i am very impressed by Carney, and think we Canadians are very lucky to have a Bank of Canada Governor who understands the current world financial reality (along with having a PM who gets it … which is a unique combo in the world today)
Mark Carney gave a few members of the public an unusually candid glimpse into his thinking at a private dinner Wednesday night, during which he said people should not judge how well Canada emerged from the recession for years because the financial crisis is not really over.
Speaking at a fundraising event held by the United Jewish Appeal Federation of Greater Toronto, Mr. Carney, the Bank of Canada Governor, painted a stark picture of the global rebound. He also suggested that America’s deficit troubles – which he warned this week could threaten Canada’s economy – would probably not be addressed until after next year’s presidential election.
Those assertions are not particularly outlandish to anyone who has closely followed economic news on either side of the Canada-U.S. border. But the statements were more blunt than Mr. Carney tends to be when knows his comments are fair game for public consumption – which is why, despite the presence of economists and Bay Street types, the invitation to the dinner stipulated that the comments should be “off the record.”
To the central bank’s chagrin, one attendant failed to notice that condition until Thursday morning, moments after he e-mailed a synopsis of Mr. Carney’s refreshingly revealing remarks to a long list of clients.
“He doesn’t see the U.S. as addressing its fiscal issues until after 2012, and is concerned that the bond market isn’t sending America the signal that it needs to act due in part to huge central bank holdings of Treasuries,” Avery Shenfeld, the chief economist at CIBC World Markets, said in the widely circulated note.
“The tone was generally pessimistic on developed economy prospects, saying that we are still in the financial crisis (likely alluding to the hangover from fiscal stimulus in terms of sovereign debt, and the U.S. housing mess), and that judgments on how well Canada came through it should probably not be made until we can look back five years from now.”
Once he realized his mistake, Mr. Shenfeld asked those receiving his initial e-mail not to cite it. But the cat was out of the bag, and other economists at the session confirmed the account.
Mr. Carney has often said that a full recovery from the financial crisis and the global downturn will take many years, if not decades. Plus, given his repeated warnings about household debt in Canada and a comment earlier this week that “fiscal consolidation” in the United States must start now or trading partners such as Canada could be at risk, his caution on the domestic economy isn’t exactly shocking.
Another comment, that it will be a long time before there is “meaningful” monetary policy tightening in the United States, wasn’t exactly new, either, since most economists see the U.S. Federal Reserve staying on hold until the end of 2012 or later.
“At the end of the day it was a 99-per-cent repeat of what [Mr. Carney] has said in the past,” another economist who was at the dinner said in an interview.
Mr. Carney indicated in a speech Monday that he is increasingly worried about the potential impact on Canada’s economy should big trading partners fail to tackle their deficits and debts before borrowing costs spike