Mark Carney, David Dodge and Russell Westcott on Alberta Prime Time

Here’s a 20 minute video that gives some pretty cool insight into Mark Carney, Canada’s monetary policy and economic strengths.

The first half is an interview with Mark Carney, Governor of the Bank of Canada. The second half is a panel with Kelly Keehn, Jack Mintz from University of Calgary , and Russell Westcott. My notes (liveblogging style) are blow.

My notes and thoughts.

  • Talking about Mark Carney, the youngest Central Banker in the G8
  • Carney went to Harvard and Oxford. He’s an Edmonton boy, so when he was in town he took some some people to Earl’s Tin Palace on Jasper Ave.
  • Do you agree that Alberta’s insulated? It’s a global recession, and there isn’t any part of the global economy which is unaffected. Some areas have some strength which help to mitigate the impacts.
  • Alberta’s budget is being released. Here’s Mark’s three thoughts. First there’s a need for stimulus, to fill in the void. The second need is for credible policies with a long term fiscal outlook. Third, there’s a need to make an investment in long term productivity and sustainability.
  • Original projections were recovery in ’09 and in ’10 but have been amended. The Bank of Canada actually reviews its forecasts on a quarterly basis, so it’s nothing too crazy. Things that have changed, the global recession is deeper and the timing of our recovery will depend on the stabalization of the global financial system. The problems are outside of Canada.
  • David Dodge has criticized the projections. He responded by saying ‘read the transcript of his comments’. The BofC has a very transparent process, and they welcome other people’s inputs.
  • Why such a wide variety of projections? There’s a huge amount of uncertianty. The band of uncertianty is wider than the range of projections. The question is how quickly the massive policy responce will take effect (monetary and policy).
  • Interest rate cuts, not much farther to go, but are working? They are, monetary policy always works with a lag, but our monetary system is still working. The levels of corporate borrowing have remained steady.
  • You’ve been critical of the banks in the past for not passing along rate drops. Now they’ve passed through all but 25 basis points.
  • What are the big lessons from what has happened?
  • Canada has many lessons we can teach others. You have to have rules and infrastructure, and a measure of prudence. We restricted the level of leverage banks could have.

Then at 12:04, Kelly Keehn, Jack Mintz from UofC, and Russell Westcott.

  • Anyone surprised? Kelly Keehn – no. Russell – no. “He who forecasts the most often gets it right eventually.” Jack – “The variability of the forecasts often gets it right eventually.”
  • The David Dodge clip at 13:45 is the one where he says ‘likely we’ll do as well as, or better than other countries, but why should we recover very quicky when the rest of the world is recovering moderately.’
  • Is it a fair criticisim? Yes, it’s been a remarkable set of changes, and it’ll take the world economy will take a while to re-adjust. Growth will take some time come back. there are huge deficits which will slow that. (and put Alberta ahead)
  • What should people be doing? Buying, selling? If you’re planning to live in your house you’ll be ok. It’s not like daytrading, just chill out. If you can’t afford to hold onto it for 5 years, you should still be renting.
  • Kelly does point out that the small drop this year over last pales in comparison to the increase the year before.
  • Housing is a consumption good, not just an investment.

Getting into Investments:

  • Kelly: Understand fear and greed. Get back to basics, and understand your risk profile.
  • Jack: Tough time to understand that. People are afraid it’ll get worse before it gets better.
  • Russell: Pay yourself first. 100% of investment portfolio is focused on yield.

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