Economic Challenges Fall 2011

"The supply and demand marketplace system they put in place doesn't work," says NDP leader Brian Mason.

"Deregulation is due for a review," he says. "It doesn't appear to be working at all."

"If the market isn't working, more likely it's the consumer in that market that gets hurt."

But Bridgeman says the retail side is not performing as well because it is a small market that it hasn't attracted many competitors.

"Power prices are going up and down like a rollercoaster, and consumers are hanging on for dear life."

"The promise was made we were going to have lower prices, more competition and better service and we now know that not to be true,"

"Electricity deregulation has been a major public policy failure of this government."

One trouble with leverage is that it magnifies losses during bad years just as it pumps up returns in good ones. It's a miracle that the list of rescued European lenders-including Northern Rock, Bradford & Bingley, Fortis and Glitnir-isn't twice as long.

Having engineered their financial mess largely on their own, the Europeans could make it even worse because the Eurozone-the 15 countries that share the euro currency-are moving at different speeds

Barclays Capital analyst John Aiken forecast an end to the double-digit profit growth that has powered the banks since the financial crisis. Yet less-bearish observers said risks from Europe’s debt crisis and other external threats make banks a wiser investment than more volatile energy and mining stocks. And traditional safe haven plays like telecoms and health care offer little upside after also outperforming the broader market in 2011. Instead of trying to mimic what worked in 2011, investors should look for companies in depressed sectors with good value, such as banks, said Barry Schwartz, a portfolio manager at Baskin Financial Services. “[Pipeline operator] Enbridge is not going to grow at 20% a year,” noted Mr. Schwartz. “However a bank stock could grow at 15% a year and they’re trading at 10 times earnings.” Canadian banks also offer hefty dividends, and did not cut them in the recent recession. Five of Canada’s six big lenders, including Royal Bank of Canada, Bank of Montreal, Bank of Nova Scotia and CIBC have dividend yields of more than 4%. Market veterans said this offers some downside protection if global financial and economic turmoil worsens. “It’s a sign of confidence on the part of Canadian bank management that, regardless of the outlook, they felt that they were in sufficiently good shape to start raising dividends&nbsp; again,” said Gavin Graham, president at Graham Investment Strategy. Toronto stocks got off to a solid start in the first week of 2012, with the composite index rising almost 2% to close at 12,188.64. But gains are expected to be modest this year, with the index reaching just 12,500 by the end of 2012, according to a Reuters poll. Many think problems outside of Canada, especially Europe’s sovereign debt crisis, will impede global growth and demand for commodities. This would hurt more growth-sensitive sectors like mining and energy, which account for more than 40% of Toronto’s composite index. Last year, base metal and energy issues plunged 27% and 17% respectively, adding up to a miserable year for cyclicals after strong performances in 2009 and 2010. Most of the gain from commodities in those years was driven by double-digit growth in China, the world’s largest buyer of industrial metals. But Chinese growth slowed last year, igniting a downward spiral in base metal mining stocks. Despite recent signs that the Chinese economy has steadied and the U.S. economy is picking up steam, eurozone debt worries are expected to dominate in early 2012. Many also expect the gridlock in Congress to worsen as the U.S. presidential election approaches, hurting investor sentiment and compounding the difficulties for resource stocks. Still, analysts said investors should not shun commodity-linked stocks indefinitely. Some think they could rally firmly in late 2012 if concern over Europe eases and the global economy gets back onto strong footing. “To the extent that the market focuses on the U.S., more cyclical names, more consumer-oriented names and more pro-growth names make sense,” said Stephen Wood, chief North American investment strategist at Russell Investments in New York. “Getting overly defensive at very high valuations is not something people want to do.” © Thomson Reuters 2012 Posted in: Economy, Investing, News, Outlook 2012, Trading Desk&nbsp; Tags: Bank of Montreal, banking, Canadian banks, CIBC, dividends, financials, investing, Royal Bank of Canada, the Bank of Nova Scotia, TSX Reuters U.S. Fed officials signal more policy action may be neededGoodman &amp; Co. boosts stake in American ApparelHedge funds take on IMF over Greek debtNot time for 'risky' spending in budget: FlahertyCopper vulnerable to price spikes due to shorts More from Reuters » var npDsqSso = /^[\s\S]*\bdisqus-sso=([^;]+)[\s\S]*$/i.test(document.cookie), npDsq_remote_auth_s3 = 'e30= 4ce72f958bc936ef5001150fc4d4fcef9fc4e256 1326247574', npDsq_api_key = '4ArDk9sCU7Y27T6Ni9ixYD3n90ZSiXdMtCOI9mcHFCEf6gnVGHpnKgereuyCJ3Rn'; Glad you liked it. Would you like to share? Facebook Twitter Share No thanks Sharing this page … Thanks! Close What do you think?Opinions expressed in comments that appear on our site are expressly those of the comment writer and not the Financial Post. Offensive language, personal attacks and unsubstantiated allegations are not allowed and may result in your account being banned. Comments containing links are not permitted. Comment threads are closed after 48 hours. For more information, read our full Terms and Conditions. If you see a typo or error in this story, feel free to <

Enbridge is not going to grow at 20% a year,” noted Mr. Schwartz. “However a bank stock could grow at 15% a year and they’re trading at 10 times earnings.”

Many think problems outside of Canada, especially Europe’s sovereign debt crisis, will impede global growth and demand for commodities. This would hurt more growth-sensitive sectors like mining and energy, which account for more than 40% of Toronto’s composite index.

Last year, base metal and energy issues plunged 27% and 17% respectively, adding up to a miserable year for cyclicals after strong performances in 2009 and 2010.

If you were super rich it went down too. The 400 wealthiest American households lost around 4%, including inflation Between 2006 and 2008

Part of the reason average Americans have been hit so hard is where their wealth comes from. Before the crash, middle-class Americans had 65% of their wealth tied up in their house.. But the richest 1% of the population kept most of their wealth in stocks and shares and business. So, when house prices went south, many Americans found their wealth disappearing too.

Now, one in every seven Americans lives below the poverty line - that's a record 46.2 million people

One in six Americans have no health insurance - 50 million people

Of every 17 Americans, at least one will be earning below the minimum wage of $7.25 per hour

14.5% of Americans households are defined as "food insecure". That means for every seven households, one will have trouble putting enough food on the table

What about taxes? The 400 wealthiest households paid $19.6bn in taxes in 2008 - the latest year we have data. That's 1.9% of all the income tax the IRS collects

Is it the 99% v the 1% What do you think?

The largest Canadian demonstration on Oct. 15 was in Toronto in the city’s financial district before protesters settled in at St. James Park and has since ended with their eviction a month later.

Elsewhere, demonstrators also occupied parks, held general assemblies and marched on the streets, protesting the increasing income disparity between the so-called 99 per cent and the top one per cent of income earners.

Occupiers know, because so many are young, that the inequities represented by the one per cent today are also intergenerational. Although not all corporations are bad, many of them, and the super-rich who run them, are increasing their wealth at the expense of generations to come -- exhausting resources, extinguishing species, and poisoning air, water, and soil. The costs of those problems will be most strongly felt by successive generations to come

Why do the governments we elect to look after our well-being and future act as cheerleaders for the corporate sector? Because money talks.

Corporations may produce or do things that we need and that are good for society, but their real mandate is to make money, and the more they make and the faster they make it, the better.

Globalization does not encourage the highest standards for workers, communities, or ecosystems. Instead, corporations often go for the lowest standards of medical care, wages, and environmental regulations because it's all about maximizing profit.

To me, the Occupy movement is about putting decisions and democracy back into the hands of people.

We need democracy for people, not corporations; we want greater equity; we demand social justice; and we want to recognize and protect our most fundamental needs -- clean air, clean water, clean soil, clean energy, biological diversity, and communities that support our children with love and care.

My generation and the boomers who followed have lived like reckless royalty and thoughtlessly partied like there's no tomorrow. We forgot the lessons taught to us by our parents and grandparents who came through the Great Depression: live within your means and save some for tomorrow; satisfy your needs and not your wants; help your neighbours; share and don't be greedy; money doesn't make you a better or more important person.