There has been plenty of evidence in recent months to show that the Canadian economy has been losing momentum. This past week Statistics Canada confirmed this with its release of the broadest indicator of all, real GDP. In the fourth quarter of 2019, real GDP grew at an annualized rate of just 0.3 percent, the slowest pace in four years. Growth in Q3 was also revised down to an annualized 1.1 percent from the already paltry 1.3 percent previously reported. Growth for the full year was 1.6 percent, down from 2 percent in 2018.
The nugatory pace of growth at the end of last year reflected several factors, among them pipeline shutdowns, the spillover effects of a strike at GM in the United States and an eight-day nationwide strike at CN rail. While household spending remained strong in the quarter, both business investment and exports were notably weak.
There is precious little reason to expect a return to faster growth any time soon. Most notably, the rail blockades in effect for more than two weeks in late January and early February undoubtedly curbed economic activity in eastern Canada, although the efforts at creating work-arounds by CN and CP may have helped to limit the impact. The impact of the coronavirus outbreak is also likely to be felt to an increasing degree in the coming weeks. It is hard to visualize any growth in real GDP in the current quarter, and with March almost certain to provide a weak hand-off into Q2, the economy may well soon meet the criterion for an official recession.
Central banks are widely expected to ride to the rescue of the global economy soon with a raft of interest rate cuts, and there is little doubt that the Bank of Canada will join in. Whether the current circumstances will prove amenable to monetary stimulus remains to be seen: if the virus erodes confidence among both businesses and consumers, it is hard to see rate cuts having much of an impact on demand and growth.
Lower rates might at best provide some relief for heavily indebted businesses, helping to offset the cashflow impact of the coronavirus. That seems likely to be cold comfort in the weeks and months ahead, based on the way the virus seems to be spreading.
Saturday 29 February 2020
Tuesday 25 February 2020
What the Teck??
Last week Teck Resources Limited, a Vancouver-based mining corporation, announced its latest financial results. It made mention of its Frontier oilsands project in Alberta, warning that failure by governments to approve the project would cause it to take a write-down in excess of C$ 1 billion.
Meanwhile, even as it faced the rail blockades, the Trudeau government was wrestling with its decision on whether to give Frontier the green light, having promised an announcement by the end of this month. There were media reports that many of Trudeau's parliamentary caucus opposed the deal.
At the start of last weekend, the Alberta government announced deals with two First Nations communities whose lands would be affected by the project, clearing a major stumbling block.
And on Sunday evening.....Teck abruptly withdrew its application for approval for Frontier, effectively killing the project after years of planning. It duly took the C$ 1 billion write-down.
Cue the blame game. Alberta Premier Jason Kenney was quick to point the finger at Ottawa, citing Trudeau's commitment to emissions reduction -- oilsands mining is notoriously polluting -- and even suggesting that the rail blockades had persuaded Teck that it could not proceed with the deal. Teck's own reasoning was rather more subtle. It noted that international investors were looking for energy projects in jurisdictions that had "reconciled resource developments with climate change", something that the Kenney administration has largely (and loudly) refused to do.
It is quite possible that Teck has done itself, Alberta and Canada a favour here. Even if approval had been granted this week, the project would have taken years to complete and would have seriously strained Teck's balance sheet. Payback for the investment would have taken decades. Can anyone seriously suggest that a highly-polluting fossil fuel project that will not pay off until well after the middle of the century is a smart move right now?
The loss of jobs (7000 for construction of Frontier; 2400 ongoing once operational) and government revenues (projected at C$ 70 billion lifetime) may be a blow. However, Alberta's oil industry already has huge unfunded back-end costs, with abandoned wells littering the Province. Adding a 270 square kilometre open-cast mine to that burden would seem the height of folly. If Teck's decision forces Alberta and Ottawa to start looking at alternatives to megaprojects such as Frontier, that's a good thing, even if it may not seem that way at the moment.
Meanwhile, even as it faced the rail blockades, the Trudeau government was wrestling with its decision on whether to give Frontier the green light, having promised an announcement by the end of this month. There were media reports that many of Trudeau's parliamentary caucus opposed the deal.
At the start of last weekend, the Alberta government announced deals with two First Nations communities whose lands would be affected by the project, clearing a major stumbling block.
And on Sunday evening.....Teck abruptly withdrew its application for approval for Frontier, effectively killing the project after years of planning. It duly took the C$ 1 billion write-down.
Cue the blame game. Alberta Premier Jason Kenney was quick to point the finger at Ottawa, citing Trudeau's commitment to emissions reduction -- oilsands mining is notoriously polluting -- and even suggesting that the rail blockades had persuaded Teck that it could not proceed with the deal. Teck's own reasoning was rather more subtle. It noted that international investors were looking for energy projects in jurisdictions that had "reconciled resource developments with climate change", something that the Kenney administration has largely (and loudly) refused to do.
It is quite possible that Teck has done itself, Alberta and Canada a favour here. Even if approval had been granted this week, the project would have taken years to complete and would have seriously strained Teck's balance sheet. Payback for the investment would have taken decades. Can anyone seriously suggest that a highly-polluting fossil fuel project that will not pay off until well after the middle of the century is a smart move right now?
The loss of jobs (7000 for construction of Frontier; 2400 ongoing once operational) and government revenues (projected at C$ 70 billion lifetime) may be a blow. However, Alberta's oil industry already has huge unfunded back-end costs, with abandoned wells littering the Province. Adding a 270 square kilometre open-cast mine to that burden would seem the height of folly. If Teck's decision forces Alberta and Ottawa to start looking at alternatives to megaprojects such as Frontier, that's a good thing, even if it may not seem that way at the moment.
Monday 24 February 2020
It didn't have to end this way
Ontario Provincial Police (OPP) moved in this morning to clear a blockade of railway tracks in eastern Ontario. Mohawk activists had been protesting next to the tracks for the past eighteen days, in support of Chiefs from the Wet'suwet'en nation in British Columbia, who oppose the construction of a gas pipeline across their territory. Thankfully, this morning's action seems to have been mostly violence-free, aside from a little yelling and scuffling. That said, however, this should all have been resolved much sooner and without any police involvement at all. Blame for the fact that didn't happen attaches both to the government and the Chiefs.
Let's start with the government. Justin Trudeau brags that he has made reconciliation with Canada's indigenous peoples a cornerstone of his government. Throw a powwow or a potlatch, and Justin will be there, quite possibly bearing a lachrymose apology for some long-ago misdeed by previous governments. And yet, with the blockade and other protests already underway, Trudeau jetted off to Africa to pursue his campaign for a seat on the UN Security Council, only getting engaged in the matter when both sides were literally and metaphorically dug in.
This left things in the charge of Trudeau's Minister for Crown-Indigenous Relations, Carolyn Bennett. To describe Ms Bennett as unimpressive would be an understatement -- she gives the impression of being almost catatonic. Her attempts to reach the Wet'suwet'en Chiefs went unanswered, which is unsurprising if you stop to think about it. Trudeau has been keen to hang out with you and treat you as equals when the going is good, but when there's a problem he suddenly has better things to do. There haven't been any reports of the Chiefs feeling insulted, but if they do, I wouldn't blame them.
How are the Chiefs themselves to blame? There are actually two sets of Chiefs in the Wet'suwet'en territory. The hereditary Chiefs, who see themselves as custodians of the traditional land, have consistently opposed the gas pipeline. However, many of the elected village Chiefs have signed on in support of the project, in the hope of securing money and jobs for their people.
Things flared up when the pipeline company obtained an injunction to stop protesters from blockading their worksite on Wet'suwet'en land. The RCMP showed up in full military regalia to
end the blockade, the hereditary Chiefs appealed for solidarity, and the Mohawks in Ontario responded, bringing us to where we were as of early this morning when the OPP moved in.
The hereditary Chiefs have been consistent with two demands: remove the RCMP from their territory, and halt construction on the pipeline so that there can be further discussions about mitigating its impact. Here is where there is blame to be laid: both of those things have been offered. The RCMP agreed to stand down almost a week ago, and in the last few days the provincial government in BC ordered the pipeline company to stop work for a 30-day consultation period. Why did that not break the logjam? Well, that could be because four of the five hereditary Chiefs decided to spend several days visiting their Mohawk sympathizers in Ontario and Quebec, rather than working directly to bring the crisis to an end.
Is this the end of the matter? Almost certainly not. Indigenous blockades of this type are a recurring event, although most do not last as long or cause as much impact as this one has. The underlying issue -- which can be stated in broad terms as "this land is yours, Chiefs, until such time as we need to do something with it" -- is entirely unresolved. Even if the Wet'suwet'en people can now make a deal over the gas pipeline, there are plenty more such disputes ahead.
Let's start with the government. Justin Trudeau brags that he has made reconciliation with Canada's indigenous peoples a cornerstone of his government. Throw a powwow or a potlatch, and Justin will be there, quite possibly bearing a lachrymose apology for some long-ago misdeed by previous governments. And yet, with the blockade and other protests already underway, Trudeau jetted off to Africa to pursue his campaign for a seat on the UN Security Council, only getting engaged in the matter when both sides were literally and metaphorically dug in.
This left things in the charge of Trudeau's Minister for Crown-Indigenous Relations, Carolyn Bennett. To describe Ms Bennett as unimpressive would be an understatement -- she gives the impression of being almost catatonic. Her attempts to reach the Wet'suwet'en Chiefs went unanswered, which is unsurprising if you stop to think about it. Trudeau has been keen to hang out with you and treat you as equals when the going is good, but when there's a problem he suddenly has better things to do. There haven't been any reports of the Chiefs feeling insulted, but if they do, I wouldn't blame them.
How are the Chiefs themselves to blame? There are actually two sets of Chiefs in the Wet'suwet'en territory. The hereditary Chiefs, who see themselves as custodians of the traditional land, have consistently opposed the gas pipeline. However, many of the elected village Chiefs have signed on in support of the project, in the hope of securing money and jobs for their people.
Things flared up when the pipeline company obtained an injunction to stop protesters from blockading their worksite on Wet'suwet'en land. The RCMP showed up in full military regalia to
end the blockade, the hereditary Chiefs appealed for solidarity, and the Mohawks in Ontario responded, bringing us to where we were as of early this morning when the OPP moved in.
The hereditary Chiefs have been consistent with two demands: remove the RCMP from their territory, and halt construction on the pipeline so that there can be further discussions about mitigating its impact. Here is where there is blame to be laid: both of those things have been offered. The RCMP agreed to stand down almost a week ago, and in the last few days the provincial government in BC ordered the pipeline company to stop work for a 30-day consultation period. Why did that not break the logjam? Well, that could be because four of the five hereditary Chiefs decided to spend several days visiting their Mohawk sympathizers in Ontario and Quebec, rather than working directly to bring the crisis to an end.
Is this the end of the matter? Almost certainly not. Indigenous blockades of this type are a recurring event, although most do not last as long or cause as much impact as this one has. The underlying issue -- which can be stated in broad terms as "this land is yours, Chiefs, until such time as we need to do something with it" -- is entirely unresolved. Even if the Wet'suwet'en people can now make a deal over the gas pipeline, there are plenty more such disputes ahead.
Tuesday 18 February 2020
This is ominous
Statistics Canada reported this morning that manufacturing sales fell by 0.7 percent in December 2019, the fourth monthly decline in a row. Although sales for the entire year were up 0.5 percent, this marked a much slower rate of growth than in the preceding two years. The loss of momentum in the final months of the year is underscored by reported declines in both unfilled orders and new orders in December, as well as by a sharp fall in capacity utilization, which slipped to 76.3 percent in December from 80.0 percent in November.
The decline in manufacturing in December was partly attributable to the week-long closure of the entire CN rail network during the month as a result of industrial action. This strongly suggests that the current closure of the network everywhere east of Toronto, as a result of Indigenous blockades, will have a serious effect on industrial output in the current month. The blockades have already lasted twelve days, with no early end in sight. Since bulk products (propane, lumber, chemicals and such) form a large part of the freight transported by rail, the impact of the closure is likely to spread well beyond the manufacturing sector.
Just last week, Bank of Canada Governor Stephen Poloz stated that the Canadian economy was "in a good place". Given the blockades and the coronavirus outbreak, together with the fact that Canada has still not gotten around to ratifying the new USMCA agreement, this may not be a tenable view for very much longer.
The decline in manufacturing in December was partly attributable to the week-long closure of the entire CN rail network during the month as a result of industrial action. This strongly suggests that the current closure of the network everywhere east of Toronto, as a result of Indigenous blockades, will have a serious effect on industrial output in the current month. The blockades have already lasted twelve days, with no early end in sight. Since bulk products (propane, lumber, chemicals and such) form a large part of the freight transported by rail, the impact of the closure is likely to spread well beyond the manufacturing sector.
Just last week, Bank of Canada Governor Stephen Poloz stated that the Canadian economy was "in a good place". Given the blockades and the coronavirus outbreak, together with the fact that Canada has still not gotten around to ratifying the new USMCA agreement, this may not be a tenable view for very much longer.
Sunday 16 February 2020
When the railroad did not run*
Mohawk activists have been "blockading"** the main CN rail line between Toronto and Montreal for the past twelve days. In response, CN has suspended all of its freight services east of Toronto and VIA Rail has cancelled passenger service, such as it is, all across Canada. The railroad is not as crucial to the economy as it once was, but the impact of the blockade and shutdowns is starting to grow. Shortages of propane in Quebec and Atlantic Canada could start to emerge this week if the situation is not resolved.
The blockade is being staged in sympathy with hereditary chiefs on the Wet'suwet'en territory in northern British Columbia, who are opposed to the building of a gas pipeline across their land. Given its remoteness from major population centres, Wet'suwet'en is not a promising spot for demonstrations to bring national attention to the cause, so the chiefs have called for sympathy action and the Mohawks, 5000 kilometres to the east, have responded. Makes sense: the line they are targeting is the busiest in Canada, and it just so happens that their Tyenindaga reserve directly abuts the CN corridor.
Canada's track record in dealing with its indigenous population has been appalling, and although things have improved in recent years, the performance of senior politicians in dealing with the current crisis leaves a lot to be desired. Let's take a look at the two main Federal leaders, PM Justin Trudeau and Tory leader (though not for much longer), Andrew Scheer.
Since October's Federal election, Trudeau has handed off most of his day-to-day responsibilities to his Deputy PM, Chrystia Freeland. It's scarcely a surprise to find that Trudeau spent the first week of the crisis gallivanting around the world. First he was in Africa, making simpering speeches about the evils of slavery in Senegal in hopes of winning that country's support for Canada's bid to join the UN Security Council. Then there was a stop for a security conference in Germany.
Trudeau has now returned to Canada and has issued a couple of statements about the blockade, basically calling for dialogue rather than confrontation. However, he is still scheduled to swan off to a meeting in Barbados this week to further his UN ambitions. If he actually goes ahead with this, it will firmly secure his growing reputation as a deeply unserious man with no real interest in his job. One wonders if it has occurred to him that an unresolved crisis with his own Indigenous population is not exactly a recommendation for a seat at the Security Council.
Still, it could be worse: we could have ended up with Andrew Scheer as PM. Backed by a chorus of Tory party grandees, Scheer is calling for a robust police response to bust up the blockade and get the railroads open again. In a stunningly tone-deaf choice of words, Scheer called on the protesters to "check their privilege", not something likely to resonate with people struggling to make ends meet on a reservation.
Scheer seems not to have taken any heed of the problems that have always arisen when force has been used to deal with conflicts of this kind: see, for example, the Oka crisis of 1990 . More recently, when Indigenous protesters closed a rail line near Sarnia, Ontario in 2012, PM Stephen Harper (like Scheer, a Tory) declined to use force, and the matter was eventually resolved peacefully.
Apart from a not-inconsiderable number of hotheads who would no doubt like to "teach the Indians a lesson", most Canadians doubtless hope the present crisis ends that way too. The Mohawk are savvy enough to know that they have the upper hand right now, but also savvy enough to know that if they push too hard and start to cause serious shortages of key products in Eastern Canada, sympathy will quickly evaporate. A full commitment by Justin Trudeau to finding a solution would undoubtedly be helpful. Putting off the trip to Barbados would be a good start.
* Hat-tip to Gordon Lightfoot, Canadian Railroad Trilogy.
** I put the term blockading in quotes because the demonstrators are not actually on the tracks. They are on their own land, but close enough that CN has determined it cannot run trains safely.
UPDATE: PM Trudeau has bowed to the inevitable and will not be going to Barbados this week, opting instead to stay at home and work on trying to solve the crisis. That's good -- and with so many controversial resource projects on the docket, starting with the Teck oilsands mine, he's going to need all the practice he can get.
The blockade is being staged in sympathy with hereditary chiefs on the Wet'suwet'en territory in northern British Columbia, who are opposed to the building of a gas pipeline across their land. Given its remoteness from major population centres, Wet'suwet'en is not a promising spot for demonstrations to bring national attention to the cause, so the chiefs have called for sympathy action and the Mohawks, 5000 kilometres to the east, have responded. Makes sense: the line they are targeting is the busiest in Canada, and it just so happens that their Tyenindaga reserve directly abuts the CN corridor.
Canada's track record in dealing with its indigenous population has been appalling, and although things have improved in recent years, the performance of senior politicians in dealing with the current crisis leaves a lot to be desired. Let's take a look at the two main Federal leaders, PM Justin Trudeau and Tory leader (though not for much longer), Andrew Scheer.
Since October's Federal election, Trudeau has handed off most of his day-to-day responsibilities to his Deputy PM, Chrystia Freeland. It's scarcely a surprise to find that Trudeau spent the first week of the crisis gallivanting around the world. First he was in Africa, making simpering speeches about the evils of slavery in Senegal in hopes of winning that country's support for Canada's bid to join the UN Security Council. Then there was a stop for a security conference in Germany.
Trudeau has now returned to Canada and has issued a couple of statements about the blockade, basically calling for dialogue rather than confrontation. However, he is still scheduled to swan off to a meeting in Barbados this week to further his UN ambitions. If he actually goes ahead with this, it will firmly secure his growing reputation as a deeply unserious man with no real interest in his job. One wonders if it has occurred to him that an unresolved crisis with his own Indigenous population is not exactly a recommendation for a seat at the Security Council.
Still, it could be worse: we could have ended up with Andrew Scheer as PM. Backed by a chorus of Tory party grandees, Scheer is calling for a robust police response to bust up the blockade and get the railroads open again. In a stunningly tone-deaf choice of words, Scheer called on the protesters to "check their privilege", not something likely to resonate with people struggling to make ends meet on a reservation.
Scheer seems not to have taken any heed of the problems that have always arisen when force has been used to deal with conflicts of this kind: see, for example, the Oka crisis of 1990 . More recently, when Indigenous protesters closed a rail line near Sarnia, Ontario in 2012, PM Stephen Harper (like Scheer, a Tory) declined to use force, and the matter was eventually resolved peacefully.
Apart from a not-inconsiderable number of hotheads who would no doubt like to "teach the Indians a lesson", most Canadians doubtless hope the present crisis ends that way too. The Mohawk are savvy enough to know that they have the upper hand right now, but also savvy enough to know that if they push too hard and start to cause serious shortages of key products in Eastern Canada, sympathy will quickly evaporate. A full commitment by Justin Trudeau to finding a solution would undoubtedly be helpful. Putting off the trip to Barbados would be a good start.
* Hat-tip to Gordon Lightfoot, Canadian Railroad Trilogy.
** I put the term blockading in quotes because the demonstrators are not actually on the tracks. They are on their own land, but close enough that CN has determined it cannot run trains safely.
UPDATE: PM Trudeau has bowed to the inevitable and will not be going to Barbados this week, opting instead to stay at home and work on trying to solve the crisis. That's good -- and with so many controversial resource projects on the docket, starting with the Teck oilsands mine, he's going to need all the practice he can get.
Tuesday 11 February 2020
Politically deniable
One of the key things that separates economics from more rigorous sciences such as physics and chemistry is the near-impossibility of conducting experiments in an effort to validate theories. Economics happens in real time. You can't re-run it under different assumptions to see what would have happened in some alternative universe.
As Brexit unfolds (unravels?) in the coming months and years, this will be significant. Sure. leaving the EU is a huge development for the UK economy, but it's far from being the only factor that will affect the country's economic performance. Just at this moment, for example, coronavirus is almost certainly a bigger risk factor than Brexit, and who knows what other shocks the future may bring? This means that even if the UK economy collapses into recession in 2022, it will never be possible to say definitively that a botched Brexit was the cause, though that won't stop Remainers from making that claim. Equally, if the UK economy booms in 2022, it won't be possible to assert that Brexit has been a boon, although again, that won't stop Brexiteers from crowing about it.
That's not particularly rigorous, but you could call it the scientific form of political deniability. No matter how badly things may go, Boris Johnson and his pals will always be able to argue that the bad stuff was going to happen anyway: "Events, dear boy, events", as Johnson's predecessor Harold Macmillan (PM 1957-63) famously said when a reporter asked him what kept him awake at night.
That level of deniability will never be enough, of course. Johnson will need someone specific to blame if things go wrong, and he is already laying the groundwork. The scapegoat will, of course, be the EU itself. Pro-Brexit sections of the UK media are already full of stories of how Johnson is "furious"with the EU for supposedly reneging on deals regarding trade and such that only really existed in the febrile recesses of his own mind.
The EU made it clear throughout the agonizing three years-plus of Brexit negotiations that the UK would never be allowed to cherry-pick the parts of the existing relationship that it liked and walk away from the rest while ceasing to contribute to the EU budget. Yet cherry-picking exactly describes the UK's opening position ahead of the formal talks on future arrangements that are set to begin in March. Not surprisingly, the EU is having none of this and is making its position understood in no uncertain terms.
This all suits Johnson well enough in the near term. Standing up to Johnny Foreigner plays well with the portions of the electorate that voted for Brexit. In the more-than-likely event that talking tough gets Johnson precisely nowhere and the UK reaches the end of the year without a deal, the back-and-forth yelling across the English Channel will allow Johnson to claim that the ensuing hard Brexit, with all the disastrous consequences that is likely to entail for the UK economy, was all the fault of Brussels.
This is not a foolproof strategy for Johnson. If things go very seriously wrong and the UK manufacturing and financial sectors leave en masse for Europe, blaming it all on the EU may not be much of a vote winner, though of course with his huge Parliamentary majority, Johnson doesn't have to worry about that until 2024.
Still, it is remarkable to note how foolhardy the government's approach has been since its election victory. It's not just the EU that Johnson is antagonizing. To take one big example, Johnson's decision to allow Huawei to participate in the UK's 5G plans has infuriated the Trump administration. The new UK-US trade deal that Johnson touted back in the fall looks unlikely now: Trump's asinine trade guru Peter Navarro suggests that the UK is now second in line behind the EU in the pecking order for new trade deals. That's got to hurt -- and there is no doubt a lot more to come in the months ahead.
As Brexit unfolds (unravels?) in the coming months and years, this will be significant. Sure. leaving the EU is a huge development for the UK economy, but it's far from being the only factor that will affect the country's economic performance. Just at this moment, for example, coronavirus is almost certainly a bigger risk factor than Brexit, and who knows what other shocks the future may bring? This means that even if the UK economy collapses into recession in 2022, it will never be possible to say definitively that a botched Brexit was the cause, though that won't stop Remainers from making that claim. Equally, if the UK economy booms in 2022, it won't be possible to assert that Brexit has been a boon, although again, that won't stop Brexiteers from crowing about it.
That's not particularly rigorous, but you could call it the scientific form of political deniability. No matter how badly things may go, Boris Johnson and his pals will always be able to argue that the bad stuff was going to happen anyway: "Events, dear boy, events", as Johnson's predecessor Harold Macmillan (PM 1957-63) famously said when a reporter asked him what kept him awake at night.
That level of deniability will never be enough, of course. Johnson will need someone specific to blame if things go wrong, and he is already laying the groundwork. The scapegoat will, of course, be the EU itself. Pro-Brexit sections of the UK media are already full of stories of how Johnson is "furious"with the EU for supposedly reneging on deals regarding trade and such that only really existed in the febrile recesses of his own mind.
The EU made it clear throughout the agonizing three years-plus of Brexit negotiations that the UK would never be allowed to cherry-pick the parts of the existing relationship that it liked and walk away from the rest while ceasing to contribute to the EU budget. Yet cherry-picking exactly describes the UK's opening position ahead of the formal talks on future arrangements that are set to begin in March. Not surprisingly, the EU is having none of this and is making its position understood in no uncertain terms.
This all suits Johnson well enough in the near term. Standing up to Johnny Foreigner plays well with the portions of the electorate that voted for Brexit. In the more-than-likely event that talking tough gets Johnson precisely nowhere and the UK reaches the end of the year without a deal, the back-and-forth yelling across the English Channel will allow Johnson to claim that the ensuing hard Brexit, with all the disastrous consequences that is likely to entail for the UK economy, was all the fault of Brussels.
This is not a foolproof strategy for Johnson. If things go very seriously wrong and the UK manufacturing and financial sectors leave en masse for Europe, blaming it all on the EU may not be much of a vote winner, though of course with his huge Parliamentary majority, Johnson doesn't have to worry about that until 2024.
Still, it is remarkable to note how foolhardy the government's approach has been since its election victory. It's not just the EU that Johnson is antagonizing. To take one big example, Johnson's decision to allow Huawei to participate in the UK's 5G plans has infuriated the Trump administration. The new UK-US trade deal that Johnson touted back in the fall looks unlikely now: Trump's asinine trade guru Peter Navarro suggests that the UK is now second in line behind the EU in the pecking order for new trade deals. That's got to hurt -- and there is no doubt a lot more to come in the months ahead.
Monday 10 February 2020
Scorecard
OK, I'm back, after an excellent Caribbean cruise to celebrate one of those nasty birthdays with a "0" at the end. Let's get back into the swing of things by reviewing the predictions I made in my final post before my "Hiatus".
- Trump vs Thunberg at Davos. Prediction? Short-term winner: Donald; long-term winner: Greta. Trump and his minions saw fit to bad-mouth Ms Thunberg, even suggesting she should take an economics course before speaking out, but there's little doubt that in the long run, she's on the side of the angels. One possible complication: we are nearing the start of a new solar cycle that some experts have warned could trigger a mini ice age, which would no doubt overjoy the deniers. However, this article seems to refute that argument quite comprehensively
- Bank of Canada decision day (January 22). Prediction? Unch. Correct! However, the growing impact of the coronavirus outbreak on global economic activity could push the Bank into easing mode very soon -- although, given the linkages among major economies nowadays, it's not at all certain that lower rates would provide much benefit.
- Brexit Day (January 31). Prediction? Short term impact: limited; long-term impact: severe but politically deniable. This is a bit more complicated than the other "predictions" so I will deal with it in a separate post, mainly to explain what I mean by "politically deniable". .
- Trump impeachment. Prediction? Short term winner: Trump. Long term loser: rule of law. Trump is certainly the winner in the short term, and is proving remarkably but unsurprisingly graceless and vindictive in his moment of supposed triumph. As for the rule of law, Alan Dershowitz's jaw-dropping argument that anything the President does in the belief that it's for the good of the country is ipso facto not impeachable is profoundly damaging, though it might not hold up in court.
- Super Bowl LIV (February 2). Prediction? KC, unless Mahomes is hurt. Correct, but only just. I watched the game on a giant screen beside the pool on the ship. This was great, although since the broadcaster was ESPN Caribbean, all of the ad slots were filled with promos for upcoming cricket and European soccer games, to the bemusement of much of the audience. As far as the game itself goes, it seemed as though Mahomes spent three quarters playing like Garoppolo and Garoppolo spent three quarters playing like Mahomes. Fortunately for my prediction, they both reverted to their true selves in the final quarter. Early prediction for next year: KC again, or Baltimore.
Subscribe to:
Posts (Atom)