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Canadian dollar up as Greek poll shows support for staying in eurozone

2012-05-28T12:54:56Z

TORONTO - The Canadian dollar was sharply higher Monday morning as risk appetite improved in the wake of polls showing increased support for a party supporting the tough austerity terms that have enabled Greece to receive international bailouts.

The currency rose 0.49 of a cent to 97.62 cents US after Greece’s New Democracy party came first in all six opinion polls published on the weekend, which indicated that Greeks still want their country to keep the euro currency and not revert to the drachma.

The survey results were released three weeks before Greeks return to the polls after May election results that were so splintered they left the country without the ability to form a government.

Markets were unnerved after political parties opposed to the harsh terms of the country’s financial rescue received unexpectedly high support in polls in the May 6 ballot, raising worries that Greece could exit the eurozone. Such a move would extend financial turmoil in the country and spread financial difficulties to other countries using the euro.

A willingness to take on more risk and a lower U.S. dollar sent the July crude contract on the New York Mercantile Exchange up 89 cents to US$91.75 a barrel in electronic trading on the New York Mercantile Exchange.

Copper rose four cents to US$3.48 a pound while bullion ran ahead $7.30 to US$1,576.20 an ounce.

Commodities have been beaten down this month on demand concerns and a U.S. dollar that surged as traders sought safety.

A stronger greenback usually helps depress commodity prices, which are denominated in dollars, as it makes oil and metals more expensive for holders of other currencies.

Traders also looked to a slew of key economic data being released this week, including manufacturing data for China and the United States and gross domestic product figures being released by Ottawa and Washington. The week ends with the release of the U.S. non-farm payrolls report for May.

Although the Greek polls provided hope that Greece will stay in the eurozone, there were still worries about how the government debt crisis is hurting other southern European countries. The interest rate, or yield, for 10-year Spanish government bonds on the secondary market — a key indicator of market confidence — was up 13 basis points to 6.42 per cent.

The spike came as Spanish lender Bankia said it needs a €19 billion bailout, raising questions about how Spain intends to find the money.

A rate of seven per cent is considered unsustainable over the long term and there is concern that Spain might soon be pushed join the ranks of Greece, Ireland and Portugal and seek an international bailout.

TSX, commodities higher as survey raises hopes for Greek pro-bailout parties

2012-05-28T12:28:25Z

TORONTO - The Toronto stock market is higher with sentiment improved by weekend polls indicating Greeks want to stay in the eurozone.

The S&P/TSX composite index gained 51.84 points to 11,628.31.

The Canadian dollar rose 0.46 of a cent to US$97.59 cents US.

U.S. markets were closed for the Memorial Day holiday.

Surveys showed Greece's New Democracy party came first in all six opinion polls published on the weekend. That party backs the tough austerity measures that have made it possible for the country to exist on international bailouts.

The survey results were released three weeks before Greeks return to the polls after May election results proved inconclusive. But markets were unnerved after political parties opposed to the bailout terms received unexpectedly high support, raising worries that Greece could exit the eurozone.

Major Spanish Bank Sees Shares Plummet Over Bailout Talks

2012-05-28T12:26:15Z

MADRID, Spain -- Concern over the bailout plans for troubled Spanish lender Bankia and the country's ability to finance itself sent the nationalized bank's share price plummeting and Spain's borrowing costs soaring Monday.

Bankia's shares were down 21 per cent to C1.23 after trading following the bank's announcement Friday that it will need C19 billion ($23.84 billion) in state aid -- the country's biggest bailout -- to shore itself up against its bad loans. The shares had closed at C1.57 before trading was suspended Friday.

Investor remained nervous over Spain's finances and whether it might soon join the ranks of Greece, Ireland and Portugal and seek an international bailout. The interest rate, or yield, for 10-year bonds on the secondary market -- a key indicator of market confidence in Spain's ability to raise funds -- jumped 17 basis points in morning trade Monday to at 6.46 per cent. A rate of 7 per cent is considered unsustainable in the long run.

In comparison, Germany's bonds, seen as a safe haven investment, were at 1.38 per cent, 508 basis points lower than Spain's.

Trading on Madrid's main Ibex 35 share index was down 1 per cent.

Among the chief concerns surrounding Bankia's request for state aid is just how Spain plans to fund the bailout.

Bankia S.A., a fusion of seven cajas -- or savings banks -- was one of the banks hardest hit by Spain's real estate collapse over the past four years. It is estimated to have C32 billion in toxic assets. The Bank of Spain had already agreed to inject Bankia with C4.5 billion in rescue funds last June.

The size of the bailout figure came as something of a shock on Friday and opposition political parties are demanding the government explain how the bank got into such a state.

Bank of Spain estimates show Spain's banks are sitting on some C180 billion ($233 billion) in assets that could cause them losses.

The government fears the cost of rescuing the most vulnerable banks could overwhelm its own finances, which are already strained by a second recession in three years and an unemployment rate of nearly 25 per cent.

Spain has long denied it will follow Greece, Ireland and Portugal and seek international help but the conservative government of Prime Minister Mariano Rajoy has called on the European Central Bank must do more to alleviate its exorbitantly high borrowing costs.

BlackBerry Maker To Cut Thousands More Jobs

2012-05-28T12:22:13Z

Embattled BlackBerry maker Research In Motion is planning to slash thousands of jobs worldwide as it seeks to restructure in the wake of losses and shrinking market share, several news sources report.

According to a report in the Globe and Mail, RIM is planning to slash at least 2,000 jobs. But an unnamed source close to the company told Reuters that number could be as high as 6,000.

That’s on top of a round of layoffs last summer that saw 2,000 people lose their jobs, and it doesn’t take into account “stealth” layoffs that have reportedly been taking place at the company for some time. Junior staff have been receiving layoff notices in what has become known internally as “Goodbye Thursdays,” because the layoffs typically take place on that day, Reuters reports.

If the worst-case number is correct, RIM’s staff could be reduced to around 10,000 worldwide, down from around 18,500 as recently as last year.

The layoffs are likely to hit southwestern Ontario the hardest, as RIM’s employment is most intensely concentrated near its headquarters in Waterloo, Ontario.

The company has seen its market share slide dramatically over the past two years, as Apple’s iPhone and smartphones running the Android operating system have come to dominate the market.

The company’s troubles, which included posting a loss of 24 cents per share in the latest quarter, prompted the departure of the company’s co-CEOS, Jim Balsillie and Mike Lazaridis. The new CEO, Thorsten Heins, said in a conference call earlier this year that he is looking to eliminate $1 billion of spending, which many took to mean more layoffs would be coming.

Although RIM remains strong in some developing countries, such as India, the company has been steadily losing market share around the world. Recent research cited by the Globe and Mail indicate the company now accounts for fewer than 7 per cent of global smartphone shipments, down from a market-leading position just a few years ago.

The company recently released details about its new BlackBerry 10, which is expected to hit the market later this year. But many analysts say it’s too late for the company to bounce back. Pipe Jaffray analyst Gene Munster told CNBC in April that RIM is going “out of business.”

Buyout rumours have swirled around the company, most recently a bizarre rumour about a $3.5-billion bid from Microsoft. Analysts, however, are increasingly saying that RIM is becoming an unattractive takeover target.

“There are not that many buyers left” for RIM, Recon Analytics analyst Roger Entner said, as quoted at the Toronto Star. “BlackBerry is running out of sugar daddies.”

Shares of RIM are hovering around $11, down from a peak of $140 in 2008.

Oil rises near US$92 as polls suggest pro-austerity parties may win Greek vote

2012-05-28T12:19:18Z

Oil rose to near US$92 a barrel Monday as Greek polls suggested pro-austerity parties might win elections next month, raising the likelihood the country will stay in the euro common currency.

By early afternoon in Europe, benchmark West Texas Intermediate crude for July delivery was up 97 cents to US$91.83 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 20 cents to settle at $90.86 in New York on Friday.

In London, Brent crude for July delivery was up 96 cents at US$107.79 a barrel on the ICE Futures exchange.

Opinion polls published Sunday indicated two parties that favour implementing Greece's bailout programs may be able to form a coalition government. Greek politicians were unable to form a government after an election earlier this month, requiring new elections in June.

Crude has dropped from US$106 the first week of May amid fears a chaotic Greek exit from the euro would deepen economic malaise and weaken crude demand in Europe.

Easing tensions over Iran's nuclear program amid talks between Iran and six world powers have also helped lower oil prices, but analysts warned that it is too early to dismiss the risk factors on that front.

Iran and the international powers "remain as far apart as ever," according to energy consultants KBC in London. "So the situation remains clouded and the negotiators' position a tricky one. Inevitably the issue will run right down to the wire."

Some analysts expect oil will linger near current prices until after the Greek vote, OPEC's quarterly meeting and the next round of Iran nuclear discussions in mid-June.

"Both European debt and Iranian nuclear issues are on something of a hold for another month," Barclays said in a report. "We would not expect the oil market to gain much of a sustained sense of direction" before those events.

Markets are in the U.S. were closed Monday for the Memorial Day holiday.

In other energy trading, heating oil was up 1.53 cents at US$2.8482 a U.S. gallon (3.79 litres) and gasoline futures added 2.39 cents to US$2.8556 per gallon. Natural gas fell 7.1 cents to US$2.556 per 1,000 cubic feet.

(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)

Will Aging Baby Boomers Dominate Tuesday's Census Data?

2012-05-28T08:30:07Z

OTTAWA - The next set of data from the 2011 census shouldn't hold many surprises for anyone in Canada — but it no doubt will.

On Tuesday, Canadians will discover how old their society has grown. It will be apparent in black and white how fast the baby boomers are entering their golden years, and how quickly the population of seniors is overtaking the number of youngsters.

It's the second tranche in a series from Statistics Canada's 2011 census, a full count of the Canadian population done every five years.

Experts say they expect to see evidence that the number of people in Canada over the age of 65 will soon outnumber those under the age of 15 — the result of a surging senior population and a steady decline in the ranks of children.

None of it will come as a shock to demographers, who have watched the baby-boom bubble grow older over time as the national birth rate slowly drops.

But analysts say policy makers and businesses alike have, until only very recently, largely ignored the challenges posed by an aging society.

Now, as the data piles up, reality is dawning at every level of government that the effects of aging are pervasive, reaching into almost every area of policy making, and — by extension — into the daily lives of most people in Canada, young and old alike.

"We have to think about it everywhere, in everything we do, including government, including business," said Lynn McDonald, director of the Institute for Life Course and Aging at the University of Toronto.

From the kinds of sidewalks that municipalities build to the scope of national social programs, aging has begun to dominate every corner of decision-making. And nothing illustrates the enormous impact of aging on policy making better than old age security.

With the stroke of a pen in the last budget, the federal government essentially raised the age of retirement — and immediately threw companies, policy makers and normal people saving for retirement into a scramble.

By raising the age of eligibility by two years, Ottawa has knocked personal financial plans off kilter, prompted middle-aged people to rethink their career paths, started a policy review in many different government departments with benefit programs tied to OAS, and launched fiscal negotiations with the provinces.

The change will also force financial institutions and institutional investors back to the drawing board to reconfigure pensions and long-term investment strategies, since anything now tied to age 65 is up in the air.

It will take years to work out all the cascading changes, said Malcolm Hamilton, a pension consultant with Mercer Human Resource Consulting Ltd.

"It has created a bit of a nightmare from a planning perspective. Unless you were really confident in your ability to plan, I think this is a good time to say, 'Let's just sort of continue business as usual for a few years in the hopes that some of this settles down.'"

Turmoil aside, the move has also helped set federal finances on a firm fiscal footing for decades to come, giving Ottawa more room for spending elsewhere in future decades.

But even though governments have known for 30 years that the demographic bulge would be retiring now, the tough policy decisions have yet to come, said economist Chris Ragan, a professor at McGill University in Montreal.

In a recent analysis, Ragan predicted that rising age-related costs associated with elderly benefits — especially health care — would mean an extra $56 billion a year in public expense, in today's terms.

While Ottawa has made a start in tackling elderly benefits, there has been scant attention paid to the effects of aging on caregiving, tax policy, health care delivery and labour force participation, Ragan notes.

Indeed, the next tranche of census data will show clearly how the size of the workforce is changing as society ages and the birth rate stagnates.

A smaller workforce in the future will mean the continual advances in standard of living that Canadians expect will be a thing of the past — unless major changes are made in the way companies and workers do business.

It's slowly dawning on baby boomers that there are so many outstanding issues in the public sector and in the workplace that governments won't be able to keep up, said U of T's McDonald.

"The baby boomers, and up-and-coming older people, are going to have to care for themselves."

Financially, they will have to save more than in generations past, and learn to navigate financial markets, since that's where their savings are.

And in health care, they are going to have to learn about managing chronic illness, dementia and improving their diets, since the health care system as it exists today is more focused on acute care.

Women in particular are going to have to figure out ways to handle mounting care-giving responsibilities even as they stay in the workforce longer, McDonald said.

The census will serve to confirm the long-term trends, clarify the exact configuration of the workforce and retirees, and — she hopes — prompt a national conversation on changes that need to be made to accommodate the aging population.

"Finally people are going, 'Oh my goodness, we have more older people than children under 15. What a surprise!'" she said sarcastically.

"It's an enormous issue, and an enormous task."

Here's a look at all the highlights:

Tories Poised To End CP Strike

2012-05-28T08:05:12Z

OTTAWA - The Harper government is expected to introduce back-to-work legislation today to end the strike by 4,800 Canadian Pacific Railway workers.

Labour Minister Lisa Raitt, Agriculture Minister Gerry Ritz and Industry Minister Christian Paradis are to hold a news conference at 1:45 p.m. ET.

Mediated contract talks between the railway and the Teamsters union representing locomotive engineers and conductors collapsed Sunday. Raitt made it clear earlier in the day that she wouldn't wait much longer for a negotiated settlement.

She gave notice of intention to intervene shortly after Wednesday morning's walkout halted the CP's freight service across Canada, meaning she can table the bill as early as today and the strikers can be ordered back to work later this week.

As she did with previous labour disputes at Air Canada and Canada Post, Raitt cited the damage to Canada's economic recovery for quickly legislating an end to work stoppages.

The minister has estimated a prolonged strike by CP Rail works could cost the Canadian economy $540 million a week.

Pensions, as well as work rules and fatigue management have been major points of contention in the bargaining process.

Asian stock markets muted amid Greece uncertainty, ahead of Wall Street holiday

2012-05-28T03:30:12Z

BANGKOK - Asian stock markets were muted Monday amid continuing uncertainty about Greece's future in the euro currency union and ahead of a holiday in the U.S.

The likelihood of Greece leaving the euro has been growing steadily since early May, when political parties opposed to the austere terms of the country's financial rescue received unexpectedly high support.

Surveys over the weekend showed that Greeks, while angry after more than two years of austerity measures that have seen salaries and pensions cut and new taxes imposed, still prefer Greece to keep the euro currency and not revert back to the drachma.

Still, the May election results were so splintered that it left the country without a coalition government. Another election has been set for June 17.

"With less than three weeks to the Greek elections, uncertainty remains whether a pro-bailout coalition can be formed," analysts at Credit Agricole CIB in Hong Kong said in an email.

After a higher open, Japan's Nikkei 225 index fell marginally to 8,579.03.

Hong Kong's Hang Seng was down less than 0.1 per cent to 18,703.01. But Australia's S&P/ASX 200 rose 0.5 per cent to 4,050.60 as traders scooped up bargains among resource shares that have underwent recent selloffs.

South Korean markets were closed for a public holiday. Wall Street will be closed Monday for Memorial Day, which typically results in subdued stock trading globally.

Debt-mired Greece has been kept solvent since May 2010 through loans the European Union and the International Monetary Fund.

A first bailout package of 110 billion euros ($138 billion) was agreed in May 2010 and a second, 130 billion euros deal was approved in March 2012.

A separate deal with private creditors earlier this year allowed Greece to write off nearly 107 billion euros of the country's 368 billion euro debt.

Later in the week, the U.S. government will release employment data for May.

China will release data on manufacturing for May. A private survey last week showed activity weakened further in May.

Benchmark oil for July delivery was up 98 cents to $91.64 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 20 cents to settle at $90.86 in New York on Friday.

In currencies, the euro rose to $1.2589 from $1.2518 late Friday in New York. The dollar fell to 79.40 yen from 79.66 yen.

'Men in Black 3' takes down 'Avengers' with $55M; superheroes top $500 million domestically

2012-05-27T18:35:56Z

LOS ANGELES, Calif. - The suits have knocked off the superheroes at the box office.

Will Smith and Tommy Lee Jones' sequel "Men in Black 3" debuted as the No. 1 movie over Memorial Day weekend with $55 million domestically from Friday to Sunday.

That bumps Disney's "The Avengers" into second-place after three blockbuster weekends on top for the superhero sensation. "The Avengers" took in $37 million over the three days to push its domestic total to $514 million and become only the fourth movie ever to top half a billion dollars.

Distributor Sony estimates that by the end of the four-day holiday weekend Monday, "Men in Black 3" will have pulled in $70 million domestically and $202 million worldwide.

Universal's "Battleship" was No. 3 in its second weekend with $10.8 million, raising its domestic earnings to $44.3 million. Paramount's comedy "The Dictator" took in $9.6 million to finish fourth in its second weekend and lift its total to $41.5 million.

The Warner Bros. horror tale "Chornobyl Diaries" opened at No. 5 with $8 million.

"Men in Black 3" launched with a bit more cash than its two predecessors, which both had opening weekends of just above $50 million.

But the original "Men in Black" debuted in 1997 and "Men in Black II" premiered in 2002, when admission prices were much lower than today's. That means "Men in Black 3" sold fewer tickets than the previous installments.

"Men in Black 3" reunites Smith's Agent J and Jones' Agent K as they battle a new alien menace that travels four decades back in time to do away with the younger Agent K (Josh Brolin).

Among the movie's box-office highlights overseas were debuts of $19.5 million in China, $18.9 million in Russia, $8.5 million in South Korea and $8 million in Japan.

Distributor Disney estimates that "The Avengers" will take in $47.1 million for the four-day holiday weekend, lifting the film's domestic total to $523.8 million. That will put "The Avengers" within $10 million of "The Dark Knight," the No. 3 movie on the all-time revenue chart with $533.3 million domestically.

"The Avengers" will pass "The Dark Knight" in the coming week, leaving only two movies above it: "Avatar" at $760.5 million and "Titanic" at $658.5 million.

With $26.3 million overseas, "The Avengers" raised its international total to $781.6 million, and its worldwide revenues to just under $1.3 billion. "The Avengers" will soon overtake "Harry Potter and the Deathly Hallows: Part 2" at $1.33 billion to become the No. 3 film on the global revenue list, again behind "Avatar" at $2.8 billion and "Titanic" at $2.2 billion.

Overall domestic receipts for the four-day Memorial Day weekend will come in well behind last year's record of $276 million. Paul Dergarabedian, an analyst for box-office tracker Hollywood.com, estimated that four-day revenues this time will total $195 million to $200 million, about 30 per cent below Memorial Day weekend a year ago, when "The Hangover Part II" delivered a $100 million-plus debut.

Hollywood remains on a record pace this year, with domestic revenue so far at $4.24 billion, up 12.5 per cent over 2011 receipts, according to Hollywood.com.

But "The Avengers" and now "Men in Black 3" have been the only notable successes for the summer season so far, with big releases such as "Dark Shadows" and "Battleship" fizzling on the domestic front.

"We really need to get going if we don't want to have play catch-up every weekend through the summer," Dergarabedian said. "Some of these summer movies are just not doing the business people had hoped for in North America."

Ottawa To Introduce Back-To-Work Legislation After CP Talks Stall

2012-05-27T18:21:02Z

OTTAWA - The Harper government is expected to introduce back-to-work legislation on Monday after negotiations between Canadian Pacific Railway Ltd and its striking locomotive engineers and conductors fell apart over the weekend.

CP Rail and the union representing 4,800 workers who have been on strike since Wednesday, confirmed that talks broke off Sunday afternoon with little hope of resumption.

"With the mediator withdrawing and the federal minister releasing the parties this afternoon, the legislative process can now commence," said Ed Greenberg, a spokesman for CP Rail.

Earlier in the day, Labour Minister Lisa Raitt said she still hoped the parties could agree on a process that would end the strike, but made clear she would not wait long.

Pensions, as well as work rules and fatigue management remained major points of contention in the bargaining process.

Teamsters Canada Rail Conference, which represents workers at CP (TSX:CPR) as well as its chief competitor Canadian National Railway (TSX:CN) among others, blamed the rail company for the stalled talks.

"Unfortunately, the company negotiated in bad faith despite Minister Raitt's wishes," said Doug Finnson, the union's vice-president.

"Canadian Pacific was hiding behind the federal government since the very beginning of the process."

But CP Rail said it was only fair that the union agreed to a deal similar to the one the they have in place with CP's primary competitor _ Canadian National.

"The real issue is the reluctance of the Teamsters to agree to pension provisions comparable to those provided to employees represented by the Teamsters at other Canadian railways," Greenberg said in an interview.

"We were simply seeking the same agreement to insure CP can remain competitive."

Raitt said earlier on Sunday that government officials have been talking with impacted industries, farmers and the mining sector, and the reports are that the strike is "starting to actually affect their operations."

"That's the kind of national economic significance we are looking for in order to intervene," she told CTV's Question Period.

"What we're talking about is the prolonged effect of a strike, about what happens for seven days, eight days, nine days, and that's when you start seeing some really significant effects on the economy."

The minister gave notice of intention to intervene shortly after Wednesday morning's walkout halted the company's freight train service across the country, meaning she can table the bill as early as Monday and strikers can be ordered back to work later in the week.

As she did with two previous labour disputes — affecting Air Canada and Canada Post — Raitt cited the damage to Canada's fragile economic recovery for quickly bringing the strikes to an end. She has estimated that a prolonged strike by CP Rail works could cost the Canadian economy an estimated $540 million a week.

Labour issues such as the back-to-work legislation, along with growing resistance to new employment insurance rules unveiled last week, are likely to dominate the agenda in the House, which resumes Monday after a week's recess.

The EI changes would establish a sliding scale on what constitutes "suitable employment" where individuals who most use the program must be the most flexible in what jobs they are willing to accept.

New Democrats and the Liberals have called morning news conferences to lay out their strategies going forward.

"EI is definitely something where we've been asking for greater clarity. There's still a lot of questions about who is going to make the decision about suitable employment and what kind of criteria they use," said Liberal House Leader Marc Garneau.

It's still unclear whether the rules, which were hastily unveiled last week, are open to changes, especially since the premiers in the most affection region of Atlantic Canada say they were not consulted by Ottawa.

A spokesperson for Human Resources Minister Diane Finley said Sunday the minister had talked to her provincial counterparts and with industry representatives since the announcement, but stopped short of saying she was ready to compromise.

"She will continue to listen to their comments as the government moves forward with implementing various aspects of the new approach," said Alyson Queen, the minister's director of communications, in an email response.

But she added: "The changes we have introduced do take into account that there will be differences throughout the country."

While the back-to-work bill is the most urgent issue facing the House, the EI changes have the potential for the most profound political impact on the government long term.

Newfoundland Premier Kathy Dunderdale warns the Conservatives could face a political backlash if they proceed with the changes as they were unveiled Thursday.

Prince Edward Island Premier Robert Ghiz has said that Ottawa failed to take into account the nature of the economy in the region.

"Our three largest industries are still agriculture, fisheries and tourism," he pointed out. "We're going to need seasonal workers ... and if they start to force out seasonal workers, well then, that's going to hurt our primary industries in the province in terms of getting their products processed to go to market."

The region has shown a willingness to vote its displeasure in the past, and even though the next federal election is more the three years off, it has also demonstrated it has a long memory.

In 1997, the Liberals lost seats throughout the Atlantic Canada, including cabinet ministers David Dingwall and Doug Young, after tightening the unemployment system as part of austerity measures.

More recently, the Conservatives struggled in the region for years after Harper in 2002 referred to the "defeatist attitude" in Atlantic Canada.

The Conservatives currently hold 14 out of the 32 seats in the four east-coast provinces, which have by far the biggest proportion of frequent EI users.

Income Inequality Visualized

2012-05-27T16:03:59Z

This feature was produced by Jeff Fraser, a student in Ryerson University's School of Journalism, in partnership with The Huffington Post Canada.

Statistics suggest that income inequality is growing rapidly in Canada -- twice as fast as in the United States. Here's an infographic to help you understand how large the problem is.

Mulcair Has Remortgaged His Home 11 Times Since Early 1980s

2012-05-27T16:03:06Z

New Democratic Party leader Tom Mulcair and his wife have repeatedly refinanced their home west of Montreal, gradually increasing the debt on the property over a series of 11 mortgages, land records show.

Canada's Wage Gap: Just How Bad Is It?

2012-05-27T15:59:33Z

This feature was produced by Jeff Fraser, a student in Ryerson University's School of Journalism, in partnership with The Huffington Post Canada.

In the past year the Occupy movement and its rallying cry of “we are the 99 per cent” brought into the limelight the growing gap between the richest and poorest in the United States and the world. In December, columnist Charles M. Blow wrote in the New York Times that income inequality could be “the new global warming.”

Over the last 30 years, the distance between the richest and poorest Canadians has widened considerably. Using different income definitions will slightly change who belongs to Canada’s “one per cent” and “99 per cent,” but the basic story stays the same across a wide breadth of statistics: the richest Canadians make disproportionately more than the poorest, and, more importantly, in the last three decades income for the richest Canadians has increased far faster than it has for the poorest.

INFOGRAPHIC: AN INCOME INEQUALITY PRIMER

Cornell University economist Robert H. Frank says inequality isn’t about “insecurity about not having what others have.”

“What you need to spend to achieve basic goals depends, in a concrete way, on what others spend,” he says. “If you go for a job interview, you want to look good – but that means looking better than the other people who want the same job you do. If they spend more on suits, you’re less likely to get the callback.”

Frank points to education as the clearest example of inequality’s concrete consequences. Elementary and secondary schools with the best quality of education are often concentrated in high-income neighbourhoods. As the income gap widens and rich neighbourhoods become unaffordable for middle- and low-income families, good schools become less accessible.

More at Mind The Gap: How The Rich Are Driving Up Home Prices For Everyone

HOW TO MEASURE ‘INCOME’

There are many different ways to measure how much money people make. The primary source for studying Canadian incomes is Statistics Canada’s Survey of Labour and Income Dynamics, which shows how earnings (employment income), market income (employment income plus private pensions, dividends, rental income and home equity), and after-tax income (market income and government supports minus income taxes) are distributed among individuals and economic families.

As of 2009, the average Canadian family had an after-tax income of $60,000, an increase of 16 per cent from the Canadian average of $52,000 in 1980. By contrast, the average income in the highest-earning 10 per cent of families saw a much larger increase of 34 per cent, and the bottom 10 per cent saw an increase of only 11 per cent. In other words, incomes have increased across the board, but the top 10 per cent have pulled ahead of the pack.

PHOTOS: PROVINCES WITH THE WIDEST INCOME GAP

The gap is more exaggerated if we look at only employment earnings for working-age Canadians. The average income that families in the bottom 20 per cent make from employment has decreased by 60 per cent since 1980, whereas the average earnings in the top 10 per cent has grown by 45 per cent.

COMPARING CANADA WITH THE WORLD

Economists often use a number called the Gini coefficient to summarize how much income inequality a country has. A simple way of understanding the Gini coefficient is to look at its maximum and minimum values: a Gini of 0 is perfect equality, meaning everyone in the population takes home an equal share of the national income; a Gini of 1 is perfect inequality, in which only one person in the population takes home 100 per cent of the national income.

In a report released last year by the Organization for Economic Co-operation and Development, Canada’s Gini was estimated to be 0.32 – a middling value compared to 0.37 in the United States, 0.36 in the United Kingdom, 0.29 in France and 0.25 in Denmark. More telling is that in the past decade, Canada’s Gini has risen faster than all but five of the OECD’s 34 countries, climbing at almost double the rate of the United States.

PHOTOS: COUNTRIES WITH THE LARGEST INCOME GAP

To fully understand the income situation in a country, we also have to look at how easy it is for earners to move from one income bracket to another. The most comprehensive study of economic mobility in Canada was done in 2006 by Miles Corak, a researcher at the University of Ottawa, who used administrative data dating back to the 1960s to compare the earnings of a group of Canadian men to the earnings of their fathers. He found that the income bracket the men were born into had relatively little effect on how much they earned, compared to other Western countries.

For instance, a man born to a father who earns in the bottom 10 per cent has a 38 per cent chance of earning above the Canadian average, and a 16 per cent chance of staying at the bottom. By contrast, if you were born in the bottom 10 per cent in the much less mobile U.S., your likelihood of making it into the top half of the earnings distribution is only 30 per cent, and you have a 22 per cent chance of staying at the bottom.

So while the income gap is growing in Canada, it is still comparatively easy to climb the ladder. In fact, Canada’s mobility is on par with Denmark and Norway, which are among the most economically mobile countries in the OECD.

WHY INEQUALITY MATTERS

Using data from 23 countries, British economist Richard Wilkinson has linked inequality to 10 social indicators like life expectancy, teenage births, obesity, homicides, imprisonment and infant mortality rates. Wilkinson says that as the income gap widens, problems related to social status increase – in particular, the “things that are more common at the bottom of the social ladder,” like health problems and crime.

“In a way, the whole picture is very simple,” he says. “All we’re saying is that these problems that people know are related to social status get worse when social status differentiation increases."

Research has shown that increasing inequality leads to income enclaves. In a 2007 study, University of Toronto researcher David Hulchanski found that he could draw distinct borders around neighbourhoods in Toronto that had low, middle and high income. The fraction of Toronto made up of low-income neighbourhoods grew from 19 per cent in 1970 to more than half of Toronto’s total area in 2005, while middle-income neighbourhoods shrank from 66 per cent to 29 per cent.

PHOTOS: WHICH CITIES ARE SEEING THE GREATEST GHETTOIZATION?

Armine Yalnizyan, Senior Economist at the Canadian Centre for Policy Alternatives and a primary researcher on the CCPA’s “Growing Gap” project, stresses the costs of neighbourhood income disparity.

“Housing takes the biggest bite out of our incomes. People without a lot of money end up living in cheaper places, and cheaper places are geographically specific – they don’t have good transit, good schools, good public spaces, or good retail,” she says. “That has consequences for how our kids get raised.”

COUNTRIES WITH THE LARGEST INCOME GAP

PROVINCES WITH THE WIDEST INCOME GAP

WHICH CITIES ARE SEEING THE GREATEST GHETTOIZATION?

Traders look to slew of economic data as distraction from eurozone uncertainty

2012-05-27T10:00:13Z

TORONTO - Expectations for the Toronto stock market are fairly tame this week as traders continue to labour under the growing possibility of a Greek exit from the eurozone and uncertainty surrounding the knock-on effects such a move would have on other eurozone countries and the global economy.

But at least investors will have the distraction of a variety of top-drawer economic data that will likely reinforce the view that aside from the eurozone debt crisis, things don't look so bad in much of the rest of the world.

"We’re right in the thick of things and I think we need to not get emotionally caught up in where we are," said Paul Taylor, chief investment officer at BMO Harris Private Banking.

"If you get outside of the peripheral European countries, the debt loads, the deficit levels I would argue are quite manageable and as you look at China, yes, you may have a slowing, but the slowing was still, I would characterize, not as a hard landing (and) the broad U.S. indicators are reflective of a moderate growth economy, not a weak outlook."

This week, traders will take in the latest growth figures for both Canada and the U.S. and the week ends with the release of the May U.S. non-farm payrolls report.

Expectations continue to be muted for the U.S. economy.

"We have 140,000 pencilled in, said CIBC World Markets senior economist Peter Buchanan.

"So we’re a bit below consensus but not really enough to have a dramatic effect on the market."

That is a fairly anaemic showing after job gains in the neighbourhood of 200,000 last winter and the slowdown will be reflected in the latest reading on U.S. economic growth.

The first revision of U.S. first quarter gross domestic product performance is released on Thursday. The original reading came in at 2.2 per cent growth but Buchanan thinks it quite possible the revised look could show expansion at a slower pace.

"That could stir some sort of deja vu concerns, the fact that things are sort of evolving the way they did a year ago when people were very optimistic to start the year, then we had a big downward revision to GDP there," he said.

Traders will also get the first look at Canadian economic performance for the first quarter. Statistics Canada is expected to announce Friday that GDP grew 0.3 per cent in March, reversing a 0.2 per cent dip the previous month, translating into a weak showing of 1.7 per cent annualized growth for the period.

The other major bit of data for the week is the U.S. Institute for Supply Management's manufacturing index for May.

Buchanan expects the sector to show continued expansion but at a slower rate with the index registering 53.8, down from April's surprise increase to 54.8.

Meanwhile, caution will be the watchword on markets as the future of the eurozone creates huge amounts of uncertainty.

"There is a frustration and an impatience that is sort of palpable in the markets where we in North America are becoming fatigued by European concerns that continue to linger without a clear sense of resolution or direction," said BMO’s Taylor.

"And that is wearing on markets."

The TSX gained 296 points or 2.6 per cent last week after three weeks of losses as traders moved in to buy up stocks that have been beaten down in value this month. But even so, the Toronto market has shed about six per cent so far in May, reflecting a growing possibility that Greece will leave the euro. Political parties opposed to the terms of the country’s financial rescue made huge gains in an otherwise inconclusive election and the worry is that they will further improve their showing in the next election June 17.

Taylor said it’s vital that between now and election day that it is spelled in unmistakable terms that the election is a referendum on whether the country continues in the eurozone monetary union.

"It should be stated very, very clearly to the Greeks that this is the reality," he said.

"It’s surprising it hasn’t been laid out as crisply as that to Greek voters."

Taylor thinks that markets will be stuck in a rut between now and the election in the absence of anything concrete.

"I honestly don’t think between now and June 17 we are going to get anything definitive," he said.

"I think they will lay it out for Greek voters a little more clearly and on the 17th we get folks backing away from the ledge and we buy ourselves more time. From there we go forward with maybe a mildly positive bias but I think we’re still stuck in a longer term trading range."

Someone's A Hot Topic For Western Leaders

2012-05-27T08:00:12Z

EDMONTON - The environment, energy and federal NDP Leader Tom Mulcair are on the agenda Tuesday when leaders of the western provinces and territories get together.

"There is going to be an emphasis on environmental regulation," said Alberta Premier Alison Redford, who will host the meeting in Edmonton.

"British Columbia wants to talk about families and community development and (Saskatchewan) Premier (Brad) Wall and I want to continue to advance the Canadian energy strategy agenda."

Redford didn't refer to Mulcair by name, but said: "My expectation is we'll probably speak a little bit about the view that other national leaders have taken of western premiers in the past month or so, so it should be an interesting discussion."

Mulcair made headlines recently by saying strong growth in the petroleum industry, particularly in Alberta's oilsands, has led to a higher dollar which is hammering manufacturers in Central Canada.

Premiers Wall, Redford, and B.C.'s Christy Clark disparaged Mulcair's remarks as divisive and ill-informed. He in turn dismissed the premiers as "messengers" of Prime Minister Stephen Harper.

Redford said her goal is not to divide, but to unite under what she terms a Canadian energy strategy.

The plan would be for all provinces and territories to work together — and with the federal government — to advance development of Canada's energy industry and address environmental protection.

It would include, for example, working to improve rules and regulations, collective lobbying in the global marketplace and shared responsibility on trans-boundary projects such as pipelines.

Harper has said he's intrigued by the idea, and Natural Resources Minister Joe Oliver said while in Edmonton on Friday that he supports "a collaborative approach to energy development."

Shortly after Tuesday's meeting, Mulcair himself will be in Alberta. The NDP leader has confirmed he will visit the province for two days starting Wednesday. The plan is to include a trip to the oilsands.

Redford said she will meet with him if time allows.

"It'll depend on his schedule," she said.

"I've got commitments that day outside of the province. If I can't meet with him, the deputy premier (Thomas Lukaszuk) will meet with him.

"I was pleased to see that he is going to (the oilsands area of) Fort McMurray," she added. "One of the things that I did suggest is that he should inform himself of the issues."

In fact, Redford said earlier this month she wouldn't meet with Mulcair unless he had educated himself on the issue.

She suggested Mulcair should not expect the same treatment accorded to James Cameron. The famed Hollywood director and oilsands critic paid his own visit to the region in the fall of 2010 and debated the issues in a private meeting with former premier Ed Stelmach.

Cameron said Stelmach tried to sway his opinion by pulling out a study refuting reports that oilsands pollution was leading to higher cancer rates in the region.

Redford said there won't be a repeat.

"I think back to others that have come to Alberta after they have made public pronouncements (on the oilsands)," said Redford.

"From my perspective I don't think anyone should expect that we're going to get into a situation where anyone representing the government of Alberta is going to sit in a meeting room and try to lobby Mr. Mulcair to change his mind."

Mulcair's comments have stirred a national debate on the economic impacts of the oilsands and the energy industry in general.

A Canadian Press Harris-Decima poll released Friday suggested Canadians are split on whether Mulcair is correct in his view of the oilsands and their effect on the economy.

Alberta NDP Leader Brian Mason is a promoter of the oilsands, but says more measured development of the resource would help the environment. He also says the province deserves a larger take of the royalties.

Non-renewable resource revenue is forecast to hit $11.2 billion in Alberta's current budget. Half of that profit comes from the oilsands.

Mason said it's sad the western premiers are responding to Mulcair's comments the way they are.

"They're trying to suggest that anybody that has criticism of policies with respect to the oilsands is un-Albertan, un-Canadian. It's kind of economic McCarthyism," said Mason.

"While I don't agree with exactly everything that Thomas Mulcair said, I think that it's an important national debate as well as an important Alberta debate. And I'm not going to support anybody that wants to curtail voices in that debate."