Canadian Economy Heading Into Recession? Fell Almost 2% 2Q16; Biggest Quarterly Decline Since 2009 -- August 31, 2016

Breaking news: Canadian economy fell 1.6% in 2nd quarter; biggest quarterly decline since 2009 largely attributed to Alberta wildfire. [Update: the falling Canadian dollar is great for its trade deficit: Canada's trade deficit shrinks on year's biggest export gain. Analysts opine this means that Canada is unlikely to lower rates.]

That was posted at "Breaking News" about 45 minutes ago.

Earlier in the week Don sent me a link to this article:

There’s trouble brewing in the Great White North.

Jared Dillian, former Lehman Brothers trader and noted financial writer, says that low oil prices have hurt the Canadian economy and the real estate market is near the peak of a massive bubble.

In a video interview with Mauldin Economics, Dillian notes he shorted the Canadian dollar almost three years ago, and has profited a great deal since then. He also says the structure of the Canadian mortgage market means that when the bubble bursts, it will look quite different than the sharp and sudden 2008 crisis in the US.

The main bullets from that interview:

• the Canadian dollar will continue to drop
• the Canadian housing crisis will be a long, drawn out bottoming process
• Canadian interest rates could go negative

Something tells me the young, socialist, Trudeau will suffer a baptism of fire. At least he can blame any failed policies on the Alberta wildfire. The tea leaves suggest that much of Alberta is back on line; hampered more by lack of pipeline to the west than the wildfire. I'm not dismissing the wildfire as trivial, but a political decision not to put in a westerly pipeline is simply ludicrous. See this post: Trudeau ready to ban crude oil tankers off British Columbia; if he does, the Northern Gateway Pipeline is "thrown into question."

Of course the US can look at its own trifecta:

• Keystone XL (outcome known)
• Sandpiper (outcome known)
• Dakota Access Pipeline (outcome pending)

****************************

The Drudge Phenomenon

I do not understand "the Drudge phenomenon." My journalism professor would have argued that Matt Drudge's website would be DOA.

To the best of my knowledge, the Drudge Report is the longest-lasting, unchanged mass-media blog out there. Everyone else has changed. Not Drudge:

• boring
• simple
• loads incredibly fast; refreshes incredibly fast; archives kept of every refresh
• never writes his own stuff
• links to every mainstream (and offbeat) medium including the most liberal (LA Times, NY Times)
• refreshes rare (not more than one or two / day)
• incredible talent for knowing which stories will resonate

My hunch is that most journalists (and newsaholics) check in with Drudge first thing each day and then multiple times/day.

*************************

Old News

From The Huffington Post (three hours ago):

As the election of 2016 draws closer, it is not surprising that more and more articles relating to the Affordable Act of 2010 (ACA) are appearing on the front pages.

If the republicans win the Presidency, they will probably move to repeal the ACA and start a process to replace it. If the democrats win, repeal will be off the table, but changes will still be inevitable. The most pressing of several contentious issues relates to several large insurers who are planning to pull out of the health care exchanges starting in 2017 unless premiums are allowed to go up significantly.

In Tennessee, my home state, Cigna and Humana have received permission to raise premiums by 46 and 44 percent, respectively. Blue Cross Blue Shield of Tennessee, losing an estimated $500 million on the state’s exchange by the end of 2016, has been given permission to raise premiums 62 percent for 2017.

Texas Blue Cross has lost a billion dollars on the state exchange and is requesting a 60 percent premium increase for 2017. Blue Cross Blue Shield of Minnesota has pulled out of that state’s exchange as losses over the last three years are $500 million.

The average premium rise for plans being offered on the state exchanges will be 24 percent for 2017. The rates must rise to offset losses due to the risk profile of those buying insurance being much worse than originally expected.

I did not read any farther (further). I have no idea what the point of the article was. ObamaCare will either be repealed or changed so much it will either be called "thank goodness" or "HillaryCare."

*****************************

A Note For The Granddaughters

I'm thinking of introducing Sophia, age 2 years old, to the drums. Any thoughts?