Category Archives: economics

Overheard in Swift Current

I was down in Swift Current this weekend.  It’s a gorgeous city that has benefitted from the oil boom tremendously.  You see it everywhere from box seats in the Credit Union iPlex to new buildings throughout town.  Better wheat and grain prices haven’t hurt either.

Every conversation I was a part of… while checking into the hotel to breakfast at the Humpty’s to the conversations around me at the curling contained one word; layoffs and how scared people were as they hit closer and close to home.

Oil is the economy in Swift Current.  Oil and farming.  With the family farm nearly extinct (something you really notice driving down Highway 4), there  are less and less opportunities to make money.  That was the boom of the oil fields.  People who had no choice to go to Alberta for work could stay at home and get jobs.  Now neither option is on the table and people are scared.

I have heard some people say, “why can’t they go back and farm”.  40 years ago that was an option.  Family farms were smaller which meant smaller and less expensive machinery, land values were smaller and you could make a living on a section or a section and a half of land.  I’ve had friends who have tried to start up farming.  It was almost impossible to do, even with family help.  Equipment costs are one hurdle but with corporate farms able to pay well above market rate for farmland, the small farmer doesn’t stand a chance.

So what’s the plan for the provincial government?  Not a lot actually.  Neither the Saskatchewan Party (let’s be honest, they’ve run out of ideas) and the NDP (who are ignoring rural Saskatchewan in this election) don’t have any.  The Saskatchewan Party is paving highways and is going to replenish the rainy day fund (which they have depleted running deficit after deficit when times were good) when oil hits $75 a barrel. 

Are they delusional?

Note to the rest of us, $75 a barrel oil is delusional.  It may not return for years.

Which gets to my point.  The Sask Party is more or less telling us that this is a momentary blip and things will be okay on the other side.  It’s good politics but horrible governance because they don’t know if things get better ever again.   It reminds me of when Grant Devine used to say and believe that things will be okay as soon as the rain returns and the prices rebound.  It never did in his time in power and people were hurt.

There isn’t an easy solution.  Saskatchewan doesn’t have a large manufacturing  base but part of me wonders that small targeted investing and mentoring in larger Saskatchewan towns and smaller cities as a way to help people start and grow small businesses is needed.  We have the same kind of things in the city with Ideas Inc and whatever it is that SREDA is doing (basically the same thing as Ideas Inc is doing but I am too lazy to Google it.  Oh wait, it’s called Square One and it the same kind of thing as Ideas Inc but without office space.) 

Make it competitive.  Go after only the  best ideas.  Keep politicians out of it.  Use the model of Y! Combinator.

Twice a year we invest a small amount of money ($120k) in a large number of startups (most recently 107).

The startups move to Silicon Valley for 3 months, during which we work intensively with them to get the company into the best possible shape and refine their pitch to investors. Each cycle culminates in Demo Day, when the startups present their companies to a carefully selected, invite-only audience.

Maybe that is the wrong model, maybe it is the right one.  All I know is there needs to be a long game of building entrepreneurial capacity and hope in Saskatchewan that isn’t based solely on the price of Brent crude.   The Saskatchewan Party kind of flails at the topic when they suggest it to be easier for more home made food to be sold in gas stations.  Outside of the entire discussion of food safe practices and the rather demeaning nature of this policy, they are right in that it needs to be easier for home based businesses to make money and hopefully hire employees.

The easy option will be to try  to do this with government spending on mega projects or pie in the sky schemes to attract manufacturers to Saskatchewan.  Anyone recall that airplane manufacturer that was going to make airplanes in Saskatoon?  That turned out well didn’t it?  I can go on and on about the NDP schemes as well.  Megaprojects aren’t saving rural Saskatchewan.

The only thing going on in rural Saskatchewan is resource extraction of some sort and unless we want to keep living a boom and bust cycle, finding ways for rural Saskatchewan to be about more than oil, farming, and government jobs, something has to change and right now, it isn’t even a political discussion.

De Beers shuts Snap Lake diamond mine, 434 jobs eliminated

It’s not just oil and potash which have low commodity prices.

The De Beers Group is shutting down its Snap Lake diamond mine in the Northwest Territories due to a softening market for the gemstone, resulting in the loss of more than 400 jobs.

Kim Truter, CEO of De Beers Canada, said the company will evaluate market conditions over the next year to determine if the underground mine is financially viable.

"The men and women at Snap Lake have put enormous effort into this challenging ore body over many years, but even the gains made this year are not enough to overcome the market conditions and put us in a profitable position," Truter said in a news release Friday.

De Beers said some employees will be required in the coming months to prepare the mine for a lengthy suspension.

Truter said 434 employees have been notified that they aren’t required for the closure and maintenance work.

N.W.T. Premier Bob McLeod said the announcement by De Beers will have a significant impact on the region’s economy.

"Our priority is the individuals and their families who are directly affected by this decision and the impacts that this decision will have on N.W.T. business owners and our communities," he said.

McLeod said about 300 people who work at the mine about 220 kilometres northeast of Yellowknife live in the territory. The others fly in from other parts of Canada.

He said De Beers Canada has spent $1.5 billion with N.W.T. companies over the years, including $865 million with aboriginal firms and joint ventures.

"These are not amounts that are easily replaced," he said.

McLeod said he hoped the closure of the mine is temporary and noted that De Beers is involved in another mine called the Gacho Kue project that is almost complete.

Maybe Germany needs to be kicked out of the Eurozone

From Foreign Policy

Last year, Germany racked up a record trade surplus of 217 billion euros ($246 billion), second only to China in global export dominance. To some, this made Germany a bright spot in an otherwise anemic eurozone economy — a “growth driver,” as the German finance minister, Wolfgang Schäuble, puts it. In fact, Germany’s chronic trade surpluses lie at the heart of Europe’s problems; far from boosting the global economy, they are dragging it down. The best way to end this perverse situation is for Germany to leave the eurozone.

Germans usually respond to such charges with a kind of hurt confusion. We run trade surpluses, they patiently explain, because we are simply much more competitive than most of our trading partners. Can you blame us, they ask, if the world prefers to buy superior German goods (and has nothing we want in return)? So goes the argument: The rest of the world just needs to up its game, get its house in order, and become a bit more like Germany. In the meantime, don’t hate us ‘cuz we’re beautiful….

Contrary to popular mythology, however, there’s absolutely no reason why being “competitive” should mean running a trade surplus. As far back as 1817, the economist David Ricardo pointed out that the optimal basis for trade is comparative, not absolute, advantage. In other words, even if a country is better at everything, it should export what it is best at and import what it is less better at. Having an across-the-board advantage does not imply that it makes good economic sense to produce everything yourself, much less to sell more than you want in return. Or, to put it a bit differently, there’s no inherent reason why earning more can’t mean spending more, on consuming both public and private goods, as well as investing in future productive capacity.

Trade surpluses take place when a country chooses to spend less than it produces — when it has excess savings, beyond its domestic need for credit. It lends that excess savings abroad, financing another country’s ability to spend more than it produces and, by running a trade deficit, purchase the lender’s excess production. It’s true that a highly productive country might have the wherewithal to conjure up excess savings, while a less productive country might be inclined to borrow rather than scrape up the savings it needs. But fundamentally, trade imbalances arise not from competitive advantage but from choices about how much to save and where that savings should be deployed — at home or abroad.

Does it ever make sense to run trade imbalances? Sure it does. In the 19th century, Britain’s Industrial Revolution enabled it to reap vast earnings from expanded output, some of which it invested in the United States. The money lent to a rapidly growing American economy generated higher returns than it would have back home, while creating a market for British-made goods. The potential productivity gains made it a win-win: It made sense for the Americans to borrow and for the British to lend. But the case also highlights something that’s easy to forget: Running a trade surplus means financing someone else’s trade deficit.

The eurozone crisis is often called a debt crisis. But, in fact, Europe as a whole did not have an external debt problem, but an internal one: German surpluses and mounting debt in Europe’s periphery were two sides of the same coin. Germans saved (a lot), and the single currency induced them — rather than save less or invest it at home — to lend it to their eurozone trading partners, which used the money to buy German goods. By 2007, Germany’s trade surplus had reached 195 billion euros, three-fifths of which came from inside the eurozone. Berlin might call this “thrift,” but it’s hard to argue that Germany’s excess savings, which its banks often struggled to put to use, were well invested. Instead, they gave Germans the illusion of prosperity, trading real work (reflected in GDP) for paper IOUs that might never be repaid.

The solution? 

So what should be done? The best solution — and the least likely to be adopted — is for Germany to leave the euro and let a reintroduced Deutsche mark appreciate.

It will never happen but it is a solution that makes sense.

Introducing the Worst Airline in America

A business professor examines how bad the worst (and most profitable) airline in America really is.

Criticism of his company’s predacious practices doesn’t faze Baldanza. “Predatory means selling at below your cost,” the Spirit CEO told a skeptical questioner in a Reddit AMA talk last July. This is not only a novel definition, it is one that Spirit doesn’t risk illustrating. In October of last year, analysts at Morgan Stanley declared the carrier the “Most Profitable Airline in the World.” It is also among the fastest growing. Spirit launched 24 new nonstop routes in 2014 and plans another 26 for this year.

Success breeds admirers. In December, Delta announced that it was introducing five categories of service, including its answer to Spirit’s Bare Fare: Basic Economy. In addition to its precarious grammar, Basic Economy does not allow passengers to pick their seats, change their itineraries, or fly standby. The move is merely the most recent evidence that Spirit has become a trendsetter—arguably, the trendsetter—in the American airlines industry. But what trend is it exactly? Baldanza has repeatedly affirmed that Spirit is refining the art of offering affordable airfare, an effort which he qualifies as nothing less than an essentially democratic endeavor. He has a point, insofar that we live in a world where social mobility and simple mobility increasingly go hand-in-hand. Yet other low-cost carriers have long provided models of budget air travel without engendering nearly the angst of Spirit. Two of them, Jet Blue and Southwest, were even ranked number one and number two, respectively, in the 2014 American Customer Satisfaction Index survey of U.S. airlines.

No, rather than being a trailblazer in economy pricing, Spirit’s real significance is that it has come to embody one of the two guiding principles of customer service that, in capitalism, have always been contending centers of moral gravity. The first principle, embodied by Braniff, is: The Customer is Always Right. This approach assumes that commercial success depends on building strong bonds of customer loyalty. The second principle is: Caveat Emptor, or more familiarly, Buyer Beware. It assumes that, when it comes to turning a profit, preying on the ignorance and necessity of customers is not simply acceptable for private enterprise, it’s standard operating procedure.

It is a commercial truism that nothing succeeds like success, but might makes right is its cultural corollary. In the airlines industry, the success of Spirit has helped to legitimize practices that treat passengers, in the words of one consumer watchdog, like “meat in a seat.” When a carrier assumes the moral status of its customers to be different from an ATM only in respect to daily limits, monetizing the mistakes of first-time flyers can be a lucrative business. And for those passengers who return to Spirit a second, or even a third time, to say nothing of 13, they do so with a fatal sense of capitalism’s capacity to justify cruel choices, as well as with a growing cynicism of dealing with a company that regards common decency as a convenience fee. 

The contempt is mutual. A significant flight delay prevented a customer named James and his wife from attending a concert in Atlanta, the sole purpose of their trip. James emailed several of Spirit’s top executives to air his complaint. Baldanza made the mistake of hitting reply all, which is how the exchange became public: “We owe him nothing as far as I’m concerned,” Baldanza wrote in response. “Let him tell the world how bad we are,” Baldanza offered. “He’s never flown before with us anyway and will be back when we save him a penny.”

Shamelessness has certain advantages. A more succinct expression of Spirit’s credo is truly hard to imagine.

I have flown great airlines and have flown horrible ones I kind of defend Spirit Air.  It exists to get you from a to b as cheaply as possible.  For some people at some points in their life, that matters a lot. You may not like it but in the end, you chose to fly the cheapest airline in North America.  You get what you pay for.

There is no such thing as a skyscraper curse

But just in case, Saskatoon leaves Parcel Y undeveloped

Until recently, however, there had been no formal analysis of the skyscraper curse. A new paper by Mr Barr, Bruce Mizrach and Kusum Mundra (all of Rutgers) investigates Mr Lawrence’s musings in detail. They look at the building of 14 world-record-breaking skyscrapers, from New York’s Pulitzer (which opened in 1890) to the Burj Khalifa, and compare them to American GDP growth (which they see as a decent proxy for the world economy).

If, as the skyscraper curse suggests, the decision to build the biggest towers happens near the peak of the business cycle, then you could use record-breaking projects to predict the future path of GDP. However, the range of months between the announcement of the towers and the business-cycle peak is large, varying from zero to 45 months. And only seven of the 14 opened during a downward phase of the business cycle (see chart). In other words, you cannot accurately forecast a recession or financial panic by looking at either the announcement or the completion of the world’s tallest building.

With such a small sample, it is tricky to draw firm conclusions. But the paper expands the sample to 311 by looking at the tallest building completed each year in four countries (America, Canada, China and Hong Kong). The authors then compare building height to GDP per person. They find that in all countries GDP per person and skyscraper height are “cointegrated”, a fancy way of saying that the two things track each other. In other words, developers tend to be profit-maximisers, responding rationally to rising incomes (and thus increased demand for office space) by making buildings bigger. While ego and hubris afflict the skyscraper market, the authors argue, its foundations appear sound.

Canada ‘potentially vulnerable’ because of household debt: report

From the Toronto Star

A renewed warning on Canadian household debt levels is coming from a research report written by an international management consulting firm.

The report, published by McKinsey & Company on Thursday, singled out Canada and six other countries with “potential vulnerabilities in household debt.”
In Canada’s case, household debt levels are higher than those that existed in the U.S. at the peak of the credit bubble, the report notes.

The data suggests a “potential risk, but not an imminent crisis,” the report said.

“There is no sign that there are a significant number of Canadian borrowers today having trouble repaying their debt. The risk comes when you look to the future,” said Susan Lund, partner at McKinsey Global Institute in Washington, D.C.

“If the economy were to slow and unemployment started to rise, when people lose jobs, that’s when a mortgage that you could afford with a job suddenly becomes unaffordable. The other potential risk is if and when interest rates start to rise, that could create a much larger burden on households repaying debt.”

So what does that mean for Calgary which already has an obscene amount of household mortgage debt?  I hate to say it but what does it mean for Saskatchewan which has a high debt to income level.  

 

Westgate Books

I’ve been having some fun at Westgate Books lately.  A couple of weeks ago I wandered into the store looking for Saskatoon: A History in Photographs by Jeff O’Brien, Ruth Miller and William P. Delainey.

They didn’t have it but the staff that was helping me went to look in the warehouse.  Instead of the book I was looking for, he came up with two books, Saskatoon, the First Half Century by Don Kerr and Saskatoon, Hub City of the West: an Illustrated History by Gail McConnell.

I looked at them and took them both.  I also put my name down on a list if Saskatoon: A History in Photographs came in.  A couple of days later I got a phone call that told me that my book was in and come to pick it up.  Last Friday I went back to get it and it was the wrong book.  It was Saskatoon: A Century in Pictures by William Duerkop, John Sarjeant and William Delainey.  In hindsight I kind of wondered if there was a bit of miscommunication when I ordered Saskatoon: A Century in Pictures but I looked at this book and I realized I wanted to read it as well.  I had a blast all week looking at it.  So has Mark.

Since I am talking about books, it looks like Gail McConnell was doing Kickstarter long before Kickstarter was a thing.  The last 20 or so pages of her book is dedicated to patrons who helped pay to publish her book.  Local Saskatoon businesses sponsored the project and she does a one page profile on each company.  Who knew a history book could be so cutting edge.

While I was getting that book, another staff at Westgate Books went looking for the book in case they missed it and found me another book on the history of electric transit in Saskatoon.  I didn’t have the money on me to get it so they put that away for me.  I’ll wander by this week and get it.  Now I am curious as to what other books I will find in my brief stop at the store.

I know being in the used book business is a hard business to be in but I haven’t had as much fun shopping as I have had in Westgate Books in a very long time.  I hope that still counts for something.

Rust Belt revival: Lessons for southwest Ontario from America’s industrial heartland

What can Ontario learn from the rival happening in America’s rust belt

There has been less longing, in recent years, to be part of our own country’s version of a rust belt – the one that comprises such Southwestern Ontario cities as Windsor, London and St. Catharines, and patches of Eastern Ontario. Young people have fled in droves as the region’s employment numbers have tanked, seeing the loss of more than a quarter of manufacturing jobs in the last decade.

The plight of the region has been a driving force behind a provincial deficit that remains at over $10-billion, as well as a net loss for Ontario in the migration of people within Canada, and an alarmingly aging population.

Even with Alberta driving the national economy, the country could ill afford Ontario’s struggles; it’s hardly healthy for the largest province’s per-capita GDP to be lower than the rest of Canada’s, and it helps explain why the federal government has remained in the red.

With oil’s current slide, Canada really can’t afford for it to remain a drag – and in fact there is some expectation that Ontario will instead reclaim its old role as the leader of Canada’s economic growth. Its premier, Kathleen Wynne, recently expressed optimism that plummeting oil prices and a sinking dollar will prove a boon to manufacturing. “I don’t wish for low oil prices and a low dollar for Alberta,” she said earlier this month. “But at the same time, we want our manufacturing sector to rebound. So if that [low oil price] helps, then that’s a good thing.”

While they could indeed help in the short term, it’s difficult to imagine those volatile factors leading to the lasting revival of traditional sectors competing with consistently low-cost jurisdictions such as Mexico, China and even the American South.

For sustainable renewal, Ontario’s old industrial towns will have to work harder at reinvention – and they should be looking to some of their counterparts in the U.S. A two-week road trip through Pennsylvania, Ohio and Michigan revealed in often surprising ways how our neighbours are much further along in reinventing their most hard-hit cities, and how much we have to learn.

“The wind is at the back of these cities in a way that it wasn’t before,” says Jennifer Vey, a fellow at the Brookings Institute who studies the revitalization of old industrial centres. And although many of them will remain smaller than in their industrial heyday, the numbers bear that sentiment out. When the Manhattan Institute ranked America’s 100 biggest U.S. metropolitan areas for their economic performance in the wake of the Great Recession, mid-size Northeastern and Midwestern cities accounted for nine of the top 20.

As Mr. Piiparinen and others are quick to stress, jobs will always be the cornerstone of any regeneration. But employers themselves can be drawn to a city by affordability and infrastructure, and like to set up shop where highly skilled people want to put down roots. The renaissance of former industrial powerhouses is fuelled by attracting and keeping well-educated, entrepreneurial citizens committed to community-building and capable of creating wealth and quality of life around them.

Of course, direct comparisons between the U.S. and Canadian experience is never exact: The places I visited tended to be larger than their Canadian counterparts; and although they may have such superior amenities as major-league sports teams and world-class museums, they also suffer from some entrenched disadvantages – notably an appalling history of race relations that has left a legacy of poverty, crime and troubled public schools.

So why is it that a younger generation is finding opportunity in these Rust Belt cities (or some of them, at least; nobody sees Flint, Mich., or Gary, Ind., as models) more than in places like London or Windsor, which have some decent bones themselves? As Ontario attempts to take back Canada’s economic reins, it would do well to learn from what’s worked, and know what it’s up against.

The Return of the Euro-Crisis

A coalition of radical leftist parties seem poised to take power in Greece. Could the troubled country really leave the euro zone?

SYRIZA has promised to cancel the austerity measures Greece adopted as part of the bailout package and renegotiate its debt obligations. This could trigger a confrontation with Athens’ lenders in Europe and the IMF, potentially resulting in a Greek exit (or “Grexit”) from the eurozone. Prime Minister Samaras is playing up this risk. “We shed blood to take the word ‘Grexit’ away from the mouths of foreigners, and SYRIZA is bringing this word back to their mouths,” he said in a speech late last year.

It seems Samaras is getting help in this campaign from Berlin. By 2012, Merkel had decided Greece must be kept in the eurozone to mitigate the risk of a “contagion” effect that could hasten the departure of other members and threaten the common European currency. This position implied Greece had some leverage, because its exit would hurt Germany and other eurozone members, as well. Now, according to the German news magazine Der Spiegel, Merkel appears willing to accept a Greek exit, and her government is preparing for that possibility. Officially, of course, Berlin’s policy hasn’t changed: It wants to keep the eurozone intact. But it’s hard to read the unnamed “German officials” who spoke to Der Spiegel and not conclude that Germany wanted to send a message to SYRIZA that Berlin will call its bluff if Athens demands onerous concessions or scuttles austerity.

Tsipras publicly scoffs at the possibility that Greece will be forced to leave the eurozone. “We are through with the possibility of a Grexit, and there is only a Samaras-exit,” he has said—a nifty bit of sloganeering that has failed to soothe the nerves of Greeks who worry a SYRIZA victory will result in tumult between Greece and its creditors. Tsipras has tried to lessen those fears. The closer he gets to power, the softer his rhetoric has become. Only six months ago, says Economides, it looked like a SYRIZA victory would result in a Grexit. “Now they’ve talked their way out of that corner, and they’re leaving it open that they’ll do their utmost to stay in the eurozone,” he says.

Can urban planning suck the life out of your city?

It can if done poorly

London is gloriously un-plannable and horribly unplanned. From the Romans to the Romanians, the immigrant tribes who now call themselves English have been drawn to our uniquely cosmopolitan capital. This heterogeneous cultural mixture may help to explain the lack of appetite for plan-led “improvements” or urban reshaping. There is no common cultural foundation upon which to create a formal grand plan.

On my bedroom wall hangs an artist’s perspective of the plan Wren touted for the City after the Great Fire of 1666, fleshed out with buildings of classical design, looking like a beaux arts continental city. It is the first thing I see when I wake every morning and provides a constant reminder of the dangers of “master-planning”. If Wren, or any other planner, had had their way London would have ended up like Paris, Bath or Milton Keynes – architecturally inspired, but difficult to adapt to changing and unforeseeable future needs. Paris is formally planned, lacking in cultural diversity and inward-looking – no one can become a Parisian. London is unplanned, culturally diverse and a world business centre – anyone can become a Londoner.

Of course un-planning only takes you so far as the author continues.  Without planning (more specifically, land use restrictions), your entire city will suffer.

But while gloriously un-plannable the capital needs to be loved if we want to avoid the phenomenon of “lights-out London”, with homes just used as boxes for spare cash. It cannot survive without careful management and subtle control. Left to untrammelled market forces it will become an unstoppable nuclear reaction. George Osborne has claimed our dizzying house price inflation as his miracle of “economic growth”. Long gone are the days when planning was the bag of a politician of intellectual calibre, such as Michael Heseltine.

He goes on

Workers and residents want comfortable accommodation near the ground, with attractive spaces and facilities close at hand. Manhattan, the City and Canary Wharf can justify building office towers because their land area is constrained and demand for commercial space high. Office towers can be built in tight, sustainable clusters. This minimises their environmental impact and maximises their economic advantage – if they are serviced by a high-capacity public transport system.

The same does not hold true for housing. The highest density residential neighbourhood in London is Chelsea, which is gloriously free of towers. In the 1970s, the Greater London Council created some of the highest density housing estates. These six- to eight-floor redbrick developments were built around the edges of their site, leaving attractive central gardens. Lillington Gardens, in Vauxhall Bridge Road, is a fine example, beautifully maintained and highly popular with its residents.

A residential development in Central London is now likely to make four to six times more profit than an office scheme. Without planning control, much-needed offices have given way to piles of “safe-deposit boxes” rising across the capital. These towers, many of dubious architectural quality, are sold off-plan to the world’s “uber-rich”, as a repository for their spare and suspect capital. The purchasers are attracted by London’s rocketing residential prices, born of our unusual fixation on home-ownership. But many chose not to live here.

Rented housing is a much more efficient use of scarce urban land, because people only rent what they need. London’s house price inflation is also being fuelled by that “buy-to-let” property boom, which has aggravated the situation by reducing the security of tenants. We need an expanded, professionally managed, residential rental sector with dependable tenant security if we are to have any chance of addressing London’s housing crisis. This would provide equal scope for development investors and the construction industry but also provide Londoners with what they need – not just a global financial laundry cum bank vault.

The Treasury now controls the policies, delighting in the destruction of the last tools of planning. The Use Classes Order has been neutered to let offices, and soon shops, be turned into homes without planning permission. Rather than stimulating the reuse of empty buildings, this measure has seen the rapid disappearance of much-needed office accommodation in prime locations. Without land-use control, planners are powerless.

Mayor of Glendale, host of the Super Bowl, doesn’t get a ticket to attend Super Bowl

From the New York Times

Jerry Weiers lives less than two miles from University of Phoenix Stadium, where the New England Patriots will play the Seattle Seahawks in the Super Bowl on Sunday. Weiers also happens to be the mayor of Glendale.

Yet as politicians, chief executives and tens of thousands of well-heeled fans rub shoulders that day in the stadium in Glendale, a western suburb of Phoenix, he plans to watch the game on television in his living room, because he has not been offered a ticket.

“It was on my bucket list, but it’s not going to happen,” Weiers said. “If I had my druthers, I’d rather be in the stadium. I’ve had people say that if I was a team player, I might have gone to the game. But I’m a team player for my city.”

Weiers is not shy about making that point, so he is not surprised that he was snubbed. Critics have called Weiers ungrateful because the Pro Bowl and the Super Bowl will draw thousands of visitors to his city, and some of them will visit restaurants and hotels there. Glendale will also receive lots of free advertising during game broadcasts, though a vast majority of people visiting Arizona for the Super Bowl will visit the city only on game day.

James Cassella, the mayor of East Rutherford, N.J., was also criticized after he complained last year that his borough had been overlooked even as the Super Bowl was played at MetLife Stadium there.

But the friction in Glendale is acute because the city has a reputation for betting big on sports — and paying a price for it. In the last decade, the city spent hundreds of millions of dollars to build a hockey arena for the Coyotes and a spring training complex for the Chicago White Sox and the Los Angeles Dodgers.

The hope was that the facilities would prompt residential and commercial development. But when the recession hit in 2008, the Coyotes went bankrupt, the mall next to the arena foundered, and the city was overwhelmed by its debt payments and was forced to slash public services.

“The city of Glendale is the poster child for what can go wrong” when a city invests heavily in sports, said Kevin McCarthy, the president of the Arizona Tax Research Association. “You don’t want to be building stadiums and not be able to hire police officers.”

Glendale is by no means the first city to have sports facilities turn into albatrosses. Cincinnati and Miami, to name just two, built stadiums for wealthy owners in deals that backfired.

But the scale of spending in the city of 230,000 residents is unique. According to Moody’s Investors Service, Glendale’s debt is equal to 4.9 percent of its tax base, nearly four times the national median and twice the average rate for cities in Arizona. More than 40 percent of the city’s debt is dedicated to paying off sports complexes.

What the NFL does to Super Bowl host cities is a crime.  NFL owners want to host a big party and the taxpayers pay for it.  It is insane.

As for his Super Bowl ticket?

Whether that attitude gets Weiers invited is another question. Cassella, the East Rutherford mayor, said that after stories surfaced that he, too, had been unable to get a Super Bowl ticket, Jim Irsay, the owner of the Indianapolis Colts, invited him as his guest. John Mara, an owner of the Giants, sent him a parking pass.

Will Saskatchewan Fall into Recession?

Will Saskatchewan experience a recession because of falling oil prices?

The Conference Board of Canada predicts this drop will cause Alberta to slip into a recession by the end of the year. Jeff Rubin, the author of “The End of Growth” and former chief economist of CIBC World Markets believes the dip in the sector could affect Saskatchewan as well, though not as seriously.

“I don’t expect Saskatchewan or Newfoundland to be as adversely affected as Alberta,” Rubin said.

“But it’s going to impact the economy, it’s going to impact tax revenues. Governments are going to be challenged in the sense that if they don’t challenge spending, they’ll see their deficits go off side.”

It could also affect property prices.

The Conference Board of Canada predicts that Alberta will slip into a recession before the end of the year. Rubin echoes that warning. He said Alberta could experience its worst recession since the late 1980s.

At the end of the day, Saskatchewan will be okay because we have what the world needs.  It may not be as great as it was in 2009 but we will be okay.  That being said, we are so reliant on commodity prices that these kind of dips are going to impact us forever with no way out.  In that way the new Saskatchewan under Brad Wall isn’t a lot different than the old Saskatchewan under Grant Devine or Roy Romanow.  Like the rest of the world, the global economy will always have a big impact on us for good or for bad.

Cam Broten has said before that he wants more eggs in more baskets.  I think we all do in Saskatchewan but man is it hard to do.  I posted before about Alberta’s struggles in diversifying their economy and the same thing has happened here.  I agree with diversification but we are a province of a million people and there are going to be times that the world economy conspires against us and makes it really hard.  This is one of those times.

What is Obama’s Legacy?

New York Magazine asked 53 historians what Barack Obama’s legacy will be

Almost every respondent wrote that the fact of his being the first black president will loom large in the historical narrative — though they disagreed in interesting ways. Many predict that what will last is the symbolism of a nonwhite First Family; others, the antagonism Obama’s blackness provoked; still others, the way his racial self-consciousness constrained him. A few suggested that we will care a great deal less about his race generations from now — just as John F. Kennedy’s Catholicism hardly matters to current students of history. Across the board, Obamacare was recognized as a historic triumph (though one historian predicted that, with its market exchanges, it may in retrospect be seen as illiberal and mark the beginning of the privatization of public health care). A surprising number of respondents argued that his rescue of the economy will be judged more significant than is presently acknowledged, however lackluster the recovery has felt. There was more attention paid to China than isis (Obama’s foreign policy received the most divergent assessments), and considerable credit was given to the absence of a major war or terrorist attack, along with a more negative assessment of its price — the expansion of the security state, drones and all. 

Alberta has already tried to diversify it’s economy. It failed

From the Calgary Herald

As for policy, the Alberta government tried to diversify the Alberta economy in a deliberate fashion back in the 1980s and early 1990s.

Starting under then Premier Peter Lougheed and also under his successor, Don Getty, the provincial government provided loans, loan guarantees and equity stakes to companies in the non-energy sector.

In one example, the provincial government backed “made in Alberta” banks, trust companies and investment firms. After the early 1980s recession and then a mid-decade collapse in oil prices (to $10.25 a barrel in April 1986, down from $26 in December 1985), Alberta’s real estate values also plummeted. That took down many of those same provincially guaranteed financial institutions, themselves heavily invested in real estate.

The price tag to the provincial government for that diversification effort was $1.8 billion, for everything from failed loan guarantees to partially covered consumer and investor deposits.
In another diversification attempt, the province also loaned, guaranteed and took equity partnerships in everything from a forestry company to a meat packing plant, a provincial bitumen upgrader, a waste treatment plant and a high-tech company. By the early 1990s, defaults and foregone capital investments from all of the above cost the province $2.2 billion — in addition to the $1.8-billion financial sector collapse.

These efforts didn’t help Albertans adjust to a new reality or diversify the economy. It was simply activist industrial policy, where governments pick winners and losers. The latter cropped up more regularly than the former.