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/
Monday, October 1, 2007
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
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