Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Vancouver Olympics--At What Price? For good alternative Olympics coverage, check out a three-part radio series entitled The Winter Olympics Comes to the Northwest...But at What Price? on KBCS community radio in Bellevue, Wash. (Part of this was rebroadcast on Boston's own Radio With a View this past Sunday--hat-tip to Mark and Dave for alerting us to this series. You can hear last Sunday's show for the next two weeks by clicking here, scrolling down, and clicking on the Feb. 14th link under the RWAV listing.) Also check out the No 2010 Olympics on Stolen Native Land website and the Vancouver Media Co-op website for updates on the excellent activism going on to disrupt the Olympics. Meanwhile, we bring you more satire about Canada from Maurice Dufour, professor of political science at Marianopolis College in Montreal: Arctic Power ... With Added Cleansers. If you like Maurice's satire, check out two of his earlier pieces for us: Shovel-Ready in Canada, about the supposed superiority of the Canadian banking system, and How to Make Mud Cookies, about famine in Haiti in the midst of the commodity crisis of 2008. One of his funniest for us, Hooked on Hydrocarbons, about the Alberta oil sands, is available only in the print edition. But email us and maybe we can send you a pdf (and try to convince you to subscribe). Labels: Canada, Maurice Dufour, Olympics, Stephen Harper, Vancouver, Vancouver Olympics Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Tuesday's IndicatorsCanada grew in June for the first time in a year, but 2Q GDP fell by 3.4%In the US, manufacturing grew in August for the first time in close to 2 years: autos and homebuilders, which had vastly supported any upward momentum in this sector during the boom years, and whose job losses have accounted for half those lost since December 2007, kept things going with cash-for-clunkers and tax credits for first time homeowners. And in fact, pending sales of existing homes grew faster than expected in July. In the Eurozone, unemployment numbers weighed on stocks, as July figures rose their highest level in ten years, reaching an expected 9.5% from 9.4% in June. Also, eurozone prices fell for the third straight month, though the pace of the drop is starting to level off. China's manufacturing grew at its fastest pace since 2008 in August. And South Korea's exports fell for the 10th month in a row, at a 20.6% rate, in July, from a year earlier. All in all, today's figures give a boost to the slow, weak but co-ordinated worldwide recovery scenario, with the troubling exception of the Chinese and South Korean figures. The latter attest (regading China, the key question concerns how much of the uptick in manufacturing is a result of overcapacity enabled by veritable torrents of bank lending which may be abruptly cut off, something that caused Shanghai shares to drop much deeped into bear--20% loss from height--territory on Monday) to the persistence of vast imbalances in the international economic and financial systems that could upend recovery--especially of such a uniquely fragile sort as we seem to be witnessing. Labels: Canada, China, consumer prices, economic indicators, eurozone, GDP, manufacturing, South Korea, unemployment, United States Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Virtues of Concentration (Doug Henwood)From Doug Henwood of Left Business Observer, responding to this op-ed from Saturday's Times. Relevant to our two most recent posted articles: Fred Moseley's article arguing for permanent nationalization of the "too big to fail" banks (vs. breaking them up), and Maurice Dufour's article on the Canadian system. Hat-tip to Larry P.On op-ed piece in today's New York Times the latest source to point out that Canada's banking system is now the most solid and stable in the world. The reasons: Canada has a very concentrated financial system, which is dominated by just five nation-spanning banks, and one that is tightly regulated. Curiously, as the author, Theresa Tedesco, point out, the Canadian national banking model was inspired by the USA's own Alexander Hamilton, a centralizer and concentrator from way back. This confirms a couple of longstanding obsessions of mine. One is that concentrated financial systems are easier to regulate than dispersed ones. This proposition has been partly discredited by the "too big to fail" doctrine, which has prompted some people, even on the U.S. left, to argue that big institutions should be broken up. But the problem is that the U.S. authorities didn't supervise or regulate, not that Citi or Bank of America got too big. Tedesco recommends using the current crisis to engineer a large wave of mergers, leaving the U.S. with many fewer banks than the 8,305 we have now (by the FDIC's count). Of course, they'd have to be kept on tight leashes, but who but a nut would disagree with that now? And the other is that concentrated ownership structures, of banks as well as corporations (something that's true of Canada), are far more compatible with social democracy than dispersed ones. Concentration can lead to greater stability and a lessened role for competition. Canada has a national health insurance system that many Americans envy (along with many other social benefits), a lower poverty rate, and a far more egalitarian distribution. The same can be said of Sweden, which is also highly concentrated and has even better income and poverty stats than Canada. It's extremely disreputable to say these sorts of things on the American left, especially its populist branches. For populists, Hamilton is the spawn of the devil, and giant banks are instruments of Satan. But the populist vision is one where everyone owns a small business and credit is practically free. For those of us interested in creating a civilized welfare state in the U.S., and taming the war of each against all ethic that governs American economic life, chucking that populist nonsense and embracing a little concentration could be a good start. Of course, concentration itself won't take us in that direction. But fragmentation virtually guarantees that we won't even get a start. Labels: bailout, bank nationalization, Canada, Doug Henwood, financial crisis Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More on Canada (N. Folbre on NYT econ blog)More on Canada's banking system, as Pres. Obama visits our neighbor to the north. This one is by left economist and UMass-Amherst professor Nancy Folbre, at the New York Times Economix blog, to which she seems to be contributing regularly (we re-posted something by her from there on early childhood education last week). She makes some of the same points that Maurice Dufour makes in the article we posted this morning, but Folbre's discussion of public spending, and single-payer in particular, is excellent. And it is nice to see her criticize the fatuous Fareed Zakaria. (For a great critique of Zakaria's oeuvrre, see frequent D&S author Roger Bybee's article in Extra! from a few months back.Canada and the Recession: Angles of Deflection By Nancy Folbre O Canada. That big, beautiful country to the north is a lot like us, just colder and a few degrees less ... neoliberal. Canada has moved more slowly than the United States to deregulate its economy and shrink its social safety net. The resulting differences in the impact of global recession are small, but instructive. As Fareed Zakaria points out in a recent Newsweek article, Canada is weathering the financial crisis better than we are. Canadian banks are more old-fashioned (that is, centrally regulated) than our own. Stricter leverage requirements have been enforced. Subprime mortgages have not been encouraged. Prohibitions against foreign bank takeovers have protected Canadian institutions from competition from the United States, but also buffered them against financial contagion. Mr. Zakaria overstates the case when he claims that no government bailout has taken place there. The Canadian government has provided substantial assistance to the financial sector. But its efforts to increase available credit remain far less costly than our trillion-dollar subsidies. A more serious concern for Canadians is the likelihood that the sinking American and global economy will pull them down. If unemployment continues to rise over the next few months in the United States, as predicted, many families will lose their health insurance coverage or struggle to pay premiums they can ill afford. By contrast, increased unemployment won't reduce Canadian access to health care. As the economist (and fellow Economix blogger) Uwe Reinhardt explains, the single-payer Canadian health care system delivers very good results for about half the per-person cost of ours—with huge savings from reduced paperwork. Economic disparities in access to health care are significantly lower there. President Obama promises to expand health insurance coverage in the United States with little threat or inconvenience to the private sector. But some Democrats in Congress, led by Representative John Conyers, advocate a single-payer "Medicare for All" bill strongly influenced by the Canadian model. Both American and Canadian unemployment insurance systems are less generous than those of most countries of Northwestern Europe. Neither provides assistance for more than 40 percent of the unemployed. But Canadians have long provided a higher replacement rate for lost earnings. According to latest estimates from the Organization for Economic Cooperation and Development, a married worker earning the average wage, with two children, could expect 78 percent wage replacement in Canada, compared to 52 percent in the United States. The differences are even greater for those earning higher than average wages, because of low benefit ceilings. The recently passed Economic Stimulus and Recovery Act offers incentives to states to expand unemployment provision to part-time workers and to those leaving jobs for "compelling family reasons." The Canadian unemployment insurance system offers more comprehensive family benefits, including paid sick leave, paid compassionate care leave, and paid maternal and parental leaves of up to 50 weeks. Many American workers aren't even eligible for the 12 weeks of unpaid family leave guaranteed by the Family and Medical Leave Act—although President Obama promises to change that. There's no evidence that Canada's public provision of health care and social benefits has reduced its economic growth, and the federal budget just presented is the first to show a deficit in 11 years. What explains more support for public spending there? Slightly lower income inequality may encourage slightly more solidaristic policies. Such policies, in turn, reduce income inequality. The French social-democratic traditions of the province of Quebec exert a distinct influence. The Canadian political scientist Keith Banting argues that explicit efforts to develop a strong but multicultural national identity have strengthened norms of mutual support. The national anthem ends with a promise (at least in translation of the original French) to protect Canadian homes and rights. (This is the full post.) Labels: bailout, banking crisis, banking regulation, Barack Obama, Canada, Fareed Zakaria, financial crisis, Maurice Dufour, Nancy Folbre, Roger Bybee Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Canadian Banks--Shovel-ReadyAs Obama visits Canada today, we are posting an article by Maurice Dufour on the supposed health of the Canadian financial sector. Maurice has been livening up our pages with satirical articles, including most recently "Hooked on Hydrocarbons?", a piece on the Alberta oil-sands that takes seriously (sort of) the notion that the United States is "addicted to oil." The article is available only in the January/February print edition (here's the table of contents). Order that issue here; subscribe here.Shovel-Ready in Canada Pundits are praising the financial health of the United States's northern neighbor—but should they? Canadians have long been trying to shed what they feel is an undeserved stereotype, namely, that our country is boring. Try as we might, we can't seem to shake the association with dullness. The gap between our self-image and the way others perceive us is still yawning, so to speak. Recent developments might offer an opportunity for an extreme image makeover, though. That's because, amidst the recent global economic carnage, this country's financial system appears to have emerged relatively unscathed. So more and more people these days are actually getting excited when they think about the land of moose, Mounties and maple syrup. Now every country wants to be more like Canada, it seems. Read the rest of the article. Labels: bailout, Barack Obama, Canada, financia crisis, Maurice Dufour Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
