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A new buzzword  and some  thoughts on the tiresome subject of Climate Change  currently emanating from the media swarm in Paris; with many thanks to Conrad Black and the National Post of Canada.

Paris, city of light, a place that will generate more hot air in two weeks than  World CO2  emissions in a year. The politicians will strut the world stage and make hollow promises to save the world from a scourge they can only pay mock homage to, for the simple reason they do understand the science or the intent of the Eco-Armageddon movement ( mostly NGO’s)

The science of Climate Change, that replaced  the debunked science of Global Warming, is at best, complex and most likely flawed There maybe little doubt the globe is warming but the cause and the result are allusive. We know as a fact the World has been warmer on several occasions and that the seas warm and cool due to ebb and flow of tides far more than atmospheric conditions. The role of CO2 with life on earth is  complex because we cannot live with too much or too little; suffice it to say the result of too little is a far greater problem than too much.

Since the Industrial Revolution, and the commencement of large-scale man-made carbon emissions  the population of the world has increased by seven times but the carbon levels in the atmosphere have not increased by anything close to this amount, nor has the mean temperature of the World  oceans. 

These wobbles in the science would be tolerable on account of the very real  benefits of  cleaning up the atmosphere were it not for the introduction of Armageddon syndrome that lays bear the real intent of the movement.  This can only be a massive transfer of wealth from the richest to the poorest and the creation of a new elite  in the same manner as communism. (It should come as no surprise that the start of the movement coincided with the fall of communism ); the transfer to be accomplished by means of fear rather than the ballot box.

The hubris of the new elite is breathtaking but it will likely cause the downfall of the movement since, like the subjects in Hans Christian Anderson’s tale of the Emperors  Clothes, voters will  the see through the ruse and bring the experiment to a close. Then just like we did at the turn of the century with Y2K we will have to wait to see  if we will cross the invented Rubicon of the magic two degree rise in sea temperature  and chaos follows. 

In the meantime a diversion of resources and considerable dislocation is inevitable, as there would be in any attempt to re-arrange the World without firing a shot.  Canada’s so-called  dirty oil is an unfortunate example. Shutting in the second largest oil reserve  in the world from future production is nothing more or less than a taking  without recourse, to the thousands who will suffer because of the resulting fall in the standard of living. The idea that new industry will magically replace this engine of the Canadian Economy is a cruel farce that will not stand the test of time; ergo Ontario grand experiment  with green power ( $37 billion and counting) 




The Muslims Are Coming:

 The media hysteria concerning the refugee crisis in Europe is hard to miss, even the reporter who felt it necessary to trip a father carrying his child in order to whip up the public outcry over the injustice of it all.

Whilst pondering this insanity  I received a missive from a reader containing a speech given in New York by  Geert Wilders, Chairman  of the Party for Freedom in the Netherlands,  entitled “The Lights are Going Out All Over Europe.;”  The speech was a rant, postulating that the Muslims were taking over Europe, and left unattended, will shortly do the same in North America and elsewhere; rather like the christian crusades of a thousand years ago in reverse.  

This mass migration is not about the Muslims taking over the Western World , as Geert Wilders would have us believe.  Rather, I would suggest, the  stampede is being caused by those who, having been exposed to the digital marvels of our age,  wish for more of the same before the gates to muslim  paradise close for ever. To wit take a closer look at the pictures being streamed over mainline media outlets. How can you miss the smart phones?. Is there a refugee who does not have at least one? Are we really to believe that Muslims check their i phones  at the door of the Mosque or fail to remove the ha-bib  in order to use the thousands of apps available for instant gratification. These people do not want the stifling authenticity of the  Muslim creed–they want out of it. 

If by a miracle, the leaders of the European nations, could bring peace to Syria, does anyone really believe these people would go home? More likely we, ( Apple, Google,, and Amazon), having opened Pandora’s Box, to the wonders of technical innovation, made possible by the western way of life, can expect more of the same.

The ancient great divide between Shia and Sunni Muslims is a matter of faith and now a caliphate (a holy war) between the two divisions of Islam. This is a war that is going nowhere for the same causal  reasons as the great  Syrian  migration. The ancient strident rules of the religion have failed against the onslaught of modernism bought on by the internet and now the smart phone. The supreme leaders may growl and kill non believers, but they are powerless to halt the march of innovation.

Witness also the apparent back down of Iran over the matter of Uranium enrichment. This is no matter of authoritarian adherence to the slogan “death to infidels” but a practical solution to the obvious that the supreme rulers can no longer control a population that is exposed 24/7 to the western way of life and wants in.

As in any human migration there will be a few nuts included (as with the lady spurred, on by a lawyer looking for fame,  who refuses to remove a the ha- bib to take the oath of citizenship) These however should not detract from the positive lesson of history that shows   positive assimilation comes far more quickly than supposed.



No Ordinary Time:

I recently read Doris Kearn Goodwin’s excellent tome “No Ordinary Time” the story of  the Roosevelt’s  War Years (1940 to 1944) in the White House. Lots of interesting stuff, particularly relating to the role of Elinor, as First Lady.  The title words are taken from Elinor’s acceptance speech to the Democratic Convention on behalf of her husband for a third term as president. Who says there has never been a female president? 

 A large part of the message contained in the book is that, in those times, people were actually listening to what their leaders were saying. Or perhaps it was that they had the time and the inclination to listen. 

FDR invented the idea of the Fireside Chat to be carried over the radio,  as a time for  him to make the case to the public at large for the policy he was proposing in the legislature branches of government. No doubt the President was a super salesman, in that he was able to convince a  skeptical public to rearm (thus saving the country from the Great Depression) and come to the aid of England then struggling in the Battle for Britain. But he also had something else going for him namely exclusivity. Radio was the only game in town. 

Compare this to the jibber jabber we have today; the one thousand channel universe, Google, facebook, twitter and yes the all important “trending”.  Is anybody listening? .  Does anybody care?

The technology of me now,  has taken over and is racing away with the future, creating a new elite and leaving the old behind, mumbling about the unfairness of it all. To wit  uber , airbandb,amazon  and iphone. It is as if the old elite are running to catch a train that has already left the station.

Political campaigns are now fought  in sound bites and the social media, as is the battle for fleeting  public adoration. A hero or a goat, it all takes about the same amount of time.  Live and in color on the iphone , in all its glory and brutality, is now the norm.

Perhaps it is because there is no time; everyone is too busy multi tasking. When F.D.R. broadcast his fire  side chats he was talking to stay at home Mums and working Dads. Now he would likely be talking to a tablet owned by a executive Mum or maybe a stay at home Dad, who drives for uber, looks after the kids, and manages the family home as an air B&B.

What this leaves me to wonder is do we still have the tools to build social cohesion should the need arise. So far the evidence is  unclear; maybe with the assistance of the new here and now generation we will grow into this strange new world. 


The China Syndrome:

What an incredible spectacle. The world financial system apparently teetering on the abyss over the failure of China to live up to the economic expectations of the pundits; and all this during the dog days of summer when not much is supposed to be happening. 

Watching the stock markets collapsing around the globe, a spectator might be excused for asking who is in charge? Or has it really come down to an interconnected world where one spark can ignite the whole shebang.?  The answer depends on who you ask. 

The traders employed by the bankers will tell us that indeed it is an interconnected world where trillions of dollars in derivatives are sloshing around waiting for the hair-trigger fingers of algorithms designed by quants. This is the scary world that few understand even though it accounts for the majority of trading volume on the worlds exchanges.

A more rational explanation might be  that asset values (stocks) driven up by years of zero interest rates (easy money) were just looking for a return path to sanity. All that was needed was the excuse, that in this case, happened to be China.

I have written before about China’s need for continued growth as a way for the Communist Party to control the proletariat. I do not think this has changed. But I suspect that controlling the levers of power is proving to be easier said then done. The very thought of  a tightly controlled  economy with massive State  Owned Enterprises placed along side of rampant capitalism  boggles the mind. There is absolutely no precedent for such a hybrid and consequently it is very difficult to figure out what is going on. I doubt however, if the lofty growth rates thrown about by the Communist elite, bear much resemblance to the Gross Domestic Product numbers used by the rest of the World.

The Baltic Dry Index (a measure of what shippers are prepared to pay for shipping capacity) has been falling for two years, and is now near an all time low. The Commodity Index has also been in free fall leading to the inescapable conclusion that World Trade has been slowing for some time. If it were not for the hysteria over China, this might well be chalked up to more normal  long-term cyclical  patterns.

The flip side of the China Syndrome is why would the likes of India. Brazil and South East Asia not be subject to well established business cycles?  Have the bankers and rulers of these countries unlocked the secret of controlled growth? I think not.

As an old-timer I have to admit I have witnessed at least four commodity cycles and I fail to see the difference this time around. The players may be different but the cause is still the same. Too much cheap money pumped into increasing capacity ahead of the growth in demand.

The volatility of the correction had nothing to do with the planners or     the players and everything to do with technology and good old-fashioned greed.   


Rant Break:

We have a saying in Canada. ‘Forget about August’ and for good reason. We live in a country where, despite the admonition of global warmers,  we experience nine months of winter and three months of bad ice every year.  Small wonder therefore that our citizens pay scant heed to what is happening, or what the media says is happening, during the dog days of the month.  I think the same might be said for bloggers and other pundits. Accordingly this will be the last rant until we return in the relative sanity of the fall. 

We in North America  have now entered the election cycle (if in fact it ever ends). For a practicarian (sic), such as myself, I find this rather depressing, until  I remember that free elections are at the heart of the democratic process. As Winston Spencer Churchill said “democracy is a terrible form of  government  until it is compared to everything else”

 So my  rant is in the form of a question.  If we hold democracy so dear why in thunder do we not make it mandatory for every tax paying citizen to vote, either in person or by proxy?  

I link the issue to the paying  taxes because we in Canada have a thing going on, that relates to the necessity of being  tax paying resident citizen, as a precursor to vote;  as opposed to the present system,  where non-resident and non tax paying citizens have the right to vote.  In the US this is handled differently, namely every citizen must file a tax return or  risk going to jail;  a system I like a lot better.

With the advent of the digital age, hackers not withstanding, surely it should be possible to cause all citizens over  the age 18 to use the smart phones, tablets, desk tops et al   to vote on generic electronic platforms where ever they might be.

Australia has performed this rather neat switch with no serious side effects, leading, as some would have  it, to  a far more enlightened populace and greater social cohesion. The reason for this is that by forcing the issue as to the number of voters, as opposed to the first by the post system now in use,  leaders from all parties have been forced to consider the opinions of third parties.  It is noteworthy that using this system, Australia is one of the few countries that has been able to come to grips with the issue of  illegal immigration, a formally very divisive issue.

It seems to me this is an issue with a lot of upside potential and very little  downside

A  second rant relates to the issues that should be aired and debated during these same elections and sadly are not. Like lemmings we only seem to discuss those issues we are told are important, leaving aside those that require more that a sixty-second sound bite to describe.  

 One issue that really needs airing  is  that of bankers and government statisticians cooking the books in order to understate the rate of inflation or disinflation and thereby influence monetary policy; a practice  that is very damaging to the welfare of citizens.  It seems to that the soothsayers start with the desired result and then  change the playing field  in order to get the desired result. 

Following the debacle of Stagflation during the 1970’s our governments were forced  to the conclusion that the practice of reporting monthly inflation figures was causal to anticipatory wage and price inflation. (Government sponsored agencies had become part of the problem)

Rather than kill the goose, the statisticians and other government hobgoblins,  decided, in their wisdom, to change the method of calculating the rate of inflation. Without the  boring details , this involved changing the content of the basket of goods and services used as a measuring stick,  so as to allow for substitution when there was a sudden  change in price in one of the component goods. We are told that the  theory behind this change is  that enlightened consumers will make a substitution when it is in the monetary benefit to do so, a theory that smacks of elitism and maybe totally incorrect. (Lower income folks cannot afford enlightened choices.)

The major beneficiaries of inflation are central governments, (they can pay down  debt with depreciated dollars) ; the banking fraternity; and the uber rich. For the rest of us it is misery. Make no mistake,  it is not possible to inflate our way to prosperity, no matter who is selling the voodoo economics. The hamburger index tells us that we now have to work longer to buy a smaller burger  an unfortunate fact that seems to be finally dawning on both  Big Mac, and the elites.

Henry Ford (no saint by anyone’s standards) got it right when he realized that by increasing the standard of living for his huge workforce he was creating new customers for his factories.

I am of the belief that if our governments can be persuaded to stop lying to citizens and  get out-of-the-way, the great ingenuity inherent in our way of life will take over and dig us out of the awful mess we now find ourselves in. 

It might also help if we would put the genie s’   of the central banks back in the  box where they belong. It is time to recognize that bankers make poor choices when faced with the greed of their constituents. 





Bankers Gone Bonkers:

I saw an interview on PBS  of Christine La Garde the  erudite, obviously smart,  Managing Director of the International Monetary Fund. This happened to come after  news clips of Janet Yellen ‘s  (Chair Women of the Federal Reserve) annual shindig with members of the US Congress during which she was supposed to lay out the intentions of the Federal Reserve in regard to monetary policy.

What struck me was the difference in the manner of speaking  between the two ladies. In the case of Madam  La Garde the bare truth on the Greek Tragedy  vs the obvious waffle of the Chair Women of the Fed on the future of Interest  rates in the USA, something that affects  the whole world.

La Garde told it like it is. The Greek Bailout is, in real-speak, a delay of the inevitable  hair cut that lenders (banks) will be forced to take on Greek Sovereign debt  at some point in the future; after those same banks have been recapitalized by the European Central Bank that itself will have to recapitalized by member nations.  (A case of the dog wagging the tail)

 Its’ all about optics for the sake of the Germans who apparently, despite having been bankrupt on more than one occasion, cannot tolerate a member of the club being given a second chance to get their act together. I liken this to the organizations for professionals (Accountants Architects et al)  who prohibit  members from declaring bankruptcy even when they are  insolvent. 

It seems to me to be all part of a charade put on to try to fool the bond market that members of the EU do not do bankrupt. All rather like the New York Federal Reserve  printing money to keep interest rates artificially low, supposedly to help employment, when in reality they are really only helping their member banks.

Where did we get off the bus on the issue of monetary policy being the only game in town?  Even Milton Friedman dean of the Chicago School of Economics realized that monetary policy alone could not do the trick, and that bankers were fallible.

If the governing elite must be responsible  for ensuring full employment, a task for which  they have proved remarkably inept, then surely it is the legislatures rather than faceless bureaucrats,  that should shoulder the responsibility. 


A New Cookie Jar:

This week back to an old theme where I got started with my occasional rant. I am referring to gold and stories I told in “Sell the Pig”  “Stories of an  Accidental Gold Miner” In particular “The Skin of the Gods” and the tangled history of gold.

With the news this week that the BRIC Countries (China, Russia, India, Brazil, and South Africa) have formed a new pool of currencies to replace the Special Drawing Rights (money of last resort) provided by the IMF (International Monetary Fund) The initial amount set at a value $150 billion  is roughly the same amount as provided to launch Special Drawing Rights, the exchangeable currency into gold,  US dollars, Euros, Pounds, and Yen after the collapse of the Breton Woods agreement in 1969. At that time SDRs’ were valued at .888671 grams of gold and hence carried forward the convertibility of the old US dollar into gold.

It is more than a little interesting that the fanfare of the launch of the new cookie jar led by President Putin makes no mention of gold, as being a part of the new arrangement. All of this bears a strange resemblance to Hans Christian Anderson’s  tale of the Emperor Clothes or the lack thereof. I suppose if all the participants believe BRICS (If that’s what they will be called) are worth something it will be alright but outside the pool it will be problematic.

Officially the BRIC countries hold 3011 tons of gold as reserve currency. ( approximately 10 % of the world total ) Unofficially China and India  may have a first call on a great deal more, and hereby hangs a tale. The gold is owned by BRIC  citizens rather than the sovereign countries, in much the same way as it was in the US prior to  1935  when, desperate to stop hoarding, the US Government devalued the dollar by purchasing all gold held by Americans at $35 an ounce.  

If there is another wobble, such  as was seen  in China during the past few weeks, history could well repeat and set off a chain reaction amongst other BRIC nations to consolidate gold holdings in the hands of government and devalue paper currencies.  I have said before the Communist Party cannot afford for the Chinese economy to go into a tailspin and to avoid this they have to keep the economy growing and more than a billion people happy. 

The Japanese condition of deflation and stagnation is not an option for China or the other the BRIC countries.

The BRIC nations alone  now comprise 40% of all World Trade and must now be bought into the fold to counter balance the ECB and the   US. Seems to me the knobs should be spending more time on this possible race to the bottom than fooling around with Greek insolvency that will make absolutely no difference to world prosperity.