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/