Does Canada really need high-speed rail?

Canada has been talking about a high-speed railway line for decades. You only have to visit Europe or Japan or China to experience the wonder of an ultra-high-speed train, but these things don't come cheap. And, in North America at least, they don't come quickly.

The current Alto plan for a high-speed rail link from Toronto to Ottawa to Montreal to Quebec City (possibly via Kingston) is about 1,000 kilometers in length, and is protected to cost between $60 and $90 billion. The fact that the estimated cost covers such a large range suggests that they actually have no clue how much it will cost. Alto, the Crown corporation tasked with developing the project, itself warns that these figures are "for planning purposes only and should not be considered as a project budget". As with every other large Canadian development project, cost overruns are all but guaranteed.

As for how long it will take to build, well, that's anyone's guess. Not much of any size gets built in Canada in less than 15 or 20 years. The experience of California's foray into high-speed rail is salient here: a line from Los Angeles to San Francisco (just over 600km) was proposed in 2008 but, eighteen years later, just a tiny stretch of track has been laid, with most of the rest still at the planning stage. Currently, projections are that a 260km stretch from Merced to Bakersfield is expected to be completed by 2032, but don't hold your breath.

The bottom line, though, is the bottom line: $90 billion (plus) is an awful lot of money for Canada. Think what just a part of that that kind of money could do for public transit in Toronto or Montreal. Think what it could do towards eliminating poverty or propping up ailing Trump-tariffed businesses. 

Many politicians, though, seem excited by such a large-scale "nation-building project". It's often pointed out that Canada is the only G7 country without high-speed trains (although, as mentioned, America's is marginal). But is this really the best use of taxpayers' money? Do we really want to spend $90 billion - and it would probably end up costing much more than that, it always does - to save a few wealthy businessmen an hour or two on their commute, or to cannibalize customers from domestic airlines. 

Because, make no mistake, the cost of a ticket will probably put it outside the budget of the average Canadian (or the average tourist, for that matter), so it could end up as the biggest white elephant in Canada, the ultimate vanity project of the kind that we regularly mock other countries for undertaking. Canada's population is much less concentrated than France's or Japan's, and the distances are greater - what works over there won't necessarily work over here. Maintenance in the Canadian Shield terrain, and through those long hard winters, is also a differentiating issue.

I don't buy the argument that it is somehow miraculously going to fix traffic congestion and reduce our carbon footprint. It will not suddenly become the no-brainer option for travelling from Toronto to Montreal or Ottawa to Quebec City - it will be too expensive for that, for one thing, and will probably only appeal to people who currently take the train anyway. Neither will it magically boost GDP and create national prosperity, let alone improve access to housing and jobs and - most improbably - advance reconciliation with Indigenous peoples, all of which Alto is promising.

Yes, high-speed rail is cool, and yes, it would be nice. But can we really justify jt? Call me small-minded and anti-development, but I think not. And, just think, $90 billion!

Charm pricing is starting to lose its charm

Ever wondered why we still see things priced at $1.99, or $9.99 or $59.99? I mean nobody really thinks they're getting a bargain, do they?

Well, according to this CBC Cost of Living episode (about 12½ minutes in), some companies, including Walmart and Loblaws, are finally starting to move away from so-called "charm pricing", and rounding up to the nearest whole dollar. It's something I've seen when visiting the UK for some years now; here in Canada, though, it's pretty new.

Charm pricing was brought in decades ago now, the theory being that, given that we read from left to right, we probably don't pay as much attention to the final digits as we do to the earlier ones. It was a way to pull the wool overt ht eyes of its customers.

But, even if that ever actually worked, people are really over it nowadays; they would much prefer to see some price transparency. A store charging $5 instead of $4.99 seems more trustworthy to many people today. It also makes it easier for people to add up their potential bill total in their heads, and, in these days of tight budgets and runaway inflation, that's important. Plus, stores get to keep that extra penny, and all those pennies add up. Win-win.

Any trend toward change is still in its early days, though. Charm pricing will doubtless continue for a good while longer, because, they say, "consumers are irrational". Do they mean "stupid"? "Easily-fooled"? Don't bet the farm on it.

Next up: standardized unit pricing. Now wouldn't THAT be nice.

I'm OK with Canada's modest AI ambitions

Call me a Luddite, but I can't help but be extremely suspicious of the whole world's reckless infatuation with Artificial Intelligence (AI). I'm not saying the whole world is wrong and I am right - well, actually, I kind of am ... - but I just have this feeling that the level of obsession most people are exhibiting over it can't be healthy, and that we are likely headed down a dark rabbit hole of our own construction.

I can't help but feel that, much like 5G communications, we are adopting a huge, expensive and world-changing technology, just because it's there - because we can - not because we need it. AI adoption, and the number of huge, power-hungry data centres under construction, is not equivalent to economic output, or even productivity, although you'd be forgiven for thinking so from the media attention. 

AI is currently keeping the world's stock exchanges at near record levels, in spite of all the other crap happening in the world, but not for any good logical reasons. Almost all of the big IPOs hitting the stock exchanges are tech related (mainly specifically AI-related). Call it a bubble or whatever other label you prefer. The markets have almost completely decoupled from the economy, and are largely running on the fumes of potential AI profitability. I've seen this movie before; it doesn't end well.

I read so many articles bemoaning Canada's sluggish uptake of AI (here's just one example) compared to our peers. Well, usually compared to the US. 30% of the US's real GDP growth now comes from private investment in IT equipment and software, compared to 5% in Canada, we are told. Data centre construction has increased by 180% in three years in the USA, while Canada doesn't even separate the category out from other spending on transportation, utilities and communications buildings. But is that such a bad thing. Who has it right?

Indeed, there is outright opposition to US-style unregulated expansion of AI data centres (except in US-style unregulated Alberta). Manitoba recently nixed a huge data centre development because, as Premier Wab Kinew explained, "there's a big threat to the environment and not much benefit to.the economy". Well, he's got a point. A similar process played out in Hamilton, Ontario, where the city council voted to pause all data centre development in the area, and most other municipalities in Canada are studying their decision with great interest. (For what it's worth, even in the US-style US, the rollout of data centres is meeting with increasing grass-roots push--back, from an unlikely alliance of Democrats, Republicans, environmentalists and just concerned citizens.)

Canada does have many AI data centres, hundreds of them, particularly in Quebec, and many more are being built as we speak. It's not like we have our heads completely in the sand. Do we have enough? Well, how long is a piece of string?

The huge bet south of the border on AI, and the all those data centres it relies on, is just that: a bet. The future gains from AI we keep reading about may not actually unfold as predicted, which would leave states, local governments and electricity payers on the hook for many decades.

Canada, generally speaking, is much more environmentally conscious than the US (despite Mark Carney's efforts to change that), and the environmental footprint of AI data centres has come under increasing scrutiny of late. AI requites massive electricity consumption, high water usage for cooling data centres, and heavy raw material extraction for hardware. It's no surprise that some of the strongest opposition to AI and, on a more local level, data centres is from an environmental perspective.

Another element, though, is the increasing Canadian distrust of AI: trust in AI is significantly lower in Canada than the global average, particularly as regards potential job losses. Data centres are the physical embodiment of AI and its perceived threat to society. That distrust of AI extends to the business community in Canada to some extent, which is investing much less in AI than the US.

Once again, is this necessarily a bad thing (as it is usually portrayed)? Is the helter-skelter scramble in the USA actually the right call? The US may be much more conservative than Canada in most respects, but Canadian business tends to be quite circumspect and risk-averse, and that's not always a bad thing (look at how Canadian banks dealt with the 2008 financial crisis compared the Americans).

Here's another thing. An analysis by the Federal Reserve Bank of Minneapolis found that the computer equipment, batteries, switchgear, copper wiring, etc, needed for the US's AI rollout amounted to 23% of all US imports last year, increasing its trade deficit by roughly $200 billion. Canada's AI-related imports, on the other hand, remained pretty much consistent with previous years, and much more manageable.

So, who has it right? History will probably tell, but that doesn't much help today's planners. Mark Carney is making some moves to at least be seen to be doing something on AI, but even his strategy is pretty modest in the scheme of things. And, you know what? I'm OK with that. 

FIFA may have miscalculated in Canada

Not only is the upcoming World Cup not going to work out as beneficial to host cities Toronto and Vancouver as advertised, it might not even work out as well for FIFA as they had hoped.

The way these things usually work is: FIFA does pretty much whatever it wants and makes all its big money up front, while the host cities and their citizens carry all the risk and the expense. That's still how it works this time, except that FIFA's policy of charging top dollar for ticket prices may not be quite as effective as usual. FIFA's dynamic pricing policy has resulted in some of the most expensive World Cup tickets ever, and many Canadians are thinking twice about them (and the $17 beers and concession prices that seem to be double or even triple those in some US stadiums).

While Canada was hugely excited by the prospect of holding World Cup games at first, the bloom is off the rose somewhat of late. Less than a week before the first games, hundreds of tickets remain unsold for events that were once expected to be oversold many times over.

Unlike many another country, soccer here is popular but a distant third or even fourth love, after hockey, baseball and basketball. Both Vancouver and Toronto are overwhelmingly cities of immigrants, most of whom have brought their idolization of soccer with them to Canada. But, as a nation, our national pride is invested much more in hockey, even in baseball and basketball, than it is in soccer. Football is not a core part of our national psyche, as it is for so many other countries.

So, there is a certain subset of the population that is socccer-mad, and will pay whatever it takes to watch a world-class display of football, even if that might be Ghana v Panama or Senegal v Iraq. But, past that, the delirium starts to fade, and there has been push-back against what many perceive as FIFA's greed and insensitivitiy. Even bona fide fans feel they are being charged exorbitant ticket prices. Even local hotels are only at about 80% capacity, which is about the same as usual during summer months. (Or according to other stats, less than half full!) So, did FIFA miscalculate?

Embattled FIFA president Gianni Infantino claims that demand for tickets has been ten times that of the last two World Cups added together, but that doesn't seem to have played out here in Canada. Infantino claims that, "there are expensive tickets, yes, but there are also affordable tickets". The face value of the cheapest tickets to the opening game in Canada (the home team versus Bosnia & Herzegovina) starts at over C$1,000, which most Canadian fans (particularly recent immigrants) will find far from affordable. It feels to many residents like they are paying for the games, but still can't attend them.

One Toronto fan summed it up well: "I've given up, and at this point, I don't want to give my money to FIFA. I'm done with them. I get that, while they can control pricing, it feels like an affront to what makes football great: it's a sport for everyone. Accessibility ought to make it easier for fans - especially those living in the host cities - to see the games."

A "sports economist" from Concordia University explains that FIFA is in the business of maximizing its revenues, not of filling stadiums (and certainly not of providing a memorable experience for local fans). Sometimes it makes more commercial sense to sell high-priced tickets than to fill lower-priced seats. The practice from previous World Cup tournaments of making more tickets accessible to local residents has been supplanted this year by the more lucrative strategy of real-time variable pricing models, which it says "aligns with industry trends across various sports and entertainment sectors". As the sports economics prof puts it, "There is no competition, so they can behave in whatever immoral, unethical, improper way they want - unless fans are prepared to walk away." Well, it seems some fans at least have walked away. 

It's thought that, as the date of the first games approaches, the prices of the remaining tickets may drop drastically. But don't bet on on it. This is FIFA at the controls, after all. 

One other wild card in all this is that Ontario recently passed a law, just in time for the World Cup, that bans the resale of tickets at prices above the original face value. So, in theory at least, we shouldn't be seeing resales on StubHub or on FIFA's own resale platform at the kinds of ridiculous prices seen in some other jurisdictions. But ... FIFA is still in charge of those original face values. And regulation and policing of the new law is almost impossible, according to experts.

Meanwhile, FIFA continues to make PR mistakes, further alienating local people. It has banned reusable water containers at the eleventh hour, ostensibly for safety reasons, and only allows fans to bring in one small factory-sealed soft plastic disposable bottle of water. (This was a climb-down after the initial announcement that NO water bottles could be brought in.) After that, they can of course buy FIFA's own high-priced disposable bottled of water to deal with the high temperatures expected during the tournament. Toronto's environmentally-conscious council has complained loudly. 

And don't get me started on FIFA's new "hydration breaks": mandatory three-monute stoppage, one in each halfs  for the players to get a swig of water, something they always used to do during regulat stoppages for injuries and other game interruptions. Players are quite capable of keeping themselves hydrated; these are essentially "TV advertising breaks", and just another source of revenue for FIFA (an estimated $250 million in the USA alone.

FiFA as an organization has never been kess popular. There's even a "Reboot FIFA" campaign underway, looking to deliver "the largest single complaint FIFA will ever have received about the conduct of its senior officials", covering a range of issues including exorbitant ticket prices and the semi-official offering of a peace prize to a notorious war-monger.

For what it's worth, the venerable Sports Illustrated magazine has voted Vancouver the best of the 16 host cities, mainly for the stadium's central situation and accessibility, the good public transportation, the city's walkability, and it's mild weather. Surprisingly enough, Toronto came in at No.3, separated from Vancouver only by Seattle.

So, are we in a recession or not?

Why is it so hard to get a straight answer? Well, that's because it depends on who you ask, and what particular axe they have to grind.

The news that Canada is now in a "technical recession" has set political birds a-twitter, with Conservative opposition leader Pierre Poilievre squawking about the "Liberal recession" and the dire need for an immediate emergency debate in parliament. Mr. Poilievre, of course, is hysterical-complainer-in-chief, and will probably never amount to anything more than that. His whole job, as he sees it, is to expostulate that the sky is falling and that it is all the Liberals' fault, leaving Conservatives to hopefully conclude that it would all have been quite different had he been in charge. It's only a matter of time until Conservatives tire of his smarmy Grinch-like smile and his negativity.

But I digress...

Most non-conservatives and most economists of any (or no) political stripe have treated the news with much more nuance, cautioning that the idea of a "technical recession" (two consecutive quarters of negative GDP growth) is not actually that helpful, and not even an official label. Many economic institutes, including he widely-recognized traditional arbiters of recession-calling, the National Bureau of Economic Research in the USA, and the CD Howe Institute's Business Cycle Council in Canada, do not use that definition. 

Most economists are cautioning that the weakness in Canada's economy is not yet widespread or persistent enough to warrant the recession label. Even the Bank of Canada, which issued the news, warned against overreacting to the announcement. BoC governor Tiff Macklem was very clear about it: "We have not seen a significant braod-based decline in economic activity ... recession is not the word I woild use".

In the current case, real GDP by expenditure was actually pretty much flat over the last two quarters (Q4 2025 and Q1 2026). StatsCan produces many different variants of national growth statistics, but the one usually used for these purposes shows a 0.036% decline in Q1 2026, and 0.246% decline in Q4 2026. Annualizing the figures magnifies the quarterly changes somewhat to about 0.1% and  1% fall for both quarters, but these are all tiny percentages, well within the margin of error for a stat that often gets adjusted or revised in retrospect, as often happens.

Getting still more granular, it turns out that it was really only October 2025 and March 2026 that showed actual decreases in real GDP - growth was either flat or modestly positive for the four months in between. Early estimates for April 2026 also suggest quite a sharp rebound to 0.4% growth.

And pulling out for a slightly different view of things, real GDP per capita, which some say is a better measure of economic growth and productivity, actually expanded 0.2% in Q1 2026, after a tiny dip in Q4 2025, as the country's overall population shrank slightly. Tellingly, a year or so ago, Mr. Poilievre and other critics were focussed much more on GDP per capita; now, when it doesn't serve their purposes quite so well, they are downplaying it.

Recession is, to some extent at least, in the eye of the beholder. Remember the great non-recession of 2015? Towards the end of Stephen Harper's Conservative administration, Canada's GDP fell by 0.5% and then 0.8%. But the Conservatives of the day, with an election looming, "declined" to call it a recession, even of a technical nature - one euphemism was a "discrete sectoral downturn" - while the opposition Liberals of course insisted that it was most definitely a full-blown recession. After much deliberation, the CD Howe Institute ultimately ruled that that technical recession didn't qualify as a real recession because its impact was not broad enough.

According to CD Howe, the last real recession was 2008/9, often referred to as the "Banking Crisis" (although Canada did not experience any major bank failures, and it weathered the downturn much better than other G7 nations), with a deep but very short one - which I would have thought ruled it out as a recession, by their own rules) in March-April 2020, at the start of the COVID pandemic. Before that, we are talking about the early 1990s and then the early 1980s. Recessions are not very common, particularly in Canada.

So, what are we to conclude? You can berate statistics and damned statistics all you like, but the fact is that they can usually be manipulated to prove a point, any point. While it's clear that, in very general terms, Canada's economy is not particularly healthy - how could it be, with all the external pressures on it? - most economists and financial institutions (including, let it be said, the Business Cycle Council) are urging extreme caution on the use of the R-word. 

Sorry, Pierre.

Trump tries some new tariffs - well, why not?

The Trump administration is at it again with tariffs, this time against almost all of America's major trading partners, with the pretext being that they are not pulling their weight on preventing the importation of goods manufactured using forced labour, which unfairly disadvantages the USA.

After the US Supreme Court struck down Trump's "Liberation Day" tariffs (levied, illegally as it turned out, under the International Emergency Economic Powers Act), he needed to find another way to impose tariffs, because that seems to be the sum total of his economic policy. What his highly-paid lawyers and policy wonks came up with this time was to use Section 301 of the 1974 Trade Act to impose tariffs of 10%-12.5% on 60 countries (including Canada) that they say are not doing enough to enforce the import ban on goods produced using forced/slave labour (from Xinjiang, China mainly). Canada, however, should be largely protected from these tariffs due to its participation in the USMCA/CUSMA agreement.

It's a bit of a stretch, and it's hard to see the current US regime taking the moral high ground on ANYTHING. But, to some extent, in this area, they may be right. 

Canada does have laws around forced labour imports, and there are specific provisions built into USMCA/CUSMA which prohibit the importation of goods produced wholly or partly by forced labour. But enforcement does seem to be lax. While Canada has intercepted 50 shipments on suspicion of forced labour contraventions since 2020, just 2 were ultimately turned away. The Coalition Against Forced Labour has called Canada out on this, and auditors from PwC agree that enforcement has been far from perfect. This will all no doubt also come up in some detail at the USMCA renegotiations later this year.

I confess, the first thing that occurred to me after I heard the news about the new tariffs was, "I bet America doesn't enforce their forced labour rules any better than we do!" Former Liberal MP John McKay, who was involved in the original implementation of the Canadian laws on forced labour, notes that the US still allows private American firms to make exports using prison labour, and it does not adequately enforce its own laws on forced labour imports, such as the Biden-era Uyghur Forced labour Prevention Act.

Actually, though, the US does seem to be enforcing that specific law quite well, as well as the terms of the Tariff Act of 1930 insofar as they relate to the products of forced labour. Some 6,300 shipments were denied entry into the US in 2024 alone (although that was pre-Trump; figures for 2025 do not seem to be available).

That said, most people seem pretty sure that the Trump regime is not doing this out of moral indignation. They are doing it as "an excuse to impose the tariffs that they wanted to do anyway", as one European diplomat put it, adding that it's completely implausible that all these US trading partners are equally guilty - all 60 major trading partners appear to have failed to meet the bar the US has arbitrarily set - and there seems to be little or no proof being offered. Human rights groups also caution that, while the problem of forced labour does exist, the US tariffs are not the way to deal with it. 

I have looked previously at the whole issue of forced labour in Xinjiang, China - because that is essentially what we are talking about here -  and it is not as black-and-white an issue as it might appear. But the bottom line is, Trump is effectively using any justification he can to impose tariffs (because he's a "tariff guy", don't you know?), and if he can also engineer a hit on China at the same time, then all well and good.

These new tariffs cannot be imposed immediately, but must go through a period of public comment and review, starting with hearings in July. Given how many legal set-backs Trump has experienced in recent months, the tariffs are not the slam dunk they may have been even a year ago.

UPDATE

A new law proposed by the Liberals to placate Trump and his buddies on the matter of blocking imports produced with forced labour was tabled this week (mid-June), designating a list of specific goods, producers, countries or regions where there are "reasonable grounds to suspect" forced labour involved. The government maintains this was not in direct response to the Trump tariff threat, and that it had been innthe works since 2024, but the timing sure is propitious.

It all sounds a bit woolly, especially as the bill puts the onus on shippers to prove that their goods are free of forced labour components. How is that going to work, I wonder? Proving the absence of something is always fraught.

Potential investors in Spacex should be very wary

The IPO for Elon Musk's SpaceX is expected to be the biggest ever, and will convert it into an almost $2 trillion enterprise. However, potential investors might want to have a good look at the way the company is set up, and particularly how Musk is paid and how his share holdings work.

An IPO (Initial Public Offering) is the way that a private company transforms into a publicly traded company, and is the way that companies raise capital for expansion. It allows institutional and retail investors to get a piece of what they think will be an exciting and profitable venture. SpaceX (Space Exploration Technologies Corp, to give it its full name) may well be exciting - space! rockets! Mars! - although the profitability piece is much less certain.

And concerning Musk's position, investors should be pretty wary about investing in a company that has been expressly constructed around him in order to maximize his income and his control. The shares that will become available for ordinary investors at next month's IPO will be Class A shares that confer one vote each. What Mr. Musk has are Class B "super-voting" shares that carry 10 votes a share. Musk has 5.5 billion of these B shares, giving him around 85% of all votes. And he has those votes even though he doesn't technically have the shares in his hands until the company achieves some increasingly-unlikely targets, such as establishing a colony on Mars with a million inhabitants, launching high-powered data centres into space, etc. 

This set-up allows Musk almost complete control over the company, including an ability to appoint insiders to its board, to set his own compensation package, to insulate himself from shareholder lawsuits, etc. Investment experts say they have never seen anything like it, calling it "insane" and that the governance structure "freaks me out".

Caveat emptor, caveat emptor, caveat emptor!

Honda cancels EV plant just as demand atarts to pick up

It's ironic that Honda is officially putting its $15 billion electric vehicle (EV) and battery plant in Alliston, Ontario on indefinite hold now, just as demand for EVs in Canada (and around the world) is starting to pick up again.

Honda "paused" development last May, at a time when EV demand was indeed reeling. Since then, though, the US war in Iran and the ensuing oil price shock, along with Canada's reinstatement of a $5,000 rebate, has made EVs much more palatable and demand for zero emission vehicles (ZEVs) is recovering, big-time. March 2026's sales of ZEVs in Canada has increased by 75% over the previous year. Whereas EVs made up just 6.6% of new vehicles a year ago, in March 2026 they made up 12.2%, almost double. And gas prices have continued going up and up since March as the US war in Iran continues, so the expectation is that EV demand will continue to rise.

And this is the time that Honda drops its bombshell about cancelling its new investment in the Alliston plant?

A big part of the problem is that the market for EVs in the USA is still soft, and most of the cars that would be made in Ontario would be destined for the US, not Canada. But, even in America, EV demand is picking up, as the Iran war and the blockage in the Strait of Hormuz, drags on with no end in sight.

So, is Honda being short-sighted here? Well, longer-term trends are almost impossible to predict in this rapidly changing world, and Honda is notoriously conservative. It's hard to commit $15 billion without a pretty firm guarantee of future sales demand, I get that. But taking risks and getting ahead of the competition is what corporate capitalism is all about, no?

Proof that Canada's economy is too dependent on the USA

I came across.an interesting graph - I do like a good graph! - in an article about how maybe Justin Trudeau was not the economic Antichrist the Conservatives paint him as, but how external events were at least as important as home-grown policies in the challenges Canada's economy has had to face over the last decade or so. This is not an attempt to rehabilitatee Trudeau - the article is quite critical of the man and the policies, unfairly so I would say - merely an attempt to remove the spin and look at the Canadian economy dispassionately.

Anyway, the graph, above, shows the extent to which American tariffs and other US trade policies have affected employment in Canada, by splitting out employment in industries dependent on US demand from other industries.

The glaring difference is of course greatest since Trump 2.0 began in early 2025. But the effect has been in force since at least 2016 (Trump 1.0), and even continued apace during Joe Biden's administration (Biden, lest we forget, was also a keen America First guy). Employment in other industries has actually been very strong (and increasingly so) throughout the whole period.

If ever anything justified our current attempt to diversify our trade away from America, this chart is it.

UAE leaves OPEC - should we care?

As of tomorrow, the United Arab Emirates (UAE) will officially leave the Organization of Petroleum Exporting Countries (OPEC), the cartel that has historically exerted a strong influence over global oil prices through its ability to impose production quotas over its members. This is probably not going to change your life overnight. In fact, you're probably not even going to see any change in gas prices, at least in the near term, and certainly not while the Strait of Hormuz remains effectively closed. But in terms of geopolitics and the global economy, it could be significant in the longer term. It has been called "the beginning of the end of OPEC".

UAE is OPEC third or fourth biggest crude oil producer after Saudi Arabia, Iraq and maybe Iran, and has been a member of OPEC (and the expanded OPEC+ group) since 1967, soon after the group's inception in 1960. 

Crucially, though, the UAE's "spare" oil capacity is second only to Saudi Arabia's, making it an important "swing producer". It has a sustainable production capacity of 4.85 million barrels a day, but due to its OPEC quota it only actually produces 3.4 million barrels a day. OPEC (effectively Saudi Arabia) is therefore causing it to lose a lot of potential revenue which, given that oil accounts for about a third of its GDP, has always rankled. 

The UAE must also be painfully conscious that, as hydrocarbons are substituted by other energy sources, oil will not always be such a sure source of income. It makes sense, then, for the UAE to maximize its income from its oil reserves now, before demand craters.

UAE's exit widens its rift with Saudi Arabia, the de facto leader of OPEC, and deals a considerable blow to the influential oil producers' group and its ability to dictate oil prices. Freed from the constraints of OPEC, the UAE will almost certainly increase its crude oil output, which could have a significant effect on global prices.

The move is also seen as a win for Donald Trump, who has long railed against OPEC and its price-fixing. Trump needs gas and diesel prices to fall before the mid-term elections, and increasesd oil production by UAE could help with that.

UAE has long been a valued ally of the US, and even of Israel in recent years. UAE's decision to move now, with a US-Israeli war against Iran going on, can be no coincidence. (It has publicly complained that Saudi Arabia has offered it no support during Iran's bombardment, while Israel cleverly extended its protective Iron Dome to the Emirates.)

OPEC has gradually been losing influence for some years now. Back in the 1970s, it controlled over 50% of the world's oil; today, with the huge production increases in the USA, Canada, Russia and China, among others, that figure is closer to 30%. Several members have already defected: Indonesia left in 2016, Qatar left in 2019, Ecuador in 2020, and Angola in 2024. UAE's exit is a much bigger deal than any these. 11 members remain. And next? Almost certainly Venezuela.

How bad is the Iranian economy?

Here's an eye-opening article about the parlous state of Iran's economy after two months of battering by American and Israeli forces. Spoiler: it's substantially worse than I thought.

At least a million jobs have been lost directly due to the war, and 10-12 million - almost half of Iran's labour force - are at risk from the ripple effects.

Although Israel claims to have landed precision strikes on Iran's paramilitary Revolutionary Guard facilities early in the war, in fact their air strikes destroyed or damaged some 20,000 civilian factories, hobbling about 20% of the country's manufacturing capacity, particularly in the essential pharmaceuticals, petrochemicals, aluminum, cement and steelmaking sectors. This has crippled Iran's main non-oil exports, and raised domestic prices for everything from plastics and pipes to fabrics, packaging and construction materials. There was little or no military targeting involved in this; this was an opportunistic Israel gleefully moving to incapacitate its arch-enemy's economy under cover of US bluster, while it thought it could get away with it.

Iran's internet has been largely shut down since the start of the war (or even before, during the domestic protests that preceded it), gutting all the small- and medium-sized businesses that rely on online sales. 

Before the war, Iran made about $98 billion in exports, just under half of it from oil. A good proportion of that is now gone, mainly due to the US blockade on exports, with no end in sight (although actually about half of Iran's non-oil trade goes overland and through Caspian Sea ports, and not through the blockaded Strait of Hormuz).

Pre-war, Iran relied substantially on the United Arab Emirates for up to a third of its imports. Since the US strikes, it has had to retaliate however it can, including strikes on UAE, leading that country to cut off all trade with Iran. No more imports.

The city of Kashan, where most of Iran's lucrative carpet production was centred, has all but closed down. Exports have plummeted and domestic sales petered out. Prices for synthetic fibres have surged by 30-50%, largely due to ongoing hits on Iran's petrochemical facilities.

Most new construction has ground to a halt, with priority going to the reconstruction of essential infrastructure. The price of iron sheeting has more than doubled. Savings of individuals and companies alike are starting to run out, those that had any.

Even with all that litany of grimness, Iranian officials are however still trying to reassure the public that the country can withstand all the economic pain. Certainly, if any country could, it is Iran. After decades of sanctions, the country has built up a lot of resilience, and is well-prepared for "worst case scenarios". It maintains large reserves of vital supplies, and even resources like electrical machinery, cement, iron and steel, for just such an emergency. The US has clearly been shocked by how resilient Iran has proved, although a bit more inquiry and less hubris could easily have alerted them to that.

Such reserves and resilience are not, of course, unlimited. While it is thought that Iran could still bounce back once the war ends, that would largely depend on whether international sanctions were lifted, and that in turn depends on a whole load of other things, things that are currently unknown. Whether Iran can outlast the United States - which has its own constraints and determining factors - is an open question.

Does MLS own the Vancouver Whitecaps?

Rumour has it that Major League Soccer (MLS) is considering relocating the Vancouver Whitecaps franchise to somewhere more profitable, like maybe Las Vegas. They say the "long-term health" of the league is at stake. They say that "stadium economics, scheduling restrictions and a lack of government and corporate support" will make keeping the Whitecaps in Vancouver very difficult.  

The current owners, a group of Canadian businessmen, have put the team up for sale, although they do say their priority is to keep the team in Vancouver. There are currently only two Canadian teams in the MLS league, Toronto (added as an expansion team in 2007) and Vancouver (added in 2011), and losing one would be pretty hard for the Canadian psyche. 

Although the Whitecaps had their most successful season ever last year, only falling to Miami in the championship game, and they currently sit second in the league this year, their on-field success has not translated into all-important revenue, in which stakes they sit at the very bottom of the league, trailing much worse clubs in the middle of the standings.

I confess the whole idea of "moving" a team from one city to another seems bizarre to me, coming from a British background. I can''t imagine "moving" Manchester City to Blackpool, or Chelsea to Portsmouth!? But I guess I just don't understand the franchise business model of North American sports. Certainly teams (or franchises) do get moved all the time: the Brooklyn Dodgers became the Los Angeles Dodgers, the Montreal Expos became the Washington Nationals, the Washington Senators became the Texas Rangers, etc, etc.

But what is the role of MLS in this current case? Google AI says that "Major League Soccer (MLS) does not own the Whitecaps directly, though it operates under a single entity structure where owners are investors in the league". The best explanation I can find for this confusing claim comes from Medium.com: "Unlike the National Football League (NFL), Major League Baseball (MLB), National Basketball Association (NBA), and National Hockey League (NHL), the MLS is considered a Single-Entity business model. This structure allow the teams to be considered "individual investors" of the league, allowing Major League Soccer to be the sole owners of all 29 teams and not be considered a Limited Liability Corporation (LLC)", although the article then goes on to question the legality of this Single-Entity status.

So, clear as mud. I still don't know how it works, but it does seem that MLS somehow has "full autonomy" over business deals, exclusivity player negotiations, and many other aspects. Weird.

Yet another productivity analysis

It's a constant taunt of the Canadian right wing that, after ten years of Liberal rule, Canada's productivity is poor (the worst in this cherry-picked category, the lowest in that, you know how it goes). The unstated implication is that the Conservatives, somehow, would have done a much better job. 

Productivity - GDP per capita, or sometimes per hour worked - has become the tub to be thumped in recent years by many in the business community, one metric to rule them all. But it's a notoriously blunt instrument, open to all manner of misinterpretations and vagaries.

The redoubtable Visual Capitalist has produced an updated analysis of global productivity, which yields some eye-popping, but actually pretty explicable, results. Way out at the top are not the USA or China, or even Sweden, but Ireland, Norway and Luxembourg. But this doesn't necessarily mean that Irish workers are much more efficient or hard-working than those in the rest of the world, or even that they are better at harnessing technology.

In the cases of Ireland and Luxembourg, their productivity dominance is almost entirely due to their status as tax havens. Both countries host the headquarters of many multinational companies, particularly in the pharmaceutical and technology sectors in Ireland's case and finance in Luxembourg's, so most of the work that generates such high productivity figures is actually done elsewhere. In both cases, productivity drops dramatically when measured using Gross National Income, rather than Gross Domestic Product.

In Norway's case, it's productivity is more to do with its high-value energy industry, although some of it is "genuine" productivity efficiency, and its adoption of capital-intensive and knowledge-based work. Most of the other (mainly European and Scandinavian) countries in the top ten or twenty similarly benefit from those same choices or circumstances.  

And Canada? In this particular listing of 37 countries, which is based on GDP per hours worked in purchasing power parity (PPP) dollars, Canada comes in at a middle-of-the-road No. 18. This is above the OECD average, and about the same as the UK, Italy and Spain. It is just below Australia, although significantly above the likes of Israel, Japan, New Zealand Mexico. Canada also comes in well below arch-rivals the USA which, at No. 7 according to this metric, is the only non-European country in the top 15. (China is not included in this analysis.)

In general, countries whose economies are more reliant on agriculture, tourism, or lower-value services tend to report lower productivity levels, while those which are more based on technology, finance, pharmaceuticals and energy typically show higher productivity. So, such lists are perhaps not all that useful.

Is the Trump administration colluding in insider trading?

Throughout Donald Trump's second term, there have been many market-moving statements and announcement, more than in any other presidential term in living memory. Whether it be to do with the war in Iran, incursions into Venezuela, or just the never-ending series of announcements about tariffs early in his tenure, few (if any) presidents have made so many, and so consequential, public announcements that have had significant effects on the stock markets and resource prices. 

Often, these were just throwaway, late-night posts on Truth Social or other social media, but many of them were enough to send the already-jittery markets into a tailspin or a mysterious upsurge. Coincidence? I think not!

There is an increasing body of evidence that suggests that there was a suspicious surge in trading activity before many of these announcements, which has some commentators posing allegations of insider trading. There are many documented examples of traders betting millions of dollars on the exchanges just hours, or even minutes, before major policy announcements. The BBC details many such examples, and The Guardian has calculated that there may have been a least a billion dollars in suspiciously "perfectly-timed" trades, as well as online betting on platforms like Polymarket and Kalshi, during the Iran war alone. 

Notably, Donald Trump's own net worth has nearly doubled during his second term, which is only, lest we forget, just over a year old. For example, there is good evidence that Trump went on a share-buying spree earlier this year, buying upto a million dollars' worth of stocks in companies like Nvidia and AMD that were just about to be awarded lucrative contracts. A look at the number of stock trades on Trump's accounts since his inauguration (which is monitored by the US Office of Government Ethics) shows a mind-boggling increase, particularly in the last month or two.

There is also evidence that legal pardons are for sale if a large enough donation to a MAGA Super PAC.or a GOP fundraiser happens to be made. Several members of Trump's immediate family have been doing very nicely thank you too.

Insider trading - stock trading based on non-public information about a company or sector - is highly illegal in America, as elsewhere. Some US senators have called for a probe into possibly insider trading during the height of the tariff nonsense. 

It is, however, notoriously difficult to prove such allegations, and the laws are very difficult to enforce. There is a strong chance that no-one will ever be prosecuted. Including, of course, Trump himself, and his family and close advisors.

UPDATE

Despite being in Trump's pocket, the Department of Justice (DoJ) has begun an official investigation into a series of suspiciously-timed trades in the oil market.just ahead of major announcements by President Trump.

My guess is that this is a show trial that will conveniently exonerate all concerned. But you never know, it might be real. Maybe this is the DoJ starting to extricate itself from under the Trumpian digit, and trying to distance itself from a president it sees as in the process of going down. Rats from a sinking ship?

Why is diesel so much more expensive than gas?

I keep asking myself questions I don't know the answers to - it's shocking how much I don't know! Well, here's another one. Why is diesel more expensive than regular gasoline? I'm sure it used to be cheaper than gas, but now it's substantially more expensive.

Well, it seems there are at least three main reasons: 

• Diesel is the main fuel used for shipping, trucking, farming and construction. Global demand for diesel has been particularly high in the last couple of decades, driving up prices. Diesel prices are particularly sensitive to shipping and maritime disruptions.
• The transition to less-polluting lower-sulfur diese, again over the last 20 years or so, and particularly in the USA, has required more intensive and more costly refining processes.
• Taxes on diesel are typically more than the taxes on gasoline.

There is also a seasonal effect, as home heating oil - which is quite similar to diesel and often produced together - sees peak demand in the winter, which has the effect of pushing up the price of diesel.

Either way, the price of diesel has indeed gone up substantially more than the price of gasoline since the Iran war - about 50% compared to 30-33%. And that, of course, will make everything else more expensive, given our calamitous over-reliance on diesel for transportation.

Why are Canadian housing prices down?

Housing - real estate - has always been considered the best investment you can make here in Canada. Not so much any more. Compared to the top of the market, back in the heady days of 2022, the average value of a home is down about 21%. A pretty substantial hit. The stock market, on the other hand, is still going great guns, despite all the global turmoil that would suggest otherwise.

So, what happened to house prices? Let me count the ways.

Mortgage rates have come down some after the precipitous increase following the pandemic, but they are still well above the 20 year average.

The country's population is actually falling for the first time since Confederation, after a huge increase in immigration in recent years, and housing responds very quickly to falling demand.

Housing remains unaffordable for many. The gross debt service ratio for housing remains stubbornly high.

New housing starts may have flatlined or even fallen recently, but there is still an oversupply of housing if anything (despite what the politicians are saying), at least in some markets, which is depressing prices.

General buyer sentiment is likewise depressed, as a sluggish economy and a poor job market (largely as a result of AI developments and US trade policy) weigh on people's minds. The uncertain CUSMA trade deal renegotiation later this year, and the current oil price shock, also has people waiting out commitments to large expenditures.

Did the Ontario budget bring in record spending, or cuts, to services?

The Ford Ontario Conservatives - gods, how bored I am with them! - brought down a budget yesterday, forecasting (predictably, given the global situation) a large deficit of $13.8 billion, and pushed back again its plans to balance the books in the near future.

They say they are increasing funding for small businesses, education and healthcare. But then they say that every budget, and after every budget the opposition parties get up and say "Oh, no you didn't!". This happens every time. 

So, what's the truth? How can both claims be made with such passion and conviction? Did they increase healthcare funding, or didn't they?

Politics is all about spin. Like or not, that's the truth. So, of course, the party in power, the Conservatives at the moment, says they are making record investments in education and healthcare. That may be technically true - in nominal terms, the education and healthcare budgets are higher than ever before, including under the previous Liberal administration. 

But this misses some important context. Everything costs more now, especially when comparing with the previous administration, which was way back in 2018, a period of particularly high inflation. So, of course expenditure has to increase, just in order to standard still. Plus, Ontario now hosts over 1½ million more people than it did. So, real per-capita expenditure on education, healthcare and pretty much everything else is not keeping pace. In real per capita terms, the measures so glowingly announced by the Finance Minister were actually pretty savage cuts.

But what's a government to do? They can't preface their budget announcement with, "We're bringing in record cuts to essential services!" No-one would ever vote for them again. No-one likes austerity. But no-one likes tax increases either. So, governments tend to sugar-coat their budget announcements by claiming to be investing in services like never before AND giving the hard-pressed populace tax cuts. Of course, that's not true; the math wouldn't add up, even with a constantly increasing debt load from deficit after deficit. But it sounds impressive, and that's what really matters to them.

How the Netherlands became an agricultural powerhouse

Having just watched the excellent A Life on Our Planet, a spry 93-year old David Attenborough's 2020 "witness statement" (he's now 99!), it's hard not be cowed by the grand old man's ridiculous optimism in the face of the seemingly insurmountable problems facing the planet.

One thing that he did cite as an example of progress in the right direction (and part of Attenborough's vision of a solution to our environmental ills) was the success of the Netherlands' agricultural endeavours. I think I had some idea that they were leaders in vertical farming and hydroponics, but I had no idea things were so advanced there ... and so successful.

But, yes, it turns out that little Netherlands is now the second biggest food exporter in the world (after the USA, which is 240 times larger). The little densely-populated country - for reference it is about the size of Wales, or the province of Nova Scotia, or half the size of US states like South Carolina or Maine - has very little real estate to spare. Nevertheless, it has devoted more than half of its valuable land to farming, and it has developed one of the world's most intensive and efficient agricultural bases.

After the grim experience of the "Winter of Hunger" under Nazi occupation during World War II, food security became a national priority, and the Netherlands made some important strategic decisions, one of which was focussing on high-value agricultural goods like eggs, meat, cheese, tomatoes, peppers and flowers. There was government subsidization, a strong push towards agricultural education and research, and farmland was rationalized into more efficient larger farms. It pioneered greenhouse growing, which it has since taken to the next level, employing robots and algorithms, hydroponics, computer-controlled watering systems and crop ripeness surveillance, optimized LED artificial lighting, etc. 

Despite all these high-tech solutions, bees are still used to pollinate the plants, and are kept in the greenhouses almost like pampered pets. Much of the picking and quality control and even some of the final packaging, is still done by hand, although often (and increasingly) with AI/computer help. Irrigation water is sparingly applied, recycled and reused, and water usage is one-fiftieth of the global average for equivalent crops. Pests and insects are constantly monitored and detected in real time, allowing for timely attention. Crop yields can be ten times or more than global averages.

This is industrialized agri-business taken to the nth degree, but it's sure as hell effective: in 2024, the country produced $140 billion worth of farmed goods. It has established itself as Europe's top exporter of meat, and about 60% of all crops produced in the country are exported, principally to Germany, the UK, China, and (ironically) even the US.

There are still challenges, though. 

There is some worry about the large carbon footprint of Dutch agriculture, although since the Russian war in Ukraine deprived it of cheap Russian gas, there have been moves to secure home-produced energy from wind and geothermal power. 

With the highest livestock density in Europe, the Netherlands also has the highest ammonia emissions on the continent, causing algae blooms in waterways and playing havoc with some native plant species. Calls to limit these emissions have led to mass protests as farmers see their livelihoods threatened. But changes to the diet of animals, separating their pee and poo, etc, have shown promising results.

There is also an increasing labour shortage in some areas of Dutch agriculture (I'm not really sure why), prompting still more AI, robotization and technology innovation, technology that is also exported across the globe.

So, if you want a business success story with a side of environmental hope, watch Business Insider's 20-minute doc on the Netherlands' agricultural revolution.

Clean power as an energy security issue

Perhaps it's not much, but maybe something good might come out of the US-Israeli war on Iran.

Spooked by the precipitous increase in oil and has prices, Britain's biggest energy company, Octopus Energy, has already seen a 50% rise in solar panel sales in the few weeks since the war started, as well as a spike in heat pumps and enquiries about electric vehicles and chargers.

Now, the UK is introducing new rules to the effect that all new homes built there (from 2028) must be installed with heat pumps and solar panels. In addition, plug-in solar panels are to be widely available in stores in Britain. The idea is to avoid being held hostage by the globalized oil and gas market, as is happening in the aftermath of the Iran war, and to move closer to "energy sovereignty" for the country. 

Something very similar is happening in Europe, which is seeing a wave of increased interested in solar power. Ditto, Australia, which had all but given up on its ambitious target of 82% renewables by 2030, until a huge surge in household solar and battery installations since the US-Iran war.

All this thanks to anti-renewables Donald Trump and his misguided Iran war?

Well, partly. The last time there was an oil crunch of this magnitude, in the 1970s, there were few practical alternatives available. This time there are viable substitutes, powerful and cheap enough to build at scale, and many countries are looking towards that off-ramp, bringing in long-overdue policies that will stand them in good stead decades into the future.

Hey, maybe we could do that here too, here in sunny Canada? Ah, no, Alberta would never allow that!

A head-scratcher of a Liberal budget

Mark Carney and his Liberal government have brought down a distinctly Conservative-style budget. As always, there are winners and losers, but which departments gain and which are being cut shows a distinct change of emphasis from the past. And the fact that there are more cuts than increases also marks a break with the Liberals' free-spending past.

All in all, there are $31 billion in cuts and just $23 billion in new spending for 2026-7, so a pretty substantial net $8 billion cut in overall spending. 

The biggest losers are the Canada Revenue Agency ($4.3 billion, or nearly 41% of its old budget), Department of Fisheries and Oceans ($4.3 billion, or nearly 70% of its budget), Department of Indigenous Services ($3.0 billion, or 11%), Department of Crown-Indigenous Relations and Northern Affairs ($2.6 billion, or 18%), Global Affairs ($2.1.billion, or 23%), and Canada Post ($2.0 billion, or 99%). 

There are some huge surprises there. Wait for some significant push-back, although probably not from then opposition Conservatives. It's a brave (or foolish) man who cuts money for Indigenous people these days, and "sunsetting" overseas programs smacks of Trumpism. And almost totally cutting loose Canada Post suggests that they have completely given up on the Crown corporation, so don't expect any Christmas cards in the mail next December.

The main winners in the budget are the Department of Finance (with a whopping $8.5 billion increase, or nearly 6%% of its original budget), Department of Employment and Social Development ($5.7 billion, or 5.4%), Department of National Defence ($5.3 billion, or 12%), and  Department of Housing Infrastructure and Communities ($1.4 billion of 15%). 

Injections of cash into defence and housing align with recent rhetoric, and a shot in the arm of Employment and Social Development perhaps makes sense in these times of tariffs and layoffs. But what is the finance department going to do with an additional $8 billion? (A bit of research suggests that this includes accelerated investments to counter the effects of US tariffs, affordability measures like the Canada Groceries and Essentials Benefit, investment in Build Canada Strong projects, including housing, investment in a new financial crimes and anti-fraud agency, and financial support for built-in-Canada defence and infrastructure projects.) 

No doubt all will become clearer in the coming days, but so far it seems like a bit of a head-scratcher of a budget. As a Liberal budget it is - that word again! - unprecedented. I can't help but think that some of this stuff will come back to bite them later.