Monday, July 30, 2012

The Dangling Carrot

"Police" in Anaheim / Source: OCWeekly
Well, I guess there is going to be some "economic headwinds" over the next few months. Thanks for the heads up, Obama. Four years into the financial crisis, trillions in easing, and now there is going to be some headwinds - but just for a few more months right? Just one more summit, one more bailout, and a few more months and prosperity is just around the corner. Just wait for it, and while you're waiting why don't you plop down in front of your T.V. eating the official Olympic sponsored fast food and cola products and enjoy as you watch people's dreams and ambitions turned into the ultimate of all fascist marketing machines.

If you're not watching the Olympics, you might be catching some of the latest chatter over Syria. War propaganda is everywhere.
Finally, the failures of all diplomatic efforts have forced Western powers, along with Turkey and the Arab League (AL), to seek alternate solutions outside the United Nations Security Council (UNSC) by funneling greater supplies and more sophisticated weaponry, communications gear, intelligence and other necessary provisions to rebel forces. Regardless of how important these measures are in aiding the rebels, they unfortunately remain insufficient to dramatically tip the balance in favor of the opposition and ensure the speedy demise of the Assad regime.
Juicy stuff, but it gets better:
It should be noted that on more than one occasion, Russia's Foreign Minister Sergei Lavrov has stated that Russia is not wedded to President Assad and would not object to a solution to end the crisis under unspecified circumstances. The prospect, if not the certainty, of a full-fledge civil war (the Red Cross has already declared the crisis as civil war), may now have created the circumstances for the U.S. and Russia to forge a strategy to force Assad out by supporting the SNC efforts toward the same objective.
Who are the SNC? Well, who cares, right? It's a "civil war" in which our "only" option was to funnel the rebels high tech weaponry. So, the violence is so bad that our only choice was to apparently "even the odds"? I'm sure this has nothing to do with Syria and Iran being allies. I'm sure that Syria isn't some sort of proxy war between the west and eastern powers. Nope, this has "civil war" written all over it, and by-golly-gee those are "rebels" I tell ya! Rebels, as we all know, are nothing like terrorists right? Those two words have absolutely nothing to do with whether you are for or against the terrori.. err sorry, "rebellious" acts.

Oh right, the Olympics. So far I have mostly enjoyed the bicycling events but I'm reserving my take as there is still plenty of time for even crazier events to take place. Good thing G4S private security is in charge, am-I-right? Corporate brand names can rest easy knowing they're safe.

Hope is change. (click to enlarge)
Of course absent from your local media is anything detailed about the T.P.P. negotiations. Out of sight, out of mind, and when the results appear in your face you'll probably not even be aware of which secretive "trade" agreement or which piece of our national sovereignty was given away to allow it to happen. We're real close though, just a few months and these "headwinds" will be long gone. All that's needed is a little more ho-ing and humming, a little interest rate manipulation here, a little oil manipulation there and it will all be O.K. Hope is change, change is hope.

As the economic carrots of greater prosperity and recovery are dangled in front of the worlds face, the dangling carrots of "safety and security" are quietly implemented. A domestic police state is being implemented at light-speed and with barely a whisper of opposition. The purpose of this security state is not to protect the people, but to protect corporate assets from the people.

You must differentiate between real police and this new security state. These new enforcers are not the police we've come to respect in western society. You've heard of 3P? Well this is 4P. Public-Private-Partnership-Policing and it's spreading. Summit, after event, after bailout, no solution in sight - no policies to be passed but in this time an incredible amount of "national security" (read: continuity of government) policies have been enacted. The world right now is so focused on the dangling carrots we're being promised we can't see the salad surprise waiting for us when we finally do reach prosperity.

Numerous divisive issues and rhetoric is out right now for those seeking dangling carrots to focus on. The recent battle between B.C. and Alberta over the Northern Gateway pipeline is a great example of this. Ridiculous babble over "have" and "have-not" provinces just serves to fuel the fire. Albertans really have been putting me to shame with this line of reasoning. I've seen so many Albertans refer to B.C. as a "have not" province while trying to use their resources. Guess what, Albertans? B.C. has a coast and we don't. They have, we don't. Think about it.

In the end, it's moot anyway as exporting oil to China so we can take the USD off their hands they're trying to quietly get rid of isn't exactly in any Canadians' best interest. As major powers gear for an Iranian war you can bet energy can only become more precious with time and volatility. I suspect that despite our alliance and trade agreements with China that Canada desperately wants an Iranian war to put more upward pressure on oil prices so we can get the "Return on Exploitation" we think we really deserve, affordability for Canadians be damned. We'll catch that dangling carrot. We'll give China the oil that Canadian companies can't even continue affording to produce, hell we'll give them the companies too as economic recovery is surely behind the next set of global headwinds, it's just a few months away, just wait and in the meantime: enjoy the show.

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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 CenturyLink

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, July 24, 2012

UPDATE-1: Chinada

China's state oil company is offering $15 billion for Calgary's Nexen. At this point I've really lost count of how many Chinese acquisitions have been made in the last few years. The sale will probably be allowed as the looting of Canadian assets continues unabated. Welcome to Chinada, please temporarily enjoy your stay.

China is dropping USD 'like a boss' all over the world, snatching up assets left, right, and yes even center. As an added bonus, for China, there really is no risk. They're trying to get out of the U.S. treasury market and alongside with the BRICs they denounced the IMF and USD as a global currency. China, obviously, would be aware the U.S. can not actually pay off their debt obligations so they are "diversifying their investments" as one might say.

China's western growth model is getting demolished by the European crisis and it's showing. However, unlike the west, China's company's assets are also the state's assets. We may look at the Chinese state owned companies coming in and buying up everything as cute and all "capitalism" like, but the motives of a state and the motives of a solely profit based company are quite different. We must be aware that behind the profit motive of any Chinese company, there is a political one - one which may far outweigh the "economic losses" a company may incur in the process. We must realize that these companies more and more have political power, they will have the lobbying power western oil companies have now. The Chinese state will be directly able to lobby the Canadian government, as "Canadians".

China doesn't care about quarterly profits. Their companies might appear too, but that's just the ante of playing the capitalism game with us. As the true corrupt state of the western banks and markets are revealed, China will begin pressing for even more international financial power and definite influence in whatever is to become the new reserve currency.

I still believe that behind the scenes, Canada is pressing for some sort of alliance with China. The price of admission for a western ally in such an alliance I imagine would be quite high, resources or not, which could explain why we're allowing so many Chinese acquisitions despite the obvious national security risks. The U.S. fiscal cliff looms (again) and I don't really think the Congressional debate show is fooling any foreign investors anymore. They do need to walk on eggshells, the U.S. military is still quite "influential", indeed it is the only reason the USD is still the international currency today but I find it hard to believe most nations don't already have a Plan 'B' ready, if not enacted.

In the streets of the U.S. the signs of a banana republic have really begun to burst through the seams. The 'moral authority' of the U.S. is waning. I can see it, you can see it, and Russia and China definitely see it. No one other than NATO is willingly playing the game anymore, they're all looking for a way out. China however might be better at the economic game than we are, and I suspect they have an ace in the hole we may not be prepared for.


Nexen was sold.

Nexen deal could put other oil sands firms in play

Opinion: Alberta can look to China for path to B.C. pipeline approval
- See what this is turning into?

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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 CenturyLink

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, July 19, 2012

Plateau Society

I actually read some good news yesterday. It was actual good news, not the usual bullshit. Edmonton is going ahead with it's "progressive" redevelopment plan. I say "progressive" because of the implied political undertones, it seems progressive has come to mean so much more than progress. I'd call this plan progress, not progressive, I don't give a shit about which political spectrum someone might think this plan resides on, this is what's needed, period.

Mr. Mandel keeps an intentionally lower profile than his neighbour, Calgary Mayor Naheed Nenshi. But since the first of his three terms began almost eight years ago, his city has invested more than $9-billion in capital projects.
The City Centre Redevelopment will include large swaths of designated parkland, recycled storm water, bike paths, light rail and have its own on-site biofuel energy system.
Last year, Edmonton was also named one of IBM’s Smarter Cities, the first Canadian municipality and just one of 24 worldwide to receive a $400,000 grant from the tech company. It gave the city access to a team of IBM employees who helped develop a streamlined City Hall management system, allowing employees of various departments to share information and concentrate their efforts.
It is designed to support a municipal development plan called “The Way We Grow,” approved by city council in 2010, which lays out a vision for Edmonton’s growth and attempts to synthesize the efforts of various city departments.
I have to applaud you Mr. Mandel for going through with this plan. With all of the controversy over the airport, the global economic situation, and the arena I wasn't sure if this plan would truly materialize into the vision set.

I know a lot on this blog sounds negative, but if your house was burning you'd expect me to tell you, wouldn't you? Reality isn't negative or positive, it's just what is, it's what we do with that reality, how we react to that reality, and how we plan for that reality which is positive or negative. I feel that, while my outlook has been negative, my reaction has been positive in my attempt to bring what I see as fairly accurate analysis on what we can expect to see in general terms. The city's reaction here, with this project is a very positive reaction.

You shouldn't think of this as "economic growth", rather I see this project and the potentials around it as "societal growth". In terms of the speed of consumption we expect today to meet the demands of GDP, this plan will not do, but nothing after peak oil will. What this project represents is a slowing down in consumption, an increase in re-usability and sustainability. This is not the sort of project that will make GDP happen, but it is the kind that will remain livable when it doesn't. The family and community orientation only enhances the strength of self-sustainability.

I take it back, Edmonton. Expand this transformation and I truly do not care about our arena debt obligations. Should (when) credit collapses and community reigns king we'll have a security worth more than any interest could compound. Our health, warmth, and home are secure and hopefully community oriented food as well. Well done Edmonton, I am literally overjoyed.

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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 CenturyLink

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, July 18, 2012

#yegarena double-think

Tonight I sat through Inside Sports to listen to Kerry Diotte's arena argument. I don't agree with Kerry that we are at the beginning of an economic boom, the reasons of which are heavily documented on this blog, but I do agree with most he said otherwise.

What I really found interesting however is the double-think that was pervasive throughout the whole conversation. Now I realize that, being that this is a sports show, the debate and responses was going to be a little one sided. So far the only sports blogger I've seen that is critical of this deal is Ryan Batty - you all should support him, he's in the minority of his elk it seems. I wasn't prepared however for the clear distortion of terms and the general confusion of issues.

As soon as 630CHED posts the audio I will link to it and record exactly verbatum what was said for this blog post, but until then I will try my best to go on memory. I almost in fact called in when I heard Dan Tencer imply that those against the arena deal somehow don't want Katz to make any money.

This isn't really a post about the arena deal, it's really pointless to try and use logic and data to debate it. everything about the arena is an assumption, assumptions piled on top of other assumptions piled on top of others, with an added pinch of fear that comes in the form of constant reminders that if we don't give this NHL team something new to play in, they won't stay and play for us anymore. This post is instead going to focus on this distortion in the context of the arena.

Tonight Dan Tencer talked about how out of all the places that might not want Katz to make money, it was "Alberta". He was obviously eluding to our pro-industrial, pro-capitalist, conservative sub-culture. Again, I have to turn this statement around as well and say it's bizarre that out of all the provinces, Alberta with our "shovels in the ground attitude" is so hung up on trying to get government funding. Montreal was ironically used (by the same person) as a reason why Alberta should waste the money on an arena and as an example of how Quebec is spending too much money and are in debt due to government spending.

This arena clearly constitutes as corporate welfare, while those for the arena are quick to say that those against the arena are against Katz making money - I'd instead like to turn the tables and phrase it like this: I support hard working business owners, small business owners, etc, keeping their hard earned money. What's being proposed is known as a "wealth transfer", this is not capitalism or free-enterprise.

What it keeps coming down to is the anticipated surrounding developments and the available capital and credit and consumption. Any typical business would need to approach a bank, with a business plan, a loan would be issued, land deals would be made with the city and they would "just build it already" already. For those who just want "shovels in the ground", my suggestion would be to let Daryl Katz know that bank loans are not subject to the same municipal political procedures as pretending the city is a bank would, however since he is not going to a bank and getting his private enterprise an upgraded facility "the capitalist way", you are going to have to sit through a painfully long process where not much is accomplished while listening to all of the people voicing concerns and "talking" about everything you apparently don't want to hear. That's politics, suck it up, buttercup.

Do you know what capitalism is? Risk and reward. You take a risk, you get a reward, and the bigger the risk you take, the bigger the reward. The Katz Group is attempting to put all of the risk on to the city with this deal. The Katz Group gets to deal with the city, while the city has to deal with private banks. Debt secured by a municipality or government is quite different than the risks associated by corporate debt (yes, even in these ridiculously fraudulent banking times). Any penalties the city might levy against the Katz Group for a failure to meet a debt obligation would be a slap on the wrist at best. Not that the Katz Group is likely to miss a payment, with a maximum of 5.5million per year the payments pale in comparison to hockey player salaries as Kerry Diotte points out.

To conclude, why are Edmontonians so against keeping their hard-earned money for their needs? Comparisons between libraries, the art gallery, the LRT, and the arena concept are absolutely silly and an obvious attempt to grasp at straws. There is a difference in reasoning in why a person might say, not use the 23rd street interchange, and not want to pay the overpriced ticket and beer surcharge at an Oilers game.

I don't use the 23rd street interchange, but I didn't and don't oppose it. I do think it could have been planned better but the point is that interchange is there for when you need it. The LRT, likewise, you may not use it today but maybe in a couple years you accidentally have your car towed, or you get a DUI, or whatever. Huge accident, etc. the LRT will be there for you. The Library? The Museum? I'm sorry, history, science and discovery, the development of our society are high-priorities. Perhaps those listening to Dan Tencer are as he is, and doesn't use these facilities, doesn't even know whats in these facilities! Well, that's their loss - now isn't it?

With a library, I can have faith that even if the internet goes down one day, my children may have public access to books and literature. Museums provide a public, factual, and explained record so we can learn and understand about our environment. Today some Oiler's fans may look at these structures as no different than the entertainment provided by an arena, but they are quite different. Historically these institutes have played an important role in societies for hundreds of years.

Arenas, too, have played important historical significance. In Rome, the government sponsored stadiums to distract the public as economic growth failed and corruption prevailed.

The difference between these core facilities and infrastructure projects and an arena shouldn't even have to be discussed, regardless of how significant the team is to the city. If the team and the city are as close to being one as many in the pro-arena crowd would claim, then you are saying that a piece of Edmonton is willing to leave Edmonton for a quick buck or because they didn't get the money they begged the government for. "But.. But.. but.. they are a business!" you are probably saying. You're right, the Oilers are a business, they need to make business decisions - and if your fear in losing the Oilers revolves around possible business decisions then you must ask yourself why Edmontonians must sacrifice their hard earned money to keep the family together, when all it's going to take is a business decision to break it up. Maybe we should start making some business decisions, too.

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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 CenturyLink

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.

Dear Politicians: Welcome to the internet

Welcome to the internet politicians! I see you've setup your Twitter account and are ready to use social media. Before you begin however there are a few lessons to be learned about the internet that can help prevent some .. common mistakes.

Please watch the following primer on "the internet".

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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 CenturyLink

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, July 17, 2012

Wading back into the #yegarena debate

It just won't go away will it? Here I was pretty well set to stop discussing it and wait for the inevitable "told-ya-so" moment years down the road and instead the debate has already heated back up. I haven't written about the #yegarena on this blog and I hadn't intended to pollute important issues with further debate of this lavish expense. However, the situation is so ridiculous that I simply can't resist.

Over the past few days I have again seen the same tired arguments rehashed back and forth over twitter and other platforms that I was seeing during the initial phases of debate. For those not familiar with my arena stance, here it is:

Of course I would love Edmonton to have this new development. Of course. This is an obvious statement sort of like saying to someone, "do you want this Porsche?" "Well yea, I want that Porsche." - No questions asked. The real question being asked to Edmontonians though of course is "Would you like this Porsche for $250,000? Oh and by the way until you pay it off I'll be the one driving but you can put your name on the door in the meantime." The conditions could really just be a run-on sentence unto themselves but you should already be aware of this conditions and you should already be aware of the horrible deal the city has agreed to. You should be aware that besides the $35 million the design has gone over budget, that there is still $100 million in what I can only guess will be the most epic tooth fairy delivery ever. This blog post isn't about any of that, this post is going to focus on several common arguments and on my take of the current viability for such a project for any deal can't be a good deal with out a good return and this comes from long term viability.

First of all, I want to address those concerned that Katz might pull the Oilers from Edmonton if he doesn't get his new facility. I'm not sure if you noticed this, but Winnipeg just got their team back - so which broke U.S. city are you worried the Oilers are going to end up in? Edmonton is one of the top markets and there are plenty of teams in underwater cities that quite frankly just don't appreciate hockey the way most Edmontonians do. It isn't going to happen and the broke U.S. cities are just going to become more broke as time goes on. The NHL needs Edmonton's market plain and simple, so stop freaking out about a business decision about as likely as Donald Trump investing in Ali G's Ice Cream Glove.

Those broke U.S. cities are going broke because of a collapsing global ponzi scheme which masquerades as a sound banking system. The first time I wrote a post about the arena I made the same argument I'm going to make now (albeit now after a year of blogging about this problem I'll hopefully do it better). Since that first post we've had several mini-oil shocks. The U.S. has lost it's triple A credit rating along with many other nations. Occupy occurred. There has been unrest, riots, and police brutality in response to the global situation in almost every developed nation. There have been bank runs in Spain, Greece, etc. I could go on and on about the cumulative problems brewing to make 2008/2009 look like a party and I do on this blog (go read some other posts) but for the purpose of this particular post I will sum it up like so: Shit hasn't gotten better, there is no recovery, and desperation is already beginning to settle in many places.

When we talk about the viability of the new #yegarena, most of this is expected to come in the form of a "revitalized downtown". A "revitalized downtown" is one where people go, presumably to shop. We're looking for more stores in the downtown core, and they better be damn good ones too as they'll have to be rolling in cash to meet the additional arena-debt paying property taxes. We want growth! Lots of it! Of course the reason interest rates globally are at all time lows is because they can't get growth to restart despite trillions in stimulus spending and free credit galore. The only thing the credit free-for-all has done is pile up consumer debt, still no growth.

The no-growth global economy is important because Canada's (and Alberta's) primary source of revenue is from these countries which are having difficulties maintaining growth and as a result I anticipate hard times are indeed coming here to Canada too. These are not the sort of hard times that call for revitalization, they call for strategic and careful planning, an arena isn't going to stimulate what trillions in global stimulus spending hasn't.

This arena will put the city into a long term debt obligation, one which assumes long term consumer growth. Under normal economic conditions this might be alright, but if this recent LIBOR scandal proves anything - it's that the global banking system hasn't even begun to clean out the corruption and there are more Lehman's waiting in the wind. The city should not take on this obligation should the future required tax revenue be questionable on top of standard civic obligations. World economic growth right now is incredibly uncertain and Canada's is partially based on our own consumer debt load. This consumer debt fueling economy is temporary at best and highly volatile.

Canada, Alberta, and Edmonton are not immune to the global economic climate, and for round two Canada is out of credit fumes.

What's in an investment?

Above and beyond the viability of the obligations the arena will place on Edmonton, I have a few sticking points about the deal itself. Katz will be paying Edmonton "back" 5.5million / year over 35 years (if this is incorrect please correct me). Now, 35 years for a huge "state-of-the-art" facility seems reasonable but then I have to wonder what we'll think of it in 35 years should it never deliver the magic revitalization bullet everyone is hoping for.

Northlands opened in 1974 and granted that it may be the third oldest stadium in the NHL, but our team is also old as well. It has history, and it has character. This is the stadium Gretzky delivered Edmonton's Stanley Cups in. Are we, Edmontonians, saying that this historic stadium has a life of 38 years? If so, how exactly did Katz land a deal that lasts for almost the entire duration of our current stadium's lifespan? So if we're not happy with this one in 35 years will we just build another? I imagine most people back in 1974 thought this stadium was "state-of-the-art", "amazing", something that might make Edmonton "world-class". But I disgress..

You know which other area could really use some revitalization? 118 avenue.

That's really all I have to say that isn't already in every arena debate already out there. Thanks for reading.

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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 CenturyLink

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, July 12, 2012

RE: Fiscal “Crisis” In Context: Two Indicators

I've enjoyed reading the Progressive Economics Forum, they've had many great posts and analysis but a post put out today titled "Fiscal “Crisis” In Context: Two Indicators" has me strongly disagreeing as I find the context presented to be much too narrow to provide proper context at all.

The post looks at two indicators. Federal/Provincial Debt-to-GDP and Government interest costs as a percentage of GDP. While I do not believe in the austerity of the "austerity camp", I do believe my beliefs of the global economy would have me lumped in with them anyway. So, here is my rebuttal.

This sort of analysis is the sort I try to stay away from, the 'straight by the numbers' type. The reason I decided to do "trend forecasting" instead of data-analysis is I find that data-analysis based predictions are often wrong.

For instance, in the first chart in the post, federal debt is clearly going down until the collapse of 2008. Writing the same post with the same data back in 2007 and using the same "decline"/"leveling-off" historical logic, the increase in 2008 should have never happened, but it did, reality tends to dictate events, not charts.

I keep having to come back to the one sentence Jim Flaherty has said in which I agree "Canada isn't an island". In fact, Canada couldn't act like an economic island even if it wanted to, we simply do not have enough domestic consumerism and trade to maintain growth in that context. Therefore, using that context as an indicator is simply not accurate - especially with the clear and visible downward global economic trend. The economy is 100% global, it's dependencies are global, its inputs and supply chain is global. Stephen Harper himself has told you all that "there isn't really a Canadian economy anymore, it's a global economy".

There is a reason I was calling for Chinese stagnation while everyone else was calling for a Chinese boom, there's a reason I was confident in that call, and there's a reason that call has turned out to be 100% right.
The problem with relying on China though is that on top of energy shortages their economy is over-heated. Their export base is falling out from under them and "housing bubble" is an understatement.

Alberta may just find itself another stagnating economy by the time we can export to it. The other question of course is exactly how much oil can we supply to keep growth going to stop stagnation? It seems the "whole world" is all of a sudden on our doorsteps; but under ideal conditions we apparently will only be providing 3million barrels / day by 2020.

- November / 2011
While I was at Titan Trading Analytics, the 'holy grail' of HFT that we wanted to pursue was real-time news analysis. Financial data could only take us so far, it gave us no clue as to the mood of the market and it also didn't allow us to see important events until after they happened in the market. It's the expertise I learned pursuing this concept I use to forecast trends. Current events mean a lot more than historical data, you're not going to see this LIBOR scandal on charts until it's too late for instance. This brings up another problem with pure data based analysis, and that is that much of the data out there could be fraudulent to begin with, either intentionally or simply due to it being based on other fraudulent reporting.

I'm not saying the data the author presents is tainted in any way, what I am saying is if it is tainted (let's say a few of the companies report invalid numbers) then you'd never know until it's too late. If you look at the collapse in the U.S., everything was fine, until it wasn't. Balance sheets that looked fine one day were totally invalid the next, this is the nature of the modern global economy.

Here is my indictator on Canadian governmental financial stability:
Carney, Flaherty say proposed U.S. bank crackdown could sideswipe Canada
The source of concern is a new U.S. regulation meant to deter deposit-taking institutions that receive backstopping from Washington from engaging in speculative trading for their own—not their clients’—profit, a practice known as proprietary trading. Risky trades by global banking giants were central to the banking crisis that compelled former U.S. president George W. Bush to launch a $700-billion bailout of Wall Street in 2008.

“I think the impact could be very, very negative,” said Canadian Bankers Association President Terry Campbell. “If you interfere with the ability of governments and corporations to fund themselves, if you interfere with liquidity in the marketplace, which is necessary for funding, then you could have a very severe impact on our economy.”
That is the President of the Canadian Banker's Association saying that if the U.S. addresses their fraud and problems, it may interfere with the ability of Canadian Banks and Canadian Governments to fund themselves. Doesn't exactly sound stable to me, especially since it was these practices which set the whole economy in a downward spiral, now does it?

Canada's balance sheets, and Canada's debt-to-GDP properly and correctly represent our position in the global economy. Take for instance, this event:

Non-US Banks Gained from Fed Crisis Fund
Some of the world’s strongest banks have profited from an emergency credit facility set up by the US Federal Reserve to shore up confidence in the global financial system, according to a Financial Times analysis of data released by the Fed.

More than half of lending under the Fed’s term auction facility – the largest of its crisis programs – went to foreign banks. Details of the varied uses to which they put it may add to political criticism of the Fed. 
Rabobank of the Netherlands and Toronto-Dominion of Canada, two of the only banks in the world with triple A credit ratings, used more than $20 billion in cumulative Taf loans.

Ed Clark, TD chief executive, said that using Taf was logical even though his bank never had a liquidity problem. “That wasn’t how we made a lot of money. But you make a dollar here, you make a dollar there. What’s the spread you make on a billion dollars?” he said.

In the summer of 2008, TD was borrowing $1 billion from TAF at rates of between 2 and 2.5 percent. For that borrowing it used the lowest quality – and hence highest yielding – collateral acceptable to the Fed.

More than 80 percent of its collateral had a triple B credit rating at a time when such bonds yielded about 7 percent. TD could therefore have made a notional gross spread of about $4m a month during 2008.
Notice the goal? "shore up confidence in the global financial system". Not, shore up confidence in the U.S. financial system. The U.S.'s USD ponzi scheme relies on other countries giving them stuff for USD and should those other countries reach crisis levels then the U.S. confidence economy is toast. The only thing backing U.S. dollars is confidence, and any sort of financial crisis might ultimately lead to protectionist policies and those types of policies might lead to countries reconsidering the USD altogether.

Canada isn't currently influential enough in the global economy to determine it's own financial stability. We depend 100% on the global financial instruments, and those instruments are where the crisis is.

As I've explained before, Canada will see it's debt problems unfold when the countries who supplement our income can no longer afford to do so, this primarily means the U.S. and shouldn't be any secret with recent actions by the federal government in consideration.

The Canadian Debt Feedback Loop

The author makes an interesting point with that chart about debt servicing only being 4% of GDP.  He also states:
According to this figure, not only has government debt service expense declined dramatically as a share of GDP since the bad old 1990s (when it peaked at close to 10% of GDP).  Moreover, debt service has continued to decline despite the (modest) rebound in debt resulting from the recession.  Debt service costs for all levels of government fell below 4% of GDP since the recession.  How could debt service costs decline, even while the debt burden (modestly) grew?  Because average interest costs have declined.  Like home-owners, governments have been able to refinance their debt to take advantage of today’s ultra-low rates.  (Remember, even fiscally pressed provinces like Ontario can still borrow money today for 10 years at real interest rates not much above zero.)  As older bonds come due and are refinanced, governments reduce their interest costs dramatically.  Those savings have more than offset the incremental debt service costs associated wtih additional debt.  So the claim that rising debt service costs are squeezing out more useful forms of public expenditure (not that conservatives support those programs, either) is empirically false.
While that graph of debt servicing as a percentage of GDP is interesting, I think you'll all find this chart even more interesting.

So $30.9B was spent in fiscal year 2010-2011 on debt servicing. That's more than Defence and the Canada Revenue Agency combined. In fact few slices are higher than debt servicing other than:
  • "Other Operations"
  • "Support for elderly"
  • "Other transfer payments"
So basically, next to "The elderly" and "other", debt servicing gets the largest chunk, seems to me like it's taking up a big slice of the public spending pie. But lets explore this further...

You'll remember recently (if you read my blog) that I explained why global growth is dead. The primary reason being that the globe's obligations currently outweigh real GDP. This is of course why interest rates are so low to begin with, and while the author praises low interest rates and rolling over debt as a practical solution, I again have to disagree.

Between the low interest rates and bailouts, GDP world-wide should be flying and high inflation should be most country's main concern. Yet it isn't. Trillions upon trillions have been injected and the return on investment has been meagre at best.
Running up public debt for the sake of running up debt makes no sense.   There are costs associated with debt, and limits to how much debt can rise.  But there are benefits associated with debt-financed spending, too.  That includes the productivity of long-lived public capital assets that can be financed with debt (just like companies or households prudently finance long-lived assets, from factory equipment to homes, with debt).  In a demand-constrained macroeconomic context, another benefit of debt-financed spending is the positive spillover effect on overall employment and income that results from that spending (even when it’s on current services rather than public capital).  Based on the preceding graphs, Canadian governments are far from any meaningful constraint on their ability to borrow.  Hence, we should make a rational decision as a country regarding how much new debt is optimal, rather than being dominated by an initial quasi-religious assumption that “all debt is bad.”
The author's confusion seems to come from his assumption that somehow debt is optional, it isn't. The entire global economy is debt based therefore debt isn't optional at all. What does debt based mean? In brief...

All money is created through loans, at the behest of banks. Now, it's not quite as willy-nilly as some people claim however. The statement "banks create money out of thin air" isn't quite correct. Banks must hold a certain amount in reserve (I believe currently in Canada it is 10%) of what they loan out. This is called "fractional reserve banking". Of course all loans have compound interest attached to them and that interest must be paid by other currency. Because interest is compounded on top of the currency loaned out, there is never enough currency in circulation to pay down all existing debts and thus bankruptcy or defaulting can occur. Not only can it occur, but it must occur, the economy is like a big game of musical chairs and at any given time there is someone out there without a chair. To get one they must borrow a chair from someone else, etc.

It is at the moment that a person cannot fulfil their obligation and defaults that the bank has officially created money out of thin air. The reason being that the currency is already in circulation but the required amount of future economic activity or production to service it hasn't occurred.

Both Jim Flaherty and Mark Carney have explicitly stated that a substantial amount of Canada's GDP growth is completely dependent on consumer debt. Within this context comparing governmental debt to GDP is completely meaningless because the GDP itself is reliant on consumer spending fuelled by consumer debt.


This chart again fits perfectly with the story of the current global financial climate. The U.S. housing bubble has collapsed, but Canada's hasn't yet. Ours probably would have if the U.S. hasn't initiated the TARP program. With the U.S. being our number one trade partner and a significant portion of Canada's own industry actually owned by the U.S. (and now China), the injections in to the U.S. economy (and global economy) shored up the Canadian economy before too many people lost their jobs, although even within that short time span hundred of thousands did lose their jobs. Had the U.S. not bailed out foreign countries to stabilize themselves, our housing market would surely have crashed due to so many debt obligations not being met, just as it happened in the U.S.

Getting back to the point, just as I explained a few days ago that 1% of current GDP is a lot different than 1% of GDP 10 years ago due to speculative bubbles and over-leveraging, 4% of the Canadian GDP just for debt servicing is a significant amount, especially if current Canadian GDP is inflated due to the fraudulent leveraging systems in place. It's one big giant ponzi, and interest rates can only go so low.

What the author proposes as a good thing is the same as saying. I can get another credit card for a cheaper interest rate than my current. My job is currently stable so to pay off the first credit card I'll use the second lower interest rate card and gradually my debt burden will decrease. First of all if an economist recommends this debt reduction strategy to you and you follow it, you get what you deserve. Second, this makes many assumptions about the future. Assumptions such as your job being stable, for if you say - get fired - or laid off - and you miss both payments, well then now you have more obligations to pay off. The authors first chart destroys the notion this is a viable plan, for if it was you would not see the increase in debt in 2008 due to the global financial meltdown (the U.S. got laid off).


If you treat Canada as an economic island, the charts presented by the author look great. however, we are not an economic island, we are a country trying to balance it's budget in a global ponzi scheme. This ponzi scheme (as all ponzi schemes) will end. Canada's position in the global economy and our large deposit of resources and land in comparison to our population hide how bad our financial situation can quickly become.

While I agree with the author that the sorts of austerity being proposed in Canada are not required I don't agree there isn't a significant problem with Canadian governmental debt.

As you can see, as soon as the 2008 crisis hit, the United States has quickly doubled their M1 money supply and you can sure bet the Canadian economy benefited from this significantly. This increase is unprecedented. The U.S. can't keep it up forever though, and when it can't go on any longer due to a loss of confidence in the USD (short an economic miracle) - only then will Canada have a clear view of exactly how bad our economic circumstance really is.

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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 CenturyLink

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.

What does 'sustainable' really mean?

Enbridge has provided an interesting response to Christy Clark's concerns over the Enbridge pipeline.

“We have a struggle here in B.C. and we know that,” said Janet Holder, the Enbridge executive vice-president in charge of Gateway. She said hearings this week in Prince George “did not take on any different focus because of what was released by the NTSB. People in B.C. still are very concerned and we will continue to try to find ways to help them understand that we can build this pipeline in a very safe, reliable and, I think importantly, sustainable way.”
Everything nowadays seems to be "sustainable", it's quickly turning into the number one P.R. catch phrase for garnering public support. Everyone wants to be sustainable, but I'm curious exactly how a pipeline, built out of non-renewable resources whose purpose is to transport non-renewable resources for export is "sustainable". What's sustainable about it or the way it's being built?

A better question to me is, what does sustainable actually mean? To me it means something with an indefinite lifespan. A "sustainable" society is a society which can sustain itself. Not just for 5 or 10 years, but indefinitely.

I find with all of this talk about sustainable development in Canada, everyone seems to be overlooking exactly what is being sustained? A pipeline to export non-renewable resources seems to sustain profit for enbridge, and sustain oil for China, but what in Canada will be sustained?

We already know that the "jobs" these projects provide will be sustained for temporary foreign workers, and we already know that these projects don't sustain the Canadian environment either. We also hear all the time how the oilsands are key for U.S. and Chinese energy security, but not Canadian energy security.

It seems to me Canada is concerned about the sustainability of everyone, except Canada. What do you think? Are the terms 'sustainability' and 'energy security' being abused? What do they mean for you? Please comment below.

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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 CenturyLink

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, July 10, 2012

The National Park Shuffle

Whenever the federal government says "budget deficit's are no excuse for not spending on X" you should probably be at least a little suspicious. Naturally, I was, but I'm always suspicious so that probably doesn't mean much.
At issue is $100 million in Rouge Valley land Ottawa wants to transform into a new national park, but is being stymied by the cash-strapped province.

“I would hope that in the days and weeks ahead the Ontario government will come to its senses and appreciate what’s at risk here if they try to hold up the project,” said Kent, who is locked in a literal turf war with provincial Transportation and Infrastructure Minister Bob Chiarelli.

“This proposal — or gambit if you will, because I really think it is a long shot — reverses a couple of decades of Ontario government policy. It’s simply not the way we build national parks,” said the federal minister, who wants the land transferred by September.
The irony of these statements coming at the same time as the #deathofevidence protest and numerous other federal cuts being made aside, it's an interesting contrast when compared with this.

Parks Canada to privatize operations of hot springs, May 2012
Parks Canada confirmed plans Tuesday to privatize business operations at hot springs in Radium, B.C., and Jasper and Banff, Alb.

This comes one day after the federal government announced
staffing cuts in national parks across the country.
It goes on to say:
The private operators will be allowed to make the call on admission fees and hours.
I see, so for an existing, popular, well established National Park there certainly isn't enough money. We need to privatize those. However, when it comes to as yet to be established national parks, there is plenty of federal money and cash strapped provinces should just give the federal government whatever they want because to do otherwise is "simply not the way we build national parks". Right.

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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 CenturyLink

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, July 9, 2012

Update-1: Alberta, Canada's 'Energy Capital', implements rolling blackouts

Yep, another Alberta post. Welcome to the reality of the two-tiered Alberta energy system. What do I mean by two tiered? Well let me explain.

Over a year ago I wrote this piece on the "requirement" for the new high capacity transmission lines. Quoted in that piece is this little blurb:
Alberta is Canada’s biggest per capita consumer of energy. In 2003, Alberta’s per capita consumption was two-and-a-half times higher than the national average. Between 1990 and 2003, per capita energy consumption increased by 11%. That surge was not entirely due to a sizeable increase in population. A big part of the increase in total energy consumption resulted from industrial activity in the province.
Now what don't you see listed in that article about who has been affected by these rolling blackouts? Industry, of course. They are of course targeting the paying population. Cities, mostly, residents are being told to cut down on their power usage. The Albertan government (obviously working in your favor) proactively decided to enforce these reductions for you, with rolling blackouts.

It was hot today, no doubt about that. Edmonton was the hottest, but as you can see from the Weather Network image, many places were near 30C and an alert was out for British Columbia. However, only one province has had to instruct the need for rolling blackouts: Alberta. Why is this important? Well Alberta is supposedly the energy capital of Canada, isn't it? Out of any province you'd think Alberta should have the spare capacity and yet turn on the ACs and we need rolling blackouts? It was well known it was going to be scorching hot today which should tell you that simply, the spare capacity is not there. Alberta to this day continues to consume the largest percentage of Canada's energy production. Yes, I know that the oilsands do themselves produce some excess energy to return to the grid but this of course does not come close to matching consumption especially when you consider all of the warehouses and other supporting industry required to operate projects of such large scale.

This is not oilsands bashing by the way, this is a warning bell to all of those working in the industry shunning the environmentalists or anyone else who criticise these projects of last resort. I personally do not want to see my fellow Albertans out of a job, so please please please take what I have to say here to heart. We, the "energy capital" of Canada should be able to handle a hot day, shouldn't we?

Alberta has multiple separate problems colliding into what is looking to be a serious catastrophe.


Alberta, in it's efforts to "slash the deficit" created an infrastructure deficit. Items like the twinning of highway 63 should have been done at least 10 years ago. Shortly after this time, during another oil boom we said Alberta was "open for business". People flocked here from all over the country, but we didn't have the foresight to actually build and prepare for them. After they arrived and residential vacancy dropped to 0.01%, sure we started building but we had/have 30 years of practically no development + cuts and a huge influx of population. The Alberta advantage quickly became the Alberta disadvantage. Spending went up, which lets face it, it had to go up, that's "growth" isn't it? Population growth causes spending growth, and since we had a whole number of infrastructure debts to pay off as well spending has been even higher.

Today Alberta likes to talk a big game about decreasing spending to something within our means, but the reality is Alberta - to support their infrastructure and the numbers of people they want working here - needs to increase spending significantly. This is of course our first trap, with an energy ratio of 3:1 the "profit" from the oilsands is not nearly as much as Albertans credit it as being. With the added and as yet unknown environmental, energy, and infrastructure expenses - not to mention industry subsidies - it is not unreasonable to say the oilsands actually don't provide any profit at all. If it did, Alberta's budget would be in surplus and we wouldn't always be wishing for a higher oil price (read: wishing for a war in Iran). This isn't about cutting spending, even now Alberta is just barely meeting the needs of it's population.

Add to this the elevated energy demand within Alberta, the inflated cost of goods (inflation which increases the closer you get to the oilsands). I remember seeing during the height of the vacancy problems of 2006/2007 that a bachelor was going for around $2000 / month. High cost, no house - the Alberta disadvantage. I often focus on Alberta's income and monetary issues related to oilsands development so you can continue this topic on this blog post.

Water, Environment, and Resources

As the costs of these projects and their supporting industries add up, so does resource usage. Alberta loves to talk about how by 2030 there will be a production count of 5mbd. However, if there are already warnings of there not being enough water to pump the operations and energy shortages on hot days, is it a good bet to make that this can be sustained for [at least] 10 more years? Keep in mind we currently only produce around 1.5mbd from the oilsands, 5mbd by 2030 is a 333% increase. Of course add to this water contaminated by oil spills and the like and this number goes up, and that's all water that will no longer be enjoyed by Albertans.

It should be no surprise to you that we are seeing the worst forest fires ever in the last few years (Slave Lake) all of which are in areas that would be directly affected by the oilsands water consumption. The oilsands of course divert water from many of the freshwater lakes in the area as well as the Athabasca River and that entire area continues to be at ever higher risk of forest fire.


Resource use, and income, brings us back to energy. Energy, currently, is the key to life. The reality behind Alberta's economic and industrial decisions is that we consume the most power in Canada to support our so-called "energy production". This arrangement is simply unsustainable and is the achilles heel of Alberta's one-trick economy.

Alberta, during the earlier years of oilsands production benefited from a cheap cost of oil, combined with a slow (and steadily speeding up) oil price. This meant that the oilsands could use the cheaper standard price of oil for the initial infrastructure and by the time oil was producing it would be worth more. This gradual increase in oil price would also account for the extra cost in operating an "extreme energy" extraction project. (For more on "extreme energy" and the global economy, see here.)

This pattern in oil has changed, with a hard ceiling near $100 reached, which when oil goes over this price becomes contentious and a burden on consumer economic spending. Once this occurs, oil (and many other economic indicators) get knocked back down, to around $80 or so, the floor on our "extreme energy" production price. Anything below $80 now is a huge warning, and if it drops below $70 then many extreme energy projects can not continue operating and many future projects are put on hold.

It should be clear to most analysts now that the bull run in oil is over. The price will surely osculate wildy, no doubt, but the uni-directional price inflation is over, it's now bi-directional.

Similarly with the water issue, one also has to wonder how if Alberta can't handle a really hot day, how exactly do we intend to handle a 333% increase in oilsands production and can we actually afford it?

Jobs? Jobs you say? Alright, lets talk about those j-o-b s

I'm seriously tired of this cliche, abused excuse for continuing to do outdated and stupid things. Anyone who criticises the oilsands (usually this is the environmental crowd) automatically hate jobs apparently. However, most of these same people when confronted with a similar (yet seemingly different) pure capitalist circumstance would probably agree with the destruction of jobs.

Allow me to try and illustrate this better. Currently in the U.S., Mit Romney's time with Bain Capital has been receiving a lot of attention. Those who support him insist that Bain's methods which are essentially to slash jobs, work. To support this it is often said that the companies "are not adapting to the market", RIM is a good current example of this phenomenon. In this light, you could say oilsands critics are simply stating the obvious: that the market is changing and we are not adapting.

Jobs are, of themselves, not the be-all-end-all in life. everytime we deflect serious issues about our own behaviour by saying "well we need those jobs", we are being dishonorable to ourselves and our children. If "jobs" are really your primary concern, you should fully support prostitution. That's a job, isn't it? Just think of how many full-time positions would be created over-night if we simply legalized prostitution. Where is it that we draw the line? If it's just about jobs, why do we foresee the future labour pool primarily comprising of foreign temporary workers? Jobs, is like the 'world peace' response of the conservative heartland. To get support in Alberta, you need to promise jobs. It is not important who those jobs are for, what impact they will have and how many other jobs will not be able to exist due to the inflated costs they cause.

Isn't it interesting that industry foresee's a skilled labour shortage, and Canada is catering to this labour shortage instead of investing in the sorts of industries Canadians are skilled for? Why is our economic "action plan" on "jobs and growth" focusing on jobs for industries that apparently Canadians are not (and apparently won't be) skilled for? Questions, questions.

What's all of this mean though?

It means you have to question the Alberta government's true capability and willingness for the long term prosperity we are constantly reminded they are planning for Alberta. The reality, to me at least, is that - if this province still can't even have the foresight to have proper traffic controls on the main highway leading in to these mega-projects then how can I have any confidence they have the economic or environmental foresight either? It means if this province, the "energy capital" of Canada, doesn't have the foresight to plan to have enough spare capacity on hand for the inevitable demand the population's air conditioner's would bring, then how can we have faith they have our long-term energy demands met?

Albertan's of all political colors should be asking the Albertan government: What is the true state of our infrastructure and how much should we really be spending to actually repair it? What are the true costs of growing the oilsands (support industries included) and do we honestly have enough resources to accomplish that without impacting ourselves and future generations and the resources that will be available for them?

The Big Disaster

Today the world is still reeling from multiple massive environmental disasters while the government's worldwide who are supposed to be responsible for oversight struggle with economic chaos in their own budgets and ever increasing demands. More mega-disasters await us in the future as cutbacks in maintenance and oversight begin to translate into inspections not being made and lower standards being used.

Example: The U.S. has extended the life of many of it's nuclear plants from 40 to 60 years as it, too, has neglected proper infrastructure investment and simply can not afford to rebuild it's power supply. The U.S. is a ticking time bomb in this sense, where one cascade failure could easily cause enough economic damage to be the final failure, as the lights after this perhaps might not turn back on. Depends if you can pay someone to get out there, right? Depends if you can pump gas in to the vehicles to get out there, etc.
Massive disasters cause massive chain reactions, and the effects can be felt everywhere.

Here is an interesting graphic on U.S. nuclear power.
Another example: recently following several oil spills it was announced that 'Pipeline Regulators Cite Two Dozen Safety Violations by Enbridge in Kalamazoo Tar Sands Spill'. Safety violations are often the result of cutbacks, and cutbacks often result in situations which mean you, the Albertan, can't go fishing.

If jobs and your own standard of living are your primary concern, then you should be questioning the Albertan and Federal government's oilsands promises because they simply just don't add up and their track record with respect to demonstrating foresight and proper planning is horrible at best.

Anyway, some food for thought. In the meantime - enjoy the heat and remember to prepare, prepare, prepare!


Someone re-tweeted this post with a comment, "shades of Enron" so I feel I need to update to be clear what it is I am saying in this post. This is nothing like an Enron type scam, what's occuring here isn't a scam. At least in a direct sense.


Alberta's infrastructure has been under-funded and the cost to bring us up to date exceeds our income if there is not enough economic growth to push oil beyond $100. The 'scam' if you can call it that is the continued use of an outdated business model. The cost of producing oilsands is expensive, and if oil levels off then there is no time-delayed profit as there has been in the past.

There is an increased danger of outages the more numerous generating stations become. Today 6 of our 35 stations were down for a few hours, but what's important to note here is the only reason we need 35 generators is because we have the largest energy consumption in Canada. The more generators required, the higher your odds numbers of them will be shutdown. Further, generators have lifespans and need to be replaced, the cost of replacing generators must be considered as well when determining the cost of long term growth. As I point out in my example, the U.S. has failed to do this. again, infrastructure.

What I'm getting at here is that for what it takes, 1.5 mbd hardly seems worth it. There are an increasing number of points of failure, all subject to possible budget cuts etc.

Is this just some attempt to link the rolling blackouts and the oilsands?

I have a feeling many are thinking this, and no, it isn't. It's not about the oilsands themselves, it's about the requirements, and the decisions (or lack there of) made to properly prepare our province. This isn't really about the rolling blackouts, its about numerous examples of a lack of foresight.

I view this lack of foresight as extremely dangerous when such life-changing decisions are at play. I don't care what industry, what business. GlaxoSmithKline? Yea, fuck them too - it's not important who. What really bugs me about these decisions, by these people, are the lasting consequences.

The Albertan government isn't being honest about the true prospects of long-term prosperity. This really bugs me, it bugs me that there have had to be protests for the twinning of highway 63. That to me (along with many other things I continue to mention here on this blog) says that Alberta's oilsands margins are just not as good as you would hope they are now (if all proper spending was actually done) and that they simply have not been prepared for the amount and the types of traffic on that highway. How could they not know that would happen? Why have they ignored the repeated requests over the last - what - 7 years? To twin that highway? Why have they not completed it since they started?

The answers to these questions are not important, what is important is that I have to ask them, about the ability to plan a highway. I have zero faith in their ability to plan a long-term sustainable economy. An economy that my children will enjoy, not dread.

So in closing, no, this isn't Enron. Absolutely the grid failed today and this isn't a money making scheme. Alberta's grid is definitely stretched and becoming riskier and that is the problem you should be concerned about. Not that they are lying in some sort of conspiracy, but that rather the conspiracy - if you can call it that - is not explaining why we have such a huge power consumption demand to begin with to Albertans.

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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 CenturyLink

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, July 3, 2012

Update-1: Lost In Stimulus

World markets and investors continue to scratch their heads about the market's direction and the problems it's facing. There is seemingly only one thing they all agree on, and that is they all are "hoping for more stimulus". On any speculation of such hope, markets rise - which should confirm for any observant citizen that supply and demand has been thrown out the window. Actually, its not thrown out the window, its just manipulated. Instead of the market being used as a tool to manage the supply demand and production of goods for the people, it is being used to gauge how successful the latest confidence P.R. ploy is. The market has now become about the supply and demand of only one commodity, of currency itself.
Stimulus is a tool being used to create demand for currency in the form of cheap loans. It is through this manufactured demand that central banker's imagine that they are "averting the crisis" by meeting their manufactured demand through an unlimited supply of new currency. There is clearly something missing from this equation to happiness and that is whether or not the public can sustain even more debt or are even eligible to get it.
Every time I write a blog post, I'm trying to explain this problem and it never comes out just quite right. It's complex. I'm going to try again tonight to explain why growth is dead and why articles like this are complete nonsense.
Growth is dead

Exhibit A - World GDP 1960-2010
This chart looks great, doesn't it? GDP is flying after a little bump in the road. Here is the problem though, as I see it. Growth and "growth" are two completely separate things. No really, let me explain.
Let's take 1990, and to use simple numbers say GDP was a flat $20T. So if the economy in 1990 was to grow 1%, we would require an increase in GDP of $200 Billion. No sweat. However, for the economy to grow in 2000 (with let's say a GDP of about $30T) by the same "1%" we would require an increase of $300 Billion.
Then take a look at what happened after 2001 (9/11), it practically shoots straight up. Why? Well as we now know it's because of a massive derivative bubble. So where does that leave global GDP? About $60T, which requires $600 Billion increase to grow a measly 1%.
"Growth" doesn't care that the last 10 years of "growth" were completely precipitated on fraud you see, for the global economy to "grow" GDP must exceed unprecedented growth levels (in which no real "growth" actually happened), however the difference between the requirements for "growth" between $30T and $60T are staggering. Add to this all of the fake "growth" fraud as yet undiscovered and you should start to see why world leaders are running around like chickens with their heads cut off. For financial "stability and confidence" to return, growth must return and for growth consumers must spend money and take out debt and that debt all has compound interest attached to it. Loans are given out on the premise of growth, but if that premise is uncertain then there can be no growth if the loans are needed to fund it in the first place, further since all existing debt already has interest attached to it which exceeds the available currency loans must be given out timely in order for the people to continue servicing existing debt as well.
The energy factor
So why is growth dead now? Why not 12 years ago? Why can the banks not just pull off another magic economic bubble and get things rolling again? you might be asking these questions and I'll try to answer them.
Have a look at these two links:
From March: Higher gas prices threaten economy if they persist
From June: Sliding oil price could herald the beginning of a recovery
Notice a trend here? Low prices are needed for a "recovery", but in the era of "extreme energy" a low price can cause instability.
Extreme energy is extreme because of the cost to extract it and as we rely more and more on it to replace conventional oil which has peaked we're going to find more and more of our resources going into the energy extraction versus our pockets. Not to mention the actual increase in energy demand to achieve growth at all.
So, here is the situation people. It's a circle of economic fun. First however I'd like to point out that risk has to be based on factual historical data. So once the cheap loan scheme got underway, and a little bit of economic historical data was created, other banks' risk calculations would have shown an increasingly likely capacity for more and more people to service their debt. The people, who work for businesses which take out (cheap) loans saw how well their businesses were doing being leveraged on loans which were seemingly risk free. That is until $147 / barrel oil hit (the actual trigger was probably a lesser number, but you have to remember how much credit was available back in 2007 that people used to absorb the shock).
So this is why growth is dead, its not that there can't be economic growth, it's that we set the bar too high and we're trying to stimulate more growth than there is surplus energy to stimulate while at the same time dealing with a global banking cartel hell bent on staying on top and in control.
Over the last 4 years we have largely lost sight of the fact that this global banking crisis was already here. Statements I've seen by "analysts" such as "Europe's debt crisis is holding back the recovery" is complete nonsense. There is no recovery because globally growth is dead and our globalized economy which has food and gadgets imported from all over the world requires stability to keep that supply chain stable.
Before we can return to stability and growth we must redefine what "growth" is. Fiddling with the levers of interest rates does nothing more than put more nails in our economic coffins. We don't need more debt, what we do need to do is figure out how we're going to service the existing debt and allow at the very least the market to re-balance (after the bankers manipulating it are put in jail) to see where we really are actually at.


Since then...

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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 CenturyLink

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, July 1, 2012

UPDATE-1: Have a #HappyCanadaDay and #DenounceHarper

Amazing. I have no other words, #DenounceHarper is trending alongside #HappyCanadaDay. I have to say that I underestimated the prospects when I was contacted about it weeks ago. At the time I refused to play a large part as I saw it then as just another partisan rallying flag. Unseat Harper, etc.

However, it's trending on Canada Day. Not only is it trending, but it's filling my own timeline like no hash tag has before; clearly #DenouceHarper is more than a partisan war song. #DenouceHarper isn't partisan afterall, #DenounceHarper isn't #DenouceTheCPC and if you read the majority of tweets they are about the man. I too, am clearly against Harper, I don't care about the CPC or NDP, it's Harper himself that I oppose.

I oppose him for one very simple reason, and it is this reason which should trump all others. Harper is a traitor to Canada and is actively seeking to limit Canada's sovereignty over it's own matters and economics. Harper has no interest in Canada or democracy, his loyalties lie with "foreign special interests" as he'd like to call them. Canada, to Harper and the rest in this global banking cartel, is a market, not a country.

This isn't simply a Canadian problem either, this same process is occuring with most western democracies.

Stephen Harper tells Canadians "it's a loss of sovereignty, but it's a simple reality".

No other issue is more important than this one. If we lose more of our sovereignty we lose more of our capacity to deal with all the other issues of concern, regardless of which partisan team you play for.

Celebrating Canada day has been hard for me ever since the G20 destroyed what little sense I had that Canada was a free and democratic country, perhaps this year it will be a little easier.

Have a happy Canada Day, and denouce Harper and his global governance goons.


Here is Paul Martin saying the same thing.

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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 CenturyLink

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.