Friday, December 27, 2013

U.S. judge rules NSA surveillance legal, but his argument is already invalid

NSA mass collection of phone data is legal, federal judge rules
US district judge William Pauley said the dragnet program "represents the government's counter-punch" to al-Qaida in the wake of the 9/11 terror attacks. The decision conflicts with a ruling in another case, increasing the likelihood that the US supreme court will take up the issue.

In the latest case, Pauley noted that the program was controversial, but lawful. "While robust discussions are under way across the nation, in Congress, and at the White House, the question for this court is whether the government's bulk telephony metadata program is lawful. The court finds it is.
Counter-punch you say? Of course the only problem is the spying actually began before 9/11:

Spy Agency Sought U.S. Call Records Before 9/11, Lawyers Say
June 30 (Bloomberg) -- The U.S. National Security Agency asked AT&T Inc. to help it set up a domestic call monitoring site seven months before the Sept. 11, 2001 attacks, lawyers claimed June 23 in court papers filed in New York federal court.

The allegation is part of a court filing adding AT&T, the nation's largest telephone company, as a defendant in a breach of privacy case filed earlier this month on behalf of Verizon Communications Inc. and BellSouth Corp. customers. The suit alleges that the three carriers, the NSA and President George W. Bush violated the Telecommunications Act of 1934 and the U.S. Constitution, and seeks money damages.

``The Bush Administration asserted this became necessary after 9/11,'' plaintiff's lawyer Carl Mayer said in a telephone interview. ``This undermines that assertion.''

The lawsuit is related to an alleged NSA program to record and store data on calls placed by subscribers. More than 30 suits have been filed over claims that the carriers, the three biggest U.S. telephone companies, violated the privacy rights of their customers by cooperating with the NSA in an effort to track alleged terrorists.
Bush-Cheney began illegal NSA spying before 9/11, says telcom CEO
Contradicting a statement by ex-vice president Dick Cheney on Sunday that warrantless domestic surveillance might have prevented 9/11, 2007 court records indicate that the Bush-Cheney administration began such surveillance at least 7 months prior to 9/11.

The Bush administration bypassed the law requiring such actions to be authorized by FISA court warrants, the body set up in the Seventies to oversee Executive Branch spying powers after abuses by Richard Nixon. Former QWest CEO John Nacchios said that at a
meeting with the NSA on February 27, 2001, he and other QWest officials declined to participate. AT&T, Verizon and Bellsouth all agreed to shunt customer communications records to an NSA database.
So not only is it not a "counter-punch", but the NSA spying they claim has prevented "more 9/11's" didn't prevent 9/11 at all. Of course the U.S. never had any intention of "preventing 9/11", but you already knew that, didn't you?

GOP lawmaker: NSA spying in U.S. could have prevented 9/11

They really do think you're that stupid.

Legalizing NSA spying has been the plan all along. Edward Snowden, likely unknowingly has delivered exactly the information the NSA wants public. Because if nobody stops them, then by default it becomes legal and can now be referenced publicly as evidence.

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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.

UPDATE-1: The illusion of cheap

Saw two interesting articles recently I thought I would share.

U.S. sticks it to transit users while gifting drivers a tax cut
In 2009, the government decided to grant an equal tax break to commuters who take public transit, allowing them to write off part of the cost of their bus or train tickets. In Washington, D.C., the transit authority noticed a slight increase in ridership. In New York, more than 700,000 people were eligible for the benefit.

But the lawmakers slapped a sunset clause onto the subsidy. So on Jan. 1, the tax benefit for transit takers will be automatically reduced to $130 a month, from $245.

At the same time, the tax benefit for drivers will increase $5 to $250 a month.

“All along we have always asserted it’s a backwards policy thrust that we have right now,” said Billy Terry, senior legislative representative of the American Public Transportation Association. “To have parking more incentivized than transit absolutely makes no sense.”
 Actually it makes perfect sense when you want to incentivize purchase of a bailed out car industry. It makes perfect sense if you need to encourage the repetitive purchase of vehicles, over and over and over. It helps to give a boost to a "vital" industry that is extremely susceptible to rising oil prices and then later gas prices which if you haven't noticed WTI is climbing back towards the magic $100 marker as talk of "the recovery" picks up.

Interestingly enough, despite the U.S.'s record "fracking boom" the overall pattern of oil prices hasn't changed, in fact 2012 saw a much lower dive down to $80.

WTI-Brent Spread Narrowing as U.S. Exports Record Fuels
While the U.S. is pumping the most crude oil in a quarter century, laws prohibit most exports, driving down costs for domestic refiners and spurring record shipments of everything from diesel to gasoline that will diminish stockpiles. The forecasters expect Brent prices to weaken as regional supply recovers, led by Iran and Libya.

The continuing arbitrage for oil products out of the U.S. is going to move WTI higher,” said
Eugen Weinberg, the head of commodities research at Commerzbank in Frankfurt. “We’re likely to see negative surprises for Brent because right now the market is not yet pricing in the return of Libyan and Iranian barrels.”
Take note first, on how important the Libyan and Iranian supplies are for lowering affordability for the Europeans. This goes back to what I said on Libya way back on Hellberta. The "nuclear deal" and lifting of sanctions with Iran is also well timed.

Second, the U.S. is going to drive WTI prices higher. Now, I disagree with their reasoning. Beyond standard considerations, supply constraints, etc, oil is largely driven by speculation which is itself driven by expectations of the future. Generally oil price will rise if demand for oil is going to go up, or that there is an expectation supply is going to go down. Not surprisingly oil price tends to follow the same pattern as economic confidence. It's good, it's good, oil price rises, but as affordability hits the ceiling of $100 and begins hitting resistance it does not have enough momentum to go beyond $110 (as I forecast back in January), and it is at these points that the "recovery stalls".


The above chart I stole from YCharts but the doodles are mine.

As you can see as well our window of affordability as I like to call it is getting smaller, and smaller.

Which brings us to:

Fossil Fuel Subsidies Nearly $800 per Canadian, says the IMF
What the general public is mostly unaware of is the prices we pay for energy are subsidized prices. When we pay $50 at the gas pump, the gas we got is actually worth more than $50. When we pay $100 for our hydro bill, the energy we used is actually worth more than $100. Why? It’s because the government financially subsidizes the energy we use. They have been doing this for years but most of the general public are not aware of this. The energy prices we consumers see are below market levels.

You might think: Isn’t that great? The government is paying for part of my gas! Let’s trace it backward, where does the government get their money to subsidize your gas? That’s from government revenues. Where does the government get their revenues? Mostly from taxes. The federal government of Canada get more than 80 percent of their revenue from two sources: income taxes and consumption taxes (source:
StatsCan). Who pay the government those incomes taxes and consumption taxes? That’s the taxpayers. You get the picture … it’s you. The gas you get from the pump is paid partly by you at the gas station. The other part of the cost is also paid by you, but indirectly through the withholding tax from your paycheque and through the GST you pay when you go shopping.
This is why I have to laugh when we talk about "low inflation" and the government supposedly fighting it. They're hiding true inflation from you around every corner. It's a joke. It's an excuse to keep interest rates low to keep lending rolling to keep this stupid impossible monetary game show on air.

Warning: Things may be more expensive than they appear

Update-1

Here is another example of how we provide the illusion of cheap:
PHNOM PENH, Cambodia – Striking workers making shoes and clothes for Western brands have blocked roads and briefly scuffled with police in Cambodia.

The workers are demanding a two-fold increase in the minimum wage to $160.

The protests Friday snarled traffic in and around the capital Phnom Penh.

Human rights activist Om Sam Ath said protesters blocking a highway leading to Sihanoukville throw stones at police, who fired into the air.

He said four workers were injured, but it was unclear how serious the injuries were.

Most of the country’s 500 factories have been closed since Thursday, when the manufacturers association urged its members to cease operations, citing the fear of violence.

The garment industry employs more than 500,000 people and is Cambodia’s biggest export earner.

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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, December 26, 2013

The new normal

This probably isn't going to be a popular post at this moment, but I think it's a necessary one. It's not going to be very long and I only have a couple points to make.

For many of the people still without power in Eastern Canada, life must currently be hell. Having no power sucks, and 5 days is certainly pushing it. Some residents have now started to get angry at the city, the province, Mayor Ford, for not restoring power fast enough. It's an understandable anger, but it's also a futile one; at the end of the day you're still the one with no power.

I've advocated many times on here that having a survival plan is essential. We often forget in our modern disconnected infinite growth world that electricity is not something we inherit. It is a complex system, made even more complex by the super storms and expensive energy that is becoming the new normal. I will say it bluntly: do not expect power supplies to remain stable. You must have an at least 7 day survival plan that works in your area: food, clothing, shelter. You want a supply of candles. LED flashlights that run on hand power, cranks, solar. You likely want propane torches, a stash of cash (in case ATMs are down), and numerous other items. There is no comprehensive list because every area is different. Examine your environment and plan accordingly.

It's sad to say, but if you are not prepared to survive without electricity you can not really blame anyone but yourself. Sure it's nice to say we have a right to electricity, that it's "unreasonable" to have to wait 5 days for power to be restored, that it's extremely sad that people have actually died from this event. But I have news for you: this is really only the beginning. Be thankful gas stations still have gas and that currently credit is cheap to fund the repair work or this mess could have been a whole lot worse.

The first storm has now moved on to the U.K. with the same devastating effects while a second storm is coming up which is likely to bring more modern misery. This is the new normal, get used to it, and more importantly prepare for it.

I have such mixed emotions during these types of events. The Alberta flood and Slave Lake forest fire, Lac-Megantic, this snow storm, hurricane sandy. I have mixed emotions because on one hand there is so much suffering, but on the other I have to point out that we're fucking asking for this folks. The day after the Alberta flood Alison Redford went on to announce the grandiose new plans for oilsands exports. No one has bothered to see if sucking all of the water out of the ground in northern Alberta is contributing to the dry conditions leading to increased forest fires. Canada has in general thumbed it's nose at the very concept of climate change. Well it's fucking changing, and the changes coming are going to bring with them a lot more suffering and a lot more instability.

Yet despite this when disaster does strike hardly anyone is prepared and it seems that everyone starts crying over it. Take some responsibility. Instead of yelling at that dipshit Rob Ford as if he can make things go faster, or complaining that a "state of emergency" wasn't declared (as though declaring it so makes it go away), why aren't you yelling at the governments who have valued profits over your family's well being? Why haven't you prepared for the event there is no power? The knowledge of the coming super-storms has been readily available for a long time. We thumb our noses at it.

It's only going to get worse from here on out folks. We're looking at a future with more storms and disasters, both man-made (Lac-Megantic, Fukushima) and natural. A government who puts millions of dollars into propaganda convincing you to sacrifice your family for profit isn't going to roll up as a knight in shining armor to save the day, they simply don't have you as their primary interest and even if they did the capacity and capability to handle these disasters is going to diminish as time goes on, peak oil takes hold, and the banking sector loses more control.

You are ultimately the only one responsible for your family, and how you handle that responsibility and ensure their safety is entirely on you, nobody else. It's time to face the music for our past abuses and ignorance. Welcome to the new normal.

Ice storm stories: How some Torontonians survived without hydro

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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.

Monday, December 16, 2013

Would the Owner of the Responsibility of Poverty Please Stand Up

James Moore has apologized for his comments on poverty though I'm not really sure exactly which part he's apologizing for, his views or the way he expressed his views (the government's views?). However, apology or no apology I think I can safely assert that his comment regarding where responsibility (doesn't) lie is representative of the current government and his views.

That's not really a stretch. It's typical conservative ideology, not surprising. It's interesting though that the ownership of responsibility never seems to come into focus when it comes to advertising for a single industry for instance? Is that the government's responsibility?

Why is the government going to the trouble of spending tax dollars on advertising in the first place? Because the oilsands have a provable, public, abysmal track record which has earned them the reputation they have which oddly brings us to a failed responsibility never performed by the government in extending the time for tailings reclamation instead of giving them all an 'F', for fail.

However, contrast that with BlackBerry whose public track record is equally public, provable, abysmal (in terms of performance), but are they receiving any P.R. support from the government? They're being attacked by "foreigners" (Samsung, Apple, et al) but do you see any Ethical Phones campaign?

Do you see $2billion dollar innovation subsidies being offered to BlackBerry to maintain competitive like government gave industry for CCS? Of course I know many industries beyond oil and gas receive subsidies but my point here is these are extraneous "subsidies" and not only that, but very direct in their interference (collusion) with industry. Select industry. Is that the government's responsibility?

Is it the government's responsibility to commercialize foreign policy (weapons sales) because it's "something business leaders have been urging"? Is it the government's responsibility to help banks that made bad bets? No...

It is, however, the government's responsibility to not undermine the economic mobility of it's population. It is the government's responsibility to not undermine the economic system with corrupt currency. It is the government's responsibility to uphold national sovereignty, no matter what "business leaders" think about the idea.

There's a lot of responsibility to go around though. Maybe if us, the Canadian people, actually stood for something - for anything other than profits, profits, and profits, we'd actually have a government that reflects that. Everything that's happening, is happening because we've allowed it to happen. Poverty is happening because we allow it to happen, because we do not address the underlying Ponzi scheme. Giving to charity will NEVER eliminate poverty. It's nice to do, it helps the impoverished endure being impoverished, but it is not a cure. So long as the monetary system exists as it does there is no cure, it is a system failure, a mathematical impossibility. Our acceptance of this system is the inherent acceptance of the existence and implied necessity of poverty.

Fixing that is everyone's responsibility, even Minister Moore's.


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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.

Visualizing generational theft

Via Zero Hedge


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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, December 13, 2013

Update-2: FP removes interesting piece of information from oilsands article with no explanation

So yesterday I came across an article on Cenovus and I found one paragraph particularly interesting, so I tweeted it.


Interestingly, the paragraph that contained that portion is now removed from the article. There is no record of an edit or mistake, just gone. Poof. It's interesting because that paragraph defines an unsustainable deteriorating condition in Alberta. If the future wealth is going to come from extreme energy, but extreme energy needs the profit from conventional energy to operate, we've got a problem don't we?

Oh well, gone now.

Update-1

The author actually got back to me via Twitter. Here is the exchange:


Apparently it wasn't "removed" or changed, the article was simply replaced with a nearly identical article with the same title at the same URL. So, NOT a change, a replacement. Good thing that was cleared up eh?

Update-2

CBC has the original article before "replacement": http://www.cbc.ca/news/business/cenovus-energy-to-cut-capital-spending-13-in-2014-1.2461632

Now that I have the full text of the two articles in front of me I can reference more than the one sentence I copied. It seems to me all of the information that defines what the *new* FP article describes as "getting a handle on rising operating costs and boost cash flow" is pretty well gone. All that remains is a light shell of the details provided in the "wire copy".

The entire outlook of the article has been altered replaced from a cautionary outlook on the cost of development, to a rosy outlook of the company's reactions in question.

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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.

UPDATE-1: Bank of Canada's new strategy? "honesty", apparently

Haha, oh boy. You can not make this stuff up folks. You cannot!
In a speech in Montreal, he said the central bank was more worried about downside risks to inflation than upside ones since inflation is well below a 2 percent target, but he stopped short of hinting at any easing.

Asked at a news conference afterwards whether it was accurate that the bank was getting ready to cut, he said: "We don't know. We've expressed our neutrality on that question, which is to say that we're even-handed on the two sides of it at this stage, given what we know today."

He said the bank's move in October and again this month to stop referring to future rate hikes, following 18 months of more hawkish language, was a shift to honesty rather than dovishness.

"All we're really doing is being honest that at this stage we think that interest rates will stay where they are for quite some time, so issuing a warning they're almost ready to go up is not the right timing for this," he said.

"Of course, we believe it will happen as the story unfolds but the destination seems far enough away that we can address that as we get closer," he said.
A shift to honesty, which I can only imagine must be from.. dishonesty, then? Hmm.

Canada’s housing market most overvalued in the world, Deutsche Bank says
According to the IMF, Canada has the most overvalued housing market in the world
Canadian housing 21% overvalued, ratings agency says

And oh yea, there's "low inflation" (we've gone over that before) and somehow housing prices just keep inching up, and up and up. But our officials insist there's no bubble. It's a concern, sure, but certainly not a concern that would warrant, oh I don't know, raising interest rates? Or is it because we can't, Bank of Canada? Is it because we're competing with the FED and American cash injections? Is our dollar really lower, or is this just a speculative taper caper high? You see it's tough to know, isn't it?

Rigged markets certainly don't make that any easier.
The system is rigged

Then the most shocking of all, a key international interest rate used to set trillions of dollars of prices, is being manipulated. LIBOR, the London Interbank Offered Rate, is like the foundation of a house that holds billions of people. If that foundation is askew — as we now know it was — what does that say about huge parts of the markets and those prices we thought were based on real information? A mirage.

For this business journalist, the shock of that was intense. There will always be fraudsters — smooth-talking snake oil pitchmen — and regulators are on the lookout for them. But the evidence is mounting that whenever it is possible to fix a price for personal gain, someone is doing it.

That’s not just a disappointment; it undermines the entire system. Tiny price distortions get magnified across the global economy. We all pay, even if we don’t really know it. Most important, if market participants — from a sophisticated bond trader trying to price a bond based off a benchmark rate, to your grandmother putting her life savings into a stock — don’t believe in its fundamental soundness, don’t believe that prices are as fair as prices can be, the entire thing falls apart.
Are we done playing this stupid game yet? Or are we just going to pretend that somehow Canada exists in a special void of economic wonder where "prudent fiscal leadership" saved the day? The U.S. saved the day, and they're still saving the day today at a cost to the American people of $85/billion per month. We're still on extreme emergency life support folks and it isn't going to last forever!

Update-1

O-M-G! folks, you can not make this shit up! Last line:
The central bank chief has previous stressed he is focused on inflation and that the value of the Canadian dollar is determined by markets.
The "markets", not the easing. Riiiiight. I guess honesty isn't so forthcoming after all.

This part, then, is even funnier:

Poloz told Reuters in December the recent Canadian dollar weakening may have been partly caused by sentiment about the U.S. Federal Reserve's plans to taper its latest round of bond-buying. But added he did not want to extrapolate where the currency was headed.
It's the markets! it's the FED! says the recently "honest" Bank of Canada. Good times.


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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, December 7, 2013

It's official: The global banking cartel is a cartel

 EU imposes record 1.7bn euro fines on major intl banks over rate-rigging
“What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other,” said Joaqu√≠n Almunia, European Commission Vice-President in charge of competition policy.

“Today's decision sends a clear message that the Commission is determined to fight and sanction these cartels in the financial sector," Almunia said in the EC statement. "Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few."
 As if there was any doubt eh?

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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, December 5, 2013

The clogged sewers of finance and industry

I read a remarkable observation today. Well it's not really a remarkable observation, it's an obvious one, one which I've been forecasting since 2011, but what's remarkable about it is that I read it in a mainstream paper.

Is Bank of Canada trying to weaken Canadian dollar in a ‘stealth easing’?

YES!!! For fuck's sake. That's what it's all about; the exchange rate! That's what it has always been about. It's why we are in a much bigger pickle than it would appear. You want to know why the government is patching the housing market with "regulation" while the central bank keeps interest rates at record lows despite the obvious signs of a bubble? This is why. Raising the interest rates will pop the housing bubble, not because the rates themselves will cause rampant defaults but because the loss of our exports to the U.S. will ensure those loans can not be serviced. The resulting loss of work is what will trigger the defaults on our unaffordable houses.

Alberta hitting limits to growth

So, remember this? The event we were waiting for to finally raise interest rates? Check this out:

Cost of refinery backed by province soars to $8.5 billion
Originally pegged at $5.7 billion in November 2012, the project's cost was revised late Wednesday to $8.5 billion by its partners, North West Upgrading Inc. and Canadian Natural Resources.

"While the scope of the facility has not changed, due to a combination of cost inflation and the inability to fully capture certain cost-savings initiatives, the cost estimate has been revised to $8.5 billion," the partners said in a release.

The startup date will be pushed back to September 2017 from mid-2016. The Alberta government said it would support the Redwater project with a $300-million loan payable over 10 years at prime plus six-percent interest.

"The project remains a good deal for taxpayers," Alberta Energy Minister Ken Hughes said in a statement. Hughes was out of the province Wednesday, but his press secretary, Mike Feenstra, said the loans will be shared 50-50 between CNRL and Alberta Petroleum Marketing Agency, with each side contributing $300 million.
Underestimating the rapid rising of costs is only going to become worse. You can bet your ass their projections do not account for monetary stimulus or the positive feedback loops being created as the cost of base materials and energy of society rises. For example.

Mining sector faces rising costs, uncertain demand
Canada’s mining industry faces significant challenges in the near term, including higher prices, uncertain demand and depressed commodity prices, according to an annual report card on the industry by Deloitte.

But the report cautions that demand for commodities will rebound in the longer term and companies should be investing now in anticipation.

The industry is in an awkward transition period, facing growing resource nationalism, demands for greater corporate responsibility and a looming labour shortage, at a time when companies are struggling with volatile commodity prices, said Jurgen Beier, a national mining practice leader at Deloitte.
Embrace innovation

But that will force mining companies to be nimble and innovative, he said.

"There are a number of proven technologies and things that are out there today that radically change the way ore is extracted and change the way mining occurs,” Beier said.

"We think this is the opportunity to embrace that innovation, to get to that point of sustainability."

The Canadian mining sector is seeing a lot of cost-cutting and rationalization in the face of slowing demand from China. Barrick Gold has s
uspended work on its massive Pascua-Lama mine in South America as the gold miner moved to cut costs.

Just today,
Potash Corp. announced more than 1,000 layoffs in the face of falling potash prices and Rio Tinto said it would pull back on capital investment in its iron ore and copper projects.
I just have to point out that I called China's stagnation back in 2011 too. I don't know what sort of "indicators" Canadian business and the government uses to forecast economic events, but they frankly suck at it. Which brings us to "foresight":

Oilsands company wants $56 million in government compensation
Leases were cancelled to give Fort Mac room to grow
CALGARY - A junior energy exploration company has submitted a $56 million bill to the provincial government for compensation for cancelled oilsands leases near Fort McMurray.

And Binh Vu, CEO of Alberta Oilsands, did not rule out seeking further recourse above and beyond the dollar value of what his company has already put into its halted project.

“When a project’s cancelled, you look at all different avenues,” Vu said in an interview Monday. “If it’s a private deal, and your joint venture partner cancels for some reason, you’d look to them for some sort of recourse ... That’s something we may look at with the government, but it’s not something we’ve looked at in detail.”

The Calgary-based junior is one of 10 companies affected by the Alberta government’s July decision to cancel all oilsands leases on 22,000 hectares of land in the Fort McMurray region. The land will instead be purchased on an as-needed basis by the Municipality of Wood Buffalo, which is desperate for more housing and infrastructure to meet the needs of its growing population.

The government has agreed to compensate the oilsands leaseholders under the terms of the Mineral Rights Compensation Regulation. Alberta Oilsands — which was already in the regulatory approval stage with its Clearwater project — says $56 million is the total it has arrived at based on that legislation. The figure represents the money spent by the company so far on licensing fees, bonus bids, and development to this point.
“We had to go through receipts and invoices from 2007, which was when we acquired the leases,” Vu said. “It’s frustrating. Shareholders coming into this company were expecting the development of an oilsands project ... Getting a project to the stage where you’re about to dig into the ground, and then it gets cancelled — well, basically, we’ve wasted the last five or six years.”
Brilliant right? The amazing inability to have simple foresight seems to be a recurring problem with the Alberta government which the taxpayer of course covers. But wait, we've yet to arrive at my all time favorite indicator of Alberta's limits to growth and stupidity regarding foresight, in this case in terms of not spending on infrastructure when it's needed to 'balance the budget':

'Peak toilet' problem puts brakes on northwest development
The sewer capacity crisis that has frozen development in northwest Calgary is so dire that the city had to take extra measures to allow 183 homes already under construction to finish.

The long-promised northwest recreation centre can also go ahead as planned. The Tuscany fire station and a planned middle school in Royal Oak, too.

But that's basically it for new growth in an area encompassing a dozen entire communities, new suburban growth areas and parts of other northwest communities.

In a city where growth strains are often discussed, the "peak toilet" crisis means the system can't handle more flushes until a second sewer trunk is built through Bowness in 2017.

"Obviously it's a mistake and we have to rectify it as quickly as possible," said Coun. Ward Sutherland. Ward 1, which he represents, is almost entirely covered under this freeze.
I wouldn't count on a real "surplus" anytime soon coming out of Alberta.

A couple of other provinces are doing some neat tricks

Deficit drops, although oil revenues dip as well - Newfoundland
The Newfoundland and Labrador government said Monday that its financial position is improving, although reductions in spending are coinciding with a notable decline in oil revenue.Finance Minister Tom Marshall told reporters that the government now expects to finish the fiscal year at the end of March with a deficit of $450.6 million, down from $563.8 million, which was projected in the March budget.
Marshall said government spending for the year has been reduced by $270.1 million, thanks to delays in infrastructure work and in programs. 
Auditor General troubled by debt growth - New Brunswick
Finance Minister Blaine Higgs delivered his second quarter financial update on Thursday afternoon. He now projects the net debt will grow by $587.2 million for the year ended March 31, 2014. That is $7.2 million less than the original debt growth prediction of $594.4 million.

"This continue increase in net debt represents a very disturbing trend," said MacPherson. "An even higher demand will exist on future revenue to pay past expenses."

The report notes in 2013, the province had to put out $660.3 million to pay the interest costs on the debt, which represents 8.5 per cent of its annual revenue.

The report also shows New Brunswick has the second highest net debt per captia in the country. In essence, it would require every New Brunswicker to pay $14,623 to pay off the net debt, which is less than $100 shy of the net debt per capita in Nova Scotia.
 

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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, November 30, 2013

Oil and economy: The shale oil revo-illusion [Part 2]

Canadian Trends: Oil and economy: Understanding the risks [Part 1]

In part 2 of this series (boy was it stupid of me to start 2 separate series posts at the same time! Stay tuned, more Key Concepts on the way) we're going to look at shale oil and some likely affects it's going to have on short term to medium term oilsands development, profitability, as well as whether or not shale oil represents the saviour energy it's being touted to be.

Shale oil and gas: The transition fuels?

Perhaps the most popular belief about shale oil and gas is that it is a "transition fuel". With conventional oil and gas long past peak the shale revolution perhaps represents a "last chance" to power society while we transition into a new economy, and new energy systems.

The problem, though, is this isn't happening. The result of rapid shale production in the U.S. has been to simply declare the boom times are back, spending can continue, debt can be serviced, so there's no reason to worry. Yet despite the huge increase in production global oil prices are still well within the range extreme energy requires of $80 - $100. Were hearing about how the world is awash in oil yet the price seems to say a different story.

Now, I know many of you are saying.. but.. but.. manipulation! That artificial scarcity and market manipulation is solely the cause of current oil prices, and in a way it is. However, my take on the logic behind this manipulation is slightly different from the conventional thinking. It's not just "manipulated higher for greater profits", that doesn't make sense for many reasons.

First, high oil prices are not sustainable for long periods of time and a high oil price means that production prices of oil will be going up shortly afterward. This is why when referring to the cost of energy you must use energy ratios, as the currency's value is a function of the available energy. So no a higher cost in currency does not translate to more profit over the long term for extreme energy producers (though it does for conventional oil producers which is why OPEC was manipulating prices before).

So yes, when energy was a lot cheaper this logic made sense, however these days we are at the ceiling of affordability. Pushing the price higher just means you can expect a drop in price sooner which for extreme energy producers then means they are put into a situation where oil produced at a higher cost is sold at a lower price. Temporarily it could be beneficial but in the long term it'll come back to bite you.

My conclusion on the way the oil markets work is that oil is being manipulated both higher, and lower, depending on the requirements of oil producers, to ensure maximum stability of oil production. All manipulation of course only works to a point, manipulation can not overcome an overwhelming market move there just isn't enough weight behind it against natural forces on an ongoing basis.

Ok, anyway, back to the point of this section: the transition aspect. Shale oil and gas perhaps represents the greatest IQ test of humankind and our collective ability to overcome the challenges ahead, and so far we're failing, miserably.

A transition utilizing shale oil and gas and oilsands means no more "Black Fridays". These resources must be diverted and INVESTED into the transition to make it possible. This doesn't mean switching all of our cars to LNG and installing over a million new natural gas stations and the infrastructure to support them while we continue to fall behind on the cost of our oil based transportation network, the highways, the roads, the tar. We must move away from personal transport, it is unsustainable in it's current form.

We must treat these extreme energies for what they are, our children's heritage. We, the world, which largely in this case means the U.S. - squandered this generation's resource wealth on trinkets and crap. Very little has been invested into the future, in fact none of it has really been invested in the future because we're borrowing FROM the future to pay for growth now. These extreme energies represent that future, for our children, that we are now depriving them of.

These extreme energies are what the future generations are going to need to deal with the problems we've already created for them, stripping them of these resources to pay our frivolous debts not only leaves them with no wealth to actually enact change, they are also going to compound the problems they face as utilizing these energies in our wasteful society is going to cause immense damage in the form of climate change, and perhaps more directly - just plain pollution. Dirty water, dirty land.

I've written before on why any transitions are going to be a net-loss in today's economic terms. It is an investment in the future, at a cost of the future because we've squandered the wealth of today. A true transition ISN'T going to have any profit in it, none, zip, zero. It's going to cost us, and it should cost us, because we don't deserve any reward for fixing a mess of our own creation using wealth that isn't even ours. We deserve NO REWARD for waiting until the last minute though I think it can be argued now we're past the last minute and no stable transition may be possible as two scientists recently argued.


What is 'the transition' exactly?

The transition is much more than just changing the sources of energy we use. It is a change in our idea of success, dropping the GDP standard. It is a change in the way we prioritize energy and resources, ensuring that anything resources go into provide long term value for society. No more garbage products, and the highest bidder can't always win.

This all may sound somewhat draconian, and it is, or rather it would be if we attempted to implement it with rules and authoritarian control, surveillance, monitoring. This is not what I'm advocating. As I said, this is really the greatest I.Q. test of humankind, can we collectively come to the realization that changing the natural order of society is in our best interest? I don't know, but I would submit that if we are not mature enough as a species to come to the realization, then we are not mature enough as a species to accomplish the transition under any order. If the change does not come voluntarily, individually, as a result of freedom of thought then it will not come at all. It's not something that can be legislated.

A skewed value system

In our growth and debt oriented value system current extreme hydrocarbon energy is both simultaneously over and under-valued. It is over-valued in today's growth atmosphere with the bitumen bubble providing the best example. Bitumen is of a much lower quality than conventional oil and there should be a spread between bitumen and WTI. The real bitumen bubble is when the price of bitumen approaches the price of Canadian oil, it is now overvalued in today's terms with a speculative bubble on future outlooks providing the added value.

However, bitumen is also extremely undervalued as valuing these non-renewable resources on the same scale as we value all aspects of the growth economy is just plain wrong. These resources represent the difference between prosperity and poverty for future generations. These resources will be needed to maintain and provide any technological base we hope to utilize to overcome the challenges in the future. Used today to pump up GDP and the markets and service the minimum payment on debt is a dangerous, irresponsible, and ultimately futile usage of these resources. But used sparingly, responsibly, and with a focus on value-added production of long term technologies they represent the hope we have of not simply regressing back to the stone age as we keep lowering the bar to make life appear affordable.

This skewed value is even worse for shale oil and gas.

An apparent "glut" in the U.S. has dropped prices for these extreme energies to recent lows. The rapid rise in production is being compared to the very discoveries of oil and gas themselves. But they are not the same at all in terms of quality. A high quality of energy got us to where we are today, this rate of expansion simply just can not continue on a lower quality of energy.

Canadian Trends: Peak Canada? No, it's still peak oil

Why is shale a lower quality?

While "total reserves" is the most touted stat of energy, rates of production and depletion rates are much more important and paint a different story than "total reserves" initially indicates. Business Insider put out a pretty good piece on it (however I disagree with their conclusion which we'll get to). Go ahead and check out those charts, then we'll continue.

So as you can see from those charts the U.S. is "fracking up a storm" but the depletion rates of shale wells are abysmal meaning the number of wells that must be drilled is incredible, yet they've concluded that shale is here to stay because the total number of wells that can be drilled is quite large. They make a note of all the problems with it like water usage, and earth quakes, but that doesn't seem to concern them. It does for me.

Massachusetts seeks 10-yr ban on gas fracking after series of Texas quakes
A Texan tragedy: ample oil, no water

The boom is really just kicking off and already they are hitting significant limits to growth. This form of energy can not supplement conventional oil for the type of consumption we've become accustomed to. It's really as simple as that, and attempting to use it as such is a huge waste and will create an environmental debt that will take generations upon generations to repay.

Now, Mound's question on shale was related to Australia. Report questions economic benefit of shale gas extraction.
Australia may have over 1000 trillion cubic feet in undiscovered shale gas resource but the enormous cost of infrastructure needed to extract it may outweigh its economic benefit unless shale gas prices rise, a new report has found.
Like Canada, Australia lacks the infrastructure needed to seriously take a cost-advantage of the mass production of extreme energy. Of course, they're going to try anyway, and like Alberta I imagine they will use "austerity", "conservatism", accounting tricks etc to hide the true reality from their population. But like Alberta, I'm sure they'll notice that "living within their means" is getting harder and harder to accomplish no matter what the price of their resource is or how much they produce. Already their industry is working hard to hide the environmental reality.
Australia's coal seam gas industry has rejected a peer-reviewed report that suggests greenhouse gas emissions from drilling and fracking are 50 per cent worse than thought.
Shale does represent an economic threat to oilsands, and that's a good thing

Will oilsand demand be affected by shale developments? Absolutely, but ultimately I think that represents a good thing. It's a chance for Canada to utilize foreign resources and save the oilsands for future generations. It's a chance for Canada to transition at a relatively cheap cost utilizing the stupidity of other nations and their desire to get all of their resources out the door in exchange for U.S. debt as Canada is doing currently.

More than any other country, I think the shale boom represents a last chance for Canada to take advantage of the future and make the needed changes now. A 100 year plan of strategic investment in our children's future is what's called for. The world is providing the perfect opportunity for us at a cost to themselves and we'd be stupid not to take it. Let's import shale oil from the U.S. and slow oilsands development right down. Let's savour the massive bounty of resources we've been blessed with.

Low oil prices are affordable prices, and our government has been working hard to make Canadians forget that fact. Investment in our future is best done when energy is cheapest and right now energy is the cheapest that it's going to be for the foreseeable future. We can either take the opportunity in front of us or we can chase U.S. debt down the extreme energy rabbit hole of the American Jesus and squander everything we've got left in the process. It's our choice, that's the beauty of freedom.


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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, November 29, 2013

Canadian MSM scrambles to defend NSA spying

The National Post and Toronto Sun have both put out pieces trying to justify the NSA's presence as "just doing their jobs". The only problem? The jobs they assume they were doing are completely different, arriving at two completely separate conclusions for their purpose of being here.

The Toronto Sun claims:
For some sensitive souls — oh, all right, the CBC — that is enough to start hyperventilating when it’s revealed the Harper government allowed the U.S. National Security Agency (NSA) to do covert work in Canada during the 2010 G20 summit.

Something they do all the time on a global scale as part of the Five Eyes multi-national intelligence network.

The Five Eyes is a club that consists of the Unites States, the United Kingdom, Canada, Australia and New Zealand.

Each member has its own internal and external agencies that for almost 70 years have shared everything they gather. Sometimes within their own borders, sometimes outside.

Not only that, the respective members of this elite club mirror political systems and inherited versions of British law that makes this possible with limited judicial oversight.

They are far from alone.

Spying is an international trade that knows no borders. The advent of the digital age has made it easier than ever to see what people look at online or discuss during telephone conversations.

The argument that just because everyone does it somehow makes it right is of course spurious, but the greater good is served if a potential terror attack is thwarted.

Think of the first question that is always asked after terrorists do their work: “Why didn’t somebody see this coming?” is universally uttered by those most affected.

Andrew Parker, director of the U.K.’s peak security service MI5, made it clear in a speech in London last month that spies exist for a reason.

They are there to watch us. We might not like it, but they do it all the same.

“Being on our radar does not necessarily mean being under our microscope. The reality of intelligence work in practice is that we only focus the most intense intrusive attention on a small number of cases at any one time,” Parker said.

The NSA was in Canada because it saw a threat to U.S. interests in general and its human capital in particular. Simple as that.

They didn’t watch everyone, read every e-mail or listen to every conversation. As Parker points out, security agencies do their work in a targeted manner because they don’t have the ability to be everywhere at once.
So, according to the Toronto Sun they were there because they "saw a threat to U.S. interests". Which is interesting isn't it? They couldn't trust our $1billion summit's super-security lockdown even though CSIS had declared prior to the summit there were "low terrorism risks"?
The upcoming G8 and G20 summits in Huntsville, Ont., and Toronto do not appear to be the subject of terrorist chatter, the head of Canada's spy agency said Monday.
"I think [there is] surprisingly little on the terrorism front," Richard Fadden, the director of the Canadian Security Intelligence Service, told the CBC's Peter Mansbridge in an exclusive interview.

"We don't think there is anyone who is really interested in doing any harm from that perspective."

"Anarchist groups" and "multi-issue extremists" are a different matter, however, Fadden suggested.

"Nothing attracts the world media like the G8 and G20, so anyone who is interested in getting their issues in front of the public, I think, are interested in being in Toronto," Fadden said at his Ottawa office. He predicted turnouts of "a substantial amount of people."
So there wasn't a threat terrorism wise, right out of the mouth of CSIS, yet there was a threat "anarchist and multi-issue extremist" wise. Going back then to the author's point of asking "why didn't somebody see this coming?", one has to ask how 10000 police, the NSA, CSIS, and CSEC all couldn't see the "black bloc" riot coming, even though they were expecting it to happen, even though it was triggered by a flare, even though mainstream media said prior "we're expecting some trouble", even though the entire Toronto downtown core was covered by CCTV.

The author also goes on to say these 5-eyes share information, both "inside and outside their borders", then assures you all you weren't the target.

Let's see what the National Post has to say.
The allegations contained in the CBC report are interesting, no doubt. The NSA reportedly set up a command post in the U.S. Embassy in Ottawa, and worked closely with a “Canadian partner” to gather intelligence on foreign delegations, to provide “support to policymakers.” In other words, listening into what the foreign delegates were saying to each other, and then quietly passing that information onto the U.S. and Canadian leadership.

We do not have confirmation that Canada spied directly, but it almost certainly did, or at least facilitated U.S. efforts.

Both the chief of CSEC, John Forster, and Defence Minister Rob Nicholson said Thursday that CSEC cannot eavesdrop on Canadians or visitors here, nor can it ask a foreign friend to do so on its behalf. However neither would say what would happen if the NSA offered to do so.

Even when dealing with allies, every country in the world does its best to analyze what a partner’s negotiating position is going to be. How far will they bend to get a trade deal? Just how concerned about a border dispute are they? A lot of the information that governments seek is available to them through conventional means — news media, public statements, regular diplomatic channels. Some of it has to be obtained clandestinely.
First of all, CBC's release explicitly states that:
The NSA and its Canadian "partner," the Communications Security Establishment Canada, gather foreign intelligence for their respective governments by covertly intercepting phone calls and hacking into computer systems around the world.

The secret documents do not reveal the precise targets of so much espionage by the NSA — and possibly its Canadian partner — during the Toronto summit.
There is no mention of "foreign delegates". The national post is taking previous reports of spying on delegates at other G20s and assuming the case is the same here. And why? Oh, for the "trade" aspect. Getting that insider info, you know?

So, two posts claiming that you have no reason to be concerned and the reasons are clear why they were here even though the "obvious" reasons are on completely different ends of the map and neither post really even bothers to investigate the legality of it which really should be the focus here, shouldn't it? Plus the NSA show no regard for laws anyway.

Canadian Trends: The G20 is the nexus of everything Canadians really need to know


Click here to recommend this post on progressivebloggers.ca and help other people find this information.

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.

Wednesday, November 27, 2013

UPDATE-1: The G20 is the nexus of everything Canadians really need to know

Senate scandals and off-shore tax havens have nothing on the G20 when it comes to the amount of ignorance claimed by "government officials". Just now we have a great little gem out of CBC.

New Snowden docs show U.S. spied during G20 in Toronto
The briefing notes, stamped "Top Secret," show the U.S. turned its Ottawa embassy into a security command post during a six-day spying operation by the National Security Agency while U.S. President Barack Obama and 25 other foreign heads of state were on Canadian soil in June of 2010.

The covert U.S. operation was no secret to Canadian authorities.

An NSA briefing note describes the American agency's operational plans at the Toronto summit meeting and notes they were "closely co-ordinated with the Canadian partner."

The NSA and its Canadian "partner," the Communications Security Establishment Canada, gather foreign intelligence for their respective governments by covertly intercepting phone calls and hacking into computer systems around the world.

The secret documents do not reveal the precise targets of so much espionage by the NSA — and possibly its Canadian partner — during the Toronto summit.

But both the U.S. and Canadian intelligence agencies have been implicated with their
British counterpart in hacking the phone calls and emails of foreign politicians and diplomats attending the G20 summit in London in 2009 — a scant few months before the Toronto gathering of the same world leaders.

Secret documents released by U.S. whistleblower Edward Snowden have provided new insight about the level of U.S. and Canadian spying on allies and foreign diplomats. (The Guardian/Associated Press)

Notably, the secret NSA briefing document describes part of the U.S. eavesdropping agency's mandate at the Toronto summit as "providing support to policymakers."
The G20, the most lavish display demo of the security state infrastructure being implemented.

No investigations of this summit were ever allowed in jurisdictions that could touch the PMO! The investigation ended at the police commanders and the expenses. The denials and claims of ignorance you're seeing now by the likes of Harper, his corrupt senators (which by the way the "honorable" Senator Patrick Brazaeu is working on a tell-all book that he'd like to sell, nothing like capitalizing on the cronyism and destruction of democracy to show you truly care), Jim Flaherty, and everyone else in the government's fiat currency free trade fan club are the same denials and claims to ignorance that you saw following the G20.

The G20 is the key folks. The NSA, CSEC, CSIS, the spying in general, the suspension of civil rights, the B20, the banking cartels, the corruption. It's all tied in together! The G20 is the mega-scandal of all recent scandals but at the time much of Canada's Conservatives were blinded by a staunch partisanship. Perhaps now that Harper's "conservatism" is in question they will entertain the idea he may not be conservative at all, but rather a globalist.

The G20 was a massive intelligence operation orchestrated by world governments and international corporations against the citizens of this country. It bypassed typical police budgets and equipped the nations forces with paramilitary style crowd control equipment. It was the biggest mass arrest in Canadian history and a preview of things to come.  If you're going to demand an inquiry into anything, it should be this.

Watch. Share. Inform.

What really happened at the G20:

"I know it's a loss of national sovereignty but it's a simple reality" - Stephen Harper:


Update-1

Canada's top spy won't answer questions about G20 surveillance
John Forster, chief of the Communications Security Establishment of Canada (CSEC), and Defence Minister Rob Nicholson both pointed to international security and said they couldn't answer questions about top secret documents retrieved by U.S. whistleblower Edward Snowden.

The documents show Prime Minister Stephen Harper's government allowed the National Security Agency (NSA), the U.S.'s largest spy agency, to conduct widespread surveillance in Canada during the 2010 summits.

Forster wouldn't answer repeated questions about whether Canada would let its allies perform those activities inside Canadian borders.

"I do partnerships with the Five Eyes allies but I do not ask them to perform actions that is against the law for me to perform in Canada."

The Five Eyes is the name given to the intelligence-sharing partnership between U.S., U.K., Australia, New Zealand and Canada.

Defence Minister Rob Nicholson also refused to say whether Canada let the NSA spy during the 2010 G8 and G20.

"I don't comment on an international security operation but under the law, CSEC cannot target Canadians. They are required to follow the law of this country," he said.

"I look at the independent audit of this organization and they have come up with positive results in the sense that they comply with Canadian law and by law they can not target Canadians."

No, CSEC can't target Canadians, they also can not invite foreign intelligence agencies to target Canadians either, or to do anything here. Notice the wording: "international security". Not "national security". These people don't answer to this country. "This isn't Canada". "It's a loss of national sovereignty". Notice a central theme in all the responses on G20? CANADA doesn't mean shit.


Click here to recommend this post on progressivebloggers.ca and help other people find this information.

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.

Oil and economy: Understanding the risks [Part 1]

In my last post on the bitumen bubble I was prompted with some questions on the global situation. My answer has become quite complex, so it's been made now into it's own post.

Hi Richard. Just how does this madness end? In terms of the larger, global Carbon Bubble, the world seems content to continue defying gravity - for now.

The world is not so much content as the banking system and those invested in such a system are content. Pete McMartin put out a great piece recently "who pays for climate change?":
As usual, there were fundraising drives. Emergency response teams were dispatched. Government dedicated relief funds and promised to match private donations. The chaos on the ground and the rising death count was leavened — here, anyway — by Feel Good stories of charity.

But this time, something was different. Typhoon Haiyan was so abnormally big it left behind more than a devastated Philippines. It left in its wake a heightened sense of the global divide of climate change. The rich play, the poor get their homes flattened. And the poor, who are most affected by climate change and least able to mitigate its effects, are growing increasingly angry.

At the United Nation’s Framework Convention on Climate Change, now being held in Warsaw, Poland, the Philippines climate negotiator Naderev Sano, who drew a direct link between Typhoon Haiyan and climate change, first thanked the developed countries for their help, then told them that the poor countries of the world need more than their charity. And he was not the only delegate there to do so.

They needed compensation, he said. They needed a global fund established to mitigate the damage the big greenhouse gas-emitting countries were causing. And they needed those rich countries to accept their moral responsibility for doing the most harm over the longest period to the global climate.
 
He then vowed to starve himself until they did.
So, referring to the world as a singlular entity I don't think is correct, much of the world is at the tipping point already, it's a small minority driving the status quo. As I wrote in my (incomplete) coverage of the 2012 budget:
A few other paragraphs confirm for me that the government believes fully in climate change and that it is occuring now and is inevitable as earlier signs have indicated.

Canada’s Economic Action Plan laid the groundwork to establish a world-class research station in the North. As announced by the Prime Minister in August 2010, the station will be located in Cambridge Bay. Once established, the station will provide a year-round presence in the region and anchor the network of research infrastructure across Canada’s North, making a significant contribution towards the Government’s Northern Strategy. The Government will be announcing next steps in the establishment of the Canadian High Arctic Research Station in the coming months. Combine the link, the "research station", and the explicit mission we have for research directly from section 3.1:

The Government’s science and technology strategy, Mobilizing Science and Technology to Canada’s Advantage, emphasizes the importance of ensuring that federally supported research contributes to the commercialization of new products, processes and services that create high-value jobs and economic growth.

Guided by this strategy, the Government provides significant resources to support research, development and technology. It's not unreasonable to assume the research station will be heavily involved in arctic mining research as thats one of few products, services, or processes that can be commercialized. This compliments another paragraph in regards to climate change (from the section on GMO research):

•Increasing the competitiveness of the forest industry. Spruce trees are the most widely used species in Canada’s forest plantations. Researchers at Universit√© Laval are working to develop tools and protocols that make it possible to select high-performance spruce trees with better quality wood and high potential to adapt to climate change. Government and industry have partnered to transfer molecular breeding technology to commercial application across a broader range of tree species, to increase the competitiveness of the Canadian forest industry.
I'm more convinced than ever now that the government's climate change strategy is adaptation and not prevention (indeed I believe they believe it is now impossible to prevent). Take note of the wording "better quality wood with high potential to adapt to climate change". It's current tense and matter-of-fact.

I anticipate most policy will be geared towards adaptation with climate change simply becoming a reality.
There is no "seeming" about it, adaptation, not prevention or mitigation, is the chosen path forward. Any talk otherwise by the major powers in control of this situation is just talk, or in the case of carbon trading or taxing, a scam meant to inflate an economic bubble greater than the current currency bubble itself. Explaining why this is would require an entire post on it's own (which I will do one day if I get the time), but I can sum up the logic simply as: If currency is backed by future production then currency itself can not be the limiting factor in future production. Proponents of these systems simply do not understand how the monetary system operates making the implicit assumption that currency represents historic wealth (or a store of value) rather than future wealth.

I am wondering whether the industrialized and developing nations aren't locked into some fossil fuel extraction paradigm they cannot shake.

The paradigm they can not (or more accurately will not) shake is that of infinite growth and debt.

I posted yesterday a great set of youtube videos that explain the infinite debt monetary system really well, but something Mike Malony doesn't get into, or perhaps himself doesn't understand, is that the USD isn't backed by nothing literally - rather it is backed by future production, future production made possible by the people, powered by oil.

It is the burning of carbon (though more recently banking shell games and fraud) which enables the current standard of GDP. Andrew Leach recently put out a great analysis of pipeline efficiency and the obsession with "productivity" which provides, in example, an explanation of the paradigm world governments are currently trapped within, deliberately by the banks.
The CEPA study is the perfect example of what’s wrong with using I/O models to measure the benefits of infrastructure, either existing or proposed.

Ideally, pipelines would be cheap to build, would use little energy, and thus would allow resources to reach their markets at minimal cost, maximizing the value realized from extraction of our scarce resources. By enhancing the value of resources, efficient transportation would enhance the implied productivity of labour in the resource sector. The method used in the CEPA study would value a pipeline system which was costless to operate at something approaching zero, and leave us all wishing for more expensive pipelines so that they’d have more economic impact. If you can’t see how that’s backwards, you’re just not giving it enough thought.

The CEPA study looks at the annual operating revenues of pipelines, and treats those as a shock to the economy – money which would not otherwise be spent. Of course, nothing could be further from the truth. Operating revenue of pipelines is revenue not earned by resource production or refining, depending on the dynamics of the particular energy market, or money not saved by consumers at the pump. This is not money which is magically added to the economy. Rather, it’s part of the value of resources lost to the costs of transporting them to market. The higher the transportation costs, the lower are taxes, royalties, net revenues to producers, margins of refiners or the higher are consumer costs. These lower margins would either mean less employment or lower wages or both in the upstream sector, while higher costs would lower welfare for consumers, all as a result of the lower productivity that we’re told is a source of great benefit to the economy. It’s as close to zero sum as you can get.
Leach unfortunately doesn't go far enough in his analysis to realize that's the same across the board, that the entire economy is now looking at "cost for cost's sake" as an indicator of economic health. You now look at central banks saying "there is no inflation so we're keeping rates at zero", but their entire idea of inflation is off base:
Perceptions can be skewed by big-ticket items, like houses and the appliances needed to fill them. A look at the cost of daily or weekly needs provides a different picture, one of mostly weak increases and equally narrow growth declines.

Inflation — like the data shows and the Bank of Canada keeps reminding us — is nowhere close to being a problem that would require jacking up interest rates.

That’s not likely to happen for another year at the earliest — not until the Canadian economy is chugging steadily along and inflation is holding around the central bank’s ideal 2% target.

For now, the consumer price index is struggling to stay around the 1% mark.

Unless there is deflation somewhere, prices are still rising [overall] and the cost of living for consumers is still going up,” says Mel Fruitman, vice- president of the Consumers Association of Canada.

“The ordinary consumer doesn’t look at the inflation number put out by StatsCan, they look at how much it costs them every month to live. We’re not seeing any decline there,” he says.

“At the end of the year, we’re still going to have less in the pocket than we did last year, no matter what. All we know is that if inflation is high. It’s going to cost us more to live. If inflation is low, it’s not going to cost us as ‘much’ more.”

Philip Cross, former chief economic analyst at Statistics Canada, says the difference in price perceptions comes from comparing everyday items to durable goods with longer lifespans.

“We buy groceries. We fill up with gasoline. So, we see price increases in these areas,” says Mr. Cross, now a private consultant.
Inflation is not only being hit by excessive monetary printing, but also by a major increase in the cost of energy. In other words, not only does a unit of energy now require more monetary units to purchase, the energy itself is also providing less of a return compounding the problem. Government's are hiding massive inflation (really devaluation) by both exporting this inflation to other countries (through the practice of free trade agreements) and by comparing the price of hamburgers and TVs. The CPI in it's current form only accurately describes inflation if you have enough disposable income to actually buy products across the board, for the poor whose spending is limited the necessary items they need to buy are all incredibly inflated leaving them little money to "save" on the cost of a TV.

Utilizing this skewed inflation scheme government's are justifying rapid amounts of currency creation which is supposed to "fuel growth" and "recovery", however with an energy supply that has now become many hundred times more expensive than conventional oil production the excess energy (wealth) required to actually create real growth is gone. All growth, all growth estimates, all budget estimates, are being based on a record low interest rate environment. Just imagine what Alberta's budget would look like with normal interest rates attached to the debt, or Edmonton's arena. As a society we're calling this sort of deficit spending "affordable" because of record low emergency interest rates and the normalized expectation that the required productivity needed to service these debts is possible, this expectation is based on our recent historical observation of energy ratios. We're still spending like oil has a 100:1 ratio, when in reality it now has closer to a 5:1 ratio. That's a massive amount of expected future wealth that has just evaporated, yet we are not accounting for this evaporation in our expectations moving forward.

A good example of the mentality here would be someone who makes over $100,000 and has adjusted their lifestyle to make use of that sort of income suddenly losing their income source. While the very reality of perhaps a new income level of only $30,000 is obvious and apparent, the mentality of the person is likely still stuck in the spending patterns of a $100,000 income. It's very easy and natural to move up the chain of a standard of living, it's very challenging to move down the chain. High cost hydrocarbon energy is the entire world moving down the chain together, and stimulus is an attempt to counter that. This is evident by the continual "ceiling to growth" we continue to hit:
Customers at St. Albert gas stations were in for a surprise Thursday morning as fuel prices dropped to about 99 cents. Some may have welcomed the reduced hits to their wallets but economists warn that lower gasoline prices also point to possible shifts in the local economy.

Although oil supplies continue to ramp up, Alberta still lacks the ability to move a large amount of its product out of the province, said John Rose, chief economist for the City of Edmonton. This keeps prices at the pump low but could drive investment out of the province in the long run, he said.

“Over the last couple of months we've seen a very significant gap open up. Great for refiners, that supports their margins. Great for people who are buying gasoline because it helps to drive gasoline prices down,” he said. “But in terms of continuing investment in the oilsands, not such great news.”

Gasoline made out of the oilsands is a relatively expensive product compared to other sources of oil, said Rose.

In order to create increased investment and production, Alberta oil should sell for no less than $60 to $80 a barrel. Once the price drops below that number, and Alberta finds no additional pipeline capacity in the United States, the West Coast or Eastern Canada, Rose said oil companies may start backing away from major projects.
I would actually submit that with currency inflation the "floor" price is no longer $60, but actually $80 with a new ceiling of $100. I've been documenting the economy bouncing between these two limits for some time and so far every prediction based on them has turned out. This is again a function of a severe underestimation of how fast the cost of living is actually rising.

What risks are the federal and Alberta government exposing us to by recklessly committing us to a truly high-cost, high carbon unconventional petroleum?

The number of risks from pursuing these projects grows exponentially everyday, while the number of benefits is approaching zero. This has been the centralized theme of my opposition to the oilsands. They are an economic blackhole whose wake of destruction outweighs the wealth remaining that would be needed to repair this destruction.

Perhaps the scariest thing about them is that because they represent a downgrade globally in the general quality of energy and thus available future wealth by the time the reality of the destruction reaches an obvious crisis point governments will be so indebted they will be unable to mitigate the damage just as Japan, after decades of deflation and stimulus spending, now does not have the resources to address Fukushima and so decided a coverup will work just as well. In fact Japan is only being kept in economic limbo because of the support they receive from the U.S. which has now entered it's own liquidity trap and will be unable to help them much longer at which point it's likely Japan will have to default and Fukushima will go unaddressed.

As real wealth evaporates governments are going to accelerate "cost cutting" measures to balance budgets. I think Lac-Megantic shows the end result of that pretty well:
LAC-MEGANTIC, Que. - Ottawa and Quebec shared a rare moment of solidarity Thursday, agreeing to split the estimated $190 million price tag to decontaminate the devastated town of Lac-Megantic.
The company responsible has already gone bankrupt leaving the government, meaning the people, to pick up the tab. There are many, many, more Lac-Megantic or Fukushima scale disasters waiting for us over the coming years as maintenance costs continue to be cut and infrastructure spending falls further behind, as we are now seeing in Quebec with the Champlain bridge. All of this cost cutting, deferring maintenance, and halting infrastructure spending to "balance the budget" in the 90s (and now) was simply an attempt to mask a declining standard of living but ignoring those costs don't make them go away, it simply deferred and amplified them into the future.

The short term risk to Alberta, and Canada, by pursuing the oilsands is an unpayable monetary, structural, and environmental debt. What good is a twinned highway to Fort McMurray after these projects die off? Infrastructure spending happening today in Alberta is not to support the people, it's to support the industry. It's shortsighted, and a major waste of non-refundable wealth. Alberta literally spends all of it's wealth on the industry that's providing the wealth in the first place and increasingly has to cut back on social service to meet this growing cost of infrastructure. Alberta provides perhaps the most minimal and privatized service in every department of all provinces across the country even as it's population and tax base is growing. This does not indicate wealth in my books, Alberta's collective wealth is decreasing overall.

The medium term risk (which partially addresses your second question regarding shale oil) is that as energy supplies get tighter and more expensive, market volatility is going to rise.

Alberta's come out with the cute name of "bitumen bubble" to essentially describe periods of market activity that don't favour it's economics, perhaps similar to how a gambler may grasp at straws for arbitrary reason to explain why "their system" was defeated. As you've eluded to with your new post on these shale gas finds and your second question bitumen's demand is highly dependant on the availability of higher quality energy sources. However, Shale Oil - while being a higher quality than bitumen is of a lower quality than conventional oil. Everything I've stated above remains true, whether we're talking shale oil or bitumen society as a whole is looking at a downgrade, and not an upgrade, of collective wealth. I'll get more to shale oil in a separate post. The irony of oilsands or shale oil developments is that they need a good availability of higher quality energies to subsidize the cost of production and ensure energy stability, on top of government subsidies and the subsidy provided by cheap liquidity in the form of low-interest loans.


The long term risks? Leaked Climate Change Report Predicts Violent, Poorer, Sicker Future

I will get to the meaning of shale oil for the oilsands in a separate post as it's a fairly complex subject on it's own.

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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.