Thursday, March 28, 2013

Cyprus, Spain, and Canada too. It's bail-in's for everybody.

See what's going on in Europe? Spain? Cyprus? See a pattern developing here?

We're going to be skipping ahead in the budget analysis for this post. Chapter 3.2 "Establishing a Risk Management Framework for Domestic Systemically Important Banks"
  • Systemically important banks will face a higher capital requirement, as determined by the Superintendent of Financial Institutions.
  • The Government proposes to implement a “bail-in” regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.
  • Systemically important banks will continue to be subject to existing risk management requirements, including enhanced supervision and recovery and resolution plans.
  • Depositors, or taxpayers, but never the criminals at the top. Deposit at your own risk.

    Thanks to @sandytauschek for spotting it.

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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.

    Wednesday, March 27, 2013

    UPDATE-2: The road to good intentions is paved with racist tendencies (at least in Canada)

    Oh those poor uneducated First Nations! To think that before our superior scurvy filled boats arrived here to share our good fortunes with the simple natives that they were basically just wandering in circles banging animal pelts. Now, we've "modernized" them a bit, but they need to come into the 21st century and shop at Wal Mart and get jobs and stuff. I mean seriously, look at the sourced article's laundry list of "facts":
    . Never "discovered" the wheel
    . Never had a written language
    . Never discovered astronomy
    . Had no science or scientific discoveries
    . Had no mathematics
    . Made no medical discoveries
    . Never had written music
    . Only "figured out" a drum and a rattle for musical instruments
    . Had no metallurgy
    . Had no sails for boats (only had canoes)
    . Created virtually no mechanical devices
    . Possessed almost nothing that required hard manual labour over a period of time, i.e.: building with or carving out of stone
    . Made almost no inventions
    . Are just in the last 200 years getting caught-up to most of the rest of the world
    . Have a history that is notable only for underachievement Are these people in trouble? Yes.
    .Do they need help? Yes.
    Why he's "quoting" strange words like "discovered" I don't know, perhaps I'm not modern enough to understand. However, right here you have a nice bite sized list of why everything FN says is wrong and why everything us "Canadians" say is right. The author has "figured it all out" boy am I glad he's on the job! So what should they do about it?
    The only way to fix this situation is to bring them into society as equals. They should be getting jobs and paying taxes like the rest of us because in reality, they are no more special than any of the other hundred or more cultures that call Canada home.

    Turn off the taps. Do away with this "traditional use" and "cultural" nonsense. Educate their children to become modern citizens.

    Instead of finding their identity and source of pride in some folks who occupied the land 15,000 years ago. Let them stand or fall on their own account.

    Just like the rest of us have to do.
    Yes, stupid culture, that's replaceable with McDonalds and I'm paying so much god-damned interest to private banks through our public debt that why the hell should the natives be getting off easy? They should want to join us! This is the modern society, one where we have IPhones and TVs, GMO foods, and remote slaves in China. I mean, come on, who would not want remote slaves in China? They're like our own frickin' set of minions, I mean they are slowly taking ownership of everything we have as we drown in debt but meh.. that's because they're becoming "modern" too.


    I want to focus on one very specific point: "Are just in the last 200 years getting caught-up to most of the rest of the world". Mr. Olson, in the last 100 years we've become a "modern economy" that is unsustainable. You sir are telling a people who managed to live in balance with their surroundings for thousands of years not subject to "boom" and "bust" or underground cities of poverty stricken people that you know better. That's the modern world right there as it sits, is it any wonder they don't want to be a part?. Are you sure they never discovered the wheel? In all that time living amongst nature never saw a log roll huh? Maybe their lifestyle just didn't require the wheel, just like people survived and lived and were happy before they knew they "needed" the cellular phones they have now.

    I'm not crapping on technology, but Mr. Olson, they had solved some of the basic challenges to life which we can't right now nor ever have. Do you think you need to "Educate" First Power? State of the art independent renewable energy run by a pure FN company and they didn't even have to reject their culture to do it! They don't require you to be tied to the grid like most of our "modern" power producers. Maybe bring back residential schools while we're at it?

    Mr. Olson, maybe it's time we allow FN to "modernize" us, because the canaries in our "modern world" coal mine are dying and we have no more lands to colonize.

    Update-1

    Nanaimo Daily News has removed the letter an issued an apology.
    In the Wednesday edition of the Nanaimo Daily News, a letter to the editor ran from Mr. Don Olsen, which has caused considerable concern among some of our readers.

    While we would defend Mr. Olsen's right to hold and express his opinion, the sentiments expressed were entirely his own and in no way reflect the views of the newspaper.

    The letter should not have run.

    We apologize for any distress this may have caused our readers.


    Hugh Nicholson
    Division Manager
    VING
    I've written a lot of "letters to the editor" (back when I thought that actually could make a difference). Ones that were factual with sourced articles to backup my claims. They were never printed. It's one thing to have your own opinion, it's another to print blatantly racist and wrong "facts". Let's try not to confuse the two.

    Update-2

    Because this blog is about future trends and not current events or history the approach I decided to take in my argument is one that I truly believe which is that at this junction the FN have a lot more to teach us than we have to teach them. In any case, another blogger has done a good job of clearing up the historical facts, please check that out.

    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.

    Tuesday, March 26, 2013

    Warning! Thinking may lead to 'serious social consequences'

    Feeling apathetic? Hopeless? Lost? Have you lost confidence in the election system and politicians? One might think that these symptoms are the result of free thinking, critical thought, a peek behind the world stage curtain. Well, you're wrong. Thankfully some U.K. researchers have discovered that it's not the lies, political games, war, death, destruction or the banking system that's causing the problem but rather just that you're thinking about it too much. That's a relief, isn't it?

    I came across this article last night which I'm not sure how exactly it slipped by me back in January. A completely one-sided farce which makes grand leaps from observing behaviour to fabricating the motivation. It's generally "right" but for all of the wrong reasons. Originally I wasn't going to bother replying to such weak thoughtless propaganda but a couple more articles that came out today have convinced me it's perhaps worth the effort after all. There's just no way to go about this than to reproduce the whole thing in my usual commentary style. Here we go.

    Can conspiracy theories make you apathetic? Who cares

    The beginning of the article sets the mood so that you know the people this article is referring to are nutcases and as such don't need to be contacted to offer any counter-points. They're just crazy anyway!
    The school massacre in Newtown was a government hoax designed to bolster gun control. The destruction of the Twin Towers on 9/11 was the result of a controlled demolition. Elvis faked his own death.
    I haven't looked much into Newtown, and I have no idea about Elvis, but I do know about 9/11 so to provide a counter-point I will act as the stereo-typical "conspiracy theorist". First though, I want you to watch my recommended documentary on 9/11 which to this day has not been refuted. It's not about the towers collapsing or any of the other speculation, it's about the cold hard facts (like put options on American Airlines) and names names. You need to watch it so that we can vet whether you are, well you know, a crazy conspiracy theorist too!


    If you watch it all the way through and agree with it then you should probably stop reading this blog as clearly you are way too apathetic to give a shit about anything (at least if the article is to be believed). Now, we start getting into the meat and potatoes now that you know whether you're nuts or not.
    For every major event, there's a conspiracy theory to explain it. And though the temptation is to treat it as harmless paranoia, a new study finds mere exposure to such information can have serious social consequences.
    "mere exposure to such information can have serious social consequences". In other words, don't even try to think for yourself or to review the available information with your own mind. Exposure to information should be feared and as we all know information can have "serious social consequences". Well like what? you might be asking, the article continues...
    Researchers from the University of Kent in the U.K. found that simply reading a conspiracy theory increased people's feelings of powerlessness, which ultimately reduced their desire to politically engage. And this effect occurred even when the information wasn't directly related to government.
    We come to the real definition of "politically engage" later in the article, for now you're meant to believe that means all types of political engagement.
    Exposure to pro-conspiracy material on climate change, for example, not only made people less motivated to reduce their carbon footprint, it also negatively affected their interest in voting. 
    I don't have much to say about this paragraph other than "climate change" and the conspiracies revolving around it vary widely. Some believe the entire narrative is false, while on the other side there are many conspiracies about industry hampering climate change change. There are both pro-climate change conspiracies, and anti-climate change conspiracies. Then there is another type of climate change conspiracy, which happens to be the one I side with: That the climate change portion is real, but "carbon taxes" and "carbon trading" are simple scams using the crisis to capitalize on it and inflate yet another financial bubble. This isn't really the topic of this post though, so I'll save this debate for another day.
    "When you're exposed to a conspiracy - say, that the government is involved in secret plots - it can make you feel as though your actions won't make a difference," said doctoral student Daniel Jolley, the study's co-author. "(It) appears to trigger a conspiratorial mindset."
    Yes, because the government is never involved in secret plots! The only reason "conspiracy" is on the law books must be to appease conspiracy theorists right? To think that a group of people might cooperate together to push through or operate something that may be illegal or deeply unpopular. Crazy talk. Governments don't plot secretly, they plot "national securetly".

    'Underwear bomber' was working for the CIA
    Defector admits to WMD lies that triggered Iraq war

    The research, published in the British Journal of Psychology, is the first to experimentally demonstrate a cause-and-effect relationship between conspiracy theories and feelings of powerlessness. And this sense of reduced agency appears to weaken interest in democratic participation.
    As a society.. what would we ever do without researchers to tell us that powerlessness feeling you get from witnessing countless lies from "officials" has to do with the fact you bothered to look into the lie in the first place. I mean fuck, really we should just go about our day and ignore the plainly obvious and continue to have faith in a political system where we call bribery "fundraising dinners". Just ignore the police beatings when we "engage". Oh, and also ignore CSIS:
    41. Continued presence and use of large numbers of security forces, fencing, and similar restrictive measures could dampen the enthusiasm of protesters and might gradually reduce the size of some gatherings, as could adverse weather conditions. But, as demonstrated by extremist animal-rights and environmental activists, security measures could prompt a rise in the scale of violence from smashing windows to arson attacks, the use of explosive devices, and even physical threats against individuals, including posting warning letters purported to contain contaminated razor blades. The situation is paradoxical: the interest of targeted institutions and their membership in holding meetings on Canadian soil could wane if faced with stringent security precautions and movement restrictions. Conversely, Seattle-type disturbances and interference could similarly engender a loss of interest in using Canadian venues for international conferences and meetings which might prove attractive to demonstrators. Nonetheless, it has been established that antiglobalists are organizing against a number of international meetings in Canada, including the April 2001 Summit of the Americas in Quebec City. Given the virulent anti-globalization rhetoric directed against the Organization of American States (OAS), the threat of Summit-associated violence in Quebec City cannot be ruled out.
    The government is clearly all about you being "engaged", it's your own thinking which is getting in the way.
    This bears out across two experiments conducted by Jolley and co-author Karen Douglas.

    In the first, 168 university students read an article that either refuted a conspiracy theory about Princess Diana's death or endorsed it. Afterward, those in the latter group reported heightened feelings of political powerlessness in comparison with the first group, along with reduced intentions to engage in politics (such behaviour as voting or contributing money to a particular candidate's party).

    In a second experiment with 191 university students, the process was repeated using articles that either presented climate change as a hoax or as a legitimate phenomenon.

    Those who read the conspiratorial material were more likely to report feelings of climate powerlessness, uncertainty and disillusionment, which in turn reduced their desire to act in environmentally friendly ways. They also reported a greater sense of political powerlessness - despite the article's lack of direct reference to government - which led to reduced desire to politically engage.
    And what is the content the "pro" conspiracy folks were reading? Well they don't say, something about Princess Diana which is probably dangerous information, and without the context on hand to tell us why shockingly their view of the world changed. Gee, what a surprise, right?

    Also finally they tell us exactly what they mean by 'politically engaged': "such behaviour as voting or contributing money to a particular candidate's party". I don't think I need to comment further on this as my article on election fraud I think covers it. Oh but wait! what election fraud right? That's a plot! That's a conspiracy theory!! CRAZY TALK!!!! How can people not have faith in our political representation?
    "There's not just one type of person who believes in conspiracies. Millions of different people believe in them," Jol-ley said.
    Yes, millions of people believe in them because million of people have realized the mainstream media isn't providing any answers and so we as a people must find our own answers with limited resources to do so and fill in the gaps with speculation. Hey, Postmedia, how many reporters did you send down to Bilderberg 2012? Oh, none? Yet you're so sure that the world's richest and most powerful people all meeting for a weekend in secret isn't any more important than baking a pop tart. It almost sounds like a conspiracy unto itself, doesn't it?
    Jolley and Douglas acknowledge that healthy skepticism can encourage government transparency and public debate. But they also note that conspiracy theories potentially lead to societal disengagement - and, as their research suggests, a waning interest in political and environmental participation.

    "Conspiracy theories aren't necessarily just harmless fun," said Jolley. "They may have potentially serious social consequences."
    This isn't "waning" political interest, we just know now the real targets to "lobby":


    Check out those disengaged, apathetic, "conspiracy theorists". These researchers nailed it! 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.

    Monday, March 25, 2013

    Airway 63

    I will resume my budget analysis once the Euro has calmed down a bit as the outcomes will likely further influence my analysis. However in the meantime I just want to make a brief note of an article out of MacLean's I noticed today.

    While the article itself focuses on how crowded the airspace is above the oilsands I find a subtler aspect more interesting:
    While many oil-sands airports consist of a few small planes on a single strip of tarmac, the biggest companies charter more flights than many of Canada’s top commercial airlines. Combined, oil-sands airplanes move roughly 750,000 people a year, more than municipal airports in St. John’s, Victoria, Regina or Saskatoon.
    Please keep in mind that at the moment the oilsands are only producing something like 2mbd and that's supposedly set to expand to 5mbd (at least) by 2030. When I talk about how the infrastructure costs of operating the oilsands outweigh the return this is the sort of scale we're dealing with. Operating aircraft isn't exactly cheap.

    The continued operation of oilsands is going to become more unsustainable, this is going to continue to weigh on our public debt in Alberta, the Canadian economy. We are not equipped to handle the infrastructure requirements current operation of these projects need, never mind expansion, and the cost to equip the province to this extent for what is already showing signs of being a temporary industry doesn't make any financial sense nor can a province with such a sparse population afford or staff. We can't sell the stuff, it's under priced for the risk we take on as a population anyway, the power consumption they require is ridiculous, they've now been proven multiple times over to be contaminating the area. Families are moving out because of the pollution. The increased immigration to Alberta and their needs are sinking the government in debt. What do we need now, Airway 63?

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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.

    Sunday, March 24, 2013

    The Art of Pacification

    Two years ago I wrote a what I then thought was a contrarian piece on why I did not support Earth Hour and felt it is actually counter productive with negative impact. A lot has happened since then and with all the recent debate about the relevance of Earth Hour I thought I would update my thoughts on the matter in particular due to a few points some mentioned recently in response which my post does not clearly cover. Don't worry, my reasoning is nothing along the lines of Ezra Levant's.

    Let's just review that last 2 years. Occupy, Idle No More. Triple-A economies losing their status. Resource Wars. Currency Wars. The rise of China as a major power. LIBOR. No-KeystoneXL, Montreal Student Protests, and so on and so on.

    Across all of these events has been one constant response to the population's concerns:


    Therefore the first point which I must address is this one: "Earth hour isn’t a hollow gesture; our participation sends a message to local and federal leaders that we care and are prepared to make sacrifices and cut back."

    They know you care, they know you want change, but they don't care and they don't want to change because the required changes likely mean an end to the status quo. How many elites do you think are down with that? With all the mass movements over the last two years I'm pretty sure they "get it", and are increasingly using their signature response. Then there is Earth Hour, advertised on TV, state landmarks getting shutdown, a completely state sanctioned "protest" of sorts. It appeases environmentalists for days as they review the stats of energy usage for that hour while this hour energy usage has resumed, energy wars continue to rave on and countries continue to war over the remaining depleting resources. It's pacification, folks, and also misdirection.

    Earth Hour embodies a pre-packaged and incorrect premise which is designed to resonate with those who are looking for change - "change" usually equating to some pie-in-the-sky idea that we'll make significant changes and keep our style of living too. It's usually very focused on the environment and not resource usage itself. For instance: Recycling centres use immense amounts of energy to perform the act of "recycling" yet this is often not considered when one might say "always recycle". Perhaps the ordering of the old "3Rs" should be noted here: Reduce, Reuse, Recycle. Reduce, THEN reuse, THEN recycle. See the difference? Consuming the same amount and then recycling what you're consuming unto itself solves nothing. The inaccuracies only magnify when this over-simplification of our predicament is scaled to account for the processes an industrial society requires to operate.

    Authors such as Daniel Yergin or Ezra Levant embody the opposite side who want to continue on as is. The classic X vs Y smokescreen to keep the population arguing amongst itself using pre-defined talking points.

    Both the "Saudi America" and the "Life after oil" arguments are propaganda. Half-truths to disable true opposition and change and create division.

    "I find this sad and cynical for the most part. The thing that is different about Earth hour is the press attention it gets."

    Yes, the world situation is quite sad. But is my position cynical? I don't think so. I'm looking seriously at this situation and my only motivation is survival. I write this blog as a donation to the community because I don't feel very many in Canada truly have a good idea what's coming down the pipe. I don't put ads on here, I in no way benefit from any decisions you may make in response to the information I put out, especially because I leave it up to you how you should respond or even if you should respond. Garbage like that "Peak Canada" article floods our media and influences our population. Governments and industry are working around the clock and investing significant resources to keep you convinced in the official narratives and to follow the official sanctioned actions. The truth is our situation is very complex and there are many portions to take into account - some of those portions the status quo doesn't want you to look at.

    "Everything starts small and sometimes we need to get the ball rolling. Maybe the Earth hour shouldn't be about what we are consuming but by how it is getting made and stored but If we see Earth hour as a jumping off point and continue making real changes, it will be more than a symbolic action."

    What do you see every day in the paper? "We need to restore growth". What's Justin Trudeau saying? "We need to restore growth." What are they saying in the Euro? Same thing. So long as "growth" remains the primary goal of our society real changes are not being made.

    Why? Because, as Chris Martenson has shown, GDP and energy consumption are strongly linked. Of course. This is where the Jevon's Paradox aspect comes into play. Without meaningful change in the economy any reduction on your part is countered by an equal increase in consumption somewhere else. Changing the monetary system is the key to saving the environment, but where's that in the Earth Hour campaign? Nowhere, because the option isn't on the table to begin with and no one in our government (perhaps with the exception of May) is willing to change it anyway.

    If we want to see real change in our society we need to identify the real culprits and reasoning and address that. I can tell you right now, no press covered government sanctioned action is going to focus on those and will most likely be designed to ensure you don't either.

    "it got you guys talking about it didn't it"

    No it didn't, opening my mind to understanding the dark truths and facing reality got me talking about it and I feel so strongly about our situation I haven't stopped since.

    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.

    Friday, March 22, 2013

    A more budgety budget, Part 1

    Last year I attempted to analyze the massive omni-budget but eventually gave up when I saw that the government's risks underestimated the real global risks we were about to face and as events began to divert further and further away from the reality the "economic action plan" of 2012 presented the relevance of completing it section by section diminished completely.

    Thankfully, this year the budget is more of a budget than a sweeping change of national policy as a whole which more or less augments the changes we saw a foundation set for in 2012. Overall over the course of the last year I've had to conclude that the policy changes that occurred in 2012 were to set the stage for a much more corporate run federal government which I expect this budget to augment.

    Budget 2013 or "Economic Action Plan 2013" can be found here.

    Improvement in Real GDPOver the Recovery
    One of my problems with Canadian's perspective of our economy is we are always being compared in ways which without proper context feed our 'Canada is best' ego and provides exactly what we want to hear. I don't know how many times I've heard the "stable banking sector" mantra repeated by those who really should know better, and it is repeated - not determined or concluded. Someone somewhere told them that our banking system was stable because we have regulations and blah blah blah.

    
    Improvement in EmploymentOver the Recovery
    Can they name the regulation which so safely and securely prevents us from following the path of every nation we like to compare ourselves to? Probably not. We're Canada! We're the best! so why doubt it, right? I mean, fuck, we survived the recession! How many other G7's have done that? Well budget 2013 gives us a couple charts to let us know.

    The charts are nothing to snuff at, they don't lie - per say. But they don't really tell the whole story either. Us, a sparsely populated, massive, resource filled land mass is being compared against 6 resource consuming debt fucked nations (excluding Germany, but still it's indirect impact from Euro instability puts them a lot closer to the debt boat than the resource provider boat and we're only doing slightly better than them and keep in mind that this is generally at the expense of these other nations).

    Considering Canada's economic policy is to sell the pond rather than the fish (IE: raw bitumen vs. refined bitumen) and we have so many ponds to sell (but not an unlimited amount!) it would be a wonder if at this time of global financial turmoil we were not on top. But we're not on top by that much, and we should be. Our real GDP is skewed also because our own banking crisis is still manifesting, for the moment household borrowing and consumer spending are playing a large part to buoy those figures. The employment figures are misleading as well as in our mad scramble for cost effective labour to cheaply exploit and then sell the pond we've opened the doors to waves of foreign labour much of it with the goal of quickly selling what we can now with no thought for the future.

    The supposed planning for the future is being done with "savings" in currency that without the very resources being exploited is useless. The jobs Canada is creating now to quickly exploit our resources are essentially at the expense of jobs which should have been created further in the future. I've said it before: if we were any other country, with our current resource management, we'd be so broke we wouldn't know what to do with ourselves. The sheer volume of resources in relation to such a sparse population makes this squandering of our wealth almost undetectable.

    We still feel rich, but we should actually have been rich. Our feeling of rich comes on the back of the credit worthiness our resource squandering created but already we are exploiting this accumulated credit and borrowing is slowly replacing more and more of the productive portions of the economy, even with our resource wealth. What does this tell you?

    Economic Developments and Prospects

    Highlights

    • The Canadian economy has experienced the best performance among the Group of Seven (G-7) countries over the recovery, with the strongest record of economic growth and job creation.
    • Over 950,000 more Canadians are working now than at the end of the recession, the strongest job growth among G-7 countries over this period. This continues the strong performance that has resulted in close to 1.5 million net new jobs created since the beginning of 2006.
    • Canada’s strong economic performance has in part been fuelled by business investment. Canada is the only G-7 country to have more than fully recovered business investment lost during the recession.
    • However, global economic growth weakened in the second half of 2012. While the possibility of severe negative shocks has diminished somewhat, there are still some risks that continue to weigh on the global economy.
    • Although the Canadian economy remained resilient in 2012, weak economic conditions throughout the world have led to decreased demand for Canadian products and affected Canada through lower exports and commodity prices.
    • Further, overall export prices received by Canadian commodity producers are now slightly lower than at the time of the November 2012 Update of Economic and Fiscal Projections (Fall Update), reflecting a wider gap between prices received by Canadian crude oil exporters and global benchmarks.
    • Indeed, lower prices for Canadian crude oil, as well as for natural gas, relative to global benchmarks are reducing gross domestic product (GDP) by about $28 billion per year, translating into over $4 billion annually in potential federal government revenues.
    • The Department of Finance conducted a survey of private sector economists in early March 2013. On March 8, economists met with the Minister of Finance to discuss the economic forecast as well as the risks associated with the economic outlook.
    • The private sector economists agreed that the average forecast from the March survey was a reasonable basis for fiscal planning.
    • Private sector economists expect real GDP growth of 1.6 per cent in 2013, which is lower than at the time of the Fall Update. However, upward revisions to subsequent years leave the average outlook for real GDP growth over the 2013-2017 forecast period unchanged since the Fall Update.
    • The economists expect lower inflation in 2013, reflecting recent softness in domestic prices.
    • As a result, the outlook for the level of nominal GDP—the broadest single measure of the tax base—is almost $20 billion lower on average over the forecast period than anticipated at the time of the Fall Update.
    • Consistent with the expectations of slower growth, the economists have revised down their outlook for interest rates over the forecast period, reducing the cost of servicing Canada's debt.
    • Private sector economists agreed that near-term downside risks to the outlook have moderated somewhat since the Fall Update, but they continue to see global economic uncertainty related to the euro area sovereign debt and banking crisis and ongoing concerns over U.S. fiscal policy as the key downside risks.
    • To reflect the negative risks to the global economic outlook, the Government is adjusting downward the private sector forecast for nominal GDP.
     If you remember from last year's budget analysis much of this described here were the risks I was referring to when stating that their risks were underestimated outside of the so-called "bitumen bubble". What should be noted both about last year's budget, and this one, is that they lay the blame on the risks associated with resource revenue completely on the demand side while neglecting well known supply risks which are quite likely not included for public relations reasons.

    I'm not seeing much else beyond the notes in Chapter 2 worthy of note except this interesting little blurb:
    In addition, on January 1, 2013, U.S. authorities reached an agreement to avert more than half of the ‘‘fiscal cliff’’—a number of tax increases and spending reduction measures representing about 4 per cent of U.S. GDP, which were scheduled to come into force automatically at the beginning of 2013. The agreement implies a fiscal tightening of about 1.5 per cent of GDP in 2013, indicating that fiscal policy will continue to weigh on U.S. growth this year. The agreement was in line with what private sector economists had been expecting, and consequently forecasters continue to anticipate growth of about 2 per cent for 2013, broadly unchanged from their expectations in the 2012 Fall Update. As well, authorities reached agreement in late January 2013 to temporarily suspend the statutory U.S. federal debt limit.

    Although these agreements have diminished risks regarding U.S. fiscal policy, significant uncertainty still remains. [...]
    I just have to point out that the U.S. "agreeing" to temporarily suspend the statutory debt limit is not a good indicator. That's not a good thing, and in my book has increased the risks associated with U.S. fiscal policy. They now have the complete control and ability with zero cheques and balances to tighten the noose around their necks. Policy-wise, nothing is improving, it's taking more and more emergency measures, and spending to keep the global economy puttering along. With QE^Infinity what good is it to refer to the equity markets as some sort of indicator? Even Bernanke admitted recently that despite the "record" highs prices in real terms are still far from their pre-2008 highs, he knows because he's the one flooding the USD!

    This year the risks are not understated as badly, but they are understated primarily due to a false sense of security derived from the ever-uncaring market reactions in response to sovereign debt crisis. From my point of view the market is simply bored of the constant, imminent, Euro is doomed talk. We're in a crisis, it's old news, and for the moment governments have just been able to print their way out of it. We've been in an emergency for so long now that the emergency itself is now the normal.

    How many times have you heard governments today talking about exploiting their high credit ratings on the historically low interest rates while ignoring why these rates are historically low to begin with? There is a false sense of confidence coming from market apathy but as Cyprus shows the crisis is far from over and only getting worse as "bank holidays" now take effect. There were no bank holidays in 2010, 2011, or 2012. There has been one now in 2013. Sound like the risks surrounding Europe are easing to you?

    Job Vacancy Rate

    This is perhaps one of the more interesting charts in Chapter two specifically because of the sudden explosion and timing. It fits the narrative that we are working to quickly expand our resource development to further compensate our financial position which is requiring infrastructure and labour growth that suddenly becomes larger than Canada's own population's nominal growth which again more or less means we are stealing jobs from the future now to compensate for a worsening financial situation. Again, looking back to the first two charts on jobs and GDP, Canada's job growth far outweighs any other of the G7, but our GDP improvement is a just a head above Germany's (who is third in job improvement). We might be producing more jobs, but these jobs are not translating into a more productive economy.

    Real GDP Growth
    To conclude for today, this is probably one of the most revealing charts. The average growth over the recovery (when things globally were supposedly worse) is clearly labelled as being at 2.5%. The last two quarters of growth are significantly under this even though, supposedly, things are better now and job demand has apparently exploded.

    That's all for today, I'll cover Chapter 3 and beyond tomorrow.

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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 21, 2013

    One big fracking mess

    If you're one of the people out there who believe that due to the shale discoveries in the U.S. and elsewhere that we are on the cusp of an energy revolution akin to the very discovery of oil then boy do you have some serious shockers coming. I'd suggest watching the following video in which peak oil veteran Richard Heinberg thoroughly debunks this new energy renaissance.


    Still not convinced? Chris Martenson makes the same arguments and provides the backing numbers: http://seekingalpha.com/instablog/21153-sufiy/1462201-chris-martenson-peak-oil-the-really-really-big-picture

    If you're basing all of your future financial decisions based on the single assumption the U.S. is about to become "energy independent" (I'm looking at you, Alberta), you might want to make a 'Plan B' as well.

    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, March 20, 2013

    Dancing with interest rates

    Flaherty's latest "intervention" further confirms that Canada's fiscal situation is far from that that has been described and repeated like a broken record for Canadians and is actually much closer to my outlook.

    The MSM media is still pushing the story that it was Flaherty's Tights and not our over-valued housing market hitting it's market peak which has resulted in the 6th straight month of slowing housing sales and falling housing prices even as household debt continues to set new records.

    You (the peasant) are supposed to believe that everything is under control, and God forbid, don't panic! Don't for a second lose your confidence in our "strong, stable banking system" for then we might have real problems! No, no, everything is fine, just like I told you. However, on the plus side, it would appear I am no longer seemingly the only one asking "well why not just raise interest rates then?"
    For instance, a top executive at one of the big banks noted that tighter mortgage underwriting guidelines imposed by the federal banking regulator last year did not apply to provincially regulated credit unions, giving the latter an advantage. If the real goal of policy makers is to raise rates, then the Bank of Canada should raise interest rates, he said.
    For which there is a very good answer which was first reported here on Canadian Trends and just recently confirmed. But these sorts of questions (and the missing answers) must always be candy coated in tales of the wonders of Flaherty's Tights:
    The unprecedented intervention reflects deep concern about residential real-estate prices and debt. The number of home sales has dropped markedly since Mr. Flaherty changed the rules last summer to make it more difficult to obtain mortgages, but house prices have not come down significantly in most areas of the country and debt-to-income levels continue to hit new highs.
    See how they have to throw that in there? "Flaherty's rules". Because the rest of this scenario totally fits that debt has been reduced due to making it harder to attain debt right? No, I don't think so, I think a country whose growth is slowing, debt is rising, and prices are peaking paints a completely different scenario than our confidence handlers are spouting. Flaherty has intervened in this manor because an official intervention via the raising of interest rates by the Bank of Canada would have a direct market reaction. He's trying to control interest rates "under the table".

    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.

    Thursday, March 7, 2013

    Buh-Buh-Buh-Budget

    Hooollly crap! That was epic! Did I not say it would be epic? I totally did.

    Where to even begin? The fact there is less than a billion left in Alberta's sustainability fund after this budget? The over $4 billion in borrowing to complete infrastructure that should have been in place 20 years ago to accommodate current growth, nevermind future growth? The whole "leveraging our triple A status to blah blah blah". Classic! Because that's working for others right?

    So to sum up Alberta's budget: There will be insufficient spending for the requirements of the population growth we've experienced and are going to experience and also need to operate the industry which isn't providing sufficient returns. We're going to put some money aside for "contingencies" (of course this should be interesting considering the future is going to be one big fucking "contingency"), and of course into the heritage fund (so our children will hopefully have enough money to clean up this crap), of course the children will need the money to clean up this crap because funding has been cut for their energy future and Alberta's environmental programs. Oh, did I mention that on top of basically draining the "sustainability fund", and cutting services, we're going to borrow more too to complete the infrastructure projects like Highway 63 which is apparently "building for the future" (because it's been like 20 deaths too many or something) and isn't actually "cataching up to the present due to neglect in the past" and again all so that we can handle the volume of traffic needed to service the oilsands which are not providing a sufficient return.

    Now I know there's a lot of talk about royalties, and the fact they should go up. They should, but on this one I will give the government credit: It will drive the oil companies away. Why? Because it's not just the government operating on thin margins. What's extremely interesting about extreme energy exploration is that the exploration portion can be extremely costly, much more costly than conventional oil and a miss can be devastating. Most companies operating in the oilsands have assets elsewhere, take Nexen for example. The oilsands in a perfect world only have a 3:1 energy returned on energy invested ratio to begin with, that's before the cost of finding it in the first place.

    The oilsands are not cost effective to run what-so-ever. The Redford government knows this (they were sent a memo). All of this deflection on to the U.S. shale boom (which isn't what it's promised to be either, but that's another topic) is simply meant to confuse you and prevent you from asking the question: are they viable in the first place? There is so much focus on "new markets" that people are not questioning the fact that there is all of this demand for people to come here and no return on them being here. Is that not strange to any of you? If we're truly expecting a city the size of Calgary due to "growth" to show up here, would revenue not increase from said growth? Of course it would! But our spending requirements and infrastructure costs will go up more.

    As I said.. epic.

    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.

    Inadvertent Admittance

    So, do you all remember how over the past year we've been constantly bombarded with warnings about how the interest rate just might go up at any time? do you also remember I told you all it wasn't going to happen in the foreseeable future? And of course the reason why?
    We can not raise interest rates to reasonable levels until the U.S. raises their rates to reasonable levels. If you don't understand much about modern currency, what is important to know about this is that banks create 95% of the money in circulation, through loans, which has compound interest attached. The more money in circulation, the more "inflation" (in reality devaluation as real inflation should come from a true increase in wealth). I've written more about inflation and fiat currency here. If we raise our interest rates too much above the U.S. to discourage cheap loans, there will be a decrease in the amount of currency being injected in to the system. If the U.S. dollar depreciates too much beyond our currency they will not afford to trade with us. I first wrote about this interest rate debate last April.


    Well, finally, the real reasons for our low interest rates is being revealed (probably because the household spending argument has no teeth since it still continues to grow): High loonie will keep rates low until 2014, TD says
    Massive injections of money by central banks to aid ailing economies is having the effect of keeping the Canadian currency higher than it otherwise would be against other major currencies, TD Bank economists said Thursday.
    Well holy fuck-balls, isn't that amazing? Funny this was never mentioned during the last year of interest rate fear mongering. Of course, readers to my blog (as always) knew this was exactly the reason though, didn't you?

    But hey, this isn't the only admittance to come in today, no no, it gets EVEN BETTER!!


    Redford says new spending in Alberta budget won’t match population growth

    Now, the official budget for Alberta won't be released for a few hours yet however I think we all know what it's going to entail: cuts to service and a budget deficit. Seriously folks, how much more evidence do Canadians and Albertans need that oilsands prosperity is a huge lie? Does no one understand it's not going to end? that this is now our current situation: where Alberta needs the oilsands to "grow" but to get them to grow requires even more people and those people require ever increasing levels of service? The oilsands WILL NEVER, from this point forward, provide more return than the required spending to keep them operating in the first place, Alison Redford is telling you as much right now.

    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.

    Monday, March 4, 2013

    The Unraveling

    I've been talking a lot about how Canada's own economic crisis isn't going to be sudden but rather a gradual decline, each year getting worse from now on. The reason it's going to be gradual is that our economy is sort of like a giant amplifier based on a subset of actual production. In a way, our economy appears larger than it actually is. Up until now this has worked to our favour allowing us to spend big and borrow big while maintaining tolerable Debt to GDP ratios albeit consumer debt is off the charts.

    The amplifier is our consumer debt market combined with influence from external sources such as our exports and foreign investment. This is really hard to describe with words so I've made a flowchart to help me visualize for you what I'm about to describe:


    I know it's not perfect but, in a nutshell, due to the way Canada currently operates it's economy when foreign countries are doing well we also are doing well primarily because we rely so heavily on foreign investment, particularly with the U.S. which of course has massive resources to spend and few countries bordering it to spend in. Firstly, we significantly underestimate the amount of value added to our economy by U.S. trade, and even more so the number of U.S. chain stores here. Imagine what most malls might look like if every store inside them that originated in the U.S. wasn't there, pretty empty. Another way to put this is we live larger than we are, economically.

    Everyone has seen the image comparing U.S. and Canadian household debt. During the U.S.'s Bush "boom" (which we all now know was just banking fraud) the growth outlook increased significantly especially considering it just followed the "dot-com" bust. The cheap availability of loans cycles more "growth" which improves the outlook which makes loans even more available. In general, the better the outlook the more available loans are.

    Since loans are the foundation of most foreign and domestic production, as well as consumer spending, more loans in the virtual fantasy world of the Keynesian economist should automatically equal more consumption which should automatically equal more GDP. The above cycle completes and so long as more and more foreign investment/exports keep filling in the holes left by our miniature domestic production we are able to live at the scale offered by such liquidity. But what if the cycle were to reverse? That is what I believe is happening now.

    This is a serious problem because we're just as amped up in debt as the Americans are but we only have a fraction of the production to back it up with. This is why our "leaders" are desperate to get investors, any investors, ethical or not. The faltering U.S. is a bad omen for Canada who has been modelling growth and standard of living and debt servicing based on the added value provided by U.S. business, business which as the U.S. falls faster and faster down that fiscal cliff will become increasingly unstable.

    If the BMO's latest move hasn't clued you in by now:
    A) "Flaherty's Tights" are not responsible for the housing slowdown.
    B) You know something is out of whack when at a time of worsening economic outlooks banks are making loans more available and easier to get especially when Canadian houses are 20% overvalued.

    Canada, this is your moment of realization about the logical fallacy that is our housing conundrum. All of our lifelines are collapsing into their own economic circuses leaving us with debt ratios our meagre domestic production will not be able to service.

    As foreign investment becomes more unstable, outlooks are going to continue to worsen and money is going to keep coming up short. These will eventually affect loan availability as banks come to terms with the current reality and economic outlooks and adjust accordingly. This is how our economic crisis will come about, worsening outlooks affecting loan availability which in turn comes back around to lower outlooks even more. Dampening the future, slow and steady.


    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.