News   GLOBAL  |  Apr 02, 2020
A Message to Our Readers
 9.6K     0 
News   GLOBAL  |  Apr 01, 2020
EarthCam Time-Lapse Documents Rafael Viñoly-Designed New Stanford Hospital Construction
 41K     0 
News   GLOBAL  |  Apr 01, 2020
Resort Town
 5.4K     0 

Weak, uninspiring and unfortunately not surprising. Double down on more of the same - let's lower corporate taxes more because the current rate - already the lowest in Canada - has proven so successful. Infrastructure spending is fine, but repairing assets while not creating new agglomerations or reduced travel time/costs doesn't do much except give the highway-industrial complex some more money back (and some knock-on spending benefits) that they donated to politicians over the past decades.

Most critically - and least surprising - the announcement sure doesn't reveal any underlying understanding by the UCP of how cities work as centres for economic agglomeration, tourism, culture and most importantly, attracting newcomers. Calgary and Edmonton, and the institutions and local economies that power them, are the single largest engines that separate this province from being anything more than a sparsely populated export province full of declining towns and the occasional work camps. I had a somewhat-optimistic hope that behind the bluster and party dogma was a few economists that could dictate good policy that would then get a thin veneer or dogma. The opposite seems to be true - let's give the economists our pre-packaged ideas so we can justify them with a thin veneer of smart sounding catch phrases over business-as-usual.

It's unfortunate that the provincial level of this province has so rarely understood the role that cities play in why we are prosperous. Oil and gas didn't make us prosperous alone - having all that money flow between oil and the markets with a lengthy stop over in the major cities is the reason we are a rich place. If there wasn't our big cities to be a talent pool for high-paying, high-skilled jobs we could pump oil for decades and simply transfer that wealth straight into the labour markets of Houston, Denver, Vancouver or Toronto.
 
Silence&Motion said:
I've been banging this drum for a long time, but if the government is serious about diversification, and "culture/tourism" is one of the main pillars of this diversification effort, then there is a very clear solution: a massive investment in the expansion of Alberta University of the Arts.

Also, no one has noted the new restrictions on immigration. It seems crazy, if you're trying to attract new businesses to the province, that you would add restrictions to who they can hire. Availability of talent is probably Alberta's greatest challenge in growing new industries. We have a huge opportunity to attract business from the US given the destructiveness of the Trump administration on immigration (especially with the recent visa ban). On the whole, immigration creates jobs.
Click to expand...
Or at a minimum don't vindictively slash funding for post-secondary education. You have to be a populist career politician to not see the benefits of funding post-secondary in todays economy.

Immigration cut backs are moronic and like you said, a barrier to diversification. The "sector-specific" approach to diversification could be good or it could be garbage depending on the policies they come out with.
 
U.S. Supreme Court upholds an injunction on the Keystone XL permit. In addition, the Dakota Access Pipeline in the eastern U.S was blocked. The environmentalists are even more emboldened.
I really don't have a good feeling about Keystone. Construction just started on the Canadian leg which was targeted to at least get the pipeline over the border in the short term. Both TC Energy/the Alberta government now run the risk that it may never get built on the other side of the border. That would be a lot of money and wasted effort to see it not finished. Not to mention a totally useless stretch of pipeline.
 
Last edited:
JonnyCanuck said:
U.S. Supreme Court upholds an injunction on the Keystone XL permit. In addition, the Dakota Access Pipeline in the eastern U.S was blocked. The environmentalists are even more emboldened.
I really don't have a good feeling about Keystone. Construction just started on the Canadian leg which was targeted to at least get the pipeline over the border in the short term. Both TC Energy/the Alberta government now run the risk that it may never get built on the other side of the border. That would be a lot of money and wasted effort to see it not finished. Not to mention a totally useless stretch of pipeline.
Click to expand...
Yeah. 'to the border' though for XL. I think after today TC must just be waiting for the next President to symbolically kill it, and hope that it is killed in a way which violates the equal treatment rules under trade agreements (don't know what happened to those in the new NAFTO though).

The Line 5 shutdown under the Straits of Mackinac and the DAPL shut down really hurts the Bakken. Both are potentially 2, 3 year shutdowns if processes are followed perfectly. As we have seen the USA is so bad at following administrative law that both I bet will be shut down indefinitely, and the Line 5 Straits of Mackinac replacement crossing will never be built. For DAPL, the owners should declare it a loss and file suit against the government for incompetence if they can.

I think we have to write off the USA having effective administration and rule of law for projects subject to federal jurisdiction due to crossing boundaries or federal works like flood/immigration systems. If Line 3 goes that is a win.

Good thing TMX is moving. Driving to Calgary from Vancouver on the weekend I saw that much of the corridor has been flagged and cleared, there are now multiple pipe stagging areas, and site work is going for work camps. Once it is operational, then we will have a new application to optimize the pipes and raise the throughput.

Alberta and Canada will need to decide together whether another export line should be pursued, or whether it is better to align production capacity with export capacity instead. Private capital isn't going to touch the risk, imagine being the reinsurers who hold the DAPL debt right now!
 
sh!t is getting real, this was an urban barn in roxborough house on 4st sw
746BE79D-E295-421E-8734-89A382BF97A0.jpeg
 
I've got mixed feelings on that. On one hand it's nice to see more businesses with inexpensive items around the core, on the other you hate to see businesses leave. From what I remember Urban Barn was pricey, and maybe not the best value out there.
 
Urban Barn is pricey because they sell a lot of niche items. I think they have pretty much closed all of their locations in the inner city .. had one in Kensington at one time. However, to replace the one in Mission with .... a Dollarama. :oops:. That is a sad state of affairs.
I will say, the state of retail in the core is getting extremely concerning ... dozens and dozens of 'for lease' signs all over the place. Also, we have not seen the restaurant closures that are sure to come. I have not been in the The Core lately or the many office buildings that have retail & hospitality outlets but I would imagine there are a lot of empty spaces there.The state of small business before COVID was dire ... now it is outright 'great depression like'.
 
Sooooo in a normal world, we have a cycle of inflation followed by interest rate increases to slow the economy followed by lower interest rates to stimulate the economy when its stalled. But what happens when people decide to not spend or can’t spend when interest rates are effectively zero? In a normal world, when a country starts “printing” billions of dollars to put into the economy, you see inflation. But this is not a normal economy right now.
 
I'm not an economist, but my sense is that in the midst of severe economic uncertainty, those people who have excess savings would prefer to invest it in government bonds (as opposed to the stock market). Those government bonds pay for spending programs designed to keep the economy on life support during the pandemic, and when the pandemic is over, the economic recovery will be that much faster and the bonds will get paid back. You can keep doing that so long as people are willing to lend to the government, and people are willing to lend to the government so long as they are relatively confident that their money is not going to go "poof".
 
Having done some of this in grad school, yes, during a recession there is a flight to safety which can freeze the commercial debt market. So central banks can print money and squeeze investors out of government debt, by lowering the yield to levels where investors will prefer taking the risk on corporate debt. The central banks also can expand buying programs into corporate debt, squeezing private capital out of various qualities of corporate debt. The interest on debt the central bank holds gets paid back to the government as a dividend from the bank.

Basically to cause inflation (as the worry a few above), the money supply has to be way too big and there has to be scarce goods or services which that money is chasing. But the money supply is not only a function of how much money there is (which for simplified purposes we would call dollar bills), but how often that money supply circulates. Super simplified. If I have $20 and it sits in my bank account for a year and I spend it, that is $20. If I have $20 and it passes through 12 businesses, that is $240. The speed it circulates is monetary velocity. Supply = dollars bills times velocity.

So: If the economy normally has $300 billion of cash and $1.2 trillion of cash convertible assets, and $10 trillion of other assets, and all of a sudden monetary velocity drops by 75%, you can inject a lot more cash into the system (printing money and buying debt with it) without increasing supply since velocity has collapsed. And since supply hasn't increased, you don't have the same inflation risk. And at the same time, it forces the corporate debt market to work, because it is the only place to make money.

It sounds like financial wizardry, but it seems to work. Recessions are getting smaller and shorter as economists learn more and more about how money supply works and how they can change it over time in response to conditions.
 
Last edited:
darwink said:
Having done some of this in grad school, yes, during a recession there is a flight to safety which can freeze the commercial debt market. So central banks can print money and squeeze investors out of government debt, by lowering the yield to levels where investors will prefer taking the risk on corporate debt. The central banks also can expand buying programs into corporate debt, squeezing private capital out of various qualities of corporate debt. The interest on debt the central bank holds gets paid back to the government as a dividend from the bank.

Basically to cause inflation (as the worry a few above), the money supply has to be way too big and there has to be scarce goods or services which that money is chasing. But the money supply is not only a function of how much money there is (which for simplified purposes we would call dollar bills), but how often that money supply circulates. Super simplified. If I have $20 and it sits in my bank account for a year and I spend it, that is $20. If I have $20 and it passes through 12 businesses, that is $240. The speed it circulates is monetary velocity. Supply = dollars bills times velocity.

So: If the economy normally has $300 billion of cash and $1.2 trillion of cash convertible assets, and $10 trillion of other assets, and all of a sudden monetary velocity drops by 75%, you can inject a lot more cash into the system (printing money and buying debt with it) without increasing supply since velocity has collapsed. And since supply hasn't increased, you don't have the same inflation risk. And at the same time, it forces the corporate debt market to work, because it is the only place to make money.

It sounds like financial wizardry, but it seems to work. Recessions are getting smaller and shorter as economists learn more and more about how money supply works and how they can change it over time in response to conditions.
Click to expand...
So with monetary velocity...and each time money changes hands it tends to be subject to various sales tax/income tax...does this mean after those 12 passes, the government has basically taken back all that money?
 
Sky of Blue said:
So with monetary velocity...and each time money changes hands it tends to be subject to various sales tax/income tax...does this mean after those 12 passes, the government has basically taken back all that money?
Click to expand...
It depends. Mostly no, and I see where you are trying to get to, and the answer to that is no, at least over the short term. But sometimes yes, but usually there aren't things to spend money on that produce such a positive return (edit: post second world war there were lots of things to spend on which had great returns, since they were replacing entirely inadequate things, or building new things which did not have real alternatives, yielding big returns in productivity). The only one where the government is not currently funding it to a level of adequacy to ensure a somewhere near optimal provision that I can think of for today is childcare. Edit: more funding to childcare makes us way more productive. Increasing funding to schools so they can at least provide all day childminding during the pandemic would also be a big productivity gain).

First to the concept of multipliers. We will start off with the Government of Alberta's official multipliers, that you can use for simplified economic analysis.

We'll look at Non‑residential building construction - a catch all.

How the multipliers work:
"Economic multipliers capture the impact of shocks to the economy on output, labour income, employment and GDP. They enable users to do impact analysis without getting into the detailed analysis associated with the Input/Output models. "
Click to expand...

They do this by using a simplified form of the input output model broken down by industry. Statscan basically maintains a huge database which shows that to produce $1 of building, $.1 of wood, $.1 of Tim Hortons is required, etc, etc, for the entire economy. This is of course simplified itself.
The I/O tables consist of the output, use and final demand matrices. The output matrix is a table that shows the value of goods and services produced by each industry; the use matrix shows the makeup of the inputs needed for each industry to produce its output; and the final demand matrix shows the final consumption of goods and services.
Click to expand...

Now the amount of economic impact show in the official multiplier tables varies widely, with the variability being how far you track the money as it flows. Since as it flows it is unpredictable, and you get to a place where you can't really tease out individual effects anymore, tables with vary large impacts aren't really used for many public policy purposes (but I am sure they are useful for something, I just don't really have exposure to that). So we use table 1 simple modifiers for almost everything, because it just gets confusing as you explain it more.
1594568242248.png

1594568271369.png

Those are used by this method
1594568783459.png


The Government can use the full sized I/O model to predict tax impact too. But they don't create a simple table for it, probably since it would be mostly abused in public discourse. Worked on a project a few years ago with the following ratios for non-residential building construction (open model):

SpendingProvincial TaxFederal TaxMunicipal Tax
$1,000,000$76,200$125,800$35,800
 
Last edited:
You must log in or register to post here.

Back
Top