Tuesday, March 31, 2009

Prepare for the worst, hope for the best

I acknowledge that attempting to predict the future in the current economic climate is nearly impossible, but one thing is for certain; it can get worse, much worse. When the American stock market collapsed in 1929, it did start to rebound the next year. However government intervention in the market exasperated the problem. Governments have a role to play in easing the pain felt in the average household, but they do not hold the key to correcting the problem. If we agree that the Global Financial System is driven by the United States and the strength of the dollar as the monetary standard; then we must alarmed if it takes a turn for the worst. The amount of debt their treasury holds relative to their GDP is insane. The margin for error is that much smaller, and if the Democrats want to spend trillions of dollars on pet projects and failed business; the negative consequences of failure are the complete collapse of the dollar. China and the EU are already talking about dumping the dollar and adopting a new Global currency.

In Canada there is very little that we can do, except prepare for the worst and hope for the best. Embark on some new infrastructure projects to add jobs to our economy, provide a moderate safety net for people who have lost their jobs, and take the opportunity to cut wasteful spending. The notion that General Motors and Chrysler are “too big to fail” is asinine. If any business engages in unsustainable activities, signs labour contracts that it can’t afford such that it is no longer competitive in the world marketplace; it should be encouraged to fail! That is economic Darwinism, survival of the fittest. Just think of GM as being like a big, furry wholly mammoth. As the world changed, the mammoth slowly withered away into extinction. Some day you will take your grand kids to a museum where there may be a GM car and you can tell them the story that once upon a time there was a powerful automotive company who signed obscene contracts with its union and went out of business. With any luck, the chapter where the Government kept dumping money onto the sinking ship, extending and possibly worsening a severe recession is not a part of the story...

“I don't know the key to success, but the key to failure is trying to please everybody.”

-Bill Cosby

Predicting the Future

While I hold an honours Degree in Mathematical Economics, I would love nothing more than to tell you what is going to happen in the immediate future, in these difficult times. My parents invested thousands of dollars in my education, over the course of which I studied every last functional component of our economy. And despite graduating with honours, I have no idea what is going to happen even 6 months from now. I am pessimistic, and my instincts tell me that drastically increasing government spending when the global financial system is collapsing is a recipe for disaster; I don't know what is going to happen. Quite frankly, nobody does. While the educational requirements to become a medical doctor are far more strict than to become an economist, the animal that is the world economy is far more complex than the human body. A doctor can walk into the emergency room and ask for symptoms, blood pressure, and vital signs, and diagnose and cure the patient in a matter of minutes. To do likewise to the economy is folly. I don't care if you have a doctorate in economics, or simply took an introductory course as a freshman; there is no way you can say what will work. Right now, all the experts are guessing. Whose guess will be right? Nobody knows for sure, but I will say this, for each expert that get it right, there will be hundreds that were way wrong. It is what is.

Friday, March 27, 2009

Earth Hour

I am an outspoken advocate for the planet Earth, and watching Edward Norton plead for my participation during Earth Hour on Saturday, I am going to spring into action. I care so much about this planet; I am going to make Earth Hour into Earth Day. To support struggling utility companies in British Columbia, I am going to keep all my lights on all day. To support our struggling forestry industry, an industry dependent on resources grown from the Earth, I am going to plan a trip to Staples to buy large bundles of paper and then burn them. As I am very concerned by the recent cooling trend displayed throughout the world the past ten years, I consider it my duty to accelerate greenhouse gas induced global warming as much as is humanly possibly. I have planned a trip to drive up and down the Sunshine Coast in my car, perhaps stopping at a camp ground to stretch my legs. Don't worry; I will leave my car running because the planet needs me. Then by the late afternoon, when everyone else is shutting off the power, I will be drafting my fantasy baseball team in an online draft, while watching TV, listening to music, with the thermostat cranked to the max setting, and all the lights on. Maybe I'll also have the oven on all day cooking a roast. All I know is that I want to do my part to help the planet, and help the industries in my home province that are struggling to survive in a severe economic downturn!

Happy Earth Day!

Tuesday, March 24, 2009

War and Democracy

I recently had a political conversation with a colleague who subscribes to the peacenik argument that corporations create wars, and that if we all just put down the guns and hold hands around a camp fire singing koombaya, the world will be a better place. It was a friendly debate, and his argument did hint of Karl Marx and the theory that if you eliminate class you eliminate war because all war is bred from class struggle. The poor/oppressed are justified in terrorism or armed insurgency because they are revolting against the evil deeds of those who have acquired wealth. To a limit, I agree that war is a byproduct of the desire of man to acquire things. Be it land, food, wealth, whatever.

Having said that, do I believe that socialism is the magic wand that can eliminate violence in the world? Not for a minute. I believe that the need in man to acquire resources and power is a basic animal instinct that you can never eliminate by drawing up a clever idea on a chalk board. We are animals. Look at the entire history of Homo Sapiens, and civilization is just the little blip at the end of the timeline. What one thing is constant in the recorded history of what we call civilization? War as a means of acquiring resources. I'm not saying that is a good thing, I'm simply pointing out that Halliburton did not convince Alexander the Great to conquer Persia.

I want to live in a world without war. While I may concede that under certain circumstances war is the best course of action, that doesn't mean that I jerk off watching bombs exploding and people dying on television. What I believe is that the megalomania, kill anyone and everyone to accomplish preconceived goals is advantageous from an evolutionary perspective in many regions throughout the world. In the Congo, Sudan, Myanmar, Somalia, the Middle East, being fucking crazy and ruthless is more likely to attain regional power than being a philanthropic pacifist. Have all the ideals you want in Rwanda, but it was the faction that had the best weapons who attained power.

We endeavor to rise above that in the "civilized world", but how do we deal with the people who revert relentlessly to their animal instincts and engage in the least civilized behaviors? Sanctions? Those tend to hurt the most the people they are intended to help. Get a United Nations consensus? Well modern history has proven that the League of Nations can rarely agree on what to do, and when they do it is more likely to fail than succeed. Remember those elections they held recently in the Congo at a cost of several billion dollars? Yeah, how did that work out?

In the Western Democratic model, we have something which is reasonably functional. There are flaws in the financial system and society in general, as we struggle to suppress the morally compromised gene. I suppose when you break it down to basic human instinct in a Game Theory matrix, it requires less effort with a greater reward to be a Bernie Madoff, and steal from hard working people than it is to do the leg work and succeed in such a way that does not take advantage of other people. Like Warlords in the third world, it is easier to raid the village next door and steal everything they have and rape their women than it is to work the land, raise crops, run businesses, and try to get laid with modern chivalry.

In our civilized society, the overwhelming majority of people are deterred from scrupulous business practices because even the small probability of incarceration prevents us from breaking the law to attain wealth. The best we can do is set up checks and balances to catch the criminals, as we can't completely eliminate crime. The notion that socialism will eliminate crime is a dream, as the act of punishing success and rewarding failure shrinks the size of the pie of which we are all competing for pieces. In the uncivilized world, there does not exist the consequences to reduce criminal behavior, and yet we endeavor to live in a world where evil does not exist and we all abide by a basic level of humanity. What NATO did in Bosnia perhaps provides us with a construct for how to deal with insane tyrants.

Many of us can likely agree that political stability is a precondition to economic prosperity. Such that if you want to eliminate ethnic cleansing in Darfur, is the solution to slap them on the wrist and impose sanctions? Or is the solution to use military force to replace the government? There is always a downside to using military force to impose Democracy, but what other means exist to force a corrupt, arguably evil regime to change their ways? Say what you will about Republicans and what they did in Iraq, it got to a point where the hope and change candidate won the next election, and now the new Obama regime is in power. If a regime in say Myanmar, the Sudan, the Congo, Somalia, or a number of others attained power by brute force, can anything other than brute force either set them straight or replace them from power? Or would we rather not engage in conflict and just allow those millions of innocent civilians to suffer under maniacal rule?

It is a slippery slope to be sure, and at this moment in time nation building is very unpopular. Though, Iraq recently had peaceful and successful elections, which the media seems content to ignore. Will that government be functional in the long term? Only time will tell. What I do know is that we are programmed with animal instincts, and the least civilized nations personify that. I see similarities to chimpanzees on the discovery channel. You have two "tribes" of chimps adjacent to one another. Every so often, a group of male chimps muster a raiding force and invade their neighboring territory. They set out to raid whatever food their neighbor has, kill the babies, rape the females, illustrating the same animal behavior of our human brethren in the Congo.

As I see it, one of the greatest advances we made in the Western world is women's rights. It has added nurture to our nature, and has thus reduced our predisposition to warfare. How can we aid the advancement of feminism in Africa, in the Middle East, and in other countries where alpha male behavior inhibits their prosperity and peacefulness? I say kick the shit out of them, but please, if you have a better idea, I'm all ears! Regardless of the Third World, if we eliminate nuclear weapons, disband armies in the West in an attempt to make the world a more peaceful place; that simply reduces the consequences of the next Adolf Hitler from acquiring the resources of his neighbors by force if he decides to do so. To me that is like saying that eliminating the RCMP would reduce crime in Canada. If we did so, I believe the opposite would happen.

Red Eye

I was actually a fan of the Red Eye show, but once I saw their rant on Canada last week, I immediately sent them a scathing e-mail and have ceased viewing any of their material. It was ignorant, both in their misunderstanding of the Canadian role in Afghanistan and their antagonizing a close ally at a time when the USA needs all the allies it can get. Sure they issued an apology, but the video is still posted on the Fox News website.

Do I think that they represent the opinion of Americans? Not exactly, but they do represent a lack of knowledge of the Canadian role in Afghanistan. My Canadian parents live in Utah, and two years ago on the 4th of July I was down there for a party attended by over 30 of our American friends. I was patriotic as always, and was educating people on the Canadian role in Afghanistan, that our military was fighting and dying shoulder to shoulder with American troops. I was also reminding them that we are the single largest exporter of natural resources to the United States. By the wee hours of the morning, after several bottles of imported Canadian beer was consumed by myself and my American counterparts, I was leading a group of patriotic Americans in singing the Canadian national anthem on the 4th of July. They did not hate Canada or see us as a ridiculous country, they simply did not know the extent to which we are their closest ally. Once they knew, they were drinking Canadian beer, singing Oh Canada, on THEIR national holiday.

By contrast, Jon Stewart frequently makes fun of Canada. Anytime we have an election, he does a satiric bit on how he forgot that there is a successful and prosperous Democracy on the northern border. When Stewart makes those arguably slanderous jokes, the Canadian media gets excited that they talked about Canada on the Daily Show. It is offensive, though not nearly as bad as slandering our military as four brave Canadian soldiers gave their lives defending the United States.

Thursday, March 19, 2009


I have been closely following recent events in Pakistan, and I am officially concerned that the inmates are within striking distance of taking over the asylum. My “spider sense” first started to tingle on our allegiance with Pakistan a few years ago when I watched President Mushareff appear on the Daily Show with Jon Stewart to pump his new book In The Line of Fire. Why he chose a comedy show to explain himself does not make any sense to me, but he carefully clarified his position after 9/11 as one where he could not openly declare war on the Pashtun/Taliban, but he could not avoid helping the Americans. When he said that he was forced to enter an alliance with America because of the “you’re either with us or against us” motto of the Bush Administration, I recalled the quote by Napoleon Bonaparte that “it is better to have a known enemy than a forced ally”

In the past year, Mushareff was forced out of power by political pressure and it looked as though former President Benazir Bhutto was destined to replace him, until she was assassinated. Elections were held shortly thereafter, and her impotent widow was elected President of Pakistan. The journey since that election has been a downward spiral of appeasement that would have embarrassed Neville Chamberlain. He has consistently made concessions to the Islamists and has actually lost sovereign territory within Pakistan. A further escalation of terrorist acts against India has complicated matters, as Pakistani paranoia has led to a mobilization of military forces to the border with India away from the border with Afghanistan. The Pakistani military is one of the best trained and effective on the planet; however their current objective is not doing anything to help the NATO mission in Afghanistan.

As Canadian forces are actively fighting for victory in Afghanistan, I have been analyzing what is required to achieve success. The bulk of the Afghan insurgency is not in coordinated military action, but rather destructive destabilization tactics like road side bombs and isolated terrorist attacks. The main area of concern is within Pakistan itself, and the power that the pro-Taliban Islamists are acquiring in the territory surrounding the Pakistani capitol of Islamabad. If the Pakistan army is unable or unwilling to knock out Taliban/Al Qaeda command and control within their sovereign territory, it then falls on NATO to accomplish that objective. The possibility that Islamists could ascend to political power in Pakistan and gain control of their military and nuclear arsenal is extremely alarming.

Part of the unwillingness of Mushareff to engage in open warfare in the North was because not all of them are foreign fighters. Many of them are Pakistani militants sympathetic to the Pashtun/Taliban fight in Afghanistan. It is the same element that helped defeat the Soviets 20 years ago, a large group of people who are among the friends and relatives of members of the Pakistani military. It is like if Quebec were conducting terrorist attacks in Maine, there would be conflicted feelings in the Canadian Armed Forces on the degree of force that we should employ when quelling the violence of our brethren. The question of the day is at what point does it become acceptable for NATO to invade Pakistan? Not to topple the government and occupy the country per say, but to defeat our enemies along the border in Pakistani sovereign territory? I’m not sure I want to know the answer to that question, much less see those circumstances unfold and force us into action.

I don’t even know what to call the people we are fighting. Al Qaeda has evolved to the point where small militia and rebel groups around the world have entered into a soft alliance with Bin Laden’s “movement” and run operations that senior leadership likely has no command or control over. Their common purpose is the overthrow of existing regional power structures which are currently being held together by Western capitalism. I shudder to call them rebels or revolutionaries, and instead have grown fond of “insurgents”. Many Pakistani people are actively aiding that insurgency in Afghanistan, and until Al Qaeda/Taliban are soundly defeated, I strongly believe that it is folly to withdraw.

I have been busy studying the underlying theories of guerrilla warfare, where the most influential tacticians in the modern age were Lawrence of Arabia and Chairman Mao. As Martin Van Creveld wrote;

“Drawing on his own experiences as leader of China’s civil war, Mao, followed by his Vietnamese student Giap, believed that the first phase of guerrilla warfare ought to consist of isolated hit and run attacks against enemy forces, with the aim of weakening and demoralizing them. The second phase would witness the consolidation of guerrilla power in some remote, outlying and difficult area to access; from there they would continue their work of propaganda, harassment, and sabotage. Once the enemy had been sufficiently weakened and started to retreat, the guerrillas, embarking on the third phase of the campaign, would resort to open warfare. The real trick was to select carefully the moment for this phase to begin.”

We are at a point in history where you can believe one of two possible modus operandi for Bin Laden. 1) He wants to be King of Saudi Arabia, or 2) He is actually working on behalf of the Saudi government to destabilize the Middle East and drive up oil prices. I will acknowledge that the latter is as likely as the former, but I do not believe that George Bush was in on it, despite what many popular conspiracy theorists in the United States might argue. Whatever the motive, it is clear that Osama’s objective was to draw the United States military into Afghanistan and bleed them to death like the Soviets. There Bin Laden had an existing infrastructure of caves, tunnels, and bunkers scattered throughout a remote mountain range that is extremely difficult to access. By comparison, Iraq is easily accessible by tanks and heavy machinery, and is predominantly flat desert with nowhere to hide but the cities.

During the Soviet invasion and occupation of Afghanistan, there was a substantial migration of young men from throughout the Middle East, who wanted to enlist to fight the Holy war against the evil invaders. That is a big reason why the Mujahedeen were able to sustain their resistance for that many years despite being largely outmatched and sustaining heavy losses. Afghanistan is a far more challenging battleground for a conventional army, and I am sure it is the preferred theatre for Jihadists to fight their Holy War. The glitch being that the international community overwhelmingly approved of NATO military action in Afghanistan, which the Soviets did not have.

When the United States invaded Iraq “illegally” it took the focus of world attention off of Afghanistan and shifted it to Babylon. As a result, the “bad guys” then shifted many of their own resources to engage the American military in Iraq, which became the new preferred destination for so-called “weekend Jihadists” from around the Middle East. The problem for the bad guys is that it is remarkably more difficult to engage the American military in Iraq than it is in Afghanistan. Whenever they engage the Yankees in direct battle, they incur heavy losses. Therefore their objective is to blend in to the civilian population and plant bombs all over the place, targeting civilians and Americans alike. This is where they differ the most strategically from Mao, who believed in winning the popular support of the people, not terrorizing them. Now the people in Iraq have turned on the Jihadists, and most young men are joining the new Iraqi army, which is now able to conduct independent military operations. I just have absolutely no idea if the Iraqi government and military can hold it together when the United States leaves. Is it unreasonable to assume that Muqtata Al Sadr is going to attempt to overthrow the government at first opportunity despite only garnering 3% of the popular vote in the recent election?

Back in Afghanistan, the insurgents have begun to gather in larger numbers and more frequently engage NATO troops in combat. This suggests that either they are recruiting larger numbers, or for whatever the circumstances they are now emboldened and taking the offensive. I can only speculate that perhaps more insurgents are taking the long march from Iraq, across Iran, to Afghanistan. A march I assume that many young Arab combatants will be making upon American withdrawal from Iraq. You can bet Iran will facilitate this migration, if not build them a highway.

It is clear that the United States is not going to be able to pacify Baghdad indefinitely, and I don’t even know if they need to. I’m just wondering if there is a way to draw the insurgents out of the cities to be engaged in open combat out in the desert. Perhaps a Feigned Withdrawal? If they were to “fake” a hasty retreat from Iraq, where they bait the enemy with glaring weaknesses in their defenses, assuming insurgents would pursue when America withdraws; could that work? They might just let them leave, then march over to continue their fight in Afghanistan. And somebody over there is definitely trying to pick a fight with India. Whether we take the initiative and march boots into Pakistan or wait for India to ask us to is a question worth asking.

"You cannot simultaneously prevent and prepare for war"

-Albert Einstein

Tuesday, March 17, 2009

Ray of Light

After posting six consecutive days of gains, a span during which the Toronto Stock Exchange has risen nearly 1000 points, there does appear to be some light at the end of the tunnel. While some economists recently predicted that conditions would get much worse in the next two years, others have been optimistic. I would take care in reminding people that there absolutely does NOT exist any consensus among economists. Forecasts, projections, and proposed solutions are all over the map right now. Find me a “leading” economist who says one thing, and I can find another who says the exact opposite. Economics is not an exact science. It is a collection of theories that endeavors to explain a very complex organism. There are free market, small government Libertarians and there are controlled market, big government Keynesians.

What has driven the recent rebound of global markets? It has nothing to do with the proposed Obama stimulus package, and everything to do with a collection of major banks around the globe announcing that they are in far better condition that previously believed. Canadian banks are actually doing very well considering the staggering loss of equity the markets have sustained in the last 6 months. We are still roughly 1000 points below the highs of early January, and there are still a number of challenges left to face. Namely, the problems at AIG, Generous Motors, Chrysler, and others. Those companies, deemed too big to fail might yet fail, and in the opinion of this economist should be allowed to fail.

There is also the massive spending package set to be implemented in the United States on experimental technologies, billions to global warming programs, and a proposed Universal Health Care system. While all these projects are noble in their intentions, they are not guaranteed to work and are just as likely to have negative financial consequences. The American government is embarking on a series of hypothetical “Manhattan Projects” at a time when their level of debt and deficit are perilously close to crashing the value of the American Dollar. One of the risks of creating large amounts of currency that does not exist for projects that might yield 30 cents on the dollar of value, is that the value of the American dollar could tank leading to rapid inflation and foreign investors dumping the dollar as the monetary standard. Should this happen, American markets would most certainly experience another massive loss of wealth from which it may never recover.

I for one hope the policies succeed even if I disagree with them on an ideological level. Ideologues like Rush Limbaugh and Sean Hannity may want the Obama Administration to fail, dragging down the markets and ushering in a Republican Congress in 2010; but I have a Conservative Government in Canada that I want to remain in power. I am not inspired by the Ignatieff Liberals, and if the Obama policies crash the American Economy even further six months hence, that will drag Canada down with it into the abyss. Given our minority government and the threat of an election at any given moment, and the historical precedence of severe recessions damaging sitting governments regardless of who is responsible, I truly hope that the gains of this past week continue, that the worst of this crisis is over, and that industries across our great country start hiring again.

Sunday, March 15, 2009

What Cramer Really Said to Upset Jon Stewart


Watch the clip that enticed Jon Stewart to attack Jim Cramer. The Bear Sterns comments were a year ago. These comments right here are the reason CNBC was molested by the Daily Show..

"Cramer is a killer! Cramer is a mess..."

I watched the Jim Cramer on the Daily Show, the entire unedited version. Stewart slaughtered him, specifically where he showed the clips of Cramer in 2006 talking about how to operate a hedge fund and circumvent the regulators. I had never seen that before, and I only wonder how many thousands of hours of footage the Daily Show staff had to watch to find those comments. I often watch Stewart's Show, and often find myself unimpressed with his shtick, which is similar to Michael Moore in its editing style. Although I frequently disagree with his ideology, I do like to monitor what the kooks are saying at turning points in history. I think what needs to be pointed out here is that the comments Cramer was attacked for on Stewart’s show were made a year ago. If Jonny was so righteously upset at Cramer recommending Bear Sterns a week before its collapse, why wait a year to comment on it? It is no coincidence that Stewart attacked Cramer almost immediately after Jim Cramer’s harsh criticisms of the Obama Budget and Stimulus.

I watched Mad Money a lot from 2005 - 2006. Back when I was tracking the stock market for my experiment of completely randomized portfolios Vs mutual funds (where my random portfolios won); I made a portfolio of Cramer picks and tracked them through the market. His picks beat the market and he earned my respect; despite the flamboyant nature of his show where he admits to over the top behavior to attract an audience not otherwise interested in the stock market. Part way through 2006, channel 36 which was CNBC was dropped by my cable provider in favour of BBC News. I had not been following Cramer in the build up to this meltdown, and he only recently came back onto my radar when he attacked the Obama budget and was himself then attacked by Stewart and Colbert. Stevie Wonder never let him finish a sentence. Stewart let him speak, but beat the piss out of him with video clips and rebuttals. It reminded me of that scene from Slapshot…

“Dave is a killer!”

“Dave is a mess!”

In defense of financial analysts being wrong, for the same reason that I am not pursuing a career as a financial analyst despite my knowledge of the markets, after Enron I came to the realization that I could not morally recommend stocks to people based on potentially imperfect information. It is illegal for CEO's and companies to hide debt and present lies about their financial viability. Anyone who does belongs in jail. Efficient markets depend on reliable public information, and falsifying that is a crime. It is obvious that CNBC relies heavily on quarterly reports and CEO interviews, and that method of collecting information is potentially flawed. That does not imply that every company and every CEO lies and falsifies information. I would contend that the majority of corporations are honest, and that many of the analyst analysis of public information are reasonably reliable. Just because one self-righteous comedian has a team of people to search over thousands of hours of video to isolate those few instances where the analysts made mistakes does not mean that on a whole they are detrimental to society.

I do recall an episode of Mad Money once upon a time where Cramer disclosed that he is not allowed to buy and sell stocks himself, since doing so could influence the market and increase his own personal wealth. In that same episode, he disclosed that he is allowed to own real estate. So aside from his salary from Mad Money and books sales, he makes money from owning real estate. It is the same reason why he consistently advocated dropping the interest rate to zero, as the interest rate is the cost of borrowing money and hastened the bubble created by Greenspan continuously lowering the Fed rates. So why would Cramer try to prop up Bear Stearns when he might have known that they held too much equity in toxic mortgages? Because popping that bubble would lead to a collapse of the housing market and thus Cramer losing money on the investments he is allowed to own. That illustrates the moral hazard in Cramer refusing to expose Bear Stearns and Lehman Brothers, the same reason he is not allowed to buy and sell stocks when his advice could drive the market.

CNBC did not create the bubble in the real estate and credit markets. Perhaps Stewart is justified in saying that the job of CNBC should have been to pop the real estate bubble when Bear Sterns collapsed due to toxic equity, but that only means that the stock markets would have collapsed in April instead of September. Perhaps Stewart was trying to suggest that CNBC should have tried to prevent the bubble from forming in the first place? Had Jim Cramer been saying back in 2005 that banks should stop loaning money to poor people, somehow I would suspect Stewart to disapprove of that line of thinking as a Liberal Democrat. I don’t blame the citizens who took out mortgages and credit lines that they could not afford; I blame the banks for issuing them. I blame Fannie Mae and Freddie Mac, the bastard children of FDR and Clinton, who were responsible for billions of dollars in absurd loans. This drove up the price of real estate to inflated levels, NOT Jim Cramer saying there is nothing wrong with Bear Sterns.

“An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today. “

-Laurence J. Peter

Thursday, March 12, 2009

Rush to judgement

I will confess that I am not a fan of Rush Limbaugh. Every now and then he says something that I agree with, but his opinion does not often reflect my opinion as a moderate Conservative. I am a social liberal who believes strongly in small government and free markets. This idea that Rush endorses that the Republican Party would have won the election had they nominated a more conservative candidate is hogwash. In the last election, Republicans lost support with moderates, so the notion that they would have enticed more moderates with a far right candidate is just wrong. McCain did not lose because he is a moderate; he lost because he is too old and has an idiot’s understanding of economics.

I do not want Rush Limbaugh to speak for me, but his role is that of an entertainer who has a radio show. We have freedom of speech, and whatever he wants to say to get ratings is his business. Now this idea that he is the defacto leader of the Republican Party is also foolhardy. That idea however, did not come from Rush, it came from Rahm Emmanuel, Paul Begala, and James Carville, who took the sound bite that he wants Obama to fail and then decided to frame him as the fearless leader so that they can attack him and slander the Republican Party in the process. The irony of it all being that James Carville proclaimed that he wanted George Bush to fail moments before 9/11, and then retracted his statements when the planes hit the towers. There is an element of hypocrisy that someone who wanted Bush to fail would then devise a strategy for attacking a conservative talk radio host for saying that he wanted Obama to fail.

I don’t want Obama to fail, even if I think his policies will, because my life and the lives of my family have been adversely affected by this economic downturn. If conditions worsen, that has a negative affect on my life, and for me to cheer for that would be absurd. I want the economy to improve. Perhaps if things get worse I can say “I told you so” as I did not support Obama during the election, but that does not help my family members who have lost their jobs in this downturn, nor does it help the retirement savings of my parents. In my ideal world, I would prefer that the Oval Office spend more time fixing the problem than devising a plan to attack Republicans. They just took office! If conditions improve that will help their status in the next election far better than a slander campaign against a radio entertainer who does not represent the Republican Party.

Tuesday, March 10, 2009

Put A Little Love In Your Heart...

During the final months and years of the Bush Administration, I recall many pundits and comedians on the left decrying that the destructive foreign policy of Bush and Cheney has bred a global environment of hatred against America. Sure Al Qaeda declared war on America halfway through the Clinton Presidency, but that spicy little slice of life is often overlooked by American Liberals. Popular culture on the left wing enjoys blaming all of the world’s turmoil on rich Republicans stealing from the world’s poor. During the campaign they pleaded and hoped for a candidate who could change global public opinion, put a little love in their hearts, and that the world would be a better place. Obama was elected, and the response across the Globe was that of jubilation and excitement.

For those who have been too consumed with events inside America to look out the window and see what has been happening around the world since President Obama was elected and need to be updated on just how much better the world is since that inspiring victory, here goes…

1) Islamic militants launched co-ordinated attacks at several crowded locations across India's financial capital, killing over 100 people and terrorizing a city with a prolonged hostage crisis at the Taj Mahal.

2) Thousands protest the government of Pakistan, which has signed a treaty of surrender against pro-Taliban elements in the North, giving them self government, and losing control of a valuable piece of real estate roughly 100 miles from the capitol city of Islamabad.

3) Iran is demanding a public apology from Obama and announced that it is escalating its nuclear program.

4) The leader of the Sudan, now charged with war crimes by the International Court, has basically told the UN to go fuck themselves and expelled aid workers from Darfur.

5) The Chinese navy has been aggressively harassing American cargo ships in International waters; starting days after Secretary of State Hillary Clinton visited the country.

6) North Korea is mobilizing its military to the border with South Korea as it prepares to test long range missiles, threatening to invade their neighbor if anyone tries to stop them.

7) Comrade Hugo Chavez has forced through a mandate for life referendum, and has used his military to seize control of an American based food producer who failed to meet his unsustainably low price controls due to inflation caused by massive spending amidst declining revenues devaluing the Venezuelan currency.

8) Bolivia has expelled a senior American Diplomat

9) Civil war is once again escalating in Somalia, though personally I blame that cluster-fuck on Bill Clinton pulling out American troops after Blackhawk Down.

10) Mexico continues to be in a state violent warfare as the government continues its crackdown on drug cartels. Over 1000 police officers and troops were killed in the fighting over the past year, and the fighting is only getting worse.

Today’s Blog post was brought to you by Al Green and Annie Lennox, and their song “Put a Little Love in Your Heart” As a satirical juxtaposition for the change that Obama’s audacious hope has brought to the world…is the world a better place?

If you want the world to know
We won't let hatred grow
Put a little love in your heart

And the world will be a better place
And the world will be a better place
For you and me
You just wait and see
Wait and see

Take a good look around
And if you're lookin' down
Put a little love in your heart

I hope when you decide
Kindness will be your guide
Put a little love in your heart

And the world will be a better place
And the world will be a better place
For you and me
You just wait and see

Put a little love in your heart
Put a little love in your heart
Put a little love in your heart
Put a little love in your heart
Put a little love in -
Put a little love in your heart...

Canadian Stimulus

I wrote this piece in January after watching Michael Ignatieff the leader of the Canadian official opposition Liberal Party respond to the unveiling of the Canadian budget. The purpose of this budget was to counter the effects of this economic downturn.


I had the privilege of witnessing the hyperbolic rope-A-dope otherwise known as a Press Conference from the leader of the opposition this morning. I’m sure it was no coincidence that Iggy hit the podium 30 seconds after Flaherty started giving a speech in Oshawa. It was eloquently timed so that the CBC would cut away from the Finance Minister after only having enough time to make a self-deprecating opening joke. I’m not certain if Iggy has a speech writer or if he pens his own material, but one thing was abundantly clear, the author certainly pushed his Thesaurus of superlativeness to its outer limits. As I’m writing this, Jack Layton is on my screen spouting off his usual nonsense, but I have muted it because at this point I don’t really care what the love child of Colonel Sanders and Sinead O’Connor has to say.

I suppose I should start my “budget critique” critique by emphasizing that this stimulus, bailout, emergency rescue plan (aka Federal Budget) is like administering morphine to a patient in critical condition. It can ease the pain, but it absolutely cannot cure the underlying global economic meltdown that has us lying on this gurney in the ICU while Doctor House and his team of extraordinary students try to cobble out a diagnosis. The Canadian government is not responsible for the collapse of the American housing market and the subsequent irresponsible behavior of Investment banks all across the Western World who packaged toxic debt into supposedly high yield equities. The bubble burst on the housing market and it dragged the financial sector down with it. Everything that was connected to it got sucked into the vortex, and the inter-connective dependencies of the rest of the world on the American market has us teetering at the precipice of another Great Depression.

Just as this crisis was not sewn by Stephen Harper, neither does it rest entirely on the shoulders of George Bush. If I’m not mistaken, the dream of putting low income people in big houses visa vie federally subsidized mortgages can trace its roots back to Roosevelt and Clinton. George Bush was so consumed with thwarting evil doers that he failed to recognize the Pandora’s bubble that was inflating at dangerous levels. Bush junior also jabbed a knife in the back of fiscal conservatives by encouraging the citizens of the world’s most powerful economy to defeat evil by spending money that they didn’t have.

Canada’s ability to sell manufactured goods is entirely dependent on the health of the American economy and the ability of the American consumer to buy stuff. As a net exporter of natural resources the health of our markets are dependent on the Global commodity prices. Stephen Harper doesn’t drive the world price of oil. The purpose of this federal budget is to inject morphine into the IV, but the real problem won’t be solved until conditions outside of our control improve.

Now we come full circle back to Michael Ignatieff. He clearly understands that the budget is not a solution, and the strategy he is deploying makes sense to me. I understand it, but that doesn’t mean I have to like it. He is using superlative language to describe both the government and the opposition. Such as the Conservative government is extraordinarily reckless and the Liberal opposition is remarkably innovative. His speech really ran the gauntlet of hyperbolic adjectives. But when it comes to describing specifically what needs to be in the budget, he regresses into this ambiguous fog of war strategy.

Fortunately I have the ability to filter through the language and read the real message. He wants the current government to bear all the risk if Global conditions worsen, and he knows that there is nothing that could possibly be included in the budget to avoid Canada feeling the effects if Messiah Obama is unable to put Humpty Dumpty back together again. Iggy’s demands are for a loosening of EI restrictions, which will appeal to the current and future unemployed, but again he won’t specifically say how much that should be; because if the Prime Minister does exactly what Michael wants and it bankrupts the treasury, the opposition shares responsibility.

Mr. Ignatieff also demands that we get this stimulus money into the economy lickity split. Knowing the amount of time and planning that goes into large infrastructure and construction projects, I would ask the government to proceed with caution rather than haste. Rushing this “Manhattan project” without the proper planning could quickly and easily blow up in our collective faces with astounding force. The Liberal party does not want their fingerprints on the murder weapons if Global conditions deteriorate or if the stimulus package goes Chernobyl; and blindly hastening it only increases the probability that it does. The Liberal Party seems content to restrict their demands to simple thumbs up or thumbs down every couple of months; which I suppose is the benefit of being in Opposition and not having to bear the burden of actually piloting the Hindenburg across the Atlantic.

All I will say to Michael Ignatieff in closing is that if he wants to leave this Coalition alternative on the table as a very real imminent possibility, he can’t hide behind the veil of opposition. If he wants Canadians to be comfortable with the alternative that we wake up tomorrow and he is our Prime Minister, he had better display the testicular fortitude of taking a tangible policy position that accompanies true leadership. Don’t one hand tell me that you don’t need to present a specific plan, while on the other hand saying you are ready to lead Canada at a moment’s notice.

“However beautiful the strategy, you should occasionally look at the results.”

-Sir Winston Churchill

Sunday, March 8, 2009


I will say this about the war in Afghanistan; I understand that Canadian public opinion has been gradually turning against the conflict, as democracies tend to do in wartime. I believe our NATO allies should rotate into the most volatile region and give our troops some relief, but withdrawing completely before the war is won will have disastrous consequences in the long term. Allowing the inmates to takeover the asylum is folly. Having said that, so long as Pakistan ignores or aids the insurgency, while by all accounts Taliban/Al Qaeda are running command and control from northern Pakistan, we can't win. We must be allowed to strike at the beating heart of the insurgency. Which is where the assassination of Benazir Bhutto and the ouster of Mushareff are so alarming. Most Pakistanis are moderates, but if the minority radicals are able to secure leadership of the Pakistani military, we're fucked.

Bhutto and her pro-Western ideologies included allowing NATO to run military operations in the volatile mountainous north of the country. Where I first turned on Mushareff was after watching his appearance on the Jon Stewart show, where he attempted to justify making peace with the Taliban as the best course of action. He played both sides, and adopted a strategy that would have made Neville Chamberlain proud. In the past year, Iraq has become less violent as Afghanistan has become more violent. To me, that suggests a migration of insurgents from one country to another. While on paper I support a de-escalation in Iraq in favour of an escalation in Afghanistan, as does Barack Obama, I remind you that a war in the Himalayan Mountains is remarkably more difficult to fight. If we do that without striking Taliban/Al Qaeda bases in northern Pakistan, we are going to follow the same path as the Soviets.

In our search for allies, I can name one that has already drawn up a plan to invade Pakistan, and that is India. The enemy of my enemy is my friend, as the Arab proverb goes. Trust me, those militant attacks in Mumbai have only strengthened their resolve. We are all afraid because Pakistan has nuclear weapons, but trust me, if the wrong people gain control of those weapons, India will be asking us for help, not the other way around. Adding insult to injury, the current Pakistani government is making further treaties with the Taliban. They are either ignorant of history, or acting out of fear.

I recently listened to a Pakistani spokesman speaking on the BBC about NATO sending Predator drones on missions over the Pakistani border. He said "they do not understand that they are just breeding hatred". I would remind him that prior to the attacks of 9/11, the embassy bombings by Al Qaeda in Africa, the attack on the USS Cole, and so on and so forth, the American military weren't sending unmanned aircraft on bombing runs in Pashtunistan. Yet none the less, the hatred was already there and boiling over the surface. Bomb their command and control targets and they will hate you, or do not bomb their military operations and they are still going to hate you? Seems to me like a simple choice...

"An appeaser is a man who feeds a Crocodile, hoping it will eat him last"

-Winston Churchill

The North American Free Trade Agreement

I have been watching Canadians in the past several weeks gleefully gleaning over the inauguration of Barack Obama like teenage girls at a Hannah Montana concert. This unprecedented reverence is in part the product of his hypnotic oratory skills, in part the hysterical hatred of the outgoing administration, and in part Obama smashing through the ethnic glass ceiling of the most powerful throne on the planet.

I can recall the elections of 2004 and 2006 when many of my friends and colleagues were merrily yearning for a Democratic Party victory. Meanwhile I was ominously ringing Hells Bells saying be careful what you wish for. I would take care in reminding them that the architect of the Byrd Amendment was a Democrat, a document that levied illegal tariffs on softwood lumber in direct violation of the NAFTA.

Fast forward to 2009 when we find ourselves with a Democrat President and a Democrat dominated House of Representatives, and suddenly within a week of inauguration day, “Buy American” was the new flavor of the month in Washington. I recall my Intro to Political Science seminar debate at the University of Guelph. I was the sole voice of sanity in the classroom defending the NAFTA. To me the math was pretty simple, if roughly 75% of everything “Made in Canada” is “Sold to America”, it is unequivocally in our best interests to eliminate any firewalls inhibiting those transactions.

The stimulus bill tabled by the Democrat dominated Senate is far worse than a tariff, a tax on imports. This clearly states that ONLY “Made in America” steel and manufactured goods are to be used in the trillion dollar American stimulus package. This is not taxing “Made in Canada”; it is banning it from being used all together! Unless our goal is to be reduced to an entirely resource based economy; our Manufacturing Sector is just a hop, skip, and a jump away from becoming Oliver Twist repeatedly walking up to the Federal Treasury asking “please sir can I have some more?”

Some of the language was changed in the final bill that passed both houses of the American legislature that did not completely ban the use of Canadian made goods, but there are still protectionist provisions in the Stimulus bill. Personally I am concerned that in their first significant piece of legislation, the new Democrat monopoly thought it prudent to include Marxian measures right off the flop. I consider what the future might hold, and I am calculating the probability that it is worse than the present. I recall the campaign, when I had change, change, and more change rammed down my throat, and yet the Messiah never accurately pinpointed specifically when he would change to. Change is all fine and dandy, but if what he was implying that he would transform North America into a Marxist welfare state, count me out.

“Communism doesn’t work because people like to own stuff”
-Frank Zappa

Thursday, March 5, 2009

Criminally Responsible or Criminally Insane?

When I first heard the story that an individual on a bus decapitated another and proceeded to chop up the remains among other unconscionable acts of horror, right away I knew the man was certifiably insane. It was not premeditated, and whether the victim "triggered" the act by saying hello or even glaring over with a dirty look, the maniac who committed the crime is unquestionably criminally insane.

As time passed I forgot about the incident, preoccupied with elections on both sides of the border and a global economic meltdown. That was until today when I turned on the news and found that the psychopath was deemed by a judge to be "not criminally responsible" and that he would be subjected to psychiatric care, treated, and potentially released after whatever period of incarceration is deemed appropriate by the attending physician. Seriously??? So if Dr. Jekyll pumps him full of valium long enough for the guy to seem "normal" in the opinion of the doctor, the man is released and God tells him to kill again; I absolutely believe that doctor should be held "criminally responsible".

Yes, he's insane. Nobody will debate that. Perhaps then we lock him in a padded room instead of mixing him into our prison population, but does anybody in Canada question just how dangerous he is? I sincerely doubt it. I would endeavor to compare the criminally insane against the criminally responsible who also commit murder, like perhaps a mob hit man. The Hit man might kill 50 people before being caught, and he will be rightly incarcerated for the rest of his natural life. In the event that he were set free to resume whacking wise guys and others involved in illegal activities; if you are just a normal law abiding citizen your probability of getting wacked should you encounter this individual is remarkably low. He is doing what he is doing for financial gain, and there is logic that can be applied to his pattern of murder that normal people can avoid becoming a victim to by applying basic common sense.

Now compare that to Vincent Li. Should you encounter this madman, even looking at him the wrong way may induce his "God" to Express Post a priority message that you are to be beheaded and mutilated. I have no problem designating a violent offender as criminally insane, but I have serious doubts at the ability of a team of shrinks to rehabilitate him to such a state where he can safely be released back into the civilian population. In my opinion he should be locked up in the Arkham Asylum, give him his meds if you must, but releasing someone that dangerous, that unpredictable, and that illogical to a bus stop near you is downright criminal in my books...

Wednesday, March 4, 2009



In reading Erin Weir’s piece defending the “Buy American” provision; it came as no surprise to me to read a union employed lobbyist advocating protectionism; a position supported by the NDP. As an honours graduate in Mathematical Economics I strongly disagreed with some of her conclusions. What is optimal for the United Steel Workers Union is not what is best for the larger economy.

Now I could write a lengthy diatribe renouncing her conclusions and applauding the benefits of free trade, but for the sake of journalistic expedience I will try to keep it as simple as possible. I will not condemn her for doing her job as a lobbyist, trying to extort the best possible deal for the people she is paid to represent. Steel is both a manufactured good and a staple input for several sectors of our economy. It is used extensively in the construction industry, in the automotive and aerospace industries, the production of heavy machinery, and so on and so forth.

When imports are capped or inhibited, that tightens supply and inflates the price above what it would be in a free market system. The net effect is a “deadweight loss” defined as a “loss of mutually beneficial transactions that are not transferred to another agent.” This says nothing of the geopolitical ramifications of upsetting our allies and trading partners, but rather illustrates the pain that will be felt domestically if our government gets into the business of supply and price manipulation.

Artificially inflate the price of steel and what would happen at General Motors? They would be forced to either cut costs (which often means layoffs) or to pass that price increase on to consumers. How would more expensive steel affect the epic works infrastructure projects that are supposed to stimulate our economy? This input price increase must be offset by either hiring fewer workers to build the projects, or the cost is passed on to already over taxed tax payers.

You keep coming back to the Smoot-Hawley Act as if to prove that stimulus and protectionism in tandem during a recession is the answer to all our problems. First, you can’t prove that a stimulus package would have averted the Great Depression. That is simply a theory. Second, I would challenge you to provide historical examples of where protectionism and stimulus cured a severe recession.

Your statement that “the world needs as much stimulus as it can get” is absolutely absurd! The risk of hyperinflation aside, beware the danger of erecting a firewall between China and North America. That will certainly anger a very powerful and unpredictable animal that happens to hold several trillion dollars in North American debt and assets. If backed into a corner, you can scarcely imagine the Hell they could unleash on Western currency and financial markets. That is one Pandora’s Box I would like to keep locked shut, please and thank you.

There are serious consequences to inhibiting less expensive steel imports from over seas with benefits only to a select few. You use clever semantics and distorted economic theory as a lobbyist looking at the Global Economy through the prism of orange coloured glasses. For centuries economists believed that if everyone did what was best for themselves, it would lead to the best outcome for the group. Then along came the beautiful mind of John Nash who proved that the best outcome comes from everyone doing what’s best for themselves AND the group. Doing what’s best for the United Steelworkers Union is not what is best for Canada.

Tuesday, March 3, 2009

Buying Opportunities?

On October 7th 2008 during the Canadian election campaign as the Toronto Stock Exchange had just lost nearly 3000 points of value within a 6 week period, Prime Minister Stephen Harper did an interview with Peter Mansbridge on the CBC where he proclaimed that there were buying opportunities on the stock market. Immediately he began to draw fire from Canadian Journalists and from his political opponents for being flagrantly insensitive to investors who had just lost a substantial amount of their retirement portfolios. He was not criticized for being wrong, he was attacked for allegedly insulting people who had lost money. I never understood what the big deal was. I understood the partisan opportunism of his political rivals taking advantage of bad economic circumstances and trying to frame a positive interview as a grievous act of malice. It was however, the outrage by the so-called professional journalists that left me scratching my head.

Hindsight being what it is, the TSX has lost nearly 2000 additional points since the Prime Minister encouraged investors to inject money into the market. I’m certain that his opponents will argue that had Canadians followed his advice they would have likely lost money. Therefore it should be noted that 10 days after Prime Minister Harper made his comments, none other than the Nostradamus of Investing Warren Buffet wrote a piece in the New York Times saying the exact same thing! In it he wrote “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.” Buffet proclaimed that it was the perfect time to be buying stocks, though he was careful to point out that nobody can predict with reliable accuracy short term fluctuations in the stock market. I don’t recall the CBC being outraged by Buffet’s comments, so I will forgive my PM if the market has fallen since he encouraged people to invest.


Fast forward to today, and none other than the Messiah Barack Obama proclaimed that there are now “potentially good deals” available in the stock market. How did the CBC respond? Was it with an elevated sense of moral outrage at the audacity of Obama to make these comments when so many people had lost money? No, as they saw it, Obama was trying to encourage confidence in the market. It is at these moments of unbridled hypocrisy that I really start to question the motives of the Canadian Broadcast Corporation, which receives millions of tax payer’s dollars annually to promote biased propaganda. I find it to be abhorrent for a public organization which does have an influence over public opinion to be advancing a political agenda; though I suppose some might argue that the ability of the CBC to influence the hearts and minds of Canadians has been gradually diminishing over time. I hope so.

“He that is of the opinion money will do everything may well be suspected of doing everything for money.”

-Benjamin Franklin

Monday, March 2, 2009

Global Warming or Climate Change?

I was first introduced to the concept of Global Warming in 1996 in 11th grade Geography. My teacher, who was a pragmatist not a political idealist, framed it as an exciting opportunity for Canada. As he explained it, Canada would have more arable land and the United States would have less. In a warmer world, we would be able to expand our economic development in the far north, drastically increasing land value and productivity.

Thus I entered adulthood excited for Global Warming. That was until University when my “Introduction to Astronomy” professor presented the theory that Venus was once just as the Earth is now, and that greenhouse gas induced warming transformed it into a great ball of fire. Needless to say that caught my attention and I was now officially concerned.

When I was told that the solution was to consume less energy, consume less food, consume less everything; my response was to hell with that! We need to build a fleet of carbon vacuum blimps to suck up all the extra CO2 floating around in the air up there; and to build several massive nuclear powered refrigeration machines at the arctic poles. We should spare no expense and get right to work! A Carbon Offset is no more than a Papal Indulgence to ease a guilty conscious.

By the time I was wrapping up my Bachelor’s Degree in Mathematical Economics, the film The Day After Tomorrow was released. I was spooked yet again, except this time convinced that a new ice age was inevitable and that mankind was doomed! I was trying to conceive methods by which we could keep the North Atlantic Current flowing, such as submerging a series of massive propellers throughout the Deep Blue Sea!

Not long thereafter, Al Gore started winning inconvenient awards and an ever growing number of Politicians began sounding the alarms and heralding the Kyoto Treaty as the solution to the “Climate Crisis”. This was what planted the first seeds of skepticism in my mind. I reviewed the Kyoto Protocol, and how a plan to redistribute wealth was going to solve the problem of fire in the sky felt eerily like a political red herring. In my opinion the solution would need to be a technological innovation or a 21st century epic public works Manhattan Project, not Marxism.

I began to take note of how the alarmists were attacking consumption as the root of all evil. As Adam Smith wrote in the Wealth of Nations, Book IV Chapter VIII: “Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.” And where Karl Marx once wrote “Under private property ... Each tries to establish over the other an alien power, so as thereby to find satisfaction of his own selfish need. The increase in the quantity of objects is therefore accompanied by an extension of the realm of the alien powers to which man is subjected, and every new product represents a new potentiality of mutual swindling and mutual plundering.”

My skepticism gradually progressed as experts such as David Whitehouse, Christopher C Horner, and Bjorn Lumborg began to emerge to debunk many of Gore’s theories. By the time Stephane Dion ascended to the throne of the Liberal Party riding the wave of his green revolution; I had already retreated from my initial position like the Czar’s Cossacks against Napoleon’s Grand Armee.

Now as the world cycles into a cooling trend, I see these experts, pundits, politicians, and professors who staked their reputations on a theory; scrambling to explain why their forecast models are turning out to have been remarkably inaccurate. Just as I imagine Mr. Bonaparte felt as he was holed up in Moscow amidst a fiercely cold winter (a mini ice age possibly caused by the exhaust from his horse’s ass); when he realized that he had made a grievous miscalculation. At that turning point in history he was faced with an incredibly difficult decision. Advance forward and risk losing it all, or retreat and risk losing credibility as a military genius. Mr. Gore’s decision has become crystal clear. He’s going all in, full steam ahead.

“It is the mark of an educated mind to be able to entertain a thought without accepting it”