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NAFTA’s legacy: the worst agreement we [Canada] ever signed
Murray Dobbin, Globe & Mail
In the aftermath of Barack Obama’s and Hillary Clinton’s threats to “renegotiate” NAFTA – or pull out – the usual suspects have been activated to tell the world how wonderful the deal has been for Canada and the United States.
There is no doubt that the sector that devised the scheme in the first place and sold it to politicians have benefited greatly from this investors’ rights agreement and its predecessor. The continent’s largest corporations have greatly reduced regulatory impediments to their profits, radically lowered labour costs, gutted Canada’s sovereign capacity to pass new environmental legislation and, in terms of investment restrictions, virtually erased the borders.
All of those corporate benefits, however, have been extremely bad for other aspects of Canada and for ordinary Canadians.
… Prime Minister Stephen Harper says Canada is an energy “superpower.” But NAFTA virtually guaranteed that the U.S. would be the beneficiary of our energy, and it unleashed a massive increase in energy exports to the U.S.
Canada now exports 63 per cent of the oil it produces and 56 per cent of its natural gas to the U.S. And because of NAFTA’s proportionality clause, Canada is legally obliged to continue exporting the same proportion of our oil and gas forever even if we face a shortage.
Next up is our water. The U.S. is already officially into its supply problems and it will, over the next 20 years, become a catastrophic crisis, outpacing even their predicted energy crisis.
Murray Dobbin, a Vancouver writer, is a columnist for the online magazine The Tyee.
(5 March 2008)
Twin shocks of finance and resources facing global economy
Tim Bond, Financial Times
The global economy is facing twin shocks. Natural resource markets are delivering a supply shock of 1970s dimensions, while the financial system is delivering a shock comparable to the bank and thrift crises of the 1988-1993 period. The magnitude of each shock is very different. The financial markets require a recapitalisation of the banking system, with estimates ranging from $300bn to $1,000bn.
By contrast, prospective capital requirements in the resource markets dwarf the current needs of the banking system.
… The energy sector is just one example of the more generalised supply problems afflicting the natural resources markets. Scarcity is endemic across most commodity markets, as existing capacity has struggled to meet a demand shock from the rapidly developing middle income economies. Historically low stock-to-consumption ratios show how severely the supply-demand imbalance has eaten into the margins of comfort in many – if not most – commodity markets. Global grain inventories, for example, are at 40-year lows, equivalent to just 15-20 per cent of annual demand. Most industrial metal inventories are at a 30-year trough relative to consumption.
The broad story is of depletion. Most of the easily obtainable resource deposits have already been exploited and most usable agricultural land is already in production. Natural resource discoveries, where they continue to occur, tend to be of a lower quality and are more costly to extract.
Tim Bond is head of asset allocation strategy at Barclays Capital.
(6 March 2008)
Eurozone Economy Heading for Hard Landing- Economic Forecast 2008
Dr. Krassimir Petrov, The Market Oracle
Economic reality will likely prove forecasts of major international institutions about Europe’s 2008 growth prospects wrong. So, let us first see what they think; then we will see what I think and why.
… I see a Eurozone hard-landing. I see major recessionary forces that forecasters conveniently downplay or ignore. I see the 2008 Eurozone economy in a tailspin. I see it on the brink of recession in early 2009. I believe that they all these “reputable” international institutions are too complacent and detached from reality.
… Undoubtedly, most of my arguments rest squarely on monetary, financial, and credit issues. This is for a good reason that may escape the North-American reader. The European financial system is fundamentally different from the U.S. financial system. In Europe, equity markets are not as important as in the United States. Instead, the European financial system is heavily dependent on bank credit. Therefore, the European economy is much more vulnerable to bank problems than the U.S. economy.
Dr Krassimir Petrov ( Krassimir_Petrov@hotmail.com ) has received his Ph. D. in economics from the Ohio State University and currently teaches Macroeconomics, International Finance, and Econometrics at the American University in Bulgaria. He is looking for a career in Dubai or the U. A. E.
(4 March 2008)
Dr. Petrov wrote The Proposed Iranian Oil Bourse in 2006.
