Tag Archives: Bank of Canada

Roundup: False narratives about the Q2 GDP

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The figures for second quarter GDP were released yesterday, and they weren’t as good as had been expected. There was a surprise contraction of 1.1% annualized, which caught economists off-guard (and perhaps Statistics Canada as well, as their flash estimate a month previous had still shown growth). The majority of these declines were in the months of April and May because of the third wave, as June had shown robust growth in nearly all sectors as economies around the country re-opened – and those declines were largely in the areas of home resales and exports. To an extent, the home resales was a bit of a correction – after giant increases in previous quarters, most especially Q3 of 2020, the market slowed down.

For Erin O’Toole and Pierre Poilievre, however, these figures were a cataclysmic sign that Trudeau can’t “manage” the economy, and that it’s deficits that are leading to inflation, which is insane. A lot of the weakness is attributable to the Third Wave and its associated lockdowns, and that is squarely the fault of premiers who opened up too soon, reduced restrictions too fast, and then were too slow to re-impose them (and we’re going to get more of that in the oncoming fourth wave). More than anything, it’s reflective that O’Toole and Poilievre aren’t even bothering to read the data beyond the headlines, and are slotting it into pre-arranged talking points which are so divorced from reality that it should be concerning to anyone paying the slightest bit of attention. The fact that Poilievre is goading the Bank of Canada over Twitter is a Very Bad Thing. He’s continuing to politicise them, and feeding into a bunch of poisonous populist narratives, and O’Toole is joining him for the ride. This is a very bad thing for our economy, and it doesn’t matter that they’re doing it all for show and that they probably will keep things status quo should they form government – the fact that they are polarising the debate and riling up these same toxic mobs that have been following Trudeau’s campaign around is absolutely a problem. This kind of rhetoric should be disqualifying for anyone who seeks higher office in this country.

Meanwhile, as you may have heard, Erin O’Toole reiterated his promise to balance the budget without making any cuts (in spite of promising earlier to cut things like the CBC) because he’s going to grow the economy enough. Why does that sound familiar?

https://twitter.com/robert_hiltz/status/1432799152266694657

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Roundup: A debasing “debate” on inflation

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Because sometimes this is a media criticism blog, I find myself outraged at the hack job that Power & Politics has been doing on this bullshit story about inflation, and it’s turned to being completely irresponsible. Yesterday was a perfect example of how shows like this are more interested in horserace bullshit than they are in economics, and lo, for an MP panel, the host wanted each party to give a single example of how their party would tackle inflation, even if it’s a complex issue, and lo, each MP gave a pitch to their party’s platform. Nothing about monetary policy and the Bank of Canada and its mandate – nothing. Just parties serving up their talking points to one another. So enlightening! Later, during the “Power Panel,” said host kept saying “we’re not going to talk about monetary policy” when talking about inflation, and that makes about as much sense as talking about climate change while declaring you’re not going to talk about GHG emissions. It’s kind of central to the point.

More to the point, the show – and several other outlets – used a truncated quote from Justin Trudeau to frame his response in a misleading way. To wit, the question he was asked by Bloomberg:

 You mentioned the Bank of Canada’s mandate, that mandate is expiring at the end of this year. If re-elected, the review, or the extension of the mandate is probably the first big economic policy decision you will make after the election. There is some talk of allowing the Bank of Canada to make some tweaks to its mandate to give it the flexibility to tolerate higher inflation and help the economy a little bit more at this difficult time. Do you have a position on the mandate? Would you support a slightly higher tolerance for inflation?

And Trudeau’s answer:

I don’t know. When I think about the biggest, most important economic policy that this government, if re-elected, would move forward, you’ll forgive me if I don’t think about monetary policy. You’ll understand that I think about families. When we first got elected in 2015, the very first thing we did was raise taxes on the wealthiest one per cent so we could lower them for the middle class. Similarly, if re-elected, the Liberal government will continue to invest in supports for families, for students, for seniors. Investing in housing, because we know that it is not right that so many people right here in the Lower Mainland and indeed across the country can’t afford their first home. We know that these are the policies that make a difference in the growth of our country, in the jobs people get, and the opportunities people have to grow and prosper. That is what we will stay focused on.

The clear implication is that he’s not focused on the Bank of Canada’s mandate, but on his own affordability agenda. But all anyone picked up on was “I don’t think about monetary policy,” and turning that into him being flip, and the host of P&P went so far as to compare it to Trudeau saying that budgets balance themselves – itself a truncated quote, where the original line, when asked about a commitment to balancing the budget, was: “The commitment needs to be a commitment to grow the economy and the budget will balance itself.” Which is true. Erin O’Toole is making the same pledge in his platform.

While I yelled at the TV over Twitter, my reply column filled up with assertions that the show was in the tank for the Conservatives, or that they were out to get Trudeau, but that’s not really the case. They’re not really in the tank for anyone – they want to get clips that will generate headlines and simplistic narratives, and that’s why they ask inflammatory questions designed to give explosive answers, and why they truncate quotes to be as sensational as possible. Part of this is the current host’s fault – she’s a reporter who is geared toward getting a “gold quote” out of people rather than a nuanced understanding of the situation. A bigger problem is the people who produce the show, who are more concerned with partisan talking heads giving simplistic and facile responses than actually understanding what is going on, and they’ve chosen the laziest, least-effort format to fill air time and generate some kind of spark of interest, which is usually partisans sniping at one another. Yes, it’s a big problem for our civic literacy, and it hurts our media literacy as well. Nobody was served by the “debate” on inflation, particularly as there was no context to what it was about, or what monetary policy means, and all it did was make everyone dumber. This kind of “journalism” has become a scourge.

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Roundup: Unnecessary panic about inflation

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It was predictable that it would happen – yesterday was the day when the Consumer Price Index figures are publicly released, and for the past few months, this has turned into a political gong show. Why? Because the Conservatives have decided to misconstrue what the data shows and to light their hair on fire about the top-line figure and wail that we’re in a “cost of living crisis.” Which is false – inflation is running hot for everyone right now, not just Canada, as a result of economies re-opening and global supply chains being disrupted by the pandemic, which affects prices, on top of the fact that there is some distortion in the year-over-year figures as a result of last year’s price crash. And to add to that, much of what is driving the July numbers are higher gas prices – which is a global issue, and good for Alberta’s economy – and higher housing prices, which is a driven by a lot of different factors. And hey, clothing and food prices were down, so there are upsides, right?

The problem, of course, is that this is being politicised – wildly so. When it came up on the campaign trail, Trudeau said that he was going to let the Bank of Canada do their job and worry about monetary policy while he worried about families, but this was truncated in the reporting, and which also got trimmed into Conservative shitposts, and O’Toole was given fresh cause to decry the “crisis.”

https://twitter.com/LindsayTedds/status/1428104169009909763

Of course, O’Toole isn’t proposing any solutions that actually deal with inflation (and his plans will actually make it worse), but if he wants to start banging on about it and monetary policy, then he needs to start talking about what he thinks the Bank of Canada’s mandate should be – especially as that mandate is coming up for renewal. Should they continue to target inflation between one and three percent? He seems to sound like he wants them to target deflation, so good luck with letting the economy grow under that kind of mandate. Parliament should have this kind of discussion, but they need to actually have it – not just talking points and shots taken that assume people are ignorant about what it means. And the reporters on O’Toole’s campaign need to step up and start asking him these questions rather than just typing up his talking points.

https://twitter.com/LindsayTedds/status/1428094182531510282

https://twitter.com/MikePMoffatt/status/1428096342342213637

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Roundup: Subjecting a minister to a double standard

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I found myself bemused at the CBC story yesterday about Carolyn Bennett’s office allegedly being some kind of “toxic work environment,” according to a number of former staffers. Reading the piece, however, says little about Bennett herself – other than hammering on the point that she didn’t get along with Jody Wilson-Raybould, as though that were somehow relevant to her office – but rather that the toxicity was related to other staffers in the office who were clannish and played favourites with other staffers. The story made great pains to say that Indigenous staff felt their voices weren’t being heard on policy files, but again, this is about the behaviors of other staffers and not the minister herself.

This all having been said, I am forced to wonder whether anyone could reasonably expect a minister’s office to be some kind of normal office environment, because I can’t really see it. These places are pressure cookers of constant deadlines and stress, and there’s a reason why they tend to be populated by fairly young staffers, many of them recent graduates, which is because they are willing to put up with the long hours, constant travel, and the obliteration of their personal lives where older staffers with families and obligations largely wouldn’t. And while we can say we’d prefer that these offices are healthy work environments and safe spaces, but this is politics at the highest levels in this country. It’s not going to be pretty, as much as we may like it to be.

https://twitter.com/jec79/status/1417870826934730753

https://twitter.com/jec79/status/1417948347009101827

I also think it bears noting that Bennett has been the subject of a lot of criticism that is never given to male ministers, and in particular with the dust-up over her snarky text message with Wilson-Raybould a few weeks ago, seems subject to a double standard that women in ministerial roles are not allowed to have personality conflicts where this, again, is not even blinked at among men. Under this context, the CBC piece looks to be both catering to these double-standards, and looking like they have an axe to grind with Bennett, for whatever the reason.

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Roundup: The “failure of negotiations” is nonsense

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It appears that the lack of seriousness around getting Bill C-6, which would ostensibly ban conversion therapy in Canada, through the Senate has reached its peak, as the Government Leader in the Senate, Senator Marc Gold, claims that negotiations have collapsed and he can’t bring the Senate back to deal with it. Which is nonsense. He has the power to petition the Speaker to recall the Chamber, and that request would almost certainly be granted. They can sit as long as necessary to pass the bill, and if they can’t get unanimous consent for hybrid sittings, well, by now most if not all Senators should be double-vaxxed and can attend in person. There are no actual impediments to them actually doing this.

Part of the problem is Gold himself – he doesn’t seem to grasp how the Senate works procedurally, and that he has a lot more power than he claims to. He also, for no good reason, proposed a date for the Senate to rise at the end of June when he could have kept it sitting into July with no actual problem. He also seems to be enamoured with the idea of agreeing on a timeline to pass the bill, which he doesn’t need, but ever since the Senate agreed to timelines around some major pieces of legislation in the previous parliament, there is a romance with doing this all the time in the Senate, which is unnecessary and in some cases counter-productive.

The other part of the problem is Justin Trudeau. And while it has been suggested that he has ordered Gold to let the bill die so that he can use it as a wedge in the election – frankly, the dynamics in the Senate don’t really support this line of reasoning – it’s more that Trudeau has a case of not-so-benign neglect when it comes to the Senate. By cutting it loose, so to speak, he gives it no mind rather than making it part of his strategy. There’s no reason why Gold is not a Cabinet minister who can answer for the government in the Chamber, rather than his current half-pregnant quasi-governmental role while still claiming independence, which doesn’t work in theory or practice. He clearly needs the support of PCO because he’s not able to do a reasonable enough job as it stands with what support he does get, and there frankly needs to be an actual government (meaning Cabinet) voice in the Chamber. But in insisting on “Senate independence,” Trudeau simply expects things to go through the Chamber and he can forget about it, which is a mistake.

Gold needs to fix this situation, and fast. If that means recalling the Senate in person, so be it. But claiming negotiations “collapsed” and he can’t do it is both untrue and against procedure. This is on him.

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Roundup: Cue the emergency committee meeting

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It wouldn’t be summer if we didn’t have an emergency committee meeting of some sort, and we got just that yesterday, as the Conservatives triggered the recall of the Access to Information, Privacy and Ethics committee with an eye to opening an investigation into Liberals contracting database services from a Liberal-friendly company, headed by a personal friend of the prime minister’s. The party has claimed that this is for constituency services, and that there is no data going to party databases (as has been the case with the Conservatives and their own constituency data in the past), and that all of the rules have been followed, but the Conservatives have a narrative they need to feed, so there it went.

In the end, it got nowhere. The Liberals managed to stymie the proceedings long enough for the Bloc MP to side with them in opting not to pursue the matter, but along the way, they (correctly) suggested that this is a matter best suited for the Board of Internal Economy, which deals with MPs’ resources and allocations, and these payments have been coming out of MPs’ office budgets. Of course, the Conservatives (and to an extent the NDP) can’t put on a public dog and pony show at BOIE like they could at the ethics committee, so of course they had no interest in pursuing that course of action – especially after the Liberals also wanted the Conservatives’ database practices included in their referring the study to BOIE.

This isn’t to say that there aren’t issues that could be better explored here, the chief of which is that political parties are exempt from privacy legislation, so there aren’t many effective firewalls around the use of constituency files. And hey, that would be something that the Access to Information, Privacy and Ethics committee should be tackling, because it’s right in their mandate! One Conservative MP also suggested that perhaps the House of Commons build their own constituency file management system so that parties don’t have to contract their own systems, which may not be a bad idea – but it’s one that BOIE would tackle, not the ethics committee. And the point of this exercise was about the dog and pony show, not anything of substance, which is one more reason why this particular session has turned toxic.

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Roundup: Exit McKenna

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It’s now official – Catherine McKenna is bowing out of federal politics, citing that she wants to spend more time with her kids while she can (the oldest is off to university next year), but insisting that she still wants to do her part to fight climate change in other arenas. This was immediately met with questions about whether this is a signal that it can’t get done in government, which she flat-out denied, but we should remember that the federal government is limited in what it can do, because it only has so many policy levers at its disposal (which we should all realise after living through those limitations in this pandemic).

https://twitter.com/AaronWherry/status/1409621322649440256

McKenna, who also stated flat-out that she’s not going to run for mayor, dismissed the attacks against her as “noise,” and that they weren’t successful because she did the work of getting the carbon price in place, and made more tangible progress on the environment file than we’ve had since the Mulroney era. But we can’t forget that the abuse was real, it was horrific, and she needed police protection because the threats were so bad. This should be one of those moments of reflection about where we are as a society that these kinds of misogynistic are able to keep happening with little to no recourse for the victims, and few consequences if any for the perpetrators. McKenna did note that she does still want to work with social media companies to address this, but we’ll see if anything actually happens.

https://twitter.com/cathmckenna/status/1409522139380785157

Of course, this has entirely been overshadowed by the spectre of Mark Carney entering the political arena, which he categorically should not, because even if he’s been out of the Bank of Canada for seven or eight years, it still has the possibility to taint the institution by association, and him declaring himself to be sympathetic to the Liberal cause is not helping either – especially given that Pierre Poilievre is currently attacking the institutional independence of the Bank by positing that they are somehow in cahoots with the government, and that they are simply “printing money” to finance the government’s deficits which will drive up inflation – entirely ridiculous notions given that quantitative easing is not actually “printing money” and that their whole mandate is to control inflation at around two percent, which they have been very good at. Nevertheless, people are believing Poilievre’s bullshit (especially as other media won’t actually call it out as such), and this will only get worse if Carney actually enters the political arena. And because the media and the pundit class have decided that they like this narrative of Carney being some kind of heir apparent and saviour, they are trying to make it happen, damn the consequences. It’s not a good look, and yet here we are.

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Roundup: Lies about inflation and the central bank

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For weeks, the Conservatives (and Pierre Poilievre in particular) have been making a bunch of bogus and nonsensical attacks against the government and what they term the “inflation tax,” which makes absolutely no sense, but is predicated on the wild notion that the Bank of Canada is allegedly printing money to finance the government’s “out of control” deficits, and that this is going to drive up inflation and turn us into Venezuela. It’s bullshit – the Bank of Canada is independent from government (and it should be shocking that the Conservatives are suggesting otherwise given the history of the independence of the central bank in this country), quantitative easing is not “printing money,” and given that a year ago, in the early days of the pandemic, we were facing deflation as a country, an expansionary monetary policy was the right move to make. We’re still in need of stimulus, because the recovery has been so uneven, but the Bank of Canada knows this, because it’s their job.

https://twitter.com/trevortombe/status/1405250437838610432

With this in mind, it was no surprise yesterday that when the inflation figures were reported, the fact that it clocked in at an annualized 3.6% had the Conservatives, and Erin O’Toole in particular, trying to make hay of this – and media outlets didn’t help with their headlines that this was the highest rate in a decade, without putting that in proper context. Now, part of that is the base effect of last year’s massive drop, which is going to take time to work itself out in the data; but it’s also in part based on factors from right now, the most important of which is housing prices, which have skyrocketed as demand has outstripped supply. None of this is a surprise, and none of this has anything to do with the size of the federal deficit or the Bank of Canada’s quantitative easing, and yet that is the narrative being painted. It didn’t help that O’Toole’s examples lacked any logical consistency, such as blaming increases in post-secondary education on the federal government, when that’s a provincial jurisdiction. Not that truth matters.

https://twitter.com/MikePMoffatt/status/1405152487821168642

Compounding this, however, is the completely irresponsible way in which this was being spun by shows like Power & Politics, where the framing was “the cost of everything is going up!” followed by asking panellists if the government should do something about it. And to their credit, most of those panellists said no, leave it for the Bank of Canada, but the fact that the host kept torqueing this notion about “prices are rising!” and trying to constantly get people to say something – anything – inflammatory about inflation, was not only irresponsible, but shows actual contempt for proper economics reporting by the gods damned CBC. They don’t care about actual information or reasonable discussion, they want the false balance of opposed partisans battling it out, and the “drama” that creates. It does such a disservice to everyone that it amazes me that they can get away with it.

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Roundup: Ford turns to the Notwithstanding Clause – again

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The sudden comfort with which premiers are deciding to invoke the Notwithstanding Clause is getting a bit uncomfortable, as Doug Ford decided he needed to invoke it after a court struck down his attempts to limit third-party spending in provincial elections in a somewhat arbitrary fashion (given that unions get together to form American-esque political action committees in this province). While you can find a great explainer on Ford and his particular legal challenge in this thread, the more alarming part is the apparent need to reach for the “emergency valve” of the Clause before even appealing the decision to the Court of Appeal or the Supreme Court of Canada.

There is a perfectly legitimate reason why the Notwithstanding Clause exists, which as to do with keeping a certain amount of parliamentary supremacy in lawmaking, and it gives governments an avenue of recourse if there is a fundamental disagreement with a court’s interpretation of legislation. But lately, it’s being invoked by premiers who know they are trying to push through objectionable legislation – François Legault did it with Bill 21, which the courts have essentially said blocks their ability to strike down any portion of the law, and he’s doing it again with his Bill 96 on trying to obliterate any bilingualism in the province (the same bill that seeks to unilaterally amend the federal constitution). Ford had threatened to invoke it to ram through his unilateral changes to Toronto City Council while they were in the middle of an election, but ultimately didn’t because of a court injunction, and his decision this time is similarly dubious. This willingness to invoke the Clause at the first sign of court challenge or on the first defeat is a very big problem for our democracy, and we should be very wary about this abuse of power, and punish these governments appropriately at the ballot box during the next elections for these decisions.

https://twitter.com/EmmMacfarlane/status/1402715067083280387

In the meantime, here’s Emmett Macfarlane with more thoughts on the court decision that led to this turn of events.

https://twitter.com/EmmMacfarlane/status/1402711628978720772

https://twitter.com/EmmMacfarlane/status/1402712563960455173

https://twitter.com/EmmMacfarlane/status/1402713058913525761

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Roundup: Poilievre wants to lie to you about inflation

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StatsCan released the April inflation figures yesterday morning, and for the unprepared, they look bad – a 3.4 percent increase year-over-year, when the Bank of Canada’s inflation target is around two percent. This may look alarming, but there is a very simple explanation for why it looks high, and it’s something they call the base effect – meaning, when you compare it to last year’s figures, you need to put those figures in context. In this case, when you look at the April 2020 figures, we were actually suffering deflation in the early throes of the pandemic, when the first real lockdown started, and everyone was being sent home. We’ve had a fair degree of economic recovery since then, and inflation is really still running a little below target, but that gets obscured by the base effect, and that will likely carry on for another couple of months.

The problem, of course, is that you have media outlets that won’t properly contextualise this, looking at how much year-over-year prices like gasoline have spiked – which again, ignores that a year ago, gasoline prices dropped to an eleven-year low because demand cratered as a result of the pandemic. It’s a better headline to talk about “price surges” rather than explaining that base effect. And to be fair, some prices have gone up for a variety of factors, while others haven’t – it’s why the consumer price index looks at a basket of goods and provides an average, where some prices rise and some fall, and they provide additional measures that will strip out some of the volatile indicators to see how the more stable ones are faring. And more to the point, the Bank of Canada knows what they’re doing, and if they see runaway inflation starting, they will tamp it down with the tools available to them, such as interest rates.

But more than just media outlets, we have the Conservatives and Pierre Poilievre in particular who are determined to light their hair on fire and lie about the inflation figure in order to denounce the government (blaming it on deficit spending) or by saying that the Bank of Canada is in cahoots with them (when they are independent of government and kept at arm’s length). And lo, Poilievre even produced a video that railed about the price of lumber to make his point – err, except the price of lumber isn’t increasing because of the monetary supply or deficit spending. It’s rising because there is a housing boom, particularly south of the border, and lumber exports can’t keep up with demand, hence the price increases. That’s basic economics, which you think that the party that bills itself as “good economic managers” and the “party of the free market” would understand, but apparently not. And more to the point, we can be assured that Poilievre will neither a) read a gods damned report from Statistics Canada beyond the headline to understand what’s going on; or b) tell the truth when he can whip up hysteria for the sake of scoring points. And because they will quote statistics in a way that strips it of its context, they will lie to the public, and the media will do very little about it – at most, both-sidesing the comment rather than calling out the simple falsehoods.

Meanwhile, Poilievre’s antics were perfect to turn themselves into memes. It’s probably just as well.

https://twitter.com/maxfawcett/status/1395103214681300992

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