Category Archives: Recession

Bank of Canada warns Federal spending cuts near

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Bank of Canada Governor Mark Carney said Canada is in trouble and spending cuts are inevitable

Bank of Canada's Mark Carney, Canada not so rosy anymore (image CBC News)

Mark Carney had a dose of bad news for Canadians Thursday. He said government spending cuts are coming. The only question is how deep, and when politicians will have the courage to act.

“The question is how do you do it,” said Carney, “and how do you do it most effectively.” Those are code words for how deep and what gets cut.

Carney warned the world economy had worsened due to currency wars as countries jockey for the best position. China, for example, is devaluing it’s currency on purpose to gain market share in the US.

Canada’s trading partners – the US and the EU – are economically weak and not willing to increase their purchases of our goods, except Alberta oil.
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Economy poised on the brink of deflation

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US stagnation, stock market redemption and Canadian credit crunch point to perfect storm

Business media talking heads promoting when caution is indicated

The press and the government declared the recession ended months ago but the economy is probably poised on the edge of a decade long decline according to economists.

BNN is reporting deflation fears in the US.  Over the weekend, one of the BNN commentators made a compelling but nerve wracking case for deflation in Canada.

Cautious people are increasing their savings by paying down debt and hoarding cash.

The US economy shed 131,000 jobs in July, leaving 14.6 Americans out of work. WSJ: U.S. Job Market Loses Steam Canada lost 139,000 jobs in July 2010. CBC

Both the US and Canada have borrowed heavily on the future with record deficits to end the recession but it has not happened. President Obama’s optimism has given frustration at his inability to make a dent in the economic crisis.  Continue reading →

Justice denied for Nortel disabled pensioners

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If the partial settlement wasn’t bad enough, the court has rejected that deal as preferential over other debt holders while politicians ponder

Nortel pensioners and their supporters rallied on Parliament Hill Thursday. Photograph by: Pat McGrath, The Ottawa Citizen

The inequity of a legal system that can reward executives with millions of dollars in bonuses while forcing pensioners with disabilities onto welfare was backed by the Ontario Super Court as the Nortel $57 million pension agreement was thrown out.

In a previous story we reported the views of Nortel’s pensioned employees who lost their benefits as a result of Nortel’s bankruptcy. Nortel pays bonuses to execs and pittance to retirees and disabled.

That agreement which only lasted until the end of 2010 has been thrown out by a judge as prejudicial to other creditors. Once again the legal system has prejudice the employees in favor of executives and bankers.

While the Harper Conservative government talks and promises to reform Canada’s pension system, they are marking time with no laws that could save these employees.  This is a travesty in Canada that the recession and it’s aftermath has made urgent. The Tories fiddle while Canadian employees take the heat.

The Opposition NDP and Liberals could force the minority government’s hand on this issue. Is their talk supporting pension reform mere political rhetoric, just another bluff from Jack Layton and Michael Ignatieff?

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Is Goldman Sachs profiting from financial crisis in Greece

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Even worse, are they and other US banks the cause of Greece’s financial dire straits?

SEC Ben Bernanke made the comments while testifying on the US economy photo: BBC

Testifying yesterday before the Senate Banking Committee, SEC Chairman Ben Bernanke said the Goldman Sachs and other US banks are being investigated for potentially setting up the current crisis in Greece. To top it off, Goldman is suspected of shorting the finances of Greece, betting that the economy will fail.

Bernanke told the Senate Committee that Goldman, over a ten year period, set up sophisticated credit arrangements that disguised the true nature and amount of Greece’s debt.

“We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece,” Bernanke said, testifying before the Senate banking committee.”

“Addressing concerns that financial firms have been engaging in trades to bet on a Greek default, Bernanke said that “using these instruments in a way that intentionally destabilizes a company or a country is counterproductive, and I’m sure the SEC will be looking into that.”  Washington Post
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Next ten years will likely wipe out retirement dreams

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If you thought the last 10 years were rough on retirement savings, fasten your safety belt

RBC is reporting the obvious today – RRSP contributions to continue declining through 2020, says RBC Economics

The reasons were predicted in 1996 by Economist David Foot. The Baby Boomers who fueled the post war economic boom are going to earn less, spend less and stop saving.

Population Projections for Canada, Provinces and Territories 2005-2031 Statistics Canada

Population Projections for Canada, Provinces and Territories 2005-2031 Statistics Canada

The chart above shows the trend under worst, average and best case scenarios – sometime between now and 2015 there will be more retired people and fewer working people.

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Layoffs continue in media

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AOL laid off 2,500 this week. The company is spinning off from Time Warner and must be profitable it says.

AP (Associated Press) the media co-op laid off 90 people to meet its payroll. The non-profit is trying to reduce member fees in the wake of the newspaper meltdown.

BusinessWeek laid off 150 people. Print magazines are dying.

The contrarians are USA Today which reports increased readers this year and a new daily in Detroit The Detroit Daily Press

We won`t pay for content get it!

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Internet may kill Saturday delivery of USPS

Internet may kill Saturday delivery of USPS photo: Washington Post

Another study tells the old media newspapers and networks Internet users don`t pay for content

Last week it was Rupert Murdoch putting up a paywall against Google. This week the Globe and Mail, Global and the National Post want us to pay through Kindle for free news.

A new study from Forrester Research, which polled around 4,700 U.S. consumers, 80% of whom indicated they’re unwilling to pay for access to newspaper and magazine articles and other content. ComputerWorld

It is easy to see how big publishers with lots of brick and mortar will struggle to find a new economical model for their business.

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Fresh round of layoffs signal recession still going strong

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The rise in the stock market has led some to conclude the recession is over

Tell that to the tens of millions of unemployed who will be welcoming new members shortly. Until people feel secure in their incomes, a recovery is a long way off.

Here are a few layoff notices handed out in the last week.

Canadian Manufacturers Association president Jayson Myers says “that even after shedding 200,000 jobs in the past year, a significant number of employers are still planning to lay off workers in the next few months.” CP

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Consumer credit and spending takes nosedive

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Don’t believe the hype – the recession is not over until consumer spending picks up

Thanks to Rob Patterson for the chart and bringing it all back to basics. Without consumer spending there is no economy and no recovery.

His post Consumer Credit Crumbles – No Spending our way out of recession is more realistic than the media and government who want you to believe the worst is over but it is not.

“Credit is being squeezed on both sides,” said economist Sean Maher of Moody’s Economy.com, adding that lending standards at banks remain tight and consumers are pulling back on their debt.

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Mayor warns Detroit is going broke, so are states and other cities

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Detroit Mayor Dave Bing photo:mlive.com

Detroit Mayor Dave Bing photo:mlive.com

10% pay cut needed to avoid receivership in 70 days

Stephen Pate, NJN Network, Charlottetown, Prince Edward Island, Canada, August 12, 2009 with story from

Dave Bing the Mayor of Detroit is warning city unions that unless they take a 10% hair cut Detroit will run out of money in 70 days. The unions are pushing back telling the mayor to borrow on future revenues.

The same story is being played out across the United States as municipal and state governments run out of cash. The recession has hit sales and income tax revenues hard. Ever harder hit have been property tax revenues which have plummeted from falling property valuations and the millions of abandoned homes with no owners to pay tax.

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As jobless claims rise, Wall Street celebrates corporate profit and market gains

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Work for foodDeepening recession means good news only for rich

The number of Americans filing new claims for jobless benefits rose by 30,000 in the week ended July 18, the Labor Department reported Thursday. The total for the week was 554,000.

With nearly 15 million people out of work, according to official figures, and 6.5 million jobs having been eliminated since the recession began in December of 2007, this week’s initial jobless claims report spells increasing social misery for millions of workers.

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