Andrew Bailey, head of Britain’s financial watchdog, will be the next governor of the Bank of England, where his top challenge will be navigating any choppy waters during the country’s departure from the European Union.
Treasury chief Sajid Javid, who announced the appointment Friday, said Bailey was the “clear front-runner” to replace Canadian Mark Carney. By the time Carney leaves on March 15, he will have been at the helm for nearly seven action-packed years.
Bailey, a deputy governor under Carney for three years until 2016, “is the right person to lead the bank as we forge a new future outside the EU and level up opportunity across the country,” Javid said.
Prime Minister Boris Johnson approved Javid’s recommendation and Queen Elizabeth II has given her formal approval.
Bailey will serve an eight-year term. The Bank of England, already an enormously powerful institution within Britain, will play a key role in the country’s first years outside the EU.
Brexit uncertainty remains
Following last week’s big win for Boris Johnson’s Conservative Party in the general election, Britain is due to leave the EU on Jan. 31 and then enter a transition period until the end of 2020. During that time, Britain will be in the EU’s economic arrangements but without a vote as the government seeks to negotiate a new trading relationship with the bloc. As a result, the Brexit uncertainty that marked Carney’s time at the bank will remain for Bailey.
Replacing Carney, the first non-Briton to take the top job at the 325-year-old institution, has been a protracted affair because of Brexit uncertainty and the election. To ensure a smooth transition, Carney has agreed to extend his time at the helm from Jan. 31 for six weeks.
Bailey left the bank in July 2016 to become chief executive at the Financial Conduct Authority. Bailey’s star was thought to have waned largely because of a few recent financial scandals, notably the collapse of investment funds run by Neil Woodford that raised questions over the FCA’s ability to regulate risky funds.
However, he remains well-respected across government and the financial community, largely because of his work during the global financial crisis a decade ago when he helped resolve a series of problems within the British banking sector. He played a key role in the state bailout of Lloyds Bank and Royal Bank of Scotland.
By far the steadiest under fire in the financial crisis. He won’t make waves unnecessarily. But his all round experience will help to steady economic policy at a challenging time for the U.K.– Nick Macpherson, Treasury’s former top civil servant
Nick Macpherson, who was the top civil servant at the Treasury during those bailouts, said in a tweet that Bailey was “the most able and competent” Bank of England official he worked with: “By far the steadiest under fire in the financial crisis. He won’t make waves unnecessarily. But his all round experience will help to steady economic policy at a challenging time for the U.K.”
Bailey, 60, said it was a “tremendous” honor to be chosen as governor “particularly at such a critical time for the nation as we leave the European Union.”
“I will continue the work that Mark Carney has done to ensure that it has the public interest at the heart of everything it does,” Bailey said.
For his part, Carney said Bailey “brings unparalleled experience” and praised him for his role during the financial crisis.
“Andrew is widely and deeply respected for his leadership managing the financial crisis, developing the new regulatory frameworks, and supporting financial innovation to better serve U.K. households and businesses,” he said.
British media reported that other potential candidates for the job included Minouche Shafik, the London School of Economics director; former U.S. Federal Reserve official Kevin Warsh; and Shriti Vadera, chair of Santander Bank’s U.K. division.
But Bailey was, according to Javid, the “standout candidate in a competitive field.”
Canada's GDP grew 3 per cent in July – Yahoo Canada Finance
Canadian GDP expanded by 3 per cent in July, as the economic recovery from the effects of COVID-19 continues.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Statistics Canada says it was the third straight month-over-month increase, but the economy remains 6 per cent below its pre-pandemic level.” data-reactid=”24″>Statistics Canada says it was the third straight month-over-month increase, but the economy remains 6 per cent below its pre-pandemic level.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Growth is also slowing, considering June’s increase was 6.5 per cent.” data-reactid=”25″>Growth is also slowing, considering June’s increase was 6.5 per cent.
All 20 industrial sectors were higher.
Some industries faired better than before the pandemic. Agriculture, utilities, finance and insurance, and real estate rental and leasing sectors surpassed February’s levels.
The manufacturing sector grew 5.7 per cent as factories continued to ramp up production. Accommodation and food services jumped 20.1 per cent, the third straight double digit advance.
“But those figures come off a very low base and are still facing the deepest slump versus year-ago levels. With the resurgence in virus cases, the struggles in those sectors could actually deepen further in the near-term,” said Benjamin Reitzes, director, Canadian rates & macro strategist at BMO.
In another sign of slowing growth going forward, Statistics Canada estimates GDP grew by 1 per cent in August.
“Together, the data are consistent with our call for a roughly 46 per cent annualized gain in Q3 GDP, but the slowing in August, coupled with the surge in the virus in recent weeks, suggest a much smaller gain is in store for Q4,” said Avery Shenfeld, chief economist at CIBC World Markets.
For comparison, annualized GDP fell 38.7 per cent in the second quarter — the worst since Statistics Canada started tracking it in 1961.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.” data-reactid=”33″>Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Download the Yahoo Finance app, available for Apple and Android.” data-reactid=”34″>Download the Yahoo Finance app, available for Apple and Android.
New parents waiting months for financial benefits amid surge in CERB claims – CBC.ca
Months after having their babies, some parents are still waiting to receive benefits from Canada’s employment insurance program, which has been overloaded during the COVID-19 pandemic.
“It’s been a complete financial change and strain for us,” said Alanna Los of Brandon, Man., who had her second child July 1. “I’ve been literally on the phone every day almost for the past three months.”
Normally, people applying for parental benefits should expect to wait only about one month for their first payment, according to the federal government’s website. But with millions of Canadians unemployed or under-employed during the pandemic, strain on the employment insurance (EI) system is likely causing delays.
While she was pregnant, Los was on sick leave from her job as a nurse after she was rear-ended in a car crash. Two days after her daughter was born, she called Service Canada to switch over her sick leave payments to her parental leave benefits. The agent with whom she spoke confirmed the change was made and said she was approved, Los said.
Months later, Los said, she hasn’t received any support from the government.
She has had to dip into her savings to pay bills, she said.
Los isn’t alone. When she posted about her issues on a Facebook group, several mothers shared similar stories, she said.
“This is a system you’re supposed to be dependant on, but it’s not there for moms right now,” Los said.
‘I’m completely broke’
Leta Jonasson had her son Aug. 12, and has maxed out her credit card waiting for her parental benefit since his birth, she said.
“It’s been pretty stressful,” said the Winnipeg mom, whose spouse was also laid off during the pandemic.
Jonasson, 26, who also has another child, worked as a retail store manager, but she’s been off since March because of the pandemic. She had been receiving support from the Canada Emergency Response Benefit (CERB), but those payments stopped when she applied for parental benefits, she said.
“I’m completely broke until I get my maternity leave benefit,” Jonasson said.
She said she feels lucky to have family and a partner who support her as much as possible and can’t imagine what others who don’t have that safety net would do.
“If I didn’t have their help, I’d really be in a bad spot because of bills and everything,” Jonasson said.
Two mothers in Ontario also told CBC News they’ve been waiting more than two months for their parental benefits.
CBC News reached out to Service Canada, but the agency declined to answer questions about ongoing service delays.
“The department understands the difficulties that any delay in benefit payments can cause to claimants and their families, and is working to address the issue as soon as possible,” spokesperson Marie-Eve Sigouin-Campeau said.
‘System is not designed for this’
Service delays are likely due to the strain the government is under having to pay emergency benefits to four million Canadians who are unemployed or under-employed because of the pandemic, one expert says.
At the time, the government said it was working to increase the number of agents taking calls and pursuing additional measures to increase the automation of calls.
There’s likely still a backlog in trying to deal with the high number of people collecting CERB, EI and other government benefits, said Moshe Lander, a lecturer in the department of economics at Concordia University in Montreal.
“I think it’s just the nature of trying to process this many claims in extremely irregular circumstances,” said Lander. “The system is not designed for this. And so, of course, it’s not going to work properly.”
Bureaucratic hurdles are putting added stress on a demographic that’s already facing a great deal of hardship because of the pandemic, said Katherine Scott of the Canadian Centre for Policy Alternatives.
Women have been disproportionately affected by the economic fallout of the pandemic, and months after the onset of the crisis their return to employment lags behind that of men, Scott wrote in a report earlier this month.
“Women continue to be unemployed in greater numbers and are still working reduced hours in the jobs they do have,” she said. “This has certainly been a she-cession, as it’s been coined.”
WATCH | Manitoba mothers on the financial impact of waiting for parental benefits:
On top of that, the glitches with accessing CERB, EI and parental benefits mean some people are falling through the cracks, she said.
“It’s just crazy-making in the face of acute stress for many, many families,” Scott said.
Scott said the delays could persist or even increase as the government transitions from CERB to EI.
“The stress on the system will actually magnify,” she said.
“If you’re an expectant parent, you’ve got to wonder, will your claim proceed in a timely fashion? And it may well not.”
For parents such as Jonasson and Los, that means more calls to Ottawa, and more stress on their families.
Secret and unprofitable Palantir goes public – Al Jazeera English
Seventeen years after it was born with the help of the CIA seed money, data-mining outfit Palantir Technologies is finally going public in the biggest Wall Street tech offering since last year’s debut of Slack and Uber.
Never profitable and dogged by ethical objections for assisting in the Trump administration’s deportation crackdown, Palantir has forged ahead with a direct listing of its stock, which is set to begin trading on Wednesday. In its stock offering, the company is not selling newly minted shares to raise money; it is simply listing existing shares for public trading.
The low-key strategy may not generate the enthusiasm many technology offerings do. But it is in character for a secretive company long reliant on spies, police and the military as customers – and whose founders are holding onto voting control of the company.
The big question for both investors and company management: Can Palantir successfully transition from a business built on the costly handholding of government customers to serving corporate customers at scale? The company is a hybrid provider of software and consulting services that often embeds its own engineers with clients.
Analysts say its future depends on selling multinationals its tools for gathering disparate data from an ever-expanding data universe and using artificial intelligence technology to find previously undetectable patterns. Those can theoretically guide strategic decisions and identify new markets much as they have aided in tracking rebel fighters and sorting military intelligence.
The company sets itself apart from most US technology providers, and just moved its headquarters to Denver from Silicon Valley. Palantir colours itself patriotic and belittles other tech firms that would not unquestionably support US dominance in war-fighting and intelligence.
“Our software is used to target terrorists and to keep soldiers safe,” CEO Alex Karp wrote in a letter accompanying Palantir’s offering prospectus. While Karp acknowledged the ethical challenge of building software that “enables more effective surveillance by the state”, Palantir’s prospectus touts its work helping US soldiers counter roadside bombings and fight the ISIL (ISIS) group.
But investors also have to reckon with the Peter Thiel factor.
The iconoclastic entrepreneur and PayPal co-founder endorsed President Donald Trump in 2016, worked on his transition team and holds the largest chunk of Palantir stock. Thiel already exerts tremendous power from the board of Facebook, which dominates global media and seeks to create a digital currency.
In its IPO prospectus, Palantir paints a dark picture of faltering government agencies and institutions in danger of collapse and ripe for rescue by a “central operating system” forged under Thiel’s auspices. As the offering is structured, Thiel will be the dominant voice among the Palantir co-founders who will retain voting control.
“Is that someone who you want deciding how a component of the [national] security apparatus is designed?” asked New York University business professor Scott Galloway. “If you believe that power corrupts and checks and balances are a good idea, this is just from the get-go a really bad idea.”
Earlier in September, BuzzFeed reported that Thiel hosted a known white nationalist, Kevin DeAnna, at a 2016 dinner party, citing emails it obtained and published whose authors refused to talk to the online news outlet. Thiel declined through a spokesman to discuss the report with The Associated Press news agency. Critics say he shares the blame for Facebook’s incomplete removal of toxic disinformation disseminated by the pro-Trump far-right fringe.
Then there are Palantir’s fundamentals, which Galloway considers lousy. The company has just 125 customers in 150 countries, including Airbus, Merck, Credit Suisse and the Danish National Police. Slightly less than half its 2019 revenues were from government agencies, and three clients – which Palantir did not name – accounted for almost a third of revenues.
“They’re massively unprofitable and they’ve never been able to figure it out,” Galloway said, noting that it took Google three years to earn a profit, and Amazon seven. Over a much longer span, Palantir has accumulated $3.8bn in losses, raised about $3bn and listed $200m in outstanding debt as of July 31.
Palantir, named for the mystical all-seeing stones from Tolkien’s “Lord of The Rings”, has recently been deepening its relationship with Uncle Sam, including winning a modest contract early in the COVID-19 pandemic for helping the White House gather data on the coronavirus’s impact.
Senior emerging technology analyst Brendan Burke of Pitchbook says he is not worried that Thiel’s association with Trump will hurt the company if Trump loses the election.
“The political connections don’t appear to be the main driver of their recent substantial contract wins,” he said, although he noted that government contracts can be more volatile than corporate ones, where Palantir’s foothold is less firm.
Palantir offers two software platforms. Foundry is designed to link disparate and largely incompatible data sources into a central operating system. It is the company’s primary hope for broadening its business.
An earlier product, Gotham, has been used by defence and intelligence analysts and police departments to identify patterns deep within datasets. But the value of “predictive policing” tools developed with the platform have been questioned for their potential to unfairly target people of colour. The New Orleans and New York City police departments, once customers, have used it.
A 2017 research paper by University of Texas sociologist Sarah Brayne, who studied the Los Angeles Police Department’s use of Gotham, found the software could lead to a proliferation of unregulated personal data collected by police from commercial and law enforcement databases.
On Monday, Amnesty International issued a briefing that says Palantir is failing to conduct human rights due diligence around its contracts with Immigration and Customs Enforcement, calling it “deeply ironic” that the company crows about its determination not to work with regimes like China that abuse human rights.
Palantir’s ICE contracts involve the maintenance and improvement of two products used in deportation raids. One of them, its web-based Falcon tool, has enhanced data accessible to investigators “involving the illegal movement of people into, within, and out of the United States”, according to documents obtained by the AP, including court records, and by the nonprofit Electronic Privacy Information Center in a freedom-of-information request.
Palantir has acknowledged in its SEC filing that “unfavorable coverage in the media” and from social activists could hurt its business. It also says its contractual obligations might prevent it from being able to defend its actions publicly, although it recently named a former Wall Street Journal reporter to its board.
Negative publicity over ICE contracts may also have hurt company recruitment on college campuses.
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