By Erica Alini - Saturday, January 26, 2013 - 0 Comments
The job of fixing financial markets is by no means over, and what does or does not happen over the next two years will be crucial, Bank of Canada Governor Mark Carney said at the World Economic Forum annual gathering of the world’s financial elite in Davos, Switzerland.
Here’s a quick summary of the governor’s remarks:
- The global economy isn’t completely out of the woods yet
Bailouts and tighter banking rules haven’t eliminated the “tail risks” to the global economy and the stability of financial markets. The next bit of financial reform will have to increase oversight of the shadow banking sector (that is, institutions that in some ways operate like banks but have so far escaped stricter rules) and over-the-counter-derivatives, which are privately negotiated and have remained unregulated. These have contributed to exacerbating the crisis in 2008, and might do so again if left unchecked, the governor argued. The remarks were interpreted as a warning that the Financial Stability Board, an international financial regulator which Carney currently heads, will be soon tackling these issues.
- Central banks can’t do it all
Central banks, which have aggressively sought to stimulate growth in many advanced economies by keeping interest rates at rock-bottom and pumping money into the economy, can’t restore lasting global growth on their own.“There is not an ability of central banks to take all this risk out or set the seeds for a sustainable recovery,” Carney said. Sensible fiscal policy and structural reforms to eliminate the remaining vulnerabilities that permitted the 2008 crisis are essential parts of the cure, the governor noted.
- But monetary policy hasn’t run out of options
Still, Carney rejected suggestions by co-panelist Angel Gurria, head of the OECD group of rich countries, that central banks have run out of tools to prop-up fledgeling economic recoveries around the developed world. Monetary policy options haven’t been “maxed out,” the BoC chief argued.
The remark also ran counter the position of Sir Mervyn King, current governor of the Bank of England, which Carney will start heading in July. Speaking to reporters this week, King said he believed the bank had run out of means to boost Britain’s economic growth. Carney refused to elaborate on whether the remaining policy options he alluded to include NGDP targeting, a controversial measure the governor praised in a December speech and that has made him the target of some criticism in Britain. (Stephen Gordon explains what NGDP targeting is here.)
By Erica Alini - Friday, January 25, 2013 at 10:44 PM - 0 Comments
One of the main themes at the World Economic Forum Annual Meeting this year is gender equality—and the big talk about that happened today.
Walking into the room this morning, you’d have been entirely justified in keeping your expectations low. For starters, panel discussions are notoriously not what’s interesting about this peculiar gathering of nerds and CEOs in the Alpine setting of Davos, Switzerland. The action, as every reporter and most participants know, is in everything that happens on the sidelines: the ideas being thrown around in the hallways, the amazing anecdotes told over lunch, the people you might bump into at the cafeteria.
The odds were especially bad for this panel on “Women in Economic Decision-Making.” The fact that only 17 per cent of Davos attendees this year are women made it look exceedingly irrelevant.
For the first thirty minutes or so, your instincts would have been proven entirely correct.
That is not to say there weren’t good things about the first half-hour. Moderator Herminia Ibarra, a business professor at INSEAD, France, had some striking statistics: women make up 60 per cent of university graduates in Europe, but then, in the Old Continent as well as the U.S., only four to five per cent of them become CEOs. Also, only 14-16 per cent of corporate board members in developed countries are female.
C-suite headhunter Kevin Kelly, the only man on the panel, pointed out that of the 5500-some board seats at Fortune 500 companies only about 300 turn over every year, of which roughly 20 per cent go to women. Even if one were to mandate that 50 per cent of those seats go to female candidates, the gender composition of corporate boards would change at a glacial pace… (Kudos to him for coming up with something original and relevant to say about women quotas—it ain’t easy.)
And then there was Sheryl Sandberg.
By Erica Alini - Thursday, January 24, 2013 at 4:13 PM - 0 Comments
At this year’s World Economic Forum Annual Meeting, Roubini, a.k.a Dr. Doom, was his customary gloomy self.
America is in for another twelve months of “anemic, subpar growth,” which he pegged at 1.6 per cent, and a “very high” unemployment rate. This despite a rebounding housing market, a helpful boost from the energy sector (think: shale oil and gas), manufacturing employment looking half-decent and the Federal Reserve continuing to pump money into the economy.
Most of the blame for dragging down what could be a healthy pace of growth, Roubini said, goes to the usual suspects: Washington lawmakers. Their stop-and-go tax hikes and spending cuts will likely be enough to shave 1.4 per cent off GDP growth in 2013, but not enough to address the U.S.’s long-term debt woes.
But financial markets are also to blame for America’s paralysis, Dr. Doom continued. “The bond vigilantes are asleep at the wheel,” he said, hinting at the rock-bottom interest rates at which the U.S. has been able to borrow despite its gargantuan debt and seeming incapacity to do anything about it.
Investors’ concerns over countries like Greece, Spain, Italy and Portugal have forced hard political choices in Europe, he noted. Alas, that blessing in disguise has so far eluded Washington.
By Erica Alini - Thursday, January 24, 2013 at 12:55 PM - 0 Comments
The world’s rich and powerful, plus a fair number of big thinkers—the latter not so powerful and certainly not as rich—are partying it up and talking about fixing the global economy in the Davos, among the snow-capped mountains of Switzerland.
Here’s the latest on the World Economic Forum Annual Meeting from the Maclean’s team:
Your guide to Davos
Who’s who and what’s what at WEF 2013
David Cameron, party pooper
The PM’s remarks quickly took over the conversation—and the Twitter feed
Dr. Doom: why bondholders are partly to blame for America’s fiscal mess
Economist Nouriel Roubini on why spooked investors are what Washington politicos need
How Sheryl Sandberg rescued gender equality in Davos
With women making up only 17 per cent of delegates at the World Economic Forum, talk of gender equality seemed doomed. Until the Facebook COO took the stage.
Mark Carney in Davos: what’s up next for the global economy
All you need to know about what the governor said in four bullet-points.
Also, from the archives, here’s Paul Wells on PM Harper’s landmark Davos speech last year:
And here’s what chit-chat looks like when world leaders, business giants and big thinkers mingle:
By Erica Alini - Wednesday, January 23, 2013 at 1:31 PM - 0 Comments
There, he finally did it. British Prime Minister David Cameron delivered his much-anticipated and several times delayed Europe speech today, promising an “in-out” referendum over whether Britain should stay in the EU by 2017.
Predictably, other European leaders were not impressed.
Speaking at Davos, where the 43rd edition of the World Economic Forum is in full swing, outgoing Italian PM Mario Monti tried to sound a positive note, saying he is “confident” British people will vote to remain in the Union. But, sharp jab at British Eurosceptics, he also said the EU needs “willing Europeans.”
Needless to say, the news from across the English Channel spoiled the mood at the WEF:
By Erica Alini - Wednesday, January 23, 2013 at 12:54 PM - 0 Comments
The World Economic Forum Annual Meeting is well underway in its Alpine setting in Davos, Switzerland.
Here’s the chatter from the floor:
By Erica Alini - Tuesday, January 22, 2013 at 6:36 PM - 0 Comments
The 43rd edition of that Alpine see-and-be-seen wonk party that is the World Economic Forum Annual Meeting kicked off today. From now until Saturday, the global financial elite—over 2,500 attendees who made the WEF’s invitation-only list—will be schmoozing and talking about that grand-sounding fiction called “the global agenda.” Davos is where world leaders, top businessmen and big thinkers exchange business cards, chat over coffee and mull new ideas as they munch hors d’oeuvres.
So who’s who and what’s what at this year’s WEF meeting? Here’s a quick guide to the event. Follow us over the next few days for more coverage:
Canada’s appearance at Davos this year will be no doubt different than the last. Twelve months ago, Prime Minister Stephen Harper used the WEF stage to deliver a bold speech promising “major transformations” for the country, what Maclean’s Paul Wells dubbed a “Throne Speech.” It foreshadowed changes to Old Age Security (without explicitly saying s0); promised we’d focus on exporting energy to Asia; and bragged about Canada’s standing among G7 economies, the solidity of our banks, and the unmatched speed of our jobs recovery.
This year, things will be more subdued. The Canadian economy, though still faring well, has lost some of its shine. The Prime Minister, for his part, is not attending, sending instead Finance Minister Jim Flaherty, Foreign Affairs Minister John Baird, International Trade Minister Ed Fast and Industry Canada’s Christian Paradis. Bank of Canada chief (for now) Mark Carney is the only top policymaker in attendance, and a panel speaker on Saturday. Alberta’s Alison Redford and Quebec’s Pauline Marois are also reportedly going, along with a large contingent of top dogs from the world of business, including RIM’s CEO Thorsten Heins.
Other major attendees include Germany’s Angela Merkel, Russian Prime Minister Dmitry Medvedev (read: Putin) and outgoing Italian Prime Minister Mario Monti. The one to watch, though, is British PM David Cameron who is expected to deliver a major anti-E.U. speech tomorrow and will be a keynote speaker in Davos later in the week.
From the world of so-called global governance there will be IMF chief Christine Lagarde, the World Bank’s Jim Yong Kim and the World Trade Organization Director-General Pascal Lamy. European Central Bank governor Mario Draghi, of course, is there as well.
Big shots from the private sector include JPMorgan CEO James Dimon, technology queen bees Sheryl Sandberg (COO of Facebook) and Marissa Mayer (neo-CEO of Yahoo), as well as George Soros. Other names of notice include Henry Kissinger, Larry Summers and economist Nouriel Roubini, a.k.a. Dr. Doom, who’s not scheduled to give speeches but is tweeting like mad.
Oh yes, and there’s also Charlize Theron. She just delivered some of the opening remarks.
The official theme of this year’s reunion is “resilient dynamism,” whatever that means. (The cryptic title is in keeping with tradition. For a sample of past, inscrutable wording choices see here.) For the official program, see here.
1. Canada Goes to Davos with a Little Less Swagger. Our bragging rights are not what they used to be. The Wall Street Journal takes notice. 2. The Confidential List of Everyone Attending Davos this Year. A series of detailed, interactive graphs let you search by name, title, affiliation, country, continent etc. Very fun—and revealing. 3. Davos 2013: why are only 17% of delegates women? So much for gender equality being one of the three key priorities identified by the WEF this year. The Guardian‘s Jane Martinson laments. 4. Prophecies Made in Davos Don’t Always Come True. Davos is where the world’s biggest brains make the most ridiculous predictions, recalls the New York Times.
By Paul Wells - Friday, September 28, 2012 at 11:45 AM - 0 Comments
Marois’s new Harper-opposing policies discourage investment, immigration, resource development and healthy universities
It is a marvellous country that tolerates as many contrasting styles of government as Canada does. In the late 1990s Preston Manning gave a news conference in Ottawa where he argued that, with Mike Harris and Ralph Klein running Ontario and Alberta on the right, Jean Chrétien must somehow be kept from running Ottawa on the left. In the end the only mechanism that could be found to fix the problem, if it was one, was a succession of general elections. It took many years after Manning voiced his complaint, but today Stephen Harper is running the country in a different direction.
Unfortunately for fans of uniformity, the provinces move too. Ontario hasn’t been run the way Mike Harris, or Stephen Harper, would like it run for nearly a decade. British Columbia seems likely to tilt leftward soon too. And in Quebec—well, let’s have a look.
Watching the early moves of Pauline Marois’s Parti Québécois government, I’ve found myself thinking of a speech Harper gave at the World Economic Forum in Davos in January. This was Harper the economic manager laying out his long-term vision for Canadian prosperity. Even people who don’t like what he’s done to the long-form census or the long-gun registry might discern some horse sense in what the Prime Minister said at Davos. At the time I noted it was much like a big speech Paul Martin delivered seven years earlier.
By The Associated Press - Wednesday, September 5, 2012 at 3:52 AM - 0 Comments
LONDON – The United States has fallen in the global economic competitive stakes for…
LONDON – The United States has fallen in the global economic competitive stakes for the fourth year running, according to an annual survey from the World Economic Forum.
Though the world’s largest economy has become more competitive partly through its continued status as a global innovation powerhouse, the Forum says Wednesday the U.S.’s ranking has dropped two places to seventh. The survey finds there is low public trust in politicians, just two months before the presidential election.
Switzerland tops the overall rankings in the The Global Competitiveness Report 2012-13 for the fourth consecutive year, followed by Singapore.
The Forum ranks a country’s competitiveness according to factors such the state of its infrastructure and its ability to foster innovation.
Other northern European countries, such as Germany and the United Kingdom, also feature on the leaderboard, those in southern Europe continue to suffer from a host of economic problems.
By Peter Nowak - Wednesday, March 21, 2012 at 3:08 PM - 0 Comments
Yeah, baby! Canadians are the most awesome YouTube watchers and Facebook photo uploaders in the world, woohoo!
But deriving actual value from the Internet, as in jobs and money savings–you know, the kind of usage that actually matters–well, not so much.
That’s the conclusion reached by a new report released on Monday by the Boston Consulting Group, which looked at the economic impact the Internet has had on G20 countries. It turns out in Canada it accounted for about $49 billion or three per cent of GDP in 2010. That ranks ninth in the G20 and below the group’s average of 4.1 per cent.
The Internet’s contribution to Canada’s GDP is expected to grow to 3.6 per cent by 2016, which will place Canada even further behind the expected average of 5.3 per cent. By then we’ll be twelfth.
By John Geddes - Friday, February 3, 2012 at 12:30 PM - 0 Comments
It’s by two former senior finance department mandarins, Scott Clark and Peter DeVries, and brings badly needed clarity to the debate sparked by Prime Minister Stephen Harper’s surprise remark about his intention to reform pensions in his “major transformations” speech last week at the World Economic Forum in Davos, Switzerland.
Clark and DeVries argue that since the government has already clamped down on spending growth in big-ticket areas like defence and health, the projected rise in OAS costs isn’t by itself large enough to pose any real threat to federal finances.
Their commentary is well worth reading, but I also took the opportunity to interview Clark this morning for a less formal sense of how he sees this volatile debate unfolding. He brings the unique perspective of a former deputy minister of finance, and a key insider during the fight to eliminate the deficit back in the 1990s—when the Liberals decided against cutting seniors benefits as too politically risky.
Here’s part of our conversation, edited and condensed:
By Aaron Wherry - Thursday, January 28, 2010 at 3:34 PM - 40 Comments
The prepared text of the Prime Minister’s speech in Davos today.
“It’s great to be here in Davos and to have this opportunity to contribute to your discussions on some of the vital issues confronting the world today. Some of them are complex and they may, at times, seem abstract. But for ordinary men and women everywhere, the substance of what we talk about here translates into simple realities like a home, food on the table, or a better life for their children. So, it’s an important debate that we’re delighted to be part of.