Monday 14 March 2011

Edmonton Arena pt2: The world class city myth

* UPDATED * My solution to the Arena Debate.

Ok, wtf. I write 5 articles and my 2nd and probably worst one gets the most hits? no comments? what gives?

Seriously I wrote that while having an overdose of anger, and its not very well done. So let me try this again. I *really* want to make the case here. I am not just some arena hating guy but that I strongly believe we are being convinced of something that is not economically feasible and is at the moment a ridiculous use of our resources. The previous article was really just a blend of half-assed points that really need some background to really make any sense.

You'll notice much of what I am writing on this blog is about energy and economics, particularly oil. Indeed my argument against the Katz Arena is centered around oil, or more specifically what has come to be know as the representation of oil world-wide, the U.S. dollar.

To understand why the state of their dollar matters to us Canadians and particularly to Albertans is that that is what they give us, for what we give them. We give them oil, they give us digital paper and say "this is worth something". Think about it, therefore what are Canadian dollars? Denominations of the American dollar. This is why staying near or below parity is very important for our government, preferably for the Americans they would want below parity.

Still with me? I promise this relates to the Arena, we'll be getting to that soon. Alright, so we've covered oil and the fact that oil is represented by the American dollar. Now, why does oil give the American dollar value? Well because up until recently it was the sole currency oil could be traded in, it is energy. How do we use it? In everything! In every stage of production! Oil is the engine for modern day consumption, it's not just any commodity it is the base of everything we have today.The American dollar is based of the future capacity to pay debts. If countries didn't accept American dollars, then they wouldn't have any value. They are not intrinsically valuable. It is a promise to pay. (Previously redeemable in gold). So what does Alberta get for it's oil? USD.

So how do we get materials to build say.. an Arena? Well we *pay* for the energy; both human and mechanical that is used in the process of getting them. This is where a term called "peak oil" becomes relevant, and which I am not going into here. There are many resources on the internet about peak oil, I suggest checking it out for yourself. I will say this though, Peak Oil is not Oil depletion. Anyone who implies this doesn't know what they are talking about.

Ok, almost to the arena now. You should see now why the USD collapsing is going to play a big role in the coming years. Think about all of these USD Quantative Easing, they are simply pressing buttons on a computer, making "cash", and then giving this "cash" to middle eastern countries for oil. So the U.S. presses a button, prints 1 trillion, and in return they get oil and also the work required to get that oil which likewise costs oil to provide the industry enough energy to get more oil. The same thing goes with derivative energy by the way, so don't think that there is an easy fix to this issue. Soon the CDN government will need to choose whether they go down over the cliff edge devaluation of the USD to maintain the huge trade relations or to revalue the CDN currency effectively cutting off the U.S. trade capability as it would be too expensive for them which likewise would affect our economy substantially as we saw with the brief interruption they had to their economy in 2008 which caused many Canadian auto shops to close, hundreds of thousands lost jobs.

So in either case we can expect a huge economic impact, there is no recovery, the recovery is a bubble, the final bubble you could say (pt2). A bubble of the USD itself, the international currency. There has been no recovery because you can't eat digital paper, or drive with it, it doesn't make buildings or develop new technology. With the manufacturing base in the U.S. gone, they are literally giving the world nothing in turn for everything, how long do you think that will last for?

When it comes to the arena, construction prices will skyrocket along with the price of oil, as the more the U.S. devalues their dollar, the more USD OPEC will ask for oil. (noticed anything expensive lately?) They are in a competition with China and India, China which by the way made the first ever deal for oil with Russia that is not in USD recently.

Daryl Katz did not become a businessman overnight. To own 1800 drug stores proves he obviously has a good grasp on the economy. How much do you want to bet that if someone like me sees this coming, not to mention many others then he probably does too. So why is it he would rather put his big money into a public relations campaign (public relations is propaganda) which I'm sure isn't cheap, instead of just putting it into the arena he wants to help "give" Edmonton?

This is not the great depression, economic growth in the future under today's terms of what an economy means isn't going to work no matter how many fiat dollars they print. Namely GDP which is just a fancy way of saying it is based on debt. This is because energy is now expensive, and will remain expensive as long as we require yearly increases in energy consumption to fuel GDP growth. More cars, more factories, Quantity not Quality.


Now. I want to get into this first class city crap. You want to know why Edmonton is not a "first class" city? I'll show you why:


From top left to bottom right:
  • Sports Bar, Home away from home.
  • The Strat, Classy.
  • More classy places
  • Used Cars
  • Gravel parking lot
This is the intersection at 103st and 82ave. The FIRST main intersection showing what Edmonton has to offer to anyone coming into the city from the airport, the reputable center of our culture. The above lists what they see first. I highly doubt this would fly in a real world class city, you know like the ones Katz Group points to as successful?

We aren't a world class city, and a downtown arena won't change that. Katz Group is playing on your wants for such a dream town, they are playing on your fears of loosing the Oilers. Edmonton has a long way to come in a lot of areas before an arena is going to make or break this city. Its a wasted investment. As I advocated in my previous article, let's spend millions of dollars in thousands of places. We could start by putting something useful in the prime real estate that is the gravel parking lot.

That all I got to say on this subject, thanks for reading. Please read my first article on the arena if you haven't already or continue on about Canada's economy in general.

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