New Brunswick Is F#%ked: A Catch 22 Situation

By André Faust

There are no short-term solutions for economics of the Province of New Brunswick. Whatever strategies are put in place the outcome of those strategies will not be realized for another 15-25 years down the road. However, New Brunswick seems to be caught in an indefinite loop. Young people migrating out of the province because of either lack of work or work that pays a living wage, leaving behind a senior population who are not producing and placing more demands on the health system. A shrinking tax base yet verses an increase of expenditures.

To try to keep people in the province and bring in “new blood” it is putting fossil fuel dependent industries as a priority for economic growth, which will only have a short-term employment boom while the infrastructure is being built. Once again the problem of population migration re appears. Once the infrastructure is built for the either the pipeline or fracking wells, it takes very little human resources to maintain them.

To bring immigrants in the province has to create employment, but the jobs are not there, so what comes first the jobs, or the immigrants.

Existing business are always trying to grow their profit margins, and as new technologies are developed, these technologies eventually displace workers with the available technology.

In the not too distant past, there used to be thousands of bank tellers that worked in the banks, after the advent of computer technology, the majority of those jobs disappeared.   In the forestry sector, many loggers lost their jobs to high tech harvesters.

Government in its attempts to find a short-term solution to its economics shifts the tax burden upon the middle class with increases in income and property taxes, which then makes New Brunswick too expensive to live, so the middle class eventually leaves the province as well. Eventually you get to a point that the province as lost so many workers that a shortage of labour occurs. What choices do these businesses have, either move out or shut down. Without a tax base, the province cannot continue to operate. Royalties alone will not be able to sustain the province economics.

New Brunswick is in a real pickle it needs an immediate solution to keep an existing tax base, but it’s going to take 15-25 years to reap the benefits of any economic strategies that it puts in place today, meanwhile people are still leaving the province. What a dilemma!

Beware the Ides of September: a turbulent month for the economy

It brought Lehman Brothers’ collapse and Northern Rock’s run, now Syria, the Fed Reserve and G20 are among new flashpoints

The Federal Reserve’s chairman Bernard Bernanke. Conflict with Syria may affect oil prices, but policy error by the Federal Reserve troubles markets the most during the dangerous month of September. Photograph: James Lawler Duggan/Reuters

September is a dangerous month. Five years ago this month, Lehman Brothers went belly-up. Twelve months earlier there was the run on Northern Rock. Black Wednesday in September 1992 saw Britain’s departure from the exchange rate mechanism; the pound left the gold standard in September 1931.

The signs are that September 2013 will also be an interesting month. That’s interesting as in scary. There are five potential flashpoints: Syria, the G20 summit, emerging markets, the Federal Reserve meeting to discuss scaling down the US stimulus, and the German election. Any one of them has the potential to damage the global economy. Continue reading

Emerging market rout threatens wider global economy

By Ambrose Evans-Pritchard

The $9 trillion (£5.8 trillion) accumulation of foreign bonds by the rising powers of Asia, Latin America and the emerging world risks going into reverse as one country after another is forced to liquidate holdings to shore up its currency, threatening to inflict a credit shock on the global economy.

India’s rupee and Turkey’s lira both crashed to record lows on Thursday following the US Federal Reserve releasing minutes which signalled a wind-down of quantitative easing as soon as next month.

Dilma Rousseff, Brazil’s president, held an emergency meeting on Thursday with her top economic officials to halt the real’s slide after it hit a five-year low against the dollar. The central bank chief, Alexandre Tombini, cancelled his trip to the Fed’s Jackson Hole conclave in order “to monitor market activity” amid reports Brazil is preparing direct intervention to stem capital flight.

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The emerging-market squeeze

THE flow of troubling news out of emerging markets is picking up. Equity indices around Asia continued their recent losing streak this morning. Though India has borne the brunt of recent market punishment—the rupee’s epic slide has continued this week—there is plenty of pain to go around. Indonesian stocks have tumbled more than 10% over the past few days. Growth is cratering around the region.

Most news stories relate the carnage to anticipated changes in Federal Reserve policy: “tapering”, which may begin in September or October, of the pace of stimulative asset purchases. But why should that matter?

Large-scale asset purchases, or quantitative easing (QE), are generally described as working through several channels. One is an expectations channel. Purchases may help communicate central bank goals or increase policy credibility. Purchases can have a fiscal effect; by lowering expected government borrowing costs QE may reduce expectations of future taxation, encouraging more work and investment in the present.

Empirical assessments focus overwhelmingly on a third channel: portfolio rebalancing. When a central bank buys certain kinds of assets they leave the banks or funds who sold them the assets short of the particular kind of asset the central bank bought. So a fund that intends to keep a certain share of its portfolio in safe-ish long-term debt will sell Treasuries to the Fed in exchange for newly printed cash, but will then find itself in need of portfolio rebalancing to get back to its preferred distribution of risk, maturity, and so on. The fund then takes its cash and buys something similar to the assets it sold: highly rated mortgage-backed securities or corporates, for instance, or the safe debt of foreign governments. But the funds selling those assets will also need to rebalance, and they may adjust their portfolios by purchasing safer emerging-market debt or equities. As the money works its way through the system it raises asset prices around the economy. And because some of the rebalancing involves purchases of foreign assets, they weaken the domestic currency and can reduce borrowing costs and raise equity prices abroad.

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The Massacres in Egypt Are a Precursor to a Wider Global Conflict Between the Elites and the World’s Poor

Radical Islam is the last refuge of the Muslim poor. The mandated five prayers a day give the only real structure to the lives of impoverished believers. The careful rituals of washing before prayers in the mosque, the strict moral code that prohibits alcohol, along with the understanding that life has an ultimate purpose and meaning, keep hundreds of millions of destitute Muslims from despair. The fundamentalist ideology that rises from oppression is rigid and unforgiving. It radically splits the world into black and white, good and evil, apostates and believers. It is bigoted and cruel to women, Jews, Christians and secularists along with gays and lesbians. But at the same time it offers to those on the very bottom of society a final refuge and hope. The massacres of hundreds of believers in the streets of Cairo signal not only an assault against a religious ideology, not only a return to the brutal police state of Hosni Mubarak, but the start of a holy war that will turn Egypt and other poor regions of the globe into a cauldron of blood and suffering.

The engine for this chaos is not religion but the collapsing global economy, a world where the wretched of the Earth are to be subjugated and starved or shot.

The only way to break the hold of radical Islam is to give followers of the movement a stake in the wider economy, the possibility of a life where the future is not dominated by grinding poverty, repression and hopelessness. If you live in the sprawling slums of Cairo or the refugee camps in Gaza or the concrete hovels in New Delhi, every avenue of escape is closed. You cannot get an education. You cannot get a job. You cannot get married. You cannot challenge the domination of the economy by the oligarchs and the generals. The only way left for you to affirm yourself is to become a martyr or shahid. Then you will get what you cannot get in life—a brief moment of fame and glory. And while what will take place in Egypt will be defined as a religious war, and the acts of violence by the insurgents who will rise from the bloodied squares of Cairo will be defined as terrorism, the engine for this chaos is not religion but the collapsing global economy, a world where the wretched of the Earth are to be subjugated and starved or shot. The lines of battle are being drawn in Egypt and across the globe. Adli Mansour, the titular president appointed by the military dictator of Egypt, Gen. Abdul-Fattah el-Sisi, has imposed a military-led government, a curfew and a state of emergency. It will not be lifted soon.

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