This morning Statistics Canada issued its first report on the overall state of the economy since the Fort McMurray wildfires. It revealed that GDP fell by 0.6 percent in the month of May, a slightly worse outcome than the consensus of analysts' expectations. This is the worst single monthly performance since the depths of the financial crisis, back in 2009. After a strong start in January, GDP has fallen in three of the last four months.
Unsurprisingly, the decline was led by the non-conventional oil sector, which is centered on Fort Mac. Output there plunged by 22 percent in the month, a number that surprises only in the sense that some of the more apocalyptic reportage at the time suggested that the entire sector was basically shut down. As with the stories that seemed to imply that the whole city had been burned to the ground, this was evidently an exaggeration. There was also a decline in manufacturing output, but this too reflected the impact of the fire, as oil refining is classified as a manufacturing activity.
What next? June likely saw some recovery in oil sands output, but not to pre-wildfire levels, so it seems certain that even if GDP rebounds somewhat for the month, it will not recoup all of May's losses. As a result, the quarterly GDP data for Q2 now seem certain to see a decline, which will no doubt see the R-word (for recession) popping up in newspaper headlines again. For Q3 and beyond, barring some further one-off shock, it seems likely that growth will resume its gentle upward trend. The reconstruction effort now underway at Fort Mac will provide a small boost to the overall picture: housing agency CMHC recently described the coming building boom there as unprecedented, but as it's a city of 80,000 in a country with a population of 36 million, the impact should not be overstated.
The really significant takeaway from the May GDP data, and from the economy's sluggish performance since February, is not really about oil per se. Rather, what we are continuing to discover, month after month, is that the Bank of Canada's hopes of seeing a rebalancing of the economy away from resource extraction are looking increasingly forlorn. The manufacturing sector, in particular, is proving itself largely incapable of responding to the supposed advantages created by the lower exchange rate -- no surprise to those of us who think that the decline in the sector is inexorable rather than merely cyclical.
All of this leaves the Bank of Canada stuck on the sidelines, even as evidence grows that its low interest rate policy is producing a housing bubble that is starting to spread beyond just Toronto and Vancouver, An excitable journalist recently wrote a column about why "low interest rates may last for the rest of your life". It's certainly starting to feel that way, and that's not a good thing.
Friday, 29 July 2016
Friday, 22 July 2016
Told you so (2)
Apologies for another post about Brexit, but as the damage mounts up, I feel I'm helping to vindicate the huge number of economists who warned that a vote to leave would cause immense damage to the UK economy. They were branded as fear-mongers by the Leave campaign, but it's already becoming clear that they were right.
Today's evidence comes in the form of the Markit PMI (purchasing managers index), which is usually a good leading indicator of how the economy is going to perform. Post-referendum the PMI has plunged to the lowest level seen since the worst days of the financial crisis. Markit's chief economist says it's possible this is just a one-month drop, but that doesn't seem to be the way to bet. Business and consumer confidence surveys are pointing in the same direction, and retailers are reporting diminished footfall in the weeks since the vote.
The most ridiculous comment comes from Andrew Lilico, a Brexit supporter who believes that the long-term impact on the UK economy will be positive. Well, maybe, but it's his comment on today's data that are worthy of remark. He claims he always expected a short-term reaction, and those who voted to leave "expected a short-term slowdown too".
Er, no. I was in the UK a week before the vote. I spoke to a lot of Brexit supporters in person and heard a lot more on TV and radio. The one thing they were all counting on in the event of a Leave vote was that immigrants would start packing their bags and quitting Britain the very next day. That was never going to happen, but that thinly-veiled promise/threat was what won the day for the Leave campaign. Well, that and decrying as fear-mongering all of the economists' warnings that are now swiftly coming true.
Today's evidence comes in the form of the Markit PMI (purchasing managers index), which is usually a good leading indicator of how the economy is going to perform. Post-referendum the PMI has plunged to the lowest level seen since the worst days of the financial crisis. Markit's chief economist says it's possible this is just a one-month drop, but that doesn't seem to be the way to bet. Business and consumer confidence surveys are pointing in the same direction, and retailers are reporting diminished footfall in the weeks since the vote.
The most ridiculous comment comes from Andrew Lilico, a Brexit supporter who believes that the long-term impact on the UK economy will be positive. Well, maybe, but it's his comment on today's data that are worthy of remark. He claims he always expected a short-term reaction, and those who voted to leave "expected a short-term slowdown too".
Er, no. I was in the UK a week before the vote. I spoke to a lot of Brexit supporters in person and heard a lot more on TV and radio. The one thing they were all counting on in the event of a Leave vote was that immigrants would start packing their bags and quitting Britain the very next day. That was never going to happen, but that thinly-veiled promise/threat was what won the day for the Leave campaign. Well, that and decrying as fear-mongering all of the economists' warnings that are now swiftly coming true.
Monday, 18 July 2016
Told you so
There's not much one can add to this, really. Prior to the Brexit referendum, just about every economist in the UK and elsewhere warned that a vote to leave the EU would very likely push the economy into recession. The Leave side dismissed this as fear-mongering, and the unlovely Michael Gove snickered that "people have had enough of experts", which is quite a statement coming from an Oxford man.
Now, as the linked article indicates, those "experts" are starting to quantify the damage, and it's not a pretty picture. Growth forecasts for the near-term are being slashed: GDP was expected to expand 2.7 percent next year, but post-referendum that has been cut to a mere 0.4 percent. The report even suggests that the UK may have to adjust to a "permanent reduction in the size of the economy". The Bank of England is all but certain to cut interest rates in August to limit the damage, but it seems unlikely that monetary policy can have much effect here. Rates are already extremely low, and both business and consumer confidence has taken a severe hit. Business confidence is reported to be lower than at the height of the financial crisis.
The only real doubt surrounds the duration of the post-referendum slowdown. A "short, sharp" setback is one thing, but with new Chancellor Philip Hammond airily musing that it may be six years before the actual Brexit takes place, there's a real risk that the UK is facing a much more prolonged slowdown, lasting right up to the next election. That's due in 2019, unless Theresa May decides to seek an earlier mandate. By that time, popular sentiment towards the EU may well have changed dramatically -- but if the electorate then wants to stop the Brexit process, who do they vote for? There will always be a large element of the Tory party that is viscerally anti-EU, and the Labour Party seems to be falling apart. It's a fine old mess, and it can surely only get worse.
ADDENDUM, 19 July: Today the IMF has released an updated global growth forecast. It has only revised its overall GDP outlook marginally lower in response to the Brexit vote, but warns of more serious consequences for the UK economy, as well as for the European financial system.
Now, as the linked article indicates, those "experts" are starting to quantify the damage, and it's not a pretty picture. Growth forecasts for the near-term are being slashed: GDP was expected to expand 2.7 percent next year, but post-referendum that has been cut to a mere 0.4 percent. The report even suggests that the UK may have to adjust to a "permanent reduction in the size of the economy". The Bank of England is all but certain to cut interest rates in August to limit the damage, but it seems unlikely that monetary policy can have much effect here. Rates are already extremely low, and both business and consumer confidence has taken a severe hit. Business confidence is reported to be lower than at the height of the financial crisis.
The only real doubt surrounds the duration of the post-referendum slowdown. A "short, sharp" setback is one thing, but with new Chancellor Philip Hammond airily musing that it may be six years before the actual Brexit takes place, there's a real risk that the UK is facing a much more prolonged slowdown, lasting right up to the next election. That's due in 2019, unless Theresa May decides to seek an earlier mandate. By that time, popular sentiment towards the EU may well have changed dramatically -- but if the electorate then wants to stop the Brexit process, who do they vote for? There will always be a large element of the Tory party that is viscerally anti-EU, and the Labour Party seems to be falling apart. It's a fine old mess, and it can surely only get worse.
ADDENDUM, 19 July: Today the IMF has released an updated global growth forecast. It has only revised its overall GDP outlook marginally lower in response to the Brexit vote, but warns of more serious consequences for the UK economy, as well as for the European financial system.
Thursday, 14 July 2016
Sick transit: an unbroken record of folly
Every major decision about transit taken in the last thirty years in the city of Toronto has been wrong. Think I'm exaggerating?
* The Sheppard subway (or more accurately, stubway, as it's only five stations long) was foisted on the city by former Mayor Mel Lastman (as in, the last man you'd want as mayor of a big city). Remarkably, council's initial decision was to dig the tunnels and build the thing and then mothball it, as there were no funds to run it. That might have been a better idea, given that the line is minimally used, with each rider costing the TTC (Toronto Transit Commission) an estimated $10 in subsidy. They're now having to custom-build shorter trains to run on the line.
* A subway was started on Eglinton Avenue around 1990, but work was halted by the Mike Harris government, which ordered the tunnels to be filled in! A part-surface, part underground light transit line is now being built along the same route, at far greater cost and with much lower capacity (and freshly re-dug tunnels).
* A subway extension is underway to Vaughan, north of the city's borders to the northwest. Given the time that the commute to downtown will take and the fact that Vaughan is a car-oriented community, it's unlikely that the line will be well-used, although the link to York University will be welcome. It is, of course, way behind schedule and far over budget.
* The TTC awarded a contract for new streetcars to Bombardier, via a bidding process that was so skewed toward "local content" that there could only be one winner. Bombardier has fallen so far behind on the delivery schedule that the TTC is suing for $50 million in damages. And by the way, local content requirements or not, much of the work is actually being carried out in Mexico.
* Toronto's airport express train, UPX, opened in mid-2015. In the rush to put it in place before the PanAm Games were held in the city, it was necessary to use diesel trains, as there was no time to install overhead wires. The line saw pitiful usage from day one, mainly because of high fares. A fare cut has improved ridership, but at the new fares, the line can never cover its operating costs, even if every train is full. Suggestions that the line be used for conventional commuter traffic are stymied by the fact that the line is so under-built -- the trains are only three cars long!
And yesterday, City Council was at it again. It has approved a plan to build a one-stop extension of the east-west subway line in Scarborough, at an estimated cost of (hope you're sitting down) $3 billion! The same money would have funded a 24-stop light rail network in Scarborough, but local pols have successfully argued that anything less than a subway would be an insult to their citizens.
Here's the killer point: the subway will replace an existing light rail line known as the RT, which has six stations. Projections show that the new one-stop extension will carry fewer passengers than the RT does. So, $3 billion to serve fewer people. Only in Toronto.
* The Sheppard subway (or more accurately, stubway, as it's only five stations long) was foisted on the city by former Mayor Mel Lastman (as in, the last man you'd want as mayor of a big city). Remarkably, council's initial decision was to dig the tunnels and build the thing and then mothball it, as there were no funds to run it. That might have been a better idea, given that the line is minimally used, with each rider costing the TTC (Toronto Transit Commission) an estimated $10 in subsidy. They're now having to custom-build shorter trains to run on the line.
* A subway was started on Eglinton Avenue around 1990, but work was halted by the Mike Harris government, which ordered the tunnels to be filled in! A part-surface, part underground light transit line is now being built along the same route, at far greater cost and with much lower capacity (and freshly re-dug tunnels).
* A subway extension is underway to Vaughan, north of the city's borders to the northwest. Given the time that the commute to downtown will take and the fact that Vaughan is a car-oriented community, it's unlikely that the line will be well-used, although the link to York University will be welcome. It is, of course, way behind schedule and far over budget.
* The TTC awarded a contract for new streetcars to Bombardier, via a bidding process that was so skewed toward "local content" that there could only be one winner. Bombardier has fallen so far behind on the delivery schedule that the TTC is suing for $50 million in damages. And by the way, local content requirements or not, much of the work is actually being carried out in Mexico.
* Toronto's airport express train, UPX, opened in mid-2015. In the rush to put it in place before the PanAm Games were held in the city, it was necessary to use diesel trains, as there was no time to install overhead wires. The line saw pitiful usage from day one, mainly because of high fares. A fare cut has improved ridership, but at the new fares, the line can never cover its operating costs, even if every train is full. Suggestions that the line be used for conventional commuter traffic are stymied by the fact that the line is so under-built -- the trains are only three cars long!
And yesterday, City Council was at it again. It has approved a plan to build a one-stop extension of the east-west subway line in Scarborough, at an estimated cost of (hope you're sitting down) $3 billion! The same money would have funded a 24-stop light rail network in Scarborough, but local pols have successfully argued that anything less than a subway would be an insult to their citizens.
Here's the killer point: the subway will replace an existing light rail line known as the RT, which has six stations. Projections show that the new one-stop extension will carry fewer passengers than the RT does. So, $3 billion to serve fewer people. Only in Toronto.
Wednesday, 13 July 2016
Good call, Mr Poloz
When Stephen Poloz took over as Bank of Canada Governor from Mark Carney, it seemed for a while that he was a little overwhelmed by the job. His off-the-cuff statements could be alarmingly erratic, when adding to market uncertainty is the last thing a central bank should be doing.
In the last year or so, Poloz's performance has been much more sure-footed. Although the economy has been underperforming, he has resisted the temptation to cut rate to or below zero, explicitly calling on the new Federal government to do more on the fiscal policy front. Concern over the elevated growth in house prices, especially in Toronto and Vancouver, has been one of the key factors staying the Bank's hand.
The Bank announced this morning that it is once again keeping its target rate unchanged at 0.5 percent, even as it again cut its near-term growth forecast. It now expects growth of only 1.3 percent for the year, mainly because the vast wildfires in Alberta in May likely led to a reduction in GDP for the second quarter as a whole, although a strong bounce-back is likely in Q3.
There is, of course, one new factor in the outlook: Brexit. The Bank sees only a minimal direct impact from an "orderly" Brexit, which certainly makes sense given the minimal proportion of Canada's trade that takes place with Europe. As this table shows, the UK takes only about 3 percent of Canada's exports, and the entire EU only about 7 percent.
In these circumstances, a rate cut at this juncture would have little effect on the growth outlook, but could well help to drive the housing market to even greater extremes. That becomes an important consideration in the context of Brexit. In the event that the exit discussions turn rancorous -- or, as seems more likely at the moment, the UK dithers about starting the formal exit process, thereby prolonging the uncertainty -- pressures on the global financial system could begin to mount. Italy's banks are already feeling a severe pinch, and other countries may well follow.
The resilience of Canada's banking system was a saving grace for the country during the financial crisis (do we now have to start calling it "the last financial crisis"??). It makes no sense for the Bank of Canada to put that resilience at risk by cutting rates now. That would only encourage further household over-borrowing while doing nothing to improve the growth outlook. If a new crisis develops, the Bank may have no choice but to join in with a round of coordinated rate cuts, but for now, standing pat is clearly the appropriate course of action.
In the last year or so, Poloz's performance has been much more sure-footed. Although the economy has been underperforming, he has resisted the temptation to cut rate to or below zero, explicitly calling on the new Federal government to do more on the fiscal policy front. Concern over the elevated growth in house prices, especially in Toronto and Vancouver, has been one of the key factors staying the Bank's hand.
The Bank announced this morning that it is once again keeping its target rate unchanged at 0.5 percent, even as it again cut its near-term growth forecast. It now expects growth of only 1.3 percent for the year, mainly because the vast wildfires in Alberta in May likely led to a reduction in GDP for the second quarter as a whole, although a strong bounce-back is likely in Q3.
There is, of course, one new factor in the outlook: Brexit. The Bank sees only a minimal direct impact from an "orderly" Brexit, which certainly makes sense given the minimal proportion of Canada's trade that takes place with Europe. As this table shows, the UK takes only about 3 percent of Canada's exports, and the entire EU only about 7 percent.
In these circumstances, a rate cut at this juncture would have little effect on the growth outlook, but could well help to drive the housing market to even greater extremes. That becomes an important consideration in the context of Brexit. In the event that the exit discussions turn rancorous -- or, as seems more likely at the moment, the UK dithers about starting the formal exit process, thereby prolonging the uncertainty -- pressures on the global financial system could begin to mount. Italy's banks are already feeling a severe pinch, and other countries may well follow.
The resilience of Canada's banking system was a saving grace for the country during the financial crisis (do we now have to start calling it "the last financial crisis"??). It makes no sense for the Bank of Canada to put that resilience at risk by cutting rates now. That would only encourage further household over-borrowing while doing nothing to improve the growth outlook. If a new crisis develops, the Bank may have no choice but to join in with a round of coordinated rate cuts, but for now, standing pat is clearly the appropriate course of action.
Friday, 8 July 2016
Canadian employment lags, badly
We've seen this story before, all too many times. After a brief hiatus, the US economy is back to adding jobs at a rapid pace, while Canada's employment market, despite the supposed advantage of a weak exchange rate, is languishing.
Data published today show that the US economy added 287,000 jobs in June, well above expectations. The unemployment rate edged up to 4.9 percent, but only because the participation rate increased, a factor which usually signals rising confidence. Average hourly wages are up 2.6 percent year-on-year. Were it not for the increasingly uncertain international situation -- did I read something about a referendum somewhere, or am I imagining that? -- the Fed would be on the point of raising the funds rate again.
Meanwhile in Canada, the employment market was essentially flat in the month, with a loss of 700 jobs, well within the survey's margin of error. The unemployment rate ticked lower, but for the worst possible reason: in contrast to the US, Canadian workers are feeling discouraged about finding jobs, and the participation rate actually slipped as 21,000 people left the workforce.
The falling participation rate is not the only negative feature of the report. The manufacturing sector lost 13,000 jobs in June, bringing the cumulative loss for the past year to 30,000. Bank of Canada Gov. Stephen Poloz had been counting on a "rebalancing" of the economy in response to the weaker exchange rate, reducing reliance on resource exports. It is surely clear by now that the manufacturing sector will not be a participant in that rebalancing: as I have argued here several times before, most of the manufacturing jobs lost in the past decade are gone for good, regardless of what happens to the exchange rate.
That's not to say that there is no benefit from the weaker dollar. My own region of Niagara, once heavily dependent on manufacturing, is seeing very healthy tourist arrivals from south of the border again this year, while the number of Canadians doing their weekly shop in the US seems to be falling. Sadly, though, that means highly skilled and well-paid unionized jobs, in the auto sector and elsewhere, are being supplanted by much lower-paying service jobs.
You get the feeling that Governor Poloz knows he's pushing on a string with monetary policy. Earlier this year he basically passed the baton over to the new Federal government, which is looking to boost growth and employment through infrastructure spending. As today's bleak job numbers show, we'd better hope that will work.
Data published today show that the US economy added 287,000 jobs in June, well above expectations. The unemployment rate edged up to 4.9 percent, but only because the participation rate increased, a factor which usually signals rising confidence. Average hourly wages are up 2.6 percent year-on-year. Were it not for the increasingly uncertain international situation -- did I read something about a referendum somewhere, or am I imagining that? -- the Fed would be on the point of raising the funds rate again.
Meanwhile in Canada, the employment market was essentially flat in the month, with a loss of 700 jobs, well within the survey's margin of error. The unemployment rate ticked lower, but for the worst possible reason: in contrast to the US, Canadian workers are feeling discouraged about finding jobs, and the participation rate actually slipped as 21,000 people left the workforce.
The falling participation rate is not the only negative feature of the report. The manufacturing sector lost 13,000 jobs in June, bringing the cumulative loss for the past year to 30,000. Bank of Canada Gov. Stephen Poloz had been counting on a "rebalancing" of the economy in response to the weaker exchange rate, reducing reliance on resource exports. It is surely clear by now that the manufacturing sector will not be a participant in that rebalancing: as I have argued here several times before, most of the manufacturing jobs lost in the past decade are gone for good, regardless of what happens to the exchange rate.
That's not to say that there is no benefit from the weaker dollar. My own region of Niagara, once heavily dependent on manufacturing, is seeing very healthy tourist arrivals from south of the border again this year, while the number of Canadians doing their weekly shop in the US seems to be falling. Sadly, though, that means highly skilled and well-paid unionized jobs, in the auto sector and elsewhere, are being supplanted by much lower-paying service jobs.
You get the feeling that Governor Poloz knows he's pushing on a string with monetary policy. Earlier this year he basically passed the baton over to the new Federal government, which is looking to boost growth and employment through infrastructure spending. As today's bleak job numbers show, we'd better hope that will work.
Thursday, 7 July 2016
A warning for Canada's banks
Canada's federal financial regulator, OSFI, has warned the country's banks that it is planning to keep a closer eye on their mortgage lending practices. There is no hard evidence that the banks are offering anything like the NINJA (no income, no job or assets) loans that crippled US lenders almost a decade ago. However, OSFI is concerned about rising risks in their mortgage books, as housing prices continue to advance strongly, especially in the greater Toronto and Vancouver areas.
The IMF, the OECD and others have been expressing concerns about the frothy state of the Canadian housing market for some time. Responding to such concerns, OSFI has a list of things it wants the banks to be careful about, including income verification, proper appraisal of properties being financed, loan-to-value ratios and such, This is all boilerplate stuff, and given the generally conservative nature of Canada's banks, it's unlikely that there have been too many lapses in this regard.
The bigger issue, as OSFI is certainly aware, is the systemic risk that continues to mount as interest rates remain low and house prices continue to rise. Each individual bank may have an acceptable level of risk in its own mortgage book, but in the event of a crisis -- presumably triggered by a rise in interest rates -- it can't be assumed that the system as a whole will remain sound. Interest rates have remained so low for so long, and house prices have risen so far beyond all past experience, that we are in uncharted territory here.
Canada's household debt-to-income ratio is at an all-time high of 164 percent, higher than the level seen in the US just before the financial crisis. Moreover, the number of super-indebted household is also at a record high. Surveys regularly report that a worrying percentage of households have virtually no leeway in their finances: miss one paycheque and they're immediately in trouble. The proliferation of payday lenders bears this out.
There's no real precedent out there to tell us how bad things will get, and how quickly, once interest rates begin to rise. Of course, there's no sign of that happening any time soon -- but that simply means that the rise in house prices and in household borrowing is going to continue, making it ever more likely that the eventual correction will be painful. OSFI may not be able to ease the pain for individual households that get overextended, but it can at least try to ensure that the stability of the financial system is not put at risk.
The IMF, the OECD and others have been expressing concerns about the frothy state of the Canadian housing market for some time. Responding to such concerns, OSFI has a list of things it wants the banks to be careful about, including income verification, proper appraisal of properties being financed, loan-to-value ratios and such, This is all boilerplate stuff, and given the generally conservative nature of Canada's banks, it's unlikely that there have been too many lapses in this regard.
The bigger issue, as OSFI is certainly aware, is the systemic risk that continues to mount as interest rates remain low and house prices continue to rise. Each individual bank may have an acceptable level of risk in its own mortgage book, but in the event of a crisis -- presumably triggered by a rise in interest rates -- it can't be assumed that the system as a whole will remain sound. Interest rates have remained so low for so long, and house prices have risen so far beyond all past experience, that we are in uncharted territory here.
Canada's household debt-to-income ratio is at an all-time high of 164 percent, higher than the level seen in the US just before the financial crisis. Moreover, the number of super-indebted household is also at a record high. Surveys regularly report that a worrying percentage of households have virtually no leeway in their finances: miss one paycheque and they're immediately in trouble. The proliferation of payday lenders bears this out.
There's no real precedent out there to tell us how bad things will get, and how quickly, once interest rates begin to rise. Of course, there's no sign of that happening any time soon -- but that simply means that the rise in house prices and in household borrowing is going to continue, making it ever more likely that the eventual correction will be painful. OSFI may not be able to ease the pain for individual households that get overextended, but it can at least try to ensure that the stability of the financial system is not put at risk.
Wednesday, 6 July 2016
Worst. Prime Minister. Ever?
There's been a lot of debate over the past couple of weeks about whether David Cameron will supplant Neville Chamberlain in the history books as Britain's worst Prime Minister ever. For what it's worth, I'd say Cameron edges it. If you read Winston Churchill's (admittedly self-serving) history of World War II, you'll find that he is surprisingly respectful of Chamberlain. While he was frustrated at Chamberlain's attempts to find a peaceful deal with Hitler, culminating in the Munich accord, Churchill is full of praise for how Chamberlain turned on a dime as soon as he realized he had got it wrong, and threw all of his energies into preparing Britain for war. It's hard to see any of Cameron's contemporaries letting him off the hook like that.
Today, however, we have a powerful reminder that this is not just a two-horse race. The Chilcot Report into the 2003 Iraq invasion, more than ten years in the making and more than 2.5 million words long, provides a scalding appraisal of the actions of Tony Blair. In Chilcot's opinion, Blair misled Parliament and the country into thinking that there was no alternative to war; entered the conflict with no real legal justification: failed to provide adequate equipment for the thousands of men he so casually sent to war; and went into combat without even a moment's consideration for what would need to be done once the fighting ended. Except, of course, the fighting never really has ended, as this assessment by the CBC's Nahlah Ayed makes very clear.
Blair has offered a public act of contrition today, but as usual he has an excuse: "the intelligence assessments turned out to be wrong". Really? Even at the time there was a clear suspicion that those assessments were being manipulated for political purposes: the intelligence was being shaped around the decision to go to war, rather than the other way round. It's hard to forget General Colin Powell's embarrassing appearance at the UN Security Council, at which he presented the supposed evidence of Saddam Hussein's weapons of mass destruction. Suffice to say the the parodies that immediately appeared online, featuring toy soldiers and Play-Doh, were at least as convincing as anything that Powell produced.
If Blair were still in office as Prime Minister, he would without doubt be forced to resign in disgrace and without delay. As things stand, there doesn't seem to be any obvious way to hold him properly to account for his actions. Since resigning on his own terms, he's had the better part of a decade to feather his nest with his consulting business and his public speaking gigs. Given the catalogue of deceit revealed by Chilcot. we can at least hope that companies will think twice about hiring him as a consultant again -- and that anyone attending one of his speeches stocks up on rotten eggs and fruit. It's the least he deserves.
Today, however, we have a powerful reminder that this is not just a two-horse race. The Chilcot Report into the 2003 Iraq invasion, more than ten years in the making and more than 2.5 million words long, provides a scalding appraisal of the actions of Tony Blair. In Chilcot's opinion, Blair misled Parliament and the country into thinking that there was no alternative to war; entered the conflict with no real legal justification: failed to provide adequate equipment for the thousands of men he so casually sent to war; and went into combat without even a moment's consideration for what would need to be done once the fighting ended. Except, of course, the fighting never really has ended, as this assessment by the CBC's Nahlah Ayed makes very clear.
Blair has offered a public act of contrition today, but as usual he has an excuse: "the intelligence assessments turned out to be wrong". Really? Even at the time there was a clear suspicion that those assessments were being manipulated for political purposes: the intelligence was being shaped around the decision to go to war, rather than the other way round. It's hard to forget General Colin Powell's embarrassing appearance at the UN Security Council, at which he presented the supposed evidence of Saddam Hussein's weapons of mass destruction. Suffice to say the the parodies that immediately appeared online, featuring toy soldiers and Play-Doh, were at least as convincing as anything that Powell produced.
If Blair were still in office as Prime Minister, he would without doubt be forced to resign in disgrace and without delay. As things stand, there doesn't seem to be any obvious way to hold him properly to account for his actions. Since resigning on his own terms, he's had the better part of a decade to feather his nest with his consulting business and his public speaking gigs. Given the catalogue of deceit revealed by Chilcot. we can at least hope that companies will think twice about hiring him as a consultant again -- and that anyone attending one of his speeches stocks up on rotten eggs and fruit. It's the least he deserves.
Tuesday, 5 July 2016
Fading Star
The problems faced by the traditional print media are well-known. The growth of the internet and of 24-hour TV news has drastically reduced their audience. Falling circulation and plummeting ad revenues have made profitability a distant memory.
Remarkably enough under the circumstances, Toronto still has four daily papers, but they're a shadow of their former selves. Just consider the Toronto Star: it's still Canada's largest circulation newspaper, but it gives fresh evidence of its decline almost on a weekly basis.
Flip through the Star's pages, or scroll through its website, and one of the first things you'll notice is how much of the paper is now taken up with wire service stories. The Star compensates for its lack of global coverage by lifting material freely (but not free) from the likes of AP, The Guardian, the Washington Post, the New York Times and Bloomberg. Even within Canada, the Star relies heavily on stories from Canadian Press.
The Star's close relationship with the New York Times is especially instructive. Each Sunday, subscribers receive two special sections, one taken from the NYT's news and opinion sections and the other from its renowned book reviews. Even the most casual reader cannot fail to notice how much superior the NYT journalism is to the Star's, in terms of both style and reach. Interestingly, though, the Star is now so desperate for material to fill its pages that it sometimes includes the NYT stories, word-for-word, in its daily editions, quite often before the dedicated Sunday sections appear. How long the subscribers will put up with this double-dipping remains to be seen.
The Star parted company with many of its more experienced journalists earlier this year. Those who remain are being pushed very hard. Consider Rosie DiManno, whose byline has been appearing in the paper for four decades. She gets first dibs on covering the Wimbledon tennis every year, but of course this year there's a whole lot more going on in London. As well as filing at least two stories each day on the tennis, Rosie has regaled us at length with her views on Brexit and Scottish independence, two topics on which it would be charitable to say that she is out of her comfort zone. In the weeks before she went to London, Rosie was covering a major murder trial and writing about figure skating and baseball. Her writing style is becoming ever more erratic and cliche-ridden, which is perhaps no surprise, given the amount of copy she is expected to churn out.
The Toronto Star makes much of its adherence to the "Atkinson Principles", a set of precepts laid down a century ago by the paper's founder, Joseph Atkinson. This is basically a wish list of slightly left-leaning, Canadian nationalist platitudes. Anyone who has read the paper even once will have seen that it is as much a viewspaper as a newspaper, and those views are inevitably liberal, feminist and inclusionary in nature; mildly pro-union and mildly suspicious of capitalism.
Fair enough: I'm kind of that way myself. But underlying the Atkinson Principles is one other imperative that didn't quite make the list: profitability. The Star may rail against the excesses of the banks and others, but it will do whatever it takes to turn a profit. Just this past week, the Star closed its printing facility in Vaughan, north of Toronto, outsourcing production of the paper to a separate company. This led to the loss of, as the Star itself would put it (at least if it was writing about someone else) "almost 300 skilled, well-paying jobs". You might think the paper would have kept this low-key, but bizarrely, it chose to splash it all over the weekend editiona, even posting a kind of farewell video about the plant.
An annual saving of $10 million is not something to be sneezed at, but you have to wonder what old Joe Atkinson would think about it. The Star may well survive for many more years, but it will never again be the opinion-shaper it was just a couple of decades ago.
Remarkably enough under the circumstances, Toronto still has four daily papers, but they're a shadow of their former selves. Just consider the Toronto Star: it's still Canada's largest circulation newspaper, but it gives fresh evidence of its decline almost on a weekly basis.
Flip through the Star's pages, or scroll through its website, and one of the first things you'll notice is how much of the paper is now taken up with wire service stories. The Star compensates for its lack of global coverage by lifting material freely (but not free) from the likes of AP, The Guardian, the Washington Post, the New York Times and Bloomberg. Even within Canada, the Star relies heavily on stories from Canadian Press.
The Star's close relationship with the New York Times is especially instructive. Each Sunday, subscribers receive two special sections, one taken from the NYT's news and opinion sections and the other from its renowned book reviews. Even the most casual reader cannot fail to notice how much superior the NYT journalism is to the Star's, in terms of both style and reach. Interestingly, though, the Star is now so desperate for material to fill its pages that it sometimes includes the NYT stories, word-for-word, in its daily editions, quite often before the dedicated Sunday sections appear. How long the subscribers will put up with this double-dipping remains to be seen.
The Star parted company with many of its more experienced journalists earlier this year. Those who remain are being pushed very hard. Consider Rosie DiManno, whose byline has been appearing in the paper for four decades. She gets first dibs on covering the Wimbledon tennis every year, but of course this year there's a whole lot more going on in London. As well as filing at least two stories each day on the tennis, Rosie has regaled us at length with her views on Brexit and Scottish independence, two topics on which it would be charitable to say that she is out of her comfort zone. In the weeks before she went to London, Rosie was covering a major murder trial and writing about figure skating and baseball. Her writing style is becoming ever more erratic and cliche-ridden, which is perhaps no surprise, given the amount of copy she is expected to churn out.
The Toronto Star makes much of its adherence to the "Atkinson Principles", a set of precepts laid down a century ago by the paper's founder, Joseph Atkinson. This is basically a wish list of slightly left-leaning, Canadian nationalist platitudes. Anyone who has read the paper even once will have seen that it is as much a viewspaper as a newspaper, and those views are inevitably liberal, feminist and inclusionary in nature; mildly pro-union and mildly suspicious of capitalism.
Fair enough: I'm kind of that way myself. But underlying the Atkinson Principles is one other imperative that didn't quite make the list: profitability. The Star may rail against the excesses of the banks and others, but it will do whatever it takes to turn a profit. Just this past week, the Star closed its printing facility in Vaughan, north of Toronto, outsourcing production of the paper to a separate company. This led to the loss of, as the Star itself would put it (at least if it was writing about someone else) "almost 300 skilled, well-paying jobs". You might think the paper would have kept this low-key, but bizarrely, it chose to splash it all over the weekend editiona, even posting a kind of farewell video about the plant.
An annual saving of $10 million is not something to be sneezed at, but you have to wonder what old Joe Atkinson would think about it. The Star may well survive for many more years, but it will never again be the opinion-shaper it was just a couple of decades ago.
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