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Stephen Poloz throws some cold water on the modern monetary theorists

If he’d been playing hockey, it would have been an elbow to the face of an opponent on his way to the bench.

Stephen Poloz, the Bank of Canada governor, had been speaking to the Empire Club of Toronto for about 25 minutes on Dec. 12. He had delivered roughly 2,500 words of his 3,000-word speech and he had just completed making the fourth of his four points.

But on his way to the conclusion, Poloz pulled a veteran’s move, throwing a rhetorical sucker punch at a group of upstarts who would rewrite the rules of monetary policy.

“As usual, the bank will be working on many more issues in 2020 than I have been able to summarize here,” Poloz said. “Before I conclude, though, let me mention one topic that has garnered a lot of interest lately: Modern Monetary Theory.”

You probably have heard of MMT. You certainly will have seen mention of it if you are one of New York congresswoman Alexandria Ocasio-Cortez’s six million Twitter followers. The face of Democratic Party socialism is a fan of the idea, which, essentially, submits that a country that controls its currency can effectively print as much money as it needs and use fiscal policy to control inflation. Hedge-fund billionaire Ray Dalio said earlier this year that he thinks something like MMT is “inevitable.”

MMT hasn’t jumped the border in a noticeable way. Often, after I’ve written something about deficits, I get an annotated letter from someone called Larry Kazdan, who created a website devoted to the subject. Stephanie Kelton, the academic and Bloomberg columnist who has emerged as the biggest champion of MMT, spoke at a gathering hosted by the Canadian Association for Business Economics in Kingston, Ont., earlier this year. But the New Democratic Party didn’t talk about it in the election campaign, and the chattering classes are mostly quiet, even though MMT has become something of a sensation south of the border.

Poloz apparently wants to keep it that way. He used his last lookahead speech as governor to stomp on MMT on his way out the door. Poloz said the theory was neither “monetary,” since government spending is a fiscal decision, nor “modern,” since similar policies have been tried before. The governor cited the rapid money creation that followed the deficits the U.S. government ran in order to finance the Vietnam War. The aftermath in the 1970s brought a surge in global inflation and the collapse of the Bretton Woods system of managed exchange rates.

It “sounds like Modern Monetary Theory is offering a free lunch, and most of us know there is no such thing,” Poloz said. “There are far better means of avoiding slow growth and deflation — promoting innovation, providing infrastructure, removing impediments to international and intra-national trade, eliminating red tape — just to cite a few obvious examples,” he added.

Sounds like Modern Monetary Theory is offering a free lunch, and most of us know there is no such thing

Stephen Pooz

Easy for Poloz to say. He’s a respected economist with nearly five decades of professional experience, including almost seven years at the helm of a Group of Seven central bank. And he has no reason to be sensitive to politics, since he’s decided to leave the Bank of Canada when his term ends in June.

Assuming relative stability is desirable, will the next governor possess the the same combination of authority and independence that Poloz showed by going on the offensive against MMT? The answer is, “probably yes.” But try saying it. When I think it through, I’m unable to convince myself that a new leadership group at the Bank of Canada couldn’t be pushed off centre by political winds with enough force.

The central bank is a vocal supporter of the stress test on mortgage borrowers, which is unpopular with the real-estate lobby. The re-election of Justin Trudeau looked like evidence that the forces seeking to weaken the policy had been defeated, since the Liberals, unlike the Conservatives, hadn’t promised to consider changes. And then these words appeared in Finance Minister Bill Morneau’s mandate letter on Dec. 13: “Review and consider recommendations from financial agencies related to making the borrower stress test more dynamic.”

Nothing’s sacred.

Keep that in mind in 2020 and 2021. Poloz’s comments on MMT were arguably prejudicial. Earlier in his remarks, he had reminded his audience that the Bank of Canada was in the middle of a review of how it goes about controlling inflation. That’s normal. The central bank always conducts research ahead of the renewal of its five-year agreement with the Finance Department, which was last issued in 2016. But this time, the Bank of Canada said it is conducting a “horse race,” pitting the many approaches to monetary policy against one another to discover which produces the best results. MMT clearly isn’t part of the contest.

But it could be if the public insists on it.

To the central bank’s credit, it is making an extra effort to involve interested parties in the policy review. In 2020, Poloz promised “a number of round tables with civil society stakeholders to deepen our understanding of the economy across sectors and regions.” He also said there will be an “open, public consultation process” on the central bank’s website. “As an accountable public institution, we are eager to hear your views,” Poloz said.

MMT or some other revolutionary notion could yet come to Canada. The next governor should possess the ability — or the fortitude — to tell us and the people that we elect that there are no free lunches.

Financial Post

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Nancy Pelosi, White House have tentative deal on new NAFTA, insiders say 

The Trump administration and House Democrats have a tentative deal on the U.S.-Mexico-Canada trade agreement, according to people familiar with negotiations, paving the way for congressional approval as early as this month even as Democrats prepare to impeach the president.

Speaker Nancy Pelosi is reviewing changes to the agreement that U.S. Trade Representative Robert Lighthizer and his Mexican counterpart Jesus Seade have put on paper over the past week.

The revision of the North American Free Trade Agreement is one of President Donald Trump’s top priorities, and its passage would help the White House make the case that he’s pursuing policy achievements on behalf of the country even while lawmakers debate removing him from office.

At the same time, a deal would show that Democrats can legislate while also investigating the president’s administration.

“I’m hearing a lot of strides have been made over the last 24 hours with unions and with others,” Trump told reporters on Monday. “I’m hearing very good things. I’m hearing from unions and others that it’s looking good, and I hope they put it up to a vote.”

Lighthizer and Seade exchanged proposals on labor inspection rules and tougher steel provisions and finished a compromise package late Friday that they submitted to Pelosi, the people said. A demand from the U.S. regarding steel and aluminum, which people briefed on the talks said came from the United Steelworkers union, threatened to stall the negotiations last week.

In a change of plans Monday, Seade stayed in Mexico rather than returning to Washington to meet with Lighthizer again, according to three people familiar with his plans.

Mexican President Andres Manuel Lopez Obrador said earlier Monday that he expects a decision from the U.S. on the agreement very soon.

“Now is the time to vote on it,” Lopez Obrador said Monday. “I am optimistic we can reach a deal.”

Seeking Approval

Seade and Foreign Minister Marcelo Ebrard plan to update reporters on advances in the negotiations later on Monday, the ministry said.

While all parties are still reviewing the deal, representatives from the three countries are already discussing where to have a signing ceremony, according to one person familiar with the matter.

U.S. labour groups and House Democrats will need to agree to the final details, in addition to the leaders of the three countries, another person said. If the AFL-CIO, the biggest labour federation in the U.S., is on board with the deal, it could make it easier for the Democratic-led House to expedite the process and vote as soon as next week, according to a different person briefed on the negotiations.

AFL-CIO President Richard Trumka spoke with Trump before Trumka briefed the labor group’s executive committee meeting at 2 p.m., according to two other people familiar with the matter.

The peso extended a five-day climb after news of a potential deal, rising 0.5 per cent to become the second best-performing currency in emerging markets on the day.

Pelosi last month cautioned that even with a deal, there might not be enough time to vote on the agreement this year, reminding her members that “in a world of instant gratification,” legislating takes time.

There are still a number of procedural hurdles before the agreement can come to the floor for a vote, including committee hearings and review of the implementing bill in the House Ways and Means and Senate Finance committees. Those steps could be waived to save time, though, and people familiar with the talks said lawmakers are likely to skip some of them.

Political Pressure

Democrats from rural, swing districts are especially eager to get a deal done. Farmers have faced devastating economic losses this year because of the trade war with China, although the president has blamed some of that on the delay in getting the USMCA approved.

The U.S. International Trade Commission, an independent government panel, in an April analysis said USMCA would boost the U.S. economy by 0.35 per cent and lead to 176,000 new jobs in the sixth year after implementation, a small addition to the 132 million people employed full-time in the U.S.

Leaders of Canada, Mexico and the U.S. signed the agreement more than a year ago and the White House and Democrats have spent months locked in tense negotiations over four key areas: environment, labour commitments, drug-patent protections and enforcement mechanisms. In recent weeks, the discussions have focused on the deal’s labour enforcement.

One of the main sticking points was a Democratic proposal to enforce labor rights by allowing products from factories accused of violations to be inspected and blocked at the U.S. border. California Representative Jimmy Gomez, a member of House Democratic negotiating team, said last week that Pelosi and Lighthizer have offered Mexico a compromise on labor enforcement that “respects Mexico’s sovereignty.”

Republicans and the business community increased pressure on Pelosi as they grew concerned that time was running out for a vote in 2019, believing it would be difficult to hold a vote in an election year. Pelosi said she wouldn’t rule out a vote in 2020, although she said her preference would be to get it done sooner.

The president has become increasingly frustrated that his deal has stalled and expressed pessimism about the chances Congress would ever take it up for a vote.

“Hard to believe, but if Nancy Pelosi had put our great Trade Deal with Mexico and Canada, USMCA, up for a vote long ago, our economy would be even better,” Trump said in a tweet on Saturday. “If she doesn’t move quickly, it will collapse!”

Labour Role

Key to reaching a deal has been neutralizing any opposition from the largest U.S. union confederation, the AFL-CIO.

Trump and his advisers tout USMCA as the best agreement ever negotiated for unions and Democrats, particularly the deal’s labor provisions and stricter auto-content rules that they say would boost U.S. manufacturing.

Trumka urged Democrats in a November meeting not to rush into an agreement without strong enforcement procedures and said they should hold out for more concessions.

The labour leader told The Washington Post on Monday that he is reviewing the deal.

–With assistance from Justin Sink.

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EU ministers criticize recent memorandum between #Libya and #Turkey on the #EasternMediterranean

Turkish President Recep Tayyip Erdogan and Fayez al-Sarraj, chairman of the Presidential Council of Libya

Arriving at today’s (9 December) EU Foreign Affairs Council, Josep Borrell Fontelles, EU High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission was asked about the recent memorandum between Turkey and Libya that would give access to a contested zone across the Mediterranean Sea.

The memorandum of understanding on maritime borders signed between Turkey and the Tripoli-based Government of National Accord is thought to have no legal standing and contravenes the provisions of the International Law of the Sea. Egypt, Greece, Cyprus and France, along with the EU and the US State Department. US State Department. The US State Department spokesperson stated: “The announcement of a signed Turkish-GNA delimitation memorandum of understanding has raised tensions in the region and is unhelpful and provocative.”

The agreement was endorsed by the Turkish parliament last week and prompted Greece to expel the Libyan ambassador to Greece. The agreement aggravates tensions that already exist over exploratory drilling in Cyprus’s exclusive economic zone and a long-running dispute of Turkey with Greece, Cyprus and Egypt over oil and gas drilling rights in the eastern Mediterranean.

Greece has expelled the Libyan ambassador in response to the deal. Dutch Foreign Minister Stef Blok said that he sided with Greece on the respect for international law. The Austrian minister for foreign affairs, Alexander Schallenberg said he was “a little bit astounding how they (Turkey and Libya GNA) split up the Mediterranean between themselves.”

Josep Borrell said that “it’s not a matter of sanctions today,” adding that ministers would study the “memorandum of understanding” agreed upon between Turkey and Libya. The Turkish and Libyan GNA  MoU also includes a deal on expanded security and military cooperation. The agreement is considered to be illegal since it is contrary to the International Law of the Sea and has not been reached with the consideration of the legitimate rights of other states in the region.


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Tags: Blok, Borrell, EU High Representative, exclusive economic zone, Greece, Libya, Turkey

Category: A Frontpage, Economy, EU, EU, European Commission, Politics

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Stephen Poloz to step down: How Canada’s top banker went from folksy obscurity to steady hand

OTTAWA — Outgoing governor Stephen Poloz once joked that, after being chosen to succeed Mark Carney as head of the Bank of Canada in 2013, he was received much like the guy who replaced Wayne Gretzky. That is to say: nobody actually remembers the guy who replaced The Great One.

Poloz was plucked from relative obscurity as head of Export Development Canada and, despite being on the shortlist of successors, was considerably less well-known compared to the high-profile Carney, who had engineered Canada’s response to the deepest recession in decades and made Time magazine’s 100 “most influential” list.

“I run into people in the street and they ask me, ‘how’s Mark?’” Poloz said in an April 2019 interview with Maclean’s. “And I’m like, ‘great… and I’m doing okay too.’”

But Poloz, who announced on Friday he would be stepping down from the role, has nonetheless made a name for himself over the last six years — even if he hasn’t reached rock-star status.

He became known for his honest communication style, delivered with a trademark folksiness and a penchant for metaphors (he once used a “spaghetti-sauce model” to describe monetary tapering after the recession of 2007-08, and compared exchange rate fluctuations to walking a dog on a leash).

He made a point of accounting for the pulse of the “real economy,” focusing on business investment and the sentiments of CEOs more than his predecessors. Most of all, he kept inflation largely within the bank’s target, even amid trade threats from U.S. President Donald Trump and a Canadian economy that, after years of tepid growth, suddenly caught fire in 2017.

It wasn’t always a smooth ride. He started his term amid some concerns that his connection to the EDC and exporters would make him partial to a lower Canadian dollar. Others were rankled by his communications style, which sometimes veered from the Bank of Canada’s official script. He gradually overcame those frustrations.

“I think he’s gained more respect over time in this role,” said Mark Chandler, head of Canadian rates strategy at RBC Capital Markets.

Poloz took over from Carney at a time when the country was climbing out of the deepest recession in decades. A prolonged period of low interest rates had pushed household debts to among the highest of any developed nation, leaving the governor tightly wedged between mediocre economic growth and fast-expanding consumer credit.

I think he’s gained more respect over time in this role

Mark Chandler, head of Canadian rates strategy at RBC Capital Markets

His first major test came when oil prices suddenly collapsed in mid-2014, sending the wider economy into a tailspin. Poloz shocked the market with a sudden rate cut in early 2015, followed by a second cut months later, reducing the overnight rate to 0.5 per cent. The move both solidified what proved to be a prescient move by Poloz, while also laying bare the limits of monetary policy in the current economy.

“He was a creature of his time,” Chandler said. “It’s something you can give him credit for — he acted quite quickly, and at a time when others maybe hadn’t recognized the impact of the oil shock.”

Poloz was born in Oshawa, Ont., and completed his economics degree at Queen’s University in Kingston. He received a master’s degree in economics in 1979 and a PhD in economics in 1982, both from the University of Western Ontario. He first joined the Bank of Canada in 1981, where he rose up through the ranks over a 14-year period.

Christopher Ragan, former special advisor to Bank of Canada governor David Dodge, said it was immediately evident to him that Poloz was on the fast track for the governor position when he first met him in the early 90s.

Poloz was heading the bank’s then-research arm at the time. The other potential successor Ragan had identified was Tiff Macklem, who would later become senior deputy governor at the bank.

“They just had the complete package of things that you want,” Ragan said. “They had the analytical power, they had the administrative savvy, they had the communication chops. It was clear as day to me.”

Macklem was seen by many analysts as a natural successor to Carney, a long-time Bank of Canada employee who seemed groomed for the job. The decision by then-finance minister Jim Flaherty to appoint Poloz was met with confusion by some.

In a 2013 interview with the Globe and Mail, former European Central Bank economist Thorsten Koeppl said there was “a lot of head scratching going on” after the appointment. Macklem stepped down from the bank shortly after the appointment, four years before the end of his term.

Bank of Canada Governor Stephen Poloz (centre) with Mark Carney (left), and the late Finance Minister Jim Flaherty in Ottawa May 2, 2013. Andre Forget/QMI Agency

But Poloz gradually won the confidence of Bay Steet, in part through a communication style that, unlike his predecessor, would readily convey the unknowns and uncertainties in the bank’s economic models.

“It’s part of his ‘aw-shucks, we-don’t-know-everything-that-the-previous-guy-knew’ communication style,” Ragan said. “He probably trades on that a little bit, and that’s okay.”

“He would say, ‘there are things the bank doesn’t know, things that I as a governor don’t know, things that the economics profession doesn’t know.’ And I think that’s extremely healthy.”

Another of his trademarks was a stand against debt. Poloz was uncommonly outspoken about rising consumer debt levels across Canada, and often expressed his worries over a heated housing market.

“That’s something that’s reasonably different than what other governors have done in the past,” said Jean-François Perrault, chief economist at Scotiabank.

“Unfortunately, that also muddles a little bit the approach to monetary policy,” he added.

Some analysts have disagreed with Poloz’s decision to continue holding rates, especially in recent months when trade rifts between the U.S. and China kicked off a wave of cuts at central banks around the globe.

“Over the last few weeks one could make a very good case that there was a need for lower interest rates in Canada to guard against risks,” Perrault said.

Scotiabank had predicted the bank would cut rates in October or December.

The wisdom of Poloz’s move remains to be seen, particularly with Canada’s current interest rate of 1.75 per cent being the highest among advanced economies.

Meanwhile, consumer debts have continued to rise. Canada’s household debt in 2018 averaged 181 per cent of total income, well higher than the United States (109 per cent), Germany (95 per cent), and others, according to the Organisation for Economic Co-operation and Development.

That could be among his more unfortunate legacies at the bank, RBC’s Chandler said. Concerns about household debts had already begun to surface when Poloz took over from his predecessor, when the Canadian economy was taking its long, slow climb back to health.

“Seven and a half years later, debt levels are even higher,” Chandler said. “So if that legacy was a question mark for Carney, it’s even more so under Poloz.”

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USMCA: Ratification is getting there but ‘difficult issues’ remain

The push to ratify a new North American trade pact is “getting there” Mexico’s top negotiator says, though some “difficult issues” remain as U.S. Democrats continue to insist on stronger labour enforcement.

Jesús Seade, Mexican Undersecretary for North America, met with Prime Minister Justin Trudeau and Deputy Prime Minister Chrystia Freeland in Ottawa Friday, as the political window to approve the trilateral pact this year slowly closes.

The Trump administration has spent months negotiating changes designed to woo skeptical Democrats even as a series of obstacles — including a government shutdown, an investigation into Russian interference in the 2016 election and an ongoing impeachment inquiry — threatened to derail the process.

United States Trade Representative Robert Lighthizer must satisfy Democrat concerns while holding on to the support of Mexico and Canada, as well as Senate Republicans.

“If the amendments suggested are fine, are acceptable, are improvements, then there’s no reason why we should not be shaking hands next week,” Seade told reporters at the Mexican Embassy.

Seade’s comments followed those of Trudeau, who told reporters that there was “a little more work to do,” on the trilateral pact.

“Canada is extremely supportive of Mexico’s steps toward labour reforms,” he said.

The Ottawa talks followed a flurry of high-level meetings in Washington earlier in the week involving Seade, Freeland and Lighthizer.

The $1 trillion North American Free trade pact — dubbed the U.S.- Mexico-Canada Agreement, or USMCA, by U.S. President Donald Trump — was signed by leaders in Buenos Aires last fall. However, it still requires ratification by all three countries before it can take effect. Mexico has already ratified the deal. Canada has been waiting for it to be approved in the U.S, where the Democrats controlling Congress have insisted on changes to pharmaceutical provisions and tougher enforcement of Mexican labour reforms.

The question of just how to enforce those reforms has yet to be answered. So far, Mexico has resisted a push by Democrats to allow U.S. officials to inspect Mexican workplaces in order to ensure compliance.

In general, my sentiment is that this is going to be an improvement, but there are some difficult issues I have to discuss with stakeholders in Mexico.

Jesús Seade, Mexico’s NAFTA negotiator

The proposal to allow U.S. inspectors is “no longer a red line but an engraving on the floor” for Mexico, Seade said Friday.

“We would not accept these lone ranger inspectors being called and 12 hours later they dash to see a factory. That’s not fun.”

Still Seade believes something will be signed soon that is an overall improvement.

“So, this is a major achievement,” he said. “In general, my sentiment is that this is going to be an improvement, but there are some difficult issues I have to discuss with stakeholders in Mexico. But we are getting there.”

Despite the optimistic tones and the final push to approve it, the path to ratification for the pact remains far from certain, analysts warn.

Indeed, since negotiations between Lighthizer and House Democrats have taken place under confidentiality agreements, “we don’t really know what they’ve agreed to,” said Dan Uzcjo, an Ohio-based trade lawyer with Dickinson Wright. That will become clear only when an implementing bill is written and presented to Congress for consideration.

“Everyone might say this is a done deal. It’s not,” Uzcjo said. “There’s a lot more work to do in December and January. The implementing bill is where the fight begins and going through that will take up until Christmas, perhaps longer.”

Everyone might say this is a done deal. It’s not. There’s a lot more work to do in December and January.

Dan Uzcjo, trade lawyer, Dickinson Wright

Democrats, for instance, are pushing to shorten patent protection for a class of drugs known as biologics to eight years from 10. Those changes could anger the pharmaceutical lobby, he noted.

Crucially, the trade deal has also faced resistance from labour group leaders, including Richard Trumka, president of the powerful AFL-CIO union, who last month warned that the agreement “would be defeated” if Congress voted before the U.S. Thanksgiving. American unions — who believe the original NAFTA did little to stop the flow of U.S. jobs to Mexico — are emphatic about the need to ensure labour reforms are fully carried out this time.

“The problem is organized labour is dead set against this deal,” said Gary Hufbauer, a senior fellow at the Washington-based Peterson Institute for International Economics. “If the unions double down against it and the Democrats vote it through anyway, I think it’ll hurt their chances in the election.”

House Speaker Nancy Pelosi, charged with the decision on whether to put the bill forward for a vote, could easily argue that with only a few weeks left in the political calendar, not enough time remains for Congress to consider the deal, he added.

U.S. President Donald Trump lashed out Pelosi and other Democrats last week, saying USMCA is “dead in the water” because of the party’s inaction.

Pelosi has insisted the Democrats are working hard, to “get to yes” on the deal, though she recently suggested a vote is unlikely in 2019. Pushing the deal into 2020 raises the risks of it languishing amid the runup to the U.S. presidential election, analysts have warned.

It could also see the deal reopened for further negotiations, something Ottawa and Mexico City have said is a non-starter, though Freeland said this week that Canada was prepared to do everything it can to ensure ratification.

“I do think if it spills into 2020 the new administration may take it back to the negotiating table whether it’s Trump or someone else elected,” Hufbauer said.

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‘We are hiring big time’: Calgary tech companies join forces to attract job seekers – Calgary

A Calgary-based group of tech companies held a hiring fair downtown on Saturday to help get the word out that the technology sector needs skilled workers.

Jason Moore was working as a geologist in Calgary for the past eight years until September when he was laid off.

“I left on good terms. They treated me very fairly but it was more just a side effect of what all of Alberta is going through at this time,” Moore said.

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Moore is one of the hundreds of people who attended the first Tech West Collective hiring expo on Saturday. He now considers himself lucky. Moore is learning the world of coding and discovering a passion he never knew he had.

“I think one of the great things about coding is you get to build stuff, and you get to see if it works right away. It’s like the mouse pushing the button and you get the pellet,” Moore said with a laugh.

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Online tool launched to help oil and gas workers find jobs in Calgary’s tech sector

The Tech West Collective is a group of Calgary tech companies that have teamed up to help fill vacant positions.

“We are feeling a talent gap. Now we want to build up the talent pool,” said Tech West Collective organizer Kat Lesperance.

Lesperance works at Showpass, a Calgary-based tech company that provides ticketing solutions for event organizers. Showpass and Avanti Software are two of the seven members of the collective.

“We are hiring big time,” said David Owen Cord, Avanti Software co-CEO.

He said the company is looking for people of all backgrounds — not just tech-related positions.

“It’s been interesting because of the negative headlines here in Calgary and the layoffs that are going on but we are having a very different reality in the business we live in every day. One of our biggest challenges is actually filling the open spots that we are trying to hire for,” Owen Cord said.

Part of the problem is a lack of people with tech skills.

EvolveU is a non-profit educational institution that is helping job hunters transform their careers to adapt to the rapidly changing digital economy.

“There’s so much opportunity right now that people don’t even know about. That’s exciting for me and it’s exciting to watch the students go through the transformation,” said Jen Morrison, program manager with EvolveU, at the job fair on Saturday.

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Calgary working to attract tech talent

Members of the Tech West Collective said it’s time for tech companies to stop poaching talent from each other and get the word out that Calgary’s economy goes beyond oil and gas. Those transitioning from the energy industry said the job hunt in the tech world is more encouraging.

“There [are] more jobs than would be for my old profession. It’s not that they’re handing them out, but there definitely does seem to be more excitement and more opportunity and a desire for more people to enter this industry,” Moore said, adding that he’s taking courses at EvolveU.

According to Calgary Economic Development, the city has over 2,000 open tech jobs.

© 2019 Global News, a division of Corus Entertainment Inc.

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Canadian economy faces a prolonged period of sluggish growth

Canada’s economy is shifting into a lower gear as some of the country’s growth drivers begin to lose steam.

Statistics Canada will release third-quarter gross domestic product numbers Friday that will probably show a sharp drop in growth. According to the median forecast of economists in a Bloomberg survey, the country’s expansion slowed to a 1.3 per cent annualized pace in the three months through September, down from an unsustainable clip of 3.7 per cent in the prior period.

It’s a return to sluggish growth that may become the new normal for a Canadian economy seeing many of its engines of growth sputter, from investment and exports to weakening consumption as the nation’s households cope with high debt levels.

Beyond the third quarter, economists predict another 1.3 per cent reading in the final three months of 2019. Next year doesn’t look much better, with growth seen running at about 1.5 per cent in 2020. That’s a sufficiently prolonged period of below-potential growth for markets to anticipate the Bank of Canada will cut interest rates as early as January.

Canada’s exporters have floundered in the second half of the year. After a rebound in oil shipments temporarily boosted real exports in the second quarter, they’ve since flat-lined, falling 0.3 per cent since June in volume terms. Waning exports are also hitting manufacturers, whose shipment volumes decreased 1 per cent in the third quarter, led downward by oil and coal.

You don’t have a domestic demand story that’s strong

Brett House, deputy chief economist at Scotiabank

Business investment remains sluggish, down 22 per cent since oil prices began collapsing in 2014. While the Bank of Canada’s latest indicator of business activity ticked up, the central bank still sees investment as a 0.4 percentage point drag on 2019 growth. Until global uncertainty and trade tensions abate, Canadian businesses are unlikely to make major capital expenditures.

Consumption has long propelled Canada’s economic growth, but cracks may be forming, even with a robust job market and wages growing at the fastest pace in a decade. Economists expect consumption to pick up in the second half of the year, but that’s coming off a second quarter that was the slowest since 2012. The lack of vigour is most apparent in a retail sector that’s seen volumes flat over the past year.

“You don’t have a domestic demand story that’s strong,” said Brett House, deputy chief economist at Scotiabank.

One bright spot in the GDP numbers could be housing, which has rebounded as borrowing costs decline and buyers adjust to tighter mortgage rules. Home sales rose 7.3 per cent in the third quarter, the fastest quarterly pace since the end of 2017. Most economists estimate residential investment picked up for a second straight quarter.

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Europe and America have a Right To Know About #5G Safety

Google announced they are testing a new 5G smartphone, a move that aims to expand the company further into the branded hardware market – writes Theodora Scarato,  Executive Director of Environmental Health Trust.


September 10, Apple launched three new iPhones (iPhone 11, iPhone 11 Pro, and 11 Pro Max). Not to be shut out of the game, also last month, Samsung released their much anticipated Samsung Galaxy Fold, the first foldable smartphone. As the leading tech companies vie for first place in the 5G smartphone market, will they also issue clear warnings to the consumer public that their phones are not intended to be used in close body contact?


On August 22, 2019, the law firm of Fegan Scott filed a class action lawsuit against Apple and Samsung alleging that these two tech companies are misleading customers because their cellphones are marketed on the premise that the devices can always be used in close contact to the body (i.e. in the pocket). But phones in these very positions could result in the body absorbing high levels of cell phone radiation. So high, in fact, that the phones could violate the radiation safety limits set by the Federal Communications Commission.


The litigation was prompted by disturbing findings released in an August 21, 2019 Chicago Tribune investigation into cell phone radiation. The Tribune independently tested several popular cell phones and found that the phones emitted far more radiation than reported by the  manufacturers. Most importantly, radiation levels skyrocketed from 2 to 5 times the legal limit when phones were tested in positions close to the body, such as mimicking a phone in a pants pocket.


Many people incorrectly assume that cell phone radiation levels are safe, no matter how or where the phone is being used. But fine print warnings buried deep in the manufacturers’ manuals state that the phone is radiation tested a specific distance away from the body. For the iPhone 7 that distance is 5mm, but for the iPhone 3 it was 15mm.


In 2017, the government of France was pressured by Dr. Marc Arazi into finally releasing data from the hundreds of cell phones they tested since 2012. The  majority exceeded the legal limits when tested at body contact. In response, the European Union strengthened compliance tests so the distance can’t exceed 5mm and several smartphone models have now been withdrawn from the market or software updated. As many models with excessive radiation levels still remain on the market, Arazi of the Phonegate association has now filed legal action against Nokia and Xiaomi stating, “The manufacturers have deceived the users of more than 6 billion mobile phones.”


The radiation levels found in the smartphones tested by France could violate US  limits by 11 times according to published analysis. Fegan Scott characterized the situation as the “Chernobyl of the cell phone industry, cover-up and all.”  This October, the French Health Authority released a report recommending that phones be radiation tested at body contact- not at 5mm. In response to this report,  the French ministries of Health, Ecology and Economy issued a press release statement announcing their recommendation that phones be tested at body contact. They also called for the public to reduce cell phone radiation exposure. US National Institutes of Health scientist published their findings of DNA damage associated with cell phone radiation in their 30 Million dollar animal study.  This really should be the crack in the dam. Yet in the US, the FDA has been informed but taken no action.


What’s far more curious is that over the years, phone manufacturers have wordsmithed these fine print warnings such that consumers are adequate confused.

Why not directly state: “If you carry or use your phone in a pants or shirt pocket, or tucked into a bra, when the phone is on and connected to a wireless network, you may exceed the federal guidelines for exposure to RF radiation.”


In Berkeley, California, retailers are required to state this exact warning to cell phone consumers after the city passed their Cell Phone Right To Know Ordinance in 2015. It should be noted that after the Ordinance passed, the telecom industry group CTIA litigated all the way to the Supreme Court claiming the ordinance violated their free speech rights.


For two years after the Apple iPhone 6 debut in 2015, Apple shared the following statement regarding the model, “Carry iPhone at least 5mm away from your body to ensure exposure levels remain at or below the as-tested levels.” While this sentence was still on their website on March 2, 2017, it was removed by November 9, 2017. Similarly, the iPhone 7 was released in 2016, along with the same online instructions to carry it “5mm away from your body” which disappeared from the Apple website by November 9, 2017.


Apple’s website still includes information that cell phones are tested with a separation distance. However, the text is absent of clear instructions to consumers. Years ago, iPhone 3 filings to the FCC stated “iPhone’s SAR measurement may exceed the FCC exposure guidelines for body-worn operation if positioned less than 15 mm (5/8 inch) from the body (e.g. when carrying iPhone in your pocket).” They clearly stated, “When using iPhone near your body for voice calls or for wireless data transmission over a cellular network, keep iPhone at least 15 mm (5/8 inch) away from the body.” Were iPhone 3 consumers aware of these instructions then? Why not inform users now?


Fegan Scott claims that “research strongly suggests that cell phone manufacturers knew – or should have known – that the radiation levels were well above what they were claiming”.


Babies are handed cell phones to cuddle in shopping carts.  A child’s first cell phone is seen as a rite of passage and yet many don’t even know how to turn the phone off. They carry phones in their pockets- as do most men. Women carry phones directly against their body- tucked in their bras and spandex pants.


As with Dieselgate, the problem lies in the test itself.  A 2012 Government Accountability Report found human exposure limits and test protocols decades outdated. A  Harvard expose points to “undue industry influence” in US regulatory agencies and published analysis document conflicts of interest in the international “authorities” many countries rely on.  Phones are simply not radiation tested the way we use them- at body contact. It is time to hit the reset button. Before deploying 5G infrastructure and allowing 5G phones on the market, the US should first hold Congressional hearings on the oversight and safety of wireless devices.



Theodora Scarato is Executive Director of Environmental Health Trust.


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Tags: 5G, economy, featured, full-image, Google

Category: A Frontpage, Digital economy, Opinion

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All joking aside, Trudeau isn’t doing much to convince the business community he’s serious

Poor Mona Fortier. She was so close to a title that would look great on any resume: associate minister of finance. But whoever runs Team Trudeau decided that moniker wasn’t descriptive enough. So Fortier, a member of Parliament from Ottawa, will spend the next phase of her career being introduced as the Minister of Middle Class Prosperity as well.

No need to spend a lot of time on the stupidity of that title. Chris Selley has already done so wonderfully in the National Post. “The title is kind of odd,” John Manley, the former minister of just about everything in Jean Chrétien’s government, including finance, said in an interview.

The unveiling of the cabinet was done without mandate letters, so we don’t know yet what Prime Minister Justin Trudeau expects of his 36 ministers. I asked for an interview with Canada’s new junior finance minister, but her assistant said that she was too busy too talk. No doubt. Whenever we can speak, I pledge to take Fortier more seriously than the Prime Minister’s Office did when it was handing out titles.

But I said we wouldn’t dwell on superficial stuff. What does the new cabinet say about how the Trudeau government will approach the economy? That matters, as one of Fortier’s first formal briefings surely will include the latest from the Organisation for Economic Co-operation and Development, which on Nov. 22 predicted that the global economy will expand 2.9 per cent this year, the weakest rate since the financial crisis a decade ago.

The OECD sees Canada’s gross domestic product growing only 1.5 per cent in 2019, compared with three per cent in 2017 and about two per cent in 2018. It also doubts the economy is on track to grow much faster for the next two years. The OECD called on the Bank of Canada to cut interest rates half a point by early next year, and advised governments against aggressive spending cuts at this time.

“Business confidence and investment in Canada are projected to recover only gradually,” the OECD said. “Exports and imports will remain subdued. Private consumption will support growth, but households will remain reluctant to spend from their income due to uncertainty, a slowing labour market and deleveraging.

Canadian retail sales increased 0.5 per cent in the third quarter, compared with a 1.1 per cent gain in the second quarter, Statistics Canada reported Nov. 22. Households “haven’t been very apt to spend in recent quarters, resulting in virtual stagnation in real retail sales since early 2018,” said Royce Mendes, an economist at CIBC World Markets.

The appointment of a minister for the middle class will do nothing to correct the business community’s impression of Trudeau.

The trouble with the first Trudeau government from the perspective of the business community was that it came across as entirely unserious about economic policy.

Finance Minister Bill Morneau, who was re-upped on Nov. 20, was afforded none of the stature that typically comes with his position. Trudeau was right to turn his back on balanced budgets, but he failed to tell a convincing story for why he was content to allow the deficit to grow wider and wider.

The government’s struggle to spend the infrastructure money in a timely manner appeared to be a lesson for what happens when you overpopulate your leadership team with thinkers and dreamers, at the expense of ministers with extensive real-life experience in business and politics.

The appointment of a minister for the middle class will do nothing to correct the business community’s impression of Trudeau.

“I’m looking for the government to do less virtue signalling and more listening to people,” said Manley, who is now special business adviser at Bennett Jones LLP, a law firm based in Toronto. “They were taken to the woodshed. I hope they know that.”

If John Ivison, the National Post’s political columnist, is right, the cabinet barely matters because a cabal of unelected advisers makes all the big decisions. And from the outside, it sure looks like the prime minister and his whisperers have created a system made to keep economic ministers busy figuring out who is in charge of what.

Deputy Prime Minister Chrystia Freeland and Environment Minister Jonathan Wilkinson lead the cabinet’s economy and climate committee. Morneau will have Fortier underfoot at Finance, while Navdeep Bains, who returns as innovation minister, will share his department’s resources with Economic Development Minister Mélanie Joly.

I’m looking for the government to do less virtue signalling and more listening to people

John Manley, former cabinet minister

Also in the picture: Agriculture Minister Marie-Claude Bibeau, Transport Minister Marc Garneau, Heritage Minister Steven Guilbeault, Infrastructure Minister Catherine McKenna, Immigration Minister Marco Mendicino, Trade Minister Mary Ng and Natural Resources Minister Seamus O’Reagan.

There’s your economic-crisis committee, more or less.

Manley said junior ministers aren’t necessarily a bother, and he included Maurizio Bevilacqua, the one-time minister of state for finance, in just about everything because he liked having “another pair of political eyes.”

However, under Jean Chrétien, everyone knew what his or her job was. At Industry, Manley had little involvement with the day-to-day oversight of the regional development agencies, but they required his signature to spend money. Ministers were given a lot of responsibility and it was their fault if they screwed up. Harsh, but it left room for the prime minister to get involved before it was too late.

There might be a lesson for the current prime minister in that. “When the PM owns everything, it’s all on him,” Manley said.

Financial Post

Email: [email protected] | CarmichaelKevin

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