By Jason Kirby - Monday, January 12, 2009 - 8 Comments
The fall of Wall Street has claimed six lives already
It’s one of the most deeply ingrained pop-culture images of Wall Street—the distraught stockbroker out on the window ledge. During the bank bailouts in September, protesters outside the New York Stock Exchange carried signs scrawled with the word “Jump.” And a recent New Yorker cartoon made light of a banker who’d thrown himself out his office window. Now, as the crisis deepens, satire is giving way to reality. At least six suicides have already been linked to the stock market collapse.
The most recent is that of German billionaire Adolf Merckle, whose bad investment bets threatened to bring down his empire. He was killed by a train. Others include René-Thierry Magon de la Villehuchet, a French money manager who lost US$1 billion of his clients’ money in the Madoff scandal. A few days before Christmas he took sleeping pills, then slashed his left arm with a box cutter. London financier Kirk Stephenson threw himself in front of a train. Russell Smith, a Deutsche Bank financial adviser, killed himself after advising family friends to invest in a fund that lost them $13 million. In his suicide note he apologized for the losses and said, “I cannot survive this, financially or otherwise.” Meanwhile, Barry Fox, a former analyst at failed securities firm Bear Stearns, jumped from his 29th-storey apartment after losing his job.
By Duncan Hood - Wednesday, December 3, 2008 at 3:51 PM - 9 Comments
As this surprising graphic shows, the amount of money pledged to bail out the…
As this surprising graphic shows, the amount of money pledged to bail out the U.S. economy amounts to more than: the amount spent on getting a man on the moon, the Vietnam War, the Korean War, the Iraq War, NASA’s all-time budget and The New Deal, combined. (And yes, the numbers are inflation-adjusted.) Imagine what the U.S. could have done with that money if it didn’t have to bail out all those banks…
By Andrew Coyne - Monday, November 24, 2008 at 4:08 PM - 72 Comments
Went to hear Paul Martin speak at the Canadian Club today. He was impassioned, articulate, and compulsively boastful, as all former politicians are — an endless recitation of his many achievements and visionary ways, all the good works he was performing before, you know…
On one point I sort of agreed with him, though: the present government cannot escape blame for the coming deficit, having raised spending at such a reckless pace since it came to office. (I would not be so churlish as to point out that spending rose even faster in the last years of the Martin government.) Still, I am stuck on one point: Martin also said he favoured running a deficit, as a means of “stimulating” the economy in this time of worldwide economic crisis.
I wanted to ask him, but didn’t: So if you were prime minister today, would you run a deficit or not? If not, then what becomes of any putative Keynesian stimulus? If so, then what’s your beef with Harper? If deficits are what’s on order, that’s what he’s fixing to deliver.
It’s one thing for green-eyeshade types like me to grump about the Harper spending record, since I don’t actually think deficits stimulate anything, except a lot of hurried, ill-thought-out “infrastructure” schemes: the bureaucrats have already been given their marching orders by the current Finance minister, namely to “get the money out the door.”
But it makes no earthly sense to be attacking the govenment for running a deficit in one breath, and calling on it to do so with the next.
CONTRARIWISE: Mind you, this sort of incoherence is rampant these days. The problem is that consumers have been spending too much — unless it’s that they’re saving too much. Banks lent far too freely, but under no circumstances should they lend less. The United States has been living beyond its means for far too long. So we’ll pitch the US government headlong into trillion dollar deficits in the name of stimulating more consumer spending, much of which will go to suck in imports. I guess this is that “pragmatism” we’ve been hearing so much about…
By selley - Tuesday, November 18, 2008 at 2:24 PM - 7 Comments
Must-reads: …Jeffrey Simpson and James Travers on the political fallout from our collapsing economy;
Casualties of the bailout
In which Stephen Harper prepares to abandon conservatism for good, and Bob Rae weeps openly into his Pinot Grigio.
Sun Media’s Greg Weston predicts tomorrow’s Speech from the Throne will “be little more than a terse statement of the obvious”—which is, in the words of a PMO official, that “the primary focus of this Parliament will be the economy, and other areas [we] committed to during the campaign … are secondary.” This likely means that measures such as the diesel fuel excise tax cut and even “the Conservatives’ hallmark crime-fighting measures will probably be pushed to the back-burner,” Weston agues. After all, hitting up “Canadian taxpayers … for billions of dollars to help rescue the economy from a tsunami of red ink” is a full-time job on its own.
The Calgary Herald’s Don Martin gets the same PMO briefing as Weston and adds tax credits for seniors and “for kids’ piano lessons” to the list of election promises we should not expect to see fulfilled in the near future. But breaking such promises pales in significance to the “horrifying” overall optics of Harper’s situation, Martin suggests. The Prime Minister “is on the record as opposing ‘Band-aid’ financial assistance for companies while insisting deep tax cuts were the way to keep corporations in Canada and defiantly declaring there would be no deficit under his watch,” Martin writes, and he’s in danger of abandoning all three in incredibly short order. That’s not necessarily his fault, of course; Canada can’t very well zag when the United States zigs. But with MPs returning to the House of Commons—and without Peter Van Loan’s silver tongue to protect him, we’d add—his life will nonetheless become increasingly difficult.
By selley - Monday, November 17, 2008 at 1:25 PM - 15 Comments
Must-reads: Rosie DiManno on race statistics; Lawrence Martin on finding a new Speaker; Doug Saunders on waiting for a European Obama; Greg Weston on Jim Prentice’s new job; Jeffrey Simpson on bailing out the Detroit Three; David Frum on the GOP’s bleak future; Don Martin on Elizabeth May.
Change we don’t believe in
Sure, the Liberal party will soon “change.” But neither it nor Canada, the pundits lament, will Change.
Ignatieff vs. Rae vs. LeBlanc is precisely the leadership race the Liberals needed, L. Ian MacDonald opines in the Montreal Gazette. For one thing, he says, “it will keep costs down at a time when the party is broke.” But more to the point, it means “amateur hour is over.” The only two legitimate candidates understand their goal is to “unite the party, fill its campaign coffers, and win the next election,” and nothing else. No young people; no new ideas; no funny business.
The Gazette‘s Don Macpherson also handicaps the race for the leadership, suggesting—weirdly, in our view—that “because of the unfortunate timing of the current leadership race, Ignatieff starts off his second run risking unfavourable comparison with the charismatic [Barack] Obama.” This is particularly true in Quebec, he argues, where election fatigue has set in and there’s nothing remotely novel about Charest vs. Marois vs. Dumont. Fair enough, but who’s Ignatieff up against? Rae and LeBlanc, and then Harper? Which of those three juggernauts is going to out-Obama Iggy?
Miscellaneous Canadian news…
Canada’s pundits are still all over the shop.
The Calgary Herald’s
Miscellaneous Canadian news
Canada’s pundits are still all over the shop.
The Calgary Herald’s Don Martin surveys the various motions and proposals up for discussion at the Tories’ convention in Winnipeg and concludes “the Conservatives have buried their old guard ways under a hefty slab of mainstream ideas, even though few seem to fit with the economic challenge of governing today.” No more “abortion-limiting, capital-punishing, immigrant-curbing inclinations,” for example—and even if there were some, everybody knows Stephen Harper would lay an instantaneous smack-down on them anyway. Just lots of little ideas, some affordable, some not, and most of which “would not look out of place on a Liberal party convention floor.” Ouch.
The Globe and Mail’s Lawrence Martin pulls back the mysterious “cloak” that enshrouds Kevin Lynch, Clerk of the Privy Council, whose power has reached such levels that he can safely be considered the second most powerful man in Ottawa. (Third most powerful if you count Earl McRae.) And that power is raising some disquieting questions, Martin notes, as the ostensibly apolitical PCO “increasingly vets communications and access to information requests and has come under criticism from Information Commissioner Robert Marleau for obstructionism.” The media traditionally has little access to the executive branch of government, Martin notes, and that was fine “in the days when power was less concentrated at the centre.” Today, however, he deems this arrangement “inadequate.”
By selley - Wednesday, November 12, 2008 at 1:32 PM - 19 Comments
Miscellaneous Canadian news…
On a weird, slow day in the world of punditry, that’s
Miscellaneous Canadian news
On a weird, slow day in the world of punditry, that’s the best headline we can come up with. Sorry.
The Toronto Sun’s Peter Worthington looks at what strikes us as a rather bizarre proposal to replicate the Vimy Memorial somewhere on Canadian soil—so that Canadians can take in its replicated grandeur, obviously, but also so that they might (in the words of Bruce Stock, the Canadian veteran behind the idea) “better understand how important it is to Canada.” This strikes us as something a good history unit could accomplish better than, as Stock proposes, a privately run interpretive centre. (This harrowing portrait of trench warfare is brought to you by Monsanto!) And with all due respect to Messrs. Stock and Worthington, the $1.6 million the memorial cost in 1936 does not inflate, at 4 per cent per annum, to $13 million today. We make it roughly double that—which, at $2,500 a pop, would be enough to send nearly 11,000 students to Vimy itself. This strikes us as a super idea.
The Toronto Star’s Thomas Walkom is happy to hear the prime minister and the premiers “talking about infrastructure,” because that’s government code for not getting “too hung up on balancing their books”—i.e., running deficits. And he will resist the temptation to dismiss all the talk going on among the “so-called G20” leaders as mere bafflegab, because “in a global crisis, talk is not meaningless.” Unfortunately, he argues, General Motors and other looming catastrophes seem determined to outpace the efforts of the world’s governments to deal with them. Still, he takes solace in seeing those governments move uncommonly quickly to address “the most serious economic crisis in decades.”
By selley - Tuesday, November 11, 2008 at 3:42 PM - 4 Comments
Pundits take on the tanking economy, the woebegone Liberal party, and the
Pundits take on the tanking economy, the woebegone Liberal party, and the tragedy of Canada’s portrait gallery.
The Globe and Mail’s Jeffrey Simpson suggests the Liberals may be hoping “to improve their fortunes” in British Columbia by holding their May convention in Vancouver, provides no evidence to support this suggestion, and then explains what just about everyone could have figured out for themselves based on very recent precedent: it won’t work. This bit of weirdness leads into a handicapping of the leadership race among the B.C. delegates, in which Simpson has Michael Ignatieff ahead of Bob Rae by virtue of having “signed up the largest number of big-name … organizers.” He also predicts this will be the last delegated convention in Canadian history.
The Toronto Star’s James Travers applauds the prime minister’s and the premiers’ willingness to embrace “job-generating infrastructure spending,” and suggests numerous other economy-boosting measures they might consider in their newfound spirit of collegiality: hiking E.I. benefits, “declar[ing] a sales tax holiday to stimulate comatose retail sales” or harmonizing provincial and federal sales taxes. But that newfound spirit is the most important point, Travers argues, in the tough times ahead. “If not much else good, the financial crisis is at least creating preconditions necessary for closer co-operation.”
By selley - Monday, November 10, 2008 at 1:49 PM - 14 Comments
Down to business
In which the audacity of hope meets reality, and a bunch of know-it-all newspaper pundits. Phooey!
The Globe and Mail‘s John Ibbitson looks at the delicate politics of dealing with the ongoing financial crisis when only Barack Obama’s plans really matter, but George W. Bush is still president, and Obama wants nothing less than to be seen to be cozying up to Dubya. “It is the president-elect who has a clear agenda to solve an economic crisis”—i.e., a stimulus package likely costing $100 billion or thereabouts, coupled with bailouts for crappy American automakers—”and who must convince a lame-duck Congress to pass it, and a lame-duck President not to veto it,” Ibbitson observes. And thus far, he says Obama has looked very “presidential” in handling the crisis. But events will dictate whether he’s able to use the recession “to justify strong measures in energy conservation, infrastructure renewal, reform of financial regulations and improvements to health care and education,” or whether he gets swallowed by it whole.
Obama faces much the same economic situation Bill Clinton did when he became president-elect, Terence Corcoran argues in the National Post. “Harold Poling, then chairman of Ford, called on Washington to bail the auto industry out of its health care costs by setting up a national health care system;” some economists demanded a stimulus package, while others urged restraint; and “environmental activists called for strategic taxes on investment to encourage capital to flow into energy efficient and waste-reducing activities.” What happened instead during the Bush-Clinton interregnum was that simple messages and solutions became burdened with complexity, doubt and conflict amongst experts. It “drown[ed] out any Yes We Can belief that solutions are simple and at hand and all that’s needed is a decisive can-do attitude,” says Corcoran. And he sees much the same fate befalling Obama.
By Jason Kirby - Friday, October 24, 2008 at 4:54 PM - 1 Comment
There seems to be quite a bit of demand for levity these days, judging…
There seems to be quite a bit of demand for levity these days, judging by the interest in my previous post about humour amidst the financial crisis. So here are some more jokes and cartoons to help ease the pain.
By Luiza Ch. Savage - Monday, October 20, 2008 at 10:31 AM - 10 Comments
The Washington Times argues in an editorial that Stephen Harper “is proof that fiscal conservatism works.”
Meanwhile, the Washington Post on Thursday reported that Canada has remained “relatively insulated” from the worldwide financial crisis, in large part because Canadian banks “are more tightly regulated, more liquid and less highly leveraged.” The Canadian example is now popping up in arguments over whether too much or not enough regulation is to blame for the crisis. Here and here.
By Andrew Coyne - Thursday, October 9, 2008 at 12:15 PM - 98 Comments
“Mr. Dion said that unlike the Conservatives, the Liberal Party understands that Canadians are worried about their savings and pensions….” – Only the Liberal Party can stop Harper’s government, Liberal press release.
“Ordinary families are very worried about their savings, their pensions, their homes and their jobs,” Mr. Layton said…” — Harper denounced as insensitive, National Post
Meanwhile, back in reality…
Canada has the world’s soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.
But Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after a 50 billion pound ($86.5 billion) pledge this week by the government to bolster bank balance sheets.
The United States, where some of Wall Street’s biggest financial names have collapsed in recent weeks, rated only 40, just behind Germany at 39, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.
When will this Prime MInister
do somethingshow he cares about protecting Canadians’ savings this frightening run of bank failures the demise of global capitalismATM fees?
By Andrew Coyne - Wednesday, October 8, 2008 at 11:42 PM - 50 Comments
The Dow Jones industrial average is down one-third from its high a year ago.
How does that compare with previous downturns?
The stock market lost almost 90 percent of its value during the Great Depression. During the most recent bear market, which lasted from March 2000 to October 2002, the market lost about 50 percent.
Since 1926, there have been 18 bear markets, a situation usually declared when a stock index drops more than 20 percent from its previous peak.
During the average bear market, the Standard & Poor’s 500 index has declined 36 percent, according to the Leuthold Group, a Minneapolis investment firm.
Coincidentally, on Tuesday the S&P 500 was down 36 percent from its high on Oct. 9, 2007.
When will this Prime Minister do something show he cares about this unprecedented collapse more or less average decline in stock prices?
By Andrew Coyne - Wednesday, October 8, 2008 at 1:30 PM - 111 Comments
I didn’t care much for Stephen Harper’s accusation, earlier in the campaign, that the opposition were cheering for a recession. At the time, it seemed like a cheap shot. But the longer this goes on, the more I’m starting to think there’s something in it. The Liberals are now trying to make a “gaffe” of Harper’s perfectly sensible observation that the present panic on the stock markets presents a remarkable buying opportunity, for those with cooler heads. Stephane Dion, in particular, was quick to denounce the advice as “so insensitive.”
I’m sorry? How? What would they have him say? Sell? Take your lumps? Do nothing? You can only call it “insensitive” if you are bound and determined that nothing should break the spell of panic that now grips the country — that no possibility of an upside should be allowed to intrude. Just so long as cooler heads do not prevail.
This is demagoguery of the worst sort. And I don’t just mean that nothing about the present state of the Canadian economy justifies lumping it in with the United States or Europe, still less invoking the ghost of R. B. Bennett. We have not suffered a real estate crash, nor are we likely to; we have not seen a single financial institution go under, nor is any likely to; we did not have anything like the sub-prime mortgage mess; nor do we have the institutional equivalents of Lehman Brothers or Bear Stearns — large, highly-leveraged, stand-alone investment banks without the backing of a chartered bank.
But that’s not what distinguishes the opposition demagoguery in this case. It isn’t that they’re fear-mongers: it’s that, having mongered such fears, they do not propose to do anything about them. Sensibly enough — the problems of the Canadian economy, such as they are, find their origins outside our borders, and will find their solutions there. But it’s the height of hypocrisy, whaling away at the government for doing nothing while offering precisely the same themselves. The 85 lefty economists who signed that letter demanding the government go into deficit and otherwise “stimulate” the economy might have been out to lunch, but they were at least putting their names on the line, and exposing their proposals to public criticism. The opposition are taking no such risk, or responsibility. Continue…
By Andrew Coyne - Wednesday, October 8, 2008 at 8:53 AM - 60 Comments
Economists at Canada’s largest bank have reduced their expectations for economic growth, while saying the domestic economy “remains firm.”
The Royal Bank of Canada now projects national growth this year of 0.9 per cent, down from its previous prediction of 1.4 per cent.
It cites “the persistent turmoil in financial markets and disappointing economic trends over the past two quarters.”
For 2009, the report released Wednesday sees a modest revival in gross domestic product with a growth rate of 1.5 per cent.
“The continued weakness in the U.S. economy is expected to dampen growth in Canada,” said Craig Wright, RBC’s chief economist.
“However, this pressure on our growth will be tempered by strong commodity prices which are contributing to robust export revenues and providing support to Canadian domestic spending via a boost to incomes.”
The report notes that Canada’s housing market “is showing signs of coming off the boil” after almost a decade of high activity.
“However, any weakening is expected to be more moderate compared to the U.S. experience as Canadian mortgage markets did not see the excesses that afflicted the U.S. housing sector,” RBC says.
It also notes “fatigue” in Canada’s labour market, with net job gains of only 87,000 in the first eight months of this year, after 320,000 new positions on average each year from 2002 to 2007.