Wednesday Night #1561

It is always a delight to have Peter Berezin with us. This week he will share some of the findings of the Bank Credit Analyst February Monthly forecast and analysis of the U.S. economy and financial markets including (somewhat gloomy) views on Europe and the euro, e.g.
The ECB’s liquidity injection has reduced the tail-risk of a euro-wide bank run, and this should benefit risk assets in the near term. However, the underlying structural problems in Europe remain unresolved and investors should expect another bout of market weakness by the middle of the year.
The Special Report in this month’s Bank Credit Analyst argues that the turmoil in the euro area resembles a classic balance of payments crisis. While the outward symptoms of this crisis have manifested themselves in the form of higher sovereign borrowing rates and banking-sector distress, the underlying problem is that the peripheral economies are caught in a downward growth spiral. Getting out of this spiral will require higher inflation in core Europe.

This arrives at a particularly appropriate moment, following the annual Davos festival of world leaders, business tycoons and economists who were tasked this year with Developing a new world model As we write, the Economic Times announces rather breathlessly that Consensus reached on euro zone solution, say sources “According to high level sources, the current thinking among Euro zone leaders is to work out a plan for Greece – and maybe for Portugal – to make a structured exit from the Euro, provided European leaders can ensure that firewalls are big enough not to spread contagion to Ireland and Italy, among others.” We should know more by Wednesday, in time to take it up with Peter. One question that many will have: now that no less an authority than the IMF has proclaimed that austerity is no longer the prescription du jour, thus joining the early disbelievers like Kimon and Paul Krugman, – what next? It looks as though there will be a focus on youth unemployment, but how realistic are the proposed measures?

Did anyone notice that in their desperate search for new ideas, the Davos seekers after truth appear to have sought inspiration from one of the world’s tiniest nations (Bhutan) with the improbable Gross National Happiness Index? The Art and Science of Happiness? We do not believe that Stephen Harper was part of this session as he appears determined to make us all miserable with the forthcoming budget. While the session was conducted under Chatham House rules, one of the intriguing points in the summary is that “A group of four-year olds were observed to share only with their closest friends at the start of the two weeks, but far more equitably within the group at the end of the fortnight.” We would ask whether this experiment might be applied to the assorted ill-tempered politicians of today? What might happen in our Parliament or the U.S. Congress? Maybe during recess, we should contemplate experimenting with sending them to kindergarten?

Which of course leads us to the Florida Primary, which even Xinhua follows with interest. We will have the results on Wednesday, unless it turns out like Iowa, whose accurate results we will apparently never have, given that “the results are inconclusive because votes from eight precincts will never be counted.” (HuffPost) Could Mitt and Newt ever share? We ask again our question from last week: Any bets we’ll see an Open Marriage for Mitt and Newt, who can then file joint tax returns? Stephen Kinsman from his Florida perch deifintely thinks not. He tells us that the attack ads are more and more vilifying. He adds: Polls here have Romney at 38%, Gingrich at 29%, but there was considerable absentee voting before even the Iowa and South Carolina primaries had taken place. This could skew the Florida primaries results considerably. By the way: Obama won Florida by a 2% margin during the last presidential election, all bets are off for November this year.

On the topic of sharing, As Parliament resumes on Monday, Stephen Harper seems to have been more than ready to share his vision for reinventing Canada with his friends at Davos Harper vows ‘major transformations’ to position Canada for growth, perhaps hoping that Canadians were not paying attention (?), but would it not have been more appropriate to announce his Grand Plan at home, to Canadians? Maybe even in Parliament? In case you missed it, “In the months to come, our government will undertake major transformations to position Canada for growth over the next generation,” Mr. Harper said in an address to some of the 2,600 forum delegates. He also reiterated a commitment to streamline environmental approvals for major energy projects. He vowed to press ahead with developing ways to export energy to Asia.” And he announced all this at Davos, which has not gone unnoticed at home.
Bob Rae, meanwhile, in his Vancouver speech on social policy issues highlighted the Liberal commitment to “shared, sustainable prosperity”. He also noted that Mr. Harper had shared his Grand Plan with the delegates at Davos, rather than his ‘Fellow Canadians”.

Absent startling events (and from experience we know they generally happen on Wednesdays), the economy writ large should keep the conversation moving right along. We do, however, want to bring to your attention a couple of other items.

Richard Gwyn‘s talk on the second volume of his biography of Sir John A. at the Atwater Library last Friday was not only riveting, but included several little-known facts regarding his support for the emancipation of women (he was way ahead of his times) and his policies to foster the inclusion of Indians in Canadian society and the political process. The author also gave a brilliant analysis of the insoluble problems of the Louis Riel affair. We cannot wait to delve into both volumes.

Not to be missed: On Sunday mornings, CBC Radio is carrying a special five-part series (Jan 22 – Feb 19) ReCivilization that examines some of the biggest challenges facing our world. It charts a path to the future enabled by the revolutions underway in communications, innovation and learning in this new, post-industrial, digital age. Celebrated Canadian author and thinker Don Tapscott guides us along this path with some of the most prominent minds in education, government, industry, the media, science, and health and medicine — along with the pioneers who are collaborating to create a new era of networked intelligence. You can hear the past shows at http://www.cbc.ca/recivilization/ and we urge you to mark your calendars for the upcoming ones at 11am Sunday morning.

Finally, Désirée McGraw alerts us to
The Politics of Climate Change: Climate Technofixes: Rio +20 or Silent Spring -50
Presented by The Karl Polanyi Institute of Political Economy
on Wednesday February 8 from 6-8 pm (thus allowing you to attend and come to WN)
http://polanyi.concordia.ca/ or call 514 848-8707

Having the “proof of principle” that industry can change the climate, the folks who caused the problem are proposing new technological solutions. Unfortunately, there is no “proof of principle” that they can do it right. Pat Mooney, author and award-winning director of ETC Group will provide an overview of the politics behind some of the most critical issues facing the planet today: unsustainable agriculture, corporate concentration in the life industries and geoengineering.
Commentators:
Désirée McGraw (Co-founder, Al Gore’s Climate Reality Project in Canada and Canadian delegate to the Rio Earth Summit)
William Marsden (Author of Fools Rule: Inside the Failed Politics of Climate Change)
Patrick Bonin (Association québécoise de lutte contre la pollution atmosphérique (AQLPA))
Moderator:
Diana Bronson (Programme Manager, ETC Group)