Tag Archives: Ukraine

Roundup: Higher inflation than expected

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It is now day fifty-seven (or so) of Russia’s invasion of Ukraine, and hope is waning for the remaining defenders of Mariupol, and the civilians still sheltering there. As the fighting intensifies in the eastern part of the country, there are also concerns that it will devolve into a war of attrition, which Russia has historically been more able to withstand. We have also learned more about what happened when Russian troops occupied Chernobyl, where staff were working at gunpoint, and sleeping three hours a night in order to safeguard the site and ensure that Russians didn’t tamper with any of the equipment there.

Closer to home, the inflation numbers were released yesterday, and they were much higher than expected, as conflict inflation brought on by the aforementioned invasion of Ukraine is hitting. And of course, most media outlets were useless in explaining the causes of it, while the parties were equally useless in their own reactions. The government keeps focusing on their talking points about things like child care and dental care, and the fact that they indexed benefits, rather than actually explaining the drivers. The Conservatives are railing about “printing money” (which, to be clear, nobody is actually doing) and insisting that the government should declare a GST holiday, which would a) do nothing for grocery prices as most groceries are GST-exempt; and b) would have a stimulative effect and just fuel even more inflation, especially as people would be likely to use said GST holiday to buy big-ticket items. And the NDP, predictably, chalk this up to greed and want higher wealth taxes, which again, do very little about the drivers of inflation.

And then there’s the Bank of Canada, who will be forced to respond with higher rate hikes, but the question becomes whether they’ll keep the increases more gradual—another 50 basis points at the next meeting in June—of if they’ll go even higher as a way of demonstrating that they are really taking this seriously and that the system of inflation control that they’ve been responsible for since the 1990s will prevail. It doesn’t directly address the drives, but it could be that the signals are more important than the actual policy at this point, because the bigger worry is the expectation that inflation will continue, which will turn it into a self-fulfilling prophecy—something they are very, very keen to avoid.

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Roundup: First leadership deadline passes

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We are now on or about day fifty-six of Russia’s invasion of Ukraine, and Russia has been pouring more troops into their offensive in the Donbas region, and they are making a bunch of unverified claims about their strikes on Ukrainian targets (which should be taken with a salt lick’s worth of scepticism). As well, there were more missile strikes on the western city of Lviv, and Russia has given another ultimatum for the Ukrainian defenders of Mariupol to leave, but thus far there has been no sign that they will take them up on it.

Closer to home, the first deadline for the Conservative leadership contest has passed, and eight of the declared candidates have crossed the threshold of the $50,000 entry fee and the completed questionnaire. They have ten days to reach the next deadline of $300,000 in fees and 500 signatures, and thus far, only three of the candidates have crossed that threshold so far (and judging from the names of the eight remaining, most won’t make it either). Meanwhile, Pierre Poilivre’s camp claims that they have sold memberships in all 338 federal ridings, in order to claim that they have broad appeal, for what that’s worth.

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Roundup: Lower-tier leadership candidates

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It is now on or about day fifty-five of Russia’s invasion of Ukraine, and it looks like the fighting in the eastern part of the country, around the Donbas region, has intensified as has been signalled for a couple of weeks now. At the same time, more missile attacks have hit western cities in the country like Lviv, which has mostly been out of the fighting, so that is keeping everyone on edge, particularly given that Lviv is hosting a lot of the people who have fled from other parts of the country.

Other news from Ukraine over the long weekend:

  • Thus far, the invasion has damaged about 30 percent of the country’s infrastructure, at a cost of about $100 billion.
  • There were further attacks on Kyiv over the weekend, possibly in retaliation for the sinking of the Moskva
  • Ukrainian fighters in Mariupol are defying Russia’s surrender-or-die orders
  • Here is a look at the situation LGBTQ+ Ukrainians find themselves in during the war.

Closer to home, Power & Politics interviewed Conservative leadership candidate Roman Baber yesterday, and it was…painful. He is not a serious person. At all. He kept speaking in facile talking points about “restoring democracy,” as though we didn’t just have free and fair elections, based on his nonsense reading of public health restrictions and what happened during the Ottawa occupation, with a dose of facile catch-phrases about “cancel culture.” And, bless her, Vassy Kapelos did gently try to push back against some of what he said, but wow. I would be very surprised if he manages to get his $300,000 in fundraising and all of his signatures to become a verified contestant because he offers nothing original, and even if this about trying to rebuild his profile after being booted from the caucus provincially, it’s a very difficult way to go about it, with not much in the way of reward.

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Roundup: Chalk up another Conservative disinformation campaign

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We’re now on or about day fifty-one of Russia’s invasion of Ukraine, and has been confirmed that Russia’s Black Sea flagship, the Moskva, has sunk, which is a huge loss for Russia (particularly as Turkey is blockading the entrance to the Black Sea to military vessels, so there will be no replacement for it anytime soon), and it will no longer be able to support Russian ground forces, or to shell cities from afar. In the meantime, president Volodymyr Zelenskyy continues to show that he is a master communicator for his country and his cause.

https://twitter.com/ZelenskyyUa/status/1514681561412780035

Closer to home, yet another pernicious bit of disinformation has started circulating, courtesy of the Canadian Taxpayers’ Federation, who read the Emissions Reduction Plan (which was prepared by an arm’s-length advisory panel), found a reference to a proposal to add a surtax to certain kinds of gas-guzzling vehicles, and then wrote an op-ed in the Toronto Sun that declared this was the government’s plan. Jason Kenney picked up on this and decried it, as has the Conservative Party writ-large and several of its leadership contenders. Of course, there are no actual plans for such a tax, but why does the truth matter? This was the tactic they’ve been using on the supposed plans for a capital gains tax on primary residents, which doesn’t exist and never will exist (even if it’s actually decent public policy). This also compounds with the selective quotes they’ve been using from the Parliamentary Budget Officer’s recent report on carbon pricing, which has been torqued into more disinformation.

There’s so much disinformation and lies floating about, as though there weren’t enough actual things that you could absolutely excoriate this government for, and yet they resort to fiction. Utterly boggling.

Programming Note: I will be taking a long weekend off from the blog, because I am exhausted after the past few weeks. See you Tuesday!

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Roundup: Words with meanings and obligations

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We’re now around day fifty of Russia’s invasion of Ukraine, and four European presidents—Poland, Lithuania, Latvia, and Estonia—visited Kyiv to show their support yesterday. (Some photos of Ukraine here). Ukrainian forces also detained one of Putin’s oligarch allies, which has led to a new round of threats from Russia. The other thing that will make Russia angry? The fact that the Ukrainians sank Russia’s flagship for their Black Sea fleet—the same ship that fired upon the border guards at Snake Island. It’s almost poetic justice.

https://twitter.com/dgardner/status/1514397710509559814

Meanwhile, we are getting into a frustrating debate about whether or not to call what’s happening in Ukraine a genocide, and what makes it frustrating is the fact that there are international obligations to do something about it if that’s indeed the case. There is no argument that there are crimes against humanity happening, and those are very, very serious. But “genocide” is a specific legal term with specific intent, and for President Biden to throw the word around and saying that lawyers can sort out the details later isn’t helping, when the term obligates the US to do something about it (which they have danced around in the past because they don’t want to be obligated). And then Justin Trudeau chines in and says it’s “absolutely right” to use the term, which would then obligate Canada to do something about it as well. But we need to stop using the most serious language for things for shock value, because words have meanings, and in this case, obligations as well.

https://twitter.com/dgardner/status/1513890485970116614

https://twitter.com/dgardner/status/1513902439556169733

Closer to home, the Bank of Canada raised its key interest rates by fifty basis points, and has hinted that more rate hikes are on the way, as they have to not only combat inflation with the only tool they have, but they have to fight the perception that they aren’t doing enough to cool inflation (and that latter part is the bigger part of the problem). I’ll be writing more about what’s in the Monetary Policy Report in the coming days, but in the meantime, here are some smart economists giving some reaction.

https://twitter.com/LindsayTedds/status/1514249461857366021

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Roundup: Sanctions take time to really bite

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It’s now around day forty-nine of Russia’s invasion of Ukraine, and it’s carrying on as Putin insists that they will continue until they meet their goals. This as there are unconfirmed reports that chemical weapons were used in an attack in Mariupol, while Russian spokespeople from Donbas were discussing the possibility. That could lead to another escalation in sanctions, and talk of “red lines,” though that didn’t seem to do much good when it happened in Syria. The mayor of Mariupol says that more than 10,000 civilians have been killed as the strategic port city continues being flattened by Russian forces. Ukrainian government officials also say that they have thwarted an attempt by Russian hackers to knock out power to parts of the country, and it’s worth noting that Canada has been providing cyber-security assistance to Ukraine.

On the subject of sanctions, there are lots of questions circulating about how effective they really are if the invasion continues, and it’s one of those things for which it’s not an easy answer. Yes, they’re hurting Russia, but Putin and his inner circle seem fairly insulated from some of the worst of it, in part because they managed to stop the ruble from collapsing entirely. That makes it even more imperative to provide military support to Ukraine so that they can defeat Russia on the battlefield, which will hurt Putin more. This doesn’t mean that we shouldn’t carry on with sanctions, because we should, but they’re at the point where they are hurting us as well, and we had Conservatives demanding exemptions for farmers last week who bought fertilizer from Russia before the conflict began and now don’t want to pay the tariffs associated. But for sanctions to be effective, they will hurt us as well, and people seem to forget that.

As well, this conflict is now going to have an effect on inflation globally, because of the effect of diverting from Russian oil and gas, and from the effect this war has on Ukraine’s ability to produce and export food, as the breadbasket of Europe. Of course, it’s going to continue to be blamed on government spending (never mind that it actually isn’t, and this is a global problem), and the Bank of Canada is going to hike rates this week if only because they need to be seen to be doing something about the problem even if it won’t actually address the root causes of these price increases. Things are messy, and it’s going to take time for everything to work itself out, but what will really help is for Russia to get out of Ukraine.

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Roundup: Trudeau confirms that there are to be strings attached

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It’s around day forty-eight of Russia’s invasion of Ukraine, and it appeared to be a fairly quiet day. Well, as quiet as can be in a country where two-thirds of its children have been forced to flee their homes in the past six weeks, which creates plenty of problems for their safety and security as they may be exploited in the confusion. Meanwhile, Russia has tapped a new general to lead its forces in Ukraine, and he’s one with a reputation of particular brutality in leading the Russian troops that acted in support of Syrian dictator Bashar al-Assad, leaving a trail of civilian deaths and human rights violations in his wake. As well, Austria’s chancellor met with Putin, the first European leader to do so since the invasion, and tried to convince him to end the invasion, but he walked away from the meeting without any optimism that the war will end anytime soon.

Closer to home, prime minister Justin Trudeau has confirmed that he’s looking to have strings attached to future health care funds from the federal government, because he’s well aware of the history of provinces that have taken more federal dollars and used them on other things, including tax cuts, and the healthcare system has been left to suffer. Which is the way it should be—if the federal government is giving you money for healthcare, it should be used for just that, and no, that doesn’t mean they’re micro-managing, it means they want accountability for the money they send.

We also got confirmation that provinces are dishonestly ignoring the fact that the agreement in the 1970s to transfer tax points to the provinces in lieu of health transfers. They continue to insist that the federal government only funds 22 percent of their health care systems, but with the tax points, it’s over 33 percent, which is not insignificant considering that provinces are demanding the federal government fund the systems to at least 35 percent—a 35 percent that they don’t count the tax points under. They need to count those tax points, and government and media need to make that clear, rather than media just repeating the premiers’ talking points and both-sidesing it.

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Roundup: Faux concern over a decades-old system

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We’re now on or about day forty-seven of Russia’s invasion of Ukraine, and Ukrainian forces are digging in and preparing for a renewed Russian offensive on the eastern and south-eastern portions of the country. UK prime minister Boris Johnson visited with president Volodymyr Zelenskyy in Kyiv over the weekend, to show his support and solidarity in person. Elsewhere over the weekend, Ukraine was trying to ensure humanitarian corridors out of the Donbas region for Ukrainians to evacuate in advance of the coming Russian onslaught in the region.

https://twitter.com/ZelenskyyUa/status/1512858863728570369

https://twitter.com/NikaMelkozerova/status/1513190467743236103

Closer to home, we are being subjected to a bunch of nonsense around Canadian content regulations in the context of Bill C-11, which updates the Broadcasting Act to now include streaming platforms like Netflix or Disney+. The particular nonsense? The notion that the CRTC will define what qualifies as Canadian. Erm, except they have been doing this already. They’ve had a well-defined point system for what counts as CanCon since 1984. Nineteen gods-damned eighty-four. This is not new. Extending broadcast regulations to streaming platforms changes absolutely nothing about what counts as Canadian content, because the rules are platform neutral. For decades, production companies needed a 6/10 on the CanCon scale to qualify for tax credits. None of this is new.

The problem, however, is that in the debates over C-11 (and its predecessor in the previous parliament, Bill C-10) you had Conservative MPs trying to make this an issue (and Rachael Thomas, who was then Rachael Harder, was particularly vocal about this). She kept trying to propagate this insane notion that somehow these rules should be in the legislation, which is bonkers because that shouldn’t be the job of Parliament, nor is legislation responsive in the way that regulation is. We have arm’s-length regulators like the CRTC for a reason, which is to de-politicise these kinds of decisions. Sure, everyone comes up with supposedly scandalous examples of why certain things which may sound Canadian on the surface isn’t considered Canadian under the CanCon rules (such as The Handmaid’s Tale series), and it’s only until you look at the points system and think through the rules that you realise that these examples really aren’t that scandalous. The whole point is to ensure that our industry isn’t just a branch plant for American productions who can do it cheaper and get tax credits up here. It’s to ensure that there are incentives for things that are actually Canadian-led and produced, and under Canadian creative control, to get made. You can argue that the rules need to be updated, but let’s not pretend that there is anything new here (and really, The Canadian Press deserves a rap on the knuckles for this kind of framing of the issue).

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Roundup: Sour premiers wanted more money

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We’re not on or about day forty-five of Russia’s invasion of Ukraine, and yesterday’s particular war crime of note was an attack on a train station in Kamatorsk that killed fifty-two Ukrainians fleeing to safer parts of the country. More chilling was the fact that the remains of the rocket had “For the children” spray painted on its side. Meanwhile, an international organization formed in the 1990s to identify the dead and the missing in the Balkan conflicts is preparing to send a team of forensic experts to Ukraine to help identify their dead as a result of Russian atrocities.

https://twitter.com/visegrad24/status/1512493160013996042

Closer to home, there is more reaction to this week’s budget, and in particular, some of the sour notes coming from provinces. It’s not just the current bit of confusion around just what the dental care programme is going to entail, because we don’t have any implementation details yet, and it sounds like the federal government may try to leverage existing provincial programmes for low-income earners. But more to the point, it’s about health transfers, and the fact that premiers aren’t getting their way with their demands for increased unconditional transfers, ostensibly to ensure that the federal government pays 35 percent of the share of health costs—a figure which is distortionary because since the 1970s, provinces were given tax points instead of direct transfers, so the true cost to the federal government would be far, far higher than the 35 percent figure they like to float. Not to mention, we saw that when federal transfers were higher for a decade, provinces used much of that money on other things, as certain provinces also did during the pandemic. So frankly, I wouldn’t expect the federal government to just hand over more unconditional money in the budget, particularly as they are negotiating with provinces for specific outcomes around mental health and long-term care.

Those demands for higher transfers are also raised in this op-ed by economist Trevor Tombe and professor Daniel Béland, which accuses the federal government of being uninterested in reforming those health care arrangements. I would dispute that because they have made it clear, during the election and since, that they are very interested in reforming those arrangements, and that those reforms mean strings attached to federal dollars, and those negotiations are ongoing. I’m also troubled by the notion that the federal government should be doing something about provincial debt, which is far more unsustainable than the federal government’s. Is the suggestion that the federal government upload more costs or programme responsibilities? Because I don’t see premiers clamouring for that (though they do want more money). Is the suggestion that the federal government simply pay for everything? Because that’s absolutely not sustainable either. It also ignores that most provinces have the ability to raise revenues the old-fashioned way—raising their own taxes. (Some provinces are admittedly screwed demographically, but again, what levers are we proposing the federal government employ?) Tombe and Béland want an open and collaborative process to rethink the fiscal relationships between levels of government, but we’ve all seen this movie before, and it always winds up with the provinces demanding the federal government give them more money. I’m not sure how that helps.

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Roundup: A more modest budget than feared

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We are now somewhere around day forty-four of Russia’s invasion of Ukraine, and Russia’s retreat from Chernihiv has shown much more destruction in its wake. Given that Russia is re-positioning to the Donbas region, Ukraine is trying to maintain humanitarian corridors from the area, while pleading with NATO and other countries for yet more weapons to fight the Russian invaders. Meanwhile, RCMP officers in Canada are reaching out to Ukrainians who have made it here to gather evidence of Russian war crimes, so that it can be forwarded to The Hauge.

As for the budget, it was not the orgy of NDP-led spending that Candice Bergen and others had been hinting at, though it did increase spending somewhat, but that was largely offset by higher revenues thanks to the booming economy. The deficit is reducing rapidly, as is the debt-to-GDP ratio, which is the “fiscal anchor.” In fact, Bergen’s reaction speech was pretty much drafted with a very different budget in mind, and when called on this, she prevaricated. Jagmeet Singh, predictably, said there was enough in there for him to support (checklist here), but he still put on a show about criticising things he didn’t like, and the environmental provisions in particular.

https://twitter.com/AdamScotti/status/1512237421513125897

Some specifics:

  • Here are the $10 billion in housing measures the government is proposing, though some of those measures will do nothing for affordability.
  • The corporate tax rate is going up, and there is a special surcharge being levied against banks and insurance companies, as promised.
  • There is money allocated for dental care, but no details on the implementation mechanism, which is very important to have.
  • The $8 billion over five years in new defence spending won’t get us to the NATO two-percent goal, but a needed defence review is included.
  • There is some $500 million earmarked for more military aid for Ukraine, plus another $1 billion in loans to prop up their economy.
  • There is new money for cyber-security, much of it going to CSE.
  • Some $15 billion is earmarked for the creation of two new arms-length bodies to help with medium-and-long term growth.
  • There is $4.3 billion over seven years for Indigenous housing.
  • As expected, the tax credit for carbon capture and storage projects is drawing heat from environmental groups.
  • There is $3.7 million being earmarked for mental health services for Black civil servants (as they have a class action lawsuit underway).
  • There is some more money for arts organizations including the National Arts Centre.
  • Both the National Post and The Canadian Press have lists of smaller items in the budget that may have escape notice.

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