Asian nations must address imbalances

Looking back to your childhood, it didn't seem to matter whether it was a game of touch football, a baseball game or matching sports trading cards. There was always one kid who didn't want to play by the rules.

Bank of Canada Governor David Dodge has noticed that certain Asian nations such as China aren't playing by the rules either and it could become a major problem for the rest of the kids on the playing field that is the global economy.

That was Dodge's message in a recent speech to the Barbados International Business Association in Bridgetown, Barbados.

Specifically, Dodge was referring to global financial and economic imbalances that, unless addressed, could stall global economic growth.

"When I say global imbalances, I am referring to the large and persistent current account deficit in the United States that is mirrored by large current account surpluses elsewhere, especially in Asia and in many oil-exporting countries.

"At the Bank of Canada, we see (these imbalances) as reflecting the financial flows associated with mismatches in savings and investment within major regions of the global economy," Dodge explains.

According to Dodge, since the latter half of the 1990s, many economies outside of the United States have increased their national savings significantly.

At the same time, the United States has reduced its level of savings and instead has become increasingly reliant on foreign borrowing.

While Dodge said that this isn't currently a problem, "The sheer size of these financial flows into the United States is not sustainable indefinitely."

In particular, Dodge singled out countries such as China who keep their currencies at artificially low levels for not playing by "the rules of the game."

"What do I mean by "the rules of the game"? For countries with a fixed exchange rate, this means that authorities need to run appropriate policies in order for the fixed exchange rate to be sustainable.

"In particular, countries with a fixed exchange rate and a current account surplus should not sterilize the foreign exchange interventions required to fix the value of their currency. By sterilize, I mean offsetting the effect of interventions on the domestic money supply," says Dodge.

You don't have to read too far between the lines to realize that Dodge is referring to China and its habit of stifling the inflationary effects of its interventions into its foreign currency exchange.

"When countries offset the effects of intervention, they delay domestic economic adjustment. They also delay global adjustment.

"Just as worrying is the fact that such intervention is provoking threats of protectionist measures in certain political quarters. Such wrong-headed measures could choke off the growth of international trade that has led to rising incomes worldwide," Dodge warns.

According to Dodge, such a scenario left unaddressed could lead to a period of very slow growth and trigger periods of recession.

"Essentially, the global economy needs a commitment by all countries to a renewed international monetary order, and a willingness to play by accepted rules within this order," Dodge says.

Jerry Cook
Editor, MPP
jcook@clbmedia.ca 

Conestoga College students win welding awards

Five students in the Manufacturing Engineering Technology-Welding and Robotics program at Conestoga College, Kitchener, ON have received awards for outstanding program-related achievements.

The awards were sponsored by a number of leading welding industry firms and a major Canadian welding association.

Manufacturing Engineering Technology-Robotics and Automation is a three-year diploma program located at Conestoga's campus in Guelph, ON.

It is a highly specialized and advanced welding technology program with emphasis on robotic programming, industrial automation systems, production planning and quality assurance.

The winners of the Lincoln Electric Award were Darby Burse and Tavis MacDonald.

The $500 award sponsored by the Lincoln Electric Company of Canada Ltd., Toronto, ON goes to a third-year student in the program in recognition of technical project excellence.

Project-based work that applies theory to industrial situations is central to Manufacturing Engineering Technology-Welding and Robotics program.

Praxair Canada Inc., Mississauga, ON sponsors the Praxair Academic Awards-two $500 awards presented to the first-year and second-year students who achieve the highest academic average.

The winner of the first-year award was Colin Spencely while the second-year award winner was Adam MacDonald.

The Canadian Welding Association (CWA) Golden Triangle Award is sponsored by the Golden Triangle Chapter of the CWA.

The $250 Canadian Welding Association Golden Triangle Award recognizes the Congestoga College student who wins the contest to represent Congestoga at the annual Ontario Technological Skills Competition (OTSC).

The award was presented to Ben VanDorp, who won a provincial gold medal at the 2005 OTSC.

VanDorp subsequently went on to capture a national gold medal at the 2005 Canadian Skills Competition.

Above Photo
Five students of Conestoga College's Manufacturing Engineering Technology-Welding and Robotics program were recently recognized by the welding industry with several awards. (Left to right): Ben VanDorp, Adam MacDonald, Colin Spencely, Tavis MacDonald, Bill Gates with Praxair, Joe Barnes with Lincoln Electric, and Darby Burse.

Automotive Parts Manufacturers Association of Canada - This site is an information resource for Canadian OEM producers of parts, equipment, tools, supplies and services to the automotive industry. www.apma.ca

Canadian Machine Tool Distributors Association - A resource for Canadian machine tool distributors. www.cmtda.org

Canadian Welding Association - Information resource for the Canadian welding industry. www.cwa-acs.org

Miller Electric Manufacturing Company - The new web site offers information and resources on welding for end users and business owners. www.MillerWelds.com/Results

Wilson Tool International - New e-Business Center offers online tool orders, quotes, invoices, special tool drawings, and shipment tracking for fabricators. www.wilsontool.com