The Progressive Economics Forum

Glancing idly at the numbers, I find to my slight surprise that the Canadian stock market (S&P/TSX) is now down about 25% from the May, 2008 peak, whereas the US stock market (S&P 500) is down by only about 10% from its peak in May, 2007. So, since the beginning of the crisis, owners of  [...]

The CCPA today released my report: “The Big Banks Big Secret” which provides the first public estimates of the emergency funds taken by Canadian banks.  The report bases its estimates on publicly available data from CMHC, the Office of the Superintendent of Financial Institutions, US Federal Reserve, the Bank of Canada, as well as quarterly [...]

This past weekend (March 31st), Sino-Forest Corp. announced it was filing for bankruptcy protection. The Chinese-Canadian company, once the largest publicly-traded forestry firm on the TSX, collapsed under allegations it was nothing more than a sophisticated fraud and Ponzi scheme. Sino-Forest’s demise wiped out about $6-billion in shareholders’ value, making it a catastrophe on par [...]

The federal government has failed to take up an historic opportunity to lock in ultra low interest rates on long term Government of Canada bonds. Normally – as outlined in annual debt management reports – the government follows a strategy which is intended to achieve two main goals -  low overall debt servicing costs, and [...]

Following up on my post on wealth and income of the top 1%, Eric Pineault wrote to add some data on financial wealth distribution for Canada. He had a research assistant comb through microdata from Statcan’s Survey of Financial Security from 2005, and notes: “the 1% richest (all households are classed according to net worth rather [...]

The wild swings in the North American financial markets this week serve as yet another reminder of the weakness of  any linkage between levels and changes in financial asset values and levels and changes in real economic variables. This is apparent for both bonds and equities. In the case of the US and Canada, the rise [...]

There’s been no shortage of new content on our blog this week. But I write to highlight a couple of interesting reads from other blogs. On The Globe and Mail blog, Andrew Hepburn (formerly of Sprott Asset Management) has a very good op-ed about financial speculation in food commodities. On the CCPA’s Behind the Numbers [...]

(The following was sent by ITUC Washington representative Peter Bakvis and deserves wider distribution. While this action by the World Bank might reduce food prices at the margin, it would be far preferable for them to push for regulation of speculation in food instead of joining in a destructive game.)   In partnership with Wall [...]

One concern is that this deal may undermine our ability to regulate financial markets. If the Canadian exchanges become majority owned in the UK, and if the Canada – EU deal is ratified with a Chapter 11 like investment clause, then we leave ourselves open to sanctions if and when we impose regulations which result [...]

The Report of the Task Force on Financial Literacy is all that one would have expected from one co chaired by the CEO of Sun Life Financial and the Chairman of  BMO Nesbitt Burns. There is hardly a whisper of criticism of financial institutions and the myriad fees, charges and interest rates they extract from [...]

One nice thing about Canada’s financial regulatory architecture is the provision that the bank act must be reviewed every 5 years.  This gives us all a time to take stock of the direction that bank regulation is heading.   This is the year we are due for the Bank Act review. After a couple of years of [...]

I’d get popcorn to watch ECB vs. the speculators, if the whole sorry story weren’t so sickening. The European Central Bank is meeting today to figure out what the bleep to do about this mess in Europe (the press conference is happening as I write). In the lead-up to the ECB announcement, non-core bonds (like [...]

This is well worh a read http://www.irisheconomy.ie/index.php/2010/12/01/barry-eichengreen-on-the-irish-bailout/#more-8831

Here is a keeper – an IMF study that argues that loss of working class bargaining power is an underlying cause of financial crises, and that retoration thereof is key to reducing debt. The abstract – “The paper studies how high leverage and crises can arise as a result of changes in the income distribution. [...]

What are banks for?  Typically, banks are described as intermediaries that take deposits and lend them out, earning what is called net interest margin on the gap between what is paid on the savings and what is earned on loans.  From where I stand, this description is wrong on three counts. First, it suggests that [...]

The front page of today’s Globe and Mail reports the latest chapter in the federal attempt to create a national securities regulator. (Premiers push back against national securities regulator plan).   Part of the Harper government’s response to the financial crisis was to promise to remedy the patchwork of provincial securities regulators.  If securities regulators [...]

Back in May when Greece was in the process of getting its “bailout” I kept wondering why it had to be that Greece would accept such harsh conditions when it held an ace up its sleeve. The proposed package of austerity, which would make the economy worse, was only an issue as long as Greece [...]

So, Export Development Canada (EDC) has agreed to lend Vale up to $1 billion US. This announcement comes on the heels of a bitter labour dispute at Vale’s Sudbury mines and in the midst of an ongoing strike at its Voisey’s Bay operations. The financial rationale is unclear. Although $1 billion is very large for [...]

Paul Krugman agrees with my view that the bond market is signaling  long term economic stagnation rather than experiencing a bubble – and he is, of course, far more influential and cogent than I. “But the argument has become even stranger recently, as it has become clear that investors aren’t worried about deficits; they’re worried [...]

The short answer to that question is that I don’t know. I am not a believer in the infallibility of financial markets and perfect information and all that stuff. But the bond market is surely speaking loud and clear. As an aside, the media focus excessively on the ups and downs of the stock market. [...]

Whenever the stock market falls, CNBC’s Larry Kudlow reliably blames the Obama administration’s allegedly anti-business policies. But when the market was rising on Obama’s watch, Kudlow generally did not talk about it. On tonight’s show, he took a different tack. He repeatedly asserted that the market has recently rallied not only on strong corporate profits, but also [...]

At the end of May in Quebec City at the annual Canadian Economics Association conference, the PEF awarded the second John Kenneth Galbraith Prize in Economics to John Loxley. Below is the full text of John’s Galbraith Lecture (pdf version with proper footnotes and formatting here). Congrats again to John for a lifetime of amazing [...]

A recent visit by some Regina friends reminded me how affordable public automobile insurance is. They insure two cars, one of which is newer than my car, for about the same rate as my one vehicle in Toronto. My first car, which I registered with Saskatchewan Government Insurance (SGI), cost about $500 per year. My sense is that [...]

            A year ago, as part of his 2009 crisis budget, Finance Minister Jim Flaherty created a Task Force on Financial Literacy.  The goal was to equip Canadians with more knowledge to traverse the minefields of high finance.  This week, just in time for Flaherty’s next budget, the Task Force released its initial “consultation” report. [...]

The case for a Financial Transactions Tax or FTT has crept in from the margins remarkably quickly. One year ago, the proposal for an internationally co-ordinated “Tobin Tax” on foreign exchange transactions was a dim memory from the early part of the decade. Today, the idea of broadening such a tax to include a far [...]

The good folks at PERI at U Mass Amherst led by Gerry Epstein and  Jane D’Arista have just launched a new web site so theirr useful work on why and how to reign in finance can be easily accessed. http://www.peri.umass.edu/safer/ “The Economists’ Committee for Stable, Accountable, Fair and Efficient Financial Reform (SAFER) is a focal [...]

I got speak on a panel for the BC Cooperative Association this week after a screening of Michael Moore’s new film, Capitalism: A Love Story. I thought it was quite well done, and better than I expected. Less of the MM kitsch and a fairly broad sweep over the history and current foibles of American [...]

            This week marks the one-year anniversary of the collapse of Lehman Brothers: the darkest moment of the global financial crisis, when those in charge genuinely feared for the survival of their system.            This somber anniversary has sparked a modest flurry of retrospection in the media.  But the dominant tone (Michael Moore’s new movie [...]

The London G-20 summit last fall may go down history as the meeting that saved the world. That’s a huge exaggeration of course, but leaders did agree to a program of co-ordinated monetary and fiscal stimulus which may have arrested an economic free-fall, and they agreed to an agenda for financial re-regulation with a view [...]

The WSJ is concerned about the implicit subsidy provided to financial institutions that are “too big to fail”(TBTF). Given the obvious willingness of the US government to support Wall Street titans during the height of the financial crisis, the market is pricing in the expectation that the government stands behind those institutions regarded as TBTF. [...]