Canada and the fine line between reality and lies

Gone are the days of fairytale stories about Canada's incredibly stable and safe banking system. These stories are now slowly being replaced by a stark reality: Canadians are carrying too much debt.

It is now 2012, and the much promised economic security and stability isn't here. Sure, many supporters of our politicians will say "well it's not our fault, the global economy is at fault" and I certainly won't argue that point, it is definitely at fault. What few seem to realize though is we are a part of that economy as well. It's not that I honestly expected the global economy to be out of the woods but what upsets me is just 1 year ago: our politicians and supposed economic experts did expect that. What good is an "expert" if they can't tell which way the wind is blowing?

Even now, our politicians continue to provide promises of "balanced books" by 2014, 2015, and beyond. Pick a year and somewhere there is some government estimating that's the year their books will be balanced. But based on what? This is utter and complete double-think. The world economy cannot both be recovering and holding back economic recovery at the same time. Someone's lying, and I don't think it is reality.

Canada's tipping point will be here within the next few months. Already austerity is the talk of the town in Ontario. Quebec is now pulling an Alberta; betting that royalties from mining will cover anticipated deficits. People should be quite upset when royalties are used to balance budgets. Why? Because that's future revenue being used to cover current revenue shortfalls or overspending. It's shortsighted and when the future they are stealing wealth from arrives, what then?

Maybe that future is here right now. A recent indicator to our true economic health passed by recently showing just how thin the line we're walking really is. Back in February TD & RBC ended a cheap mortgage financing scheme early a few days after a series of warnings about Canada's debt load sustainability. But it didn't last long as the banks recently just launched the same deal again! What's going on here? Can you think of a good reason why banks would cancel cheap financing for mortgages early only to relaunch the same deal a month later? The only answer I can think of is that Canadian's are out of wiggle room.

If we're to keep up the illusion that our economy is actually still growing, secure, and stable Canadians must be able to afford houses. Not being able to afford a home is a sure sign that your purchasing power has been destroyed; that your real wealth has fallen. Thus there is a need for the Bank of Canada to maintain low interest rates and for banks to offer cheap loans. As long as housing sales & housing starts look healthy most people believe the economy is healthy. Indeed "housing starts" blanket the headlines every time new reports come out. However, if the Canadian household debt continues to grow then it is safe to reason that housing starts & housing sales are only bouyant due to the financing options available and only at the record low interest rates that come with them, but should these rates raise it's likely many people will not afford their monthly payments: triggering defaults. Sound familiar?

February mid-month round-up: Greece burns, Alberta gambles & Canada trades soul for Pandas

Well it would appear that China has finally found a spot to park it's unwanted USD. That would be here in good old Canada and all it cost them was leasing us two Pandas. What a deal! Back in 2011 I wrote a quick post about why Canada's economy is good, bad and bullshit. A key portion of this post was that China was dumping the USD - but one year later with multiple countries such as Russia, India, and Iran writing off the USD as well one has to wonder, who exactly is taking it? Well it would appear the answer is Canada.

Now not only are we trading resources to the U.S. for a devaluing USD, no no.. now we will accept them from China as well. Many people are probably looking at our new trade relations with China and say to themselves: "well thats good isn't it? We're diversifying from dependence on the U.S. economy" - but this isn't really the case. Whether we are receiving USD from China, or USD from the U.S. it is still USD which is directly tied to the health of the U.S. and global economy. So are we breaking our dependence on the U.S.? When it comes to the actual physical trade: yes. When it comes to the value we receive for what we trade: no.

Are you a big coffee drinker? Have you noticed anything happening to the price of coffee? How about other imported foods? If you are conscious about your grocery bill you will probably have noticed it's gone up quite a bit. This is a direct result of piggybacking the CAD off the USD. Many analysts now claim the CAD is directly tied to resources now. They indicate that when resources go up, the CAD goes up, and when resources go down, the CAD goes down. However, the target for comparison always happens to be the USD. You may notice that if the CAD does exceed the USD, it's not by very much and not for very long. This is because while resource prices influence our dollar, a 1:1 ratio with the USD at most (approximately) is essential not just for continuing trade with the U.S. but also to continue trade with any country who trades using USD. The number of countries is large, albeit dwindling. It is really a match made in heaven: MAny countries around the world are looking for a place to dump their USD and Canada's valuable resources are "open for business". As most of our politicians are heavily involved in the U.S. stock market, they also have a vested interest in keeping the USD alive, even if the cost of food and gas for you and your family becomes unaffordable. This is the new measure for economic health, this is why the Euro was rising even as Greece was burning. On paper accepting austerity is great, but in reality it is destroying what's left of their physical economy. You know; the economy that feeds people, not HFT.

On top of Canada's "everything must go" fire sale policy it appears that we also are in a bit of a huff about proposed changes to the U.S. banking system. The take away paragraph from this article is:

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.

Translation: our banks engage in the same practices as in the U.S.

It goes on further:

“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.”

Translation: Governments and Corporations fund themselves using risky and sometimes fraudulent banking practices and if we try to change that now then our "financial stability" is put at risk. Canada's complaints about these changes should confirm for all Canadians that our banks ARE NOT anymore stable than the U.S. or European banks. When you combine this fact with a world that uses the USD and a U.S. whose financial system is mostly dependant on foreign countries providing goods for that USD it should be no surprise the Fed's crisis fund bailed out non-US banks including Canada's TD.

The crisis in Greece is a preview of what's to come for all countries that engage in these practices as their ponzi economies rely on ever-increasing returns while peak oil ensures returns will be ever diminishing. It is the shortfall between leveraged value and real wealth which has Canada concerned as without riskier and riskier ways to leverage funds: profits dry up. For proof of this look no further than Alberta's latest budget which depends on a predicted 40% increase in oil revenue to meet expenses and bring Alberta out of a deficit (yet again).

Alberta's entire budget is based on a "bet" and betting is a feature of gambling. So Alberta's budget isn't really a "budget" at all now is it? When I budget for the month, I do not assume that sometime during that month I'm going to win the lottery and I certainly do not factor my theoretical lottery winnings into my budget. After you win the lottery and have the money in your hand then it is safe to include that in your budget. Now of course the odds of predicting oil price are a lot better than winning the lottery, but the cost of failure is the same.

Back in 2008, no energy analysts and no economic experts predicted a drop in oil price from $147/barrel to $38/barrel. No experts predicted that there would be a scooter revolution due to the price of gas at the time. Alberta has spent the last decade convincing Albertan's the oilsands were making them rich and yet wheres the money? The sustainability fund has been drained, infrastructure is crumbling or 20 years behind, the heritage fund in leu of their olympic train, $25m rebranding effort, and $2B for carbon capture is hardly sufficient to account for all of the resources given away in Albertan's names. With the latest budget and Alberta's continued campaign to pretend it has more money than it does - I expect a repeat of the 2008 situation in Alberta within the next 2 years.

Remember, at $147/barrel - and with cheap credit everywhere - debt could not be sustained. This time around all of that cheap credit has been used up and I believe the ceiling on oil demand is a lot lower. There is no more debt people (Americans) can get into to subsidize their ever-increasing cost of living. If oil hits Albertas targets and without some external crisis (Iran), it's highly unlikely it will be sustained any longer than the time it takes for those price changes to show up in the cost of consumer goods.

Further Reading: The Federal Reserve's Explicit Goal: Devalue The Dollar 33%: Forbes

Why the dinosaur propaganda system can't use social media effectively

Lately I have been swinging my sights on to Ethical Oil's latest mouthpiece Kathryn Marshall. Of course I am not a radical environmentalist; what angers me about Ethical Oil is how insulting their campaign is. Their campaign is propaganda designed to fool Canadians, not other countries.

The Ethical Oil campaign is the face of fascism. Their campaign is nationalist in nature (Canadian interests against foreign interests). Their campaign is a collaboration of government and industry. It is text-book fascism, and fascism never falls on the side of truth.

Luckily for us that live in the era of social media; fascist propaganda is a lot harder to get away with. Take for example Marshall's viral embarrasment from a few weeks ago. All 3 organizations featured boasted this interview on their social media feeds; each expecting to have positive feedback as a result. Of course since Marshall's performance was so poor the Ethical Oil organization didn't get the feedback they were probably desiring, and instead received a big 'ROFL' from the Twitter universe. This brings us to today's topic, which is why the old dinosaur propaganda outlets just can't master the art of social media; specifically Twitter.

The first thing to notice about social media is that your audience is very aware if you are "real". Almost every politician has a Twitter account, but not all of them actually man it. Many (such as http://www.twitter.com/PMHarper) simply treat it as another arm of their PR spin, putting out "tweets" like they put out news releases. It's impersonal and a failed use of social media for PR. It's rare that you will get a reply if you message these sorts of "manned" accounts and it's so obvious that it's a PR team answering your message even if they do reply that these accounts should really be named @[Politician]sCampaign.

Another form of "news release style" social media practices are those used by the @Ethical_Oil account and @KVMarshall. They do take an interactive approach, but they do so in the same form of a relationship that say a blogger and their readers/commentors have. Bloggers often moderate (censor) comments coming from their readers and as a result most blogs usually end up with a "cherry-picked" feeling; where all of the comments strangely seem to be of the same view as the blog they are published on (For the record I do not modify, moderate, or delete comments posted on this blog). Of course, what Ethical_Oil and Kathryn Marshall seem to not realize is: that Twitter isn't a blog and you can't cherry pick your public presence on it (even though it might appear that you can).

For the next few days after her embarrassing interview, Kathryn Marshall went on a Twitter banning spree. Anyone who disagreed with her was banned and blocked from following her on Twitter and thus she no longer can see these user's mentions either. She justified this mass blocking beating some sort of sexist drum and retweeting the few who did make sexist comments to make it appear as though everyone she was blocking was being sexist. Of course most in fact were questioning her absurd statements about Enbridge funding being a "conspiracy theory". What Kathryn Marshall doesn't seem to understand though, is that a Twitter search still returns all "mention" tweets even by user's she herself has blocked. Since she's blocked all those user's who oppose her (Enbridge's) position she has inadvertently created a virtual "social reality" in which everyone she sees agrees with her which reinforces her belief that most of Canada must be on her side.

The result of this is quite amusing, looking at her feed you will see statements such as "I'm so glad I have so many fans, etc" - and looking at her twitter in which she retweets anything even remotely positive about her or Ethical Oil it would indeed appear that is the case, however.. the picture changes starkly if you search her twitter handle. Under the tweets mentioning her handle (or @Ethical_Oil), you will find the majority of them are quite negative. Most are calling out Ethical Oil for being funded by Enbridge. Many are laughing at Marshall herself for seemingly being so oblivious about how stupid she has made Ethical Oil look - and are there any replies or rebuttals to any of these statements? No. Why not? Well it's hard to reply and make your point about your PR spin if you block everyone who disagrees, this might work on a blog but when it comes to social media - sorry - all of those "blocked" comments are all still available for everyone except the blocker. Not exactly smart when the point of launching such a campaign is to convince those who would disagree with you that you are correct. By blocking everyone who disagrees they are simply revealing how disingenuous they are. What's really sad is I think that this point is actually beyond Ethical_Oil and Kathryn Marshall, either that or this campaign is designed "for the ethical oil choir". I mean honestly, the only people they are "convincing" is those who already agreed with the concept of "ethical oil" or those who are so brainwashed they think giving our oil to China isn't "foreign special interests" - but these people all thought this way before Ezra's pathetic blog.

So this is why the dinosaur propaganda outlets will never make good use of the social media platform (however hard they may try). The reason is that social media (unlike traditional media) is an interactive two-way street. Propaganda depends on a one-way, information-out only - where critical thinking is deflected with straw-man arguments about nothing at all. Such as "is our oil ethical?". This is why the ethical oil argument can't stand up in any interactive forum, it's propaganda at it's purest - a 100% straw-man argument - that when analyzed or questioned even a little: falls apart like a house of cards.

The Great Oil War [Chapter 2] : Iran

In chapter 1 of what now may be considered the beginnings of a World-War III we discussed what was then the active military action against Libya. We covered economic hitmen and the typical approach taken by western nations to overthrow or at least get nations to play along with their game.

Of course there are many other skirmishes going on, such as Syria but for me it is Iran which gets a "chapter 2" due to the clear escalation it represents. Back in 2005 Michael Ruppert described exactly the scene we are seeing play out with Iran today:

I know it is 2 hours long but please do take the time to watch as it is extremely important material. As you can see there are no mentions of nuclear weapons in this video and clearly what is happening now has been building for a long time far longer than this "sudden" nuclear media spotlight threat from Iran. Iran of course is simply going to be another theatre war as was described in "Project for a New American Century"'s report titled "Rebuilding America's defenses". The nuclear threat is the same WMD bullshit we were fed with Iraq.

Understanding the concept of "theatre" here is very important. It is theatre for your consumption, like a hollywood movie. If you have been watching the republican debates, one you might find quite interesting is the debate specifically oriented around national security. First of all, to begin: why national security? Why not the economy? It seems to me that national security really only comes up when the mass media exadurates the threats coming from countries with resources, or drugs. Then notice that for some reason all of the questioning is about Iran. You'd think with multiple wars going on, North Korea's leader near death, and China quickly gobling up global energy resources that some of the topics might have also made the list of "national security"; but instead it's a full 2 hours of essentially descriptions of theoretical scenarios involving Iran and how the candidates would respond to them. And respond they did, my most memorable response was Newt Gingrich talking on public TV about how he would use covert operations. Let me ask you, if Iran was such an imminent threat to their national security then why would they publically be discussing tactics they've yet to deploy? Why antagonize a nation you are not yet at war with by talking as though you are? Why give them the heads up? You see it was all for you, dear reader. It was a big scary show put on to promote a war with Iran and to scare the viewers with all of the scary theoretical scenarios the media (government?) could dream up.

I'd like to show you an interesting contrast. Here is some lovely theatre fluff for your consumption put out by ethicaloil.org to promote the ethical oil brand at the expense of Iran, and on the back of 10 years of propaganda and lies. It doesn't hold back at all even mentioning 9/11. It's 100% advertisement.

Here is an objective article put out by Zero Hedge about the dangers of Iran and oil price. See the difference? One provides facts and the other? Well the other tells you all about how great ethical oil is because you know.. war sucks. Sorry.. "conflict" sucks. The HuffPost article is so incredibly filled with shit I'm surprised Huffington even published it. Let's disect this sucker!!!!

Not everyone cares about the conflict footprint that comes with oil from Iran's loathsome regime. Plenty of countries are content to patronize a government that not only brutally tramples basic human rights, degrades women, and persecutes gays, but also uses the currency it collects from oil sales to build nuclear weapons so it can threaten and potentially attack its neighbors.

This is a real gem of a paragraph, let's look past the obvious and skip the demonization introduction. I'm not a fan of Iran but that sentence is clearly there to set your mood for this article. Tacked on to the end after the first three crimes get you all angry is this: "uses the currency it collects from oil sales to build nuclear weapons so it can threaten and potentially attack its neighbors". Obviously the author is hoping that the introduction has numbed your critical thinking here as this sentence is clear propaganda. The mention of using "oil money to build nuclear weapons" is interesting. First of all: I wasn't aware that ethicaloil.org had access to Iran's financials and second: that's a lot of oil money they've spent to not yet have a nuke, don't you think? It's an assumption on speculation presented as fact. Finally the author insults your intelligence by implying Iran has been threatening to attack it's neighbors with nuclear weapons when they re in reality denying these weapons exist at all. Moving on.

When France's president, Nicolas Sarkozy, recently floated the idea of slapping an embargo on Iranian oil to pressure the mullahs to stop their dangerous and illegal nuclear arms race, he won support from Britain, but the rest of the European Union wasn't hot on the idea. They're just fine punishing ethical Canadian oil, but debated over punishing Iran's conflict oil.

Again, let's ignore obvious points such as the fact that there is a large ocean between us and Europe and the infrastructure to heavily douse Europe in Canadian oil doesn't exist anyway. What I find really interesting here is the idea implanted by the author that oil consumption at the moment is some sort of choice by these countries. For those who read this blog I shouldn't have to remind you that we only pump just under 2million barrels of ethical oil a day and I think it is safe to say that with the U.S.'s oil demand, and China.. Europe isn't getting any. Europe is demonizing our oil because it makes economic sense. They don't rely on our oil and they must appease those pesky environmental activists somehow. So they campaign against a product that doesn't impact them to gain popular support, just as ethical oil does against Saudi oil for popular support here. China is a brutal regime too, but we have no problem inviting them in and allowing them to use foreign temporary workers for staff.

But supporting conflict oil doesn't just mean promoting terror, persecution, murder, and war -- though it certainly does mean all those things. It also means promoting instability and risk. That's what the Europeans, and other importers of Iranian oil, are discovering right now. That's because the Iranian autocrats have declared that if the world continues to bring pressure to bear on them over their illegal nuclear program, they'll choke off world oil supplies by closing off the Strait of Hormuz.

The author doesn't know what "supporting terror" is, this is supporting terror with a direct result. Like I said, it is theatre for your consumption, dear reader.

In short, that could be disastrous to a world economy that's already perilously fragile. The Strait of Hormuz is the main channel through which Middle Eastern tankers transport oil for export from Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq. In addition, about 15.5 million barrels -- or a third of all ocean-transported oil and liquefied gas worldwide -- moves through the six kilometre-wide strait. Even for those countries, like the U.S. and Canada, who aren't clients of the Shariah oil state, the spike in oil prices that would be caused by such a major disruption of supply could be devastating.
This is what a world at the mercy of conflict oil looks like. It's a hostage situation. We either directly support the horrendous rule of the worst dictators on earth and, if we don't, they can cause the entire world great economic pain and, potentially, even spark warfare. As the National Post reports, Iran's decision could very well "trigger military conflict with economies dependent on Gulf oil."

This paragraph is almost true, if you remove one word "conflict". It should read: "This is what a world at the mercy of oil looks like". Somehow the ethicaloil.org author has determined that Canada's ethical oil production will have no problem reaching the combined oil output of "conflict oil" countries. Considering that Saudi alone produces around 9million barrels / day I don't think I need to tell you why this assertion is a slap in the face to your intelligence.

Most of the time the difference is psychological: It's about values and the fate of persecuted people in foreign lands. Once in awhile the cost of choosing conflict oil becomes very palpable and very direct; 9/11 was one of those times, when Saudi oil money was linked to Al Qaeda.

Here's the kicker... 9/11!!!! Mixed in with the last three paragraphs of ethical oil promotional lines.

I guess the author hasn't heard that a lot of American money was "linked" too:

To conclude, the momentum behind this war has been building for years. It's no surprise that ethical oil would take advantage of this situation but seriously HuffPost, WTF? The Iran situation is certainly dangerous, it is something we should all be paying close attention to. Last year I predicted that oil prices would bounce between $80 and $100 for the remainder of 2010 (turned out true, no?). This year with the Iranian, Chinese, and Saudi situations I think we will definitely see $150, I can't say whether or not Zero Hedge's $200 will happen, that seems a little high. If it does happen, oil will be so hard to find on the market that it won't matter I believe.

Occupy: Out with the old, in with the new

I'm happy to say that since my last post Occupy Edmonton is doing very well. Edmonton (and the whole world) showed tremendous support tonight. I dare say Occupy Edmonton is nearing the amount of critical mass it needs to carry forward as a major movement. But where to?

All around the world it seems this is becoming the next big question: What is next for the Occupy movement? Will they start political parties? Will they make demands? I've been thinking about it for sometime from a theoretical point-of-view.

Some of the people who I talked with might remember me saying that ending compound interest for instance might be a good demand. But as this week has gone on I started asking the question 'why should there be demands?' What the people are upset about is obvious. Forcing them to make demands is almost an act of submission in itself, just wrapped in a confidence bow. Sure specifics need to be provided, by why is all of the onus on the people to come up with a credible "societal equitable business plan" and present it to big business/government when they would have us believe they make the big bucks because only they know how to make the big decisions or plan the big plans.

Obviously this stance by the system is completely contradictory. It serves a purpose though, it allows them to play both sides of the field. Say Occupy does make a plan or demands and we present them; it's highly likely the system comes back and says that it had it's "experts" analyze our plan and it simply won't work for one reason or another. When dealing with a systemic issue as large as we are the number of straw-man arguments is endless, there are countless ways we could restructure and everyone has a different idea what that restructuring looks like. Its simple to come up with an argument against any system, as the perfect system is yet to be invented. If no demands are made at all we make an argument for the system in that "we do not know what we want". This isn't desirable either.

So seemingly both avenues are cut off. But wait! There is another!! What if the demand is Occupy itself? Think about it. What if instead of demanding what the people need, the people are actually just doing what the people need? Could our society (for now mostly the U.S. although Canada's turn is coming soon) actually have already reached a point where confidence in the system is so low the people are simply shedding it?

Look at the U.S. right now, Occupy tent cities everywhere. They are beginning to turn into miniature self-governed communities. If these continue to grow.. what significance is the government anyway? If the government can't take care of the people and is just a revolving door and shell game with the banks, what good is it? What service exactly is it providing?

This week it occurred to me that the world just might have been looking in the wrong spot. While we were sitting and waiting for demands, we witnessed the birth of a globally supported, internet based governing system. A system based on direct democracy and consensus.

Lets be honest here and admit society is collapsing, and everything is not ok. As a society we have neglected and underestimated many fundamentals to life which have been lost in our current standard of living. Perhaps without even realizing it the human race is already adapting for the inevitable low-energy future just around the corner.

Katie from OccupyYEG says "As one voice, and one individual I am proud to state, I am a part of the Occupy Revolution. I will not stand silent, I will not relocate and I will not give up. We do not have hope, we are hope."

Maybe more than she even knows.

#YEGArena Tales: Santa Katz and the gift of debt

The mystery surrounding Stephen Mandel's trip to New York is over and the word is in; Daryl Katz and Stephen Mandel have a new deal for the city. For those who haven't been following Edmonton's newest attempt to catch the dangling carrot of becoming a "big city", prior to this meeting two main sticking points about the arena existed:

1. A non-compete clause with Northlands
2. $100million in funding outstanding

Post New York it seems they managed to "sort out" the non-compete clause. Katz has withdrawn this request and has instead replaced it with a public-private marketing campaign for the city of Edmonton (I *think* it's about the city, although it sounds more like a campaign about visiting Edmonton's new arena). Considering the ridiculousness of such a request of the city in the first place I don't exactly see this as "productive" since the $100million (arguably the most important sticking point) is still outstanding.

What else has changed? Well it appears the city will now be putting up 100% of the cost up front, with a 30-year "rent-to-own" style lease of 5.5million / year for the $100million Katz was supposed to contribute. Of course Mandel says the city would "ensure" that the $100million is paid, but with the city's *amazing* negotiation skills how confident can anyone really be on that point?

The live chat was again filled with the pro-arena Nike addicts, chanting their "Just do it" slogan. Seriously guys, you watch too much TV. Last weekend while visiting with my parents we all watched the game. I found it shocking how many Money Mart and other payday loan commercials I saw. Thinking about it though, is it really so shocking? Here you have a group of people whose argument for hastily spending a large portion of taxpayer dollars while taking on considerable risk is "Just do it", Money Mart must be getting rich.

So it would appear that Santa Katz this year brings us the gift of debt. Of course we can be completely confident this loan (give away?) will be paid. We can be confident of this because their reasoning for needing public money in the first place is that the industry would go bankrupt otherwise. As we all know, taxpayer dollars are magical and never go bankrupt. So yes, the new twist of logic is "We can't go to a bank and get a loan, we'll loose money. We can however go to the city and get a loan and pay that back 100%".



No investor could realistically take Santa Katz seriously, and that is probably why he doesn't have any.

My solution to the Edmonton arena debate | #yegarena

Ugh, this arena debate just isn't going away. Now it appears the city wants to preemptively buy the land for 25million (on top of the arena's tag price, and infrastructure costs). Some of the ignorant comments in the live chat such as "Like Nike, Just Do It!" shows the severely irrational mentality behind justifying this frivolous expense.

So I'm going to propose a plan that should make everyone happy. It will transfer the risk to those invested in the arena. It will provide returns in as secure a sense as the free market can provide. It will leave the city free to spend it's money on the many high-grade infrastructure upgrades that will be needed should funding be raised. Finally it will give Edmontonian's (or other Albertans, probably open to other investors too) who want to build up, have input, and support the arena a direct way to do this.

Now before I explain this plan, I am in no way vouching for the success of the project itself. Even if this approach were taken, I would not be investing my own money expecting a return. Like any investment this one would be folly to the market's mood and if you read my other posts on this blog my long term outlook for the current global economic system is clear. However that aside, let's see how we can solve everyone's issues here.

First, the main arguments for and against (as I understand them):

• Katz should be using the free market if he is certain about the return on investment.
• Maintenance alone is not worth 100% of return on investment.
• The questionable non-compete clause.
• We are in a deficit and the arena is a luxury item.
• The meetings are too secretive.
• Infrastructure upgrading

• It's believed the arena will contribute to revitalizing downtown.
• The costs to renovate/modernize Rexall are also high.
• The Oilers might leave without an upgraded facility.
• The facility would probably get heavy use by non-hockey events.
• There are high hopes that an arena will springboard an expansion in commercial service in the area.
• It's a 1 time opportunity for the city.
• If not an arena, then what?
• And finally, Katz says he loves Edmonton.

 So how do we solve all of these issues and make everyone happy? We need to both please those for and against the arena, this is a large investment and those not confident in it should not be obligated to fund it. So the solution? We need a competitive bond process. Ownership of this arena needs to be on the open market. We've had partial open ownership of the Oilers before. So let me break this down for you.

Right now it's estimated that the cost is $450 million broken down:

• $100 from Katz Group.
• $125 directly from city.
• $125 loan from the city, which will be paid back with a utility fee in the future.
• $100 is remaining without a source.

What I would propose is to drop everything except the utility fee. The utility fee would remain but not to repay a loan from the city, instead it would go towards dividend payouts. Once the shares were put on the open market, Katz could *buy* his $100million worth of ownership (or however much he deemed fit) and the rest would be put up for bids. As time went on, this would give the Katz Group opportunity to buy back all of the shares for complete ownership and would minimize their risk.

Under this model, I also would not be *AS* opposed to city investment in the arena as there would be a direct return and we'd be able to cash out and have another player buy the shares. This would also give the hockey players themselves a chance to invest in the stadium they play in, giving them direct input. Other investors, and hockey fans would get direct input by holding shares.

So lets see, this solves the issue of Katz circumventing the free market system in hopes of placing himself in a monopoly. If he wants a non-compete clause with Northlands that is his business, but it's not the city's business to give him an edge over an already established business and then demand a monopoly. It solves the issue that the city is getting very little in return as like any other investor it could get as much a return as anyone else depending on free market risk. It places all risk and reward directly on the shoulders of those with direct interest in the success of a luxury item. I personally do not believe with the current credit crisis that an arena will increase growth, so why should I personally be on the hook with all risk and no reward? This mitigates that for me, and also leaves those who think that like Nike "Just Do It" to cover the cost. They might then make financial decisions off information instead of propaganda slogans.

Under this proposal all meetings would need to be 100% transparent to convince investors it's a viable opportunity. Good bye shadowy city counsel meetings, it should be 100% public and this system would ensure that.

When it comes to infrastructure upgrading, the city would have a lot more resources in terms of state of the art infrastructure without an already large commitment to the facility itself, and any commitment like I said would provide direct returns thus topping up the infrastructure fund if the city chooses to put it there.

Since everything on the pro-side is theoretical or fan-based, I don't see why it doesn't meet the needs. It certainly would show Edmontonians how much Katz loves us and the city by giving us direct input. It would give the expected commercial services the chance to have a direct investment in the facility as well.

That's my idea, I'll be refining it as I think about it more, but I think this model pretty well solves all of the major issues and controversies regarding the arena and should make everyone happy, or at least get their happiness out of city council’s hands as they are supposed to work for all people and any deal brokered by the city isn't going to work for everyone.

I am still refining this solution, so please comment with your constructive criticism. Additional factors I should consider, whatever...

In a war of ideology, everyone loses

Not long ago a naive younger version of myself decided he would be ‘left-wing’.  For many years I subscribed to this ideology. I amongst many others took part in partisan flame-wars on news article comments. “Everyone on the right doesn’t have a clue”, I told myself.

Five years later, my perspective has changed considerably. I no longer identify with any ideology. Today I rarely even bother to look at what our politicians are saying, because I already know what they are saying. They are promoting whatever ideology they have subscribed to. They will paint today’s issues with a partisan brush and explain how only their ideology can work. It seems that no matter what sort of problem society encounters all it will take to solve it is a subscription to a specific ideology.

Reality tends to dictate though, that whatever your plan is unforseen circumstances will likely screw with it. This is why life on this planet is adaptive. Life adapts to the circumstances of which it finds itself in. In the last 100 years, with the advent of the petroleum based society which arguably for the first time in human history has provided more surplus than we know how to handle a new problem emerged. How do we control and distribute these resources? It is from this question that the modern left and right ideologies formed. Free market vs. Communism.

Today the world faces vastly different problems than it did 100 years ago and yet  we continue to frame all debates within these two very limited views on society. These views are not adaptive, they do not acount for unforseen circumstances. No one who subscribes to these views truly lives by either of them 100%. Many of those on the right are all too happy during a natural disaster to have governmental disaster relief. Take for instance the recent fire in ultra-conservative Alberta. Even though the government is giving money for rebuilding efforts no one is saying this defies the free market response. Albertans have been accepting of government intervention in this unforseen circumstance.

When push comes to shove in society, ideology goes out the window in favour of critical thinking. The rules of our virtual ideologies do not apply when the “greater good” is deemed imminently threatened. When a crisis is occurring most people are focused on what needs to be done, not who and how they are going to do it. These considerations do not matter in a crisis, there’s a job to be done and someone’s got to do it.

Yet when the crisis subsides the ideologies take hold again. The petty arguing between citizens resumes over petty issues. Who they think should provide health care, the government or corporations for instance. Both sides overlook the fact they both want the best healthcare to be provided, and that should be the primary concern or ‘root’ problem to solve.

Anyone who has ever debated me in politics may or may not have noticed that I refuse to use political labels. When I discuss issues you will not hear the words socialism, capitalism, etc, etc. I don’t use them because they don’t really mean anything when there is a problem to solve.

Since I’m a programmer, I will explain this using a programming analogy. Many people today have a favorite O/S of which you can find flame wars all over the internet debating which is “better”. Few of these arguments though put the phrase “better” in a circumstance.

IE:

“Windows is better for new users.”

“Linux is better for security professionals.”

“Android is better for embedded devices.”

Instead most of these discussions are absolutes, “Windows is better.”

When I’m approached for a development contract, my first question is always “what is the exact problem you are trying to solve?”. I don’t ask what their favorite O/S is, or if they have a preferred language. The reason? The preferred language or platform may not be the best choice for the particular problem. You might want a desktop app to manage your database, but I insist a centralized corporate website is better!

I can tell them what is the best solution to their problem because I evaluate all tools available without bias. Just because I do not like Windows does not mean I automatically rule out Windows as a tool to solve problems. This is the approach that is needed today in politics. As a society we must learn to address the root problem, and use all tools available to do it. Just as Linux is not the best O/S for every situation, the left (or right) is not always the best ideology for a given situation.

What we need to do to solve today’s problems is focus on critical thinking first and foremost. Not until all available tools are given equal weight will a true solution to our problems emerge. I don’t just mean left and right either, as I mentioned before these ideologies are mostly about resource distribution. None of the mainstream ideologies account for things like “finite resources”, instead opting for infintie growth. These ideologies were developed at a time when things like oil production and consumption might have been a sidenote on someone’s napkin at best. They were developed at a time when the majority of economic activity took place within a countries borders. We need to fully step back and address today’s problems without bias. We need to be open to modern technology, and the infinite amount of tools available to us. We need to understand that today’s world is neither socialist, nor capitalist.

Another sleepless night

It's 3:45am. For the past week I've had a churning in my stomach I can't shake, and with it I can't sleep. So much is on my mind, but so much is always on my mind -- why should this week be any different? So I'm going to just sit here, and write in my little space on the internet. I don't know yet even what I'm going to write about.

I can almost sense that the moment of just utter economic panic is closing in now. Since 9/11 who could have believed what we've seen? What we've witnessed? The G20s to riots in London. An utter war rampage in which now it's "nothing big" when we start attacking or invading a new country, It's seemingly become our right, and our right alone (NATOs) to globally police the world. I'm sick of it, seriously plain sick of it. Is this really all our "civilized" and "progressive" society is going to do? Wage war for the earth's remaining petroleum reserves while enslaving the future generations to debt servitude? These days it sure seems like it. So many people I speak to are so adjusted to the constant atmosphere of war and terror played on repeat to us through our discount Chinese slave labour TV screens.

Even when presented with extreme contradiction, such as NATO claiming to be worried about Al-Qaeda gaining access to Libya's weapon arsenal while simultaneously admitting that the "rebel" leader has links to Al-Qaeda! And people seriously believe this crap about our "war on terror"? Get over yourselves and the false sense of reality you have. Our leaders are liars.

This post isn't about Libya though, I still don't know what it's about. Maybe it's about the fact that the number of problems the world has on it's plate is overwhelming? Or maybe it's about the fact these problems are being left to a generation that will have no resources while the baby boomers drool over their stock portfolios and all of the monopoly money they think it will bring? Or how 10 years later it's perfectly O.K. that civil servants and the population was lied to about dust not being toxic from 9/11? The number of inconsistencies, lies, and glaring holes in not just 9/11 but the entire economic and political systems continue to mount and where is our Canadian voice? I'm still not hearing it. We are not going to be able to vote to fix these issues. Not at a federal level at least. The corruption of our system is utter and complete to the point where deception and propaganda infiltrates our lives almost 24/7. Marketing agencies are on a constant search to see where they can put ads next to get in your face. Cable companies continue to extend the time given to ads and then wonder why people are leaving their services. It's amazing anyone manages to end the day having any independent thoughts that weren't baked up for them by a public relations team.

The double-think in our world I believe can literally drive a non-adjusted person insane. If your memory is longer than 5 years then watch out; the plain criminality and denial can be a lot to handle. But no, none of these things are what is keeping me up tonight. So, what could it be?

I don't get this feeling often, maybe its some sort of super-power? I wish. It just feels like a climax of unseen proportions is barreling our way. Today was an insane news day. I'm still processing everything and trying to understand it. It seems Canada is stepping up it's police state. Two announcements today: Stephen Harper is predictably reinstating the charter violating anti-terror laws and in Vancouver's riot report, the "recommendations" certainly raise some suspicions. Take note of the vague terms such as 'hooligan demographic'. Do you know what that is? It's anyone, like "terrorist". I find it interesting in light of London which may arguably have the most CCTV cameras in the entire world and still had the recent riot, CCTV is still being recommended for riot prevention. Watch how fast 'hooligan' and 'terrorist' become one and the same. The writing is all over the wall at this point, Canadians really need to start noticing the path we are on. If you have never seen it, you need to see Into the fire -- this is their preparation for whatever is in store. I've been writing now for some time about how Canada will soon be in the same economic boat as the other western powers, does it still seem so unbelievable? If it does I'm sorry to say, but you have been brainwashed. Repeated statements such as 'economic stability' and all the other crap these politicians spout might sound fancy, but critically think about what they have said. Are they saying anything? Our banks are stable because we have "regulations"? Give me a break; we use fractional reserve banking, fiat currency and compound interest just like every other ponzi fiat economy. They are not stable, Canada's just in a different spot in the economic food chain. Just today I read an article about how we had better drop our "hostile corporate takeover" regulations. "Hostile takeovers in the U.S. are a lot more difficult" -- I almost pissed my pants laughing. Harder for who? Those not on the inside.

Am i rambling? I can't even tell anymore. There are so many problems, but in reality they are all one problem. A failed naked system, an emperor not only with no clothes, but no money in the bank either. The world's last economic hope of China has just reported that they anticipate a slowdown of growth in their economy. Probably because they are short on energy to grow it. It's simple logic, you see. But does either article point to the conclusions of the other? No. Everything is compartmentalized and packaged with a neat little bow for your half-thought out consumption.

I can feel tensions in my generation are growing. It's not a simple anger boiled around politics or economics. It's a complex, deep seeded anger, that either consciously or unconsciously is on every youths mind. When we see articles today about the baby boomer pensions crisis it's pretty well a huge red flag of hopelessness for future generations already debt ridden. If anyone from my generation believes there will ever be a pension waiting for them, it's a false belief. Maybe it's more faith than belief. Or even normalcy? My generation has been taught that you work hard, live it good, then retire. It's another form of double-think, we are constantly told by the system that everything is ok, and yet if there is a debt crisis now, a pension crisis now, what hope do we have in 40 years? This feeling of hopelessness is inherently political. It really makes me angry when simple-minded supporters of this corruption boil down events like the London or Vancouver riots to simple phrases. One of the more common one's I heard was "Well what do you mean they're poor? They've all got ipods and are tweeting.". Well what do you expect? this comes back to the 24/7 corporate invasion into our life. Madness that can drive actions like this. This isn't 1991, you don't need to be rich to have a cellphone, and most carriers are more than happy to sign multi-year contracts providing the phones for free. Just like how governments keep adjusting the CPI so that real inflation is hidden. Oh the price of food went up? That's ok, kids will just buy more Ipods because they are cheaper. This is the lunacy of the system we surround ourselves with, and then wonder why it's blowing up in our face.

The response from the system is becoming obvious. A campaign against western youth is well underway. The system knows we are long overdue for a generational revolution, and it just doesn't want to let go. It'll come none-the-less though, it's inevitable. Just as civil unrest has spread like wildfire in Europe and the Arab nations, it will be here too. One day in your streets you will see events like this for yourself. They are gearing up for a war against the generation they've stolen everything from. They know most of us will figure it out one day, and when that day comes the propaganda against them will be in full effect.

I'm going to try to sleep now.

Forbes openly admits to internment camps in the U.S.A.

Update* Forbes is sourcing bogus stuff. I have contacted the author to either verify or correct.

Update2* I've contacted the author, and he was not aware the source was bogus. Bloomberg has not made this announcement, at least not yet. I still recommend giving these videos a watch though.


ORIGINAL ARTICLE
===========================================================
In the wake of hurricane Irene Forbes is reporting that Mayor Michael Bloomberg has warned looters they will be put in internment camps if caught. This is a shocking development, and leads me to believe that the United State's (and Canada's?) network of internment camps is now running and operational. This could signal that they expect economic crisis in the very near term.

The notable paragraph:

In New York City, Mayor Bloomberg chose not to evacuate the criminals in Rikers Island, according to Mother Jones. The mayor has also warned that any looters caught during or in the wake of the storm will be placed in internment camps. This raises questions about the role of law enforcement and order during a natural disaster.

===========================================================

More information:

Into the fire (I believe this is preparation or training for the same thing in Canada):

Debt Collapse - $20,000 Gold - Mike Maloney (FULL PRESENTATION)

Canada: A country in economic denial

Well the market since the S&P downgrade of U.S. debt has been a fun ride huh? Gold continues to set what seem like daily records while stocks are "only slightly higher than a decade ago". But all of these lightning fast developments have not shaken the faith Canadians (and in particular, Albertans) have in the positive outlook on the economy. Canadians still believe that the politicians we call leaders had "no idea" this was going to happen. We are a country in economic denial.

Psychologically it is no different than when a wealthy business man looses their job, their house, and will continue to dress in suits even though they live in a car. This is becoming commonplace amongst the U.S. population whose jobless outlook is bleaker by the day. It is indeed a psychological issue, and is quite prominent amongst our population too.

No one believed the titanic could sink either...

For instance, last week when I tweeted that I had successfully predicted the Bank of Canada interest rate dilemma i received an overly rude message from a fellow Albertan which said "Being essentially the smartest man alive, I'm sure you've turned all your nostradamus like predictions into millions ". This is a typical reaction from someone that is in denial, and finds the topics I write about truly frightening. So frightening that to effectively deal with them he must fantasize about nostradamus like "fortune tellers", which normally are quite crazy to put his mind at ease. For it is simply impossible that Canada is not in the pristine economic shape it has been claiming and anyone with evidence or opinions to the contrary must be crazy.

My prediction wasn't the work of nostradamus. It was a simple conclusion based on a trend being set by current events; the outcome was obvious and I explained briefly the logic to reach the conclusion. All it takes to make such a prediction is to stay current with events, and to think for yourself. The sender of this message obviously hasn't actually read anything I've written, otherwise he would be well aware that millions in fiat money is just what I have been saying it is. Worthless. Why would I want it? I write what I write because it is what I think, and I strongly *hope* that at least a few Albertans and Canadians were inspired to prepare for their futures from my words; that is all, not money, nor twitter followers. I personally don't care if you listen to me or not -- ultimately we are all in charge of our lives, but what we all have in common is that we are on the Canadian economic titanic together. It is your choice whether you want to believe this ship isn't sinkable or not, I surely won't convince you otherwise if you believe it's unsinkable in the first place.

Of course, having provincial and federal governments that also are in denial are not helping matters. Alberta has announced that it's deficit is in better shape than first thought. Of course these numbers are all based on events before the U.S. downgrade during a period where oil was sky-rocketing. As I have reiterated over and over and over again; the oilsands can *ONLY* bring in a profit during large upward moves and it is unlikely with world-wide economic growth outlooks that we will see $120 oil again this year, and it will be rare that we see $100. I predict the price will remain between $80-$100 for the rest of the year. This of course means all of the profit predictions being made by the Alberta government are based on the Q1 run up in oil prices. again as I've explained many times though, input costs take longer to catch up to the price of oil than profits do and once the bar is set for $80-$100 input costs all of those market riding profits are going to dry up. We've already seen this happen once before, remember when $70 was "high and profitable"? Now the government dreads a $70 oil price. It's also a one way road, meaning that input costs don't come down. What happens instead? the projects shut down. The Alberta and Federal governments have been playing Russian roulette with the Albertan (and Canadian) economies with the full support of an uninformed population in economic denial. They are uninformed because an informed populace would have seen the direct connection between Alberta's "growth" in the last few years and the U.S. QE programs. An informed populace would have noticed how in 2008 we lost hundreds of thousands of jobs the moment injections of cash from the U.S. stopped flowing into American businesses in Canada.

As I often say to my friends "if Canada was any other country [without our vast natural resources], we'd be so broke we wouldn't know what to do with ourselves". We may quite possibly be the worst money managers in the first world. We simply don't realize it because theres always more "oil in the ground" or "fish in the sea" to replace the funds we squander and not to mention our number 1 trading partner can (for the moment) print all the money they need to pay us. If Canada properly managed it's resources, we'd all be living like kings. Instead we've opted to "sell the pond, instead of the fish" and at bargain basement rates at that. From the actual issuance of our currency, to the oilsands, to our nuclear industry it is safe to say that Canada is "For Sale" and it is through these bottom basement price sales that Canada has been able to lie about the amount of foreign business we are loosing due to global economic circumstances. At least up until now.

Canada, we are a country in economic denial. Time to face reality.

A rundown on Alberta's future

So the deed is done, the U.S. has now officially been rated AA+ for an entire trading day during which the S&P took the ratings axe to many U.S. institutions. Many people who have read this blog probably look at it with an overly negative outlook. Please now look back at all of my posts and notice they revolve around two themes. The price of oil & the collapse of the USD.

I've been clear about three things in particular:
1) The USD will collapse.
2) The price of oil will not rise continually enough to sustain the oil sands developments, and the failing America's will not be able to afford it.
3) Alberta's failure will be due to lack of diversification or having all of our eggs in a failing market.

They are really not complex principles. Hard to believe maybe.. back in April, or March. Or if you followed me on Facebook before I moved to twitter/this blog for the two years on there in Canadians for an Energy Revolution. But are they hard to believe now?

I have to tell you all, I'm pissed. I do not write about these issues to be a "downer". I write about them because NOBODY is discussing them. I don't *want* Alberta to fail, but it WILL fail unless we address these issues now, TODAY. For over two years I have been posting news, writing blogs, emailing the legislature and parliament, and nobody wants to address a U.S.A. failure and the implications on Canada.

I don't have solutions for you. I'm not going to lay out any plans for you to follow. This is a job for the community to do. The communities around Alberta collectively need to discuss the very real and imminent problems in the economy that will be caused by maintaining the oil sands projects. They need to figure out how to adapt their economies away from an industry that puts multiple projects on hold if the price drops. This "stop and go" mentality is my main reasoning for my negative outlook on oil sands production capacity along with the three points above.

Extreme oil price volatility will be a fact of life now until 1 of 2 things happen:
1) U.S.A. stabilizes (won't happen)
2) USD is dropped as the reserve currency of the world. I've written a bit about this scenario here.

And Edmonton, for god's sake stop bothering with the stupid arena project already. Does our city counsel not understand that the world has big problems on it's doorstep? Canada is not invincible, it may seem so now but as I've said before we will be near the bottom of the list of countries affected. This is because we won't see a massive drop in revenue until our trade partners can't afford the costs involved. At this point, we will be hit fast and hard.

A chain-reaction is happening right now, as I write this. The last support in the U.S.A. economic house of cards has fallen and the debt collapse I spoke of on Friday is underway.

* Update | 08/09/2011: Seems that OPEC has now revised it's oil demand outlook downward once again. One of the reasons cited is the cost of oil hampering economic growth. Look back to point 2, The price of oil will not rise continually enough to sustain the oil sands developments, and the failing America's will not be able to afford it.

* Update | 11/09/2011: MSM articles about Canada's U.S. dependent economy are starting to emerge ( article1, article2 ). It's only a matter of time now before the truth is obvious and in our faces.

* Update | 17/09/2011: Will Canadian oil go to China instead of the U.S.? What Stefan doesn't understand in this interview is that it is not "individuals" from China investing in oilsands. It is the government of China investing. All oil in China is state run.

A conflict over ethical oil

By now anyone who follows energy, economics, or the environment has probably heard the term "ethical oil". If you are not familiar with it; it was coined by Ezra Levant in his book Ethical Oil: The Case for Canada's Oil Sands. It also coined a lesser known term "conflict oil".

Recently a new blog came to my attention which was influenced by Ezra's book and it's causing quite the stir amongst environmental groups not sure how to counteract the image being portrayed. This image or argument is essentially that right now society requires oil, so would you rather get this oil from unstable, civil rights violating dictatorships or from friendly democratic Canada. This argument is painted for you in colorful contrasting advertisements which pop up on the blog showing the clear contrast between "life" and "death" (green or orange), along with exaggerated images to reinforce the idealism. A happy worker in a green field for "life", and a destroyed oil excavation site with Hugo Chavez imposed over top for "death" for instance.

Inside the site is scattered with cherry picked statistics, such as the employment statistics for nearby native communities. It is certainly a clever ploy by Big Oil which more or less renders the environmental aspect and argument moot as no matter what anyone says regarding environmental impact the response has become "well would you rather have 'ethical oil' or 'conflict oil'?". Clever indeed.

What the website fails to mention however is that as long as we have dependence on oil the world will always require conflict oil. Lets put this in perspective, here is a chart showing world oil consumption and production. Do you see the spread between European oil usage and production? How about for North America? Never-mind even about Asia-Pacific, but consider it none-the-less. For this argument we will not look at it as we don't need to. So roughly from that chart, you could say that if Europe and North America didn't import (or export), production would need to increase by what? 20million/day? 30million/day? Well according to Canadian Association of Petroleum Producers Canada's total production in 2010 was 2.8million barrels / day. By 2025 they estimate 4.3!!! (Keep in mind, this is the oil industries estimates, not the *REAL* numbers.).

So here is what I ask you Ezra, how is your argument for Canadian oil relevant at all? The world doesn't just need oil, the world needs conflict oil. There is no magic bullet to make that not so, and no amount of Canadian ethical oil (rated at 1.5million barrels / day in 2010 (World usage = at least 85 / day)) will change that. Do you know why Ezra? Because unlike ethical oil, conflict oil doesn't need $100 / barrel to pretend a profit is coming in.

The oil sands are environmentally damaging and are not financially viable. We don't even know what the untold costs in environment and water usage are. They will never ever ever add up to more than a drop in the world oil usage bucket, because production is inefficient. It requires too much energy to make a barrel of low-quality "oil" from these projects of last resort. Remember when $70 / barrel was "expensive" and enough to make Alberta a profit? What happened to that? now we need $100. What happened is the input costs caught up with the output costs, and we don't want to know what happens if a sudden market move drops oil well below the input costs as it takes time for those price fluctuations to reach production. In other words the oilsands *only* bring in profit during sudden upward market moves in oil up until the time input costs rise due to the cost of oil. Get it?

Conflict oil vs. Ethical Oil is a straw-man argument. The infinite growth economy doesn't care how many people die to fuel it, or how much of the environment is destroyed. All it cares about is fueling more growth, which needs more resources, or the debt pyramid we've sold our kids into will collapse on our heads. You've been warned.

PS: Here is another reason to not buy into ethical oil vs. conflict oil.

* Updated | 08/08/2011: Well it's Monday now. The U.S. S&P downgrade has taken effect in the market; and what do you know, this appears in my twitter feed. Yea, wow. Amazing I know. Get it yet? The oil sands are a MONEY LOOSER. The price CAN NOT climb forever. What is worse: we are selling our resources short, without our own stock or "strategic petroleum reserve". That's right, we have no SPR.

The next Alberta economic boom will be funded by faith

Good day to you Albertans. I haven't written on this blog for quite awhile, in fact I wasn't even sure if I was ever going to blog again. Things are moving too fast now to really spend any significant time on a particular subject however I feel Alberta's economy needs some special attention right now.

Just recently I saw an article proudly displayed on every frontpage: Alberta tops U.S. job creation. Apparently Alberta's job market grew by 22,000 jobs where as the ENTIRE united states only recorded 18,000. Naturally Albertans rejoiced, claiming that boom times were back and economic growth was on the way. Further it seems to be not a reason to be concerned but instead put even more faith the Alberta government is right "waiting for oil & gas revenue to rebound". Anyone remember Ed-TV almost 3 years ago? Anyone remember Alberta's "5 year economic action plan"? Yea, I didn't think so, apparently 3 years into this plan we are still on step 1 "waiting for oil & gas revenues to rebound". So lets look at when they will be rebounding.

Who buys our oil? Who is our largest trading partner? Well it happens to be the U.S. The same U.S. that had the remarkable drop in job numbers, and now today GDP data just kicked the U.S. while already down. One has to wonder exactly where all of this expected economic growth is going to come from? U.S. oil demand continues to stagnate, and lets be honest about how much time it takes for oil infrastructure to be set up for any profitable sales to China or other cross-continental markets. A long time. China certainly is pursuing this option though, and you can trust that China (the largest slave-wage market) really has Albertan's jobs and wages at heart.

Just wait for the day in the very near future where Alberta says "hmm, we really didn't see this coming". Because they will, of this I have no doubt. The forgotten 5-year plan will be revived and extended into a "10 year plan" and by the time Albertan's and the Alberta government take the global economic situation seriously we will not have the funds to do anything about it.

The new Alberta boom is based entirely on faith that Alberta "always has a boom". We simply expect economic booms to be thrown our way, and when we are not in one we are waiting for the next. There is no world-economic data to show any signs of a coming boom for Alberta. Yes, we had more jobs than the U.S., so what? That means a whole bunch of our clients will soon not afford our product. 18,000 jobs for an entire country is dismal, it does not point to an Alberta job boom, it points to a U.S.A. mega-economic failure and this will surely affect the Albertan economy in the not-to-distant future. Faith alone can't sustain us anymore.

Oilsands optimism on the downslide

canada.com

The oilsands continue to take public relations hits across the globe. Just recently the Keystone pipeline leaked yet again making for the forth pipeline leak in relation to oilsands pipelines in the last 2 months, 2 of which occured in Alberta. In the midst of all of the bad public relations it seems a very important long term trend has been overlooked: Canada has significantly decreased it's expected oilsands output.

In 2005 the alberta government released a video of their current plans for Alberta's oil economy:

The video makes an estimate that Canadian oil output will be 5million barrels per day by 2030, however just recently the Guardian released an article about Canadian oilsands which contains an interesting little blurb:

Output will increase five-fold to 5m barrels of dirty oil a day by 2040.

Now obviously this author is biased against oilsands oil, and in being so could have his facts wrong. He doesn't source where this output estimate comes from. If he is correct however, that means in the last 6 years, Alberta (and Canada) have significantly lowered their output expectations.

Going by Alberta's original video, over a period of 25 years we would see gains of about 140000 barrels per year. But if the 2040 estimation can be believed we will be seeing a yearly increase of only 100000 barrels per year over a period of 29 years. (Calculations based off 1.5m barrels / day in 2005, 2m barrels / day today).

So what could this indicate? Well for one, it indicates that prior to 2008 economic turbulence probably was not considered by the Alberta Government. Indeed their attitude at the time was "We're in a boom, we have money, it'll never end!", well until it did end that is. It tells us that Canada is overly-optimistic of their production capacity during a time when the input costs are an unknown (the gas and water and electricity needed to power the oilsands operations).

With an estimate of 5m barrels by 2040, I am now forced to lower my estimates of a peak of 3.5m barrels in 2020 to 3m barrels in 2015. We'll never reach the 5million mark, as oil price lead depressions will destroy demand as soon as any sort of production ramps up, causing the sorts of shutdowns we saw in 2008/2009.

Alberta, you need a new plan, and Canada: we'll never become an energy super-power if we expect to get our energy from the energy intensive, unstable, and fiscally impossible oilsands industry.

* Update: Changed calculation results from fractions to whole barrels produced.

Canada's Economy: The Good, The Bad, and the Bullshit.

Seems to be a lot of confusion out there about why exactly Canada's economy isn't entirely under water like the rest of the world. Is it Conservative policy, was it Liberal policy? No one seems to really know, and both parties claim it was their doing.

Reality Check: The people make the economy and not the politicians. So in this article I will explain to you why our economy is currently percieved as being stable (which in reality it is not anymore stable than the currencies we depend on).

Canadians have all heard the stories about how "stable" our banking system is. The reality couldn't be further from the truth and a little known fact is our banks were bailed out by the U.S. Federal Reserve. This was an under the table deal which was only revealed this year and it was on top of the Canadian stimulus package put forth by the Harper Government and the Liberals. It coincidently didn't make Canadian news, and I'm sure most people reading this never heard about it. You were never meant to hear about it as it would fly directly in the face of the 'deep integration' plans currently underway.

Now I know my detractors will point at the "AAA" rating of our banks in the article and simply say they were just looking for more profit, so let me remind you the banks that failed in the U.S. all had "AAA" ratings. Rating agencies are run by the ratees. This should be obvious given that the S&P is only just now warning about U.S. debt even though U.S. debt has been a problem for awhile. The S&P is only now saying something because their credibility is being seriously questioned by those who bought into the USD koolaid.

So what's so great about the Canadian economy? Well we export resources, and this isn't because of political policy in the last few years. We are one of the few energy exporting countries left, in fact just recently Russia announced it would be cutting off petroleum exports in the month of May. This is just one more sign that the dawn of the post-petroleum age has begun due to peak oil.

What is bad about our economy? Well, about 60% of our economy relies on trade with the U.S. We give them valuable resources, and they give us USD. Unfortunately the USD continues to push towards record lows due to the QE programs while gold continues to push for new record highs. So what exactly is Canada getting for it's valuable resources? Not much. We are trading resources that are only increasing in value, for worthless digital paper that is not worth the paper it's not printed on, and is also decreasing in value. Sound like a good deal to you? Well it gets better.

What does Canada use to import pretty well everything? USD. Unfortunately for us, China has begun dumping the USD meaning that as our politicians push for more integrated trade between the U.S. and Canada, the rest of the world is trying to figure out how to dump the U.S. and not get stuck holding the empty bag. Canada will be the empty bag holder, as none of our politicians have the political will to say no to the United States. In other words, all 4 politicians telling us the economy will be fine are completely full of shit. We have no control over the economy, we are an exporting nation. This means as long as there are buyers, we can be sellers -- but if no one is buying, we won't be selling. We experienced this briefly in 2008 before the U.S. initiated the TARP programs.

So Canada, we have a big decision ahead of us. Do we decouple the CAD from the USD, effectively cutting off trade with them, but returning our dollar to a reasonable value? Or do we keep the trade going by devaluing our own currency and thrusting 8% or more inflation on Canadian citizens. I'll be honest, neither option is without it's downfalls. We will not escape this crisis pain-free.

* Updated | 11/09/2011:The decision is now ahead of us. As I predicted when I wrote this article on April 30th (posted just after midnight on May 1st), Canada is faced with a decision on whether to break the peg to the USD. Raising interest rates would prevent the inflation I mentioned (for a time) at the cost of our exports to the United States. However, as I mentioned in 'Miss Canada' our political "leaders" have no political will and this probably won't happen. This includes the NDP which voted alongside the Liberals and Conservatives to continue our illegal war against Lybia, in which we are actually backing Al-Qaeda. They are all puppets.

* Updated | 18/09/2011: Surprise, surprise, the truth about Canadian banks is coming out. Like I said, our banks are only as stable as the currencies we depend on. Look around the world... all of them are failing.

Canada is a country in economic denial.

Miss Canada 2011

Here we go again, another Miss Canada contest. Leaders debates, campaign roadshows, and probably more time spent in a stylist's chair than your favorite hollywood actor. Is it any wonder we have such low voter turnout when so many Canadians are not even entirely sure how our political system works? Let alone having any faith it works at all?

canada.com

Browsing comments on election articles you often will see statements such as "I'm not voting for Stephen Harper." Well just an FYI, hardly anyone in Canada is voting for Stephen Harper. You would have to be a member of his Calgary constituency. You see here in Canada, we actually don't vote for a Prime Minister, believe it or not. We don't even vote what "party" will be in power. Our MPs vote for these things and it is indeed quite possible to have a Prime Minister elected from a party not in power, as long as the house has faith in the governing body. In simple terms, we elect members of parliament and nothing else.

I know it sounds simple right, and yet here Canada is stuck in this Canada/American party politics, first-past-the-post void. Canadian elections today are more like leader popularity contests, which is funny because it is also entirely possible for the "leader" to not even have a seat in the house. This is why leaders choose a constituency that is highly likely to vote them in and favor "their party". Wouldn't it be embarrassing for Prime Minister Stephen Harper to not get elected to his seat? Yes it *could* happen in our political system. When it comes to the "party system", I believe strongly in what Gerald Celente has to say:

"they're having a party, and you're paying for it." -- Gerald Celente

This election though has had a few interesting turns in events. everyone has heard about Harper throwing students out of his rallies. I personally don't care what he does at his rallies, it is his prerogative who attends and who does not. Whether it represents true democracy or not is debatable but in any case it is not illegal. However, what seems to be getting the good old media white-wash on this is that it is the RCMP doing these background checks:

“I was told the RCMP had done a screening and that perhaps my name was affiliated with something on Facebook or the Internet,” MacDonald told the Star. “Something that made me unfit to enter. They wouldn’t say what it was.”

The RCMP are even complicit in removing media from Harper events:

Since when is it the RCMP's job to work for political campaigns in this manner? Normally we would say things like this happen in a police state but as mainstream media constantly reminds us we are not Iraq and this is not a police state, which leaves me still almost a year later without an appropriate term to call this circus:

Truth of the matter is that Canadian elections are just for our entertainment. None of the parties have any interest in explaining the real way things work. All of them have latched on to this party policy crap which is usually superficial issues that don't affect our overall agenda. Notice how during this election all work for the people has stopped to campaign, but agendas we take part in such as bombing Lybia are going ahead as scheduled. In the end no difference will be made, especially if we go with either the Conservatives or the Liberals who both have publicly stated an intention to sell Canadian sovereignty.

The Cons:

The Libs:

So you see, when it comes to what matters to those in power; on the real issues, they all agree. That is why Ignatieff is not using the G20 public inquiry as an election issue. The liberals don't want an inquiry into the rights abuses, just as much as the conservatives don't. Indeed it was the Paul Martin liberals who created the event in the first place, at which rights abuses have occurred at almost every single event held. The Liberals will focus on the costs though, to give the illusion of opposition. There are many other examples of the singular agenda between the Conservatives and Liberals.

When it comes to the NDP, they will promise the moon to get in power. But once they get in and realize the world economic state what will they do about it? The sad truth is that today, no political "party" or politician has the political will to come out and lay down the situation about the world debt collapse and peak oil even though it's obvious confidence in the economy just isn't there.Take for instance the Liberal Platform fiscal policy which states:

A Liberal government will commit to reducing the deficit to one percent of GDP within two years, down from 3.6 percent in 2009-10. We will set subsequent, rolling targets to continue decreasing the deficit every year after that until the country is returned to surplus. Unless Canada is faced with an unexpected second recession, all fiscal planning will be consistent with this anchor.

"Unless Canada is faced with an unexpected second recession"? How often do you see that on a political platform? Or take Harper's flagship platform promise which might take effect in 4 years if everything is A'Ok economically. Politicians today are running on empty promises, because that is all a politician really has under their belt to offer. They then go and backup their empty statements with propaganda campaigns to keep peoples faith in a political system of all stripes and colors that has screwed them over time and time again. How many politicians does it take to change a light bulb anyway?

Canadians need to realize that we have some serious structural issues that go far beyond our partisan political bickering. Until politicians stop painting the world in rainbows, sunshine and lollipops voter apathy will only go up. Fewer and fewer people believe the tired rhetoric coming out of these people's mouths on a daily basis and I believe this trend will only continue as the world situation gets worse and increasingly contradicts the unrealistic promises in their platforms until one day there will only be one action left to take: facing reality.