Friday, April 24, 2015

The Alberta Debate 2015 #abvote

I have plenty of thoughts about yesterday's debate between Alberta's major political party leaders but if I were to declare one overall takeaway it would be that regardless what party you look to; Alberta's future has been reduced to math of the present based on (incorrect) assumptions of the past.

I was probably most disappointed in Brian Jean's performance (or the lack there of). I have previously on Twitter voiced my support for Brian Jean (the person due to the events surrounding his resignation as an MP, not the Wildrose party in general) but his inability to stray from party lines in what was possibly the most tightly scripted "debate" I've ever seen has me doubting his capacity  to tell the truth to the Albertan people.

It's very frustrating to watch Albertan debates as no party wants to touch the elephant in the room, the viability of Alberta's oil industry itself. Considering Alberta's entire situation revolves around and is a result of the oil industry it's concerning that nearly no mention of it was made at all. Instead leaders jumped around the topic, such as the brief discussion on a royalty review.

The royalty review portion of the debate perhaps best highlights how Alberta's political parties are attempting to solve symptoms of a problem while trying to avoid the problem itself. Points made by Prentice and Notley are actually both correct, but the reason they are both correct is left un-addressed rather painting the issue as a black and white yes or no type situation.

First I'll discuss the Prentice position, that a royalty review right now will harm the industry and result in job losses based on the experience of the past royalty review.

Those who oppose this view often confuse the product Alberta is producing, called bitumen, for conventional oil. For instance you may have seen this image floating around:
It's not really a truthful comparison as conventional oil has much greater returns than bitumen. Readers of this blog will know that I have been forecasting serious financial issues due directly to Alberta's reliance on oilsands as early as 2011 and in the 4 years since the financial landscape has severely changed, as I said it would. Back in 2011 and 2012 when I was talking about Alberta actually being broke and on a downward spiral of what will become tighter and tighter financials as time goes on, not very many people took me seriously. It was a laughable assertion back then as the "Alberta Advantage" was still fresh in everyone's mind. Now today however I'd hope that Albertans are taking my claims a little more seriously.

The error of this chart, is the lie the Albertan and Canadian governments continue to stand on: that oil is oil and returns are returns. It's an accepted assumption that is never challenged that Alberta's oil industry provides value to Alberta based on a skewed view of the history of the industry, and comparisons to other oil producers. Every single political party makes the claim that it's simply the mismanagement of our "immense wealth" which has created the economic situation Alberta resides in today.

So let's talk about the royalty review: The royalty review occurred back in 2007 before the beginning of the current economic collapse in 2008. This was at the height of oilsands perceived prosperity, oil was at all-time highs and the forecasts were that demand would only make it go higher. At this point in time conditions were the most favorable they could have ever been to extract more value for Albertans out of the industry. It had never been more profitable, it had never been producing more, and the outlook for the future of the industry had never been brighter. Yet still, despite the perfect environment for a royalty review the companies still couldn't stomach it, why?

Some may chalk this up purely to greed, which isn't entirely incorrect: of course companies want to pad their bottom line. However there is more to this story, the risk and investment required to explore and develop the oilsands is immense. Oil companies must redeploy their capital in long term exploration ventures and if a few of those fail a nicely padded margin can quickly turn into a gaping hole.

In fact even today the lie of great returns persists in the reasoning for the claim that despite depressed oil prices the large operations will pull through. They can keep operating supposedly because they have "long term timelines", or at least this is the official story. The reality is they have no choice but to keep operating due to the long term "sunk costs" already invested:
Current projects will continue, especially those that take five to seven years or more to complete. These projects have "sunk costs," or money that's been invested and can't be recovered, he said.

The other projects that haven't been started may start to get pushed back, at least until there's more clarity on where oil prices are headed.
 In other words, it's not that these projects are actually profitable at these oil prices it's that so much investment capital which can not be recovered has already been deployed to get the operation going that the only thing the company can do is hope and pray that returns will, well, return.

This is very important to understand because once you do you will realize Alberta has never had a hope in hell of matching the returns from Norway's conventional oil production and once you realize that you will also realize why it may very well be true that companies would leave Alberta should any additional pressure be put on what are already very thin margins. At today's royalty rates the economics of the oilsands were already coming into question (and before the collapse in price to boot) so I don't believe the industry can actually tolerate any additional pressure on their margins whether in the form of royalties, environmental standards, or safety. From this perspective Prentice is 100% right, adding that pressure to the oilsands industry and corporate Alberta will likely be devastating.

But Notley's position is also valid, Albertan's have not been receiving their fair share of the returns in proportion to the risk they're taking on.

The cost to cleanup abandoned wells is ultimately shouldered by Albertans in the event a company can't afford to do it themselves.
In the past year, the number of so-called orphan wells has more than quadrupled from 162 to 702. At the current rate of reclamation, it will take 20 years to dismantle just this year's supply
It's an expensive process, costing a minimum of $10,000 and millions in special cases. It also takes time. In the first 20 years of the program's operation, it reclaimed a total of 651 wells, around 30 a year. Orphan wells are not new to Alberta. They dot the landscape in the central and southern part of the province. Since 1994, the Alberta Energy Regulator has run a program to take over abandoned wells, pipelines and other facilities and reclaim them.

In the past 12 months alone, 540 wells have been abandoned, almost as many as have been reclaimed in the past 21 years.
The article goes on:
Two years ago, the regulator increased its expected or deemed cost to reclaim a well, which threw many companies out of compliance. 
That's probably for the best, according to Barry Robinson, a lawyer with Eco-Justice in Calgary.

"I think the [Alberta Energy Regulator] has set some more realistic security requirements. A lot of companies that aren't really financially viable were operating wells, and they didn't have the capability to clean up an abandoned well. Marginal companies that don't have the ability to clean up, and abandon a well after they've done operating it, shouldn't really be in the business."
But they were in the business, and many more will quickly be discovering that they too shouldn't be operating wells. This is just one example of what happens when Alberta attempts to add pressure to industry margins for the good of the people. The cleanup of abandoned wells is absolute, it must be done, however whether or not these companies and their financials will be good enough 20 years out to actually perform some of these cleanups is questionable at best and an unreasonable risk to be guaranteed by the government.

Alberta has a lot of undiscovered and hidden liabilities in the form of environmental management which ultimately the people of Alberta will end up paying for. That is, if the technology even exists...

So no, Albertans are not receiving their fair share of the oil wealth in proportion to the risk they are taking on and yes should Albertans attempt to get their fair share or put more of the risk on the industry itself and actually hold them to the standards and guidelines we republish on a regular basis it is very likely the industry as a whole will fail. They're both right, but neither of them will ask the real question that needs to be asked: why does Alberta support an industry which it itself admits can't provide returns adequate even to cover it's own costs let alone provide value to Albertans and sufficiently cover the risk that we as Albertans (as well as our children who will actually be the ones left to deal with the problem) are taking on?

No party will touch that question, and therefore in my mind no party actually stands for real change as Alberta's policy, economic performance and environmental performance are all held hostage to an industry that can barely turn a profit when oil is $100 / barrel and has admittedly already "picked all the low hanging fruit" meaning oilsands developments in the future are even riskier and will provide less than the current.

The situation is so bad that Jim Prentice is actually hoping this downturn will get the industry back on it's feet (at the worker's expense):
Despite the mass layoffs and deep investment cuts under way today, and expectations that oil prices will remain depressed, the premier said many large projects in the oil sands are moving ahead because they are based on a long-term pricing and expectations that revenue will bounce back over time. (RF: As we covered earlier in this post, this narrative is a bold-faced lie)
“The new projects coming on stream over the next few years will amount to some of the most significant spikes in oil production in the world,” he said. (RF: Also a bold-faced lie as the industry itself has admitted all the low hanging fruit has already been picked)
The premier even suggested that there is a silver lining to today’s depressed conditions.
“Unpromising economic conditions are an opportunity,” he told delegates. “Industry will be able to take advantage of favourable labour markets and diminished construction expenses, potentially lowering their break-even costs. The province’s oil production will go on climbing for the foreseeable future.”
Basically what he's saying here is "the downturn provides us an excuse to depress worker wages" which makes sense when you remember that back in 2012 the Albertan government was warned about the unsustainable nature of oilsands development, specifically citing rising labour costs.
A confidential government memorandum obtained by CBC News warns that soaring costs of developing the Alberta oilsands could put the brakes on the massive project, stalling one of the main engines of the Canadian economy. 
The booming oilsands industry supports tens of thousands of Canadian jobs, and pumps billions of dollars a year into the national economy. 
The memo written by Mark Corey, one of the highest-ranking officials in the federal Department of Natural Resources, warns that if the current trend of spiralling labour and other costs continues, investors may start to turn off the tap on the massive amounts of money needed to develop the oilsands. 
"Although current crude prices promote oilsands development, ever-increasing capital and operating costs could make this price insufficient to support oilsands development at forecast levels," Corey writes. 
Cost increases are currently "the biggest risk to investment in the sector," and could jeopardize the viability of some projects, he says. 
Rising labour costs 
The memo estimates that operating and capital costs to extract a barrel of oil from the tar-like sands have both more than doubled over the past decade. 
It blames a chronic shortage of workers and resulting sky-high labour costs as the main cause of increased operating expenses. 
Corey's memo reflects a growing concern inside government over the future of the oilsands, and specifically the massive amount of capital investment that will be needed to fuel their continued development.
All talk of diversification and "getting off the resource revenue roller coaster" by the Prentice government is a flat-out lie. He actually is hoping that the hard times being experienced by Albertans will provide the needed crutch for a cash-strapped industry. Your prosperity be damned. The talk of diversification by the other parties I largely chalk up to either them being ignorant to the reality, or uninformed.

The reality of Alberta's situation is it can't diversify itself from oil revenue and at the same time grow and support oilsands development. Alberta hasn't been able to keep up with adequate service for it's population growth, growth that is required to operate and grow oilsands. Alberta operates a power grid where per capita we consume the most energy of any province and 80% of that consumption comes from industry, not the people. We have to provide and maintain an advanced road network that can sustain heavy freight to areas where the population is so sparse if the industry wasn't there would probably have a dirt road instead.

In short, we operate an infrastructure network many times larger than our population would require and it is because of this that the government needs oil revenue to maintain operations and further expand infrastructure. Its hard for me to see how where most expenses derive from industry development (including services like education, and health, to account for industry driven population growth and industry caused health problems) Alberta can somehow ween itself off oil revenue. You can disagree with me all you want but every gov't that has come to power has made the case Alberta needs to "get off the roller coaster" and none has ever been able to, I'd submit it's because due to the co-dependent nature of our situation it's literally impossible to separate the two.

The claim becomes even more unbelievable when you remember that even if Alberta weened itself off royalty revenue for operating expenses and instead turned to taxes, the amount of taxes Alberta will collect also directly depends on the viability of oilsands developments as so many of the productive industries provide services for oilsands developments, and the other service industries depend on the high wages which if you remember earlier from this post Jim Prentice actually hopes the downturn puts an end to those too. It's simple really, we can't diversify from oilsands revenue and grow them too, it's one or the other and any party that claims different will likely disappoint you when it fails to happen regardless if their intentions are pure or not.

No party in last night's debate has offered any vision of what Alberta could be, all of them instead are trying to offer solutions to return the "Alberta advantage", an idea that Alberta doesn't really have any fundamental problems but rather simply an issue of mismanagement. So long as Albertans hold this belief and faith in the false narrative of oilsands prosperity it doesn't really matter who wins as nothing can possibly change in the grand scheme of the course we're on. The old government will continue to deceive Albertans as to our current situation, and a new government will come into office only to find their hands tied and a closet full of financial skeletons.

That being said, and with Brian Jean's complete failure to bring up any of the points I supported him based on regarding the harm rapid unchecked oilsands growth has done to Alberta the best thing for Alberta is probably an NDP lead minority government with Wildrose as the official opposition and the Liberals or the Alberta Party the swing vote to keep either side in check. The PCs are so corrupt and harmful to Alberta's future they should be destroyed.

The reason I say it should be NDP lead is that barring the real problem of Alberta's main industry providing no returns and ever-growing risk, Alberta's second problem thanks to Ralph Klein's "plan" to dupe Albertans into believing the province is "rich" is a severe lack of services, and infrastructure, and it's very likely that the NDP will actually deliver on those promises and also likely they will come attached to more taxes, and more debt. but that's not the NDP's fault, Alberta needs these services, and Alberta needs this infrastructure if we're not going to change course in regards to the province's growth strategy. Balancing the budget sounds great but even if a party successfully does balance the budget on paper, all they are doing is deferring Alberta's expenses into the future sort of like just paying the minimum monthly amount on your credit card: cheaper now, more expensive later.

If the math of the day is all your concerned about, then it's not the budget that should be your focus but rather Alberta's entire economic model - Albertans will be paying for their unprofitable industry one way or another - so I say bring on the services, because we're already paying the costs. Alberta, frankly, must be the poorest "richest" province around.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

Saturday, March 21, 2015

We are all one, now, ok?

I had an experience tonight on Twitter which was to say the least quite unpleasant, especially since it was with someone I had previously greatly respected. I'm not gunna link the tweets, they exist, go find em yourselves. It's not important really, what is important is that the lack of attempt to understand what I was saying was routed in a bias against my color, and my race. I'm a white male.

I get it, First Nations, you're mad. I would be too. The colonizers are racist fucks, but I'm not one of them. I rally against them. Holding a grudge isn't going to get the human race as a whole anywhere fast.

I attended the #C51 nation wide rally last Saturday here in Edmonton and out of all the speakers only one I felt was the absolute truth. All the others were sugar coated with political platitudes, but this one, this very special one that filled my heart with joy to hear the truth, the full truth, and nothing but the truth spilled, was exactly what I wanted and needed to hear.

This speech reminded me of a video I saw a few years ago, which is mainly talking about the U.S. directly but in reality this same thing is happening everywhere. Yes I know this next video is from Infowars, I don't like to source them as they are not trust worthy, HOWEVER Russell Means was greatly respected by the late Michael C. Ruppert, who is/was greatly respected by me. SO WATCH THIS FUCKING VIDEO.

We're all one, now, ok? We're all being colonized.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

Thursday, March 12, 2015

Letter to the editor on C51

Over at they have a form to write letters to the editors of your local newspapers about C51. I'd encourage everyone to do so. As readers know I have quite a bit to say on the subject and so the 300 word limit was challenging. They provide numerous points to address on their form but I felt that plenty of people will likely be covering these points so I felt I should approach it from a different angle. Here is what I submitted.

There are plenty of reasons contained within C51 for which this bill should be demolished and destroyed that I could talk about. In essence with each additional anti-terror law liberty and due process become more and more inconvenient for the government and their investigators. While Jason Kenney tweets hoax pictures to rile up the public and support these laws, and the "war" effort, it seems everyone has forgotten the part we played in creating the monster we fight.

Under the headline: "Libyan rebel commander admits his fighters have al-Qaeda links" published in the Guardian it was first revealed that portions of the "rebels" we were supporting to overthrow Muammar Gaddafi were al-Qaeda of Iraq and Levant, or what has become ISIS today. NATO's "war on terror" has created the very void with which ISIS has planted it's flag by removing secular governments (which were earlier directly supported by the U.S. to remain in power) and we have provided the initial support for ISIS to rebuild. In short, we created the threat.

We take no accountability for these actions, and many more I don't have the space to write here yet the government has the audacity to ask us to believe they can use the further destruction of rights with liberty and accountability in mind. We've mistakenly accused and tortured. We've killed innocents in our pursuits. Our moral authority is no greater than that of ISIS and the implementation of C51 will reflect that, mark my words.

Annnnnd I just realized I put Guardian instead of Telegraph. Sigh, oh well.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

Tuesday, March 10, 2015

Dispelling the myth of 'government for the people'

Every other day I'm sent a petition or campaign or something which proclaims something similar to the following: "tell Stephen Harper we don't want _________" as though on delivery of the petition or whatever it is Harper will say to himself: "Oh, gee, they don't want this law? Ok scratch that then".

The majority of laws being passed today are not in the interest of the people or of the country but are in service to global economic feudalism being implemented across the entire western world. Harper & pals are already well aware of how unpalatable these laws are which is why so many resources are spent on propaganda, manipulation, and manufacturing consent for them using what a former CSIS officer calls "fascist techniques". When a former intelligence officer invokes the word fascism, you had better pay attention.

But it's not just Harper, Trudeau and likely Muclair are playing along too in fact as a general rule of thumb when any politician says "jobs and growth" are their priority you should now instantly know who they're working for, and it's not you, it's the banks.

For instance: Justin Trudeau passes off his support of Bill C51 by claiming "Liberals Are Supporting Bill C-51 So Tories Can't Make 'Political Hay'" yet at the same time is 'making political hay' with his meaningless speeches. If Trudeau is so worried about appearing soft on terror then why make wild comparisons to World War II? Surely such comparisons are bound to create much more "political hay" than opposing bill C51 which amongst Liberal supporters would, I'm guessing, be quite popular.

As they say: "talk is cheap" and "actions speak louder than words". Trudeau's actions are a deafening indicator as to what he truly believes in.

But for the Canadian people to continue believing in the myth of "a government for the people" some form of "opposition" must exist, or at least the appearance of such opposition. With no or little opposition mounted against C51 (what may be the most controversial law tabled in my lifetime) it would be all too obvious that it's passing is a mutual agenda among every party (aside from the Green Party) and so what we get instead is a false opposition; an opposition that talks big but really has no actions to back up that talk in fact directly contradicts that talk with their actions.

I've seen a new narrative development that says "Harper is focusing on terror and fear to distract from the economy", essentially framing C51 as some sort of election ploy: if you believe this you are head deep in the illusion of Canadian democracy and the myth of a government for the people where winning the election is an actual goal. elections today are merely a dog and pony show for the electorate to keep them believing in a democracy that no longer exists and C51 is not meant to be a distraction from Canada's failing economy, it is a preemptive response.

Back in 2013 I wrote a post titled "In the future there will be no law and order (only corporate policy and terrorism)" in which I forecast that within a relatively short time frame you'd see terrorism begin to take over the justice system. Here we are 2 years later and with the constant propaganda of "homegrown terror" I hope you all can see that this is already happening. The laws of the nation, and of the people, are taking a back seat to corporate policy and economic growth which is also being cast as a "national security issue" which then leads to the inevitable result that the net of what shall be considered "terrorism" will be ever expanding, bypassing due process and the rule of law, creating a second tier within the justice system for expedited trials, black site torturous interrogations, and kangaroo courts all in an attempt to preempt and disable the capacity for any type of people lead resistance to the new feudalistic economy.

Jobs & Growth

I talk a lot about the bi-partisan and global agenda of "jobs & growth" but have only a few times explained why it is misleading. We will revisit this topic now for new readers to the blog as well as for completion sake in the context of this post.

The jobs & growth mantra is a paradigm we currently believe in. What is a paradigm? A paradigm is what you think about something before you think about it. So in the case of "jobs & growth" this generally means people think of more job availability, growing wages, and a rising standard of living, but these things are not what the "jobs & growth" agenda is really about they are merely the generally accepted assumption of what these things are about and the common beliefs held about them all rest on other misleading or outright false paradigms we exist within: such as the belief that "growth = prosperity".

Chapter 5 - Growth vs Prosperity from Peak Prosperity on Vimeo.
(If you've never seen Chris Martenson's crash course I'd recommend the whole series)

From all corners of the political spectrum you hear a lot about "creating jobs", "growing the economy", and of course the "middle class". Do you notice though that despite the rampant talk of job creation that "wealth creation" is rarely if ever mentioned? You would think with the very visible "wealth inequality" and faltering quality of jobs that wealth creation would be front and center in the discussion of "recovering the economy" if the government and financiers were actually working in the "best interests" of society as a whole and yet it's practically nowhere to be found.

The focus on "growth" as opposed to prosperity is also likewise just as misleading. Readers of this blog know I often refer to the "economy" as the "ponziconomy" as the entire global economy operates on debt based currency. No matter what country you come from your government borrows from private banks at interest leading to a situation where at any given time there is always more outstanding debt than there is currency to pay it which of course means even more must be borrowed to service existing debt. When those in power talk about growth what they are actually talking about is 'credit growth' as the economy requires an exponentially increasing amount of loans to pay down existing debt and if these loans are not made the stability of the entire ponziconomy comes into question. This is why in the face of meager growth, rampant risk and immensely overvalued assets central banks are trying to artificially lower the cost of borrowing to "stimulate the economy".

Excessive credit creation with little or no wealth creation to speak of to back it up however simply results in compounding the problem which is increasingly and more frequently forcing us to manipulate the metrics we use for economic health as well, such as inflation.
Already, food prices have seen sharp gains, although not only because of the dollar. Overall consumer prices rose 1 per cent in January from a year earlier, with food inflation up 4.6 per cent, the largest gain since November, 2011, Statistics Canada said. 
At some point, we expect some cost inflation pressures,” Eric La Fl├Ęche, CEO of grocer Metro Inc., said in late January. “We will be treated fairly by the suppliers and we will be competitive.” 
The council’s report said retailers expect to raise prices mostly in the second half of 2015, which could “amplify the trend toward online shopping, where price is the critical variable.” 
Some merchants are considering ways to skirt the problems, such as changing their product mix, specifications or suppliers, it said. Some are considering purchasing renminbi to pay for their Chinese goods. For now, “the outlook for margins is gloomy, driven by the devaluation of the dollar,” the report said. 
Mr. Manchon said that to soften the blow of price hikes, many companies are reducing package sizes or the amount contained in each one. 
Research shows consumers are generally more sensitive to price changes than to changes in the quantity of goods, he said. For example, suppliers shrink the depth of a package while the height and width remain unchanged, so the silhouette of the package looks the same on the shelf, he said. 
Other ways to try to disguise a price increase in a smaller package are by using new descriptions such as “more portable” (smaller bags for takeout), “greener” (lighter for the environment) or “healthier” (fewer calories), Mr. Manchon said.
The unfortunate thing about the way government calculates manipulates inflation data is that, among many tricks, it does not account for actions by companies such as "suppliers shrink the depth of a package while the height and width remain unchanged, so the silhouette of the package looks the same on the shelf". These are tricks everyone is aware of yet somehow are always overlooked whenever discussions of cost-of-living or inflation come up. It is in the governments and banks best interest to maintain the "low inflation" story even though in reality inflation is probably running upwards of 10% (it's nearly impossible to actually determine as almost all data today is massaged to look better than it is - example (reality starts about halfway down)) even with the collapse in oil prices especially in Canada thanks to the subsequent collapse of the Canadian dollar facilitated by the central bank's policy of lower and lower interest rates (no it's not fucking Dutch Disease, another myth pushed by the political system).

The low inflation narrative is imperative for companies and the government as the claim of there being low inflation provides the excuse companies need to not offer sufficient wage increases to cover for the increases in the cost-of-living caused by rampant credit expansion. It means the government has an excuse to underfund infrastructure and services as well as keep any obligations they owe lower than they should be. If the rate of inflation was being honestly reported the lack of wealth creation would become painfully obvious as obligations quickly dropped every government and corporate budget in the red. The low inflation narrative also provides the justification the central bank needs to keep interest rates low to facilitate credit expansion where as if inflation was being honestly reported they would have no choice but to raise interest rates to address systemic financial risk and prevent the further formation of asset bubbles.

The expanding trend towards automation perhaps offers the best example of how prosperity and growth are not necessarily one and the same. The implementation of technology allows corporations to significantly save on labour costs allowing machines with perhaps a small team or even a single operator to produce the same amount of goods it would have taken hundreds or thousands of human labour to produce. While at first glance the implementation of machines to automate labour may appear to facilitate growth it is in reality not growth but in fact deflationary. I'll explain why.

In theory machines replacing human labour is great. It means we all would or more accurately should have more time for our own endeavors. We have this time because the productive capacity of the economy hasn't changed in fact for most tasks machines can do it more accurately and faster than human labour ever could hope. However the result of this migration to a more automated world hasn't quite been what people are expecting. The reason for this is that the economy hasn't changed; it is still an infinite growth debt economy predicated on the concept of borrowing new debt to pay off the old. That can be private debt, or that can be public debt, all currency in the system at some point down the line was borrowed into existence.

So when it comes to private debt machines are deflationary for the obvious reason that all of the people replaced no longer have a job. They no longer have the income to leverage against new loans, they likely had to downsize (if their job was high paying) which may mean selling off items which then facilitate other people's needs who may have otherwise bought something freshly produced. This puts pressure on the credit system as it requires ever growing expansion and as we saw in 2008 contraction can be catastrophic.

Public debt is affected too as machines don't pay taxes do they? Yes there is the corporate tax on their income but you must remember each and every employee is also taxed on their income and these taxes can not be replaced. So while the government is forced into a position to borrow more and more to meet ever rising interest (alternatively they can cut services to "balance the budget" but whether taking new debt or downsizing government both represent a deterioration in standard-of-living as actually balancing the budget in a debt based economy is impossible) they are also faced with a shrinking revenue base.

So is the innovation of technology and freedom at fault? Or is an infinite growth ponziconomy at fault? Is technology destroying "the economy"? Or is it that the economy is holding back our potential? I'd submit that without the artificial obligations a debt based society places on us we would be free to actually have a better of standard of living in a society free from the "growth" requirement which is actually already dead (due to peak oil, and "peak everything") with new growth in reality just transferred from some other sector of the economy, or fabricated altogether. Some who have read my blog may have the impression that I don't believe a different, better, healthier future is possible which couldn't be further from the truth. I do believe it is possible, I also believe it is impossible to accomplish without addressing the dependence on "growth" our current monetary system relies on and until we do address it attempting change absent of the monetary system is futile.

A society built on myths and paradigms

Maintaining this system is of the up most importance to those in power, it is the only thing that is important to those in power as their position and status in society directly rides on it. The different options provided by political parties are all just slight variations on different management styles for managing the same infinite growth dependant system. Whether it's the NDP, the Liberals or the Conservatives all of them have repeated many times the "jobs & growth" goal they would like the public to believe they have. The prevalence of these myths and paradigms actually work against real political change and corrections within the system. It is the fear that this paradigm might break which began the cycle of bailouts and emergency procedures we now exist under.

It is the fear of the unknown that keeps us in line and adverse to real change benefiting the few at the expense of the many.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

Tuesday, March 3, 2015

Expanding the domestic threat

Just a quick update in response to an article I saw today.
But under the heading Domestic Extremism, the spy service also underscored what might be the flip side of that coin — the recent development "of a Canadian online anti-Islam movement, similar to ones in Europe." 
CSIS characterized it as an "ongoing risk, particularly as its proponents advocate violence." 
The Sept. 18 briefing for Blaney's office came a little more than a month before soldiers were killed in Canadian attacks just two days apart — murders committed by young men that authorities say were motivated by Islamic extremism. 
Shortly after the killings, there was vandalism of mosques in Ottawa and Cold Lake, Alta., threats against the B.C. Muslim Association, and a general increase in reports of public bullying and harassment of Muslims. 
CSIS likely monitoring anti-immigrant sentiment: expert 
However, CSIS is likely more interested in the kind of anti-immigrant, anti-Islam sentiment that has taken root in some parts of northern Europe, even among the middle class, said Lorne Dawson, a University of Waterloo sociology professor and co-director of the Canadian Network for Research on Terrorism, Security and Society.
A Norwegian official briefed CSIS shortly before the release of an inquiry report that found the Scandinavian country's security services could have prevented Breivik's attack.CSIS spokeswoman Tahera Mufti did not respond to requests for comment. 
A simple online search quickly turns up websites with Canadian domain addresses spouting anti-Islamic invective. 
The government's anti-terrorism bill, to be scrutinized at a Commons committee starting next week, would give the RCMP power to seek a judge's order to remove extremist propaganda from websites. 
National security threats are not confined to Canadian borders, the CSIS presentation notes warn."International developments have a considerable impact on Canada's interests." 
CSIS faces a challenging investigative environment in which the rapid movement of people and modern communications technology has "extended the reach" of those who pose a threat and has increased the ease and speed with which they can act, the notes add. 
"Co-operation with domestic and foreign partners is critical, including reliable access to information." 
So you now see the net expanding and suddenly those who have been strong proponents of legislation such as C51 influenced with a direct fear being associated with Muslims - which is being fomented by the government and media themselves - are now being cast in the same net, along with environmentalists.

Websites, perhaps like Ezra Levants' "CanadianJihad"? Where an entire 8, yes 8, whole questionable out of context examples have been compiled by a "researcher" Jonathan Halevi who if you follow the links back to his own website you discover is:
Senior researcher of the Middle East and radical Islam at the Jerusalem Center for Public Affairs, a co-founder of the Orient Research Group Ltd. and a former advisor to the Policy Planning Division of the Israel Ministry of Foreign Affairs.
Gee, what a surprise eh? Because Israel doesn't lie for it's own agenda does it?

Ezra Levants' followers don't understand he has lead them into a trap and the trust they place in the government to leave them alone is misplaced. What group of people in Canada comes to mind when you hear of the anti-Islam crowd?

This entire thing is being manufactured. You, no matter what label you fall under will sooner or later be considered a threat for something. That's the entire point, to allow the rendition of anyone at anytime, to disable our ability to fight back. The fear of the islamic terrorist I think barely exists, the portrayal of it in the media is being amplified. The polls showing the fear manipulated. As we've been discussing over the past month your consent to having severe restrictions placed on your rights is being manufactured through multiple different facets, and a false opposition.

Divide and conquer. There is no Canada, only Zuul.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

Tuesday, February 24, 2015

Guardian exposes domestic 'black site' in U.S.

It really says something about the 'normalization' of extrajudicial methods to "get the bad guy" when a major newspaper can run a story about domestic anti-terror 'black sites' being used to detain protestors and nobody even blinks an eye.
The Chicago police department operates an off-the-books interrogation compound, rendering Americans unable to be found by family or attorneys while locked inside what lawyers say is the domestic equivalent of a CIA black site.

The facility, a nondescript warehouse on Chicago’s west side known as Homan Square, has long been the scene of secretive work by special police units. Interviews with local attorneys and one protester who spent the better part of a day shackled in Homan Square describe operations that deny access to basic constitutional rights.

Alleged police practices at Homan Square, according to those familiar with the facility who spoke out to the Guardian after
its investigation into Chicago police abuse, include: 
Keeping arrestees out of official booking databases.

Beating by police, resulting in head wounds.

Shackling for prolonged periods.
Denying attorneys access to the “secure” facility. 
Holding people without legal counsel for between 12 and 24 hours, including people as young as 15.

At least one man was found unresponsive in a Homan Square “interview room” and later pronounced dead.
Do you understand how serious this is? Consider that the U.S. is one of the nations that our standards for "oversight" are being compared to and this is happening in their country. It is strikingly similar in terms of the methods used at the "temporary facility" at G20 in 2010 which I believe was a public test run of these new standards for holding inmates and operating political black sites. This is the model moving forward.

This is the path were on with laws like C51, make no mistake.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

Friday, February 20, 2015

Understanding low interest in the risk adverse "free market"

Alrighty, in the meantime while I debate with myself what to do with this blog I do have more stuff to say about things. Last night I accidently published this post in an incomplete state and it was picked up by progressivebloggers before I could delete it. Oddly just my summary garnered two votes (as the link to the post itself is now dead) so I must be on the right track! We've been talking a lot about C51 (or what we shall dub 'the Orwell act') but plenty has been happening in the global ponziconomy too (which is why Canada is now moving so rapidly to get these "anti-terror" freedom killing laws in place).

The spectre of negative interest rates in Europe really is something isn't it? It occurred to me when the Swiss announced their further rate cut (though now that rates are negative maybe "rate increase" is more accurate in the new normal) to -0.75% that really in this bizarre risk adverse world makes perfect sense. Behind all of the jargon, the supposed intent, is a declaration: the omnipotence of the central bank and it's printing press, destroyer of risk.

Of course the idea of total risk banishment is quite insane, which provides the logical basis for why economists believed negative rates were impossible. No one in their right mind in a sound economy would pay to hold risk and yet somehow, they are. This indicates that either the basic logic surrounding risk has been flawed all along or that the global economy is far from sound. My bet is on the latter.

It's been awhile since we've gotten deep into banking so I will rehash some of the more important relevant points needed to fully understand what negative rates (or for those nations that haven't crossed the 0% barrier yet, continually decreasing rates) anywhere in the world now represent. The starting point for this story of utter insanity is your bank account.

You earn interest on your "deposits" in your bank account at a floating rate loosely based on the overnight lending rate. I say loosely as because with all other commercial rates banks don't actually have to follow the central banks overnight rate at all with their prime rate but largely do follow the trends as their competitors likely will follow them thus making their loans more attractive (collusion of the banks on rates such as in the LIBOR scandal is obviously implied but outside the scope of this write-up). To not match the rate change especially when the rate is lowered amounts to the commercial bank quite obviously pocketing the difference as they are now borrowing cheaper than they are lending themselves.

The reason you earn interest on your deposits is because you are assuming risk, you are not a depositor, in fact you've deposited nothing into "your" bank account but rather what you have done is loaned the bank your "deposit" so that they can take it and loan it to someone else and earn interest on it to boot. They keep a small portion of your "deposit" on reserve and the rest is out the door being loaned at interest as soon as possible.

Interest rates and monetary policy, or at least the people's perception of these things, is extremely important today; the fact you see central bankers making headline news is a testament to that. If the global economy were truly even remotely healthy they wouldn't need to be out nearly everyday reassuring markets and providing forward guidance. Prior to 2008 most people barely knew what a central bank even was. Yet despite all the talk about interest rates, and all the talk about growing inequality and the generational gap, very few seem to talk about growing inequality and the interest rate policy together at the same time.

With prolonged low interest rates, along with the ever increasing introduction of "bank fees" which shouldn't exist at all or "ATM fees" (which shouldn't exist either as banks introduced ATMs to reduce their direct labour cost in tellers) multiple generations now have had to live with savings accounts that earn literally less than nothing. At the end of the day we have already been paying banks for the risk we assume in their lending as over time the concept of "savings and loan" has been distorted.

The global economy hasn't been sound for a long time and the spectacle of low and negative interest rates is simply the next phase in it's long deterioration. With low interest rates the only way you can get a return on your savings is to "invest" it and that is the direct intent of the central bankers: to force you to play the investment game and feed the market and ponziconomy. Of course to invest in the market you have to have some significant amount of capital actually available to invest, if you don't and are living cheque to cheque you currently have no avenue to earn a return on your income and keep up with the rate of inflation, you are losing money simply by holding on to it and the concept of "saving" is nearly impossible.

Explains a little bit why despite the constant broken promises of "recovery", uncertain "growth" prospects, and a continually worsening geopolitical situation, world markets just continue hitting new highs without a care in the world, doesn't it? Which the political class then uses as evidence of the illusive recovery narrative we hear so much about yet don't see in daily life.

There is an investment side to this story as well, aside from forcing citizens into the rigged market interest rates are also being used to make sovereign bonds and their perceived "safe haven" status less appealing by artificially increasing demand for the bonds. The goal here is to push investors and people looking for a safe place to retain the value of their income back out into the risk laden market which in fact proves the logical fallacy of sovereign bonds being a safe haven.

Sovereign bonds are perceived to be safe because they are backed by the government, which is in turn backed by "the people" (or more accurately the people's labour). As I've pointed out before you are in fact nothing more than a human resource. Your S.I.N. or Social Insurance Number represents you as collateral on the public debt.

So what do negative interest rates say? They say that no matter what the people's labour that is backing these bonds will in any circumstance and with no chance of failure absolutely will be able to produce enough wealth to pay back the bonds. This concept seems fine and dandy until you remember that the way people produce the wealth that is to service this debt is by working for the companies whose future is so uncertain that central banks are having to artificially lower interest rates to drive investment dollars into (which the companies are themselves taking and instead of expanding are simply engaging in stock "buybacks").

We've now come full circle, and as Greece's situation shows the people will only tolerate having their labour used as collateral on the debts so long as they're getting something out of it. The "Troika" has been forcing Greece to hand over not only their public assets but the spoils of Greece's human labour itself as previous government's, like all government's, have put their citizens lives up for collateral on the debt with absolutely no guarantee it can actually be paid back. It is the citizens who suffer while those in the oligarchy use the public debt for their private gain and stick the people with the tab.

There is one final piece to how low interest rates, or negative interest rates, are being used to kick the economic can down the road and that is by making consumption in the post-peak-oil world seemingly more affordable especially when it comes to the housing bubble, student loans and auto loans, and most importantly cheap loans for expensive energy production in an effort to make the projects seem temporarily viable.

The importance of low interest rates for the banks, and their vested interest in extreme energy producers can not be understated. Often I talk about the fact that contrary to popular belief amongst Canadians big oil doesn't sit on top, the banks do and big oil operates at the behest of the banks. There is no intrinsic interest in oil for the oligarchy beyond the fact that oil (cheap conventional oil, to be exact) is the only energy source that can support infinite exponential growth.

The energy companies own all of the patents to "alternative energy" (in reality derivative energy), the resistance to begin the long process of switching to other energy sources is not rooted in some ideological dislike for "Green energy", it is rooted in the fact that switching to Green energy will collapse the ponziconomy. Not the people's economy, the oligarchs credit ponziconomy where more and more loans must occur to service existing debt, where more and more consumption must occur and saving must not, where more and more must be produced quicker, sold faster, and made cheaper.

The ponziconomy requires an ever growing energy surplus to support infinite exponential growth while the green economy inherently represents a contraction in the energy surplus (doing more with less) and would require a sustainable balance between the environment and the resources we depend on and economic growth. Under this scenario the borrowing binge the western world has been on with no proof the debts can ever be repaid would be impossible as the risk and uncertainty around future wealth would be much more apparent and interest rates that account for this risk would likely follow. It is the historical observation of the results of an economy running on cheap conventional oil which provides for our (always wrong) future outlooks today.

The reason economist theories and predictions on growth and the effects of interest rates, currency pair valuations, and the like are not working out is because the fundamental structure of the economy has changed. Forecasts are no longer being made based on proof of potential future production, they are being made on the hope of it.

The migration from oil would also mark the migration of the status-quo towards something more honest, balanced, and which wouldn't revolve around "growth" as a measure of success because growth itself inherently is not wealth we've just been fooled into thinking it is. Concepts like "planned obsolescence" provide a glimpse into how quickly consumables must be turned over these days to keep "growth" humming, which represents the waste of wealth not the accumulation of it. GDP today in a world that has peaked it's natural growth potential is now a measure of energy inefficiency and nothing more.

Depending on the actions Greece takes the confidence in central bank omnipotence itself may be in danger (hopefully in danger, as every day the world continues under this false reality adds to the impact the resulting monetary collapse is going to have when these bond bubbles finally pop).

The great deflation

The majority of the world economy is now supported by near zero, zero, or negative interest rates. Seven years on from the peak-oil induced "great recession" central banks are finally out of ammo. Inevitably this situation can not last forever and with the Saudi's pushing the collapse in oil price the stage has been set, and in fact the play is already in the first act, for deflationary spiral the world has never seen the likes of before because the world has never seen a fiat asset bubble of this size before.
The expected benefit economists are expecting from lower oil and gas prices are not going to materialize as the middle class which is the primary driver of this trend has been crushed by unaffordable consumption and debt accumulation. The easiest path for this excess wealth to take is towards paying down debt which in itself is inherently deflationary and will only contribute further to the deflationary spiral we've entered.

The artificial deflation of oil is having a direct effect on the outlook for oil related employment and income which both Canada and the U.S. have been completely reliant on for wealth generation. The entire myth of the current "U.S. recovery" which Canadian economists are banking on is essentially based on the economic performance of the shale oil industry prior to the collapse in price (you'll remember the latest U.S. recovery narrative was originally about the boom of shale oil) which is no longer valid. Without the high incomes oil related jobs provide the unaffordable asset bubbles become completely unbalanced. This is why the Bank of Canada is citing mitigating the effect of low oil prices (lower inflation) as the reason for lowering interest rates while effectively ignoring the increase in inflation high oil prices represent. They are selectively interpreting the situation to service their own needs of maintaining the credit markets.

No amount of low interest or free currency can ever hope to make up for the loss in energy bounty as a result of peak oil and the focus on low EROI energy production though as currency is not wealth itself but the representation of wealth, it has an end of life and this is where C51 becomes very important for the status-quo.

I'm very happy to see Canadians quickly becoming wise to the obvious implications for those fighting the environmental fight in Canada though unfortunately I believe it is also leading to another false narrative in regards to it. While the critical infrastructure portion of the bill is important what is most important is that "economic and financial stability" is mentioned.

When you consider the great deflation of the credit markets, the asset markets, and then throw in the newish "bailin" regime and insufficient funds held by the CDIC to insure Canadian deposits the picture of inherent danger of C51 becomes a lot more clear. The broad reaching implications of this bill did not happen by accident.

You can be certain that when the deflationary pressure hits Canada in full force the government will become even more aggressive in it's "economic action plan" likely at your expense. Why is the government pushing pipelines? Why did the government reduce rail safety standards? For the economy, and as the real affordability of economic consumption declines more and more shortcuts will be taken to make up for it.

The further along we go down this rabbit hole the more obvious it will become that western governments have gone rogue and are sacrificing the livelihood of the people in the name of economic growth to service the private banks. They will sacrifice your livelihood by reducing your safety in the name of economic growth and they will sacrifice your livelihood by offering your deposits to the alter of debt as enshrined in their "bail-in" regime in the name of economic stability. The illusion of "voting for change" will disintegrate the moment people realize every single party stands for the same thing: growth at any cost. The people of course will be covering that cost.

Eventually the inevitable conclusion will be reached (as it almost was with the Occupy movement before it was co-opted) that only a direct revolt by the people and a rejection of the infinite growth model will offer any significant change and it is for that eventuality that C51 exists.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.