Tuesday, June 24, 2014

"Smaller words", Big Dreams, Hidden Realities

The Progressive Conservatives of Alberta are getting pretty desperate. Not that I believe in the leadership race but rather that the unified "we need more debt" stance for "capital projects" and "Building Alberta" is really quite interesting when you consider Alberta is a province that once prided itself on it's "debt free" status. You'd think one of these politicians running for leadership might try to advocate it after all Alberta's enjoyed pointing it out whenever another province made an economic blunder, or borrowed. But no, instead Conservative Albertans are having to vote for (what is admittedly very entertaining) blabber like this:
Tory leadership candidate Ric McIver said Tuesday the provincial government must do a better job explaining to Albertans why it needs to take on debt for infrastructure.

In a breakfast speech to the Calgary Chamber of Commerce, McIver said he accepts using debt to pay for capital projects but borrowing should be linked to specific projects, with a fixed repayment schedule.

The government must also demonstrate that its debt-to-GDP ratio will decline within a three-to-five year planning horizon, he said.

The Calgary-Hays MLA told reporters that a revamped budget presentation and “plain talk” would build support among Albertans for the government’s fiscal plan.

“We need to talk to them in a language they want to hear and I don’t believe we’ve been doing that well enough as a government,” said McIver, who stepped down as infrastructure minister to run for the Progressive Conservative leadership.

“When I talk about these things I use smaller words. Because you know what, I’m not smarter than other Albertans and I don’t want to present myself as being (so). And I want Albertans to be comfortable with what we’re saying and I want Albertans to say ‘yeah, what my government is saying I understand.’”

In the spring budget, the PC government projected it would post a $1.1-billion surplus this year while taking on $5.1 billion in debt to pay for public infrastructure, part of a plan that will see the province’s total liability rise to $18.4 billion by 2015-16.
YEAH! WHAT MY GOVERNMENT IS SAYING I UNDERSTAND!

Isn't that cute? "smaller words" lol. So, he's not really smarter than Albertans because he's purposely dumbing himself down to their level. It's a well known fact Albertans just can't handle "bigger words". Albertans need "plain talk" and then they'll see why everything the government has been telling them for years about debt is completely false and yet all of the "prestige" the Conservative brand name earned in the process as "prudent fiscal managers" should stay.

You see the truth is that Albertans have been fooled into believing they were debt free (largely to support the myth of oilsands prosperity as being incredibly profitable which at the time they were, sort of) and now they need to understand in "plain talk" with "smaller words" why they actually aren't. "Capital projects", but if those words are too big we'll just go with "build stuff". We need to build stuff, why? Because we're growing. Why are we growing? To support the supposedly profitable industry known as the oilsands industry. How do we become profitable? Well.. something something oil price and markets and magic. The Alberta government has no plan, they're more like the Underwear Gnomes in South Park:
  • Step 1) Collecting bitumen.
  • Step 2) ???
  • Step 3) Profit!
The Alberta government is perpetually on Step 2; from Ralph Klein who figured he'd just defer "building stuff" into the future to "pay off the debt" that we're now re-acquiring to start "building stuff" to the Ed Stelmach era where the government's target price for oil was constantly raised upward to the current era where unattainable and unsustainable price targets are the only option left only to be replaced by [in smaller words] "we'll get more money if we just get access to new markets". If we get access to new markets there will be something else, some new excuse, if we get pipelines there will need to be something else. It doesn't matter what price they're selling at or how much we produce their associated revenue will always (and I can't stress this enough: ALWAYS) be insufficient to cover the related costs to support oilsands growth. Always.

That's not going to stop them from trying to convince you that everything is just going swell though, building off the other global lies currently at play and using some fairly "bigger words".

Record income for Alberta’s Heritage Fund
Strong equity markets helped push the Heritage Fund to an all-time earnings record of $2.1 billion in 2013-14.

The fund posted a 16 per cent return, the third highest since it was created in 1976. At March 31, the fund was worth $17.5 billion on a fair value basis.

“The Heritage Fund’s strong growth confirms what we have been telling Albertans for some time now—that we can grow our short-term and long-term savings and keep our balance sheet strong at the same time.”Doug Horner, President of Treasury Board and Minister of Finance

According to the Heritage Fund’s 2013-14 Annual Report, the fund’s average annual investment return over the past five years was 12.7 per cent. The 10-year average annual return is 7.5 per cent

The Alberta Heritage Savings Trust Fund is a key part of the government’s legislated savings plan that will see Alberta’s total savings; which include the Heritage Fund, endowments and the Contingency Account; grow to $26 billion over the next three years. A portion of non-renewable resource revenue will be regularly set aside for savings, and by 2017-18, all net income earned by the Heritage Fund will remain in the fund.
So apparently because the government bet right on the equity markets they've now shown that "we can grow our short-term and long-term savings and keep our balance sheet strong at the same time.". Hmm, how about that?

*Slow-Clap*

Oh, right, I mentioned how this lie is just building off other lies? Right, well an interesting paragraph in a piece on Joe Oliver (unrelated though)
“The market, bolstered by the Federal Reserve, seems content to ignore weaker U.S. data and Iraq, putting off the day of reckoning yet again. New-home sales are surging once again, as the market continues the trick of focusing on one piece of good news to the exclusion of others.”
Why is it a lie? Because they know it's temporary. They didn't do anything special, the market won that year for them just as it lost for them in 2008 and 2009. This doesn't confirm anything for Albertans besides the fact the Alberta government hasn't learned a god damned thing and are now depending on an artificially manipulated market to deliver their hopes and dreams (and cover up their mistakes).

They're still gambling and calling that a plan. 2.1 billion fuckin dollars? Really? Because of a market that's bolstered by.. oh let's see... what is now only uh yes, $35 billion in bond buying per month. I don't know if you've noticed this folks but with the amount of currency that's been injected into the global economy 2.1billion isn't exactly what it used to be. They're printing U.S. dollars like it's confetti. Japan is printing to "keep the market bolstered" too. They're all printing. So does this market win actually mean anything? I'd bet that by 2017-2018 when the Albertans finally get some of that "income" being generated from their children's savings back (supposedly) that the central bank and "recovery" cash cows will have run out.

In smaller words that means: "the cake is a lie".

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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.

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