Toronto is Money: Part I, Hedging and Nudging

Bank of Canada Governor Tiff Macklem causes thoughts and positions of those invested in Canuckistan occasional consternation, understandably. Life and investing aren’t without risk.

According to widespread reports, Canada’s senior public banker surprised most financial analysts June 7 with the decision lifting the bank’s policy rate 25 basis points to 4.75%. Can you say for sure though? Authors writing about markets can be cagey as a rule.

Some of what makes it to printer or public electronic access will testify to one position in front of the crowd, but be authored by writers who quietly recommend hedging bets for a selection of others.

Timing is critical if not everything. Positions change. Disclaimers warn such that “opinions expressed are to date and subject to change without notice” meaning they’re historical at the time that you read and contemplate them. Debt and equity analysts release some information about their own positions in reports.

You can be sure that by surprising even a small selection of paid forecasters, the Governor vexed more investors. Following the decision, journalists discussed potential regret. In the context of a retail contraction less than a percentage point in March, of financial services being down in two of the last four months, and of residential construction being off for five, some contemplated trouble. In that regard, the former Rotman School of Business dean who left that University of Toronto role for the new leadership position three years ago could come to “rue” his decision it was suggested.

Short-term indications indicate nothing definite, not in total, specifically because they are short. Longer term, past and future, analysts will perceive a more substantial and meaningful picture. The Governor, who originally joined the bank in 1984, contemplates short and longer term movements.


According to social science professor emeritus David Livingston, the need to speculate was already legitimate scholarship back in the 1970s. Individuals in government, business and academia, as a result were even then piling on a growing “body of literature concerned with the projection of ascertainable trends and the presentation of alternative societal models.”1 That body has proliferated since.

Forecasting for banking capitals such as Toronto is not unlike the legal betting industry that has grown up around professional sports. Canada’s biggest banks, five of six of which are headquartered in the city, and investments specialists employ capital markets divisions whose speculative function attract public attention via loud financial journalists and quieter discussions within government bureaucracies.

Although it’s unlikely to procure a concrete answer, how much governments are nudging this guesswork along in order to influence behaviour is an interesting question. If we’re hedging how much are we also consciously prodding? Obviously mass media and social media and are playing large roles here, and some fortunate media owners are becoming fabulously wealthy.   

Printed science fiction is a speculative genre today which own, I’m thinking, not only a small minority audience but vastly shrunken per capita from before. So yes, there’s an urgency to sit back and reflect on what is within the realm of possibility. In Livingston’s comparison of five sci-fi novels for journal International Organization,Gather Darkness!, Nineteen Eighty-Four, Stand on Zanzibar, Teg’s 1994 and The Space Merchants2now over fifty years old, the former Case Western fellow and jazz musician compares how authority allocates decision making.

Macklem is a bureaucrat, but his “riff-raff” colleagues who will face down public electors would prefer to be idealized as re-electable. As such, they likely prefer to engineer risky unpopular momentum shifts like recessions and real estate crashes, from behind the scenes where possible.

According to Livingston, sci-fi social systems into the 1970s were typically of two types. There was “traditional” stratification with its “mass of workers and peasants at the bottom, salaried personnel and lower echelon managers at the middle level, and a small group with ultimate decision making* authority at the top level.”3 These dramatic, simplified idealized worlds are thoroughly distinguished from historical recreations.

If authors and readers are speculating with their illiterations, how else are they thinking about the future? It goes without saying that much of economic speculation is charted.

In regards to Canadian housing, the above chart makes the most sense and puts current insanity in perspective. The market up north is unhinged from reality. A big reason there hasn’t been a reckoning already is that banks are holding the swing back to the rational by allowing the delinquent to layer unpaid interest on top of the principal, suggests the Globe and Mail’s Jason Kirby.

But the dire image of this disconnect is not the only way to think about Toronto’s future, nor are charts the only media for exercising imagination. Just the other day, I saw UrbanToronto contributor hawc’s photo of a downtown la ville reine looking more oddly barren than I had seen in a long time.

Next “Toronto is Money: Part II, Starts and Stops.”


  1. Livingston, D. (1971). Science Fiction Models of Future World Order Systems. International Organization, 25(2), 254-270.
  2. Novels are accompanied by three short stories.
  3. Livingston, 1971, 255.