January

The Laurel Comment

“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

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