Monday, 20 October 2014

The evil of three lessers

Watching the Toronto mayoral election from our safe vantage point on the south side of the lake has been a depressing experience, so thank the Lord there's only a week to go until polling day. It's hard to believe that a city of almost three million people is likely to elect one of the gruesome threesome who are leading in the opinion polls.

The best-known of the three is probably Doug Ford, who replaced his younger brother Rob on the ballot paper when Rob was diagnosed with an unusual form of cancer.  Doug appears to have maintained his brother's support in the so-called "Ford Nation" (basically angry suburbanites) but has been unable to widen his appeal, if the polls are to be believed. His politics are virtually identical to his brother's -- "respect for taxpayers", implausible promises to build subways all over the place -- but he doesn't have Rob's odd likability.  If you need a mnemonic to tell the Fords apart, then there's a rhyming one that will do just fine: for Rob and Doug,  read Slob and Thug.

Doug also shares with his sibling an effortless, almost reflexive mendaciousness, even when lying serves no particular purpose.  One example from the campaign will have to suffice. Responding to suggestions that he and his brother were borderline racists, Doug announced that this couldn't possibly be the case because his wife was Jewish.  This came as a surprise to his audience -- and to his wife!

Close to Doug Ford on the ideological spectrum is John Tory, whose surname sums him up pretty well.  If Doug Ford is new money (his father founded a successful manufacturing company). then Tory is old, establishment money.  He's had a checkered career in business -- some successes but also one large failure -- but an entirely unsuccessful one in politics, having suffered several rejections when he's attempted to seek office in the past,

Tory's one and only notable campaign platform is a plan to build a commuter rail line dubbed SmartTrack to relieve Toronto's chronic congestion problems.  It will be quite remarkable if this scheme propels him into office.  For one thing, it's not really his idea: the Province has already announced plans for a much larger electrification of Toronto's regional rail network, including the lines Tory wants to use for SmartTrack. For another, to the extent that Tory has tweaked the Province's ideas for his own scheme, the changes are all for the worse.  A quite pointless adjustment to one end of the route is almost certainly impossible to construct, especially in the 7-year timeframe Tory is promising, and his proposed financing technique (TIF or tax increment financing) is basically a shell game.

Opposing these two worthies from the left of the political spectrum is Olivia Chow.  She started the campaign with a deep reservoir of voter goodwill, based on her long service on city council and the recent loss of her well-liked husband, the former Federal opposition leader Jack Layton.  By virtue of a dithering, unfocused campaign and an occasional inability to make herself heard, she has squandered most of that support, and looks likely to finish behind both Tory and Ford on voting day.

One disappointment in watching Chow has been her lack of grace in dealing with her opponents.  Again, one example will suffice. At one of the innumerable debates among the candidates, the moderator asked each participant to say something nice about one of their opponents. The other candidates managed this well enough, praising one another's commitment to the city, work ethic and such.  When Chow was asked to say something positive about John Tory, all she could come up with was "he has an expensive suit and a very full Rolodex".

When the campaign started (back on January 2!!), there were some promising candidates in the field. Many have dropped out because of the expense of running such a long campaign and the difficulty of competing with the Ford family circus.  There's one excellent candidate I'd be voting for if I were actually in Toronto (a left-leaning lawyer named Ari Goldberg) but the winner is going to be one of the three profiled above -- probably John Tory.  Does Toronto deserve better?  It's hard to argue that -- you tend to get the politicians you deserve.  But it surely needs someone better.

Thursday, 16 October 2014

Climbing the wall

Global equity markets have been scaling the proverbial "wall of worry" for the last couple of weeks. Most major indexes are in or close to correction territory (falls of 10 percent or more), with the gains for the entire calendar year to date wiped out in the space of just a few sessions.

Looking around the world, maybe it's hard to be surprised by this.  Sanctions on Russia, in response to the crisis in Ukraine, are weighing on already-weak European economies; ISIS/ISIL is threatening a conflagration in the entire Middle East;  there are signs that the momentum in the Chinese economy has waned, which will inevitably rekindle fears over the solvency of the country's financial system; and now there's ebola, which could deliver a major hit to global growth if it were to get loose in one of the major economies.

Only the last of these is really new, however, and should not prove to be a major drag on growth unless the health authorities in the developed world really are as inept as they've seemed at times in the past couple of weeks.  (Yes, we do mean you, Texas Health and the CDC). The other negatives have been known for many months, and yet markets had continued to move ahead regardless, until just recently.  So what is it that's changed?

The factor that many analysts are choosing to focus on is the fall in oil prices.  As an explanation for the current weakness, this needs to be treated with caution.  Although the IEA has revised its crude oil demand forecast down slightly in recent days, it still expects demand for the year as a whole to be higher than a year ago.  The signs of slowdown in the global economy are not so severe as to suggest that the anticipation of falling oil demand is behind the price weakness.  Rising oil production, especially in the US, seems to be the root cause.

Is this really a negative for the US and other countries? It may weigh heavily on the share prices of oil companies (and it's potentially damaging for the oil patch here in Canada, with its abundance of expensive-to-produce crude), but it's a boon for the profitability of truckers, airlines and a whole host of other energy consuming sectors.  And it's an even bigger boost for consumers, who are likely to see lower prices for gasoline, natural gas and even groceries in the coming months, which should stimulate real consumer demand.

If energy is not the main negative, then we're left to assume that the key factor may be the looming removal of monetary stimulus in the US and elsewhere -- what one analyst in the linked article refers to as "monetary morphine".  The rise in equity markets in the past couple of years has always seemed out of line with the underlying strength of the global economy, fuelled by cheap money rather than real optimism about the outlook.

The big question now is whether the fall in equities will spook the Fed and other central banks into halting or even reversing their plans to unwind monetary stimulus -- a "Yellen put", if you will.  The even bigger question for the longer term is whether failing to return monetary conditions to something more normal will set the stage for a rerun of the 2008 financial crisis, or something even worse, not too far down the road.  

Friday, 10 October 2014

Go figure!

The wild monthly gyrations in Canada's employment data continue.  StatsCan reported today that the economy added 74,000 jobs in September, almost all of them full time.  This was a much stronger result than most experts had predicted.  However, the erratic nature of the employment data over the last several months, together with growing fears over the outlook for the global economy and commodity prices, warrants caution.

The most bizarre aspect of the previous month's employment report was StatsCan's claim that about 98,000 private sector jobs had been lost, the most for any single month in the history of the data, with an offsetting and equally unprecedented leap in self-employment offsetting most of the loss.  Guess what? In September, StatsCan estimates that 130,000 private sector positions were created.  Neither the August nor the September data seems to bear any resemblance to what can be observed in the economy -- there have been no major layoffs, but equally no big plant openings either.

It still looks as though there may be something amiss in StatsCan's data collection, or perhaps its seasonal adjustment techniques.  Q3 is normally the time of the auto makers' model year switchover, which sometimes leads to workers being furloughed, but that wouldn't account for the reported jump in self-employment in August, which was largely reversed in September.

Unreliable data make it difficult for even the most plugged-in experts to forecast the future, and one such has today announced that it's throwing in the towel:  the Bank of Canada!  Governor Stephen Poloz has announced  that the Bank will be dropping its "general market guidance" -- the use of terms like "easing bias" or "tightening bias" -- in the belief that doing so will help to reduce market volatility.  Poloz's predecessor, Mark Carney, was big on guidance, but his attempts to introduce it at the Bank of England have backfired quite badly.

From now on, the BoC intends to lay out its analysis of the economy and let market participants draw their own conclusions. In principle this sounds like a good thing -- economists and analysts will have to examine the economic data, rather than carrying out an exegesis on Gov Poloz's pronouncements. It's a bit unfortunate, however, that the Bank is unveiling this new approach at a time when faith in StatsCan's data is as low as it's ever been.

Wednesday, 8 October 2014

You don't say!

The IMF is warning that low interest rates pose a potential threat to global financial stability, and hence to the entire global economy.  In its Global Financial Stability Report, the Fund frets that low interest rates are leading investors to take on greater risks as they search for higher yielding assets.  As a result, it believes that prices "in virtually all the major asset classes are simultaneously stretched".   Consumer prices may not be rising, but then they weren't a decade ago either, when the Greenspan Fed allowed itself to believe that there was no harm in persisting with cheap money policies. We know how that ended up. 

The Fund isn't just waking up to this, of course, but its warnings are definitely becoming a bit more urgent, if not yet panic-stricken.  As a number of central bankers and others have admitted in the last couple of years, it was all very well and good to slash rates and pump money into the system to prevent an outright collapse, but nobody gave any real thought to how all of this would be unwound. There's no sign even now that any of the main central banks has a firm plan.  The Fed has set the ball rolling by halting its QE program, but it's unclear whether Ms Yellen and her colleagues will continue to stay the course if the recent pullback in equity markets becomes more pronounced.

The US, UK and others have been happy over the years to brandish the IMF's advice like a cudgel at countries whose policies they disapproved of. It will be instructive to see whether they will be equally keen to follow its advice, now that they themselves are the ones coming under criticism.   

Monday, 6 October 2014


The fact that there's a man close to death from ebola in a Dallas hospital is all Uncle Sam's fault. Mark Steyn says so, so it must be true.

America's favorite right-wing Canadian blowhard blames the situation on US border security.  In his view, those cheery folks that you meet when you enter the country are too busy looking out for Kinder Surprise eggs and illicit bagpipes (really!) to spot a real threat like ebola when it's staring them in the face.

Except it wasn't staring them in the face, was it?  When Thomas Duncan approached the immigration desk at Dulles, he wasn't showing any symptoms, and he wasn't yet infectious. Steyn comes up with all sorts of other reasons why he should have been refused admission, but truth to tell, he presented as a perfectly normal traveller on a routine family visit.  For much the same reason, you can't really blame United Airlines.  There was no reason to turn Duncan away when he checked in for his transatlantic flight in Brussels.

Texas Health Presbyterian hospital in Dallas, well that's another matter, though the startling incompetence or negligence shown there doesn't seem to trouble Mark Steyn.  That's surprising, because a few years ago, when the SARS outbreak took a nasty toll in Toronto, Steyn was quick to blame the medics.  Well, not the medics exactly: Steyn blamed Canada's "socialized" medical system for creating the conditions in which SARS could spread within the supposedly hygienic walls of a hospital.  But Texas Health Presbyterian isn't "socialized", of course, so Steyn has had to direct his vitriol elsewhere, and it's the poor old border agents who are getting it in the neck this time.  

Steyn's not the only one going gaga over ebola.  CNN, never shy about spreading panic, rigged out a shouty doctor named Gilbert Mobley in a hazmat suit and sent him into the terminal at Atlanta airport before interviewing him on air.  Mobley baldly accused the Center for Disease Control of lying about the risks the virus poses to Americans. Bizarrely, he claimed that dealing with the Thomas Duncan case had overwhelmed the health authorities in Dallas, before warning darkly about how bad things could get if ebola spread to a third world country such as Mexico.

That's no doubt true in theory, but is it sufficiently likely in practice to justify scaring people?  The number of people travelling between the affected countries and Mexico or anywhere else in Central America must be microscopically small.  Thomas Duncan made a deliberate choice to travel to the US when he knew he had come into contact with ebola, on the assumption (wrong, as it now appears) that he'd have access to good medical care there if he in fact came down with the disease.  It's unlikely he, or anyone else back in Liberia contemplating a similar journey, weighed up the merits of flying to Mexico City or Guatemala City instead.

CNN was careful to advise its viewers that Mobley is not an expert on ebola.  No surprise there: those good folks are putting their own health on the line in an effort to get the disease under control, so they're far too busy to take part in distasteful stunts at the world's busiest airport.

Thursday, 2 October 2014

The cost of ebola

CNN is giving its customary wall-to-wall coverage to the news that a man in a Texas hospital has been diagnosed with ebola.  He was turned away from the hospital when he presented himself showing symptoms, even though he told the nurse he had recently arrived from Liberia.  He was only admitted when he arrived again in an ambulance several days later, much more seriously ill.

How, Wolf and Anderson are asking, could this possibly have happened?

Well, here's one possibility.  The poor man is a Liberian national.  If he couldn't make it past the triage nurse, could it have been because his credit card was found wanting?

Hope I'm wrong.

Tuesday, 30 September 2014

Updating the anthem

There's a move afoot in Canada to amend the national anthem, O Canada, to remove a non-gender-inclusive phrase.  The words "all thy sons" should, it's proposed, give way to "all of us".  Seems unobjectionable, though you'd be amazed how many traditionalists (i.e. the Tory government in Ottawa) want to stick with the old words.

There's another issue here, though.  Once you start picking away at the words, the whole anthem emerges as a viper's nest of problems.  Let's go through it line by line.

O Canada, our home and native land.

Not any more it isn't! Canada's a country of immigrants, so it's not really the "native land" for a large percentage of the population.  And while we're at it, a lot of Canadians live abroad, so when they sing the anthem, it's not really their home, is it?

True patriot love, in all thy sons command.

We've already agreed that the sexism has to go, but what about that word "patriot"?  Patriotism is famously "the last refuge of a scoundrel", and that's surely not what we want to say about ourselves, is it?

With glowing hearts we see thee rise,  the true north strong and free.

Whaddaya mean, north?  The most populous parts of Canada lie south of large chunks of the United States.  (For example, Toronto lies to the south of Seattle, Portland and Minneapolis).  In addition, Canada lies south of most of the parts of Europe from which its white settlers came, including the pioneering French and English.

From far and wide O Canada we stand on guard for thee. 

Clearly non-inclusive of folks with disabilities who are unable to stand when the anthem is sung. The "stand on guard" part is anachronistically militaristic too, especially with Canada spending so little on its armed forces these days.

God keep our land glorious and free, O Canada we stand on guard for thee.

Who dragged the Deity into this??  Clearly not appropriate in this more "enlightened" day and age!

So where does all of that leave us?  Let's put it back together.

O Canada, our favourite patch of land
Warm sentiments in all of us command
With glowing hearts we see thee rise, a very big country
From far and wide O Canada
We gather 'round for thee
Let's hope our land stays glorious and free
O Canada we gather 'round for thee!

Inspiring, no?  Think I should have a go at the French language version?