Skip to main content

Home/ Economic Challenges Research/ Group items tagged business

Rss Feed Group items tagged

Filter: All | Bookmarks | Topics Simple Middle
Steven Iarusci

Canadians load up on mortgages, cut card debt - 0 views

www.montrealgazette.com/...story.html

credit card debt mortgage rates bubble housing

shared by Steven Iarusci on 02 Jun 11 - No Cached
  • The bank set aside $145million in provisions for credit losses, down $104-million as more customers repaid their loans.
    • Steven Iarusci
      Steven Iarusci on 02 Jun 11
       
      BMO is the bank in question.
  • consumer credit-card balances are declining as bank customers start to heed warnings about taking on too much debt
  • On the residential mortgage side, Mr. Downe said he expects to see growth start to "soften" in the coming months
  • ...8 more annotations...
  • record household debt levels have left this country vulnerable to economic shocks
  • the Canadian banks will report a slight increase in profit for the quarter as they contend with the impact of declining consumer borrowing, moderating capital markets activity and other headwinds.
  •   Please wait while we process your request   Please wait while we retrieve the user's information Bio Your bio is currently empty. Now is a great time to fill in your profile. This profile is private. This profile is only shared with friends. This profile is under review. We were unable to request friendship with this user. We were unable to request friendship with this user. Are you logged in? Your friendship request has been sent to this user. We were unable to terminate friendship with this user. We were unable to terminate friendship with this user. Are you logged in? You are no longer friends with this user. We were unable to ignore this user. We were unable to ignore this user. Are you logged in? This user is now ignored. We were unable to stop ignoring this user. We were unable to stop ignoring this user. Are you logged in? This user is no longer ignored. We encountered a problem recommending this user. pluck_user_recommend_permission You have recommended this user. Type Obscenity/VulgarityHate SpeechPersonal AttackAdvertising/SpamCopyright/PlagiarismOther Comment(optional) pluck_user_mp-abuse_too_long_err Send Cancel height: 3px; width: 1px; position: absolute; font-size: 1px; overflow: hidden; background-color: rgb(118, 117, 114); top: 0px; left: 3px; bac
  • With domestic household debt levels hovering close to where they were in the United States prior to the financial crisis, many observers are warning that Canadians need to start paying down debt if the economy is remain on level footing
  • Canadian consumers continue to pile on mortgage debt despite repeated warnings that they need to crank back on borrowing if this country is to avoid a painful real estate correction
  • anadian consumers continue to pile on mortgage debt despite repeated warnings that they need to crank back on borrowing if this country is to avoid a painful real estate correction
  • growth in the overall home loan market "is continuing to be more robust,"
  • Canada's fourth-largest lender on Wednesday kicked off second-quarter bank earnings season with a 7.5% increase in profit on the back of lower provisions for bad loans
Ilia Merkoulovitch

'Wall of taxation' keeping businesses small, study says - 0 views

www.financialpost.com/...story.html

taxation business growth

shared by Ilia Merkoulovitch on 02 Jun 11 - No Cached
  • Small business tax incentives are keeping businesses in Canada small, hindering business efficiency and disproportionately benefiting the wealthy
  • Canada has a special small business deduction that allows companies with less than $500,000 in revenue to be taxed at a rate of 11%, less than the standard 16.5% corporate rate.
  • only 12% of small businesses grew from having less than five employees to 5-19 employees, and only 1% grew to having more than 20 employees from 1985 to 1992
  • ...1 more annotation...
  • the small business tax rate has led to an abundance of small businesses in Canada that have no intention to grow
  • Ilia Merkoulovitch on 02 Jun 11
     
    Incentives on taxes for small businesses keeps them small and benefits the wealthy disproportionately. Companies with less than $500,000 in revenue are only taxed at 11%, instead of 16.5%, the standard rate.
Noah Schafer

Jobless rate, global uncertainty to test Tories' economic strategy - thestar.com - 0 views

www.thestar.com/...-test-tories-economic-strategy

Canada USA Corprate tax stimulus governmentspending

shared by Noah Schafer on 05 Jun 11 - No Cached
  • The new Conservative government’s business-friendly economic strategy will be tested by uncertain global conditions and a stubbornly high jobless rate in Canada. One of the first items on Prime Minister Stephen Harper’s agenda when Parliament re
  • The new Conservative government’s business-friendly economic strategy will be tested by uncertain global conditions and a stubbornly high jobless rate in Canada.
  • n February, Canada’s output sank by 0.2 per cent, the worst monthly performance since May 2009.
  • ...9 more annotations...
  • One of the first items on Prime Minister Stephen Harper’s agenda when Parliament returns will be reintroduction of a $278 billion budget that includes a sprinkling of social and economic spending and a plan to slay the budget deficit in several years. And the government will continue with a $6 billion corporate income tax cut.
  • Prospects for Canada are also complicated by expectations that spending by debt-burdened consumers could slow in 2011 and by the shut-off of the Conservatives’ two-year, $47 billion emergency stimulus program.
  • “We’re seeing continued uncertainty and concerns still with respect to the Eurozone and where it’s headed,” he said. Uncertainty on economic growth is also being fanned by volatile energy markets and the questionable U.S. business rebound, Wright said.
  • “The risks still lie outside the Canadian border, which as we’re well aware can have a spillover effect on Canada,” said Royal Bank chief economist Craig Wright.
  • With government spending slowing, the Conservatives have staked a great deal on their view that the business community will pick up the slack and stimulate the economy with expansion-minded investments.
  • Besides phasing in corporate income tax cuts worth $14 billion by 2012, the Conservatives in recent years have provided a wide range of investment incentives for business, including easing taxes on small business and manufacturers. In all, tax cuts for business by the Conservatives total an estimated $60 billion by 2013.
  • both Flaherty and Bank of Canada Governor Mark Carney have pointedly talked about the urgent need for more spending on machinery and equipment by companies.
  • But many are not convinced, with some Canadians saying the government would be smarter to tie tax incentives directly to company investments to ensure that corporations don’t just pocket the extra profits.
  • Speaking of corporate tax cuts, Canadian Association of Social Workers spokesperson Fred Phelps said it would be one thing “if corporations turned around and invested those funds into the economy.” But he said that hasn’t been happening in recent years. “What really has driven us out of the recession,” he said, “is spending by households and government, not business.”
Kiruban Mahadeva

Canada 2011 Budget: Flaherty Budget Speech (Text) - Bloomberg - 1 views

www.bloomberg.com/...herty-budget-speech-text-.html

Government Spending Taxes Debt

shared by Kiruban Mahadeva on 03 Jun 11 - No Cached
  • The global economy is still fragile. The U.S. and our other trading partners are facing challenges. Compared to other countries, Canada's economy is performing very well-but our continued recovery is by no means assured. Many threats remain.
  • Securing our recovery from the global recession The Next Phase of Canada's Economic Action Plan is critically important
  • Now is not the time for instability. It would make it harder for Canadian businesses to plan and to expand. It would drive investment away to other countries. It would jeopardize the gains we have made.
  • ...18 more annotations...
  • We will keep taxes low. We will undertake additional targeted investments to support jobs and growth
  • massive tax increases
  • We will not give in to Opposition demands to impose
  • This reckless policy would lead to continuing deficits and higher taxes on all Canadians. It would stall our recovery, kill hundreds of thousands of jobs and set families back.
  • Sustained growth comes from the private sector. We will help businesses to create jobs. We will not raise taxes on growth.
  • Since July 2009, the Canadian economy has created more than 480,000 new jobs-more than were lost during the recession
  • we remain concerned about the number of Canadians looking for work
  • We need to keep protecting and creating jobs now
  • Keeping taxes low A key part of that foundation is low taxes.
  • Our government has delivered tax relief for all Canadians
  • Our tax cuts are also helping employers to invest, grow and create jobs.
  • Our commitment to low taxes is supported by a strong consensus: that protecting Canada's tax advantage is key to securing our recovery.
  • Canadian industries Even so, in the current global economic climate, many businesses remain hesitant to invest and to hire.
  • Our government will take further action to encourage them to expand and create jobs.
  • The Hiring Credit for Small Business will provide a one-year EI break for some 525,000 Canadian small businesses
  • Expanding international trade Beyond this, we will promote new export opportunities for all Canadian businesses
  • We need to keep expanding our access to foreign markets, to create new jobs here at home.
  • We will provide greater financial security for Canadians, and practical help to make ends meet.
Kiruban Mahadeva

Tax incentives don't create jobs: economist - 0 views

www.calgaryherald.com/...story.html

Tax Government Spending Jobs

shared by Kiruban Mahadeva on 31 May 11 - No Cached
  • Tax incentives for small business don't create jobs and in some cases restrict a company's growth
  • lower taxes create disincentives for small businesses to grow
  • governments have reduced or eliminated corporate taxes on small businesses (2.5 per cent in Alberta) even though there is no evidence the move is effective
  • ...2 more annotations...
  • companies may break into smaller units to take advantage of tax benefits
  • concern really is over the growth aspect and job creation, because we do see so few small businesses growing
Carolyne Wang

The rich really are getting richer - The Globe and Mail - 2 views

www.theglobeandmail.com/...article1819803

Income Inequality Cultural Attitudes Toward Income Historical Trends

shared by Carolyne Wang on 02 Jun 11 - No Cached
  • The top 0.01 per cent of Canadian income earners, the 2,400 people who earn at least $1.85-million, aren’t just basking in investment income and business profits. Nearly 75 per cent of their income comes from wages, just like the average Canadian, according to a new study from the Canadian Centre for Policy Alternatives. The top 1 per cent, the 246,000 Canadians who earn more than $169,000, receive about 67 per cent of their income in wages.
  • That’s a change from the 1940s, when the rich took 45 per cent of their income from wages, 25 per cent from business profits and the rest from investments, dividends and interest.
  • , the income share of the richest 1 per cent fell from 14 per cent to 7.7 per cent. That trend was reversed over the past 30 years, as the top 1 per cent regained its 14-per-cent share of Canadian income. Over that time, the richest 0.1 per cent almost tripled their income share and the richest 0.01 per cent increased their share fivefold.
  • ...10 more annotations...
  • Ms. Yalnizyan said the major trend she identifies is that the wealthiest Canadians are increasing their share of income at a historic pace. Looking back over the past 90 years, income is now concentrated in a way that hasn’t been seen since the 1920s, she said. In the past decade, almost a third of income growth has gone to the richest 1 per cent, she added.
  • The top 0.01 per cent of Canadian income earners, the 2,400 people who earn at least $1.85-million, aren’t just basking in investment income and business profits. Nearly 75 per cent of their income comes from wages, just like the average Canadian, according to a new study from the Canadian Centre for Policy Alternatives. The top 1 per cent, the 246,000 Canadians who earn more than $169,000, receive about 67 per cent of their income in wages.
    • Carolyne Wang
      Carolyne Wang on 02 Jun 11
       
      See the link for visuals of income distribution in Canada.
  • That’s a change from the 1940s, when the rich took 45 per cent of their income from wages, 25 per cent from business profits and the rest from investments, dividends and interest.
  • Looking back over the past 90 years, income is now concentrated in a way that hasn’t been seen since the 1920s, she said. In the past decade, almost a third of income growth has gone to the richest 1 per cent, she added.
  • The big picture shows that after the Second World War, Canadian society distributed income in an increasingly level fashion. From 1946 to 1977, she writes, the income share of the richest 1 per cent fell from 14 per cent to 7.7 per cent. That trend was reversed over the past 30 years, as the top 1 per cent regained its 14-per-cent share of Canadian income. Over that time, the richest 0.1 per cent almost tripled their income share and the richest 0.01 per cent increased their share fivefold.
  • Median incomes, meanwhile, have been stagnant
  • “You’ve always had these people who’ve got their fingers on something the rest of us don’t. But why are they suddenly worth many multiples of what they were back then?” Ms. Yalnizyan said.
  • The answer, she said, is not economics. It’s in our culture.
  • Economist Michael Veall, who teaches at McMaster University, said a few theories try to explain the income shift by focusing on changes in the labour market at the high end, particularly for managers. One view is that corporate governors have allowed CEO salaries to jump because they were climbing elsewhere. Another is that CEOs, known for being superb communicators, are more effective, and thus more valuable, in the digital age because e-mail and the mass media facilitate contact with employees and the public, Prof. Veall said.
naheekim

Household debt continues to rise - Business - CBC News - 2 views

www.cbc.ca/...household-debt.html

household debt consumer debt credit debt

shared by naheekim on 25 May 11 - No Cached
  • Household liabilities grew by 6.5 per cent in the fourth quarter, compared with the same period a year ago, the slowest annual growth rate since the fourth quarter of 2002.
  • The average debt-to-personal disposable income ratio edged down to 146.8 per cent in the quarter, but only because a 1.8 per cent gain in average personal disposable income outpaced a gain in credit market debt.
  • But the rate at which Canadians piled on debt slowed, with nonmortgage credit, such as credit cards, slowing the most, at 5.8 per cent from a year ago.
  • ...5 more annotations...
  • Overall household liabilities grew by 6.5 per cent from the same period a year ago levels.
  • Household net worth per capita increased from $178,200 in the third quarter to $181,700 in the fourth quarter.
  • The rate of growth in net worth, after rebounding from the recession, has stayed in a range of between five and six per cent. That compares with a pace of between nine to 10 per cent in the five years leading up to the recession.
  • "Once interest rates start to rise over the latter half of 2011, the debt-service ratio is expected to climb substantially."
  • Measuring all debt — government, business and family — national net worth edged up 0.3 per cent to $6.3 trillion in the fourth quarter, the slowest quarterly growth of the year.
alex yesikov

Tag, You're It! Too Big to Fail Risk Transferred, Not Eliminated - Daniel Indiviglio - ... - 2 views

www.theatlantic.com/...239414

Systemic Risk USA Banks Financial Crisis 2008 Too big to fail

shared by alex yesikov on 30 May 11 - No Cached
  • Whenever we think of giant firms that a government feels it must bailout, big banks generally come to mind. Sure, an insurance company sneaked in there too, but AIG might have been more of an exception, since it so grossly underestimated the risks it was taking on its financial products and lived in a grey regulatory area. Although last summer's giant financial regulation bill sought to eliminate the systemic risk that led to a crisis a few years ago, it may have merely transferred some of it, creating a new breed of too big to fail firms
  • Those who understand the crisis know that derivatives were involved, particularly through AIG. It needed to be bailed out, because it did not have enough capital on hand to back up the credit default swaps agreements it had written. A large number of those were tied to the housing market, which caused the crisis.
  • In order to avoid this problem derivatives pose in the future, new financial regulation demands that all derivatives are cleared, when possible. For those who aren't familiar with clearing, the general idea is that each derivative is matched with an equal, opposite derivative through a central bookkeeper -- a clearing house -- to net out the risk they pose (more explanation with a lengthy analogy here).
  • ...1 more annotation...
  • For example, imagine if AIG had cleared all of its credit default swaps. In theory, that means a clearing house would have ensured that the insurer had ample cash (or other collateral) on hand to satisfy their payouts.
Heshani Makalande

Banks trim mortgage rates - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2037912

Mortgage rates

shared by Heshani Makalande on 28 May 11 - No Cached
  • Four of Canada’s biggest banks are once again lowering residential mortgage rates at a time when falling government bond yields are cutting funding costs for financial institutions.
  • Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia and Bank of Montreal are all trimming their posted rates on popular five-year fixed-rate mortgages by 0.1 percentage point to 5.49 per cent among other reductions.
  • The last time they did so was on May 19 when rates for five-year closed mortgages fell by 0.1 percentage point to 5.59 per cent.
  • ...4 more annotations...
  • RBC, TD, Scotiabank and BMO are also trimming interest rates on Saturday for a number of other residential mortgage products, including various special offers.
  • This latest round of mortgage rate cuts was prompted by falling yields on government bonds across a range of terms, said TD spokeswoman Barbara Timmins in an e-mail.
  • For instance, the yield on the five-year Government of Canada benchmark bond was 2.33 per cent on Thursday, down from 2.58 per cent on May 2 (the first business day of the month), according to data on the Bank of Canada’s website.
  • Banks usually try to match maturities when they use bonds to finance consumer mortgages. As a result, a five-year government bond would be matched up with a five-year consumer mortgage.
    • Heshani Makalande
      Heshani Makalande on 28 May 11
       
      Currently it is easy to get a mortgage because the interest rates are low. This is good news for consumers who will continue to enjoy record low interest rates on mortgages and other borrowing.
ngodup yaklha

Netflix proves need to deregulate - 0 views

www.leaderpost.com/...story.html

Deregulation

shared by ngodup yaklha on 05 Jun 11 - No Cached
  • ngodup yaklha on 05 Jun 11
     
    Peladeau explained that services like Netflix and Apple TV are new models to deliver television and movie content online, and therefore do not fall within the regulations outlined by the Canadian Radio-television and Telecommunications Commission for television broadcasters. Netflix is American owned, whereas television companies must be majority owned by Canadians.  But rather than regulate Netflix, as television operators suggested in a letter to the CRTC last month, Peladeau said all existing regulations should be eliminated to make the playing field more fair. Quebecor reported flat firstquarter earnings Thursday of $34.3 million, or 53 cents a share, in the three months ended March 31, compared with $34.9-million, or 54 cents a share, in the same quarter a year ago. Quebecor is channelling much of its available cash flow into a new wireless business at Videotron central to the parent company's growth strategy over the coming years. The company said Videotron added more than 28,000 new mobile customers in the quarter, lifting its subscriber base to 143,600 in total
ngodup yaklha

http://www.theglobeandmail.com/report-on-business/economy/eu-grapples-with-greek-crisis... - 0 views

www.theglobeandmail.com/...article1463543

Deregulation

shared by ngodup yaklha on 05 Jun 11 - No Cached
  • ngodup yaklha on 05 Jun 11
     
    The second was failure to deal with its huge structural costs, the result of excessive government hiring and lack of deregulation. Stefanos Manos, the retired politician who was minister of economy and finance in the early 1990s, launched Greece's deregulation and privatization process. Before he lost his job in 1993, the telecom industry deregulation was well under way and public-private partnerships were put in place. Later, banking was deregulated to some degree. But then the political will to keep going evaporated and the deregulation process pretty much stopped. By last year, Greece's debt as a percentage of GDP was about 112 per cent, more than double that of Spain (another ailing euro zone country) while its budget deficit reached 12.7 per cent of GDP, the EU's highest. The spectre of Greece going bust sent Greek bond yields soaring last week, sending the euro in the opposite direction.
ngodup yaklha

http://www.theglobeandmail.com/report-on-business/greece-prepares-for-asset-fire-sale/a... - 0 views

www.theglobeandmail.com/...page2

Greece-Deregulation

shared by ngodup yaklha on 04 Jun 11 - No Cached
  • ngodup yaklha on 04 Jun 11
     
    Greece's first privatization effort was launched in the early 1990s under Stefanos Manos, who was minister of economy and finance at the time. Before he lost his job in 1993, the telecom industry deregulation was well under way and public-private partnerships were put in place. Later, banking was deregulated to some degree. But then the political will to keep going evaporated and the deregulation and privatization processes pretty much stopped. Mr. Mitsopoulos says the biggest potential obstacle to the success of the privatization program is a dragged-out process. Fast sales would do two things, he said. It would collect a lot of money quickly, which could be used to pay down debt, and it would deliver the message that Greece is finally serious about making its economy competitive. "All these state investments are burdens on the government," he said. "Privatizations will deliver productivity gains and they can be transformed into tax-paying entities." Privatizations are expected to pick up pace across the EU, as countries with budgets deficits above the 3-per-cent EU limit look for quick debt fixes in the absence of strong GDP growth. The Loterias privatization in Spain is expected to raise about €10-billion, valuing the company at as much as €25-billion, making it the second-largest gaming company in the world, behind casino manager Las Vegas Sands.
Lok-Hin Yuen

CTV News | With temporary workers, flexibility's the name of the game - 1 views

www.ctv.ca/...article2045163.html

Jobs Temporary Workers Labour

shared by Lok-Hin Yuen on 03 Jun 11 - No Cached
  • Weak business confidence coming out of the global credit crisis is playing a major part in keeping jobless rates at painful levels – U.S. unemployment is nine per cent while Canada is stuck above 7.5 per cent in large part because companies are wary of hiring long-term.
  • Canada’s employment-services industry is mostly temporary staffing along with permanent placements and contract staffing, according to Statscan. Revenue has climbed steadily in the past decade, and employment in the sector has jumped six per cent in the past year alone, to 158,000 people.
  • But as the industry grows around the world – staffing firms are expanding in Europe and in emerging markets such as India and China – there’s an intensifying debate over the merits of an increasingly fluid work force. Proponents say it helps both employers and workers be nimble in globally competitive markets; opponents argue it’s part of a shift toward precarious, lower-pay work.
  • ...7 more annotations...
  • Temporary workers tend to earn less than permanent staff, they get little or no benefits and many can be fired without notice
  • The earnings gap between a permanent and a contract worker is about 13 per cent, while between a permanent and casual worker the gap is about 34 per cent
  • Labour is typically a company’s most expensive cost, and a contingent labour force helps reduce costs
  • What staffing agencies dub “flexible” work, unions call “precarious.”
  • With the recession and the resulting slackness, employers are in a position where they can offer no security, no benefits, unreliable hours and lousy pay – and still have people apply. And that will persist until either the labour market picks up or we put some restrictions in place on how precarious employment works
  • Lower pay leads to weaker consumer spending, restricts workers’ ability to get a mortgage and makes it more difficult to save for the future.
  • $8.7-billionRevenue from temp industry in Canada in 2009 (up from $1-billion in 1993).158,000Number of Canadians employed in temp services in the past year, up six per cent from year earlier.13%Estimated earnings gap between a permanent worker and a temporary contract worker.
Carolyne Wang

Is income inequality just business as usual? - The Globe and Mail - 0 views

www.theglobeandmail.com/...singlepage

Income Inequality Historical Trends Cultural Attitudes toward Income

shared by Carolyne Wang on 02 Jun 11 - No Cached
    • Carolyne Wang
      Carolyne Wang on 02 Jun 11
       
      The visuals in this link show the distribution of wealth among the highest income earners in Canada.
  • Professor Richard Wilkinson just finished a tour of Canada, discussing his research findings from the past 30 years or so. A social epidemiologist, he has gathered international data showing the very tight correlation between life expectancy and income inequality, between literacy and income inequality, between rates of incarceration and income inequality, etc. etc. Over and over again he shows a range of issues that have a strong social gradient which reveal that almost everybody is better off in a society with greater income equality, including the rich. You can see his presentation in Vancouver at this link. http://i.sfu.ca/TmyYCh
  • For most of the 20th century inequality in Canada - and in virtually all developed nations, actually - had been declining. By the 1980s that long term trend reversed. First because of recessions (where the bottom end of the spectrum lost ground) then because of rowth (when the top part of the income spectrum zoomed ahead). So for the past generation inequality has grown in Canada, in good times and bad.
  • ...7 more annotations...
  • There are two reasons for hope. One is, oddly, the result of an aging population and the consequent shrinking pool of workers, which may push up wages for workers producing basic goods and services, not just those at the top of the skill spectrum. The other is a culture shift, where a growing number of boomers understand what is at play and start working with others to come up with ways to ensure there will be a resilient middle class for the next generation.
  • When the cost of something goes up, we tend to consume less of it. So, since living wages are higher than minimum wages, employers are likely to hire fewer workers. A living wage campaign is part of the effort to raise the visibility of a sorry development in Canada. The saying that "the best social policy is a job" is in many ways true; but a new reality has developed over the past decade or so - that you can't necessarily escape poverty by working. Working full-time full-year at a minimum wage job, as many adults do, condems you to poverty.
  • international statistics show that poverty rates are lowest where income inequality is lowest too. That can be because of culture -- the wage spectrum is compressed, as in Japan, where it is unseemly to get too far ahead of others in pay -- or through active redistribution programs, where taxes and the services they buy redistribute incomes and opportunities to try to level the playing field a bit more.
  • The Mincome experiment in Manitoba in the mid 1970s, the MacDonald Commission i n the mid 1980s, and the House Report from Newfoundland and Labrador in the early 1990s all had proposals for providing a basic income. Only Manitoba tried it, as a pilot project, for a few years. The problem with the guaranteed income idea is at what rate you set it, and at what rate you tax it back. It could remove the stigma of income support programs, but it could just as easily be a costly experiment that, essentially, guarantees poverty. Also, as Dr. Wilkinson has suggested, at some point on the GDP per capita curve, income inequality is no longer about material deprivation, but rather one of psycho-social responses. We are, after all, pack animals.
  • We can redress some of the vagaries of the market through public policies, but the root cause of growing inequality is how different peoples' work is valued. IN a slow growth environment, which seems to be the foreseeable future for Canada, it will become harder and harder for those at the top of corporate structures to take the types of increases they have been commanding in the marketplace and expect unionized workers to be happy about losing their pension, benefits and wage increases, and expect low-end workers to essentially stay put or lose more ground. Two things can happen - those at the top start moderating their increases; or those in the middle and the bottom start seeing solid increases, particularly as the wave of retirements starts accelerating. The problem with rising incomes, generally, is that usually goes along with rising prices; and we're about to host the largest cohort of retirees we've ever had in history, a group that lives on fixed and low incomes, to whom rising prices are toxic. So how will the highest priced workers get away witih demanding more in that context I wonder?
  • Historically, increasing economic growth first deliver rising inequality, then lowering inequality (Simon Kuznets' famous work back in the 1950s). That's still true of developing nations - economic growth is first badly distributed, then leads to demands for greater equality.
  • We can raise our kids more equitably - but it will take more taxes. We can have less of a winner take all society - but it will require some people at the top to trim their expectations. We can beat this in small ways, but we also need leaders to express the way forward. In the US they have Warren Buffett, Bill Gates and politicians leading the way. We're waiting for more people like Ed Clarke, the CEO of TD Bank, to weigh in on how to make Canada fairer (his suggestion is higher taxes on the rich).
alex yesikov

Could Greece be the next Lehman Brothers? Yes - and potentially even worse | Larry Elli... - 0 views

www.guardian.co.uk/...ce-debt-crisis-lehman-brothers

Systemic Risk Banks USA Financial Crisis 2008 Greece

shared by alex yesikov on 02 Jun 11 - No Cached
  • It was less than three years ago that the failure of Lehman Brothers sent tremors through the global financial system, threatening the existence of every major bank and triggering the most severe economic crisis since the Great Depression. As Europe's policy elite met for fresh crisis talks today, the dark fear that haunted everyone around the table was this: if the bankruptcy of a middling-sized Wall Street investment bank with no retail customers could have such dire consequences, what would happen if the Greeks decide they have had enough and renege on their debts?
  • Could Greece, in other words, be the new Lehmans? Given the structure of modern financial markets, with their chains of derivative trades and their pyramids of debt, there is only one answer. Greece could certainly be the next Lehmans. The likelihood that a Greek default would pose a threat to the future of the eurozone as well as to the health of the world economy means it has the potential to be worse than Lehmans. Much worse.
  • To be fair, it's a tough one. A single currency that involved a hard core of European countries that were broadly similar in terms of economic development and industrial structure might just have worked. Bolting together a group of 17 disparate economies with different levels of productivity growth, different languages and different business cultures was an accident waiting to happen, and so it has proved.
Maria Li

Rate hikes okay for most but a 'financial shock' for many - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2041683

Consumer Debt Mortgages

shared by Maria Li on 03 Jun 11 - No Cached
  • Most Canadians should be able to handle higher interest rates expected later this year, but many will still see a "financial shock," Toronto-Dominion Bank economists say
  • "The main question is how households will respond to the eventual rebalancing of monetary policy, TD economists Craig Alexander and Diana Petramala write in a new report that looks at indebtedness among Canadian households.
  • Canadians will experience a financial shock when interest rates eventually rise, but the vast majority of households should be able to cope so long as interest rates rise only gradually
  • ...4 more annotations...
  • Bank of Canada held its benchmark overnight rate steady at just 1 per cent, citing global uncertainty and the impact of the strong Canadian dollar, but said rates must eventually rise
  • Annual personal credit growth slowed to a year-over-year pace of 6.4 per cent in April, compared to an average 10.9 per cent in a period spanning 2004 to 2008
  • The moderation in credit growth has been evident in all measures of debt
  • The debt-service ratio, the interest households must pay on their debt each month as a share of personal disposable income, climbed to a two-year high of 7.6 per cent in [the first quarter of] 2011, despite still record low interest rates.
Steven Iarusci

Report cautions that over-indebted consumers can't drive economy - 0 views

www.vancouversun.com/...story.html

economy consumer debt growth

shared by Steven Iarusci on 02 Jun 11 - No Cached
  • a rate hike may come in the fall
    • Steven Iarusci
      Steven Iarusci on 02 Jun 11
       
      Interest rates
  • the main message is that consumers cannot be the main engines of economic growth over the next couple of years,” the authors conclude. “Instead, the economy will have to rely on other sources of growth, such as exports and business investment.”
  • Canadians have “eased off the debt-accumulation throttle,”
  • ...8 more annotations...
  • still net borrowers, meaning they borrow more than they save
  • consumer spending will not be the engine of economic growth in the coming quarters and the inevitable future rebalancing of monetary policy will be a shock to many households
  • some of the drop in household indebtedness is explained by strong income gains, not by debt repayment per se
  • sustainable personal growth is likely in a range of 4.0-4.5 per cent. Credit continues to grow at a pace that is two percentage points above that
  • the level of Canadian household debt — which in December officially surpassed those of our neighbours to the south — is unsustainable
  • total consumer debt load is reported to be about $1.5 trillion
  • Data released late last year suggested Canadians owed on average $112,000 — a figure that includes all kinds of debt, including mortgages — and a debt-to-income ratio of 150 per cent means they were spending $1,500 for every $1,000 in take-home pay
  • Factors that will moderate credit growth over the short term include spending fatigue, a soft landing in the housing market, stricter mortgage rules and Canadians preparing for the higher interest rates that are sure to come as the economy recovers.
Steven Iarusci

Consumer fatigue an ominous sign for economy - The Globe and Mail - 1 views

www.theglobeandmail.com/...article2039584

debt consumer ratio economy slow

shared by Steven Iarusci on 02 Jun 11 - No Cached
  • Consumers typically account for 60 per cent of the country’s gross domestic product, and rising living costs along with elevated debt levels suggest they won’t be much help this year
  • Gross domestic product expanded at an annualized 3.9 per cent in the first quarter, the fastest pace in a year, led by business investment and manufacturing, Statistics Canada said
  • that pace will be cut by almost half in the second quarter, while Finance Minister Jim Flaherty told reporters Monday he’s anticipating “more modest” growth in the rest of the year
  • ...7 more annotations...
  • In the near term, households are under pressure as rising food and energy costs cut into their budgets
  • “I will never, never do that again. I want to have the money up front before I buy something, because I don’t want to get into that trouble again,” said Ms. Thornton
  • In the longer term, high debt levels could restrain spending for years
  • Kim Thornton, for example, is one fatigued consumer. The mother of four says her family ran up about $50,000 in debt in prior years on credit card spending
  • the household debt service ratio – debt payments to disposable income – jumped to a three-year high of 7.8 per cent from 7.2 per cent
  • Canadians are getting the message about whittling down debt, and that is translating into fewer purchases of discretionary goods
  • reduced hours and leaner wages – a legacy from the recession – mean many families have less money with which to service their debt, he added
Linda Lei

Canada's personal debt rises - Business - CBC News - 1 views

www.cbc.ca/...canada-cosumer-credit.html

consumer debt

shared by Linda Lei on 08 Jun 11 - No Cached
  • Canadians rang up five per cent more in personal debt in the first three months of 2011 compared with 2010, according to a report released Wednesday.
1 - 20 of 65 Next › Last »
Showing 20▼ items per page