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Newsletter. Issue 2009-06. March 14, 2009

 
 
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Newsline Canada

U.S. Downturn Dragging World Into Recession
Report Says Global Economy Will Shrink for First Time Since 1940s

By Anthony Faiola | Monday, March 9, 2009; A01
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/08
Excerpts from: Washington Post Staff Writer


The world is falling into the first global recession since World War II as the crisis that started in the United States engulfs once-booming developing nations, confronting them with massive financial shortfalls that could turn back the clock on poverty reduction by years, the World Bank warned yesterday.

The World Bank also cautioned that the cost of helping poorer nations in crisis would exceed the current financial resources of multilateral lenders. Such aid could prove critical to political stability as concerns mount over unrest in poorer nations, particularly in Eastern Europe, generated by their sharp reversal of fortunes as private investment evaporates and global trade collapses.

In its report, released ahead of a major summit of finance ministers in London this week, the World Bank called on developed nations struggling with their own economic routs to dedicate 0.7 percent of the money they spend on stimulus programs toward a new Vulnerability Fund to help developing countries.

The report predicted that the global economy will shrink this year for the first time since the 1940s, reducing earlier estimates that emerging markets would propel the world to positive growth even as the United States, Europe and Japan tanked. The dire prediction underscored what many are calling a mounting crisis within a crisis, as the downturn that started in the wealthy nations of the West washes over developing countries through a pullback in investment, trade and credit. Despite the United States' position as the epicenter of the crisis, investors are flocking to U.S. Treasury bills and the dollar, squeezing developing nations out of global credit markets.

"We need to react in real time to a growing crisis that is hurting people in developing countries," World Bank President Robert B. Zoellick said in a statement. Action is needed by governments and multilateral lenders "to avoid social and political unrest," he said.

The report said that 94 out of 116 developing countries have been hit by economic slowdowns. The World Bank projected that the economic crisis will push around 46 million people into poverty in 2009 through job and wage cuts, as well as declining flows of remittances, the money that foreign workers send to their families. Net private capital flows to emerging markets are plunging, set to fall to $165 billion this year -- or 17 percent of their 2007 levels. Falling demand in the West is sparking the sharpest drop in world trade in 80 years, sending sales of the products and commodities of poorer nations spiraling down, the report said.

That decline is touching off a wave of job losses. Cambodia has lost 30,000 jobs in the garment industry. In India, more than half a million jobs vanished in the last three months of 2008, including cuts in the gem, jewelry, auto and textile industries, according to the World Bank.

As a result, the report estimates that at least 98 countries may have problems financing at least $268 billion in public and private debt this year. It noted a worsening in market conditions could raise that figure as high as $700 billion. Additionally, only one quarter of vulnerable developing countries, the World Bank said, have the ability to launch their own stimulus programs or to independently finance measures such as job-creation or safety-net programs.

To help them, multilateral lenders will need to dig deep. The World Bank remains well financed and is positioned to almost triple spending to $35 billion this year. But it warned the scope of the need in the developing world will exceed the combined ability of major multilateral lenders, and it called on governments in major nations and the private sector to pitch in more.

For instance, its sister organization, the International Monetary Fund, recently received $100 billion more from Japan but is still asking more affluent nations to come up with an additional $150 billion to replenish its rapidly diminishing funds. While the World Bank aims to reduce global poverty largely through long-term projects in the developing world, the IMF is charged with offering bigger, more immediate bailouts to countries on the verge of economic collapse. The list of countries fitting that description has soared in recent months.

In November alone, the IMF parceled out $50 billion to nations in crisis -- the most the institution has ever spent in a single month. With more nations, particularly in Eastern Europe and Central Asia, facing serious trouble, the IMF is preparing to hand out tens of billions more. It is hoping to raise more funds from Western nations and other cash-rich countries such as China and those in the Middle East.

The concern now, however, is that the scope of the crisis may be so vast that even an extra $150 billion may not enough. Some fear that nations in Western Europe such as Austria, Ireland and Spain -- believed to have graduated from IMF lifelines decades ago -- may soon require bailouts, taking funds that would have been spent on poorer nations. It could also prove difficult to raise more money from hard-hit countries including the United States and Britain, where politicians and citizens may decide that charity begins at home.

"I'm worried about what happens when you see that a Greece or an Ireland that might need bailouts," said Simon Johnson, an MIT economics professor and former IMF chief economist. "Where is the money going to come from?"

 

Battered Canadian economy needs stimulus spending now:
Finance Minister Jim Flaherty says

Fri Feb 27, 4:30 PM | By The Canadian Press
http://ca.news.yahoo.com/s/capress/090227/national/flaherty_stimulus


OTTAWA - Finance Minister Jim Flaherty says the Canadian economy has fallen off the table and needs a free hand in speeding through $3 billion in emergency stimulus. The finance minister predicts Monday's report from Statistics Canada on GDP will show that the economy contracted significantly during the fourth quarter of 2008.

He says that unless he can start injecting stimulus into the economy starting on the first day of the new fiscal year, April 1, Canadians will suffer more pain than is necessary. The minister has asked Parliament for the right to spend $3 billion of the budget's stimulus starting in April with little oversight on how the money is spent.

He concedes that increases the risk of mistakes, but that Canadians cannot wait for the normal procedures to be followed.

 

83,000 Jobs Lost in Canada February- Ontario loses 35000
February 2009
http://www.statcan.gc.ca/daily-quotidien/090313/dq090313a-eng.htm

Employment fell for the fourth consecutive month in February (-83,000), bringing total losses since the peak of last October to 295,000 (-1.7%). The February employment decrease pushed the unemployment rate up 0.5 percentage points to 7.7%.

All of the employment losses in February were in full-time (-111,000), while part-time employment edged up slightly. This continues the downward trend in full-time employment observed since October. Part-time employment has shown only a marginal increase over the same period.

In February, the largest decline in employment occurred in Ontario (-35,000), followed by Alberta (-24,000) and Quebec (-18,000). Employment in Ontario fell by 35,000 in February, mostly in construction and finance, insurance, real estate and leasing. This pushed the unemployment rate up 0.7 percentage points to 8.7%, the highest since April 1997. Since last October, the province's unemployment rate has risen by 2.0 percentage points, with increases concentrated in southwestern Ontario.

Since last October, just over half of the country's total employment losses have occurred in Ontario, well beyond the province's 39% share of the total working-age population. Employment in the province fell by 160,000 during this period, with the largest decreases in manufacturing; business, building and other support services; and construction.

Men aged 25 to 54 were particularly hard hit by February's employment decline (-66,000). Since the start of the labour market downturn, employment among core-age men has fallen by 170,000 (-2.7%). Employment among 15 to 24 year-olds also continued to trend down in February (-29,000). This latest decline brings total losses since October to 104,000 (-4.0%), the fastest rate of decline of all age groups. The unemployment rate for youths was 14.2% in February, up 2.0 percentage points from last October.

A decrease of 43,000 in construction accounted for over half of the employment decline in February. There were also losses in professional, scientific and technical services; educational services; and natural resources. The only industries with gains in February were manufacturing and agriculture.

In February, the increase in average hourly wages was 3.9% compared with 12 months earlier. The most recent year-over-year increase in the Consumer Price Index was 1.1%.

 

Child poverty on the rise in Peel
Friday February 27 2009
Peter Criscione
http://www.northpeel.com/printArticle/65674


Peel has outpaced every other municipality in the Greater Toronto Area with respect to the number of children living in poverty

Appearing before region council, Peel Children?s Aid Society executive director Paul Zarnke presented startling data on poverty in Peel.

Zarnke warned local rates of child poverty are growing at an alarming pace, and revealed the number of poor children in Peel has jumped 51 per cent since 1997. ?There are some disturbing trends in our community that we need to better understand and assess,? Zarnke said.Information presented by Zarnke on child poverty comes courtesy of ?Greater Trouble in Greater Toronto?, a poverty report recently published by Toronto Children?s Aid.

The report shows substantial increases of poverty in communities outside Toronto particularly in Peel and York regions, with the latter municipality boasting a 44 per cent jump in child poverty in over a decade.

Zarnke noted Mississauga saw child poverty reach 21 per cent in 2005, up from 12 per cent in 1990. Brampton followed closely behind at 18 per cent, up from 10 per cent in the same period.
In comparison, child poverty rates in Oakville hit 11 per cent in 2005, up from six per cent in 1990 while Toronto reached 32 per cent from 24 per cent.

Markham and Richmond Hill increased from eight to 20 per cent and nine to 18 per cent respectively.

?Poverty has shifted from Toronto to the GTA suburbs,? said Zarnke adding ?Peel stands alone in terms of the rate of increase in child poverty.?

Zarnke said poverty has risen one per cent a year between 2000 and 2005.

The median household income in Peel also dropped by more than six per cent in that same time frame. Currently, 15 per cent of Peel?s population (167,000 people) lives below the low income cutoff line with 71,000 children living in poverty. Peel Region has grown by more than 30,000 people each year in the last several years (many being new Canadians) and services geared to helping residents in need are struggling to keep up.

The report also revealed Peel Region receives one third of the funding that other municipalities get to provide these services, which infuriated local politicians.

?How is it that the families in this region are living with one-third of the money that families (in other communities in Ontario) are getting? It?s alarming, it?s sad and it?s wrong,? charged Brampton Mayor Susan Fennell. ?We as regional council need to step up our advocacy for fair share for Peel. ?Our colleagues (in other municipalities) don?t share this same under funding situation so we need to have a Peel-specific plan that keeps this issue front and centre.?

Mayor Fennell suggested the mayors of Peel?s three member municipalities arrange a meeting with Ontario Premier Dalton McGuinty whereby they would advocate for Peel. The province introduced legislation this week that will aim to reduce child poverty by 25 per cent in five years.
Zarnke called on council to press the province to act decisively on its poverty agenda and provide adequate and equitable funding for services provided locally.

 

Housing Starts Decrease in February
http://www.cmhc.ca/en/corp/nero/nere/2009/2009-03-09-0815.cfm

OTTAWA, March 9, 2009 ? The seasonally adjusted annual rate1 of housing starts declined to 134,600 units in February from 153,500 units in January, according to Canada Mortgage and Housing Corporation (CMHC).

?Increased listings and reduced sales in the existing home market continue to impact the new home market,? said Bob Dugan, Chief Economist at CMHC?s Market Analysis Centre.  The seasonally adjusted annual rate of urban starts decreased 14.9 per cent to 107,800 units in February. Urban multiple starts decreased 17.5 per cent to 63,300 units, while urban single starts fell 11 per cent to 44,500 units in February.

February?s seasonally adjusted annual rate of urban starts moderated in all of Canada?s regions except Atlantic Canada, where urban starts increased by 10.8 per cent. Urban starts fell by 19.6 per cent in Quebec, 14.4 per cent in Ontario, 19.4 per cent in the Prairies, and 12.8 per cent in British Columbia.

 

Let us go to St Francis Xavier's birthplace: Pope
Published : March 07 2009
http://www.indiancatholic.in/news/storydetails.php/11419-1-12


PAMPLONA, Spain (Zenit.org): Benedict XVI is urging faithful going to the birthplace of St. Francis Xavier, patron of the missions, to make their pilgrimage a faith-filled event.

The Pope affirmed this in a message through Cardinal Tarcisio Bertone, his secretary of state, addressed to Archbishop Francisco Pérez González of Pamplona. The text was published in the Spanish magazine Ecclesia. He encouraged the participants of the "Javieradas," pilgrimages going to the saint's birthplace according to the tradition held every year in early March, to "imitate this great missionary, who went across the world spreading the Gospel."

The Pontiff noted that the pilgrimage must be lived "as an opportunity to strengthen the faith, to increase the commitment to be consistent with it at all times and to increase the generosity to proclaim it to others, as true witnesses of Christ before today's world."

Invoking the intercession of the Virgin, he said that, "with her maternal tenderness, she will prepare the hearts of all the participants to receive the grace of God with joy." At the end of the message, the Holy Father imparted his apostolic blessing on the pilgrims. The "Javieradas" are two pilgrimages undertaken on two consecutive Sundays around the Novena of Grace dedicated to St. Francis Xavier. This year they will take place on March 8 and 14.

This year, the archbishop of Pamplona dedicated his traditional message to a comparison between the evangelizing work of St. Francis Xavier and St. Paul, given the Pauline Jubilee Year, and invited the faithful "to take seriously the new evangelization" proclaimed by the recent popes.

The motto for this year's pilgrimage is "Missionaries Like Paul and Xavier: Woe to Me If I Do Not Evangelize!"


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