/Posthaste Sept. 30: Why racking up federal debt is smart but taxing robots is a bad idea; Citibank predicts rise of e-flying taxis by 2025

Posthaste Sept. 30: Why racking up federal debt is smart but taxing robots is a bad idea; Citibank predicts rise of e-flying taxis by 2025

Good morning!

The federal election race is getting ever tighter, and there are concerns that a minority government would be bad for the Canadian economy and the loonie, as typically strange political bedfellows don’t often agree on how to move the country forward.

However, the minority governments of Paul Martin (2004-2005), and Stephen Harper (2006-2011) were periods of considerable strength for the loonie, CIBC Capital Markets argues.

“Indeed, the C$ enjoyed one of its strongest periods between 2004-11, thanks to higher oil prices, and CAD during that period actually outperformed on average a simple model of fair value based on oil and interest rate spreads,” CIBC said, noting that latest tracking suggests around a 60 per cent chance of a minority government of some form.

Meanwhile, the Liberal party unveiled its economic plan over the weekend which projects deficits of more than $20 billion per year for four years — which at least one analyst thinks isn’t as bad as it sounds.

“The federal debt/GDP ratio is still projected to be falling under the LPC commitments — though at a slower rate,” tweeted Trevor Tombe, as associate professor at the University of Calgary. “This is relevant as the core measure of debt sustainability is a debt/gdp that isn’t rising.”

Economist Kevin Milligan argues: “A reminder of how low borrowing costs are right now. We can borrow *for 30 years* at 1.6%.”

However, the Green Party’s robot tax idea has been widely criticized.

“Automation saved the manufacturing industry from 2003-09, when the dollar rose,” tweeted . Without automation, we’d have lost far more jobs as Canadian manufacturing would have been far less competitive,” tweeted Mike Moffatt, senior director, smart prosperity and assistant prof at Ivey Business School. “The robot tax is wholly inappropriate in an open economy with lagging productivity.”

Here’s what’s you need to know this morning:

  • The Canadian Health Food Association will release its submission to Health Canada’s recent Cannabis Health Products consultation in Ottawa
  • First session of the 42nd Manitoba legislature to begin with election of a Speaker and speech from the throne in Winnipeg
  • B.C. Premier John Horgan and Yukon Premier Sandy Silver hold a news conference after holding meetings in Whitehorse, Yukon

By 2025, you may be able to hail an emissions-free flying taxi.

Citigroup Global Markets Inc. gazed into the future and has assessed that by 2020-2025 it expects to see a number of companies testing and optimizing their air taxi solutions, and working closely with local authorities and global regulators as they get ready to take off.

“We expect air taxis to start providing urban mobility services as early as 2025 with a few companies targeting entry into service in 2022/3, but regulations are unlikely to be up to scratch by then and public perception will certainly not be,” write a group of Citibank analysts led by Charles Armitage, head of European aerospace and defence research, in a new report.

The futuristic vision involving flying cars and air taxis with vertical take-off and landing (VTOL) capabilities and electric-propulsion technology is coming closer to reality as well, as cities look for ways to cope with growing populations.

“We expect to see multicopter and hybrid prototypes for passengers emerge in the next 2-3 years and urban mobility services to start operating as early as 2025,” the analysts said.



— Please send your news, comments and stories to yhussain@postmedia.com.
— Yadullah Hussain @YAD_FPEnergy

With files from The Canadian Press, Thomson Reuters and Bloomberg


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