You’d think the most prominent banking job in the country wouldn’t be one that would require ads in newspapers to fill. But you’d be wrong.
According to CTV News, the Bank of Canada has taken out ads in The Economist, La Presse in Quebec and the Globe and Mail in search of a replacement for governor Mark Carney, who is leaving this summer to take on the job of head of the Bank of England.
But unlike the Bank of England, which broke with centuries of tradition to appoint the non-British Carney, the BoC wants a Canadian at the helm, and says so explicitly in its ad.
“A Canadian citizen, you have the demonstrated ability to exercise sound judgment in a highly complex environment, to manage competing priorities, and to rank strategic priorities,” says an online version of the ad posted on the website of recruiting firm Odgers Berndtson.
The ad goes on to say that the candidate should “have the courage to take a stand to support principles and policies.”
Speculation has already begun on who may take the helm of Canada’s central bank, with current senior deputy governor Tiff Macklem generally considered to be the favourite.
The Financial Post reported last week that the shorter-than-usual timeline to find a new governor — the result of Carney’s abrupt departure announcement in November — favours Macklem, who is well established at the Bank of Canada in the number-two spot.
Carney, a shining star on the global financial scene who — besides running the BoC — also heads the international Financial Stability Board, announced on November 26 that he is leaving to head the Bank of England.
In the weeks since, he has seen more publicity — both good and bad — than he has likely ever seen before.
In a speech given in Toronto in December, Carney threw some support behind a new idea that has been gaining popularity among bankers in recent years: That central banks should focus on job creation, instead of their usual targeting of the inflation rate.
That ruffled some feathers in the U.K., where some observers worried the country may have hired itself a radical central banker.
Back home, Carney took flak after a Globe and Mail article revealed that he had been courted to run for the Liberal Party leadership, even spending a week at the Nova Scotia home of a senior Liberal figure. The news raised questions about the Bank of Canada’s impartiality.
10: Copyright reform & file-sharing lawsuits
Canada’s new copyright law came into effect this fall, getting generally good reviews from consumer advocates. The law protects consumers’ right to copy materials for personal use, and implements a $5,000 cap on liability for unauthorized file-sharing, so long as it’s not for commercial use. But it took almost no time at all for copyright holders to start testing the new law. Canipre, a “takedown services” firm employed by the U.S. and Canadian film industries, announced in November it had tracked one million Canadians who engaged in unauthorized file-sharing. Days later, internet provider TekSavvy said it had received a request for the identity of some 2,000 customers whose IP addresses were reportedly linked to file-sharing. The company behind the request, Voltage Pictures, has gone to court to require TekSavvy to hand over the information. The court is expected to issue a ruling on the matter in January. In the meantime, digital law experts worry that the start of file-sharing lawsuits in Canada could lead to copyright trolling</a>. But it’s unlikely the lawsuit will put much of a crimp in file-sharing in Canada, which is the fourth-largest market for unauthorized music downloads in the world.
9: Labour's no good, very bad year
The year began with a powerful symbol of the decline of union influence in Canada, and it ended with one, too. On January 2, 2012, heavy equipment giant Caterpillar locked out 420 workers at its Electro-Motive plant</a> in London, Ont. Contract talks had collapsed after Caterpillar insisted on cutting workers’ salaries in half. Critics said Caterpillar was simply looking for an excuse to shut down the plant and move operations to the United States. Sure enough, a month later, Caterpillar announced the plant’s shutdown. It was a powerful sign of the shrinking leverage unions have in an increasingly globalized economy. Then in the fall came C-377, a private member’s bill that forces unions to publicly disclose their finances. Labour leaders said the bill would have little impact as unions already disclose their finances to members, and the law would only serve to give management access to union finances. Nonetheless, Canada’s unions saw it as an unabashed attack on organized labour. Finally, the year ended with GM announcing that it's moving production of the Camaro to Michigan. Industry insiders said this was evidence Canadian auto workers are too expensive and are bleeding jobs as a result. The unions called it a betrayal by a company that had recently been bailed out by Canadian taxpayers. One thing was clear: Canada's unions were unable to stop it, and as 2013 rolls in, many labour activists will be wondering where, if anywhere, the movement is headed.
8: SNC-Lavalin corruption scandal
Quebec-based SNC-Lavalin entered 2012 in the midst of an international relations firestorm over its links to the Libyan government of Muammar Gaddafi, and things largely went downhill from there. In fact, the firm had so much bad publicity this year it would have to transform itself into an American investment bank to do any worse. SNC found itself the target of uncomfortable questions when in November 2011, Cyndy Vanier, a hired consultant for the firm, was arrested in Mexico and charged with leading a plot to help members of Muammar Gaddafi’s family sneak into Mexico. As 2011 moved into 2012, the Libya scandal’s focus shifted from Vanier (who still sits in a Mexican prison awaiting trial) to Riadh Ben Aissa, reportedly SNC’s point man for Libya. Swiss authorities arrested Ben Aissa in the spring of this year in connection with a Swiss probe into "suspicion of corrupt practices, fraud and money laundering in connection with dealings conducted in North Africa.” Aissa, a vice-president at SNC-Lavalin, had resigned from his job several months earlier after the discovery of tens of millions of dollars in “inappropriate” payments that appeared not to have been used for the projects to which they were billed. The mysterious payments also laid low SNC’s chief executive officer, Pierre Duhaime, who resigned in March after allegations he had signed off on payments to unknown agents in Libya. But the trouble didn’t end for Duhaime there. Quebec’s anti-terrorism unit arrested him last month. He faces charges of fraud, conspiracy to commit fraud and use of false documents. All the same, SNC’s constant bad publicity didn’t stop it from winning a contract to build Ottawa’s long-awaited urban light rail, as well as the fourth line of Vancouver’s light rail network. So it seems “too big to fail” might apply to Canadian construction giants as much as to Wall Street banks.
7: Sketchy trade deals
It’s not so much that Stephen Harper is signing on to trade deals left, right and centre, it’s more the way he’s going about it that has some people upset. Rick Mercer may have done the most succinct job of summing up the public’s concerns about the China-Canada Foreign Investment Protection and Promotion Agreement (FIPA), when he criticized the prime minister for quietly signing on to the deal during a trade mission to Russia, and for agreeing to a very long withdrawal period should Canada decide it wants out — 15 years, compared to six months for the U.S.-Canada free trade deal. The left-leaning Council of Canadians criticized the FIPA as a “corporate rights pact” because it institutes an arbitration institution that can force Canadian taxpayers to pay up when a company has been aggrieved under FIPA rules. That institution does not answer to any court in China or Canada. (Free trade deals often have arbitration courts like this, NAFTA included). Then there is the Trans-Pacific Partnership, a free trade deal being negotiated by about a dozen Pacific Rim countries, including Australia, Malaysia and Singapore. After years of lobbying, Canada joined the talks this year — but with a catch. Canada will have to abide by any chapters of the deal that were already agreed to when we joined the talks. That prompted former prime minister Paul Martin, a free trader himself, to criticize the Harper government’s approach. Consumer advocates worry the TPP is a back-door to harsh new copyright restrictions being pushed by the film and recording industries. A leaked copy of the TPP from early 2011 contained clauses that would “criminalize some everyday uses of the internet,” consumer advocacy group OpenMedia said, including small-scale file-sharing and mashups. It’s unclear whether that part of the agreement is still intact, but when OpenMedia’s Steve Anderson asked Canada’s chief TPP negotiator whether the country would fight to protect its more consumer-friendly copyright laws, the negotiator reportedly refused to answer the question. And then there are the Canada-Europe free trade deal talks, in which Canada is reportedly about to give Europe a big concession on the length of drug patents, which could push the price of drugs up and cost Canadians as much as $900 million per year in added medical costs. Labour leaders and municipal politicians fear the rules about government procurement might mean they won’t be able to buy locally anymore. All of which makes us wonder whether the Harper government, for all its good intentions in opening up new markets for Canadian businesses, might not just suck at negotiating free trade deals. Pictured: Prime Minister Stephen Harper and Chinese President Ju Jintao
6: The continuing misadventures of RIM
RIM came into 2012 with shrinking market share, earnings under pressure and no new-generation smartphone to sell. It left the year in much the same state, though a little closer to having a new phone on the market. The good news this year was that the company finally stopped delaying the launch of its new BlackBerry 10 operating system and phones, and set a launch date (January 30, 2013). The bad news was everything else. The company reported its first quarterly loss this spring, and responded in the usual corporate method: If you can’t grow profits, cut staff. And cut staff they did, causing observers to fear for the future of Canada’s high-tech labour force. Much of the year was spent dealing with the fallout from bad publicity. In one wince-evoking incident, CEO Thorsten Heins responded personally to a New York Times story declaring the BlackBerry the “black sheep” of cellphones. Things looked up for RIM briefly towards the end of the year, once it announced the BlackBerry 10 launch date and analysts began to feel good about the company, for the first time in years. But then its third-quarter report came out, showing a 47-per-cent decline in revenue and a first-ever drop in the number of BlackBerry subscribers. The next day, RIM shares collapsed. Analysts generally agree the BB10 is RIM’s last chance to remain a player in a smartphone market now almost entirely dominated by Android and the iPhone. Make or break time for the company arrives at the end of January. Pictured: RIM CEO Thorsten Heins.
5: Failed Bell-Astral merger
The proposed takeover of Astral Media by Canada’s largest company, Bell, was most noteworthy for the fact that it was rejected by the government — a move so rare it left many market observers dumbfounded. The proposed merger had attracted controversy, as consumer advocates argued Canada’s concentration of media ownership is already too high, and allowing the merger would further reduce the variety of voices with access to media. Bell argued the opposite, promising to shore up support for Canadian content after the takeover. The CRTC didn’t buy the argument, and blocked the deal, leading to a temper tantrum from Bell CEO George Cope that only served to highlight the company’s sense of entitlement. Bell has resubmitted its bid for the Astral takeover, tweaking the planned purchase in the hopes of making it more palatable to the CRTC. But the dollar value of the new deal is about the same as the old one, suggesting that the same concerns that scuttled the last deal could come up again with the new one.
4: The housing bust
Canada escaped the real estate bust-out that ravaged the U.S. economy in recent years, but 2012 looks like the year Canada’s housing market finally peaked and started heading south. The real estate industry is unanimous in laying the blame for the bust: Finance Minister Jim Flaherty’s new mortgage rules, put into place this summer, that limited mortgage amortization periods and cut the amount you can borrow against the value of your house. The only problem with blaming the new rules is that the housing decline began before they were put into place. In reality, excessive debt burdens and intimidatingly high sticker prices on houses likely had as much to do with it as the rule changes. The big question is, where are things headed now? Big bank economists like CIBC’s Benjamin Tal say the bust-out isn’t nearly as bad as the situation in the U.S., because we have super-low interest rates to shore up housing affordability, and therefore prices. But of course bank economists would say this; banks make money off mortgages so it’s in their interest to talk up the market. Independent and foreign analysts are a bit more pessimistic, with some of them predicting a housing bubble pop that will send prices down by 25 per cent. One important note: Like Canada’s economy as a whole, what real estate looks like depends on where you are. While Vancouver is seeing sharp declines in prices, and Toronto is seeing alarming drop-offs in the number of units sold, Calgary’s housing market continues to boom, and many smaller housing markets continue to be resilient. So whether your house will drop in value will depend largely on where you live.
3: Mark Carney, superstar
Mark Carney was already the world’s most admired central banker when the year began, but by the time 2012 ended, he had achieved the unprecedented and been poached by the Bank of England -- a move certain to solidify his status in the admittedly dry annals of central banking history. Rumours had been swirling for months that the BoE wanted Carney to work his Canadian magic on Britain’s debt-laden economy, but it wasn’t until late November that the move was confirmed. Yet Carney had little time to celebrate; within days of his new appointment, which begins in June, he was beset by two controversies. A <em>Globe and Mail</em> report chronicling efforts by the Liberal party to recruit him as a leadership candidate, which included a week at a senior Liberal’s maritime home, raised questions about the Bank of Canada’s impartiality. And a speech Carney gave in early December, suggesting that central banks may want to focus on economic growth rather than inflation, got some of the U.K.’s more conservative media worried that England may have a radical central banker on its hands. So it seems at central banks, as in economics as a whole, what goes up must come down. But Carney’s star hasn’t quite faded yet, and 2013 promises to be an interesting year, as the world watches to see if Carney can import Canada’s financial miracle to old Britannia.
2: Foreign money in the oil sands
This was the year Canadians stopped fretting about whether the oilsands are good or bad for the environment, and started fretting about government-run corporations from communist countries stealing all our oil. A wave of economic nationalism swept the country when the Chinese state-run oil company CNOOC put in a $15.1-billion bid for Alberta’s Nexen. Polls showed that anywhere between 70 and 80 per cent of Canadians oppose letting state-run foreign corporations buy Canadian natural resources, but that didn’t stop the establishment business media from cheering the deal and warning that foreign investors will flee the country and no one will buy our oil if we don’t give the Chinese government everything they want (because, you know, oil is such a hard sell). In the end, Prime Minister Stephen Harper gave the deal the green light, but warned this would be the exception rather than the rule, and promised tougher standards for foreign takeovers in the resources sector. Time will tell if the Harper government is serious about this, but analysts say the end result will be fewer big buys like CNOOC-Nexen and more small acquisitions that skirt the need for a government review. And evidence suggests this is exactly what’s happening.
1: The indebted consumer
Canadians arrived at an alarming milestone this year: A record consumer debt burden. Granted, with house prices on a decade-long tear, the ratio of household debt to average income was hitting new records quarter after quarter for years, but this year we found out the problem is even worse than we thought. StatsCan revised its method of calculating debt-to-income ratios, to bring it more in line with international norms. That adjustment revealed our debt-to-income ratio to be above 160 per cent, or roughly the same ratio the U.S. and U.K. saw at the peak of their housing bubbles. But there’s good news buried in all this. First, evidence is building that Canadians are taking Bank of Canada Governor Mark Carney’s warnings about debt to heart, and pulling back from the credit brink. And a recent study found that people are happiest in the countries where debt burdens are highest. So maybe we’re headed for a horrible credit crisis of our own making — or maybe we’re just headed for eternal bliss. Your guess is as good as ours.