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A banker’s unusual approach to analysis

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in Leaders & Managers,Leadership Skills

Stephen Poloz runs the Bank of Canada, the nation’s central bank. As a central banker, Poloz scrutinizes economic models to predict movements in the global financial system.

But Poloz doesn’t just rely on data that he gleans from his computer screen. In addition to scanning models, graphs and economic indicators, he also gathers evidence by interviewing actual people.

Poloz and his team spend some of their time traveling through Canada chatting with a range of citizens, especially business executives, about economic issues. For example, his researchers went to Calgary to meet with managers at energy companies to ask them about infrastructure investments they were considering. Poloz’s staff also visited Toronto to pick the brains of retail executives on the competitive pressures they faced when pricing their merchandise.

Discussing such topics with people face-to-face helps Poloz draw more accurate conclusions about the economic ­challenges that impact real businesses.

He then seeks to reconcile his team’s in-the-trenches findings with economic modeling data.

In describing his unconventional approach, Poloz provides an analogy. He compares central bankers to “the sailors of another era who were driven far off course by a nasty storm. When things calmed, they found themselves in the Southern Hemisphere. Suddenly the navigational chart that they relied on—the night sky—was completely different.”

His comment reflects the confusion that many central bankers around the world confronted in 2008 during the financial crisis. The turmoil led many of them to realize that leaning too heavily on computerized models was foolhardy.

— Adapted from “Canada Central Banker’s Unusual Approach,’” Jon Hilsenrath and Elena Cherney, www.wsj.com.

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Rudy Haugeneder November 3, 2014 at 5:34 pm

Don’t get your Christmas expectations too high. In fact, it might be worthy to lower them due to an impending, if not already under way, economic downturn in the oil patch.
With big world economies slowing down, oil prices dropping and fracking oil and gas surpluses exceeding demand, it appears Alberta, Saskatchewan and BC oil field booms have become, at best, stagnant — meaning the need for new workers is collapsing — or, at worst, the boom is over, something that has often happened in the past, meaning there will soon be a lot of layoffs. For those to be laid off, that means living on a few hundred dollars weekly rather than big wages, and a corresponding collapse in living standard — something most, especially among younger workers, will find almost impossible to adjust to.
And it will be even harder on the federal and provincial governments who depend on oil and gas taxes to keep things running smoothly or at least keep deficits down to a manageable level.
On the international job front, especially in the West, there are no skill shortages nor will there be any in the future as artificial intelligence and robotics replace humans in every job and professional arena, including medicine, the police and military, education, construction, science and ditch digging. In fact, in the coming years and decades there will be a massive — massive — surplus of workers in every field, meaning unless the economic/ political system changes to include a Guaranteed Annual Income for everyone, violent social unrest by the trained jobless masses of all ages will become a permanent feature.

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