Econowatch: The good and the bad

Building permits get a boost, while American workers fear for job safety

Kevin Lamarque/Reuters

The Good News

  • America has seen a jump in building permits in recent months. The number of new permits climbed 6.2 per cent in October after a five per cent gain in September.
  • The IMF has called on Canada to get out of the mortgage insurance business by phasing out the CMHC, saying it’s distorting the lending market. Finally, someone’s talking sense.
  • Canadian farmers earned close to 32 per cent more last year than the year before, on higher prices for grains and oilseeds. Talk about cash crops.
  • Researchers found that companies with female directors are more frugal in acquisitions. Of the companies studied, purchase prices were 15.4 per cent lower for each female director on the board.
  • Spain, the economic basketcase of Europe, experienced its first quarter of growth in two full years, with GDP rising 0.1 per cent. Hardly a bull run, but any sign of growth there is welcome.
  • The world’s second-largest clothing chain, Hennes & Mauritz, otherwise known as H&M, said it will pay a “living wage” to 850,000 of its textile workers in developing countries by 2018.
  • Warren Buffett, the oracle of Omaha, is bullish on the disaster that is Detroit, saying demand for the city’s debt will pick up. It will be “a great city in the future.” Rock on.

The Bad News

  • More than six in 10 American workers fear their jobs are at risk, according to a Washington Post-Miller Center poll, a record high not seen in 40 years. It’s an ugly repeat of that ’70s show.
  • Another week, another massive round of layoffs, this time at Sears Canada, which is axing 800 jobs. The struggling retailer can’t catch a break.
  • The revolving door for CEOs is picking up speed. U.S. companies are switching CEOs at the fastest pace in half a decade, according to recruitment firm Spencer Stuart. More turnover means less stability.
  • The shine is off commodities, a crucial driver of Canada’s economy. The Scotiabank Commodity Price Index dropped 3.8 per cent in October, the third consecutive monthly decline.
  • In case you need reminding, RBC says it’s getting harder to afford a home in Canada. Affordability eroded for the second quarter in a row thanks to rising prices and higher mortgage rates.
  • Banks in Europe are getting stingier when it comes to lending to businesses. Private sector lending fell 2.1 per cent in October from the year before, after a similar drop in September.
  • The number of Canadian seniors living in poverty is climbing, according to the OECD. In a global report on pensions it found the poverty rate among the elderly rose two per cent between 2007 and 2010.



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Econowatch: The good and the bad

  1. “The IMF has called on Canada to get out of the mortgage insurance
    business by phasing out the CMHC, saying it’s distorting the lending
    market. Finally, someone’s talking sense.”

    Shouldn’t someone, I dunno, a business columnist maybe, be asking the IMF however did the housing bubble happen in the US without the benefit of a CMHC to distort the market? And what happened here? Hmmm?

    Less knee jerk ideology and more facts and balance please.

    • Fannie Mae and Freddy Mac. They were 40% of the mortgage market and as broke as Lehman.

    • Canada is sometimes slow to catch on. CMHC is kinda looking like a Fannie/Freddy these days with CDN banks offloading their mortgage risk to CMHC.

      Canada was actually one of the first countries to have a banking crisis — it was called Asset Backed Commercial Paper (ABCP). Canada muddled its way through that one. It was not a pretty sight.

      The Canadian real estate market is overpriced. It’s based on mortgage rates that are still ridiculously low when viewed with almost any historical context.

      The IMF has a valid point.

      • It’s the offloading that’s the problem, not reasonable mortgage insurance based on helping first time home buyers enter the market.


  2. Canadian farmers earned close to 32 per cent more last year than the year before, on higher prices for grains and oilseeds. Talk about cash crops.”
    Well..shucks and Golly Gee.
    Looks like getting rid of the Wheat Board did exactly what Harper and his Conservatives have said would happen.
    I suspect a lot of this money would have ended up in the pockets of the Wheat Board beaurocrats or “directors” so I suspect many will still be waiting for Trudeau to bring the Wheat Board back.
    After these results…….good luck with that.


  3. Canadian farmers earned close to 32 per cent more last year than the year before, on higher prices for grains and oilseeds. Talk about cash crops.
    Guess getting rid of the Wheat Board wasn’t that bad for farmers after all.

    • Hint 1: The CWB monopoly was only for prairie wheat and barley. Those aren’t oilseeds.
      Hint 2: The CWB is still around, and is receiving the benefit of government guaranteed loans. It will remain so until 2016. That’s when we’ll start to see the real effects of it going away.
      Hint 3: Last year’s weather conditions severely hurt the US grain growing market. I wonder if there’s some possible connection….

      • It wasn’t just oilseeds. It was GRAINS and oilseeds.
        I know it was only the prairies…which is why the Libs didn’t care about the impact of the Wheat Board. Injustice against Conservative voters was just fine by their book.
        The CWB is still around, but farmers have already been freed from its constraints, and have already been selling their own wheat and grains.
        Weather will always be a determining factor in foodstuffs that rely on a growing season, but the price you get for your goods is always going to be higher if you can cut out the middle-man.
        I suspect the income farmers will get will only increase…now if only we could do more processing here. Pasta plants..bakeries, etc.
        (nice try though)

        • Yes. Grains and oilseeds. Which, without stats on which increased by how much, means your implications are meaningless.

          However, by the rest of your comment, I see you lack a basic understand of “economies of scale”. Try looking it up, you may be surprised at what a single-”middleman” can do if it controls the bulk of a product.

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