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6 Reasons Canada Won’t Share America’s Economic Growth in 2014 | Diane Francis

6 Reasons Canada Won’t Share America’s Economic Growth in 2014 | Diane Francis.

Consensus is forming that 2014 will be the economic turning point for the United States and that is, traditionally, good news for Canada. But is it?

Most rosy is the forecast by UBS that U.S. GDP will grow by about 3 per cent in 2014 and in 2015 then beyond. The IMF has also just raised its U.S. forecast.

“There has been good action taken by Congress to eliminate the fear about the budget and to reduce the sequestration. We see the Fed having taken some very well-communicated action concerning the tapering of the program, and those are good signs — in addition to which we see some good numbers: Growth is picking up and unemployment is going down,” head of the IMF Christine Lagarde said this week. “So all of that gives us a much stronger outlook for 2014, which brings us to raising our forecast.”

Interestingly, if the United States grows by 3 percent that will virtually match China’s growth, in absolute dollars. (Lest we forget the math. A 3 percent rate in the U.S. is based on a nominal GDP of US$17-trillion and China’s equally rosy forecast of 7.5 percent is based on a nominal GDP of less than US$8-trillion.)
The turning point has come due to the energy boom in the U.S., the housing recovery, the health of its manufacturing sector and productivity rates, banking stability, job growth, low consumer debts and an improved fiscal situation due to the spending cuts imposed by sequestration.

Canada, unfortunately, has some headwinds that, until addressed, will likely decouple Canada’s growth from its neighbour’s in the short and medium term.

Here they are, not necessarily in order of importance:

— Canada lives beyond its means as an economy, with trade and export deficits, despite the benefits of high commodity prices in the past few years.

— Canada’s productivity lags U.S. rates considerably, representing a negative metric that makes export growth difficult. The reasons are varied and include the fact that the Canadian economy is balkanized into political spheres of influence, variant tax and labour laws, non-tariff barriers internally and disparate worker credentials because it lacks a national trade agency to insure the fair flow of workers, goods and services or an over-arching Inter-provincial Commerce Commission. There is no free trade within Canada.

— Canada’s dollar is headed to as low as 88 cents U.S. this year, according to some projections, which is a symptom of problems but also, ironically, somewhat helpful in exports if sustained but not helpful concerning the following issue.

— Canada’s federal and Western provinces are pitch-perfect when it comes to debt levels, spending and investment. Their Triple A or high AA credit ratings reflect that.

But Eastern Canada, on the other hand, is a problem, a clearly defined have-not part of the country with high unemployment rates, high underemployment rates and spendthrift provinces led by Ontario which has the biggest debt of any sub-national government globally. In 2003-4, debts were C$140-billion and in 2013-14 are expected to reach $260-billion and heading higher.

So this means that as the Canadian dollar falls, repayments to foreigners increase as does the need for the Bank of Canada to begin increasing interest rates. The only solution is to bite the bullet, something that vote-hungry politicians have failed to address in the past.

In light of that realization, Goldman Sachs and others are shorting the Canadian dollar.

— Consumer debt is Canada is worrisomely high. The housing bubble in Ontario, condo craziness, has forced prices for all real estate upwards, and increased borrowing, with the result that Canadians now have switched places with the Americans as holders of the highest consumer debt. (Americans were forced to shed their borrowing after the 2008 meltdown but Canadians continued the tradition.)

(This debt overhang will slow consumer spending in Canada, but the newly lower debt levels south of the border are expected to enhance U.S. growth in the next few years.)

— Canada’s cornerstone exports are facing declines. Natural gas is being replaced by U.S. shale gas production. Crude oil, Canada’s most valuable export, is expected to drop in price $20 a barrel due to increasing supplies: the U.S. shale oil boom, Canada’s increasing production, a relaxation of the embargo against Iran if it fulfills its pledges on the nuclear portfolio and Mexico’s invitation to foreign oil companies to help increase production for its moribund national oil giant.

The one bright spot would be approval, finally, of the Keystone Pipeline, with its 800,000 barrels a day of exports. Another would be the Northern Gateway proposal to the B.C. coast.

But both are political footballs for different reasons and may not happen for years, if ever.

The Iranian diplomatic deal, if successful, could enhance world peace but would unleash much oil onto the market. The embargo has limited exports from 2.5 million barrels per day to one million.

The other important export driver in Canada is Ontario’s auto industry but this year the province was overtaken, in terms of production, by the state of Michigan for the first time in a decade. And Ward’s Automotive forecasts a steady decline in Ontario production.

On a positive note, most of Canada’s problems are soluble if electorates, and their public servants, agree to old-fashioned belt-tightening.

Most importantly, Canada has to stop signing free trade agreements with countries that don’t offer reciprocity in terms of export or investment opportunities, such as China and/or the European Union, and forge a Canadian Free Trade Agreement among its provinces and territories. And the US-Canada bi-national issues should be fixed and talks about a development partnership in the North should become policy.

But those are long-term solutions that have eluded Ottawa for generations.

In the meantime, just curbing the excessive growth and overheads of the entire Canadian public sector, and creating a healthy, fair market at home for the Canadian private sector, are bottom-line essentials that any nation-state must enact in order to protect and grow.

 

NSA considered spying on Canadians without this country’s consent, top-secret directive says | National Post

NSA considered spying on Canadians without this country’s consent, top-secret directive says | National Post.

OTTAWA — The U.S. National Security Agency considered spying on Canadians without the knowledge or consent of its intelligence partners in this country, according to a top-secret draft NSA directive.

The 2005 memo, leaked to The Guardian newspaper by former NSA contractor Edward Snowden, details how the NSA considered “unilaterally” targeting the citizens and communication systems of Canada, Australia and New Zealand. The countries are part of the “Five Eyes” intelligence-gathering pact that also includes the U.S. and United Kingdom. The directive refers to partner nations as “second-party” countries.

“Under certain circumstances, it may be advisable and allowable to target second party persons and second party communications systems unilaterally when it is in the best interests of the U.S. and necessary for U.S. national security,” says the directive, classified as “NF” for No Foreign and is titled Collection, Processing and Dissemination of Allied Communications.

“Such targeting must be performed exclusively within the direction, procedures and decision processes outlined in this directive.”

The document states the proposed U.S. spying on its Five-Eyes partners can take place even when the partner government has explicitly denied the U.S. permission to do so, says The Guardian. “The memo makes clear that partner countries must not be informed about this surveillance, or even the procedure itself.”

In a later part of the draft cleared for release to the Five-Eyes countries, the document suggests there may be circumstances in which Canada, Australia and New Zealand should co-operate to allow the U.S. to target their citizens.

The public release of the directive is part of a series of calculated leaks over the past year in which Snowden has exposed a vast campaign by the NSA, assisted by Five-Eyes partners, to snoop on U.S. and global electronic communications in the name of counter-terrorism.

“The slow release of secret documents by Snowden [via journalist Glenn] Greenwald is having a cumulative effect which may reach a tipping point,” says Tom Quiggin, an Ottawa security and intelligence expert.

“The NSA runs the risk of losing the confidence of its allies and forcing allied agencies into distancing themselves from the NSA and the U.S. government.”

Meanwhile, U.S. Internet and telecommunications companies such as Cisco are now reporting slipping international sales directly attributable to the drip-drip-drip of Snowden’s unauthorized disclosures.

Microsoft moved this week to assure international customers by pledging to fight in court any attempt by U.S. intelligence agencies to seize its foreign customers’ data under American surveillance laws, one of a series of steps aimed at reassuring nervous users abroad.

Microsoft general counsel Brad Smith told Reuters the company will dramatically increase the amount of encryption it uses for internal traffic, following similar moves by Google and Yahoo after reports the NSA had illicitly tapped into their facilities overseas.

The NSA runs the risk of losing the confidence of its allies and forcing allied agencies into distancing themselves from the NSA and the U.S. government

The Five-Eyes coalition was formed under the 1946 UKUSA Agreement, which was believed to limit the ability of the partner countries to spy on each other. Ottawa’s Communications Security Establishment Canada (CSEC), the country’s premier intelligence agency, maintains a close partnership with the NSA.

The original 1946 UKUSA agreement between the U.S. and Britain was previously designed only for “foreign intelligence” operations. The draft directive appears to indicate that the agreement has changed, according to The Guardian.

“(The 1946 UKUSA) agreement has evolved to include a common understanding that both governments will not target each other’s citizens/persons” says the directive. “However, when it is in the best interest of each nation, each reserved the right to conduct unilateral Comint (communications intelligence) action against each other’s citizens/persons.”

In a later part of the draft cleared for release to the Five-Eyes countries, the document suggests there may be circumstances in which Canada, Australia and New Zealand should co-operate to allow the U.S. to target their citizens.

International law does not provide much guidance on transnational peacetime spying, says Craig Forcese, a leading expert on national security law at the University of Ottawa.

“International law rules pertaining to spying are best described as a checkerboard of principles,” he wrote in a recent blog posting. “The clearest principle is a simple expression of sovereignty preoccupations: don’t spy on the territory of another state, in violation of its laws.

“Beyond that, there is no simple rule governing the international legality of spying. This may not be a happy situation, but it is fair to say that this is the world that states have quite clearly set out to create. After all, all states spy at one time or another.”

In the long run, the real damage may be to U.S. society, concludes Quiggin.

“Ironically, it was similar spying and information collection activities of the British Crown that lit the fires of revolution in America in the 1760s. Using a new law called the ‘Writs of Assistance,’ the King’s men were able to search the homes, papers and belongings of anyone without warning and seize all information and goods,” in pursuit of smuggled contraband.

 

Oil Execs Drink Fracking Fluid At Montreal Meeting

Oil Execs Drink Fracking Fluid At Montreal Meeting. (source)

Oil and gas executives at an industry conference in Montreal sipped on a rather unique beverage this week, the National Post reports — fracking fluid.

During a lunch presentation at the Quebec Oil And Gas Association’s annual conference, Halliburton Canada vice-president John Gorman handed out glasses of the company’s “CleanStim” fracking fluid, and some 20 to 25 execs — Gorman included — took a sip, the Post reported.

Talk about a potent potable.

Gorman said Halliburton “only had to replace very few chemicals with some food additives” to create a fracking fluid safe enough to drink. But the company maintains its fracking fluid is “not intended for human consumption.”

It was a publicity stunt, of course, one that Halliburton — which used to be headed by former Vice President Dick Cheney — has repeated multiple times in recent years.

It’s meant to show that environmentalists’ concerns about toxic fluids in fracking operations are overblown.

Colorado Governor John Hickenlooper told a U.S. congressional committee earlier this year that he drank Halliburton fracking fluid.

You can drink it. We did drink it around the table, almost ritual-like, in a funny way,” he told the Senate Committee on Energy and Natural Resources.

And it was likely not a coincidence that the latest round of fracking fluid drinking took place in Quebec, which has instituted a moratorium on fracking.

That moratorium has frustrated some energy companies hoping to jump-start the fracking industry in the province, and led to a lawsuit against the federal government.

Lone Pine Resources says it plans to sue Ottawa for $250 million under NAFTA provisions. The company claims Quebec’s moratorium on fracking beneath the St. Lawrence River, instituted in 2011, takes away the company’s “valuable right” to frack.

Critics say the move shows the potential of free trade agreements such as NAFTA to limit governments’ options in setting policy.

Violent clashes broke out earlier this month at Elsipogtog First Nation in New Brunswick when police tried to enforce an injunction against an ongoing protest against shale gas exploration. Shale gas is typically extracted through fracking, which is a process by which water and chemicals are forced into rock formations in order to extract oil or gas.

Besides concerns that toxic chemicals could leak into the groundwater from fracking operations, some studies have suggested fracking exploration is causing earthquakes.

A new study from the British government, released this week, says fracking isn’t a public health risk, so long as it’s well regulated and well run, the Guardian reported.

 

CETA Free Trade Deal: Harper Heading To Europe To Conclude Pact

CETA Free Trade Deal: Harper Heading To Europe To Conclude Pact. (source)

OTTAWA — Prime Minister Stephen Harper is heading to Europe to conclude a free trade deal with the European Union on Friday.

Negotiations over the terms of the Comprehensive Economic and Trade Agreement (CETA) have gone on for years. The trade deal is expected to generate some $28 billion in new trade annually.

Sources say the federal government hopes to announce it has concluded the agreement in principle Friday when Harper is in Brussels to meet with President of the European Commission, José Manuel Barroso.

The federal government received the tacit agreement of all provinces on Wednesday, Huffington Post Canada has learned.

Quebec is concerned about its dairy farmers and the impact of the deal on Canada’s supply management system but they will be compensated, according to a source with knowledge of the deal.

The federal government is offering compensation for producers if there are any losses and plans a long phase-in for dairy access, HuffPost has learned.

The Conservatives also announced Wednesday that they are lifting travel visas for Czech citizens.

The change is designed to get the Czech Republic onside with the trade deal. It will likely take approximately two years to get the legal text finalized and the deal ratified. The European Parliament must study and vote on the deal. Some European Union member states may also get to have their say if the contents of CETA touch on areas they haven’t relinquished authority to the European Union.

The National Post was first to reportWednesday that Canada had broken through a major roadblock by agreeing to allow a doubling of cheese imports from the European Union.

Wally Smith, the president of the Dairy Farmers of Canada, told Reuters the content of the deal was “unacceptable.”

“This deal would displace our local products with subsidized cheeses from EU and risk our small businesses being shut down or put out of business.”

The federal government said the doubled European imports — which will amount to about 30,000 tonnes annually — would still only account for about four per cent of domestic cheese consumption.

“In these discussions, the system of supply management has been completely protected and Canada has gained unfettered access for Canadian dairy products into the largest, most lucrative market in the world,” Trade Minister Ed Fast’s office told the National Post.

NDP Leader Thomas Mulcair said he was concerned the deal could mean a loss of jobs in Canada.

The provinces have been deeply involved in negotiations since many of the items discussed, intellectual property, trade, sub-national contracting, touch on areas of provincial jurisdictions. However, there is no legal requirement for them to hold legislative votes. Only the federal government needs to sign the deal.

The Conservative government plans a massive communications plan to sell the deal to Canadians. The government said CETA could create 80,000 jobs in Canada in Wednesday’s speech from the throne.

 

North American Union? Diane Francis Pushes U.S.-Canada Merger

North American Union? Diane Francis Pushes U.S.-Canada Merger.

It’s time for Canada to merge with the United States.

That’s the argument from pundit, author, HuffPost blogger and American-born dual citizen Diane Francis in her new book “Merger of the Century,” and it’s already starting plenty of conversation about the future of a North American union.

Francis’ argument centres around what she sees as the threat posed by state-run economies such as China and Russia to Western prosperity. In her view, these nations are using a variety of nefarious means to buy up Western resources and corporations while barring such purchases in their own nations.

These “giant holding company” nations are “wolves at the door,” Francis told CBC.

In an excerpt from the book published by the National Post, Francis argues that the antidote to this Eastern encroachment is for Canada and the U.S. to become one giant nation.

She lists a number of potential benefits, among them:

 

The great municipal recycling scam | Full Comment | National Post

The great municipal recycling scam | Full Comment | National Post.

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