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Page THE HERALD OUTLOOK Saturday February 1M0 the HERALD OUTLOOK is published each Saturday by Ihe HALTON HILLS HERALD Home Newspaper of Hallon Hills A Division of Canadian Newspaper Company Limited at Street Georgetown Ontario L7G 877 2201 PUBLISHER David A EDITOR Brian MacLeod AD MANAGER Dan Taylor Second Class Registered Number Oil 877 8822 STAFF WRITERS Ben Alan SPORTS EDITOR Colin Gibson ACCOUNTING Jennie lnga Shier CLASSIFIED ADVERTISING Joan Valuis Teeter Roberts PRODUCTION Dave Hastings Supt Annie Olsen ikon Wilson CIRCULATION Marie Shadbolt Interest rates up business confidence is down since 1984 SNAFU by Bruce Beattie Interest rates are higher and business confidence lower than they have been since Indeed business confidence has drooped dangerously close to where it was on the eve of the 1982 recession It is useful to step back and look at what was happening the last time interest rates were this high In July the yield on three- month Government of Canada treasury bills stood at 12 73 per cent The current yield is 12 per cent Diane A year earlier in April 1983 the T bill rate was 9 per cent Treasury bills trade on financial markets so they are a good measure of short term interest rates What caused the big runup from to Nineteeneighty four was a bad year for the Canadian dollar It fell from cents US at the end of 1983 to 75 cents at the end of It continued to fall in 1985 ending the year at cents Early it slipped below 70 cents S for the first time In 1984 the economy was still recovering from the 1982 sion The brief rise in interest rates in mid year caused a swift slowdown By January 1985 the treasury bill yield had plunged nearly 3 percentage points to 50 per cent This wiped out the rise Long term rates were less volatile In April for exam pie a fiveyear mortgage Joan cost 13 25 per cent By July it cost 15 per cent By January the rate had fallen three points to 12 25 per cent ANOTHER BOUNCE A month later in February rates bounced back again The T rate gained more than points to 11 per cent Fiveyear mortgage loans jumped a point to 25 per cent By fall rates had tumbled The T bill rate was down 2 75 points to per cent The mortgage rate was down l to 1 75 per cent In February 1986 the dollar came under attack on foreign ex change markets The bill rate soared more than three points to 11 per cent By the following it had tumbled 75 percentage points to 6 per ce t its low erst point in years OtT OF WHACK The fiveyear mortgage rate held fairly steadv during the 1986 dollar ens s climb a quarter of a point to per cent Over the following vear it fell along with the T bill rate although not as much In the spring of could get a fiveyear mortgage loan for 10 per cent That was the low est it had been in 10 years The bargains did not last long The low rates fuelled the post recession housing boom By the fall of 1987 a fiveyear loan had bounced back to 12 per cent It slid again in the spring of falling by half a percentage point A year later it rebounded By last spring the fiveyear mortgage rate had climbed to 12 75 per cent The T bill rate had almost overtaken it climbing a whopping four percentage points from the spring of 1988 Since then the bill rate has climbed a further quarter of a r nt while the mortgage rate has fallen For the T bill rate to catch up with the fiveyear mortgage rate is an unusual situation Con sumers are paying the same for a fiveyear mortgage as the rated federal government is for short term money Either homeownes are getting a good deal or Ottawa is getting a bad deal To restore the usual up ward slope of interest rates either short term rates must fall or long term rates must Until very recently it seemed short rates would fall Then they started climbing m Europe and Japan S bond yields a measure of long term rates began to creep higher Despite the economic slowdown it doubtful that we II see per cent mortgage loans again soon Berrys World JUST AROUND THE CORNER- Liberal leaders decency wont allow revenge It s sort of I ke a tree The number of rings tells how long it s been since Mom cleaned Canadian farmers are in for a very rocky ride down in the current talks on General Agreement on Tariffs and Trade Canadian grain farmers could be entering another gloomy decade Ironically and Hills like to be known as freemarket wheelerdealers and they per sistently preach about the evils of tradedistorting subsidies The Bush administration s farm proposals also call for multilateral reform in agricultural trade and a move towards a market system for farm goods with fewer subsidies But in the meantime it appears the United States will fight fire with fire regardless of who gets burned The current GATT talks known as the Uruguay round are schedul ed to end this year just when Yeutter proposes that his bigger subsidies kick in He says he s will mg to reduce the level of subsidies if the Europeans cooperate but there no guarantee that the United States will back off from its aggressive export program if that happens If the talks collapse over the issue of subsidies a fierce trade war is almost certain to occur Although the proposed U S farm bill does not list specific spending goals President George Bush s budget proposals include million to expand farm exports through the Export Enhancement Program roughly three times the amount spent on the program last year Another sign that the S is prepared to play hardball was a re cent sale of wheat to the Soviet Union that was made with the help of a subsidy of US a tonne In addition to an aggressive pro gram of export subsidies Yeutter said the U S administration also expects that the new farm bill will lead to an increase in production of wheat which could glut the market As one Canadian farm leader said If you comb that with export subsidies that is ex bad news prediction of expanded wheat production immediately sent wheat prices tumbling on the Chicago Board of Trade If there is any good news for Canadian farmers it comes from refusal tn attach any dollar figures to his proposals Canadian farmers are bracing themselves for another rocky as S lawmakers begin writing another farm bill that could threaten the livelihood of growers in Canada So far it looks like the may be bumpier than anticipated as the United States government prepares to get tough in the inter i ational war over agricultural trade The Bush administration pro posals for the Farm Bill which were delivered to Congress this week may be just the ing of a renewed war over farm subsidies that could find Canada farmers caught in the middle again Since the last U S farm bill was written in 1985 the United States and the European Community have used massive subsidies in the fight for international markets The result has been a rapid decline the price of wheat forcing tawa to help shore up struggling farmers with billiondollar outlays from the federal treasury Canada was looking for a sign that the subsidy war may be abating but the proposals for the Farm Bill show that the United States is determined to clobber the Europeans with even more subsidies Considering that Agriculture Secretary Clay on Yeutter and Trade Representative Hills had repeatedly warned that the U S would not unilaterally disarm in the subsidy battle the ad ministration determination to continue subsidizing grain exports picking up larger and more powerful weapons the hope that the European cannot him on subsidies However if does not back Km juvw mwwjoxA It s highly unlikely that John Turner will ever write a book about his nearly six years as Liberal par ty leader And even if he does it s even more unlikely he would as they say let it all hang out You see Mr Turner is not the type of person to settle scores or to clutter his mind with resentment about unfair treatment or things like that He holds to the theory that history will be the judge as in history will prove me right on that freetrade agreement and that it not necessary for him to influence these judgments That of course stopped others from throwing in their two cents worth of influence The result could be one fears that history won t treat the retiring Opposition Leader with the kindness he deserves What be s more likely to be remembered for is presiding over a fractured and feuding caucus for being the first Liberal leader in history never to win a general elec for serving as prime minister for the shortest period in history for being creamed by Brian Mulroney in one television debate for losing the electoral battle over free trade for failing to hold his caucus together on Meech Lake See how easy it will be for history to be so harsh But the cruel fact is John Turner was not one of the great success stones when it comes to leading a Canadian political party And if there is one constant in politics it s the difficulty of finding party insiders who are willing to share the blame with an unsuc cessful leader NOT BITTER Mr Turner is the only one who could put it all in perspective but unless he is subjected to unbearable pressure from publishers well probably never know what he endured as Liberal leader We do know that when be took over the party 1984 it was in shambles But we don really know the full extent of these shambles Nor do we know how he felt about all those behind thescenes power struggles the attempted coups the assorted acts of disloyalty the failure of the party apparatus in times of need and other tribula tions that would drive a political leader up the wall Trouble with Mr Turner is that he has this inherent streak of decency that seems to inhibit his views from time to time It s not necessarily a great virtue in politics except upon retirement when other leaders such as the NDP s Audrey McLaughlin can refer to the departing Opposition Leader as a fine man an honorable politician and a great Canadian Even Prime Minister never one to lead the Turner fan club was unstinting in praising a man of strong conviction and courage a man who smiled in tic face of adversity and who never