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Gloomy central banks face new danger of economic good news: Don Pittis




What if the global economy doesn’t go horribly wrong after all?

To most of us that sounds perfectly appealing, but central bankers may have reason to worry.

Certainly the world economy is not out of the woods yet. There is still plenty of room for disappointment. But suddenly some of the biggest worries everyone was listing at the end of 2018 seem as if they could be resolved.

A new U.S. partial government shutdown, the trade dispute with China, Brexit and a crumbling Canadian economy just aren’t as ominous as they seemed a few months ago. And that could be bad for central bankers who have signed up for gloom.

This week there were early indications U.S. President Donald Trump has a tentative deal with Congress over his border wall that would avoid another economically devastating shutdown.

“Our staffs are just working out the details,” said New York Democrat Nita Lowey, who chairs the House appropriations committee.

Speaking to students at Mississippi Valley State University yesterday, U.S. Federal Reserve chair Jerome Powell played down the idea that a recession was coming and said jobs and the economy were solid. (Rogelio V. Solis/Associated Press)

Of course there are still plenty of potential glitches, and Trump has reportedly not signed off on the deal, but at the same time neither side wants to wear a second shutdown.

In his most recent monetary policy news conference, U.S. Federal Reserve chair Jerome Powell warned of the economic danger of a repeat of last year’s impasse, effectively by saying just the opposite. He reassured reporters that the economic effect of the previous shutdown would be short-lived, and any lost GDP would be regained in a rebound in the next few months.

“If there were going to be a permanent effect or a lasting effect, let’s say, it would be from a longer shutdown or perhaps a second shutdown, and that would be through the channel of a loss of confidence,” said Powell only two weeks ago.

Deal-blockers have been warned

Whoever stands in the way of the deal now on the table has been warned.

Only yesterday, speaking to students at Mississippi Valley State University, Powell played down the idea that a recession was coming and said jobs and the economy were solid.

However, last month Powell cautioned that another potential “crosscurrent” that could slow the economy was U.S.-China trade. Suddenly this week, the outlook for a resolution of that trade dispute has also turned positive.

Once again there are plenty of factors that could torpedo any deal, but U.S. markets rebounded at the beginning of this week on news that U.S. Treasury Secretary Steven Mnuchin had scheduled a return visit to Beijing with the aim of working out the differences between the two countries.

U.S. Treasury Secretary Steven Mnuchin, right, arrived in Beijing yesterday to begin another round of U.S.-China trade talks, leading to market optimism a deal could be done. (Jason Lee/Reuters)

It’s pretty clear the U.S. and China will suffer if the trade talks fail, forcing Trump to persist with his threatened 25 per cent tariff on a list of Chinese goods by his March 1 deadline. There are increasing rumours that at the very least the deadline will be extended to allow negotiations to be completed.

On the Chinese side, the economy is already suffering. On the U.S. side, politics may be the biggest motivator. Republicans worry the impact of slowing agricultural sales and other blowback from Chinese counter-tariffs could hit just as the 2020 presidential campaign begins in earnest.

New talk of a meeting between Trump and Chinese President Xi Jinping is also a positive sign. If a meeting goes ahead, the publicity-conscious U.S. leader will insist on returning triumphant, waving a deal that will Make America Great. 

Running off a Brexit cliff

Another global crosscurrent, the British plan to leave the European Union without a deal, sometimes takes on the aspect of Wile E. Coyote in that frozen moment after he has mistakenly run off a cliff but before he has begun his whistling descent.

The strongest indication British Prime Minister Theresa May will either work out a deal or delay her own March 29 deadline is growing horror by all but the most committed Brexiteers at the alternative.

Ministerial talk of stockpiling body bags in advance of a no-deal Brexit is only one of the latest dismaying reports. Every day there seems to be new economic Brexit backwash, from warnings of a shortage of food to news of British firms moving investments offshore to the European Union.

What this leads to is the idea that the monstrosity of it all means somehow Parliament in London will be forced to figure out a solution.

There are signs a no-deal Brexit may be so bad for the British economy that U.K. parliamentarians will be forced to find some alternative. (Toby Melville/Reuters)

In Canada, fears of economic gloom really haven’t come true. Last week’s employment report showed the economy continued to crank out tens of thousands of private sector jobs. Unemployment rose but only because thousands of young people were enticed into the workforce. Friday’s real estate report will give us an update on the state of the housing market.

So what’s the problem if everything goes well? The problem is that central bankers, led by the Fed’s Powell, have effectively committed themselves to economic weakness.

In what was widely described as a U-turn following complaints that he was raising rates too quickly, leading to market declines, Powell used his latest statement to hint that he was no longer in a rush to raise interest rates. In fact, he said that rather than leading the way on rates to prevent inflation, he would wait for inflation to kick in, to tell him when to raise rates.

“I would want to see a need for further rate increase, and for me a big part of that would be inflation,” he said at the end of January.

That sounds like a smart position if you expect the economy to continue to sink month after month, but less so if jobs and growth begin to rebound, pushing prices and wages higher. Maybe it will be different this time, but that is what has always happened.

It’s a well accepted fact that sudden moves in interest rates take six months to a year to make an impact on inflationary behaviour, something that Canada’s chief central banker Stephen Poloz and former Fed chair Janet Yellen have warned about. 

If everything really does go unexpectedly well, central banks could suddenly find themselves chasing inflation from behind, forced to raise rates faster than they would like to, to cool an overheated market where prices and wages have started to rise, bringing about the sudden slowdown that everyone had urged them to avoid.

Follow Don on Twitter @don_pittis


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List of Tourist Attractions Open Now in Ottawa




With Ontario now in Step 3 of 2021 three-step plan for reopening, museums and other indoor attractions are allowed to reopen with capacity limited to not exceed 50 per cent capacity indoors and 75 per cent capacity outdoors.

Here is a list of Ottawa attractions you can visit starting July 16th.

Do remember to wear masks and buy tickets in advance.

Parliament Hill

Parliament’s Centre Block and Peace Tower are closed for renovation.

You can join for tours of the Senate of Canada Building (2 Rideau Street), House of Commons at West Block (111 Wellington Street) on Parliament Hill, and East Block at East Block (111 Wellington Street) on Parliament Hill.

When: Grounds open; guided tours of Parliament are suspended through the summer of 2021.
Where: 111 Wellington Street, Downtown Ottawa

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Ottawa performer leapfrogs from gymnastics to Broadway to TV




A new AppleTV+ series set in a magical town that’s stuck in a neverending 1940s musical includes a pair of Ottawa siblings in the cast. 

Warren Yang and his sister, Ericka Hunter, play two of the singing, dancing residents of the village portrayed in Schmigadoon!, a small-screen series that takes its cues from classic musicals like Brigadoon, Wizard of Oz and Sound of Music, and skewers them with the offbeat comedic mastery of Saturday Night Live. 

In fact, you’ll recognize many of the names from SNL, starting with executive producer Lorne Michaels, creator of the late-night, live-comedy sketch show. Schmigadoon! also stars SNL cast member Cecily Strong and comedian Keegan-Michael Key, who hosted SNL in May. They play a New York couple who get lost on a hike and stumble into a strange town where everyone sings and dances. 

For Yang, a relative newcomer to show-biz, the series marks his television debut. For Hunter, the younger of his two older sisters, it’s the latest in a career path that began with dance lessons as a child more than 30 years ago. She attended Canterbury High School, Ottawa’s arts-focused secondary school. 

“Her dream was always to perform,” said Yang, 34, in an interview. “But that was never the path I thought was an option for me.” 

While his sister studied dance, Yang did gymnastics. He was an elite gymnast throughout his youth, ultimately leaving Merivale High School at 16 to train in Montreal, finishing high school through correspondence courses. He was a member of the Canadian National Team and received a scholarship to study at Penn State, majoring in marketing. 

A few years after graduation, Yang was working at an advertising agency in Toronto when he got a call from a Manhattan number. To his astonishment, they asked if he would be interested in auditioning for a Broadway revival of Miss Saigon.

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COVID-19: uOttawa to require vaccination for students living in residence




Vaccination will be mandatory for students who want to live in residence at the University of Ottawa this year, with proof of vaccination and at least one dose required before move-in, or within two weeks of doing so if they can’t secure a shot before arriving.

Those who can’t receive a vaccine for “health-related reasons or other grounds protected under the Ontario Human Rights Code” will be able to submit a request for accommodation through the university’s housing portal, according to information on the university’s website.

Students with one dose living in residence will also have to receive their second dose “within the timeframe recommended by Ottawa Public Health.”

People who haven’t been granted an exemption and don’t get vaccinated or submit proof of having done so by the deadlines set out by the school will have their residence agreements terminated, uOttawa warns.

“Medical and health professionals are clear that vaccination is the most (effective) means of protecting people and those around them,” reads a statement provided to this newspaper by uOttawa’s director of strategic communications, Patrick Charette.

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“It is precisely for this reason that the University of Ottawa is requiring all students living in residence for the 2021-2022 academic year to be fully vaccinated. The University recognizes that some students may require accommodations for a variety of reasons and will be treating exceptions appropriately.”

Faculty, staff and students are also strongly encouraged to get vaccinated, the statement notes.

“Ensuring a high vaccine coverage in all communities is critical to ensuring an ongoing decline in cases and ending the pandemic. This will be especially important with the return of students to post-secondary institutions in our region in the fall of 2021.”

Neither Carleton University nor Algonquin College is currently mandating vaccination for students living in residence, according to the websites for both schools. But uOttawa isn’t alone in its policy – Western University, Trent University, Durham College and Fanshawe College have all implemented similar requirements. Seneca College, in the GTA, is going even further, making vaccination mandatory for students and staff to come to campus, in-person, for the fall term.

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