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IMF warns of looming financial crisis, says world is woefully unprepared to handle it

A closer look at the day's most notable stories with The National's Jonathon Gatehouse: IMF warns of likelihood of another global recession; Canadian technology helps grow tailored food using 'light recipes'; comedian Kevin Hart's decision to step down as Oscars host raises a host of questions.

Newsletter: A closer look at the day's most notable stories

IMF first deputy managing director David Lipton, seen here at the 2018 spring meeting of the International Monetary Fund and World Bank Group at IMF Headquarters in Washington, warned Tuesday that another global recession is looking increasingly likely. (Saul Loeb/AFP/Getty Images)

Welcome to The National Today newsletter, which takes a closer look at what's happening around some of the day's most notable stories. Sign up here and it will be delivered directly to your inbox Monday to Friday.

TODAY:

  • The International Monetary Fund is warning that another global recession is looming, and governments and financial institutions are not properly prepared.
  • Canadian technology helps grow tailored food using "light recipes."
  • Comedian Kevin Hart's decision to step down as Oscars host raises a host of questions.
  • Missed The National last night? Watch it here.


The gathering economic storm

The International Monetary Fund is warning that another global recession looms on the horizon, even as governments and global institutions remain woefully underprepared for the next financial crisis.

In a speech delivered in London this morning, David Lipton, the IMF's deputy director, told an audience that two years of lobbying governments to "fix the roof while the sun shines" has met with limited success.

"Like many of you, I see storm clouds building, and fear the work on crisis prevention is incomplete," he said.

Lipton, the No. 2 to IMF head Christine Lagarde, said there is a pressing need to work towards limiting the next, inevitable downturn to a "garden variety recession," as the risks of another 2008-style global meltdown remain high.

International Monetary Fund managing director Christine Lagarde, right, and IMF first deputy managing director David Lipton hold a news conference at IMF Headquarters in Washington in April 19. On Tuesday, the IMF warned that the global financial system is not well prepared to deal with another major downturn. (Chip Somodevilla/Getty Images)

But world leaders have fewer tools in their emergency kits than they did a decade ago, he said, after years of deficit spending and soaring national debt levels.

"We should not expect governments to end up with the ample space to respond to a downturn that they had 10 years ago," said Lipton. He added that "enduring public resentments" might make the sort of corporate bailouts and stimulus packages that limited the damage of the Great Recession a much harder sell the next time around.

"The point is that national policy options and public financial resources may be much more constrained than in the past," he said.

The IMF isn't the only institution forecasting a stormy future.

On Monday, BlackRock, the world's largest money management firm, released its annual Global Investment outlook, putting the risk of the world slipping into a recession in 2019 at a very scientific-sounding 19 per cent. By 2020, the company predicts a 38 per cent chance of a major downturn, rising to 54 per cent in 2021.

Either way, BlackRock is already warning clients to rebalance their portfolios in anticipation of an economic contraction.

BlackRock Inc., the world's largest money management firm, estimates the risk of the world slipping into a recession by 2021 is 54 per cent. (Lucas Jackson/Reuters)

Spooked by the recent drop in world markets, a number of other analysts and economists are sounding the alarm over potential meltdown triggers, like Donald Trump's trade war with China or a no-deal Brexit.

Late last month, Mark Carney, the governor of the Bank of England, sketched out the worst-case scenario for the U.K.'s impending divorce from Europe, including:

  • an economy that could shrink by eight per cent
  • the value of commercial property tumbling by almost half
  • 7.5 per cent unemployment
  • the British pound trading 25 per cent below the U.S. dollar

The outlook from Canada's central bank is more bullish.

Last week, Stephen Poloz, the governor of the Bank of Canada, told a Toronto audience that the low oil prices that are causing hardship in Alberta and Saskatchewan will reverberate across the country, but that he doesn't anticipate a national downturn.

In fact, Poloz said that his prime worry remains inflation, signalling more interest rate hikes in coming months.

Stephen Poloz, Governor of the Bank of Canada, says his prime economic worry is inflation. (Sean Kilpatrick/Canadian Press)

One cause for optimism is that the current stock market jitters, and the slowdowns in China, Germany and Italy, don't appear to resemble the pattern of past recessions.

Economists at UBS Securities recently charted 120 downturns in 40 different countries over the past four decades, and concluded that the current atmosphere is more consistent with a "sharp slowdown" than a depression. Especially since consumer spending, employment and productivity all seem to still be on the upswing.

It's worth noting, however, that precious few economists and analysts called the 2008 mortgage security crisis in advance, and even then no-one anticipated the failure of two giant Wall Street investment banks and all the downstream, worldwide consequences that followed.

The central problem remains the same one identified this morning by the IMF's Lipton — it's awfully hard to get people interested in rainy day preparations when the weather remains so warm and pleasant.


Growing food using 'light recipes'

Senior business reporter Aaron Saltzman and producer James Dunne checked out a futuristic, made-in-Canada solution to the romaine lettuce E. coli problem. It's technology that goes far beyond produce — so far, in fact, it's actually out of this world.

Sitting at the dinner table the other night, my 10-year-old son asked me what story I was working on. When I told him, he asked me, "Can they make vegetables that are good for you that taste like ice cream?"

Not quite. Not yet. But actually, he's not all that far off.

The genesis of the story, as odd as it may sound, was the E. coli outbreak last month that's linked to romaine lettuce.

It was the third such outbreak in North America in the past year alone.

As with most E. coli outbreaks involving produce, the exact source hasn't been found. All investigators have been able to determine is that it was linked to romaine grown sometime in the fall, somewhere in central or northern California.

With most E. coli outbreaks involving commercially farmed and distributed produce, the exact source of the contamination is difficult to pinpoint. (Andrew Caballero-Reynolds/AFP/Getty Images)

"Traceback information from four restaurants in three different states so far has implicated 10 different distributors, 12 different growers, and 11 different farms as potential sources of the contaminated lettuce," the FDA said in a release.

"The information indicates that the outbreak cannot be explained by a single farm, grower, harvester, or distributor."

And that is often the case — the source of many, if not most, E. coli outbreaks like this goes undetermined.  

"We've got a product that is consumed daily. Its consumption is arguably growing. And there is a significant supply chain issue," says Amin Jadavji, CEO of We The Roots.

Jadavji's company has a small hydroponic farm in a warehouse in the east end of Toronto.

Just 100 square metres in size, it's fully automatic, with plants moving through a multilayered racking system that stretches from floor to ceiling.

"I think people today want to know where their food comes from. And it's not enough to know that it came from California," Jadavji says.

"We have a solution where we can track from the seed all the way through the growth cycle. We know the PH level and the nutrient contents of the water that these plants were grown in, essentially every single day of its life," he says.

We The Roots CEO Amin Jadavji, right, gives CBC's Aaron Saltzman a tour of his company's vertical farming operation in a Toronto-area warehouse. (Yan Jun Li/CBC)

There are plenty of indoor, urban farm operations in cities around the world. Check out Paris-based Agricool, for example, which grows strawberries in shipping containers in various spots in that city and just raised millions to expand into other fruits and vegetables.

Jadavji's operation is a step up. And it's because of Canadian technology.

Yes, like Agricool, the east Toronto operation is a controlled environment. The plants are nourished by a closed-loop water system. Dehumidifiers remove moisture from the air, creating a byproduct of distilled water filled with organic nutrients. This, not soil, is what the plants are grown in.  

But the big difference in Jadavji's set up is an extremely specialized lighting system that allows him to control and manipulate the size, texture, taste, and even the nutrient level of the produce.

"We have the technology today to make highly nutritious food. We can increase things like calcium and phosphorus and various vitamins by as much as 50 per cent just by changing light recipes," Jadavji says.

They change those light recipes by changing the colour spectrum of the lights. Different colours produce different effects.

The lights were developed by a Norwegian firm, but the system as a whole is technology developed at the University of Guelph, originally for the space race.

"The pull for the technology is the challenge of going to the moon or Mars and developing plants for human life support," says Mike Dixon, a professor in Guelph's School of Environmental Sciences and the director of the Controlled Environment Systems Research Facility.

"Food determines how far from Earth we can go and how long we can stay," he says.

"We want to reduce the mass and energy of growing food for life support. So we need disinfection protocols that don't leave toxic residues, we need hydroponic systems that you can recycle indefinitely and reliably," Dixon says.

"And you need a really high-fidelity, controlled environment, including light quality and quantity."

Arugula thrives under the special LED light recipe at the We The Roots indoor vertical farming facility outside Toronto. (Yan Jun Li/CBC)

This type of control and ability to manipulate food sources without genetic modification or the use of chemicals also has multiple applications for life here on Earth. Jadavji's operation is the first commercial enterprise using Guelph's technology, and he's currently supplying several higher-end restaurants in the Toronto area.

The system offers the ability to provide fresh, local, pesticide-free vegetables not only in urban environments, but also in places like the Canadian North.

The federal government has yet to move on this idea to bolster access to fresh foods in remote communities, but another country has. Kuwait recently opened its own pilot system using the Canadian technology to provide food security in the desert.

Perhaps one day Canada will recognize its potential for more widespread use here at home.

- Aaron Saltzman

  • WATCH: The story about high-tech produce farming tonight on The National on CBC Television and streamed online


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Problematic apologies

Last week comedian Kevin Hart had the shortest-lived tenure of any Oscars host. He was announced as the Oscars MC on Dec. 4, and two days later he stepped down from what he called the opportunity of a lifetime. The reasons are all-too familiar: thanks to the internet, his problematic past caught up with him. But Hart took a stand, refusing to apologize. On tonight's Pop Panel we ask whether any apology can be enough and what, if anything, can make your past stay in the past, writes producer Tarannum Kamlani.

To apologize or not to apologize. This was Kevin Hart's dilemma just a day after he was anointed Oscars host.

Hart is one of the most successful comedians working today, a household name thanks to his movies, tours and stand up specials.

But it's no secret that some of his material, both in his act and on his Twitter feed, is deeply and openly homophobic, and it's there for anyone to see.

Inevitably, it did not take long after the Oscars MC announcement for someone to dig up the tweets, because as we all know by now, the internet never forgets.

Actor Kevin Hart arrives at the Los Angeles premiere of 'Jumanji: Welcome to the Jungle' in Los Angeles on Dec. 11, 2017. Hart has bowed out of hosting the 91st Academy Awards, after public outrage over old anti-gay tweets. (Jordan Strauss/Invision/AP)

According to this video Hart posted to his Instagram page, the Academy asked him to apologize. And he made the choice to step down rather than give in to pressure from, you guessed it, "trolls."  

Hart has made the case that he has "addressed" his past material, and has "evolved." But he doesn't appear to have actually used the words "I'm sorry" or "I apologize" until after he stepped down.

All of which raises several questions: Why did Hart simply not just say I'm sorry for my past? Why did the Academy, facing another annual telecast in ratings freefall, not do its homework?

And then there's the more fundamental question of whether it's ever enough to apologize. Is saying you're sorry just once enough, or will you have to repeat those words every time your past is brought up?

And finally, with this kind of scrutiny, who on Earth would want to host the Oscars anyway? (As of this morning, we may have an answer.)

Stage craft artist Rick Roberts gives Oscar statues a fresh coat of gold paint ahead of the 2017 Academy Awards in Hollywood, Calif. The board of the directors for the awards are evaluating what to do to replace Kevin Hart as the host of their next show. (Mike Blake/Reuters)

That's part one of what our panelists will unpack on The National this evening.

We'll also take on problematic Christmas songs. The brouhaha over Baby It's Cold Outside just won't die down, so we'll dive in and ask what are some of the other well-loved seasonal ditties that just don't sound the same in 2018.

In the host's chair tonight, making her Pop Panel debut, is Adrienne Arsenault. Joining her around the table are news curation editor at Buzzfeed News Elamin Abdelmahmoud, Ishani Nath, senior editor at flare.com, and writer and columnist Stephen Marche.

Hope you'll join us!

- Tarannum Kamlani

  • WATCH: The Pop Panel tonight on The National on CBC Television and streamed online


A few words on ...

Reaction to a new Ontario Human Rights Commission report on racial profiling by Toronto Police.


Quote of the moment

"In terms of substance, these are half measures. We can feel that Macron has got a lot more to give."

- Benjamin Cauchy, one of the spokespeople for France's "yellow vest" movement, reacts to concessions delivered by the president in a televised speech last night. The protests continue across the country today, with 170 demonstrations and 45 road blockades.

Benjamin Cauchy, centre, a spokesperson for the 'yellow vests' (Gilets Jaunes) movement in Haute-Garonne, talks with a yellow vest demonstrator in Toulouse, southern France, on Nov. 21. (Pascal Pavani/AFP/Getty Images)

What The National is reading

  • Canadian ex-diplomat detained in China (CBC)
  • Theresa May locked in car while Angela Merkel looks on (PoliticoEU)
  • 'I will be born again': First wave of Syrian refugees set to become Canadian citizens (CBC)
  • Pilot gets 7 years in prison for attacking Hydro-Québec network (Montreal Gazette)
  • Massive arched bridge to link China to Myanmar (Asia Times)
  • Voyager 2 probe reaches interstellar space after 41-year trip (CNN)
  • Forgotten statue kept in margarine tub is a 2,000-year-old treasure (Guardian)
  • Nuns steal $500,000 from school for Vegas gambling spree (Deutsche Welle)

Today in history

Dec. 11, 1998: Do-it-yourself divorce

Just in time for Christmas, a do-it-yourself divorce kit. This New Brunswick publication is so popular that booksellers can't keep in on their shelves, and the reserved list at the public library is lengthy. Little wonder, since it promises a conscious uncoupling at the low, low price of $140, compared to $1,000 or more for a traditional, lawyer-driven marriage dissolution. "It looks complicated, but it really isn't," explains Nancy Hartling, a happy customer. "You study the book first and then you go through the process. Just like getting your driver's licence."

Divorce kits make it easier and cheaper to get a divorce in New Brunswick. 1:44

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About the Author

Jonathon Gatehouse

Jonathon Gatehouse

Has covered news and politics at home and abroad, reporting from dozens of countries. He has also written extensively about sports, including seven Olympic Games and a best-selling book on the business of pro-hockey.