World’s 1% will soon be richer than the rest of us combined: Oxfam

Michael Babad, The Globe and Mail, Published Monday, Jan. 19 2015, 7:39 AM EST, Last updated Monday, Jan. 19 2015, 1:33 PM EST, Source - Globe and Mail

Act on inequality, agency urges
The globe’s 1-percenters will soon be richer than the rest of the world combined, the global aid agency Oxfam warns today in an urgent call to fight mounting inequality.

In a report issued just ahead of the World Economic Forum gathering in Davos, Oxfam calculated that the richest 1 per cent will be wealthier than the rest by next year if nothing’s done.

Oxfam’s executive director, Winnie Byanyima, is urging global leaders to act, first via a “crackdown on tax dodging by corporations” and then with various other measures.

Not only is Ms. Byanyima calling for change this week. In his State of the Union address tomorrow, President Barack Obama is expected to unveil a plan to raise some $320-billion (U.S.) over 10 years by hiking taxes on the rich while helping poorer families.

The president’s plan, seen as not having much of a chance surviving a Republic Congress, will define the end of Mr. Obama’s tenure.

Rising inequality has been a growing issue for years. And, for the record, many of the world’s wealthy are involved in trying to fix it.

The president’s address and Ms. Byanyima’s call underscore the extreme divide more than six years after the onset of the financial crisis, with many countries still struggling under crippling levels of unemployment and with wages still lagging.

According to Oxfam today, one in every nine people can’t afford to eat properly given today's "inequality explosion."

But the world’s 1-percenters will account for more than half of global wealth by next year, Oxfam says, up from 48 per cent last year and just 44 per cent in 2009, which marked the depths of the crisis.

The average wealth of the 1 per cent is $2.7-million, according to the latest reading.

But it’s still extreme even below that level.

“Of the remaining 52 per cent of global wealth, almost all (46 per cent) is owned by the rest of the richest fifth of the world’s population,” Oxfam says.

“The other 80 per cent share just 5.5 per cent and had an average wealth of $3,851 per adult – that’s 1/700 of the average wealth of 1 per cent.”

Oxfam is also pushing for universal health care and education, fair taxation, a boost to minimum wages and a “living wage,” and equal pay legislation.

Ottawa invokes anti-sanctions law
The Canadian government is invoking a rarely used anti-sanctions law after Alaska refused to void Buy America purchasing rules in the rebuilding of a B.C. ferry terminal, The Globe and Mail's Barrie McKenna reports.

The Canadian government signed an order today under the Foreign Extraterritorial Measures Act, barring companies from complying with the requirement that only U.S. steel be used on the project in Prince Rupert, B.C., Trade Minister Ed Fast said.

Despite of weeks of high-level talks to reach a compromise, Alaska Governor Bill Walker told Canadian officials over the weekend that he won’t seek a waiver of the purchasing rules. The state of Alaska, which runs the Alaska Marine Highway System, is now slated to close bids on the project Jan. 21 and then award a final contract.

Canadian officials, including Ambassador to Washington Gary Doer, had urged the U.S. and Alaska to waive the rules or delay the project. But those efforts proved fruitless.

Goldcorp in new deal
Goldcorp Inc. has struck a $526-million deal that will give it control of a project near one of its own developments.

Goldcorp reached an agreement to acquire the rest of Probe Mines Ltd. – it already holds more than 9 per cent – in a stock deal it says is worth $5 a share.

The company is paying 0.1755 of a common share.

Probe shareholders will also get stock in a new exploration concern.

The Probe project is about 160 kilometres west of Goldcorp’s Ontario Porcupine mine and, the company said, “transporting ore to Porcupine would significantly reduce capital costs and permitting requirements compared to a stand-alone development while delivering higher-grade gold production to Porcupine within a relatively short development period.”

A key week
Get ready for one heck of a week.

Today may be slow, so far, but the rest of this week promises a lot as three central banks hold their meetings.

First out of the gate is the Bank of Canada, on Wednesday. Not only will there be a rate decision, but also the central bank’s monetary policy report, which may well include a lower forecast for economic growth given the rout in the oil market.

“The key pieces will revolve around how the BoC sees the impact of oil prices on the Canadian economy and monetary policy,” said chief currency strategist Camilla Sutton of Bank of Nova Scotia.

“The market is already well positioned for a more dovish tone,” she added, noting that there are some market players now projecting the Bank of Canada could cut rates over the next year.

“The forecasts are likely to be revised lower for both growth and inflation’ but the market will be looking closely for details on how the fall in prices are being incorporated into the BoC models.”

That may be big, but expected to be bigger still is the latest from the European Central Bank, which is expected Thursday to unveil a full-scale asset-buying stimulus program known as quantitative easing.

The Bank of Japan also meets, and new forecasts are expected there, as well.

Swiss decision has wide fallout
Denmark’s central bank is following the lead of its Swiss counterpart to a point, cutting interest rates in advance of the European Central Bank decision.

Dansmarks Nationalbank said today the deposit rate would fall to minus 0.2 per cent from minus 0.05 per cent, and its lending rate to 0.05 per cent from 0.2 per cent.

The move appears aimed at holding down the value of Denmark’s krone, which rose in the wake of the Swiss National Bank decision last week to remove the ceiling on the franc against the euro.

The Swiss also dragged their rates further into negative territory.

Among those rocked and socked by the Swiss central bank’s currency-cap decision last week were speculators betting the franc would fall.

Of course, the currency soared after the Swiss National Bank abandoned its ceiling, sending ripples through global markets.

According to the latest report from the U.S. Commodity and Futures Trading Commission, the short position in the Swiss franc stood at $3.2-billion (U.S.), which according to Scotiabank was the fattest since the summer of 2013.

That’s where things stood just two days before the Swiss announcement, burning those on the short end of the stick.