Labour Minister Lisa Raitt responds to a question during Question Period in the House of Commons on Parliament Hill in Ottawa on Tuesday, June 14, 2011.Sean Kilpatrick/The Canadian Press
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Ottawa and the unions Is Ottawa setting a new standard in labour relations?
Labour Minister Lisa Raitt plans back-to-work legislation to get striking members of the Canadian Auto Workers union back on the job at Air Canada and members of the Canadian Union of Postal Workers, who have been locked out, back to the post office.
She's using a vague argument, saying the government is concerned about the impact on the recovery, and claiming that Canadian voters gave the Tories a majority to protect the economy.
What's interesting here is that the strike against Air Canada, and what began as rotating walkouts at Canada Post, were not having a huge impact on the public, and one has to question how they were damaging a fragile economic rebound. No doubt they're hurting the airline and the post office, but the broader economy? That's doubtful.
Unions have the right to strike, and management the right to lock out. The United Auto Workers union, which used to include Canadian workers, was born during the Great Depression to fight for workers in an economic downturn. How do other negotiations proceed under such a cloud?
"it does not appear that the AirCcanada strike is disrupting services," George Smith, a fellow at the Queen's University School of Policy Studies, said yesterday. "The company is still operating and airports are still functioning, with a few delays here and there."
Mr. George said he wished the government would not have stepped in, and instead let the unions and management sort it out.
"In some cases the threat of back to work legislation is an impetus for the parties to solve it themselves rather than letting someone solve it for them in a way they might not like," he added.
Perhaps Ms. Raitt is wielding the newly found power of the Conservatives a little harshly.
- Strike two: Ottawa steps in to end Canada Post labour dispute
- Air Canada workers dig in heels despite back-to-work threat
- Ottawa vows to legislate an end to Canada Post labour dispute
Greece rattles markets The political and economic turmoil in Greece is rattling financial markets again today, amid growing fears Athens will have to default on its debts.
Prime Minister George Papandreou is naming a new Cabinet today and calling a confidence vote, and two key deputies have quit. Greece has been the scene of ongoing demonstrations against austerity measures, which have not yet been approved in Parliament and which are tied to conditions of the bailout by the European Union, European Central Bank and International Monetary Fund.
As CMC Markets analyst Michael Hewson put it today, markets are fixed "on the policy paralysis in the euro zone as politicians fiddle for a solution while Greece burns under the glare of austerity and protest." Rumours and speculation abound today, not only about Greece but also about Ireland.
"As things stand talk of the bailout fund being doubled in size ... a Greek government reshuffle, and Greek PM Papandreou offering to resign, doesn't offer a stable back drop for investors, and could complicate matters with respect to a resolution in the short term."
Borrowing costs in the periphery countries of the euro zone are stunningly high, and markets fear the the potential fallout throughout the 17-member monetary union in the event of a default. Euro policy makers have been unable to find a solution, particularly given a standoff between politicians and the ECB, which is opposed to any type of debt restructuring.
Policy makers rushed to reassure investors. Olli Rehn, the EU's point man on economics, said the EU and the IMF would allow Greece to tap the next tranche of its bailout money next month.
French President Nicolas Sarkozy urged unity today, warning that "we have to leave the national fights behind us to find our sense of common destiny again." And there are dire warnings from observers across the globe.
"Greek two-year yields soared again overnight and have risen by about seven percentage points over the past week to almost 30 per cent while 10s approach 18 per cent," said economists Derek Holt and Karen Cordes Woods of Scotia Capital.
"The combined effects of a likely no-confidence vote in Greece that will make restructuring more difficult and comments by Ireland's finance minister calling for bond holders to share in haircuts are hitting yields across much of the euro zone. Greece continues to face high odds of multiple defaults in the years ahead, sparking contagion risk through bond, [credit default swap] and inter-bank funding markets. The spillover effects through financial markets could well serve to take many central banks out of the picture for 2011."
Markets are sinking, partly in response to the growing Greek crisis, though there are also concerns China is poised to hike interest rates again.
- Acropolis Now: Fears over Greek default rattle investors
- Greek PM vows to stay, lead exit from debt crisis
- Greece lawmakers quit in austerity uproar
- Ireland revives pledge to go after bondholders
- Eric Reguly: In the EU, armoured cars drive over the taxpayers
- The roots of the Greek tragedy: bloated bureaucracy and tax evasion
Inflation, interest rates in spotlight Inflation in Europe dipped in May, but remains uncomfortably high for the European Central Bank, which has already signalled it plans to hike interest rates next month.
Throughout the EU, consumer prices climbed 3.2 per cent in May from a year earlier, a pace down only a smidgeon from the 3.3-per-cent annual pace in April. In the euro zone alone, the annual inflation rate dipped to 2.7 per cent from 2.8 per cent.
Costs in the euro zone were driven primarily by transportation, housing, and alcohol and tobacco. (No surprise on the last category. If you've got troubles like they do, you drink and smoke.)
India's central bank, which is battling far higher rates of inflation, boosted its key lending rate today for the 10th time in about a year, by a quarter of a percentage point to 7.5 per cent.
Emerging market researchers at RBC Dominion Securities said they expect further hikes in India later this year and early next.
Jobless claims dip New claims for jobless benefits among America's unemployed are heading in the right direction - down - but remain above the key 400,000 mark.
America is in the midst of a jobs crisis, and doesn't appear to be getting much better.
Initial claims fell last week to 414,000, while a four-week moving average showed them stuck at more than 424,500.
"No special factors were involved, and the trend is improving ... which is reassuring," said senior economist Jennifer Lee of BMO Nesbitt Burns. "However, corporations (large and small) are not going to hire in droves until they are certain that the economic recovery is on terra firma."
Housing starts climb There is, however, a bit of better news on the U.S. housing front, the place where the meltdown began.
Housing starts in the United States climbed 3.5 per cent in May to an annual rate of 560,000, and building permits increased by 8.7 per cent, to an annual pace of 612,000.
"Starts rose sharply in the west, with the rest of the country showing a mixed pattern," said Peter Buchanan of CIBC World Markets. "Notwithstanding May's increase, the longer term trend still just shows the sector bumping along the bottom. One positive note in the report was the stronger than expected showing by permits."
Bombardier loses out Reports today question the future of a Bombardier Inc. train plant in Britain after it lost out on a huge order.
Britain's rail minister named a group led by Siemens as the preferred bidder for the Thameslink project, which The Financial Times estimated is worth more than £3-billion. Bombardier was the other bidder in the running.
It's one of Britain's biggest train orders ever, the newspaper said, and today's decision will probably raise questions about the long-term future of the plant.
RIM in the spotlight Investors and analysts are eagerly awaiting first-quarter results from Research In Motion Ltd. after markets close today.
RIM reports amid increasing questions about the BlackBerry maker and fierce competition from iPhone maker Apple Inc. and Google Inc. , the father of the Android operating system.
Analysts expect RIM to report revenue of about $5.2-billion (U.S.) and earnings per share of $1.32. In late April, RIM slashed its profit outlook for today's report, saying it expected per-share earnings of between $1.30 a share and $1.37, blaming the new projection on a shift in its sales mix.
Analysts say they want a clearer view of RIM's competitive position.
"While the stock has sold off hard, we await clarity on how RIMM intends to fend off mounting competitive pressure," analysts Phillip Huang and Amitabh Passi of UBS said in a recent report on the BlackBerry maker, referring to the company by its U.S. stock symbol. "... RIMM's position appears incrementally weaker."
That followed an earlier report by the two analysts at the beginning of June, when they cut their 12-month price target on the stock by $15, taking it to $45 from $60 and maintaining their "neutral" rating.
With limited visibility on earnings power, increasing competitive threats, an un-compelling product refresh, and a management structure that, in our view, now appears sub-optimal (co-chairmen, who are co-CEOs, with one of the CEOs the CMO as well) we still foresee risks investing in RIMM stock at these levels," they said in the early June report.
RIM has signalled better times ahead, and it has many times come in with earnings above what the analysts expect. The UBS analysts say they're keen to see the company's outlook for the second quarter, and the second half of the fiscal year. And they're not alone.
The most recent report from ComScore Inc. showed that in the key U.S. market, RIM's share of mobile subscribers slipped to 8.2 per cent from 8.6 per cent in the three months ending in April. Apple's share, in turn, climbed to 8.3 per cent from 7 per cent.
In terms of operating systems for smart phones, RIM's market share fell to 25.6 per centfrom 30.4 per cent, while Apple rose to 26 per cent from 25.7 per cent. Google's share reached 36.4 per cent, up from 31.2 per cent.
- The Apple effect: Calls grow for a shakeup at RIM
- After RIM warning, all eyes on new product outlook
- RIM to roll out PlayBook internationally over next month
- Apple sets sights on cloud control
- Investors to RIM: Tell us a story
- Vox: RIM needs a software boost, not a share buyback
In Personal Finance today Change-of-use rules can trigger a taxable capital gain - but there are ways to sidestep or minimize that.
Lauren Templeton, the great-niece of the legendary investor Sir John Templeton, started investing at age seven.
Exchange-traded funds are taking off but advisers selling them are still few and far between.
In International Business today As the world's top investment bankers flock to Russia's second capital this weekend for the St. Petersburg economic forum, attention will once again focus on Dmitry Medvedev's efforts to transform Moscow into an international financial centre. Catherine Belton of The Financial Times reports.
From today's Report on Business