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Toronto Star

Canada supports Ukraine’s bid to join NATO, Mélanie Joly says

Sep 30, 2022 5:58:00 PM

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OTTAWA—Russia’s war on Ukraine escalated sharply Friday after President Vladimir Putin illegally annexed four eastern Ukraine territories, prompting Kyiv to apply for fast-track membership in NATO and the U.S. and Canada to promise more support.

In Moscow, Putin renewed threats to use tactical nuclear weapons and blamed the West for sabotaging Russia-built undersea gas pipelines to Germany — an accusation the White House flatly rejected.

In Washington, U.S. Secretary of State Antony Blinken and Canada’s Foreign Affairs Minister Mélanie Joly condemned Putin’s latest moves, including “sham” votes this week that were “political theatre” to justify Friday’s “illegitimate” annexations.

Joly said Canada supports Ukraine’s bid to join NATO.

Blinken was more cautious, saying only there is a “process” to follow for any country seeking to join the western military alliance. Sweden and Finland were fast-tracked as countries with “very advanced militaries that are fully interoperable already with NATO, with equipment that is also fully compatible with what NATO countries have, and of course, strong democracies that have been partners as part of the European Union and with us for many, many, many years,” he said.

Under NATO’s article five, an attack on any member nation is considered an attack on all.

Neither Joly nor Blinken downplayed the seriousness of the new threats as they rolled out more sanctions with the European Union targeted at Russian oligarchs and senior officials operating in Donetsk, Luhansk, Kherson and Zaporizhzhia, the four annexed eastern Ukraine territories.

Blinken said the U.S. is looking at whether Russia is “actually doing anything” to act on its tactical nuclear weapons threat, saying Putin’s “loose talk about nuclear weapons is the height of irresponsibility and it’s something that we take very seriously.”

So far, Blinken said the U.S. has “not seen them take these actions,” but he underlined that the U.S. administration is planning against “every possible scenario including this one.”

Ultimately, the question of how the West should respond “is a U.S. decision,” said foreign policy expert Janice Stein of the Munk School of Global Affairs and Public Policy.

For the last four months, she said the U.S. has had a “tiger team working full time inside the U.S. national security council” that is gaming out every conceivable response to actions Russia might take, because the stakes continue to rise.

“This is a life-and-death struggle for Ukraine. But nevertheless, we’ve seen now how much is at stake for Putin. He’s doubled down on everything.” In her view, it is an “especially dangerous” period she likened to the 1950s when the U.S. and the then-Soviet Union had early nuclear weapons, “but there were no rules.”

“What makes it so dangerous is that neither the United States right now nor Russia is confident about the rules. So they push and it’s always possible that one or the other miscalculates and they go over the edge.”

On Friday, Canada along with other G7 countries issued a joint statement denouncing Putin’s actions, calling the annexation “a new low point in Russia’s blatant flouting of international law.”

“We will impose further economic costs on Russia, and on individuals and entities — inside and outside of Russia — that provide political or economic support to these violations of international law,” the declaration said. It supported Ukraine’s right “to defend itself against Russia’s war of aggression and its unquestionable right to reclaim its territory from Russia.”

Canada’s latest round of sanctions targeted 43 Russian oligarchs, a “so-called governing body in Kherson,” and 35 Russia-backed senior officials in the eastern Ukrainian territories.

That brings the count to more than 1,400 individuals and entities Canada has sanctioned in response to Russia’s Feb. 24 invasion, and comes on top of more than 400 sanctions (for a total of more than 1,800) that had earlier been imposed after the 2014 illegal annexation of Crimea.

Joly said Friday that Canada must “redouble efforts for the Ukrainian people” — days after Deputy Prime Minister Chrystia Freeland told reporters “what we all have to do now is double down on supporting Ukraine.”

Ukraine continues to press Canada for more weapons, ammunition and financial support.

Stein said there is room for Canada to more swiftly deliver weapons and ammunition, because Ukraine is suffering casualties and burning through supplies. “So if we’re doubling down, we have to do much better on that. We’ve pledged but not delivered, unlike financial assistance, which we have pledged and delivered.”

One Germany-based institute that tracks global donations to Ukraine ranks Canada 13th in terms of financial assistance as a percentage of GDP, and fifth in terms of military aid.

Stein suggested there is less to do on sanctions because “we’ve sanctioned all the big fish” with previous penalties on Russia’s central bank and its governor, and restrictions on trade exports. “So it’s not an unwillingness to do more, we’ve exhausted the field.”

She predicted the major impact of those sanctions would be felt next spring when technology restrictions really begin to bite “because of the inability to import technology and critical parts, for advanced weaponry, and for what it takes to run an industrial economy.”

Tonda MacCharles is an Ottawa-based reporter covering federal politics for the Star. Follow her on Twitter: @tondamacc

Lawyer representing Toronto councillor Michael Thompson in sex assault case steps away

Sep 30, 2022 2:15:11 PM

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The lawyer representing a Toronto city councillor who is facing sexual assault charges has stepped away from the case, one day after the allegations came to light.

Late Friday afternoon, Calvin Barry wrote in an email to the Star and others that he will no longer represent Coun. Michael Thompson.

Thompson denies the allegations, which have not been tested in court.

“I feel that we are so close as friends that I may not be objective enough,” Barry wrote.

The former prosecutor, who specializes in impaired driving cases, did not

indicate who will now represent Thompson.

In a statement released Friday, the Ontario Provincial Police said that in September it received a report “alleging sexual assaults had taken place at a private residence in the District Municipality of Muskoka earlier this year.”

After an investigation, the Muskoka Crime Unit of the OPP charged Thompson, 62, with two counts of sexual assault.

According to Barry, Thompson was notified of the allegations late this week and voluntarily attended an OPP detachment Thursday to be charged.

The OPP said it will not be releasing further details in order to protect the identity of the victims. The force is asking for anyone who has information related to the investigation to come forward.

Thompson is scheduled to appear before the Ontario Court of Justice in Bracebridge on Nov. 1.

Thompson was first elected in 2003, and for the past eight years has been an ally of Mayor John Tory. After news of the charges broke on Thursday, Tory released a statement saying Thompson had agreed to step down as chair of council’s economic development committee, a role that has seen him travel the world to attract business to the city, and to relinquish the title of deputy mayor, a largely ceremonial position.

On Friday, a spokesperson for Centennial College said that earlier that day Thompson had also tendered his resignation from the school’s board of governors.

“Centennial College takes all allegations of sexual assault seriously, therefore it would not be appropriate for Councillor Thompson to continue in his role,” the spokesperson said.

Before Barry resigned from the case, he told the Star Thompson planned to plead not guilty and would “vigorously defend against these allegations and he is asserting his innocence.” He added that Thompson was co-operating with the authorities “to hopefully have him exonerated in the near future.”

Barry also told media the alleged victims in the case are two adult women.

The Star has not been able to reach the alleged victims or their representatives.

The charges come just weeks before the Oct. 24 municipal election. Thompson has registered to run for re-election in Ward 21, Scarborough Centre, for what would be his sixth term.

His city hall office was closed and dark on Friday afternoon, as was his Lawrence Avenue East campaign office.

On Thursday evening, shortly after the charges were reported by the media, a campaign worker told the Star that senior campaign officials were all out putting up Thompson re-election signs on the first day it was legal to do so.

Thomas Rowland, who works at a neighbouring business in the plaza, said up until Friday Thompson’s campaign office has been a hive of activity.

“Maybe 20 to 30 (people) coming and going”, many wearing red campaign jackets on a typical day for about the past month, Rowland said.

“As far as I know, it’s been empty all day” Friday, he said.

In addition to promoting Toronto’s business interests, Thompson, who is council’s sole Black member, has championed policies to combat racism within city government, and was a vocal opponent of police carding. He served on the Toronto Police Services Board from 2010 to 2014.

According to his council biography, he’s the recipient of the African Achievement Award for Excellence in Politics, the York University International Award and the Bob Marley Lifetime Achievement Award.

He also sits on the boards of Destination Toronto and Canada’s Walk of Fame. The organizations didn’t immediately return a request for comment Friday.

With files from David Rider

Ben Spurr is a Toronto-based reporter covering city hall and municipal politics for the Star. Reach him by email at bspurr@thestar.ca or follow him on Twitter: @BenSpurr

How inflation, rate hikes and a looming recession could push a wave of cash-strapped Canadians to bankruptcy

Sep 30, 2022 11:00:00 AM

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“Wickedly high.”

That’s how Doug Hoyes describes the amount of debt Canadians are carrying. And he would know: the licensed insolvency trustee spends his days working with people who are drowning in debt, at a time when consumer insolvencies are hitting the highest levels since the start of the pandemic.

Interest rates are rising, a recession is looming, and inflation is pushing up the price of everyday goods such as groceries, which are now so costly that some are skipping meals.

There’s a debt crisis brewing, economists say, and it’s pushing cash-strapped Canadians, now carrying an individual average debt load of $21,128, to the brink.

Already, for every dollar of income earned, Canadians owe $1.81 in debt.

“It’s just going to keep getting worse,” Hoyes said, as more Canadians turn to credit to pay for necessities.

Between new lending as demand for credit rises and higher spending linked to inflation, consumer debt in this country — excluding mortgages — has climbed to $591.4 billion. That’s an increase of more than five per cent compared to the same time last year, according to a recent report from Equifax, a credit reporting agency that tracks credit scores and debt.

Total consumer debt grew by more than eight per cent in the second quarter of 2022 — to $2.32 trillion — compared to the same period a year ago, the Equifax report shows. Overall, the amount Canadians owe on their credit cards is at the highest level since the fourth quarter of 2019.

The numbers are so alarming that Canada’s big banks are preparing for a worst-case scenario, setting aside millions of dollars in anticipation of a wave of loan defaults.

The Equifax report found consumer insolvency — people who can’t repay their debt — has risen to the highest level since COVID-19. Consumer proposals, a method of debt management wherein an insolvency trustee puts forward a lower payment plan to creditors, are up 20.7 per cent compared to a year ago, and account for 76 per cent of all insolvencies.

These rising debt levels represent a marked shift from the pandemic era, when non-mortgage debt such as car loans and lines of credit fell by a record $20.6 billion, according to Statistics Canada, in part due to government support programs and a slowdown in non-essential spending.

Hoyes, who is co-founder of debt counselling firm Hoyes Michalos, anticipates a worsening situation as people watch their mortgages become more expensive or see the cost of living continue to rise.

“Everyone can sort of bob and weave for a few months,” Hoyes said. “But with each passing month, more and more people get to the breaking point.”

The inflation factor

Inflation has cooled slightly, but that doesn’t mean the price of goods is dropping. Canadians are stretched thin at the cash register, and more are turning to food banks in addition to credit.

The inflation rate in August was recorded at seven per cent, according to Statistics Canada, down from 7.6 per cent in July, a slowdown largely driven by falling gas prices.

Wages, though rising overall, have not spiked at the same speed as inflation, meaning money doesn’t go as far as it used to when it comes to covering the cost of essentials.

Despite the lower inflation rate recorded in August, the price of groceries has stayed exceptionally high, with food inflation clocking in at 10.8 per cent in August. This, Statistics Canada said, represents the fastest price rise since August 1981. It means, essentially, the same food you bought a year ago now costs on average nearly 11 per cent more.

The high cost of living means Canadians have largely reversed course on the progress they made during the pandemic in tackling debt they owed, and are now seeking credit to fight inflation.

There has been a higher than usual demand for new credit cards, said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada. And it’s people with lower credit scores whose card balances are seeing the biggest increase, according to the Equifax data, indicating they’re likely charging small, everyday purchases to their credit cards to navigate the high cost of living, Oakes said.

The demand is driving competition: lenders are offering higher limits on new cards: the average credit limit is up $1,200 compared to the same period last year. Overall, the average card limit on new cards is more than $5,800, the highest it has been in the last seven years.

The interest rate pinch

Canada’s debt problem doesn’t lie solely with credit cards.

Many homeowners have taken on large mortgages, with some now facing ballooning monthly payments because of ongoing rate hikes.

In a bid to cool inflation, the Bank of Canada has increased interest rates five times since March. The key lending rate now sits at 3.25 per cent, up from 0.25 per cent from the start of the year.

Julia Wendling, an economist with Rosenberg Research, said the higher rates mean homeowners will need to redirect more cash toward their mortgage, leading to a drop in consumer spending.

Wendling said her organization is calling for a pause on hikes following the next Bank of Canada meeting in October. The housing market “has already started crumbling,” she said. “We think that’s going to continue, and that’s it’s going to ultimately lead the Bank of Canada to realize that the Canadian economy, as indebted as it is, cannot support these higher interest rates.”

Other economists share Wendling’s concern.

“We’re facing one of the steepest rises in interest rates in a single year that we’ve seen since the mid-1990s,” said Douglas Porter, chief economist and managing director at BMO Financial Group. Further upticks could mean Canada is facing rate hikes not seen since the early ’80s, he said.

The pandemic boom in the housing market before the rate hikes took hold has led to a new rise in debt levels, largely due to the size of Canadian mortgages, Porter said. That comes with both good and bad news: while the debt is healthier when it is held in mortgages because there is an asset attached to it, is still at an all-time high as a share of income.

David Macdonald, senior economist with the Canadian Centre for Policy Alternatives, told the Star the danger of the hikes lies in their longevity.

If the Bank of Canada continues to raise rates, more of the population will be exposed to the additional stress on their mortgages as more people renew their terms. (Right now, those most exposed are homeowners carrying variable rate mortgages, and those who are currently in the process of renewing).

While it isn’t likely that a large number of homeowners will lose their homes from the added stress, “it’s more that there will be a rash of people becoming house poor,” Macdonald said. “A lot more of their money is going to interest payments on their mortgages.”

The recession question

It remains unknown how hard the first economic downturn since 2007 will hit the country — but between the high cost of living and the rise of interest rates, the situation looks dire.

Wendling, of Rosenberg Research, said a recession is “all but guaranteed” given the Bank of Canada’s rate hikes. With less money available to spend overall, people prioritize essential costs first, which in turn pulls consumer spending out of the economy and leads to a decline in Canada’s GDP, she said.

“We think that the contraction in GDP that we are going to see is going to be a lot more negative than most people realize,” she said. A contraction in GDP shows that economic activity has decreased; if this happens for two or more quarters, it indicates that, technically, a country has entered a recession.

The earliest that could happen here is at the end of the year — if GDP growth is negative for both the third and fourth quarters of 2022.

While some have suggested a recession could turn out to be mild, BMO’s Porter said it’s too soon to know how one would play out. “You can’t know that a downturn won’t turn into something deeper,” he said. “Our household debt situation does make us vulnerable to other shocks that could lead to job losses or further interest rate hikes.”

For its part, the Bank of Canada has consistently argued that Canada’s high inflation justifies the continued rate hikes, even as some economists say they will lead to a recession.

“The governing council remains resolute in its commitment to price stability and will continue to take action as required to achieve the two per cent inflation target,” the bank said at the announcement of its September increase.

By raising interest rates, the cost of borrowing should be so expensive that consumers balk at the price, in turn spending less and driving down the cost of goods, lowering inflation.

But with a recession now on its way, the unemployment rate could rise as businesses look to save money. In the face of job loss, said Hoyes, people simply can’t pay down debt.

In a nutshell, said Hoyes, “we’ve got a big problem on the horizon.”

CP24 News

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