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A year full of ups and downs

December 23, 2015   ·   0 Comments

SINCE THIS IS OUR LAST issue of the year, wishing our readers a Merry Christmas isn’t really sufficient, so we’ll make it both a Merry Christmas and a Happy and Prosperous New Year.

As for the year that has only a few days left, it has surely had an unusual number of ups and downs everywhere you look.

Internationally, terrorism likely eclipsed natural disasters as a killer, but this week we finally saw evidence that most of the combatants in the civil war that has devastated Syria may turn their attention to battling Islamic State, the terrorist force that has taken untold numbers of lives and occupied much of both Syria and Iraq.

In Canada, the major “up” was support for the federal Liberal Party, which at one point looked as if it might continue in third place, with the New Democrats and Conservatives battling it out for top prize in the October 19 election.

Clearly, recent opinion polls show that the Grits would do even better if an election were held today, and it seems Prime Minister Justin Trudeau will enjoy an unusually long honeymoon with the voters.

Meanwhile, the major “downs” on the national scene have been the price of oil and the Canadian dollar.
It will be interesting, indeed, to see whether the new year will bring with it some stability in world oil prices and, if so, at what level the prices will settle in.

As we see it, the plummeting ‘loonie’ will continue to lose value compared with the U.S. dollar, particularly if the Bank of Canada sticks to its policy on interest rates. We may even see our dollar drop to about 60 U.S. cents if the U.S. Federal Reserve continues to increase interest rates as a means of combatting inflation.

Don’t be surprised to see some Canadian economists suggest in the new year that the time has come to raise our interest rates to at least keep pace with those south of the border. Part of the reason would be that inflation here is a lot worse than we’re being told, thanks to the weak dollar.

Anyone who has visited the fresh food shelves in a local grocery store recently will find that produce being brought in from the U.S. and Mexico costs a lot more than it did a year ago. And apart from the price of gasoline, where have we been seeing any trace of deflation?

Although there is no doubt that having the Canadian dollar close to par with its U.S. counterpart was tough on our exporters and cost us thousands of actual jobs in the auto and auto parts industries as multi-national employers moved more and more operations to low-wage countries and latterly even to lower-wage parts of the States.

So after what we’ve been experiencing in 2015, what’s likely to happen in the new year?

One thing for sure is that the situation in Syria and Iraq is going to force some unlikely cooperation between such foes as the U.S. and both Iran and Russia, who at least all agree that the Islamic State forces must be defeated.

Less certain is the role Canada will play in the battle, its new government having promised to end our participation in the bombing of ISIS targets in both Syria and Iraq.

In our view, the sensible position for the government to take is to postpone the withdrawal until it has placed the issue before the Canadian public in the form of a government-ordered poll.

If the polling confirms our suspicion that most Canadians want to continue the bombing for at least a few months, the government could do just that.

A similar approach could and should be taken by the Wynne government in Ontario concerning the controversial sell-off of Hydro One.
We strongly suspect that most Ontarians would far prefer to see the production and transmission of electricity remain mainly in public hands, with private participation limited to a minority share of Hydro One stock and management of the nuclear power plants, which is already the case at the Bruce A and B nuclear plants, where privately owned Bruce Power seems to be doing a much better job of managing than publicly owned Ontario Power Generation has done at the Pickering and Darlington nuclear sites.

         

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