2013-04. Weak job market

In today's Financial Post (available in the Peters Building) there is an article on the job market in Canada.
One way to get a handle of how the job market will perform is through a survey, The article reports the results of a Manpower Canada Survey. "Of the 1,900 Canadian firms polled,

• 74% said they expect to keep staffing at current levels between October and December [...]
• 8% plan to cut staff [...]
• 16% responded they plan to increase payrolls [...]
• 2% have yet to decide either way."

So there is a small upward trend but three quarters of the firms are not planning to do anything.

The VP of Manpower Canada says the reasons for poor labour market situation are:

• poor productivity
• a skills mismatch
• high labour costs

He suggests that the education system needs to be overhauled to ease the skills mismatch.
We will be talking about the labour market in chapter 7 and 8.

2013-03 Grecovery

We will be talking a lot about the sovereign debt crisis. Itbegan in Greece in 2009 and spread to Portugal, Ireland, Italy, Spain and Cyprus. The coomon problem was excessive foreign borrowing. In Greece the crisis was precipitated by the disclosure that the outgoing government cheated and the actual deficit was much higher than reported.
Since 2008 the Greek economy shrank by almost a quarter. Now the Greek prime minister says the worst is over.
It seems that people do not believe him. Wait a second! How did the crisis start?

2013-02. No prosecution for Lehman executives

5 years ago, on September 15, Lehman Brothers, the 4th largest investment bank in the US, collapsed. The failure of Lehman converted a recession that started several months earlier into the Great Recession.

So has anyone at Lehman done anything wrong? Apparently not. This article describes the end of attempts to prosecute Lehman personnel. Prosecution concluded they did not have a chance to win.
Now, I am not a lawyer, and perhaps the reporting is inaccurate. But I had a laugh when I read the following explanation about Repo 105 and Dick Fuld, the CEO: "Bart H. McDade, another Lehman executive, told Mr. Valukas that Mr. Fuld “was familiar with the term” Repo 105 and “knew about the accounting.” But Mr. Fuld told the S.E.C. that he had never heard of Repo 105, officials said, undermining a potential case."

Rep 105 was an accounting trick to reduce the bank's leverage reported in quarterly report. It seems that prosecution gave up when the CEO said he has not heard about it.

It could be that, indeed, Lehman failed because of bad business decisions, not criminal acts. But following the biggest financial crisis in history it is hard to believe that there was no outright fraud in the entire financial industry. You can read more on the topic here.

2013-01. Growth versus Level

One of the things I would like to teach you is to avoid common errors. So, from time to time, I will point out an error when I find one. The title in the Financial Post says:Canada’s productivity beats the U.S. for the first time in a long time
Well, it does not. Productivity  GROWTH  was higher in Canada than in the US in the second quarter of 2013, not the level.  As the article correctly says, our productivity lags behind US.
A similar mistake would be to write that Sierra Leone is richer than Canada.  Last year Sierra Leone's GDP grew by over 15%; much faster than Canada's. But per capita GDP in Sierra Leone is 25 times lower.
Lesson - do not mistake growth rate and level.

2013 COURSES START HERE. POSTS 1-76 ARE FROM 2012

76. And finally

Euro crisis is the biggest danger to world recovery, says OECD.
But it is hopeful. It expects output to increase faster in the near future. Provided fiscal cliff is avoided and Europe does not fall apart, growth will pick up by 2014, just in time for your graduation.

75. Greece will be ok

in 2020 or some time later.
But at least for now, they will live to fight another day. An agreement between the IMF and the Euro area lenders will provide the next installment of EU money and keep lights in Athens on.
For how long? It is difficult to say: " the IMF had stuck to a bottom line of getting the Greek debt level to 120% by 2020, far below what eurozone and IMF inspectors concluded was possible."
The agreement is to have Greek debt, in 2020, to fall only to 124% of GDP, rather than 120%. The IMF would like to have some of Greek debt forgiven; te creditor countries do not agree.
Everyone will now wait to German elections in 2014 which will clarify what German voters want.

In a pinch, there is always Super Mario. Who?
The guy in the picture, Mario Draghi, the president of the European Central Bank. ECB can pump money into the Euro area as needed.

PS. In case you were looking for a Christmas present - look on the right of the page