ElenaGolovan

IT'S THE ECONOMY, STUPID!

Prof. Tony Deutsch

A not very polite way to introduce this Wednesday's topic. Try as we might, there simply isn't any subject that has so many issues right now; the Dow tops 11,000 and nobody seems to care, the U.S. savings rate goes negative, Bank of Canada lowers interest rates, the Canadian dollar rises impressively, Real estate values continue to rise rapidly, StatsCan delays the preliminary report on productivity whose findings are expected to reveal deterioration in growth. And for Cabinet watchers, there is the squabble between Jean Chrétien and John Manley over the need to cut taxes. At least someone is talking about it!

David and Diana Nicholson

Wednesday Night Salon #896

May 5th 1999

It was a relatively small group that gathered at the Nicholsons' on May 5, 1999, to discuss and debate once again, the developments in Yugoslavia along with issues of the economy, taxes and education. Kosovo

Despite the high profile of the operation in the media and the spin put on it by politicians and the military, not unlike the familiar story of the three blind men and the elephant, the debate revealed a variety of analyses, each very dependent on the background and occupation of the speaker.

The Industrial Model

As economies are going large scale, so nations are becoming large political/regional conglomerates. We have to form strong strategic alliances, not only industrially, but politically as well. NATO is a superb instrument and the Serbs gave it the opportunity to prove itself. The bombing - and particularly the targeting of the power grid which has proven to be more demoralizing than other damage - will be sufficient to bring them to the table, and will have had the additional advantage of getting rid of some obsolescent equipment so that it can be replaced with more technologically advanced bombs, planes and missiles. Morally, NATO should work to return displaced Kosovars to their homes, but practically this may prove impossible.
(Editor's note: this discussion was before the bombing "mistake" in which the Chinese Embassy in Belgrade was targeted.)

The Strategic Model

Ground troops are inevitable. A United Nations agreement would have added to the moral authority. The problem is that it is tactically difficult to send ground troops into Kosovo . They cannot go through Albania because narrow roads and mountainous territory leading into Kosovo would make any ground troops easy targets. Neither Turkey nor Macedonia is happy with the idea of providing passage for NATO soldiers. The only feasible route is from Hungary, but this is the longest trajectory, going through the entire country. This may be the most satisfactory tactic however, forcing Serbs to withdraw some troops from the north. The stakes are high; the future of NATO may very well depend on the outcome. If successful, this exercise will enable NATO to survive and prosper, with the Serbs possibly joining NATO as an ally. The military advantage would be secondary to the advantage of being part of the global economy.

The Political Model

Elena Golovan

Russia has been greatly diminished in its power and influence, but has recently been making a lot of noise. This military exercise may have, in part, had as its purpose to intimidate the Russians.

Turkey, a Muslim country, has wholeheartedly supported the bombing. The Greek Church supports the Serbs, while the Greek government takes a more balanced view, lending its support, to NATO.

The Ecclesiastic Model

Reverend David M. Oliver

The Canadian Council of Churches has stated that this is not a war we should be fighting in this way. While the Council in no way condones genocide, the U.S. may well have chosen the easy way out by minimizing its own casualties, at the expense of the Serbs and Kosovars. Canada has acted admirably in extending an open hand to those displaced by the war.

The question remains, will NATO be able to establish its ethical and moral bone fides to police and clean up the acts of Yugoslavia and other nations who transgress the accepted norms of good governance?

George Cavadias

The Stock Market

What is the most exciting recent new development in the market? Japan has closed down the traditional "open cry" market in favour of "meeting with a mouse". Why don't we? We are heading that way, but are having difficulty getting the technology to work! Traders don't need to be on the floor, say most, although there are still die-hards who believe that you must look the person in the eye and see the body language ....

Another noteworthy development is the signature of a Memorandum of understanding among the European bourses to consolidate their activities. see our Day Trader file.

The current bull market started in October 1998. The bull run normally lasts two years. It was reported that Martin Barnes admits that BCA is "getting a little bit bullish".

Ron Meisels

Traditional stocks are driving the market. Ron Meisels states that at this point the Canadian market is the best buy because it is cheap in relation to what other markets have done. Our resource sector is undervalued; Ron Meisels states [Wednesday May 5th 1999] that at this point the Canadian market is the best buy because it is cheap in relation to what other markets have done. Our resource sector is undervalued; Alcan AL $33us & at $47cdn, .. T-CP $37, are among Ron's current recommendations. Please click for our charts and DTN's [short term] contrary conjecture as seen in the arrows.

DTN

We should see a positive period between now and May. We may see a correction in mid-May and early June and then another leg up until August, at which time it may be a good idea to become a little defensive.

1 week AL us

An interview with the president of Priceline.com (which sells airline tickets, hotel accommodations, etc.) was screened. Mr Walker seemed undismayed by the recent decline in their stock, stating that "stocks go up and come down". He noted that he also had several other companies including a think tank looking at how the Internet will affect society long term. He stated that this organization has a number of "patented" business models.

George Cavadias

The interview was greeted by much skepticism and when it was suggested that with an IPO he is undoubtedly a very rich man, no matter the bien fondé of his business strategy, Ron Meisels retorted that "a lot of people get busy and forget to sell their shares".

Taxes

It was noted that Mike Harris has just announced 30 more tax cuts - and called an election for June 3rd.

Despite the high marginal income tax rate in the higher tax brackets, the tax system in Canada has been very good to people with below median income. This worked well until about 1970, but Canada did not adjust the taxation system when the U.S. did and today politicians do not realize how radical the changes need to be.

Canadian taxpayers are becoming angry. Is the government stealing our money? Yes, if it is not spending it wisely. There are too many handouts to the wrong programs, too little intelligent long-range planning of cuts to sectors such as healthcare and education, too many bureaucrats, notably in Québec.

The public sector unions are one of the roots of the problem, and the time has come for a change. Marie points out that the salaries of civil servants in Québec have been frozen for five years.
(Editor's Note: Jean Martel, Head of the Québec Securities Commission, resigned later in the week after failing to obtain more staff and higher salaries for his operation. He is paid roughly 1/4 of his counterpart's salary in Ontario.)

Canadian governments need to lower taxes, encourage the high-income earners, to remain here and invest. Right now, opportunity costs are too high.

One voice predicted that taxes in Canada will continue to increase unless people complain and act politically. Canadians complain, but they do not organize, they leave policy to the politicians with the result that now 57% of our wealth is outside the country. The tax base will continue to expand thanks to GST and QST, taxes will increase. New taxes will be imposed on Capital (savings and investments) and on residential capital gains. RRSP limits will increase.

In Canada, we should eventually see a flat tax.

It is not that the American taxes are so much lower in total. It is just that they are deferred until a later date. Americans, they are moving to a flat tax rate in order to control their economy. The American tax philosophy encourages Americans to build wealth, but they pay more eventually through death taxes. The way to beat this is through life insurance to pay death taxes.

Education and taxes

A video clip showing an elementary school teacher, her class and their computer introduced the topic. The ratio of computers to students in the school is 28/350. The teacher had to rely on one of her 9 year-olds to carry out even simple tasks. No computer literacy education time had been made available to the teachers, although the principal stated that there is a three-year plan to do so!

School taxes are going up and the quality of public education is declining throughout North America.This is one obvious area where there are too many bureaucrats, too many advisors, too many theorists (all paid for with tax money) and inadequate deliverables.

Ron Meisels spoke of the otherwise well qualified secretarial applicant he interviewed who could not add one-half and one-quarter.

In the States, many middle class families who cannot afford the pricey private schools are opting for religious schools where teachers "don't treat teaching as job action stuff".

Diana Thébaud Nicholson

One answer may be an increasing involvement of corporations in the funding of education and of individual students' fees in order to ensure an appropriately trained and educated employee pool. This is already happening especially in the U.S. where companies "buy" promising students and pay their tuition.
(Editor's note: The Québec Minister of Education, François Legault failed to address the English school principals and school-board members annual meeting in Québec City. See Gazette story Whither English Schools? May 10th, page A-3) see also Nat Post Monday, May 10, 1999 Premiers plan to confront Ottawa over brain drain At odds with the PM: Canada-U.S. productivity gap will be on the agenda

Closing remarks

Marie Cormier gave a particularly eloquent and charming thank you to the guests who had participated so intensely in the evening's debate.

Cynthia Lujham & Herbert Bercowitz

Notes by Herbert Bercowitz
Edited by Diana Thébaud Nicholson

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May 12, 1999

Dr. Peter R. Andersen

Wednesday-Night #897

Next Wednesday Night, Chil Heward will be introducing Peter R. Andersen, Ph.D. of Andersen Economic Research Ltd. His career started with the Bank of Canada where he became Assistant Chief of the Research Department before moving to Woods Gordon (now Ernst and Young). He later spent several years as Chief Economist with Burns Fry before founding his own company which has a broad range of clients throughout North America.

Dr. Andersen acts as a consulting economist for the Canadian Home Builders' Association and writes a column for Home Builder Magazine. He is also the author of a number of publications in professional journals. The Financial Post has frequently rated Dr. Andersen as Canada's most accurate economic forecaster.

This should be a most interesting and stimulating evening.

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Robert Shaw & Andy Kniewassser

Diana mentioned that today is the 32nd anniversary of the opening of Expo 67 and David said that he had recently met Robert Shaw, "The Builder of Expo" who is currently living at Chateau Westmount as he recovers from a broken hip. Bob Shaw would welcome visitors (afternoons are most convenient).

Several people commented favourably on the new format of last Wednesday's write-up, saying that they found the pro/con summary easy to digest and visually attractive.

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the UNA Gala98 front page

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Landry: target is 10,000 jobs in production.

Tuesday 27 April 1999 837 new multimedia jobs $15,000 annual subsidy for each post will be recouped, Landry says JAN RAVENSBERGEN Lucrative Quebec government incentives have drawn a further 15 multimedia companies - and a promised 873 new jobs over the next three years - to the provincial government's Cite du Multimedia project adjacent to Old Montreal, the province announced yesterday.

The fresh influx brings to 36 the number of multimedia and related companies which have signed up to take advantage of exceptionally generous Quebec tax credits of as much as $15,000 per job created, per year, from June 15 through to the end of 2010.

Tuesday 27 April 1999 Boost economy with tax cuts, not handouts JAY BRYAN Leapin' tax burden! Fast Bernie Landry has done it again. This fearless champion of entrepreneurship has created 873 virtual jobs over the next three years (we won't know the actual number until this promise has been long forgotten, of course). And he did it using nothing more than creativity, hard work and $100 million or so of taxpayer-funded handouts.

Urban issues

Margaret Lefebvre

Montreal - Mega-city or not? do see #894 for more

amalgamation? Peter Trent getting legal

See: "Mayors detail new plan" , by Michael Mainville, The Gazette, March 31st

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See our first Surround Pan of "la cucina" at 388 Victoria

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Thank you to Andrew de Courcy-Ireland for the comments below

This is typical of what we see at our Stk Forecasts page
or Stk forecast Banks Wed 895 Mega-City 897 Heward


our Medical Web ..Super Hospital