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

November mid-month round-up: Occupy dies, the New World Order is born, the revolution begins

The Occupy movement is dead. Seriously. In it's place however is the new American revolution. They look similar, and the new American revolution is still calling itself Occupy, but they are very different.

I'll point out this difference for you in a very simple contrast of thought:
1) Occupy: When it first started people asked how long it could possibly go on for.
2) The revolution: People are asking how it can possibly end.

This difference may seem insignificant, but I assure you it is THE difference that makes this now a non-violent revolution. Whether you agree or don't agree with what Occupy has become, one thing everyone can agree on is that it's come so far now that it won't stop and it can't stop. It might change shape, venues, tactics.. but the fight is definitely on. The increase in police oppression shows that the system is aware of this. The status quo is in danger, and they know it.

The system is also coming out with the truth more and more. Take this article from Bloomberg/Businessweek:

“Asset sales are impractical in the current environment,” said Simon Maughan, head of sales and distribution at MF Global UK Ltd. in London. “Every bank is selling, and no bank is buying. It just won’t work. Beyond that, the magnitude of the cuts the banks are talking about is nowhere near the likely required amount of deleveraging. They need to reduce hundreds of billions more to adjust to the new world order. There has to be a recapitalization.”

Thats right, to "adjust to the new world order". That's what the Greece/Italy technocrats are a part of. You see, the system is currently working on transforming the population into accepting non-democratic economic policies. This is the new world order, it's a lot like the Kings and Serfs from the old world order.

As the European banking system continues to collapse and it becomes obvious this WILL be affecting North American commerce you can expect that the New World Order will be making it's North American appearance soon (probably after the U.S. supercommitee fails), and that the war on youth I've been blogging about will go into full swing.

This is an exciting time, scary but exciting. The most important thing you can do to prepare yourself, is to prepare yourself mentally for the what were once unbeliveable situations we are about to witness first hand. This is history in the making.

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.

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.

Capturing carbon or public support? The 2 billion dollar conversation

The Sleipner A project injects carbon dioxide into saltwater aquifers deep beneath the sea floor off the Norwegian coast. (Credit: Statoil) / sciencedaily.com

Carbon capture has been a hot topic in Alberta for a few years now. It's pretty well been the government's pre-canned response to any criticism of the environment related to the oil sands. For example:

As such, he cites committing $2 billion to carbon capture and storage - touted by industry and government as a way to green oilsands development.

Alberta's media has been flooded with references to this 2 billion dollar deal as a successful solution to oil sands carbon pollution. For the record, I don't think oil sands carbon pollution is really all that bad in comparison to the tailings, acid rain, or impact on the water table but for the sake of this post let's assume that is the top priority. So lets have a look at whether or not CCS is really a "solution" to the problem. Here is the problem:

How can we generate more power and produce more goods without increasing the amount of carbon dioxide in the atmosphere while keeping energy just as affordable, if not more affordable?

 I think that pretty well describes the problem CCS is being touted as a solution for but if you disagree please comment. Now looking at that picture there -- I think it's reasonably safe to say that cost is not cheap. Obviously that's the Norwegian offshore way but just recently their CCS program was in the news as being set back considerably.

A Carbon Capture and Storage (CCS) facility at the Mongstad oil refinery in western Norway was originally planned to be in place by 2014 but has been delayed several times.
"An investment decision could be taken latest in 2016," the Norwegian oil and energy ministry said in a statement. In May it had said a decision on investments would be postponed to 2014.
CCS may cut the contribution of coal and gas-fired power plants to global warming by trapping and burying carbon dioxide (CO2), but it is untested on a commercial scale.

The most interesting part I find from this exert is "coal and gas-fired power plants", not oil sands. The oil sands are large and spread out. CCS itself uses enormous amounts of power which Alberta is already the top consumer in Canada of largely in part to the oil sands. This would make CCS ideal for Coal or Gas plants in Alberta but what does that have to do with making the oil sands cleaner? Well in my last article I demonstrated that the majority of our new power consumption is from the oil sands itself so in a sense yes CCS would "make them cleaner"; so why isn't the government explaining it that way? I'm guessing they would prefer Albertans not look at how much demand the oil sands are themselves creating.

Anyway, back to the topic of CCS. As I was mentioning that CCS itself is energy intensive, the equipment must be built, it takes huge amounts of energy to compress the carbon, and the storage theories for carbon capture certainly have some safety concerns. Further, no oil sand related companies have as of yet stepped up to the plate with the implementation of CCS in oil sands development. Why? My guess is as with anything oil sands, it simply is not cost productive to do as producing them in their current state is only cost productive by socializing losses.

The only conclusion I can be left with is P.R., 100% P.R. We'll probably never see it implemented, and I wouldn't count on the 2 billion set aside for it to still be there either (but that is another conversation all together). It's likely gone with the 25 million wasted on a website and that shitty slogan no one can remember. Public relations change instead of real change because the truth is we can't afford the real change without the big business on top "taking a hair cut".

What was that slogan again? Freedom to exploit, spirit to believe?

Edmonton Arena Reasoning Awry

* UPDATED * My solution to the Arena Debate.

Ok Edmonton; I've got a beef with the Katz Group. I think they are trying to put one over on us; to distribute risk (that lets all be honest here is quite high) amongst Edmontonians.

nhl.com

Of course I am talking about the beloved Arena: that will revitalize downtown, kick start the economy, upgrade our standard of living, and be paid off in a relatively short time by a bunch of side businesses who haven't stepped forward yet through the taxes that could be levied on future establishments.

Yup, similar to the Alberta Government's theory that oil booms are some sort of universal constant law; the City of Edmonton and the Katz group also seem to be of a similar mystical belief that "if you build it, they will come" in any and all cases.

Edmonton has had a pretty large list in recent history of big investment ventures with little payoff, all in some quest to become a "first class" city which isn't really new. We've made big investments in events like the Edmonton Indy. We were willing to put large bids towards events such as Expo 2017. Yet even though we have held multiple of these world-class events we are not as of yet a "first class" city it would now seem without a new arena for the Oilers.

At the forefront of the drive for a higher standard of living and improved economy for their fellow Edmontonians through the thoughtful service of a new arena is the Katz Group, which according to their site:

The Katz Group is one of Canada's leading drug store operators with over 1,800 drug stores across the country. 

This drive primarily is being done through a propaganda campaign which for the most part seems to offer little information in the "how" department. I call it propaganda because the argument being presented to Edmontonians is being framed for you with the possible outcomes limited to:

• Build an arena and revitalize downtown.
• Do not build an arena and do not revitalize downtown.

The arena is a dreamland, but also likely an expensive economic nightmare based on this rendering.

edmontonjournal.com

Naturally the domain name they chose is "revitalizedowntown.ca". Working to establish an assumed association that the revitalization is an absolute certainty and will surely happen, only the arena itself is debatable not the assumed effects. Their version of the effects this arena will have is that basically, the Arena itself will be so glorious, amazing, and kick ass that business far and wide will flock to have their business near the arena, that people will have the money to pay what are surely to be ridiculous costs to use the arena and surrounding business, that more tourists will come to use it even though its primary months of use for hockey will be when its cold or even colder (-40C).

With the way things are going predicting long term budgets are likely to be pretty much impossible with the Wall Street Journal predicting an end to the USD which up until now has reigned as the international currency and more importantly has been the only currency you can trade for oil. Contrary to sports arena economic experts I have the belief we are nowhere close to being economically positioned to afford a project on this scale.

I have a question for the Katz Group since they ignore me in their Facebook group. If you can own 1600 different drug store locations, and you actually believe this investment is a 100% guarantee -- why not take out a loan? Isn't that what capitalism is all about? If I wanted to get my business a larger office because I needed it and it would surely pay itself off then that would be a no-brainer. I wouldn't then go to the city for my loan, I would go to the bank like everyone else is supposed to. So what is with the insistence Mr. Katz? Could it be this investment is not nearly as sound as you would prefer us all to believe? Could it be you know the construction costs will over-shoot due to current world economic circumstances? Could it be you want the new arena right now before the cost of living goes so high no one will be able to afford the ridiculous cost of tickets to one of the events hosted there? Might it be that world food prices are soaring which is sure to affect us sooner or later?

Edmonton, I plead with you that the logic behind the arena is flawed. There is no extra consumer money right now to fuel the needed amounts of consumption that will be required to pay this thing off. The Katz Group is trying to sell you on the idea to distribute their investment risk on to the people of Edmonton. If we really want to revitalize downtown, how about a park? More street venders? More culture and arts? Why don't we try spending millions of dollars in thousands of places around Edmonton, instead of in one single place? one single investment? I'm all for becoming this elusive "first class" city but my excitement for that prospect does not cloud my judgment on the fact this arena is probably one of the stupidest ideas Edmonton has had in a long time. We already have an arena, and a stadium -- both of which are the center of their particular bad neighborhood. Sports centers do not revitalize anything in Edmonton, and in the end how much should this revitalization really be costing?

Besides problems like this haven't you ever been downtown at rush hour, Daryl? Our downtown can not handle the sorts of traffic this arena would generate even if your theory is correct. Why don't you prove you have faith in the project by going ahead with it on the Oiler's dime and if you can demonstrate a personal faith with personal risk in such a project then I'm all behind Edmonton getting behind it too.

* Edmonton Arena Part 2 *

Welcome to Hellberta

Arnold Lim, Edmonton Journal

That's it! I can't take it anymore, this province is so ridiculous I simply had to make a blog on the subject. No this isn't a happy blog, this is an upset blog; an upset political blog. I'm upset because many Albertan's live in a bubble built out of lies and deceit. Like many places around the world our politicians make promises that are never fulfilled and in fact are bold faced lies.

This province for the longest time has been no better than your typical dirty gambler. Remember back in 2009 Ed Stelmach presented his 5 step economic action plan alongside this budget? Now just a few days ago what do we see again in the news?

EDMONTON — While surging oil prices will deliver a financial windfall to the petroleum-powered provincial treasury, a series of major production hiccups over the fiscal year is expected to cost the Alberta government at least $340 million.

How many times before Alberta tries something new? The definition of insanity is to repeat the same thing over and over expecting different results according to Albert Einstein, are those bumper stickers about not pissing away the next oil boom not a clue for anyone? Does this sort of behavior remind you the reader of any other sort of personality? Maybe the sort that sits in front of the slots dumping money in, waiting for their next big break and not noticing the amount of money going in is either equal to or greater than the amount coming out?

The Alberta government lies constantly, and I'm sick of it. So welcome everyone to Hellberta.