist. She doesn't investigate stories and reveal scoops; she expresses her opinions about whatever takes her fancy -- or, more often, about whatever puts her back up. There's nothing wrong with that, of course, but it's not the kind of newspaper work that helps prevent us from slipping into a fascist dictatorship, as she seems to imagine.

Reading the Star these days is dispiriting.  Without actually counting the column inches, I'd venture to suggest that more than half of the "news" content is provided not by the paper's own editorial staff but by wire services -- Canadian Press, AP, Slate, Bloomberg and many others. Some of the reporters who remain on staff don't exactly seem to be heavy hitters; today the paper ran on its front page this story about an absurd woman who is hiring someone to manage her love life, she herself being too busy to do so.

That seems to be the future for the Star, and very likely for many other newspapers that can't quite figure out a way forward.  The older hands will take the buyout, leaving the paper to be filled with wire service content and puff pieces by inexperienced reporters.  And all the columnists, Ms Mallick and the rest, will stay on,  making the Star less and less of a newspaper and more and more, a views-paper. Those columnists had better hope their families and friends all take out subscriptions, because I'm not sure the rest of us will want to for much longer.  Me, I'll hang in with the paper for now -- my wife likes the daily sudoku --  but when I'm looking for serious news coverage, you'll find me online.

UPDATE, 29 January: I posted the paragraphs above before the Star had to publish a correction of one of the main claims made by Heather Mallick in her original article. I don't want to be mean about it -- I'll leave the meanness to Ms Mallick, who specializes in it -- but just what does that correction tell us about Ms Mallick's pretensions to be a "journalist"?

Sunday, 10 January 2016

Out of here

No posting for the next two weeks or so as we escape the Canadian winter (such as it is this year) for a spot of R&R. (Both Rs stand for "rum").