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Chris Li

The Progressive Economics Forum » Out of Equilibrium: Why EU-Canada Free Trad... - 2 views

www.progressive-economics.ca/...de-wont-work-in-the-real-world

Free Trade Canada European Union

shared by Chris Li on 02 Jun 11 - No Cached
  • comprehensively liberalize trade in goods and services, government procurement, foreign investment, and other important economic interactions between the two parties.
  • The recent appreciation of the loonie against the euro (up 18% since the two sides first committed to free trade talks) vastly overwhelms any cost advantage Canadian exports could hope to attain in European markets through tariff elimination.  Aggregate trade imbalances, and the skewed sectoral composition of trade, imply that Canada already loses some 70,000 jobs
  • The EU and Ottawa commissioned a joint economic study which predicted mutual economic gains from a free trade agreement, worth approximately $12 billion per year to Canada by 2014.  However, that report incorporates bizarre and far-fetched assumptions regarding the self-adjusting nature of all markets, and the manner in which free trade would be implemented and experienced. 
  • ...5 more annotations...
  • even the government’s own report shows that Canadian imports (of both goods and services) from the EU will increase by twice as much as Canadian exports to the EU, substantially widening the existing bilateral trade deficit.
  • exports grew less rapidly with FTA partners than with non-FTA partners, but imports grew quicker with FTA partners than with non-FTA partners. 
  • In the real world, free trade agreements (not surprisingly) tend to make existing trade imbalances even worse: this is true throughout economics, where deregulation generally tends to exacerbate the imbalances and unevenness of market outcomes.
  • Three scenarios are presented: one in which tariffs are mutually eliminated; one in which EU-Canada trade expands in line with the historical experience of Canada’s previous FTAs; and one in which tariff elimination is combined with the appreciation of Canada’s currency (versus the euro) which has been experienced in fact since the two parties launched free trade negotiations.  In every case, the bilateral trade balance worsens significantly (and in the third scenario, it worsens dramatically – since the higher Canadian dollar reduces Canadian exports, even as imports from the EU are surging).  Based on average employment intensity across 23 goods-producing industries, the simulations suggest an incremental loss of between 28,000 jobs (in the first scenario) and 150,000 jobs (in the third).  Direct losses in Canadian GDP range between 0.56 percent in the first scenario, and almost 3 percent in the third.
  • A free trade agreement with the EU will exacerbate Canada’s existing large bilateral deficit, at the expense of output and employment in many important sectors of the economy. 
Carolyne Wang

How paying people's way out of poverty can help us all - The Globe and Mail - 0 views

www.theglobeandmail.com/...singlepage

Income Inequality Tax Cuts Homelessness Set Annual Income Unemployment

shared by Carolyne Wang on 02 Jun 11 - No Cached
  • there’s an increasing awareness, among even the country’s most wealthy, that poverty reaches beyond the tables of the hungry and digs into their own pocketbooks
  • When people are poor, out of work or homeless, it hurts the bottom line of all Canadians. And as the country struggles to maintain a shaky recovery amid growing global economic uncertainty, that’s not a hit they can afford to take.
  • If Ottawa and the provinces fail to make this a priority, Tory Senator Hugh Segal predicts, “over time, we will begin to run out of the money that we need to deal with the demographic bulge because it will be consumed in the health care requirements of the poor, which will increase. It will be consumed in the costs of the illiteracy and unemployment which relate to poverty. ... And it'll be unsustainable.”
  • ...22 more annotations...
  • It’s already on the radar of some provinces: One of Christy Clark’s first actions as B.C. Premier was to raise the province’s minimum wage for the first time in a decade and offer a tax cut for low-income families. Ontario has launched a sweeping review of social assistance programs that Community and Social Services Minister Madeleine Meilleur has admitted are failing the province’s neediest.
  • Despite Canada’s reputation for a strong social safety net, the country is becoming economically polarized. And the decades-old dominant economic dogma that growing wealth among society’s highest earners would trickle down to those less fortunate is being challenged by an alternative approach: Eliminate crushing poverty among the lowest earners, and wealth will trickle up.
  • The ranks of the working poor have swelled as minimum wages fail to keep pace with rising costs and social assistance levels drop.
  • The recession widened the chasm, and a subsequent recovery hasn’t closed it.
  • On paper, almost as many jobs have been added as were lost during the financial crisis. But they offer fewer hours and less pay – and some of the hardest-hit sectors aren’t coming back.
  • Food bank use hit a record high in 2010. Tellingly, more of the people using those food banks have jobs – they just don’t make enough to pay the bills or feed their families.
  • As the incomes of the country’s top earners have risen, the incomes of Canada’s lower- and middle-income earners have stagnated.
  • Tony Masciotra is diversifying himself. The Argentine-Canadian father of two went back to school immediately after being laid off from his tool and die job at Ford Motor Co. in Windsor three years ago.
  • “I have records of over 100 jobs I have applied for,” he said. “I have looked really hard. ... But I haven’t been able to get a job yet.
  • Mr. Masciotra is part of a growing group of skilled labourers on the brink. The métiers in which they’ve worked for years are no longer economically viable: Many well-paying blue-collar jobs are being replaced by minimum-wage, service-sector ones. And that’s causing significant shifts on both sides of the border, notes MIT economist David Autor.
  • It gets more complicated, and more economically detrimental, if the people who’ve lost jobs aren’t the ones being hired to new ones.
  • They enter what Robin Somerville of the Centre for Spatial Economics calls “structural unemployment.” And if they leave the workforce entirely, they fall off the radar of unemployment stats: The numbers look better precisely because they’re worse.
  • The drop is even more significant because more Canadians are putting off retirement. That should mean more people in the workforce. But it doesn’t: So many younger workers are dropping out entirely that they outweigh the older ones sticking around longer.
  • “If you’re losing opportunities in some areas, and you’re not replacing them with opportunities of equal or greater value, then the overall level of income in the economy is reduced. And the ability of people to go out and buy goods and services is reduced.”
  • Homelessness costs taxpayers money – in both foregone wealth and social service spending.
  • Some see a solution in a 40-year-old experiment: In the 1970s, Manitoba wanted to see what would happen if it guaranteed poor people in a few communities a set annual income.
  • The philosophy behind this is simple: People are more likely to stay in school, out of emergency rooms and out of jail; they contribute to the economy through their purchases; they’re more likely to move eventually above the poverty line and pay taxes.
  • The irony is that Canada already scores high compared to other OECD countries when it comes to helping the elderly. Where it falls short is where it matters: The working-age poor – the ones who should be contributing to the economy.
  • $134,000 Estimated amount for emergency shelter, emergency hospital care, law enforcement and other social services for one homeless person in Calgary, for one year
  • $34,000 Estimated cost to proide supportive housing for one person in Calgary, for one year
  • $12,555 Average cost of hospital stay for non-homeless patient at St. Michael's Hospital in Toronto
  • $15,114 Average cost of hospital stay for homeless patient at St. Michael's Hospital in Toronto
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.
  • “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.
  • “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.
  • 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.
  • 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.”
Dmitri Tkachenko

Back in the green: CEO pay jumps 13 per cent - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2039083

CEO performance unit shares high salaries

shared by Dmitri Tkachenko on 30 May 11 - No Cached
  • Dmitri Tkachenko on 30 May 11
     
    "The economic downturn in 2008 and 2009 was a distant memory by 2010 for Canada's top chief executive officers, at least as far as their pay packages were concerned. A Globe and Mail review of executive pay last year shows CEOs at Canada's 100 largest companies saw their compensation jump 13 per cent last year, led higher by a 20-per-cent increase in annual cash bonuses. Base salaries climbed 4 per cent. Instead, many gains for CEOs came from better economic performance by companies, which boosted variable elements of pay like cash bonuses. They can also be worthless. If the company performs in the bottom quarter of the peer group, and earns a negative return over three years, none of the share units vest for the executives. "
Carolyne Wang

Economist's View: Why Does Inequality Matter? - 0 views

economistsview.typepad.com/...hy-does-inequality-matter.html

Income Inequality Tax Income Redistribution

shared by Carolyne Wang on 02 Jun 11 - No Cached
  • We know that a society with perfect equality does not grow at the fastest possible rate. When everyone gets an equal share of income, people lose the incentive to try and get ahead of others.
  • We also know that a society where one person has almost everything while everyone else struggles to survive—the most unequal distribution of income imaginable—will not grow at the fastest possible rate either. Thus, the growth-maximising level of inequality must lie somewhere between these two extremes
  • As Lane Kenworthy notes, when we look at how inequality has changed in various rich nations over the last several decades, "it turns out that there is no relationship between changes in income inequality and changes in the absolute incomes of low-end households. The reason is that income growth for poor households has come almost entirely via increases in net government transfers." Thus, nations where lower income households have fared better are also the nations where income transfers have been the highest.
  • ...6 more annotations...
  • One hope for turning this around in the future is education
  • Unfortunately, we won't know the answer until we actually improve education, then wait to see how our better educated young fare when they graduate, a process that will take decades. It will do little to alleviate existing levels of inequality.
  • redistribution of income is the only answer to our inequality problem
  • But won't such policies lower economic growth? No. Given the present, elevated level of inequality, a reduction is unlikely to have much of an impact on incentives that are important for economic growth.
  • If we want to preserve a growing and socially healthy economy, and avoid moving to points on the inequality curve curve associated with lower growth, then we will need to do much more redistribution of income than we have done over the last several decades. That means the wealthy will no longer get it all, or at least almost all; they will be asked to share economic growth with the workers who helped to bring it about, workers who ought to be rewarded for their growing productivity.
  • sharing economic gains among all those who had a hand in creating them is the right thing to do
Peter Shishkov

Commodity prices rise amid economic turbulence - 0 views

news.yahoo.com/...commoditiespriceweekly

Greece Commodity Prices

shared by Peter Shishkov on 01 Jun 11 - No Cached
  • Peter Shishkov on 01 Jun 11
     
    Lately, oil price is extremely volatile due to disappointing economic data from the US and eurozone, uncertainty about a potential debt-restructure in Greece and weaker oil demand from the US, China and Japan. Gasoline demand is expected however to pick up in the coming weeks as Americans take to the road for their summer holidays. On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for July climbed to $100.35 a barrel from $97.41. Gold and Silver remain to be the safest investments during problematic economic times. As a result the precious metals have increased in price: on the London Bullion Market, gold jumped to $1,533 an ounce from $1,491 the previous week; Silver rose to $37.69 an ounce from $34.80.
dani tav

Government Collaboration Builds Growth - 0 views

business-journal.com/ion-builds-growth-p19266-1.htm

Government Collaboration Building Growth USA

shared by dani tav on 31 May 11 - No Cached
  • effective local government would play in improving northeast Ohio's economic future
  • conomic competitiveness component of the Fund for Our Economic Future
  • government efficiency and collaboration are relevant and timely topics in our region
  • ...5 more annotations...
  • We are beginning to see the positive results collaboration can bring, including significant savings to protect vital services and ensure our communities invest in innovation and education to create jobs and keep the region competitive in the global economy."
  • he rate of local government spending in Northeast Ohio is 70 times the region's population growth, 2.8 times its inflation rate and 2.4 times its economic output
  • government entities spend $20 billion to operate
  • ortheast Ohio residents have made it clear that more efficient local government is a regional priorit
  • collaboration of 100 foundations, organizations and philanthropists from across Northeast Ohio
Alejandro Enamorado

ROHAC: Income inequality doesn't matter - Washington Times - 1 views

www.washingtontimes.com/...ncome-inequality-doesnt-matter

income inequality rohac

shared by Alejandro Enamorado on 03 Jun 11 - No Cached
  • income inequality is not a useful measure. Measures of inequality tell us nothing about the living conditions of the poor, their health and their access to economic opportunity.
  • one should think primarily about lifting developing countries out of poverty rather than about reducing income disparities in wealthy countries.
  • Focusing on income inequality rather than drivers of poverty, obstacles to economic opportunity and systematic injustice obscures what really works and what does not in the realm of economic policy
  • ...3 more annotations...
  • Putting in place restrictions on executive bonuses, taxing financial transactions and corporate profits does little to mitigate the flawed incentives that have led to exuberant financial booms. A genuine solution would consist of eliminating bailout guarantees to the banking sector, thus reducing the existing incentives for gambling with other people’s money.
  • the rise of cheap imports from countries such as China and new forms of large-scale retailing, epitomized by Wal-Mart and Sears, which have given the low-income groups access to goods that previously were enjoyed only by the rich. In terms of the actual material conditions of living, developed countries appear to be more equal than ever before.
  • growth of executive remuneration in the financial industry cannot be dissociated from a cozy relationship that has long existed between policymakers and bankers
dylan huber

Canada discovers trickle-up economics - 0 views

www.thestar.com/...discovers-trickle-up-economics

Income Inequality trickle down canada

shared by dylan huber on 03 Jun 11 - No Cached
  • there’s been a massive transfer of income and wealth from Canada’s middle and lower class to the rich.
  • some degree of inequality is inevitable and even desirable (allowing bigger rewards for those making bigger contributions), the level of inequality that exists today in the Anglo-American countries — the United States, Britain and Canada — is extreme
  • virtually all the income growth in the last 30 years has gone to the top.
  • ...5 more annotations...
  • less equal societies almost always have more violence, more disease, more mental health problems, higher infant mortality rates, reduced life expectancies, as well as less social cohesion.
  • average CEO was making about 25 times the average worker in the late 1970s, today’s average CEO makes roughly 250 times the average worker.
  • evidence linking extreme inequality with serious economic problems. The level of inequality reached in 2008 was virtually identical to that of 1929, suggesting that large concentrations of wealth at the top create a dynamic leading to reckless financial speculation and Wall Street crashes
  • people in less equal societies have reduced social mobility.
  • the top-earning 1 per cent of Canadians almost doubled their share of national income, from 7.7 per cent to 13.8 per cent, over the past three decades.
John wang

Economic inequality - 0 views

www.windsorstar.com/...story.html

economic inequality gini coefficient

shared by John wang on 02 Jun 11 - No Cached
dylan huber

Economic news fl ash: Inequality is complex - 0 views

www.nationalpost.com/...story.html

Inequality Income OECD

shared by dylan huber on 02 Jun 11 - No Cached
  • in most places growth was more rapid at the top than at the bottom of the income distribution.
  • Canada's numbers were 0.9 and 1.6, the United States' 0.5 and 1.9.
  • incomes at the top grew more quickly than incomes at the bottom.
  • ...5 more annotations...
  • deregulation, free trade, fiscal conservatism (yes, that would be neo-liberal conservatism) -are rewriting the post-war economic and social contract at the expense of the poor and to the benefit of the rich.
  • globalization may be playing a part.
  • Technology also plays a role
  • Changes in household size do seem to be part of the problem. In most countries, there are fewer people per household. Across the OECD, the number of households with only one head has risen from 15% to 20% of the total.
  • If more families are smaller and therefore not enjoying such economies of scale, more are going to be poorer.
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.
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  • 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
  • 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
  • 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
  • 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
Susan Cui

The Progressive Economics Forum » Housing on the knife's edge - 6 views

www.progressive-economics.ca/...ng-on-the-knife%e2%80%99s-edge

Housing Price Unstable Housing Market

shared by Susan Cui on 23 May 11 - No Cached
  • On the heels of multiple warnings from the Bank of Canada that Canadians have taken on too much household debt for comfort (we hold the dubious distinction of having the worst consumer debt to financial assets ratio among 20 OECD nations), the federal government announced
  • On the heels of multiple warnings from the Bank of Canada that Canadians have taken on too much household debt for comfort
  • the federal government announced
  • ...13 more annotations...
  • these federal changes will have the greatest effect on middle class Canadians
  • With these moves, the federal government is starting to take seriously the risk of record-high housing prices and record-high household debt.
  • It will reduce the maximum insurable amortization period from 35 years to 30 years
  • The pessimistic possibility is that trying to reign in mortgage debt and housing prices could burst the housing bubble that simultaneously exists in six Canadian cities.
  • The optimistic possibility is that reverting to pre-2006 regulations could help put a lid on house prices
  • to get back to basics and start saving again.
  • It could also force Canadians
  • Between 1980 and 2001, housing prices in four of the six major markets in Canada (Edmonton, Calgary, Ottawa and Montreal) remained in a tight band of between $150,000 and $220,000 (in today’s dollars).
  • experienced three housing price declines between them brought on by interest rate hikes.
  • Toronto and Vancouver
  • When the bubbles burst, they wiped out in the worst case more than 35% of an average house’s value
  • Today it isn’t just Toronto and Vancouver; it’s all six major Canadian cities that are outside of the safety zone.
  • Canada’s housing market is still on a knife’s edge and isn’t clear which way we’ll fall.
Chris Li

The Progressive Economics Forum » Garbage In, Garbage Out - 4 views

www.progressive-economics.ca/...garbage-in-garbage-out

Outsourcing Garbage Collection

shared by Chris Li on 24 May 11 - No Cached
  • contract-out garbage collection for half of the City of Toronto as soon as possible as the first step to outsourcing everything we can by next year.
  • Much of the rationale for contracting-out is that private waste collection will save the city many millions of dollars.   However, these figures are based on misinformation and distorted statistics. 
  • Toronto’s costs in 2009 were $72.22 per tonne.  Costs for Mississauga and Brampton as part of the Peel regional municipality were $106.79 per tonne.  Vaughan’s costs were $168.40 per tonne.   The other regional municipalities also had higher costs: Durham at $85.74 per tonne and Halton at  $86.79 per tonne.
  • ...4 more annotations...
  • costs for residents of Toronto for private waste collection will increase by at least 20% a year or more than $6 milllion per year and could be 50% or $16 million higher. 
  • From their estimates they claimed that Toronto could save $49 million per year from contracting-out all its waste collection. 
  • they used an econometric technique called “fixed effects regression” which effectively engineered the results they were looking for.  
  • “The most recent studies have found no difference in costs.  Cost savings from privatization erode over time….”.
naheekim

Housing prices to drop 25%, forecaster predicts - thestar.com - 2 views

www.thestar.com/...to-drop-25-over-next-few-years

Housing Prices Recession

shared by naheekim on 28 May 11 - No Cached
  • House prices in Canada will fall over the next several years by as much as 25 per cent, creating a massive impact on the economy and possibly pushing the country into recession, says a forecast
  • predicting house prices will fall by a cumulative 25 per cent over the next several years
  •  Madani says the effects on consumer spending and housing investment could be significant and perhaps strong enough to “push the economy into another recession
  • ...7 more annotations...
  • “If house prices are to fall, there needs to be a mechanism — an excess of supply relative to demand,”
  • Last year, the Canadian Real Estate Association modified its forecasts at least four times. After initially predicting housing prices would increase in 2011, it now says prices will fall by 1.3 per cent — far below the eye-catching 25 per cent forecast by Capital Economics.
  • Financial agencies such as the Canadian Mortgage Housing Corporation, which provides mortgage loan insurance, could also be exposed to significant losses
  • The Capital Economics forecast is not the first to predict a bubble in the Canadian market. Gluskin Sheff & Associates chief economist David Rosenberg has also predicted a 25 per cent drop in Canadian housing prices, as has The Economist magazine.
  • As in the U.S., financial innovation and very low interest rates have allowed Canadian consumers to take on more debt, and house prices are high relative to income
  • However, consumers have remained complacent because low rates are keeping mortgage payments low.
  • The historical home price-to-income ratio is 3.5, but now it's hovering around the 5.5 mark, meaning average house prices are more than five times the income of workers
  • naheekim on 28 May 11
     
    The economists and forcasters are predicting that housing prices will decrease over the next several years by 25%.
Peter Shishkov

Food, oil prices hit US economy - 0 views

www.peopleforum.cn/redirect.php

USA Commodity Prices

shared by Peter Shishkov on 01 Jun 11 - No Cached
  • Peter Shishkov on 01 Jun 11
     
    Economists have cut forecasts for economic growth in the second quarter following the dismal 1.8 percent pace in the first, with indicators of industrial production, consumer spending and unemployment all appearing soft. Economists said they still foresee a stronger second half, as consumers and businesses adjust to the higher oil price Ian Shepherdson, U.S. economist for High Frequency Economics, said the sharp rise in the price of oil has helped stifle job creation. "The trend in claims has nudged up a bit as companies have responded to the rise in oil prices," he said.
Kiruban Mahadeva

Jesse Kline: U.S. looks to Canada to fix its debt crisis | Full Comment | National Post - 1 views

fullcomment.nationalpost.com/...-canada-to-fix-its-debt-crisis

Debt Government Spending

shared by Kiruban Mahadeva on 01 Jun 11 - No Cached
  • In 1994, Canada’s debt-to-GDP ratio was around 67%, but thanks to sound fiscal management, deep spending cuts and sustained economic growth, this number was reduced to 29% by 2009
  • Canadian experience shows that government can balance the books by making significant spending cuts, and that can be done without having an adverse effect on economic growth and levels of employment
Heshani Makalande

Housing affordability getting worse, RBC says - Moneyville.ca - 1 views

www.moneyville.ca/...ability-getting-worse-rbc-says

Mortgage debt

shared by Heshani Makalande on 28 May 11 - No Cached
  • Despite two quarters of increasing affordability thanks to lower mortgage rates in the second half of 2010, housing affordability will remain an issue for Canadians in 2011, said a report by RBC Economics released Friday.
  • “We believe we have now entered a period of steady increases in homeownership costs, which will act to restrain growth in homebuyer demand in Canada for the quarters to come,”
  • Declining mortgage rates mean that the second half of 2010 showed improving affordability. The first quarter of 2011 saw mortgage rates remain flat, but house prices started to accelerate upward across Canada
  • ...5 more annotations...
  • In the key Toronto market, housing affordability measures rose by 0.8 per cent for a 1,200 square foot detached bungalow in the first quarter.
  • It now takes 47.5 per cent of household income to service the cost of mortgage payments, property taxes and utilities.
  • The average price of a bungalow in Toronto was $486,900 and the qualifying income needed to purchase was $103,000. But that is light years away from the Vancouver market, where an average 1,200 square foot bungalow is $736,000 with a qualifying income needed of $136,900.
  • Affordability levels are expected to get worse as interest rates get higher this year, said RBC, warning that Vancouver may be “dangerously disconnected from prevailing local housing demand fundamentals.
  • “The risk of a sustained and widespread drop will be limited given our expectation of a positive economic context that will sustain growth in household income and a gradual pace of interest rate policy normalization,” said Hogue. In Ontario, the market looks to be on a “sustainable path” although it is likely to face headwinds in the coming months arising from interest rate increases and a tightening in mortgage regulations, said RBC.
Dmitri Tkachenko

As Canadians get older, economy gets weaker - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2039511

Aging Unemployment Slowing economy

shared by Dmitri Tkachenko on 30 May 11 - No Cached
  • Dmitri Tkachenko on 30 May 11
     
    "Statistics Canada projection shows a sharp decrease that will continue for at least the next 20 years. Employment growth since 1976 has averaged 1.6 per cent a year, while the population grew at a rate of 1.1 per cent. That extra half a percentage point added roughly 0.3-0.4 percentage points to the average growth rate of real per capita income above what it would have been otherwise. Not only is this source of growth about to disappear, demographic aging is going to start being a negative contributor to economic growth: fewer workers mean less output. One of the first places we'll see the effects of population aging is its effect on the government budget balance. Higher output per worker would help compensate for a reduction in the number of workers, so productivity will become an increasingly important policy priority. But in the short and medium term, there is no quick fix. "
Alejandro Enamorado

William Watson - Economic news flash: Inequality is complex | FP Comment | Financial Post - 0 views

opinion.financialpost.com/...ws-flash-inequality-is-complex

income inequality complex

shared by Alejandro Enamorado on 04 Jun 11 - No Cached
  • Almost everywhere there was growth at the bottom. But incomes at the top grew more quickly than incomes at the bottom. In effect, the rich were pulling away.
  • People who can handle the new technology on which most production is based are increasingly in demand and in many cases such brain (as opposed to brawn) workers are already well paid, so paying them even more only widens the income gap.
  • Across the OECD, the number of households with only one head has risen from 15% to 20% of the total. In calculating households’ real income, the statisticians try to factor in the economies of scale families enjoy. (Kids are cheaper by the dozen, yes, but also by twos and threes.) If more families are smaller and therefore not enjoying such economies of scale, more are going to be poorer.
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  • “assortative mating” also seems to blame. More than in the past, the same kinds of people — or at least people with similar earning power — are marrying each other. Doctors increasingly marry other doctors, rather than nurses. Today, 40% of couples in which both partners work have similar incomes, compared with only 33% in the 1980s.
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