The Laurel Comment
“ It was ordained at the very beginning that time would be the natural equalizer of all humankind and that it would be at once, both man’s mortal enemy and his greatest savior “ William Milton
If the major economic events of 2007 are to act as a harbinger of those things yet to come about, then it would appear that unlike Ebenezer, it is already too late for the world to change course. The impact of the sub prime mess that was brought about through cheap credit, lax regulation and blatant hucksterism may have been temporarily eased through the facility of the world’s central banks and their out of control printing presses but it is far from resolution.
As was the case during the Reagan-Bush Senior era when the Savings and Loan crisis was spawned, it is the perpetrators rather than the victims who are receiving the bailout. The ongoing actions of the aforementioned central banks to alleviate these short term difficulties are even seen as necessary and unavoidable by many of the issue’s most severe critics as their fear of imminent collapse has superceded their normal reticence toward monetary inflation. The question , it appears has reached beyond the pale, and that the only hope for present and future economic stability lies with “more of the same”. In essence, the easy credit , low rates and printed money that created the crisis in the first place are not being reversed, but enhanced.
Added to the actions of these all powerful government institutions are those of a relatively new and increasingly influential subset of national entities known as the “sovereign funds “. Dubai , ( known by some as the world’s money laundering capital ), China, Singapore, the OPEC nations and a still growing list of others have spent billions during the past few years buying U.S. based assets, including large positions in major financial institutions barely diminishing their ever mounting reserves of dollars. Hard assets , it would seem are better investments than currency based low yield treasuries, lending thought to the prospect that “ boxing day “ may have ended on December 26th but “ boxing year” in America has only just begun. The country is on sale , not necessarily to the highest bidder , but to any bidder at all.
It is difficult to believe that less than a decade ago America sat unchallenged as the world’s only superpower as it rode the rich technology wave to a budget surplus and record job creation। Remember too that oil in 1998 was at 10$ per barrel and only double that in the days of 9/11. Alas the surplus is no more and the deficit appears to have been permanently installed, while job growth even in the midst of the real estate boom barely matched labour market increases. Meanwhile the Iraq debacle , despite the surge fantasy, continues to waste both precious lives and precious funds as it destroys the last vestiges of America’s international moral and military credibility. This first decade of the new millennium has once again proven that a small group, or cabal if you will, of influential people can have an enormous impact upon history, unfortuneatly this impact is of a negative and destructive nature.
So where to now we might ask? Since the U.S. election is still eleven months away , there is little point in speculating upon what a new administration might do as the problem is about now. Furthermore, a recent poll voted George Bush as America’s most admired person, yes folks even a President Huckabee is possible . Betwixt here and there however lies the challenge for “sane “ Americans to fill the vacuum of intelligent political leadership with new hope for without such hard slogging...disaster looms.
Economy
The American consumer is responsible for 70 plus per cent of the U.S. economy, the savings rate in that country is effectively zero, credit card debt has reached epic proportions and the ATM machine that used to be a three bedroom house is broken. Meanwhile, energy and food prices have continued to escalate in the face of increased demand and market manipulation typified by the absurd subsidization of corn based ethanol. The potential for a return to the stagflation of the 1970's has fast become a topic for discussion among economists who either lived the experience and did not understand it and those who were conceived during its long nights and think they can avoid it.
Gold, energy and food appear to be the investments of choice should such a circumstance come about. It is true that emerging markets may one day replace the need for vast amounts of American consumption but that day has not arrived. China and the other sovereign funds will continue to support the “system” as long as they can and as long as it is in their interest to do so. Think 2008 Olympics.
Look for a strong market upsurge early in the year despite all the bad news as the mass of paper liquidity chases hard assets higher. Beware however that markets and economies are subject in the end to two important tenets, real growth and trust in the system. Such growth is fast fading and confidence in world currencies is eroding at a rapid rate. This is the recipe and the burners are on high.
Commentary
The recent events in Pakistan have underlined the nuclear threat we wrote of last month, they have also served to illustrate the failed policies that have abetted the breakdown. The government of Pakistan has received some 10 billion dollars of Bush largesse since 9/11, monies that were purportedly spent in support of the Bush “ war on terror” as well as to stabilize that country. This is not a joke, it is a tragedy of what may be epic proportion, one born of naivete at best or stupidity at worst. It is past time to change these insane neo con policies and for America and the West to abandon their interventionism as their efforts have not only proven to be wasteful, but counterproductive.
Leave, monitor and contain should be the freshly adopted stance of all serious Presidential candidates। Islamic terrorism is undoubtably a danger to the world but it is not an uncontainable one. North America , Europe including Russia, China , Japan, newly emerging India and Brazil represent a far more powerful potential economic and military alliance than all the bin Ladens of the world can ever dream. It is time to unite in the face of such tenth century foolishness and stop wasting precious resources in the pursuit of oil. Worries over global warming will quickly pale if a loose nuke finds its trigger.
Remarkably
The decade of the roaring twenties ended with a bang not a whimper as the crash of ‘29 brought a painful end to the excessive pursuit of pleasure and of things material that had typified the post Great War period. The depression that followed, it is said , did not have to be so severe, if the policies implemented by the Hoover administration had been more enlightened. Tight money and restrictive trade legislation have long been blamed for the length and depth of the economic decline that ended only with the buildup that preceded the Second World War.
As we look forward now to our present circumstance we note a different reaction to some of the same emerging problems. Instead of tight money, our cure has been greater monetary expansion as we have sought to innoculate the economy with the bacteria that caused the disease. As for trade and globalization , the real boom creators, we now hear rumblings of discontent from both the left and right as the scepter of protectionism and the xenophobia wrought from immigration and job loss move to front and center of the Presidential campaign.
In 1932 Franklin Delano Roosevelt , an aristocratic Democrat replaced the then unpopular Republican Herbert Hoover as President and quickly proceeded to rally the American public, morally if not practically with both his speeches and public policy decisions which appeared to be both inclusive and caring leading many observers of history to believe that his actions saved capitalism from itself and America from a revolution.
Social and regulatory policies implemented during FDR’s three plus terms some 70 plus years ago remain the basis for what is now America’s tattered social safety net. There have been additions over the years in the areas of civil rights and old age medicare of a sort but for the most part the nation has lagged far behind the rest of the industrialized world when it comes to citizen rights. A new agenda is long overdue and it is becoming ever more obvious and increasingly imperative that a vigorous and charismatic leader must emerge soon before the now developing social revolution becomes something else. If America is to move forward and regain the moral high ground it has most recently forsaken then it must elect a new FDR not another George Bush.
Monday, December 31, 2007
Thursday, December 6, 2007
December
The Laurel Comment
“We are in a race between cooperation and catastrophe, and the threat is outrunning our response”.
Sam Nunn
Commentary
The global warming issue has once again moved to center stage this month as representatives of 190 nations along with a goodly number of NGO’s initiated a new round of subject discussions in Bali Indonesia, the framework of which, when decided shall replace the Kyoto Protocol which expires in 2012. Once again it is America that has so far chosen to avoid taking a leadership position in this global movement and with the signing on of Australia’s new Prime Minister Rudd, it becomes the only non-aligned nation.
Although Kyoto, and what will soon be known as the “Bali” something, are not, nor have they been a panacea to global warming they do encourage both a constructive effort and a forum for discussion of the views, both pro and con the growth of carbon emissions.
Even though there remains much to be learned in this area, the debate continues to rage over what is bogus science and what the real threat to climate change may be. The question to be begged here concerns the pursuit of knowledge and not the ideological rejection of ideas that don’t fit the anti-progressive mold. Yes there have been questionable claims and hyperbole on either side of the issue but the activation of international caring and commitment should never be diminished or counted out. It is also kind of nice to see some of the world’s youth inspired by something more substantial than i-pods and x-boxes, even if there is little they can contribute to the general solution other than enthusiasm.
The problem, there always is one, that I see with this exciting venture is its relative importance to what may be a greater environmental problem…the nuclear bomb.
For most of the last 60 years the nuclear club had five members; the United States, the former Soviet Union, China, Britain and France; and amazingly with all of the fear and fuss of the Cold War, humanity managed to survive.
However, since the fall of the Berlin Wall and the end of the Gorbachev era, the “peace bonus” as it was once called has been squandered and the age of proliferation has arrived as India, Pakistan and North Korea now boast such capability. The view that nations such as these latter three hold little international threat due to their inconsequential delivery systems and fear of massive reprisal is a questionable one if we take the role of fanaticism and loose nukes into account.
Difficult as it is to fathom, the question of “loose nukes” and unprotected plutonium first surfaced during the breakup of the Soviet Union when in the pre-Putin, pre-oil price surge days, everything was for sale. The answer to this incredibly dire threat was the 1992 passing of the Sam Nunn – Richard Lugar legislation known as the Cooperative Threat Reduction Program. This important and sensible program helped to deactivate or destroy some 7000 nuclear warheads and nearly 700 ICBM’s among other things. Similar to most such intelligent initiatives it was and remains under-funded having spent some 10 billion dollars during its long lifespan, or the equivalent of 3 weeks in Iraq.
According to Michael Crowley of the “New Republic” Sam Nunn the former Democrat Senator from Georgia and co-creator of the “loose nukes” program has since enlisted the support of Ted Turner and Warren Buffett to fund his Washington-based foundation the “Nuclear Threat Initiative” or N.T.I. circa 2001. Please Google.
Alright, now let’s go back to that first number of 6000 nuclear warheads destroyed and understand for a moment that 3 times that many remain, as well as the plutonium to potentially create yet another 40,000 new ones.
The Bush Administration has now spent over 600 billion dollars and incurred future costs of another trillion fighting a war of choice in Iraq that was ostensibly begun in the pursuit of nuclear weaponry. Furthermore, these actions have further empowered the non-Arab Shiite community of Iran and the Sunni Pakistanis. The former, it has recently been revealed, possess no nuclear program despite Bush bombast, while the latter has been an unstable nuclear state for a decade.
The bottom line here is that the world is now relying upon a privately funded (or underfunded) 250 million dollar organization to seek out and destroy real threats while the administration spends trillions chasing neo-con phantoms as it simultaneously courts the newly emerged and potentially combative powers of Pakistan and India.
Does this policy make any sense at all…to anyone?
Markets
Markets successfully tested their August lows in late November before staging a massive 2 day rally that served to place the entire precept of financial rationality in doubt.
We have often noted in this space that markets have a proven tendency to overshoot fair value at both tops and bottoms and that such volatility usually expends itself in the form of a burst bubble or a throw in the towel bottom. It is our view that neither condition has yet been reached.
In previous letters we have described the growth of sovereign funds and their increasing investment importance. China, Russia, India and even Brazil have joined OPEC nations as major players in this realm of super wealth. The amount of money controlled by these “sovereign” nations along with that of the private hedge funds has proven to be enough to not only move financial and commodity markets but to control them. Aided and abetted by the U.S. Federal Reserve, these behemoths have taken a world awash in paper currency created by loose credit and the world’s “out of control” super power and turned its economic system into “casino world”.
Super wealth, not immigration or free trade, is in the process of destroying middle class America and with it, the stability that both the nation and the world require for their survival. Western Europe and our beloved Canada appear to stand alone as bastions of sanity in this nether world of uncaring greed.
Buy gold, it will do well no matter what the market or economic outcome of the coming year.
Remarkably
As has been the case throughout history, booms end in busts and the world goes on to bigger and better cycles. The final result of this the greatest period of world growth is of course yet unknown, and only a reasonable prognostication based on previous performance can be made.
The foundations for a better world are laid through cooperation and diplomacy, functions that are most successfully realized through strong and informed leadership among the major powers and through the growth and improvement of international institutions. Let us hope that such leadership will become the norm rather than the exception in future years as we cannot dodge the bullet of stupidity forever.
Note: Will Stephane Dion’s next dog be named Bali Hai?
“We are in a race between cooperation and catastrophe, and the threat is outrunning our response”.
Sam Nunn
Commentary
The global warming issue has once again moved to center stage this month as representatives of 190 nations along with a goodly number of NGO’s initiated a new round of subject discussions in Bali Indonesia, the framework of which, when decided shall replace the Kyoto Protocol which expires in 2012. Once again it is America that has so far chosen to avoid taking a leadership position in this global movement and with the signing on of Australia’s new Prime Minister Rudd, it becomes the only non-aligned nation.
Although Kyoto, and what will soon be known as the “Bali” something, are not, nor have they been a panacea to global warming they do encourage both a constructive effort and a forum for discussion of the views, both pro and con the growth of carbon emissions.
Even though there remains much to be learned in this area, the debate continues to rage over what is bogus science and what the real threat to climate change may be. The question to be begged here concerns the pursuit of knowledge and not the ideological rejection of ideas that don’t fit the anti-progressive mold. Yes there have been questionable claims and hyperbole on either side of the issue but the activation of international caring and commitment should never be diminished or counted out. It is also kind of nice to see some of the world’s youth inspired by something more substantial than i-pods and x-boxes, even if there is little they can contribute to the general solution other than enthusiasm.
The problem, there always is one, that I see with this exciting venture is its relative importance to what may be a greater environmental problem…the nuclear bomb.
For most of the last 60 years the nuclear club had five members; the United States, the former Soviet Union, China, Britain and France; and amazingly with all of the fear and fuss of the Cold War, humanity managed to survive.
However, since the fall of the Berlin Wall and the end of the Gorbachev era, the “peace bonus” as it was once called has been squandered and the age of proliferation has arrived as India, Pakistan and North Korea now boast such capability. The view that nations such as these latter three hold little international threat due to their inconsequential delivery systems and fear of massive reprisal is a questionable one if we take the role of fanaticism and loose nukes into account.
Difficult as it is to fathom, the question of “loose nukes” and unprotected plutonium first surfaced during the breakup of the Soviet Union when in the pre-Putin, pre-oil price surge days, everything was for sale. The answer to this incredibly dire threat was the 1992 passing of the Sam Nunn – Richard Lugar legislation known as the Cooperative Threat Reduction Program. This important and sensible program helped to deactivate or destroy some 7000 nuclear warheads and nearly 700 ICBM’s among other things. Similar to most such intelligent initiatives it was and remains under-funded having spent some 10 billion dollars during its long lifespan, or the equivalent of 3 weeks in Iraq.
According to Michael Crowley of the “New Republic” Sam Nunn the former Democrat Senator from Georgia and co-creator of the “loose nukes” program has since enlisted the support of Ted Turner and Warren Buffett to fund his Washington-based foundation the “Nuclear Threat Initiative” or N.T.I. circa 2001. Please Google.
Alright, now let’s go back to that first number of 6000 nuclear warheads destroyed and understand for a moment that 3 times that many remain, as well as the plutonium to potentially create yet another 40,000 new ones.
The Bush Administration has now spent over 600 billion dollars and incurred future costs of another trillion fighting a war of choice in Iraq that was ostensibly begun in the pursuit of nuclear weaponry. Furthermore, these actions have further empowered the non-Arab Shiite community of Iran and the Sunni Pakistanis. The former, it has recently been revealed, possess no nuclear program despite Bush bombast, while the latter has been an unstable nuclear state for a decade.
The bottom line here is that the world is now relying upon a privately funded (or underfunded) 250 million dollar organization to seek out and destroy real threats while the administration spends trillions chasing neo-con phantoms as it simultaneously courts the newly emerged and potentially combative powers of Pakistan and India.
Does this policy make any sense at all…to anyone?
Markets
Markets successfully tested their August lows in late November before staging a massive 2 day rally that served to place the entire precept of financial rationality in doubt.
We have often noted in this space that markets have a proven tendency to overshoot fair value at both tops and bottoms and that such volatility usually expends itself in the form of a burst bubble or a throw in the towel bottom. It is our view that neither condition has yet been reached.
In previous letters we have described the growth of sovereign funds and their increasing investment importance. China, Russia, India and even Brazil have joined OPEC nations as major players in this realm of super wealth. The amount of money controlled by these “sovereign” nations along with that of the private hedge funds has proven to be enough to not only move financial and commodity markets but to control them. Aided and abetted by the U.S. Federal Reserve, these behemoths have taken a world awash in paper currency created by loose credit and the world’s “out of control” super power and turned its economic system into “casino world”.
Super wealth, not immigration or free trade, is in the process of destroying middle class America and with it, the stability that both the nation and the world require for their survival. Western Europe and our beloved Canada appear to stand alone as bastions of sanity in this nether world of uncaring greed.
Buy gold, it will do well no matter what the market or economic outcome of the coming year.
Remarkably
As has been the case throughout history, booms end in busts and the world goes on to bigger and better cycles. The final result of this the greatest period of world growth is of course yet unknown, and only a reasonable prognostication based on previous performance can be made.
The foundations for a better world are laid through cooperation and diplomacy, functions that are most successfully realized through strong and informed leadership among the major powers and through the growth and improvement of international institutions. Let us hope that such leadership will become the norm rather than the exception in future years as we cannot dodge the bullet of stupidity forever.
Note: Will Stephane Dion’s next dog be named Bali Hai?
Tuesday, November 6, 2007
November
The Laurel Comment
“Time will run back and fetch the age of gold”.
-John Milton
Commentary
The world had great reason to celebrate on October 28th with the passing of the 45th anniversary of the Cuban Missile crisis. Although this date did not fall on a special number in 2007 its observance held particular importance in light of the recent drum banging by the Bush regime.
Our ability to look back four decades is predicated upon the actions taken, or lack thereof, at that crucial time in history. Similar to all things historic, we are now aware of greater detail than those who lived the experience. This is not hindsight; it is knowledge dispersed over time and now freely available to all through the magic of the Internet. For an interesting take go to the National Public Radio (NPR) site and listen to JFK’s premier speechwriter, Ted Sorenson, review the event.
The lessons of history are numerous and incredibly dangerous when ignored. One such instruction that appears increasingly relevant to our present circumstance is the understanding that permanence as it relates to both allies and enemies is a fleeting thing and an undisciplined measure, both of what has been and of what is likely to come about.
The Bush Administration’s recent campaign against Iran appears to ignore even the most basic lessons of diplomatic process as its penchant for grandstanding and unbridled hubris have now reached pre-Iraq invasion status. Worse still, their rhetoric belies the true effect of such bombast given the recognition by the rest of the world of its now diminished military and economic power. This perception, as it pertains to the Middle East, may prove to be highly dangerous because the true might of America now resides in only one area… its nuclear arsenal and its capacity to deliver weapons of mass destruction. What insanity we might wonder would provoke anyone to consider such a course of action, particularly given the minor nature of the threat? Welcome again to Bush world.
So in the name of perspective let us review once again the friends and foes list of the last century. Our enemies in World War II were Japan, Germany and Italy…okay? Our allies included the ex Soviet Union and China. Fast-forward to the Mao Tse Tung successes of 1949 and the outset of the “Cold War” and we then find that these are allies no more.
Bring on Vietnam, as boy George might opine, and America is soon faced with its greatest policy disaster. Concurrently let’s include the excursions into Latin America and the Middle East where Iran was then America’s best buddy, or at least the Shah was. How things change, by the 1980’s. Reagan at his Machiavellian best was arming both Iran and Iraq during their nine year war of attrition while another crazy in Libya topped their evil persons list.
Then along came Gorbachev and the fall of the wall, reform in China in the post Tiananmen Square era and a whole new look in the Muddled East.
Oh wait! I forgot to mention Osama, Al-Qaeda and America’s support of these gentlemen and the Mujadeen\Taliban during the Afghan-Soviet war. Silly of me, but it is as if this game of musical chairs, normally played by children now resounds to the harshness of rap as opposed to the gentler melodies of my youth; just as the war hawks’ mentality that had remained tethered during that other more serious confrontation of the 1960’s has now been freed to both proselytize upon and perpetuate the myth of nuclear weaponry as a military option.
This is indeed a troublesome time fraught with dangerous people but it is not the little Iranian who is the major problem.
Former enemies Japan, Germany and Italy are now America’s allies. Vietnam, Russia and the late Eastern Bloc have each become trading partners meanwhile China has over a trillion dollars in US currency, an amount that is growing faster than the US treasury can print the paper. Yes and even Muamar Qaddafi, remember him, well Al Qaeda’s number two man now calls him an enemy because he is too close to the United States.
Go figure, is the world going to watch George Bush and his neo con masters risk World War III against Iran, which left alone or properly courted might well prove to be America’s next best friend in that troubled and troubling part of the globe?
Markets
Every bull market ends in a credit\currency crisis and this one is a doozie. The problems this time around are not with the peso, the baht or even the ruble, well not just yet anyway because it is the US dollar that is in deep and dire straits and as Canadians we have carnal knowledge of the event as we have seen our newly minted petro\gold currency reach and surpass historic highs, while the new century’s Euro performs similar aerobatics.
Gold has now traded beyond $800 per ounce but is still priced at one-third of its inflation adjusted 1980 high. The prospects for this imperfect hedge are now almost limitless as paper rich holders around the world seek value for their fast diminishing greenbacks.
We will be hearing a good deal more about “sovereign wealth” over the coming years while excess liquidity in Petro dollars, Asian banks and Hedge funds may presently amount to as much as 20 trillion dollars, an amount that has driven markets higher this past year. But that was then and this now we have been warning of for many months includes the recognition that this mass of liquidity is made of paper and backed by less and less real value. The binge may not yet be over but as Robert Redford famously said…it’s close, it’s damn close.
Remarkably
As the fires raged in Southern California this past month it was interesting to watch the out pouring of sympathy for the many who had to leave their homes for their other homes. It brought to mind the greater tragedies of New Orleans and Iraq where 4 million of the displaced had neither a place to go nor an insurance policy to cover their losses.
And to finish with one more read on markets, someone recently pointed out that if you removed Google, Rim (Blackberry) and Apple from the NASDAQ, the index would be close to even on the year. So I guess that as in all things it’s not what you own but whom you own that counts most.
Buy gold, it has only begun to rise.
Addition
When Charles de Gaulle exited NATO in 1966 he demanded the removal of all U.S. troops to which Lyndon Johnson responded “Does that include the ones buried there?”
From de Gaulle to “freedom fries” to the Sarkozy-Bush wedding…plus ca change…
Geoff Ryan
Nov 6, 2007GeoffreyRyan@hotmail.com
514-795-8450
http://thelaurelcomment.blogspot.com/
November
The Laurel Comment
“Time will run back and fetch the age of gold”.
-John Milton
Commentary
The world had great reason to celebrate on October 28th with the passing of the 45th anniversary of the Cuban Missile crisis. Although this date did not fall on a special number in 2007 its observance held particular importance in light of the recent drum banging by the Bush regime.
Our ability to look back four decades is predicated upon the actions taken, or lack thereof, at that crucial time in history. Similar to all things historic, we are now aware of greater detail than those who lived the experience. This is not hindsight; it is knowledge dispersed over time and now freely available to all through the magic of the Internet. For an interesting take go to the National Public Radio (NPR) site and listen to JFK’s premier speechwriter, Ted Sorenson, review the event.
The lessons of history are numerous and incredibly dangerous when ignored. One such instruction that appears increasingly relevant to our present circumstance is the understanding that permanence as it relates to both allies and enemies is a fleeting thing and an undisciplined measure, both of what has been and of what is likely to come about.
The Bush Administration’s recent campaign against Iran appears to ignore even the most basic lessons of diplomatic process as its penchant for grandstanding and unbridled hubris have now reached pre-Iraq invasion status. Worse still, their rhetoric belies the true effect of such bombast given the recognition by the rest of the world of its now diminished military and economic power. This perception, as it pertains to the Middle East, may prove to be highly dangerous because the true might of America now resides in only one area… its nuclear arsenal and its capacity to deliver weapons of mass destruction. What insanity we might wonder would provoke anyone to consider such a course of action, particularly given the minor nature of the threat? Welcome again to Bush world.
So in the name of perspective let us review once again the friends and foes list of the last century. Our enemies in World War II were Japan, Germany and Italy…okay? Our allies included the ex Soviet Union and China. Fast-forward to the Mao Tse Tung successes of 1949 and the outset of the “Cold War” and we then find that these are allies no more.
Bring on Vietnam, as boy George might opine, and America is soon faced with its greatest policy disaster. Concurrently let’s include the excursions into Latin America and the Middle East where Iran was then America’s best buddy, or at least the Shah was. How things change, by the 1980’s. Reagan at his Machiavellian best was arming both Iran and Iraq during their nine year war of attrition while another crazy in Libya topped their evil persons list.
Then along came Gorbachev and the fall of the wall, reform in China in the post Tiananmen Square era and a whole new look in the Muddled East.
Oh wait! I forgot to mention Osama, Al-Qaeda and America’s support of these gentlemen and the Mujadeen\Taliban during the Afghan-Soviet war. Silly of me, but it is as if this game of musical chairs, normally played by children now resounds to the harshness of rap as opposed to the gentler melodies of my youth; just as the war hawks’ mentality that had remained tethered during that other more serious confrontation of the 1960’s has now been freed to both proselytize upon and perpetuate the myth of nuclear weaponry as a military option.
This is indeed a troublesome time fraught with dangerous people but it is not the little Iranian who is the major problem.
Former enemies Japan, Germany and Italy are now America’s allies. Vietnam, Russia and the late Eastern Bloc have each become trading partners meanwhile China has over a trillion dollars in US currency, an amount that is growing faster than the US treasury can print the paper. Yes and even Muamar Qaddafi, remember him, well Al Qaeda’s number two man now calls him an enemy because he is too close to the United States.
Go figure, is the world going to watch George Bush and his neo con masters risk World War III against Iran, which left alone or properly courted might well prove to be America’s next best friend in that troubled and troubling part of the globe?
Markets
Every bull market ends in a credit\currency crisis and this one is a doozie. The problems this time around are not with the peso, the baht or even the ruble, well not just yet anyway because it is the US dollar that is in deep and dire straits and as Canadians we have carnal knowledge of the event as we have seen our newly minted petro\gold currency reach and surpass historic highs, while the new century’s Euro performs similar aerobatics.
Gold has now traded beyond $800 per ounce but is still priced at one-third of its inflation adjusted 1980 high. The prospects for this imperfect hedge are now almost limitless as paper rich holders around the world seek value for their fast diminishing greenbacks.
We will be hearing a good deal more about “sovereign wealth” over the coming years while excess liquidity in Petro dollars, Asian banks and Hedge funds may presently amount to as much as 20 trillion dollars, an amount that has driven markets higher this past year. But that was then and this now we have been warning of for many months includes the recognition that this mass of liquidity is made of paper and backed by less and less real value. The binge may not yet be over but as Robert Redford famously said…it’s close, it’s damn close.
Remarkably
As the fires raged in Southern California this past month it was interesting to watch the out pouring of sympathy for the many who had to leave their homes for their other homes. It brought to mind the greater tragedies of New Orleans and Iraq where 4 million of the displaced had neither a place to go nor an insurance policy to cover their losses.
And to finish with one more read on markets, someone recently pointed out that if you removed Google, Rim (Blackberry) and Apple from the NASDAQ, the index would be close to even on the year. So I guess that as in all things it’s not what you own but whom you own that counts most.
Buy gold, it has only begun to rise.
Addition
When Charles de Gaulle exited NATO in 1966 he demanded the removal of all U.S. troops to which Lyndon Johnson responded “Does that include the ones buried there?”
From de Gaulle to “freedom fries” to the Sarkozy-Bush wedding…plus ca change…
Geoff Ryan
October 1, 2007
GeoffreyRyan@hotmail.com
514-795-8450
http://thelaurelcomment.blogspot.com/
Monday, October 1, 2007
October 1
The Laurel Comment
“I think we agree, the past is over”
-George W. Bush
Markets
The August sub prime crisis that served to mortify bulls and please the “I told you so” bears largely subsided in September as the world’s central banks injected unseemly amounts of cash into the system, effectively solving a credit problem by expanding credit.
On the surface of things this unprecedented action brought both stability and strength to equity markets and some “funding” currencies such as the Euro and our own resource backed dollar. It also empowered US dollar based commodities, as both gold and oil rose to new (unadjusted for inflation) highs.
It is now, however, October and the beginning of the year’s final quarter, one that has begun trading with a continued upswing. As we write, Canadian markets have risen well above 14,000 and the dollar has exceeded par with its US neighbour. In America the weak currency has continued to help equity markets regain, and even surpass, their mid-July highs as foreigners convert their ever more worthless paper into the harder assets found within US companies.
The question before investors now is to decide whether the printing presses of the world’s banking system are solving the present problem or creating a far greater one. There are of course, differing opinions as to what the likely outcome may be, for as Mark Twain familiarly stated “that is what makes horse races”. The opinion of this writer for many months has been and continues to be guardedly pessimistic. It is possible that China may be capable of kiting America’s cheques through to the end of next summer’s Olympics, it may also be their wish to do so. But on balance we don’t believe that this can happen and that a severe market correction will soon occur.
There are any number of reasons both fundamental and technical for adopting either a bullish or bearish stance at this juncture, the most important of which resides in market momentum and the continuance of present trends. If you are determined to remain fully invested I extend my very best wishes but advise that you might do well to hedge your bank stocks with some gold positions. Try a Sprott fund or the Horizon ETF (symbol HGU). There is also a pure bullion play available through Central Gold Trust (symbol GTU.UN).
Special situations also exist among Oil and gas Royalty trusts as the merger and acquisition game continues. You might also wish to follow one of Canada’s more astute investors, Seymour Schulich, first by following him into Starfield (SRU) and Birchcliff (BIR) and secondly through reading his book “Get Smarter”.
You may also use this period to cover your gains with 100% or 150% national or Quebec based tax shelters.
Commentary
There are numbers and then there are numbers beneath the numbers, the ones that we can grasp.
The all time high for gold was reached in January of 1980 at $850 US dollars per ounce, a price this letter has projected for year’s end. But wait a minute folks, this is like comparing apples to oranges because the real price, you know the one you think your house is worth, would be better reflected in current dollars; and when adjusted for inflation that number would be in excess of $2000 dollars per ounce. Think of oil at 40 1980 dollars then apply the same 2.5 times multiple and think about how cheap gas actually is when that equivalent comes to one hundred bucks a barrel.
The flip side of these realities can be seen when you reduce the inflation factor to constant dollars and discover that the much followed S&P 500 has only appreciated from 139 at its 1982 August bottom to 270, not the inflated factor of 1555 which it reached this past July. As David Nichols points out in his Fractal Market Report this truer measure reflects a realistic growth factor of doubled wealth over 25 years.
So next time you are calculating your net worth think about that $60,000 cost home you own that is now selling for upwards of $400,000 and ask what it all means?...or on second thought maybe we shouldn’t bother.
Remarkably
A recent analysis of the Iraq War cost put the number at 720 million dollars per day, an amount that promises to continue to grow for some years into the future.
Last month we wrote of the need for an infrastructure rebuild in America that would dwarf the one required here in Canada, one that will take 5 years and a trillion dollars to begin to address. Strangely this is roughly the amount that has been frittered, no pissed away, in Iraq over that same period of time.
The question for the Democrats, should they be elected, is whether they will reverse this course by withdrawing from the former debacle and implementing the latter programs.
Long ago, Bill Copp, suggested that Iraq be divided into 3 federal or independent sectors whose transition would be temporarily guarded by United Nations forces made up of mostly Muslim nations, a position that has since been adopted by some Democrats. It is now later but it is not too late to begin the beginning. If you believe the foregoing then sell defence stocks and buy infrastructure for the coming 4 years.
Real numbers also tell a different story when the actual cost of oil is assessed. Details are available to anyone who wishes to do the research but suffice to say that 80 dollars per barrel does not include the 50 billion tax payers send to the Middle East each year nor does it include the subsidies given to the energy companies. Factor everything in and you come up with a number closer to $260 dollars a barrel. Don’t believe me? Then read it in a Senate report and discover what the true depth of lobbying can mean.
And finally, do the math once more on displaced Iraqis; 4 million of them are now refugees. That’s roughly 15% of the population, a number equivalent to greater Toronto.
What is there not to see? Maybe if New Yorkers had to pass through an Iraqi checkpoint as they travelled to and from work or day care, they might begin to understand what Bush’s America has wrought.
Geoff Ryan
October 1, 2007
GeoffreyRyan@hotmail.com
514-795-8450http://thelaurelcomment.blogspot.com/
“I think we agree, the past is over”
-George W. Bush
Markets
The August sub prime crisis that served to mortify bulls and please the “I told you so” bears largely subsided in September as the world’s central banks injected unseemly amounts of cash into the system, effectively solving a credit problem by expanding credit.
On the surface of things this unprecedented action brought both stability and strength to equity markets and some “funding” currencies such as the Euro and our own resource backed dollar. It also empowered US dollar based commodities, as both gold and oil rose to new (unadjusted for inflation) highs.
It is now, however, October and the beginning of the year’s final quarter, one that has begun trading with a continued upswing. As we write, Canadian markets have risen well above 14,000 and the dollar has exceeded par with its US neighbour. In America the weak currency has continued to help equity markets regain, and even surpass, their mid-July highs as foreigners convert their ever more worthless paper into the harder assets found within US companies.
The question before investors now is to decide whether the printing presses of the world’s banking system are solving the present problem or creating a far greater one. There are of course, differing opinions as to what the likely outcome may be, for as Mark Twain familiarly stated “that is what makes horse races”. The opinion of this writer for many months has been and continues to be guardedly pessimistic. It is possible that China may be capable of kiting America’s cheques through to the end of next summer’s Olympics, it may also be their wish to do so. But on balance we don’t believe that this can happen and that a severe market correction will soon occur.
There are any number of reasons both fundamental and technical for adopting either a bullish or bearish stance at this juncture, the most important of which resides in market momentum and the continuance of present trends. If you are determined to remain fully invested I extend my very best wishes but advise that you might do well to hedge your bank stocks with some gold positions. Try a Sprott fund or the Horizon ETF (symbol HGU). There is also a pure bullion play available through Central Gold Trust (symbol GTU.UN).
Special situations also exist among Oil and gas Royalty trusts as the merger and acquisition game continues. You might also wish to follow one of Canada’s more astute investors, Seymour Schulich, first by following him into Starfield (SRU) and Birchcliff (BIR) and secondly through reading his book “Get Smarter”.
You may also use this period to cover your gains with 100% or 150% national or Quebec based tax shelters.
Commentary
There are numbers and then there are numbers beneath the numbers, the ones that we can grasp.
The all time high for gold was reached in January of 1980 at $850 US dollars per ounce, a price this letter has projected for year’s end. But wait a minute folks, this is like comparing apples to oranges because the real price, you know the one you think your house is worth, would be better reflected in current dollars; and when adjusted for inflation that number would be in excess of $2000 dollars per ounce. Think of oil at 40 1980 dollars then apply the same 2.5 times multiple and think about how cheap gas actually is when that equivalent comes to one hundred bucks a barrel.
The flip side of these realities can be seen when you reduce the inflation factor to constant dollars and discover that the much followed S&P 500 has only appreciated from 139 at its 1982 August bottom to 270, not the inflated factor of 1555 which it reached this past July. As David Nichols points out in his Fractal Market Report this truer measure reflects a realistic growth factor of doubled wealth over 25 years.
So next time you are calculating your net worth think about that $60,000 cost home you own that is now selling for upwards of $400,000 and ask what it all means?...or on second thought maybe we shouldn’t bother.
Remarkably
A recent analysis of the Iraq War cost put the number at 720 million dollars per day, an amount that promises to continue to grow for some years into the future.
Last month we wrote of the need for an infrastructure rebuild in America that would dwarf the one required here in Canada, one that will take 5 years and a trillion dollars to begin to address. Strangely this is roughly the amount that has been frittered, no pissed away, in Iraq over that same period of time.
The question for the Democrats, should they be elected, is whether they will reverse this course by withdrawing from the former debacle and implementing the latter programs.
Long ago, Bill Copp, suggested that Iraq be divided into 3 federal or independent sectors whose transition would be temporarily guarded by United Nations forces made up of mostly Muslim nations, a position that has since been adopted by some Democrats. It is now later but it is not too late to begin the beginning. If you believe the foregoing then sell defence stocks and buy infrastructure for the coming 4 years.
Real numbers also tell a different story when the actual cost of oil is assessed. Details are available to anyone who wishes to do the research but suffice to say that 80 dollars per barrel does not include the 50 billion tax payers send to the Middle East each year nor does it include the subsidies given to the energy companies. Factor everything in and you come up with a number closer to $260 dollars a barrel. Don’t believe me? Then read it in a Senate report and discover what the true depth of lobbying can mean.
And finally, do the math once more on displaced Iraqis; 4 million of them are now refugees. That’s roughly 15% of the population, a number equivalent to greater Toronto.
What is there not to see? Maybe if New Yorkers had to pass through an Iraqi checkpoint as they travelled to and from work or day care, they might begin to understand what Bush’s America has wrought.
Geoff Ryan
October 1, 2007
GeoffreyRyan@hotmail.com
514-795-8450http://thelaurelcomment.blogspot.com/
Wednesday, September 5, 2007
September
The Laurel Comment
“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy: this is to search for a superior moral justification for selfishness.”
John Kenneth Galbraith
Commentary
There seems to be little question that the opening decade of this, the third millennium has been frought with unforeseen difficulties. There is also little doubt that the present dearth of competent world leadership has served to magnify rather than to alleviate or resolve these growing negatives.
In our view however the major long term event that has overshadowed all others is not the absurd Iraq war but the China growth story and that of the other emerging economies in Russia, Brazil and India. These economic stories are the basis upon which our future world will develop and their potential will not be consumed but enhanced by Middle Eastern misadventures.
While America remains the world’s most powerful economy it is no longer the engine of international growth that it once was, as the diminishment of its national treasure and global reputation is now reaching unprecedented proportions. The arrogance of power, as Senator William Fulbright once called it, has truly been perfected by the Bush administration.
The final cost of the Iraq war is now being estimated at 1 to 2 trillion dollars while a recent paper on the need for an infrastructure rebuild in America calls for a 1.6 trillion expenditure over 5 years.
Although we Canadians have become acutely aware of our own such basic infrastructure failures in recent years, our needs pale when compared with the creaking underpinnings of major U.S. cities and the interstate highways that were constructed 50 years ago. The tragedies are multiplying monthly if not weekly and they are each so unnecessary.
Bombs, guns and the equipment of war are indeed stimulants to short term economic growth but aside from the obvious issues of morality and waste they are essentially, unless you are Halliburton, a non-productive use of public funds.
When a bridge, a sewer system, a hospital or a school is built the money spent is regenerated within the community and taxes are paid by both the companies contracted and the workers employed. Better still, at the end of construction society may have a useful facility or a safer environment instead of an exploded bomb, a flag draped coffin and an enriched defence contractor with an offshore account.
Put your two palms up and weigh these alternatives in the balance of life.
Markets
It has taken far longer then we ever expected for world markets to recognize the potential dangers inherent in the most recent policies of many of their central banks. Led by the once monetarist U.S. federal reserve, money supply growth has soared beyond any historical measure, save the Weimar Republic, while access to fast money and easy credit has abounded.
The surprise so far however, has not been the volatility of the market’s reaction but the facility with which it recovered from its August 16th flirtation with disaster, wherein the Fed, which had created the problem in the first place temporarily solved the liquidity crisis by creating more liquidity. This addendum policy was highly necessary as a short term solution and effectively added trading stability, but in the end we must ask…for how long?
We are now over 5 years into this present cyclical bull market and the time to pay heed to history has become imminent. The problem of a credit expansion and an inflated stock market can only be resolved by a contraction in both. The bigger the bubble grows, the greater the bursting will be, when not if it occurs.
The sub prime mortgage and “teaser” loan crisis has yet to work its way though the economy because the big jump up in U.S. mortgage rates will not take place until January. Markets however, will not wait until then to discount a possible recession in 2008.
September and October are the two worst market months of the year in normal times and these are not those. Please pay attention to the seasonality of what is happening and continue to take serious precautions as this summer’s action has a familiar 1987 look about it. For those of you who are either short of years or memory Google 1987 crash and look at a chart of the period, then move a large portion of your investments to cash or short ETF’s and sleep like a baby until all this passes; as it surely will.
Remarkably
Breaking news has Toyota taking over second place from Ford in U.S. car sales but the real economic and moral news is written beneath the headline number. BMW and Lexus sales have risen over 20% this past quarter while mid-sized cars, light trucks and compacts sales are all down. Get it, the rich are doing okay while everyone else is heading into the tank. Welcome to Bush world.
The ATM machine that closely resembled the average American’s house these past four or five years has stopped functioning and the aftermath wrought by tighter credit is about to begin…and no, cutting taxes to the already wealthy is not even on Bush’s agenda although it may be on Harper’s.
The Laurel comment may be wrong about all this but why take a chance.
Some months ago this letter noted a possible shift in Bush Administration policy towards Iraq. This transition of support from Shiite to Sunni now appears to have crystallized with the Bush Labour Day visit to Anbar province where a courtship of Saddamites appears to have been furthered. This situation bears watching.
Geoff Ryan
September 4, 2007
GeoffreyRyan@hotmail.com
514-795-8450
http://thelaurelcomment.blogspot.com/
“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy: this is to search for a superior moral justification for selfishness.”
John Kenneth Galbraith
Commentary
There seems to be little question that the opening decade of this, the third millennium has been frought with unforeseen difficulties. There is also little doubt that the present dearth of competent world leadership has served to magnify rather than to alleviate or resolve these growing negatives.
In our view however the major long term event that has overshadowed all others is not the absurd Iraq war but the China growth story and that of the other emerging economies in Russia, Brazil and India. These economic stories are the basis upon which our future world will develop and their potential will not be consumed but enhanced by Middle Eastern misadventures.
While America remains the world’s most powerful economy it is no longer the engine of international growth that it once was, as the diminishment of its national treasure and global reputation is now reaching unprecedented proportions. The arrogance of power, as Senator William Fulbright once called it, has truly been perfected by the Bush administration.
The final cost of the Iraq war is now being estimated at 1 to 2 trillion dollars while a recent paper on the need for an infrastructure rebuild in America calls for a 1.6 trillion expenditure over 5 years.
Although we Canadians have become acutely aware of our own such basic infrastructure failures in recent years, our needs pale when compared with the creaking underpinnings of major U.S. cities and the interstate highways that were constructed 50 years ago. The tragedies are multiplying monthly if not weekly and they are each so unnecessary.
Bombs, guns and the equipment of war are indeed stimulants to short term economic growth but aside from the obvious issues of morality and waste they are essentially, unless you are Halliburton, a non-productive use of public funds.
When a bridge, a sewer system, a hospital or a school is built the money spent is regenerated within the community and taxes are paid by both the companies contracted and the workers employed. Better still, at the end of construction society may have a useful facility or a safer environment instead of an exploded bomb, a flag draped coffin and an enriched defence contractor with an offshore account.
Put your two palms up and weigh these alternatives in the balance of life.
Markets
It has taken far longer then we ever expected for world markets to recognize the potential dangers inherent in the most recent policies of many of their central banks. Led by the once monetarist U.S. federal reserve, money supply growth has soared beyond any historical measure, save the Weimar Republic, while access to fast money and easy credit has abounded.
The surprise so far however, has not been the volatility of the market’s reaction but the facility with which it recovered from its August 16th flirtation with disaster, wherein the Fed, which had created the problem in the first place temporarily solved the liquidity crisis by creating more liquidity. This addendum policy was highly necessary as a short term solution and effectively added trading stability, but in the end we must ask…for how long?
We are now over 5 years into this present cyclical bull market and the time to pay heed to history has become imminent. The problem of a credit expansion and an inflated stock market can only be resolved by a contraction in both. The bigger the bubble grows, the greater the bursting will be, when not if it occurs.
The sub prime mortgage and “teaser” loan crisis has yet to work its way though the economy because the big jump up in U.S. mortgage rates will not take place until January. Markets however, will not wait until then to discount a possible recession in 2008.
September and October are the two worst market months of the year in normal times and these are not those. Please pay attention to the seasonality of what is happening and continue to take serious precautions as this summer’s action has a familiar 1987 look about it. For those of you who are either short of years or memory Google 1987 crash and look at a chart of the period, then move a large portion of your investments to cash or short ETF’s and sleep like a baby until all this passes; as it surely will.
Remarkably
Breaking news has Toyota taking over second place from Ford in U.S. car sales but the real economic and moral news is written beneath the headline number. BMW and Lexus sales have risen over 20% this past quarter while mid-sized cars, light trucks and compacts sales are all down. Get it, the rich are doing okay while everyone else is heading into the tank. Welcome to Bush world.
The ATM machine that closely resembled the average American’s house these past four or five years has stopped functioning and the aftermath wrought by tighter credit is about to begin…and no, cutting taxes to the already wealthy is not even on Bush’s agenda although it may be on Harper’s.
The Laurel comment may be wrong about all this but why take a chance.
Some months ago this letter noted a possible shift in Bush Administration policy towards Iraq. This transition of support from Shiite to Sunni now appears to have crystallized with the Bush Labour Day visit to Anbar province where a courtship of Saddamites appears to have been furthered. This situation bears watching.
Geoff Ryan
September 4, 2007
GeoffreyRyan@hotmail.com
514-795-8450
http://thelaurelcomment.blogspot.com/
Wednesday, August 29, 2007
August
The Laurel Comment
“…this is not the end. It is not even the beginning of the end. But it is perhaps the end of the beginning.”
Winston Churchill
Commentary
A little over 7 ½ years ago (6 ½ if you count your millennia properly) the United States entered the 21st century as the most powerful nation on earth and arguably, the mightiest in history.
Around the world she had been admired by some, envied by many more and despised by only a minority, reflecting a condition of public opinion that had been growing positively, albeit with the exception of certain periods, since her revolution and birth.
There have, unquestionably, been times during which America’s incredible foreign policy blunders have brought both its international and domestic popularity poll numbers to numbing depths, yet it has been seen that its powers of recovery have been strong enough to overcome tragedies even as great as Vietnam. In fact the disdain once felt for America during the late sixties and early seventies had largely dissipated through the Reagan and Clinton years. America, in short, with the Cold War behind her and a budget surplus gilding her treasury was on a roll when Bill and Hillary turned the White House keys over to the Bushies.
Then there was 9/11 and America’s popularity in the world soared to new heights as sympathy, loathing and fear shook the emotions of even the most cynical of the civilized nations. Ah, the opportunity for a positive and united response to such treachery could have only found parallel with that exercised by the Allied powers in the 1940’s. Sadly it was not to be at this time and place in history as this potential watershed for progress was squandered by ideologues infatuated with power and robber barons hungry for oil. The Republican party and its newly appointed administration sought not the friendship of allies or the advice of history, instead it began the hijacking of America in pursuit of goals that were not only dishonourable but incredibly misguided.
The unnecessary and debilitating war in Iraq may go down in history as the first symptom of America’s terminal disease. It may also be seen by future historians as the symbolic event that led to America’s hurried demise as the world’s greatest power contrasted to China’s accelerated rise. This will have not proven to be a good thing for our world because the promise that the United States and its Constitution held in both philosophical and practical terms may well be vanquished in future decades by nations which operate under far less democratic principles, where rule of law is subject to the rule of the state.
The irony inherent in this possible circumstance lies with the knowledge that it was a conservative/libertarian coalition that brought it upon us.
Markets
Bulls have called the recent market downdraft a healthy correction while bears have intoned the crash word and others meanwhile still have adopted the fence sitters motto…let’s wait and see.
The difficulty in writing a “market current” letter to be read on any but the day one parses it, is a conundrum solved only by those who believe in the theory that “I’m in it for the long term” which may be either a catchall phrase or an investment philosophy. For those of us however who struggle with the ups and downs of extreme market volatility bear with me while I present the other side.
In last month’s column I wrote that “a 5% upside move in markets won’t change your life but a 20% downside move might.” Well since that time the former has largely been achieved while the latter (at this writing) is still pending. Caution is not a particularly strong word unless it is applied to a flashing yellow light on the cusp of turning red. This bull market has now past 5 years of age and unless “things are different this time” the economic and credit cycles are in the process of forcing a set of old realities on this new realm of circumstance.
Protect is a stronger word and it implies a move to money market funds in whole or in part of your portfolios. Stronger still for the brave among you is the phrase “creative action”. This would involve familiarizing yourself with the methods of money making in down markets, the most simple of which we have already mentioned, the second involves the purchase of short or ultra short Exchange Traded Funds. As an example; for those of you who do not wish to sell your bank shares, now or ever, for whatever tax or personal reasons try the following HFD on the TSX. This is Horizon’s short on the TSX financial index, a wonderful hedge considering the age old market adage that financials lead markets up or down. You may also wish to engage the HGU which is a long on gold ETF.
Remarkably
The Bush team of Gates and Rice have been travelling the Middle East lately handing out defense packages to those it presently deems to be friends.
This current program of arming majority Sunni nations is reminiscent of the 1980’s policy that funded the Iran-Iraq war. There is little beneath the Machiavellian surface of these machinations as they portray a possible exit strategy from Iraq and a balancing of the Iran threat.
This is such a screwed up policy that the grasping of straws in the wind is now finding purchase in neo con circles.
And while on the subject of irony, George W Bush bears no similarity to the old lion who roared our opening quote during the worst days of WWII, despite what he may believe.
Geoff Ryan
July 31 2007
GeoffreyRyan@hotmail.com
514-795-8450
http://thelaurelcomment.blogspot.com/
“…this is not the end. It is not even the beginning of the end. But it is perhaps the end of the beginning.”
Winston Churchill
Commentary
A little over 7 ½ years ago (6 ½ if you count your millennia properly) the United States entered the 21st century as the most powerful nation on earth and arguably, the mightiest in history.
Around the world she had been admired by some, envied by many more and despised by only a minority, reflecting a condition of public opinion that had been growing positively, albeit with the exception of certain periods, since her revolution and birth.
There have, unquestionably, been times during which America’s incredible foreign policy blunders have brought both its international and domestic popularity poll numbers to numbing depths, yet it has been seen that its powers of recovery have been strong enough to overcome tragedies even as great as Vietnam. In fact the disdain once felt for America during the late sixties and early seventies had largely dissipated through the Reagan and Clinton years. America, in short, with the Cold War behind her and a budget surplus gilding her treasury was on a roll when Bill and Hillary turned the White House keys over to the Bushies.
Then there was 9/11 and America’s popularity in the world soared to new heights as sympathy, loathing and fear shook the emotions of even the most cynical of the civilized nations. Ah, the opportunity for a positive and united response to such treachery could have only found parallel with that exercised by the Allied powers in the 1940’s. Sadly it was not to be at this time and place in history as this potential watershed for progress was squandered by ideologues infatuated with power and robber barons hungry for oil. The Republican party and its newly appointed administration sought not the friendship of allies or the advice of history, instead it began the hijacking of America in pursuit of goals that were not only dishonourable but incredibly misguided.
The unnecessary and debilitating war in Iraq may go down in history as the first symptom of America’s terminal disease. It may also be seen by future historians as the symbolic event that led to America’s hurried demise as the world’s greatest power contrasted to China’s accelerated rise. This will have not proven to be a good thing for our world because the promise that the United States and its Constitution held in both philosophical and practical terms may well be vanquished in future decades by nations which operate under far less democratic principles, where rule of law is subject to the rule of the state.
The irony inherent in this possible circumstance lies with the knowledge that it was a conservative/libertarian coalition that brought it upon us.
Markets
Bulls have called the recent market downdraft a healthy correction while bears have intoned the crash word and others meanwhile still have adopted the fence sitters motto…let’s wait and see.
The difficulty in writing a “market current” letter to be read on any but the day one parses it, is a conundrum solved only by those who believe in the theory that “I’m in it for the long term” which may be either a catchall phrase or an investment philosophy. For those of us however who struggle with the ups and downs of extreme market volatility bear with me while I present the other side.
In last month’s column I wrote that “a 5% upside move in markets won’t change your life but a 20% downside move might.” Well since that time the former has largely been achieved while the latter (at this writing) is still pending. Caution is not a particularly strong word unless it is applied to a flashing yellow light on the cusp of turning red. This bull market has now past 5 years of age and unless “things are different this time” the economic and credit cycles are in the process of forcing a set of old realities on this new realm of circumstance.
Protect is a stronger word and it implies a move to money market funds in whole or in part of your portfolios. Stronger still for the brave among you is the phrase “creative action”. This would involve familiarizing yourself with the methods of money making in down markets, the most simple of which we have already mentioned, the second involves the purchase of short or ultra short Exchange Traded Funds. As an example; for those of you who do not wish to sell your bank shares, now or ever, for whatever tax or personal reasons try the following HFD on the TSX. This is Horizon’s short on the TSX financial index, a wonderful hedge considering the age old market adage that financials lead markets up or down. You may also wish to engage the HGU which is a long on gold ETF.
Remarkably
The Bush team of Gates and Rice have been travelling the Middle East lately handing out defense packages to those it presently deems to be friends.
This current program of arming majority Sunni nations is reminiscent of the 1980’s policy that funded the Iran-Iraq war. There is little beneath the Machiavellian surface of these machinations as they portray a possible exit strategy from Iraq and a balancing of the Iran threat.
This is such a screwed up policy that the grasping of straws in the wind is now finding purchase in neo con circles.
And while on the subject of irony, George W Bush bears no similarity to the old lion who roared our opening quote during the worst days of WWII, despite what he may believe.
Geoff Ryan
July 31 2007
GeoffreyRyan@hotmail.com
514-795-8450
http://thelaurelcomment.blogspot.com/
Thursday, July 5, 2007
July
The Laurel Comment
“The unapparent connection is more powerful than the apparent one”
Heraclitus 500 B.C.
Commentary
During his recent visit to the United States, the Russian leader, Vladimir Putin made one thing perfectly clear; unlike Tony Blair he was not and is not Bush’s man.
Politeness and platitudes aside the underlying message that now emanates from the remainder of the former Soviet Union, is one of strength, even of arrogance but certainly not of fear. Putin, for the moment, and perhaps for the foreseeable future presides over one of the fastest growing world economies… a Russia that now boasts the world’s most expensive city.
Who would have thought that the ascension to power of Mikhail Gorbachev some twenty plus years ago would quickly lead to the end of the “Cold War” and the capitalization, if not quite the democratization of this once powerful communist empire?
And who could have predicted that the rocky road upon which this reluctant nation began its journey would soon pave its way to a Moscow rife with billionaires and a 1000-dollar per night Ritz Carlton hotel? Well folks, it wasn’t all Putin’s or Yeltsin’s or Gorbachev’s doing, this growing success story has a taste of irony to it, because it is George W. Bush who deserves a great deal of the credit.
Canada and Russia as we all know are similar in many ways other than just a love of hockey. We are both rich in natural resources and particularly awash in oil, a commodity that was trading at one-quarter of its present price when George W. Bush assumed the presidency under the auspices of the United States Supreme Court.
The floundering economy of Russia’s turn of the century days was not rejuvenated by brilliant leadership but by bubbling oil prices. What Putin has supplied is stability, what Bush mistakenly conferred was an incredibly stupid war. Russian and Canadian economies have been among the greatest beneficiaries of the Bush years, a time of vast money supply growth and incredible waste. A time of growing distortions between the super rich and everyone else, the dawning of an era of extraordinary wealth wherein private planes, luxury vehicles and castles in the air are being paid for by the blood of the innocent and the false hopes of the ignorant.
The lessons of history are clear in one regard. Never ever open “Pandora’s Box”. Be it in Iraq\Afghanistan today, Vietnam yesterday or during the days leading up to the Great War a century ago. This truth has been ever evident, wars of conquest and civil wars that could have been prevented were not; crises that could have been managed were left to fester and jaw-jaw too often became war-war. The failure of leadership has always been thus.
Markets
A trend will remain such until a clear top or bottom has been delineated. Stock markets are in the process of forming the former while the US housing market is not even close to creating the latter condition. Yet this paper fuelled global expansion continues to defy all previous ones. Britain for example, has enjoyed ten years of sustained economic growth, far and away its best record in modern history. At home in Canada we of the rising Loonie are also enjoying tremendous top-line numbers even as we sell off our future well-being. Meanwhile China and India continue their record achievements as their world shipping lanes may well attest. Trade, trade, trade, the single most important factor in post World War II growth has now gone into warp-drive as production has beget new markets in nations that had no significant middle class a decade or two ago.
Fuelled by massive M3 growth, this printing press phenomena shows few signs of slowing as the “new privateers” and the growing nouveaux riches continue to spend their fiat currency on hard assets, ever wary that these liquidity driven markets are ballooning out of shape and defying fundamental form.
We are either at or fast approaching that point in the cycle when shoeshine boys (they must have them somewhere) are offering market advice. Be on guard for your portfolio and remember that the last five percent of upside is not going to change your life; a twenty percent downside correction might.
Remarkably
The battle between right and left had always been more of an American than a Canadian thing. We citizens of this comfortable and pleasant place have generally kept our politics civil and respectful. Hell, even the séparatiste issue has been debated and fought over (Chomedey ballots aside) with a degree of decorum unknown in other lands.
This is why the Conservative Party attack ads on Stéphane Dion seem so out of character in this Karl Roveless environment. We as Canadians do not indulge in this kind of crap and most of us simply watch in awe when our American neighbours do.
At least we did until recently.
The Afghanistan adventure\occupation begun in another time for reasons that no longer apply should be ended as quickly as possible. It is long past time for Canada to pass the baton to other NATO nations……… it is not our war, maybe it is theirs or perhaps it is the Afghani’s war, perhaps it always was.
Geoff Ryan
July 4 2007
GeoffreyRyan@hotmail.com
514-795-8450
http://thelaurelcomment.blogspot.com/
“The unapparent connection is more powerful than the apparent one”
Heraclitus 500 B.C.
Commentary
During his recent visit to the United States, the Russian leader, Vladimir Putin made one thing perfectly clear; unlike Tony Blair he was not and is not Bush’s man.
Politeness and platitudes aside the underlying message that now emanates from the remainder of the former Soviet Union, is one of strength, even of arrogance but certainly not of fear. Putin, for the moment, and perhaps for the foreseeable future presides over one of the fastest growing world economies… a Russia that now boasts the world’s most expensive city.
Who would have thought that the ascension to power of Mikhail Gorbachev some twenty plus years ago would quickly lead to the end of the “Cold War” and the capitalization, if not quite the democratization of this once powerful communist empire?
And who could have predicted that the rocky road upon which this reluctant nation began its journey would soon pave its way to a Moscow rife with billionaires and a 1000-dollar per night Ritz Carlton hotel? Well folks, it wasn’t all Putin’s or Yeltsin’s or Gorbachev’s doing, this growing success story has a taste of irony to it, because it is George W. Bush who deserves a great deal of the credit.
Canada and Russia as we all know are similar in many ways other than just a love of hockey. We are both rich in natural resources and particularly awash in oil, a commodity that was trading at one-quarter of its present price when George W. Bush assumed the presidency under the auspices of the United States Supreme Court.
The floundering economy of Russia’s turn of the century days was not rejuvenated by brilliant leadership but by bubbling oil prices. What Putin has supplied is stability, what Bush mistakenly conferred was an incredibly stupid war. Russian and Canadian economies have been among the greatest beneficiaries of the Bush years, a time of vast money supply growth and incredible waste. A time of growing distortions between the super rich and everyone else, the dawning of an era of extraordinary wealth wherein private planes, luxury vehicles and castles in the air are being paid for by the blood of the innocent and the false hopes of the ignorant.
The lessons of history are clear in one regard. Never ever open “Pandora’s Box”. Be it in Iraq\Afghanistan today, Vietnam yesterday or during the days leading up to the Great War a century ago. This truth has been ever evident, wars of conquest and civil wars that could have been prevented were not; crises that could have been managed were left to fester and jaw-jaw too often became war-war. The failure of leadership has always been thus.
Markets
A trend will remain such until a clear top or bottom has been delineated. Stock markets are in the process of forming the former while the US housing market is not even close to creating the latter condition. Yet this paper fuelled global expansion continues to defy all previous ones. Britain for example, has enjoyed ten years of sustained economic growth, far and away its best record in modern history. At home in Canada we of the rising Loonie are also enjoying tremendous top-line numbers even as we sell off our future well-being. Meanwhile China and India continue their record achievements as their world shipping lanes may well attest. Trade, trade, trade, the single most important factor in post World War II growth has now gone into warp-drive as production has beget new markets in nations that had no significant middle class a decade or two ago.
Fuelled by massive M3 growth, this printing press phenomena shows few signs of slowing as the “new privateers” and the growing nouveaux riches continue to spend their fiat currency on hard assets, ever wary that these liquidity driven markets are ballooning out of shape and defying fundamental form.
We are either at or fast approaching that point in the cycle when shoeshine boys (they must have them somewhere) are offering market advice. Be on guard for your portfolio and remember that the last five percent of upside is not going to change your life; a twenty percent downside correction might.
Remarkably
The battle between right and left had always been more of an American than a Canadian thing. We citizens of this comfortable and pleasant place have generally kept our politics civil and respectful. Hell, even the séparatiste issue has been debated and fought over (Chomedey ballots aside) with a degree of decorum unknown in other lands.
This is why the Conservative Party attack ads on Stéphane Dion seem so out of character in this Karl Roveless environment. We as Canadians do not indulge in this kind of crap and most of us simply watch in awe when our American neighbours do.
At least we did until recently.
The Afghanistan adventure\occupation begun in another time for reasons that no longer apply should be ended as quickly as possible. It is long past time for Canada to pass the baton to other NATO nations……… it is not our war, maybe it is theirs or perhaps it is the Afghani’s war, perhaps it always was.
Geoff Ryan
July 4 2007
GeoffreyRyan@hotmail.com
514-795-8450
http://thelaurelcomment.blogspot.com/
Monday, June 4, 2007
June 1 2007
The Laurel Comment
“The connection between God and man seems not to be so much a theological question as it does a Republican obsession/possession”.
-Bill Copp
Commentary
Last month’s Republican Presidential candidate debate brought forth an unexpected but healthy dose of shock and awe to both party minions and concerned Americans of all stripes.
Common sense policy views have earned short shrift among the party’s neo con ideologues and religious fundamentalists in recent years making the views of the Texas Republican Representative and one time Libertarian Party candidate Ron Paul’s particularly refreshing. What was even better were the silly attack platitudes put forth by FOX news reporters and Paul’s fellow candidates, the most embarrassing of whom was Rudy Giuliani.
In response to Mr. Paul’s suggestion that the 9/11 attacks may have been blow back from a long history of U.S. foreign policy decisions, the erstwhile Mayor of New York and traveling empty suit proclaimed that such a view was absolute nonsense while inferring that these thoughts bordered upon sedition.
Well Rudy, what do you think caused the attacks…serendipity; or as Dr. Paul responded, why did the terrorists attack New York and not Switzerland?
The point here is that there is nothing wrong with trying to understand the enemy’s motives or by questioning certain facets of what appears to be a failed 50 year Middle East policy. Rudy’s wartime record and that of his buddy George Bush appear to consist of their standing atop a pile of rubble in New York on September 14 2001 which at the time was among the safest places in the world.
The maligned Dr. Paul on the other hand served as a flight surgeon in both the USAF and Texas National Guard.
Markets
Markets continue to be driven by excess liquidity, a dangerous but so far manageable situation that has inspired terror among many economists over the past several years.
This letter and its predecessor written by Bill Copp have noted over the years that markets, driven by momentum in their final bull stages, will always exceed expectation by degrees both unknown and unpredictable. We are, with the aid of enormous China growth, at such a juncture. The concept of fair value is a relative term that applies only in periods of stable monetary policy and modest demand. At this time and place companies and large private investment pools are using the massive liquidity surge to purchase hard assets with diminishing dollars. This has produced a drive to convert ever more worthless US dollars into commodities or company held assets, thereby pushing world equity markets beyond the norms of technical or fundamental analysis. In the words of Marc Faber of the DoomGloomBoom report the Dow Jones could rise to 25,000 but if it did, gold might well trade at $25,000 per ounce. Liquidity, it is said, will drive markets higher…until it doesn’t.
Remarkably
The first test of Quebec’s minority government was resolved in favour of the people as the PQ decided that an early election was not in their interest. It would appear that wiser heads within the separatiste party prevailed over their more aggressive members to allow Mario Dumont and the ADQ the time to self destruct through public exposure. Before federalists get too excited however, the rule of 15 should be remembered. That’s the one by which self flagellating Quebecois enjoy submitting themselves to a referendum every 15 years. So mark 2010 on your calendar for the next attempt at destabilizing Quebec’s economy and social structures.
Meanwhile the Iraq beat goes on without cessation or moderation as politicians in both parties stubbornly refuse to face reality. The last 50 years of failed Middle Eastern policy may be explained by two factors; the battle over who controls the oil and the unresolved Palestinian diaspora.
Troubling as these issues may have been in the past what has occurred since 9/11 has exacerbated these problems to a degree of difficulty far beyond that known previously.
Two direct results of the Bush response to 9/11 have been the dramatic increase in the price of oil (aided by China demand) and a new diaspora of Iraqis, one that far exceeds the original number of displaced Palestinians.
Oil has always been a valuable commodity, one over which many wars have been waged. As that value increases it is only natural to assume that powerful interests will accelerate their quest for control over the commodity. These price hikes have been great for producing countries such as Canada and Russia while becoming negative for all in the Middle East but the very wealthy “royalty. As for the Iraqi refugees, think for a moment of what 2 million homeless people newly arrived in Canada or even the United States would mean, then apply that the thought to much smaller countries such as Syria and Jordan. Further to this Bush policy inspired disaster are the additional 2 million Iraqis who are refugees within their own borders.
Unresolved humanitarian crises constitute the material from which future folly is wrought and disaster is the fruit of shame.
Geoffrey Ryan
June 1 2007
“The connection between God and man seems not to be so much a theological question as it does a Republican obsession/possession”.
-Bill Copp
Commentary
Last month’s Republican Presidential candidate debate brought forth an unexpected but healthy dose of shock and awe to both party minions and concerned Americans of all stripes.
Common sense policy views have earned short shrift among the party’s neo con ideologues and religious fundamentalists in recent years making the views of the Texas Republican Representative and one time Libertarian Party candidate Ron Paul’s particularly refreshing. What was even better were the silly attack platitudes put forth by FOX news reporters and Paul’s fellow candidates, the most embarrassing of whom was Rudy Giuliani.
In response to Mr. Paul’s suggestion that the 9/11 attacks may have been blow back from a long history of U.S. foreign policy decisions, the erstwhile Mayor of New York and traveling empty suit proclaimed that such a view was absolute nonsense while inferring that these thoughts bordered upon sedition.
Well Rudy, what do you think caused the attacks…serendipity; or as Dr. Paul responded, why did the terrorists attack New York and not Switzerland?
The point here is that there is nothing wrong with trying to understand the enemy’s motives or by questioning certain facets of what appears to be a failed 50 year Middle East policy. Rudy’s wartime record and that of his buddy George Bush appear to consist of their standing atop a pile of rubble in New York on September 14 2001 which at the time was among the safest places in the world.
The maligned Dr. Paul on the other hand served as a flight surgeon in both the USAF and Texas National Guard.
Markets
Markets continue to be driven by excess liquidity, a dangerous but so far manageable situation that has inspired terror among many economists over the past several years.
This letter and its predecessor written by Bill Copp have noted over the years that markets, driven by momentum in their final bull stages, will always exceed expectation by degrees both unknown and unpredictable. We are, with the aid of enormous China growth, at such a juncture. The concept of fair value is a relative term that applies only in periods of stable monetary policy and modest demand. At this time and place companies and large private investment pools are using the massive liquidity surge to purchase hard assets with diminishing dollars. This has produced a drive to convert ever more worthless US dollars into commodities or company held assets, thereby pushing world equity markets beyond the norms of technical or fundamental analysis. In the words of Marc Faber of the DoomGloomBoom report the Dow Jones could rise to 25,000 but if it did, gold might well trade at $25,000 per ounce. Liquidity, it is said, will drive markets higher…until it doesn’t.
Remarkably
The first test of Quebec’s minority government was resolved in favour of the people as the PQ decided that an early election was not in their interest. It would appear that wiser heads within the separatiste party prevailed over their more aggressive members to allow Mario Dumont and the ADQ the time to self destruct through public exposure. Before federalists get too excited however, the rule of 15 should be remembered. That’s the one by which self flagellating Quebecois enjoy submitting themselves to a referendum every 15 years. So mark 2010 on your calendar for the next attempt at destabilizing Quebec’s economy and social structures.
Meanwhile the Iraq beat goes on without cessation or moderation as politicians in both parties stubbornly refuse to face reality. The last 50 years of failed Middle Eastern policy may be explained by two factors; the battle over who controls the oil and the unresolved Palestinian diaspora.
Troubling as these issues may have been in the past what has occurred since 9/11 has exacerbated these problems to a degree of difficulty far beyond that known previously.
Two direct results of the Bush response to 9/11 have been the dramatic increase in the price of oil (aided by China demand) and a new diaspora of Iraqis, one that far exceeds the original number of displaced Palestinians.
Oil has always been a valuable commodity, one over which many wars have been waged. As that value increases it is only natural to assume that powerful interests will accelerate their quest for control over the commodity. These price hikes have been great for producing countries such as Canada and Russia while becoming negative for all in the Middle East but the very wealthy “royalty. As for the Iraqi refugees, think for a moment of what 2 million homeless people newly arrived in Canada or even the United States would mean, then apply that the thought to much smaller countries such as Syria and Jordan. Further to this Bush policy inspired disaster are the additional 2 million Iraqis who are refugees within their own borders.
Unresolved humanitarian crises constitute the material from which future folly is wrought and disaster is the fruit of shame.
Geoffrey Ryan
June 1 2007
Wednesday, May 2, 2007
May 1, 2007
The Laurel Comment
“Next time I tell you someone from Texas should not be President of the United States, please pay attention.”
Molly Ivins
Markets
Okay, so while the Dow Jones was setting record highs last month in the 13,000 plus stratosphere why were Canadian and European investors asking themselves this most important question? Where’s my money?
As many RRSP and other long term holders of U.S. equity and bond funds have realized, their nominal gains in the U.S. markets have been wiped out by the reality of the currency world. To wit, while the post Clinton world of Bush/Greenspan/Bernanke has brought great rewards to domestic investors, the money printing machine that has driven the housing boom and privatization rush has also left a legacy of longer term scars on the face of the real economy and fading U.S. hegemony. Cheap money can be a temporary solution to assuage sharp economic downturns but as a practical long term policy one must ponder its eventual outcome with at least a small degree of skepticism.
During this period the Canadian dollar has risen from 62 cents U.S. to over 90, a percentage gain of some 45%. Similar gains have taken place in the Euro-US dollar arena allowing many US based corporations to add serious numbers to their balance sheets from foreign sales.
A good thing or a bad thing you might ask? The answer to that conundrum is also a question. How long can America expand its deficit, devalue its currency and diminish its middle class without triggering higher inflation and tighter money. One clue as to how the government’s domestic policy has mirrored its Iraq adventure is in the “truthiness” of it reporting. Aggregate money supply aka M3 is no longer officially reported but “Shadow Government Statistics” states that it has annualized near 12% since mid-2005. No economy can grow its currency at three times GDP without a reckoning. Buy gold, which incidentally, is already up over 100% during the same post-Clinton period. This commodity’s price would have to close in on 2000 USF per ounce just to reach the inflation adjusted high that occurred in 1980.
Commentary
Everyone, in or out of office, who supported the Iraq war and the subsequent occupation has been dead wrong. Many of those running for the 2008 Presidential nominations have been furiously backtracking on their positions, yet few have adopted strong opinions out of fear of appearing unpatriotic.
The face saving White House continues to expound a fantasy world overview of its policy waffling between the unrealistic and the accusatory even while the facts on the ground belie the rhetoric. Newly appointed “surge director” General Patraeus has promised to be truthful to Congress when he reports on progress or the lack thereof by late summer or early autumn 2007. It is indeed strange that the Bush administration so adamant in its criticism of Democratic guidelines, can be so accepting of their own…or is this just another lie?
In Canada the debate over our commitment to the Afghanistan occupation had almost reached rational grounds when the Liberals proposed their timelines. The NDP, in its infinite quest to appear silly, supported the government. No matter what position we may hold on the Martin/Harper Afghan policy we must surely agree that Canada has already done more than its share of the fighting.
Even if the policy and the battle were justified, a stance with which this writer has disagreed from the outset, then let the rest of NATO and other interested nations make their contribution. If the NDP had not been disingenuous on this issue they could have proposed an amendment to the motion…2009 or BEFORE.
The proponents of the war in Iraq may have been dead wrong, a malleable position, many of the troops however, have just been dead….and for what!?
Remarkably
Corn based ethanol is not the answer and it should not even be among the questions. This is the phoniest boondoggle perpetrated on the public since bottled water. Its cost is both prohibitive and subsidized, its environmental impact versus gasoline is at best neutral and may even be net negative, its effect on food prices both in ours and third world countries may border on the disastrous, while its proponents will get rich at the public’s expense and upon its naiveté.
Getting excited about the environment is a good thing and makes us all feel useful in a community sort of way. Getting screwed by special interests is not conducive to feeling good, it isn’t even sexy.
One final note on the Afghanistan debate. Why tanks? Why not an air conditioned fortress? In fact why not bring them home and spend money on Arctic bases and ice breakers? Maybe new coast guard helicopters. Something that will help, not hinder the coming generations.
Geoff Ryan
May 1, 2007
“Next time I tell you someone from Texas should not be President of the United States, please pay attention.”
Molly Ivins
Markets
Okay, so while the Dow Jones was setting record highs last month in the 13,000 plus stratosphere why were Canadian and European investors asking themselves this most important question? Where’s my money?
As many RRSP and other long term holders of U.S. equity and bond funds have realized, their nominal gains in the U.S. markets have been wiped out by the reality of the currency world. To wit, while the post Clinton world of Bush/Greenspan/Bernanke has brought great rewards to domestic investors, the money printing machine that has driven the housing boom and privatization rush has also left a legacy of longer term scars on the face of the real economy and fading U.S. hegemony. Cheap money can be a temporary solution to assuage sharp economic downturns but as a practical long term policy one must ponder its eventual outcome with at least a small degree of skepticism.
During this period the Canadian dollar has risen from 62 cents U.S. to over 90, a percentage gain of some 45%. Similar gains have taken place in the Euro-US dollar arena allowing many US based corporations to add serious numbers to their balance sheets from foreign sales.
A good thing or a bad thing you might ask? The answer to that conundrum is also a question. How long can America expand its deficit, devalue its currency and diminish its middle class without triggering higher inflation and tighter money. One clue as to how the government’s domestic policy has mirrored its Iraq adventure is in the “truthiness” of it reporting. Aggregate money supply aka M3 is no longer officially reported but “Shadow Government Statistics” states that it has annualized near 12% since mid-2005. No economy can grow its currency at three times GDP without a reckoning. Buy gold, which incidentally, is already up over 100% during the same post-Clinton period. This commodity’s price would have to close in on 2000 USF per ounce just to reach the inflation adjusted high that occurred in 1980.
Commentary
Everyone, in or out of office, who supported the Iraq war and the subsequent occupation has been dead wrong. Many of those running for the 2008 Presidential nominations have been furiously backtracking on their positions, yet few have adopted strong opinions out of fear of appearing unpatriotic.
The face saving White House continues to expound a fantasy world overview of its policy waffling between the unrealistic and the accusatory even while the facts on the ground belie the rhetoric. Newly appointed “surge director” General Patraeus has promised to be truthful to Congress when he reports on progress or the lack thereof by late summer or early autumn 2007. It is indeed strange that the Bush administration so adamant in its criticism of Democratic guidelines, can be so accepting of their own…or is this just another lie?
In Canada the debate over our commitment to the Afghanistan occupation had almost reached rational grounds when the Liberals proposed their timelines. The NDP, in its infinite quest to appear silly, supported the government. No matter what position we may hold on the Martin/Harper Afghan policy we must surely agree that Canada has already done more than its share of the fighting.
Even if the policy and the battle were justified, a stance with which this writer has disagreed from the outset, then let the rest of NATO and other interested nations make their contribution. If the NDP had not been disingenuous on this issue they could have proposed an amendment to the motion…2009 or BEFORE.
The proponents of the war in Iraq may have been dead wrong, a malleable position, many of the troops however, have just been dead….and for what!?
Remarkably
Corn based ethanol is not the answer and it should not even be among the questions. This is the phoniest boondoggle perpetrated on the public since bottled water. Its cost is both prohibitive and subsidized, its environmental impact versus gasoline is at best neutral and may even be net negative, its effect on food prices both in ours and third world countries may border on the disastrous, while its proponents will get rich at the public’s expense and upon its naiveté.
Getting excited about the environment is a good thing and makes us all feel useful in a community sort of way. Getting screwed by special interests is not conducive to feeling good, it isn’t even sexy.
One final note on the Afghanistan debate. Why tanks? Why not an air conditioned fortress? In fact why not bring them home and spend money on Arctic bases and ice breakers? Maybe new coast guard helicopters. Something that will help, not hinder the coming generations.
Geoff Ryan
May 1, 2007
Tuesday, April 3, 2007
April 2007
The Laurel Comment
“Science is simply common sense at its best, rigidly accurate in observation, and merciless to fallacy in logic”.
-Thomas Henry Huxley
Commentary
Now that the Quebec election is behind us and Canada’s second minority government has been installed, it is past time for the Laurel Comment to add its analysis to the growing list of more or less expert commentary.
Although we were fortunate enough to get the election call right in last month’s column we remain reticent in our embrace of the “new wave” politics that is being envisioned in some circles. In essence, the relegation of the PQ to third party status does not reflect the diminishment of Quebec nationalism nor does the situation enhance the movement. If anything, the way we are, is the way we were as the divide between urban and rural Quebec so evident in the Union Nationale and Creditiste eras has once more asserted itself. The aberration, if it may be construed as such, occurred during the past 30 years when the civil service, including educators and the communications industry connected unionism with national political goals and the xenophobia of unilingual regions outside the major city centers. This quasi left-right cohabitation led to several PQ victories and multiple factions and fractions within this unnatural alliance.
Mario Dumont has enjoyed an enormous amount of good luck over the past year, beginning with the incredibly absurd ascension of André Boisclair to the leadership of the PQ. This streak continued with the Hérouxville affair and the growing disconnect between the educated elites and the conservative values still widely held in much of rural Quebec. Jean Charest was not light with his political contribution either as his seeming “walk in the park” campaign found little resonance even among his own supporters.
So who shoots now? Certainly not the PQ who are in much need of a remake and time to ponder. Surely not the Liberals, who will require constant medical attention for their near fatal collapse; and doubtfully the ADQ who may spend some time basking in the glow of victory while figuring out how they might install a grocery bag stuffer in their new cabinet should the present government fail.
Quebec, similar to the minority situation in Ottawa, will need time to muddle through the first 18 months of its new circumstance. This will allow time for many in both rural and urban environs to figure out whether the new leader of the opposition is likely to become Mario Bourassa or a Mario Duplessis.
Markets
Some crises come and go, others linger for years or decades on end. Among the fleeting variety we would include the present (as we write) hostage taking in Iran. Among the latter more permanent troubles, we would mention the Iraq war and the devastating legacy of the Bush administration in its entirety.
As a point of reference, during the final year of the Clinton Administration, oil prices averaged about 20 dollars a barrel, the budget was in surplus and the troubles in the Balkans, rather than igniting World War III, were quieting down. Flash forward 6 years to the world today and ask what might have been.
It is true that markets have done well world wide with commodity based countries such as our own having been particularly fortunate. Yet the main beneficiaries of Bush policies have been oil producers and the relatively tax free wealthy one percent. No, Bush tax cuts did not create China demand and yes central bank monetary policy has impacted both the liquidity upon which the market has depended and the shaky floor upon which it stands. There is a serious coming to Jesus meeting awaiting investors as the cheque and debt kiting that have been driving this international game comes full circle. It is not the “if”, it is the “when” that remains unknown.
Fact: The average inflation adjusted price for a barrel of oil from 1869 to present is approximately $21 per barrel; one third of today’s. Do the math.
Remarkably
Two events occurred at the end of March which may prove to be of longer term importance. The aggressive statement by King Abdullah of Saudi Arabia at the closure of the Arab Summit has watershed overtones. Remember that it was the 1979 Iranian Revolution that brought about the rise of Saudi Arabia as America’s chief client state in the Middle East. Always close to the Bush family and its minions the House of Saud now appears to be feeling its way down a different path, one by which Middle Eastern problems may someday be resolved by those who live there, rather than those who dream of empire.
The other shoe to drop was the opening gambit in a potential trade war with China. Hard to see who would win this one…or is it?
In the final analysis America will someday leave Iraq with or without a victory whatever that may be. In the interim many more will die and much treasure will be wasted. Face saving at whose expense and upon whose conscience?
Back in Canada we are about to be infested with a second series of Conservative attack ads. This is a shameful and disturbing exercise for a country that is uniquely if not uniformly polite and mature.
The other ad campaign that concerns me is the ethanol promotion. This is not the first time we have discussed this phony solution here so please do some internet research before you fall prey to this corn and oil lobby conspiracy. Being concerned about the environment is a good thing, doing the right thing about it is quite something else. This story is so full of holes you could drive an oil billionaire through it.
Google “12 lies about ethanol” for starters.
And who is George Bush waving at anyway?
Geoff Ryan
April 3, 2007
Geoffreyryan@hotmail.com
“Science is simply common sense at its best, rigidly accurate in observation, and merciless to fallacy in logic”.
-Thomas Henry Huxley
Commentary
Now that the Quebec election is behind us and Canada’s second minority government has been installed, it is past time for the Laurel Comment to add its analysis to the growing list of more or less expert commentary.
Although we were fortunate enough to get the election call right in last month’s column we remain reticent in our embrace of the “new wave” politics that is being envisioned in some circles. In essence, the relegation of the PQ to third party status does not reflect the diminishment of Quebec nationalism nor does the situation enhance the movement. If anything, the way we are, is the way we were as the divide between urban and rural Quebec so evident in the Union Nationale and Creditiste eras has once more asserted itself. The aberration, if it may be construed as such, occurred during the past 30 years when the civil service, including educators and the communications industry connected unionism with national political goals and the xenophobia of unilingual regions outside the major city centers. This quasi left-right cohabitation led to several PQ victories and multiple factions and fractions within this unnatural alliance.
Mario Dumont has enjoyed an enormous amount of good luck over the past year, beginning with the incredibly absurd ascension of André Boisclair to the leadership of the PQ. This streak continued with the Hérouxville affair and the growing disconnect between the educated elites and the conservative values still widely held in much of rural Quebec. Jean Charest was not light with his political contribution either as his seeming “walk in the park” campaign found little resonance even among his own supporters.
So who shoots now? Certainly not the PQ who are in much need of a remake and time to ponder. Surely not the Liberals, who will require constant medical attention for their near fatal collapse; and doubtfully the ADQ who may spend some time basking in the glow of victory while figuring out how they might install a grocery bag stuffer in their new cabinet should the present government fail.
Quebec, similar to the minority situation in Ottawa, will need time to muddle through the first 18 months of its new circumstance. This will allow time for many in both rural and urban environs to figure out whether the new leader of the opposition is likely to become Mario Bourassa or a Mario Duplessis.
Markets
Some crises come and go, others linger for years or decades on end. Among the fleeting variety we would include the present (as we write) hostage taking in Iran. Among the latter more permanent troubles, we would mention the Iraq war and the devastating legacy of the Bush administration in its entirety.
As a point of reference, during the final year of the Clinton Administration, oil prices averaged about 20 dollars a barrel, the budget was in surplus and the troubles in the Balkans, rather than igniting World War III, were quieting down. Flash forward 6 years to the world today and ask what might have been.
It is true that markets have done well world wide with commodity based countries such as our own having been particularly fortunate. Yet the main beneficiaries of Bush policies have been oil producers and the relatively tax free wealthy one percent. No, Bush tax cuts did not create China demand and yes central bank monetary policy has impacted both the liquidity upon which the market has depended and the shaky floor upon which it stands. There is a serious coming to Jesus meeting awaiting investors as the cheque and debt kiting that have been driving this international game comes full circle. It is not the “if”, it is the “when” that remains unknown.
Fact: The average inflation adjusted price for a barrel of oil from 1869 to present is approximately $21 per barrel; one third of today’s. Do the math.
Remarkably
Two events occurred at the end of March which may prove to be of longer term importance. The aggressive statement by King Abdullah of Saudi Arabia at the closure of the Arab Summit has watershed overtones. Remember that it was the 1979 Iranian Revolution that brought about the rise of Saudi Arabia as America’s chief client state in the Middle East. Always close to the Bush family and its minions the House of Saud now appears to be feeling its way down a different path, one by which Middle Eastern problems may someday be resolved by those who live there, rather than those who dream of empire.
The other shoe to drop was the opening gambit in a potential trade war with China. Hard to see who would win this one…or is it?
In the final analysis America will someday leave Iraq with or without a victory whatever that may be. In the interim many more will die and much treasure will be wasted. Face saving at whose expense and upon whose conscience?
Back in Canada we are about to be infested with a second series of Conservative attack ads. This is a shameful and disturbing exercise for a country that is uniquely if not uniformly polite and mature.
The other ad campaign that concerns me is the ethanol promotion. This is not the first time we have discussed this phony solution here so please do some internet research before you fall prey to this corn and oil lobby conspiracy. Being concerned about the environment is a good thing, doing the right thing about it is quite something else. This story is so full of holes you could drive an oil billionaire through it.
Google “12 lies about ethanol” for starters.
And who is George Bush waving at anyway?
Geoff Ryan
April 3, 2007
Geoffreyryan@hotmail.com
Tuesday, March 6, 2007
March 2007
The Laurel Comment
“It’s hard to argue against cynics, they always sound smarter than optimists because they have so much evidence on their side”.
-the late Molly Ivins
Commentary
I have likely stated or felt the following a thousand or more times over the course of the Bush Presidency so going through the rote once more shouldn’t matter a great deal.
The difference between neo-conservatives and people such as myself may be easily if not perfectly defined through the comparison that liberals unlike neo-cons possess the distinct understanding that other people, other nations, and other factions within those nations have agendas of their own.
The commoners of all nations wish above all else to find work that will feed, clothe, house and educate their families, whereas the powerful wherever they may reside wish to control the means by which these simple wants are to be either delivered or denied.
The problem inherent within the neo-con philosophy, be it in the Middle East or around the world, lies in its failure to comprehend the goals of those they oppose or even those they believe they are trying to help. These shortcomings become most apparent when the neo-cons gain power and exercise their ideology in what amounts to old world imperialism.
A recent article in the New Yorker by Seymour Hersh does much to describe the present Middle Eastern dilemma. The most frightening aspect of Hersh’s view and of his many previous discovery pieces is that the knowledge of the inner workings of foreign politicos is both available and apparent. The former, if one cares to look and the latter if one has even a modicum of historical knowledge from which to draw conclusions.
It is shocking to know that expert advice in Middle Eastern history as well as intelligence reports from professional officers was not just ignored by the pre-war Bush administration, but ridiculed. The incredible hubris of the gung ho chickenhawks; Perle, Wolfowitz, Feith, Rummy, Cheney and others was not only dismissive of international advice but of their own military and intelligence experts. Tragically this was also true of the conduct of the war itself and the disastrous occupation that followed.
When you take your nation to war you should at least know who your enemy is and who their enemies are. Sunnis, Shi’a, Iraq, Iran were all lumped together and now they are coming apart.
The new U.S. policy in the Middle East is one that has been pondered in this space over the course of the war. Firstly, that Iraq is in the process of being divided along ethnic lines and secondly, by way of achieving this, America is abandoning the Shiites in order to side with the long-term Bush family friends in Saudi Arabia who happen to be Sunni. Just for the record Al Queda is Saudi Sunni as were most of the hijackers and Bin Laden himself. The policy failure of the Iraq expedition is about to morph into something else, something that may turn out to be far more dangerous. Iran is not the problem, America is not the problem. Bush/neo-con policy is the problem.
In Quebec the provincial election campaign has surprised many of us but none more than the Pequistes. It would appear at this juncture that the Liberals might return with minority status if the rise of the ADQ continues. There now appears, at the time of this writing, to be a distinct possibility that the PQ is about to become the third party. Debate night promises to take on more than its usual importance.
Markets
In a bull market everyone is a genius, or so it would seem. The reality is that bull markets always come to a short-term end, an end that can be brutal to those who remain unprepared.
The volatility of the past few weeks was foreseen by many investment professionals and discussed on many levels so it should have come as no surprise to anyone who was paying attention. This five-year bull market has been abnormal in both its length and breadth, it has also been far more real in Euro and gold terms than it has been in U.S. dollar related securities.
Excess liquidity drives markets upwards, the opposite occurs when such liquidity is diminished. In 1999 Alan Greenspan flooded the market with money in advance of what proved to be the Y2K hoax. In February 2000 the rug was pulled from beneath the market.
There is little doubt that the foundation of the world economy is undergoing profound changes as a billion new “Chindia” consumers have most recently proclaimed. Yes, markets will be higher some years down the road, but what is the rush.
Remarkably
The U.S. intervention in Iraq has served to break the Sunni-Shi’a balance of power in the Middle East. The Bush administration has unwittingly opened Pandora’s Box and the reckoning for this dramatic error has only begun. Hundreds of thousands have died in this exercise of hubris and billions of dollars have been wasted. As one of the 2 million Iraqi refugees recently pondered…for what? “There used to be one Saddam, now there are a thousand”.
And finally, unlike many around the world I breathed (heaved is too much) a deep sigh of relief last month when Vice President Dick Cheney escaped the alleged Taliban assassination attempt. The last thing I want is for this son of a bitch to be martyred; I want him and his cohorts to be impeached.
Investment note: Own gold in the face of this coming currency crisis.
Geoff Ryan March 6, 2007.
Geoffreyryan@hotmail.com
“It’s hard to argue against cynics, they always sound smarter than optimists because they have so much evidence on their side”.
-the late Molly Ivins
Commentary
I have likely stated or felt the following a thousand or more times over the course of the Bush Presidency so going through the rote once more shouldn’t matter a great deal.
The difference between neo-conservatives and people such as myself may be easily if not perfectly defined through the comparison that liberals unlike neo-cons possess the distinct understanding that other people, other nations, and other factions within those nations have agendas of their own.
The commoners of all nations wish above all else to find work that will feed, clothe, house and educate their families, whereas the powerful wherever they may reside wish to control the means by which these simple wants are to be either delivered or denied.
The problem inherent within the neo-con philosophy, be it in the Middle East or around the world, lies in its failure to comprehend the goals of those they oppose or even those they believe they are trying to help. These shortcomings become most apparent when the neo-cons gain power and exercise their ideology in what amounts to old world imperialism.
A recent article in the New Yorker by Seymour Hersh does much to describe the present Middle Eastern dilemma. The most frightening aspect of Hersh’s view and of his many previous discovery pieces is that the knowledge of the inner workings of foreign politicos is both available and apparent. The former, if one cares to look and the latter if one has even a modicum of historical knowledge from which to draw conclusions.
It is shocking to know that expert advice in Middle Eastern history as well as intelligence reports from professional officers was not just ignored by the pre-war Bush administration, but ridiculed. The incredible hubris of the gung ho chickenhawks; Perle, Wolfowitz, Feith, Rummy, Cheney and others was not only dismissive of international advice but of their own military and intelligence experts. Tragically this was also true of the conduct of the war itself and the disastrous occupation that followed.
When you take your nation to war you should at least know who your enemy is and who their enemies are. Sunnis, Shi’a, Iraq, Iran were all lumped together and now they are coming apart.
The new U.S. policy in the Middle East is one that has been pondered in this space over the course of the war. Firstly, that Iraq is in the process of being divided along ethnic lines and secondly, by way of achieving this, America is abandoning the Shiites in order to side with the long-term Bush family friends in Saudi Arabia who happen to be Sunni. Just for the record Al Queda is Saudi Sunni as were most of the hijackers and Bin Laden himself. The policy failure of the Iraq expedition is about to morph into something else, something that may turn out to be far more dangerous. Iran is not the problem, America is not the problem. Bush/neo-con policy is the problem.
In Quebec the provincial election campaign has surprised many of us but none more than the Pequistes. It would appear at this juncture that the Liberals might return with minority status if the rise of the ADQ continues. There now appears, at the time of this writing, to be a distinct possibility that the PQ is about to become the third party. Debate night promises to take on more than its usual importance.
Markets
In a bull market everyone is a genius, or so it would seem. The reality is that bull markets always come to a short-term end, an end that can be brutal to those who remain unprepared.
The volatility of the past few weeks was foreseen by many investment professionals and discussed on many levels so it should have come as no surprise to anyone who was paying attention. This five-year bull market has been abnormal in both its length and breadth, it has also been far more real in Euro and gold terms than it has been in U.S. dollar related securities.
Excess liquidity drives markets upwards, the opposite occurs when such liquidity is diminished. In 1999 Alan Greenspan flooded the market with money in advance of what proved to be the Y2K hoax. In February 2000 the rug was pulled from beneath the market.
There is little doubt that the foundation of the world economy is undergoing profound changes as a billion new “Chindia” consumers have most recently proclaimed. Yes, markets will be higher some years down the road, but what is the rush.
Remarkably
The U.S. intervention in Iraq has served to break the Sunni-Shi’a balance of power in the Middle East. The Bush administration has unwittingly opened Pandora’s Box and the reckoning for this dramatic error has only begun. Hundreds of thousands have died in this exercise of hubris and billions of dollars have been wasted. As one of the 2 million Iraqi refugees recently pondered…for what? “There used to be one Saddam, now there are a thousand”.
And finally, unlike many around the world I breathed (heaved is too much) a deep sigh of relief last month when Vice President Dick Cheney escaped the alleged Taliban assassination attempt. The last thing I want is for this son of a bitch to be martyred; I want him and his cohorts to be impeached.
Investment note: Own gold in the face of this coming currency crisis.
Geoff Ryan March 6, 2007.
Geoffreyryan@hotmail.com
Thursday, February 15, 2007
February 5, 2007
The Laurel Comment
“The United States of America is still run by its citizens. The government works for us. Rank imperialism and war mongering are not American traditions or values. We do not need to dominate the world. We want and need to work with other nations. We want to find solutions other than killing people. Not in our name, not with our money, not with our children’s blood.”
-The late great Molly Ivins
Commentary
Once upon a time, at the very beginning of the neo con inspired Iraqi expedition, many true believers dreamed of a day when American military might would uproot the present leading dictators of the Middle East and supplant them with democratically chosen favourites of their own making. Alas the fantasy that drove them to such wild expectation has long since been replaced by the trauma of reality.
George W. Bush, the perpetrator in chief of America’s disastrous foreign policy now states that one final surge is required to stabilize the fledgling democracy in Iraq and that the new commander, General Petraeous, is the best man for the job.
If this be the case, the question begs as to why this brilliant officer was not discovered and put in place earlier. Spin, spin, spin, the entire Iraq debacle has degenerated into a face saving exercise for the Bushies, one which is costing America dearly in lives, national treasure and moral authority. I am once again reminded of John Kerry’s finest moment when as a young Vietnam Veteran he asked a 1974 Senate committee hearing “how do you ask a man to be the last man to die for a mistake”. America will be leaving Iraq one day soon, whether it is tomorrow or two years from now everyone will be worse off and many more on both sides and in the middle will be either dead or severely maimed.
My predecessor in this space, Bill Copp, long ago suggested that a dividing Iraq into three sectors was the only solution left to the creators of this havoc. Many, including Senator Joe Biden and conservative columnist David Brooks have since joined with this opinion. This solution may be compared to that used in many historic battles; separate the combatants. Failing this it would appear that this civil war, like all others before it, will end only when the stronger or more numerous side vanquishes its weaker foe.
To this former end America should not be threatening Iran, it should be enlisting its help as well as that of other nations of interest both within the region or geographically removed from it. Cooperation and diplomacy have yet to be tried, is there a reason?
Two final questions; how much more can be asked of National Guardsmen and other troops without there being more than a rumble of discontent? Captain Queeg Anyone?...and what was China doing with that recent missile launch, maybe they were asking who really was in charge?
Markets
Okay, okay, so markets have continued to rise in spite of an inverted yield curve and a pending recession giving many professional investment managers more than a slight headache while proving once more that excess liquidity is capable of driving stocks and commodities well past their normal points of reference to fair value.
The world is awash in money and its credit twin. This vast source of printable energy seems to know no bounds and unlike fossil fuels appears to be an infinite resource. I can only suggest that the greed will eventually be tapped and the fallback position will be precious metals. Although gold has already doubled during the past five years it is not even close to its all time inflation adjusted highs. Look for further gains in the 30% range for 2007.
Ethanol from corn is a joke. It makes no sense practically, environmentally or economically. Cellulitic ethanol may be quite something else. Before Bush and the corn/ethanol lobby rape the American public once more, bear these numbers in mind, or better still, do your own research. It takes eight gallons of gas to produce 10 gallons of corn ethanol a fuel that gets less mileage. Without huge subsidies it would die a natural death. Oil sands in Canada employ one quarter as much energy to provide the same amount of useable gasoline. With clean nuclear power plants, it would be even less. We are on the cusp of a huge proliferation of nuclear based power, a situation which may soon be embraced rather than feared by the “greens” as the disposal of nuclear waste may prove to be more easily controlled than was previously the case.
Trade with caution, own gold, biotechs and special situations in the energy area including oil and gas income trusts.
Remarkably
I was going to finish this column with a supportive comment about former President Jimmy Carter and his latest book “Palestine: Peace not Apartheid” until I discovered that such a favourable comment was akin to criticizing the Muslim Prophet Mohammed in other circles.
Bearing this in mind I decided instead to plumb the depths of the global warming argument which may or may not be safer turf even though these last few weeks in the Northeastern part of the continent have led many of us toward a more welcoming view of the prospect.
Many of you have by now either watched or read about the Al Gore film “An Inconvenient Truth”, a presentation that makes many of us wonder what the world would be like had this articulate and intelligent gentlemen overcome the Florida voting irregularities and kept George W. Bush and the neo cons from the Presidency.
And for what it’s worth on that score I would like to see John Edwards win the Democratic Party’s 2008 nomination.
As for George and the gang of many allow me to paraphrase their most fervent supporters:
“Impeach them all and let god sort them out”.
Geoff Ryan
Feb 5, 2007
“The United States of America is still run by its citizens. The government works for us. Rank imperialism and war mongering are not American traditions or values. We do not need to dominate the world. We want and need to work with other nations. We want to find solutions other than killing people. Not in our name, not with our money, not with our children’s blood.”
-The late great Molly Ivins
Commentary
Once upon a time, at the very beginning of the neo con inspired Iraqi expedition, many true believers dreamed of a day when American military might would uproot the present leading dictators of the Middle East and supplant them with democratically chosen favourites of their own making. Alas the fantasy that drove them to such wild expectation has long since been replaced by the trauma of reality.
George W. Bush, the perpetrator in chief of America’s disastrous foreign policy now states that one final surge is required to stabilize the fledgling democracy in Iraq and that the new commander, General Petraeous, is the best man for the job.
If this be the case, the question begs as to why this brilliant officer was not discovered and put in place earlier. Spin, spin, spin, the entire Iraq debacle has degenerated into a face saving exercise for the Bushies, one which is costing America dearly in lives, national treasure and moral authority. I am once again reminded of John Kerry’s finest moment when as a young Vietnam Veteran he asked a 1974 Senate committee hearing “how do you ask a man to be the last man to die for a mistake”. America will be leaving Iraq one day soon, whether it is tomorrow or two years from now everyone will be worse off and many more on both sides and in the middle will be either dead or severely maimed.
My predecessor in this space, Bill Copp, long ago suggested that a dividing Iraq into three sectors was the only solution left to the creators of this havoc. Many, including Senator Joe Biden and conservative columnist David Brooks have since joined with this opinion. This solution may be compared to that used in many historic battles; separate the combatants. Failing this it would appear that this civil war, like all others before it, will end only when the stronger or more numerous side vanquishes its weaker foe.
To this former end America should not be threatening Iran, it should be enlisting its help as well as that of other nations of interest both within the region or geographically removed from it. Cooperation and diplomacy have yet to be tried, is there a reason?
Two final questions; how much more can be asked of National Guardsmen and other troops without there being more than a rumble of discontent? Captain Queeg Anyone?...and what was China doing with that recent missile launch, maybe they were asking who really was in charge?
Markets
Okay, okay, so markets have continued to rise in spite of an inverted yield curve and a pending recession giving many professional investment managers more than a slight headache while proving once more that excess liquidity is capable of driving stocks and commodities well past their normal points of reference to fair value.
The world is awash in money and its credit twin. This vast source of printable energy seems to know no bounds and unlike fossil fuels appears to be an infinite resource. I can only suggest that the greed will eventually be tapped and the fallback position will be precious metals. Although gold has already doubled during the past five years it is not even close to its all time inflation adjusted highs. Look for further gains in the 30% range for 2007.
Ethanol from corn is a joke. It makes no sense practically, environmentally or economically. Cellulitic ethanol may be quite something else. Before Bush and the corn/ethanol lobby rape the American public once more, bear these numbers in mind, or better still, do your own research. It takes eight gallons of gas to produce 10 gallons of corn ethanol a fuel that gets less mileage. Without huge subsidies it would die a natural death. Oil sands in Canada employ one quarter as much energy to provide the same amount of useable gasoline. With clean nuclear power plants, it would be even less. We are on the cusp of a huge proliferation of nuclear based power, a situation which may soon be embraced rather than feared by the “greens” as the disposal of nuclear waste may prove to be more easily controlled than was previously the case.
Trade with caution, own gold, biotechs and special situations in the energy area including oil and gas income trusts.
Remarkably
I was going to finish this column with a supportive comment about former President Jimmy Carter and his latest book “Palestine: Peace not Apartheid” until I discovered that such a favourable comment was akin to criticizing the Muslim Prophet Mohammed in other circles.
Bearing this in mind I decided instead to plumb the depths of the global warming argument which may or may not be safer turf even though these last few weeks in the Northeastern part of the continent have led many of us toward a more welcoming view of the prospect.
Many of you have by now either watched or read about the Al Gore film “An Inconvenient Truth”, a presentation that makes many of us wonder what the world would be like had this articulate and intelligent gentlemen overcome the Florida voting irregularities and kept George W. Bush and the neo cons from the Presidency.
And for what it’s worth on that score I would like to see John Edwards win the Democratic Party’s 2008 nomination.
As for George and the gang of many allow me to paraphrase their most fervent supporters:
“Impeach them all and let god sort them out”.
Geoff Ryan
Feb 5, 2007
Wednesday, January 10, 2007
January
The Laurel Comment
“History is invaluable for many reasons, none of which have helped the present administration or its creators.”
– William Milton
Commentary
“History is invaluable for many reasons, none of which have helped the present administration or its creators.”
– William Milton
Commentary
The recent holiday season witnessed the deaths of two vastly different world figures. Gerald Ford as you all know by now was the thirty eighth and first unelected President of the United States. Saddam Hussein was the long term Sunni dictator of the enigmatic region which has been known as Iraq for much of the last century. On the surface of things there appear to be few parallels or connective dots between the careers of these two men yet underneath the glamour of revisionist history we may arguably discover some, if not many, cause and effect circumstances that have bound both world history and our current dilemmas to the actions of these men.
The eulogies given over to President Ford during these past weeks uniformly described him as a conciliator and healer of the nation’s wounds. They spoke not of his leadership skills but of his agreeability. The networks, in their choice of pundits and experts also seem to have decided, with few exceptions that Ford’s defining moment was the Nixon pardon, a gesture for which most have lauded the President and similarly agreed to its being a correct measure in the eyes of history. First among those from whom this patent nonsense was elicited were the two Bushs, Cheney and Rumsfeld, men who gained access to power either directly through Ford or through genetic transfer, as in the case of the White House’s present occupant.
If is a big word when it comes to rewriting history but let us for a moment consider that it was Gerald Ford who elevated Bush Sr., Cheney and Rumsfeld to star status in his White House giving them not just temporary but permanent access to the power levers of the GOP. Without this promotion George senior would never have been considered for the Vice Presidency under Reagan or the candidacy for President thereafter, and need we speculate on the possibility that George W, without his father’s powerful influence would have ever become quasi owner of the Texas Rangers baseball team let alone Governor or President. We think not.
So what exactly is Gerald Ford’s unintended legacy? A Nixon pardon that was immediately rejected by most Americans but lovingly accepted by those about to attain power whose fear of punishment for any crimes yet to come was now less intimidating. Has the legacy not also included the Presidency of Bush Sr. and by unhappy circumstance the subsequent terms of Bush Jr. and the roles of Vice President Cheney and former Defense Secretary Rumsfeld?
This tragically, is the real history of a good man, a conciliatory Republican who might well have been happier on the other side of the aisle.
It has been some time since America discovered that the capture of Saddam Hussein would have little to do with either winning the war in Iraq or even toning down the violence in that troubled region. I suspect that it will take them even less time to figure out the true impact of his execution.
The invasion and occupation of Iraq cannot be blamed on Gerald Ford, a man as we now know, who opposed the war but shamefully chose not to express his views during his lifetime. This might in future be referred to as the Colin Powell syndrome, whereby you are supposed to remain adamantly loyal to people that you know are wrong and to policies that you fundamentally oppose.
The Nixon pardon has already proven to be an enormous mistake for both America and the world because it separated the politicians from the rule of law and left the true actions of the Nixon administration buried in the unseen files of history...subject to revision from time to time or state funeral to state funeral.
As for Saddam he would still likely be alive and in power, not a good thing but compared to what? Iraq as it is now? There was a better way...still is.
Markets
The 2006 market year was one of many surprises many of which were outlined in last month’s column. Canadians are now all too well aware of the Halloween surprise wherein the Harper Conservatives went against all commonly held belief and altered the rules on income trusts and since Finance Minister Flaherty has time and again reiterated his unwillingness to recharter the game I advise everyone to get over it.
Value still exists within this group and it is my view that many trusts will be among the best performers of 2007. So do your homework and make some profitable decisions soon.
On the other hand the general world market situation may be a little less productive in the coming year. At this time it appears that a distinct slowdown if not an outright recession will overtake the U.S. economy during the next six months. Right now America is being held together by China demand and an overactive Federal Reserve whose money printing skills have reached Guiness Book record levels.
There will be a time to pay the piper as the race to buy hard assets ahead of the coming currency crisis runs its course.
Own gold, silver and special situations in the energy area as hedges against the tide.
Remarkably
Federalists, realists and the relatively sane may all breathe a deep sigh of relief both here in Quebec and elsewhere with the election of Stephane Dion to the Liberal Party leadership. Compare for a moment the attributes, shortcomings and personal presence of these three men Boisclair, Duceppe and Dion. Not much else to say...is there?
December
The Laurel Comment
“I believe in being strongly partisan on issues that require choice”.
-Ralph McGill 1963
Publisher Atlanta Constitution
Commentary
“I believe in being strongly partisan on issues that require choice”.
-Ralph McGill 1963
Publisher Atlanta Constitution
Commentary
The past six weeks have proven to be an exceptionally newsworthy period and perhaps one of watershed proportions. November began with Democrat majority victories in the House and Congress giving the party and the American people important oversight control of committee chairmanships for the first time since 1994 (less their short lived Senate majority in 2001-02 due to the Jeffords defection).
The Iraq civil war continues to rightfully occupy centre stage in the hearts of thoughtful Americans. During the recent election Republicans were seen running from both Bush and his Iraq debacle leading the President to finally dump his incompetent defense secretary Donald Rumsfeld. This has in turn been followed by the resignation of the abrasive U.N. ambassador John Bolton. At this writing we await the release of the Baker Hamilton report on the Iraq war, a document which we expect to have little immediate impact on policy while fully respecting its underlying guidance on future administration decisions.
The Middle East, prior to the Iraq invasion was an area fraught with enormous problems both social and political, and the exercise of American military might has not alleviated but worsened relations in the area. The Bush administration which had little understanding of the Sunni-Shia split at the outset of this ill-conceived adventure is finally learning something about the lay of the land. Look for them to soon abandon both the Shia and the Malaki/Sadr government as they seek backing from their largely Sunni co-conspirators in the rest of the region whose fear of a strong Shia Iran outweighs their distaste for Israel and America.
In Canada, November began with the Harper government’s surprise move on income trusts, a story still in the making and if this wasn’t shocking enough the western based Conservative party reached out to soft nationalists in Quebec with its “Quebec nation” motion. First seen as a political coup for Harper many later understood it as a boon to the Liberals who would no longer have to contend with this divisive issue at their convention. It may be argued that this “coup” allowed “Clarity Act” creator Stephane Dion to win the leadership. At first glance it would appear that the Tories got what they wished for with the victory although many others believe that this underestimated man of character is and will be a force to be reckoned with both in his native province and more surprisingly…across the land.
So as Republicans continue to flee the war and their party’s leadership, we can envision Canadians of all parties flocking to the “practical green” policies of Stephane Dion.
The next Canadian election promises to be about character versus ideology…a strongly partisan choice.
Markets
World markets have also brought us their share of surprises in 2006 as oil, commodities and most broad indexes have enjoyed record performances. On the surface of things this all seems to paint a rosy picture of things to come despite the underlying weakness found in most economic projections.
The failing factor however is something to consider when comparing numerical performance with reality. During the last five years the U.S. dollar has lost 35% of its value against the Euro. The Canadian dollar, even with its recent declines, has gained over 40% on its U.S. counterpart, while gold and silver, considered to be U.S. dollar hedges in some trading circles, are each ahead more than 100% during the same period.
Meanwhile the Dow Jones Industrial Average has soared to new all time highs…or has it? In U.S. dollar terms the Dow is up 26% during the same five year period, more from its absolute lows in late 2002, but you get the point. In essence U.S. dollar buying power has markedly depreciated in this time frame leaving foreign investors of both bonds and equities poorer for their efforts.
While growth in China and India continues to fuel world expansion their U.S. dollar reserves have also appreciated and this too has not been an entirely happy outcome. In recent months there has been much talk of currency diversification among foreign holders, the serious evidence of which we are now seeing in the rise of the Euro and the breakout in precious metal prices.
For Canadians this has been a double edged sword with one side being much more blunt than the other. The TSX and Venture exchanges have done extremely well of late despite the income trust fiasco, lower oil prices and a falling dollar. In effect the saw off is a net benefit to Canadian manufacturers, diminishing breed that they may be.
Finally, this Canadian dollar decline may not be so much a reflection of Canada’s economy or fiscal health as it is of the international attachment it has to its U.S. counterpart. The world is awash in paper currency, the real reason for market strength and the best reason for owning precious metals.
Remarkably
The amazing victory of Stephane Dion was happily coupled with the defeat of born again Albertan Conservative Ted Morton. Maybe this leaves room in America for the emergence of a strong Barack Obama candidacy.
Happy Holidays
Geoff Ryan
geoffreyryan@hotmail.com
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