A Tale of Two Economies...

[GRG55]

A thread for Canucks (and displaced Canucks), on a USA centric site, to watch the Canadian economy, and see if we really are all that independent from our cousins south of the border after all...
[As I like to remind my English-born mother-in-law, Canada will never be a truly independent nation until we get the Queen off our money ]

Three random items to start the confusion.

From the "Technically Canada Doesn't Have an Economy When There's No Hockey" file:

Things are pretty tough when an economy is so dependent on a bunch of overpaid, heavily padded, entertainers playing in taxpayer funded ice palaces. "The Canadian Economy" is thanking gawd they are finally back to work. Let's hope they keep giving 110% to make up for the lost time. And that Vancouver doesn't lose to Boston in the Cup final again. Or the next round of Vancouver riots will subject us to more "broken window" economic theory than we really need

Economy grows at fastest rate in seven months

The Globe and Mail

Published Thursday, Jan. 31 2013, 12:28 PM EST

Last updated Thursday, Jan. 31 2013, 7:23 PM EST

The Canadian economy expanded at its fastest pace in more than half a year, but the bigger picture is still one of slow growth.

The country’s gross domestic product rose 0.3 per cent in November, Statistics Canada said Thursday, its strongest showing in seven months as auto makers and oil firms ramped up activity...

...In Canada, the goods side of the economy led the better-than-expected monthly growth. Natural resources registered a bounce in the month, climbing 0.8 per cent on increases in crude petroleum extraction and mining. Among manufacturers, auto output revved up and so did primary metal production.

Construction activity was flat in the month – reflecting a drop in residential construction. Accommodation and food services declined amid fewer foreign tourists, while the arts-and-entertainment sector “continued to reel from the hockey strike,”...

From the "Downsizing for Growth" file:

Best Buy scales back as tablets take over and Target looms

The Globe and Mail

Published Thursday, Jan. 31 2013, 11:41 AM EST

Last updated Thursday, Jan. 31 2013, 7:09 PM EST

Best Buy Canada has seen better times.

The chain is closing 15 of its almost 230 big-box stores and cutting roughly 900 employees, a dramatic step for the retailer as it faces growing pressure from discount rivals and a fast-changing market.

The shutting of eight Future Shop and seven Best Buy big-box stores across the country comes as electronics retailers feel the squeeze of the burgeoning business at online retailers such as Amazon.com Inc. and Wal-Mart Stores Inc. and their cut-rate prices.

The cuts follow a similar move last March in the United States, where the parent company said it was closing 50 stores...

...On the same day the company announced it was reducing its work force by roughly 5 per cent, it also said it was moving toward smaller stores...

Finally, from the "If You Can't Downsize, Then Right-Size" file:

Sears Canada lays off 700 workers

Thu Jan 31, 2013 5:36pm EST

TORONTO (Reuters) - Sears Canada, which is struggling with shrinking sales and the looming arrival of Target Corp on the Canadian retail scene, said on Thursday it was laying off 700 workers as part of a plan to "right-size" the operation.

The job cuts will include 360 department store staff and about 300 distribution center workers, as well as some head office personnel...

..."The reductions are spread pretty well across the country as far as geography is concerned."...

[jk]

Re: A Tale of Two Economies...

here in the states, after the superbowl there will be a bit of attention to the endless nba schedule, then intense focus on "march madness" ncaa basketball tourney. then it's spring training for baseball around the time of the nba finals [and the hockey finals, i suppose]. so the key is obviously a more diversified sports economy. you need to pump up the audience for curling.

[GRG55]

Re: A Tale of Two Economies...

here in the states, after the superbowl there will be a bit of attention to the endless nba schedule, then intense focus on "march madness" ncaa basketball tourney. then it's spring training for baseball around the time of the nba finals [and the hockey finals, i suppose]. so the key is obviously a more diversified sports economy. you need to pump up the audience for curling.

My theory is that curling was invented by the Scots as an excuse to drink Scotch in winter. And golf was invented by the Scots as an excuse to drink Scotch in the summer (presumably caber tossing was intended to be an excuse to drink in the off-seasons?)

Canadians benefit because the pace of the games are similar and that means year-round employment opportunity for any versatile play-by-play commentator...

[don]

Re: A Tale of Two Economies...

an excuse to drink Scotch in winter

an excuse is needed? I'm confused . . .

[GRG55]

Re: A Tale of Two Economies...

an excuse is needed? I'm confused . . .

Well, last weekend the Scots I know claimed they were drinking to the memory of a dead poet. Any excuse'll do apparently...

[GRG55]

Re: A Tale of Two Economies...

From the "Owe Canada" file:

Moody's downgrades 6 Canadian banks

RBC the only one of Big 6 banks to escape downgrade

CBC News Posted: Jan 28, 2013 2:06 PM ET Last Updated: Jan 28, 2013 5:16 PM ET

Moody's Investors Service has downgraded the long-term credit ratings of six Canadian banks, including Toronto-Dominion, Bank of Nova Scotia, Bank of Montreal and CIBC. National Bank and Desjardins were also downgraded.

The ratings agency lowered each of its ratings one notch, citing high levels of consumer debt and high home prices as threats to the Canadian economy. Moody's had put all six banks under review in October...

...Canadian consumer debt has risen to a record-high 165 per cent of disposable income in the third quarter of 2012, up from 137 per cent in mid-2007...

[GRG55]

Re: A Tale of Two Economies...

Sears Canada lays off 700 workers

Thu Jan 31, 2013 5:36pm EST

TORONTO (Reuters) - Sears Canada, which is struggling with shrinking sales and the looming arrival of Target Corp on the Canadian retail scene, said on Thursday it was laying off 700 workers as part of a plan to "right-size" the operation.

The job cuts will include 360 department store staff and about 300 distribution center workers, as well as some head office personnel...

..."The reductions are spread pretty well across the country as far as geography is concerned."...

Just in case anybody was wondering, that works out to one Sears job loss per 5,507 square miles.

[GRG55]

Re: A Tale of Two Economies...

...From the "Downsizing for Growth" file:

Best Buy scales back as tablets take over and Target looms

...

Who says productivity isn't rising? High efficiency right-sizing in a high technology, always connected world.


‘I woke up to a text that I had lost my job,’ says Best Buy employee

Times Colonist
January 31, 2013

“I woke up to a text that I had lost my job,” said 18-year-old Shelby Ross, who had worked at Best Buy in Nanaimo since 2009...


...The company’s head office did not return calls Thursday. A statement called the closings part of a “transformational strategy.”...

[jk]

Re: A Tale of Two Economies...

Who says productivity isn't rising? High efficiency right-sizing in a high technology, always connected world.


‘I woke up to a text that I had lost my job,’ says Best Buy employee

Times Colonist
January 31, 2013

“I woke up to a text that I had lost my job,” said 18-year-old Shelby Ross, who had worked at Best Buy in Nanaimo since 2009...


...The company’s head office did not return calls Thursday. A statement called the closings part of a “transformational strategy.”...

i've heard of relationships being broken up by text. clearly the technology is penetrating ever deeper into the culture. progress indeed!

[lektrode]

Re: A Tale of Two Economies...

i've heard of relationships being broken up by text. clearly the technology is penetrating ever deeper into the culture. progress indeed!

and then theres this method....

[Polish_Silver]

Canada Kicks financial Butt?

Kotlikoff has analyzed the long term solvency of various nations.
Canada is the first one to be truly solvent long term, I think.

Niall Ferguson has also mentioned Canada, along with Norway, as having a good record of paying back sovereign debt without too much inflation.

Especially remarkable since in a similiar analysis in 1996 indicated that Canada needed big changes. I guess the nation made them!

[Fiat Currency]

Tax Me - I'm Canadian

OK - I'll put this one here. Lot's people around here are waiting to see what the Obama Administration will do with the upcoming Keystone Pipeline decision.

http://business.financialpost.com/20..._lsa=4442-842a

Why the oil sands industry wants the carbon tax that Stephen Harper hates

Prime Minister Stephen Harper has vilified political opponents who support a tax on carbon-dioxide emissions. The oil sands industry, Canada’s fastest growing CO2 polluter, says he’s out of step.

The contradiction of an industry seeking a new tax on itself has emerged in energy-rich Canada because producers are concerned the crude they process from tar-like sands will be barred from foreign markets for releasing more carbon in its production than competing fossil fuels.

Oil companies operating in Canada such as Exxon Mobil Corp., Total SA of France and Canada’s Cenovus Energy Inc. plan to convert billions of barrels of the sticky bitumen into diesel and gasoline. Under foreign and domestic pressure, they now see a greenhouse-gas levy helping to provide access to markets and more predictable costs for Canada’s biggest export industry, which shipped $68-billion of oil in 2011.

A carbon tax “is one of the ways to promote better performance of the industry,” Andre Goffart, president of Total’s Canadian unit, said in an interview in Calgary. “The principles are probably agreed upon by the players. The question is, where do you put the level to incentivize the industry to go in a more efficient way?”

Europe’s third-largest oil company joins a group of competitors around the world calling for a price on carbon. Many favour taxes over a cap-and-trade system to encourage cuts. After European Union emissions credits plummeted in price, securitizing CO2 has lost favour among jurisdictions considering pollution limits, said Guy Turner, director of commodities and energy economics at Bloomberg New Energy Finance in London.

‘What You’re Getting’

“At least with a tax, you know what you’re getting,” Turner said in an interview from London. “The cost is in effect fixed. Industry will be able to lobby for a rate of tax that it feels it can wear.”

European Union carbon permits have sunk 88% from a 2008 intraday high of 29.69 euros (US$40.30) a metric ton. Permits for December dropped 10% Thursday to close at 3.42 euros, data from the ICE Futures Europe exchange in London show.

“A carbon tax maximizes the use of markets and minimizes complexity,” Pius Rolheiser, an Imperial Oil Ltd. spokesman, said in a phone interview. “On that basis, a carbon tax is a better approach.” Imperial, Canada’s second-largest oil producer by market value, is 70%-owned by Exxon.

Brian Ferguson, chief executive officer of Calgary-based oil-sands producer Cenovus, said last year that a carbon tax is “probably the most effective means of regulating and addressing the cost of carbon.”

Emissions Debate

The debate in Canada over how to slow the pace of emissions from the nation’s fastest-growing source of greenhouse gases echoes choices being considered around the world.

Conservative Prime Minister Harper, who said in remarks during a 2008 election campaign that a carbon tax would “screw everybody” in Canada, favors other ways to curb greenhouse gases.

“Our government is committed to reduce GHG emissions at the industrial source rather than through an economy-distorting carbon tax regime,” Rob Taylor, a spokesman for Environment Minister Peter Kent, said in an e-mail.

The country needs to meet a 2020 commitment to lower emissions by 17% from 2005 levels under the Copenhagen Accord. Nations such as Australia and subnational governments have already chosen taxes to cut pollution.

Canada’s government introduced regulations last year that capped the amount of carbon that can be emitted by coal-fired power plants and has been negotiating with the oil-and-gas industry on similar rules.

Pricing ‘Intuition’

Australia, the world’s largest per-capita emitter of greenhouse gases, in July set a fixed carbon price that works much like a tax of A$23 (US$24) a ton for the country’s largest 500 emitters, including miner BHP Billiton Ltd. The Canadian province of British Columbia enacted a carbon tax in 2008 that covers about 70% of fossil-fuel consumption, making its gasoline among the most expensive in the country.

“The intuition behind carbon pricing is straightforward: we should tax things that we do not want, and making it more expensive will reduce pollution,” Marc Lee, senior economist at the Ottawa-based Canadian Centre for Policy Alternatives in Vancouver, said in a Jan. 13 report. “A carbon tax provides greater certainty around the price of GHG emissions, but poses a great deal of uncertainty around actual emission reductions.”

British Columbia’s carbon tax is currently pegged at $30 a ton and adds about 6.7 cents to a liter of gasoline. The tax has helped the province’s per-capita emissions decline almost 10% from 2008 to 2010, with families paying an average of $386 per household, the report said.

Hydropower Reliance

Neighbouring Alberta, home to the oil sands industry, has a carbon levy of $15 a ton for industrial emitters that exceed limits. Finland was the first country to enact a carbon tax, followed by Sweden in 1991 and a handful of other jurisdictions including the U.S. city of Boulder, Colorado.

Per-capita emissions in Canada, which relies on low-carbon hydropower for almost 60% of its electricity generation, are only exceeded by Australia, the U.S. and Saudi Arabia among large polluters.

“The world is monetizing carbon,” said Daniel Gagnier, president of the Energy Policy Institute of Canada, an advocacy group funded by business. “If a country looks at Canada and says your energy exports are too carbon-intensive, then it becomes an economic competitiveness issue.”

A case in point is TransCanada Corp.’s Keystone XL pipeline. The project would bring Canadian heavy crude to the Gulf Coast, helping companies earn world prices for their commodity, which currently trades at a US$31.75 discount to benchmark U.S. crude because of scant capacity to move oil from Alberta.

Lobbying Efforts

After two years of lobbying U.S. officials to approve the pipeline, the Canadian government is now watching as environmental groups, emboldened by Canada’s 2011 annulment of the Kyoto Protocol, push to derail the $5.3-billion project.

At the same time, Canadian politicians are trying to thwart EU plans to implement a carbon-reduction directive that would penalize Canadian crude.

Still, global efforts to tax carbon emissions have slowed following the 2008 recession and the failure of negotiators at United Nations-sponsored talks to create a replacement for the Kyoto climate agreement that would include China and the U.S., the world’s largest emitters.

Canada, the seventh-largest emitter, was the first of 191 signatories to withdraw from Kyoto.

For oil-sands producers, carbon pricing may be the answer to reduce risk associated with carbon regulation and access to markets, said John Stephenson, a Toronto-based fund manager.

“What business hates is a lack of clarity,” Stephenson, who helps manage $2.7-billion at First Asset Investment Management Inc., said by phone. “Even a bad tax would be better than discussions that are endless.”

[GRG55]

Re: Tax Me - I'm Canadian

OK - I'll put this one here. Lot's people around here are waiting to see what the Obama Administration will do with the upcoming Keystone Pipeline decision.

http://business.financialpost.com/20..._lsa=4442-842a

A rejection of Keystone may not be all that bad for Canada. It might force some sanity to return to the idiocy going on in the oil sands sector that the industry and the Alberta government have jointly allowed to prevail for far too many years.

Who knows...they might just price themselves out of the market at the rate they are going. Imperial Oil is a Canadian subsidiary of Exxon.

The figures in the last line below work out to $90,500 per flowing barrel. If they hit their targets for costs and production. Right now there's better reward/risk buying production than to develop projects like this. For example, the current market cap of Suncor Energy is about $53 Billion. Using the mid-point of Suncor's 2013 production forecast range means the entire company is valued at $88,000 per flowing barrel.

Imperial bumps up cost of Kearl oil sands project

CALGARY — The Globe and Mail

Published Friday, Feb. 01 2013, 9:00 AM EST
Last updated Friday, Feb. 01 2013, 7:37 PM EST

Imperial Oil Ltd. boosted the price tag of its Kearl oil sands mine by $2-billion, the second major increase for the project and the latest cost increase to hit Alberta’s energy industry.

Imperial said Kearl’s first development phase will cost $12.9-billion, up from $10.9-billion estimated previously. And the latest estimate is 61-per-cent higher than the original calculation of $8-billion...

...Kearl’s escalating budget is another indication of the difficulties facing the oil sands sector, which is grappling with higher costs for materials and labour, as well as discounted prices for heavy crude due to an oversupply caused by transportation bottlenecks – mainly pipelines – for exported oil.

Companies are reconsidering planned projects, as the industry re-calibrates spending to boost results that have often failed to impress investors. Suncor Energy Inc., for example, is weighing how and when to proceed with three undeveloped projects. It also withdrew its goal of hitting production of 1 million barrels of oil per day by 2020...

...Imperial on Friday said it will now cost $6.80 per barrel to develop the first and second phase of the project. That is a 10-per-cent increase from its last estimate of $6.20 per barrel. The company originally predicted it would cost $5 per barrel.

Imperial still expects a second phase of Kearl to ring in at $8.9-billion, despite revisions to the first phase of the project. It has not released a cost estimate for the final phase of the project, known as “de-bottlenecking,” but it expects the development costs per barrel to be the same as the during first two phases.

This means the cost of the entire project will reach about $31.2-billion, the company confirmed. The Kearl mine is expected to produce 345,000 barrels of bitumen per day by 2020, when it is running at full speed...

[Fiat Currency]

Re: Tax Me - I'm Canadian

A rejection of Keystone may not be all that bad for Canada. It might force some sanity to return to the idiocy going on in the oil sands sector that the industry and the Alberta government have jointly allowed to prevail for far too many years.

Who knows...they might just price themselves out of the market at the rate they are going. Imperial Oil is a Canadian subsidiary of Exxon.

No argument from me. A good friend of mine called last night. He runs his own business with offices in Calgary, Edmonton & Vancouver. He was cursing the oil sands because his 3rd manager in Edmonton just quit within a 9 month span. He pays a competitive wage but he is frustrated by O&G companies paying way above market rate for semi-skilled labour, and is having a hard time competing. He feels they have created too much distortion in the low/mid level skill sets within the market.

Then I told him that I was just in to meet with an O&G company this week. They have a role they need done on a one year contract basis. I don't necessarily want the role, but a good friend of mine recommended me so I thought I'd take a courtesy meeting and offer my classic "indifference" rate of $200/hr. They didn't even bat an eye and said that "while that was a little high, they could get it approved". Not that long ago I could have hired somebody for $80K to do that mid-level role and probably received 100+ resumes/applications.

So I think you are both right - lots of distortion going ... in an environment where the US will supposedly become energy independent. Something's not right.

[Fiat Currency]

Re: Tax Me - I'm Canadian

This one fits your thread title perfectly ...

http://www.theglobeandmail.com/globe...rticle8104877/

U.S. / Canada car markets head in opposite direction

Vehicle sales roared ahead in the U.S. market in January, but went into reverse in Canada.

Pent-up demand for cars and trucks that has driven the average of vehicles in the United States to 11 years old helped boost sales to a seasonally adjusted annual rate of more than 15 million, senior executives said Friday.

That’s positive news for the Canadian economy because the recovery of U.S. sales from the depths of the recession is creating strong demand for the cars, crossovers and minivans cranked out by auto makers’ assembly plants in Ontario, many of which are running on overtime. The U.S. market is the destination for about 80 per cent of the vehicles that come off the assembly lines operated by the five manufacturers that build vehicles in Ontario.

“The biggest driver of this year’s story is going to be replacement [demand],” Ken Czubay, vice-president of U.S. marketing, sales and service forFord Motor Co. said Friday. “When the fleet is 11 years old, you can imagine the fuel economy that they used to get on an 11-year-old vehicle. They are now getting significantly better fuel economy,” Mr. Czubay told analysts and reporters on a conference call.

Kurt McNeil, vice-president of U.S. sales operations for General Motors Co., pegged the January sales rate at 15.3 million, up about 14 per cent from January, 2012, and 50 per cent from January, 2010.

“This says to us that we continue to recover strongly from the recession despite the headwinds of higher taxes and lower government spending,” Mr. McNeil said on GM’s conference call.

Both Ford and GM reported double-digit increases as did Chrysler Group LLC, Honda Motor Co. Ltd. and Toyota Motor Corp.

In Canada, Asia and Europe-based auto makers took the brunt of the slide, offsetting gains by the Canadian units of each of the Detroit Three.

Some of the big winners of last year found their sales slumping in January. Among those were South Korean auto makers, Hyundai Auto Canada Corp. and Kia Canada Inc., the Germany-based luxury brands and most of the Japan-based auto makers.

Chrysler Canada Inc. grabbed first place in the market with a 3-per-cent sales gain. Ford Motor Co. of Canada Ltd. posted the biggest advance among the Detroit Three with an 8-per-cent jump. General Motors of Canada Ltd. chimed in with a 6 per cent increase.

Volkswagen Canada Inc. recorded its best January sales yet.

Some of the January slump can likely be attributed to the end-of-year sales races in December pulling sales ahead by a month, said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc.

The decline “shows the power of how much pressure they’re under to meet certain sales targets or have the best-selling vehicle in this or that category,” Mr. DesRosiers said.

Consumer confidence fell in December, noted Toronto-Dominion Bank economist Dina Ignatovic said, and there’s usually a one-month delay until that affects actual spending, so that may have had an impact.

“Auto sales in Canada have been fairly strong though, so consumers could just be taking a breather,” Ms. Ignatovic said.

Despite the sluggish start in actual sales, the seasonally adjusted annual rate in Canada was about 1.7 million units last month, said Bank of Nova Scotia economist Carlos Gomes, who is forecasting annual sales of 1.69 million in 2013.

That would top the 1.675 million delivered in 2012, but fall short of the record 1.731 million level hit in 2002.