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The Citizen, 1990-02-21, Page 5jl The International Scene Letters Letter writer says Looking at those high interest rates BY RAYMOND CANON It has been brought to my attention a good many times re­ cently that it is difficult to under­ stand what the current high inter­ est rates are doing to fight infla­ tion; the same people usually ask what the connection is between the interest rates and the concomitant high value of the Canadian dollar. I take it from all this that my readers are in need of another lesson in basic economic mechanisms so here it is. I don’t want to get into the methods by which money is created in the economy but I can say that borrowing plays an integral role in m such creation. For this reason the high bank rate which is set each Thursday by John Crowe, governor of the Bank of Canada, have as their main goal the reduction of such borrowing and thus a reduc­ tion in the amount of money that people spend. However, what I want to talk about today is the effect that these high interest rates have on the value of the Canadian dollar. It is something of a chain reaction which goes as follows. The higher bank rate in this country tends to make all interest rates relatively high in Canada compared to other countries. Since the bank rate works directly off the interest Province blamed for mix-up A misunderstanding over lottery licencing that led to the Blyth Branch of the Royal Canadian Legion losing two weeks of revenue was blamed on uncertainty within the Ministry of Consumer Re­ lations at the February meeting of Blyth Council Wednesday night. John Battye, president of the Blyth Branch was present at coun­ cil to ask for an explanation of why the Legion had been told in December that it had to pay the licence fee when it hadn’t been charged a fee before. The fee meant the Legion, which was between regular meetings, could­ n’t get its licence and lost two weeks of selling “nevada” tickets before Christmas. The tickets are a major fundraiser for the group. In talking to the Ministry of Consumer Relations, he said, officials said the fee was not mandatory. Helen Grubb, village clerk-trea­ surer said the employees inside the Ministry didn’t seem to know whether the fee had to be charged or not. She said that the represen­ tative from the Ministry who called on her office made it clear the fee had to be charged but this official had since been replaced. Staff at the Ministry office didn’t seem to know the fee could be waived by the village if it wished. But she had finally got in touch with the new representative for this area and he had said the fee schedule said a “fee up to ...” could be charged which meant the council could waive the fee if it wished. Councillor Dave Lee asked how much the fee was. Mr. Battye said the fee would cost his group $60 - $70 a month and he said his group wondered where the money went, the province or to the village. Mrs. Grubb said the money would go rate of 91-day treasury bills (short term government borrowing) peo­ ple and institutions in other coun­ tries will be attracted by such rates and invest in Canadian securities. In order to do so, they must buy Canadian dollars to pay for the securities and the increased demand for Canadian dollars drives the exchange rate up. A higher exchange rate means that Cana­ dian exports cost more than they used to; in addition, Canada be­ comes a more expensive place to visit for foreign tourists. We saw one tangible result of all this when our country experienced its first monthly deficit in the balance of trade in about 15 years. At the same time goods that we import become less expensive (thereby helping to reduce inflationary pres­ sures by the way) and foreign countries also become cheaper for Canadians to visit. It was only a few years ago that we had a surplus in our balance of trade of over $20 billion; at the present time we will be lucky to end 1989 with some­ thing only slightly more than a quarter of that. Out of all this comes a very important economic law that you should keep in mind whenever you approve or do not approve of some economic policy which the govern­ ment has introduced. There is no such thing as a policy which benefits everybody and hurts no­ body; it will always benefit some­ body and hurt somebody. I think that you will agree that inflation hurts a great many people but, when you attempt to come to grips with the evils of inflation, you hurt, at least in the short term, some groups of people, including those that you are really trying to help. All those that are being affected into the village funds. Reeve Albert Wasson said the village had been ignoring the licence fee as long as it could but the Ministry changed the rules and said the money had to be charged. “Only now is it coming to light that groups don’t have to pay,” he said. Reeve Wasson said he was concerned about the way the issue between the village and the Legion came to a head (including a letter to the editor in The Citizen). “I find it difficult to accept the way this issue came from the Legion to this office,” he said, saying there had Park's future unclear Continued from page 3 PRIDE grant for the total of $6,500 estimated needed to finish the project. While the company hasn’t officially responded to the Village’s letter it did issue a statement after receiving the letter, calling it “disturbing” and saying the issue was evidence of a growing lack of communication in the village. At present the park remains unusable with large mounds of topsoil still to be spread over the outfield before seeding can begin. As well, some light standards and fencing must be installed. Mr. Black said he was concerned particularly for the minor ball players. By the time the seeding is done and the grass and turf had developed enough to be played on, he suggested, it was likely that most of the season would have been lost with ball teams having to get along with only one diamond. Councillor Dave Lee agreed that the young players shouldn’t be negatively by the high Canadian dollar can take whatever consola­ tion they wish from the fact that they are in the front line in the fight against inflation. This brings us to the corollary of the first statement. If you go off to Florida this year, to cite one example, and you find that your Canadian dollar, because of the high exchange rate, goes a bit father than it did last year, you can be sure that somebody is paying unwillingly for the slight benefit you are enjoying. In short, there is still a great deal of truth in the oft-repeated statement that there is no free lunch. Working as I have been for a goodly number of years with firms who are involved or wish to become involved in the business of export­ ing, I am able to see both sides of the coin. I try to explain to them why the Canadian dollar is so high; they know that it is hurting their business but they wonder why they have to be singled out to suffer in the fight against inflation. “Why me, O Lord?’’ seems to be their cry and I am frequently reminded when I attempt to give an objective explanation of the current econo­ mic situation that the fervent wish on the part of most Canadians is that the government carry out any policy it deems necessary as long as it does not affect them. I hope what I have explained helps you to appreciate a bit better what is going on. It won’t bring an immediate solution but it may assist you in some way to live with it. As an old German philosopher friend of mine once said, “Life is all too seldom a bowl of cherries and all too frequently a barrel of prune pits.” always been good co-operation with the Legion in the past. “I would simply now encourage you to take back to the Legion that if there is any question or inconvenience they should get in contact with us,” Reeve Wasson told Mr. Battye. Mr. Battye pointed out that some of his members couldn’t under­ stand how the issue was dealt with by the village office and wanted some answers. He pointed out his group had lost between $1,000 and $2,000 during the delay in getting its tickets. He asked that a letter of explanation be sent to the Legion membership. pushed off the diamond to make way for the older players. The one diamond will have to be aggres­ sively scheduled to make best use of the time until the other diamond is available, he said. He suggested, however, that if the grass seed is planted by mid-May it might not take that long for the diamond to be back in playing shape. While council could not give any further information at this time, Councillor Sparling said, “I’m assuming as soon as we know something it will be made public.” Here’s to marriage, that happy estate that resembles a pair of scissors: so joined that they cannot be separated; often moving in opposite directions, yet punishing anyone who comes between them. -Sydney Smith Henschel wasn’t misled THE EDITOR, I have been made aware of the article in your paper of February 7, 1990, “Henschel gets 18 month sentence” and feel compelled to make some comments. My firm acted as auditors for Brussels Stockyards Ltd. from its inception March 1, 1970 until its sale to Klaus Henschel April 29, 1987. During that time I was continually impressed by the excel­ lence of their accounting records and the competence of the office staff. In March of 1987 Mr. Bruce McCall receivd an unsolicited in­ quiry about the possibility of acquiring the business. On March 24, 1987, with Mr. McCall’s authorization I released eight years audited financial statements to Mr. Henschel for his review. After reviewing the outstanding operat­ Writer just sad now THE EDITOR, Today I am not mad. 1 am very sad. Where has our tolerance, co-operation and understanding gone. When the city of Thunder Bay declared itself to be English only nobody seemed interested in their reasons for doing it at this time. Or what could be done about correcting the situation. Every group placed their own interpreta­ tion on it and used it for all the propaganda value they could get out of it. When the Mayor appeared on a CTV television program and said what they were against was Ontario Education laws that allowed a group of French speaking people to transfer from the separate school system they had been in to the public school system and demand French Immersion classes in an area where they did not exist before the host quickly moved to another panelist and nothing more was said about it. The show only wanted an English-French langu­ age confrontation. I am old enough to remember Others need travel help too THE EDITOR, According to a report from a Huron County Council meeting in your Feb. 14 issue, a Community Information Co-ordination Service For Seniors and People with Physi­ cal Disabilities will soon be in operation. Will this program have any services for those adults with chronic psychiatric problems? Some sufferers from your paper’s service area were cut off transportation assistance a year Game called on account of...? The Diamond in the Corner had some Places that were low; And All were game to fix Them - ' ‘All Systems were on Go TobringinFilland Topsoil to make It smooth and high enough; But through a Change in how the Game was played It's a Diamond in the Rough. Because of Changes in Procedure, Someone had to change the Rules; And the Thoughts on these Adjustments camefrom two quite different Schools. So Operations halted while there the Diamond sat And We wondered who was Pitching and who was at the Bat. So a legal “Ump " was hired and We don 't know if his Call Will generate a Protest or get the Players playing Ball. Clare Vincent Londesboro. ing results, Mr. Henschel became very presistent in acquiring the company, and insisted on the earliest closing date possible. Throughout the negotiations Mr. Henschel’s personal accountant Mr. Claude Laneville C.A. attend­ ed several meetings and at no time was there any question concerning the integrity of the financial state­ ments. It is my opinion that the allegations that financial state­ ments were “not made in accor­ dance with standard accounting practices” and that Mr. Henschel “had been taken in” are without foundation. From reading your article one might conclude that the McCalls were responsible for Mr. Hen­ schel’s actions, a very wrong conclusion indeed. James W. Malcolm C.A. Elmira. well the elation across the country when the law was passed saying that every person who had been born in Canada was simply a Canadian. We no longer had to state on documents what nation­ ality our ancestors had been. Years later after much heated argument we were given a Canadian flag. Now 25 years later nearly every­ body accepts and respects it. Now we are in the midst of a rights and language dispute. How it will finally be settled 1 don’t know and I may not live to see it. One thing I firmly believe is that there are enough clear thinking tolerant co-operative Canadians in every province and society to insure that Canada will still be a single greast nation many years from now. In the meantime if anyone does not like the way they are being treated there are other communities and provinces they can move to and still be Canadians. Where else in the world can you beat that. Wm. F. Buchanan Brussels. or so ago to the day programs at Wingham Community Psych Ser­ vice. No transportation service cuts were offered to those attending the Jack Reavie Centre or the pro­ grams for the Homebound in Wingham. Have the designers of the “One Stop Access” made any plans to help the disadvantaged suffering from a severe mental illness such as chronic schizophrenia? Dan A. Webster Wingham, Ontario.