'Is that really the best we can do? Yes.' - Macleans.ca
 

‘Is that really the best we can do? Yes.’

Mark Carney’s last words as BoC chief


 

Outgoing Bank of Canada Mark Carney had said before that, as he leaves Canada to head the U.K.’s central bank on July 1, the economic picture he’s leaving behind in his home country is that of a glass that is “more than half full.” Today, in his last public remarks as a Canadian central bank official, he reiterated that point.

What awaits the next BoC chief is a delicate transition from a growth model based on household consumption, real estate investment and government stimulus to one propelled by exports and business investment, Carney said at the Board of Trade of Metropolitan Montreal.

“We cannot grow indefinitely by relying on Canadian households increasing their borrowing relative to income.”

Re-orienting the economy will be a “challenge,” Carney added, noting that the post-crisis rebound in Canada’s export sector is still over $130 billion shy of what it would have been in a typical post-war recovery, according to the Bank’s calculations.

Still, the governor also recalled that Canada has had it easier than most during the financial crisis, thanks to both pre-existing traits—such a solid, conservatively regulated and well capitalized banking system, an  inflation-targeting regime that was instrumental in using monetary policy to stimulate the recession-stricken economy, small federal fiscal deficits and a well step up monetary union, which ensured that the wealth from rising commodity prices didn’t just benefit resource-rich provinces—and a “massive and disciplined policy response.” The BoC slashed the key interest rate from four to 0.25 per cent at the height of the crisis and subsequently promised to keep rates at rock bottom, in order to give households and businesses the confidence to borrow. The government, for its part, hiked up public spending by three per cent and in 2010 accounted for one-third of economic growth, Carney noted. By the beginning of 2011, Canada has recouped all the output and the jobs lost during the downturn.

“Relative to our peers,” the governor remarked, “Canada is working.”

That said, in a global economy still struggling with the aftermath of the 2008 crisis, it might take time for Canada’s economy to be roaring again, as business investment and exports might remain below average in the short term.

Still, Canada has “a real advantage” over most other advanced economies, the governor told reporters during a press conference following his speech: “We’re not getting up every day wondering about how we’re going to fix things.” Canada, he noted, has the luxury of having a forward-looking agenda.

Now it’s up to Stephen Poloz to take it from here.

 

 


 

‘Is that really the best we can do? Yes.’

  1. “What awaits the next BoC chief is a delicate transition from a growth
    model based on household consumption, real estate investment and
    government stimulus to one propelled by exports and business investment,
    Carney said at the Board of Trade of Metropolitan Montreal.”

    The BoC might be well suited to making a delicate transition…But this govt isn’t. At a time when the exporting of resource products [particularly energy] is still an area of growth and one of the few bright economic lights out there, the Harper govt’s record is coming back to haunt it, and us. Getting some kind of pipe line out to the coast [ PR should have been the first option not Kitimat. Anyone who lives on the coast could have told them for nothing] and south through the US, was almost priority number one for a competent and flexible federal govt. Instead these clowns have made enemies all the way from Texas to Masset BC. The friends they needed they thoughtlessly antagonized in the case of environmental orgs with genuine concerns about transporting Bitumin; and FNs they alienated or allowed Enbridge to alienate for them. Unbelievably they even found a way to piss off conservative US land owners. As to whether we should be exporting the tarry crap is another question?
    It’ll have to be left up to another govt that knows how to make friends[ or at least allies] in order to achieve national goals now. One that doesn’t just pay lip service to sustainable development. There’s a lot of fence mending to be done; a lot of horse trading.[ how bout acess to the coast for a national carbon tax with teeth? as an example] It wont get done by Harper’s goons though.
    So far, I like the way JT is shaping up in that regard; he gets it. If you absolutely have to use the mailed fist, first put on the velvet glove. At the very least give your critics a fair and informed hearing, and the hope of transitioning to something better. IOWs carrots and sticks work quite nicely when coupled with good policy. Certainly better than sticks, followed by bigger and better sticks.