Ben Bernanke, the FED Chairman in the US gave a speech today that had every economic and market commentator absolutely hanging off of every nuanced word. Listening to the passages would likely put most people to sleep. And from time to time the phrases that command the most attention change and their focus either diminishes or grows in import. Today the phrase "is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly,” referring to the Federal Open Market Committee's desire to fight deflation. So that begs the question:... Continue reading

Its not like we have not had our share of bubbles in North America. And we are not unfamiliar with the results. But what happens when a bubble on the other side of the world collapses and its effects ripple like a tsunami the world over? This is what is happening in China right now. And like the real estate collapse in North America and Europe it is following the same pattern. Chinese real estate is perhaps the most expensive on the planet. At an average of $ 1,160 USF per square meter against an average annual family income of... Continue reading

I am sure by now that you all know I think debt levels the world over are way too high and they pose a latent threat to recovery and to the economic futures of many countries the world over. So in this post I just wanted to make people aware of a couple of items. The first is a book I am currently reading and the second is a news article I read a couple of weeks ago that has been haunting me ever since. The book I am reading is called "This Time it's Different - Eight Centuries of... Continue reading

OK so this blog entry may be a little off topic but I just had to comment as it is a topic near and dear to my heart. The Canadian Air Force has some of the best pilots in the world. We consistently rank in the top when it comes to NATO exercises, TOP GUN training, or just about any combat aircraft competition held anywhere on the planet. To get there you have to have top notch equipment and more importantly you have to use it to its limits. This comes from training and operational use. And lots of it.... Continue reading

According to the ancient Mayan calendar the December 21, 2012 solstice marks the end of a 5,125 year Great Cycle. After that a new one begins and what is in store for humanity remains a mystery. Likely it will pass with the same underwhelming result as the Y2K threat. However, 2012 promises to be the end of another cycle that may have more impact on the planet than the Mayan prophecy. In that year Banks the world over will have to roll over $5 trillion (yes 5 with 12 zeros behind it) in bonds. Of that about $ 1.3 trillion... Continue reading

The G8/G20 meetings in Toronto and Muskoka have come and gone. But their legacy will be around for many years. As will the memory of the shameful vandalism and thuggery performed by the Black Block who are simply petty criminals disguised as agents of change. There are two legacies that will fall out of the meetings. One to Canada and one to the world. For Canada, its legacy will be one of hypocrisy. It was President Obama who wanted the group of countries to continue stimulating their economies although at the cost of ever increasing debt burdens or in the... Continue reading

By now you have no doubt heard of the estimated cost of security for the G8/G20 series of meetings to be held in Canada. At CDN $ 1 Billion it literally boggles the mind. And it is likely the best indication that government no longer cares about how they use taxpayer funds. The last time this meeting occurred in Canada was 1988 and it only cost CDN $ 6 million for security. On an inflation adjusted basis it should cost about CDN $ 10 million to day. So why is it 100 times more? Is the world really that much... Continue reading

It should not come as a surprise that some new financial innovation developed in the USA will be adopted by Canadians and other countries. However, what will come as a surprise is that this time the new innovation is unlikely to create catastrophic financial failure. The innovation is PACE Bonds. PACE stands for "Property Assessed Clean Energy". The process is very simple. Owners of homes, commercial properties and industrial properties looking to install new energy efficient heating, ventilation, lighting systems or other capital intensive energy saving modifications are able to access long term loans to do so. Often with little... Continue reading

There has been no shortage of concern regarding the massive amount of public debt that Japan is accumulating. But should there be? In my humble opinion the answer is no. For the past 15 years at least Japan has been stuck in a debilitating cycle of deflation, continuous stimulus attempts and debt accumulation as a result. What is perplexing to me is why one of the few countries that could benefit from printing money does not do so. The country has massive foreign reserves (over 1 trillion USF), runs a current account and trade surplus, has spare industrial capacity, some... Continue reading

No doubt by now you may have heard of the results of the Oliphant Commission report. It is refreshing as it is depressing. As Canadians however, I believe it is important that each and everyone of us read it, or at the very least the 75 page Executive Summary. The Mulroney Schrieber affair has been at times bizarre, gross spectacle, intriguing, sad, and ultimately instructive. But more importantly it has been an example of the cost one man's arrogance and venality can have for a country's citizens. That Mulroney took $225,000 to $ 300,000 in cash stuffed envelopes on three... Continue reading

Debt is the modern slavery. And it is debt that will be the cause of the major issues this planet will face in the next 5 years. Despite having thrown over 2 trillion towards the collapse of 2008, it will seem an almost comical response in the next few years were the results to follow not so potentially devastating. A review of the period leading up to and during the great crash of 1929 is instructive as it is chillingly close to the events that have transpired from 2008. And while many current commentators have referred to the Great Crash... Continue reading

On the weekend of May 08, 2010 the finance ministers of Eurozone countries and representatives from the IMF came up with a debt stabilization plan worth Euro 720 Billion. The idea is to provide loan guarantees and bi-lateral loans for members of the European Union that run into trouble with their debt loads. The most recent being Greece with Portugal, Spain, Italy and Ireland looking to run into trouble based on the yields their bonds were commanding in the bond markets. Is it me or does anyone else see the folly of this grand plan? In essence the plan places... Continue reading

By now you will likely have heard of the events transpiring in the Gulf of Mexico. As we write this the spill has been growing at the rate of 5,000 barrels of oil per day. A British Petroleum offshore oil rig caught fire, exploded and sank on April 20th. Just two days before Earth Day. What is disturbing about this spill is that, unlike a tanker spilling oil, there is no finite amount that could spill. It was initially stated there was 1,000 barrels a day spewing from the well head at the bottom of the ocean, a mile down,... Continue reading