Canada US Relations
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Time to put out news you want to bury:
May 23, 2008
Ottawa, Ontario
Today, the Prime Minister’s Office issued the following statement:
Upon receipt of the Report on the Investigation into Unauthorized Disclosure of Sensitive Diplomatic Information, the following conclusions are noted:
Any comments Mr. Brodie may have made during the lock-up did not reveal any information tied to the diplomatic report, of which he was made aware only on February 28. There is no evidence that Mr. Brodie disclosed any classified information.
Based on the findings of this investigation, there is no evidence that Ambassador Wilson revealed any information tied to the diplomatic report or to any U.S. presidential candidate’s position with respect to NAFTA, though his comments likely helped lead the reporter to the Senator Obama campaign. There is no evidence that Ambassador Wilson disclosed any classified information.
The original diplomatic report was incorrectly classified and had an inappropriately broad distribution list. pmo
Given that the report fully cleared both Wilson and Brodie why release it in the Friday afternoon deadzone? Likely because the PMO does not want the press to re-report a story which they are happy to have fade away. Nothing wrong with that.
I wonder if the CHRC will be floating any decisions, news releases, resignations….
Written by jay on May 24th, 2008 with 3 comments.
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Aw, look at the cute little Canadian babies! It’s all very sweet and innocuous, right?
Don’t believe it. Read between the lines, and you realize this is a sinister Canadian plot to take over America. Canada’s military is no match for ours, so the crafty Canucks are using infancy instead of infantry to carry out their imperial designs.
Think about it. Canadian officials send women across the border, smuggling in “anchor babies” cleverly disguised as clumps of tissue. The women give birth inside the U.S., which means their Canadian offspring are entitled to U.S. citizenship. As these “children” grow and mature, they receive instructions from their masters in Ottawa about how to undermine American culture. JAMES TARANTO wall street journal
Damn, another couple of thousand and, in thirty years, we’d achieve what Kenya appears to have achieved tonight
Written by jay on May 7th, 2008 with no comments.
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Bear Stearns was bailed out on Friday. Very much a temporary fix and very much part of an ongoing process of financial musical chairs in which, when the music stops, there is no chair left.
People like Jim Kunstler can barely contain their glee. After all, the potential collapse of the American financial system just proved that George Bush, the suburbs, greedy Wall Streeters and sleazy mortgage merchants are just as bad as Kunstler has been saying they are. Throw in the rising price of oil and the falling dollar and the end of economic life as we know it - at least in America - is just around the corner.
Now, as it happens, I don’t live in America and from where I am sitting the “marking to market” of the sub-prime mortgage market, assorted bundled credit card debt and mounds of leveraged buyout corporate paper seems both necessary and manageable. The decline of the American dollar - given the US trade deficit and ongoing budget deficit - is also necessary and can be controlled to a degree. A decade and a half of capital export has to be paid for and that payment will take the form of a significant reduction in Americans standards of living.
How big a reduction and how it is distributed is, at the moment, unknown. However, to take a simple example, if the American dollar continues to decline the price of oil in dollars will continue to rise (although there is an awful lot of speculative froth in the oil market). Gas will go to $5.00 a gallon and this will take a chunk out of people’s disposable income. Similarly, consumer goods made overseas will rise in price.
On the other hand, things like houses and rent are likely to fall and fall fast. Not good if you own a house with a big mortgage, but encouraging if you are renting and hoping to buy.
The real question is how quickly this all happens. If it occurs over a few years the dislocations will be painful but possible. However, if it occurs in a matter of months the foundations of the American economy will be threatened.
At this point the Federal Reserve is pumping money into the system to try and extend the adjustment period. The worry is that that extension may be purchased with bad decisions and that those decisions will further erode the currency:
Paper dollars are technically Federal Reserve Notes, which means they are liabilities of the Fed. When it puts newly minted notes into circulation it does so by buying assets, usually U.S. treasuries, which it then holds on its balance sheet to offset that liability. By swapping treasuries for mortgages, the Fed effectively alters the compilation of its balance sheet and the backing of its notes.
However, backing paper money with mortgages is nothing new. The French tried it in the late 18th Century, and it lead to hyperinflation. Assignats, which were first issued in 1790 to help finance the French revolution, were backed by mortgages on confiscated church properties. Although the stolen underlying collateral did have some value, the revolutionaries saw no reason to limit how many Assignats were printed, which resulted in massive depreciation. Within three years, price controls were introduced and failure to accept Assignats, initially an offence subject to six years in prison, was made a capital crime. By 1799 the currency was completely worthless. 321gold.com
Central bankers know this stuff. To a degree the Fed is willing to run the risk of holding potentially worthless collateral in order to preserve the overall system. As a “one off” the Bear Stearns loan is not completely idiotic; however, as a pattern such loans could sink the value of the dollar in a matter of months.
Canada is in an odd position in all this. Our banks, while they took on some sub-prime exposure, have not been lending recklessly. Our governments, federal and some provincial, have a decade and a half of zero deficits and, in many cases budget surpluses. We have relatively low inflation. We have a huge endowment of ever more valuable oil and gas.
While we are, of course, exposed to the economy of our largest trading partner, our economy has been decoupling from the American economy for years. Which can be seen in our dollar’s strength relative to the USD. There is no reason to believe that the pain in the US will cross the border.
The US is undergoing a reality check. It’s political and financial systems have to re-align themselves so that budget and trade deficits are first reduced and then eliminated. Lending into bubbles will cause trillions of dollars to simply be flushed from the system. However, at the end of this process America will still have a huge economy and a vast capacity to invent, manufacture, design, distribute and market high value goods and services. If America can get its financial and political house in order there is every reason to believe it can beat the bears and emerge as an economic, scientific and cultural powerhouse.
With intelligent, realistic, decisions the contraction and re-emergence could take a couple of unpleasant years. With the wrong decisions, or, worse, no decisions or panic, a decade could be wasted.
Update: blazingcatfur notes that JP Morgan has just bought Bear Stearns for $2.00 per share. It closed Friday at $30.00 per share. Marked to market indeed.
Update:
JPMorgan today agreed to buy Bear Stearns, the second- biggest underwriter of U.S. mortgage securities, for $240 million, less than a 10th of its value last week. In order to strike a deal before the opening of Tokyo trading, the Fed agreed to help JPMorgan finance up to $30 billion of Bear Stearns “less liquid assets.” bloomberg
Written by jay on March 17th, 2008 with 3 comments.
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At the end of WWII Switzerland was unscathed, had a strong currency and a sophisticated - and secretive - banking system. When my parents got there in 1960 it was awash in currency. So much so that my father bought a house which had a negative mortgage. That’s right, the bank paid him to own the house simply to have a safe place to put some money. While we lived in Switzerland the exchange rate was, roughly, 4.3 SWF to the USD. (The Canadian dollar was between .97 and 1.07 to the US dollar in this same period.)
The SWF is now trading at 1.18 SF to the US dollar and 1.15 SF to the Canadian dollar.
At the moment Canada is in a position where, if we are smart, we can decouple our dollar, to a degree, from the potentially tanking USD without, for once, taking a huge export hit. Why? Quite simply, $80 USD oil and $720 USD gold and thirteen years of balanced budgets.
On the income side Canada’s huge resources of oil, natural gas, coal, assorted minerals and - though we are not allowed to say this - water - means that we are racking up trade surpluses with the US. But, more importantly, we are also exporting significant amounts of our resources to non-US markets.
At the same time, while the CPC is hardly the picture of fiscal rectitude one would hope it would be, so much money is flowing into the national coffers that deficit spending is a distant, and ugly, memory and surpluses are the order of the day.
Our banking system - while irritating and stodgy - at least had the wit to limit its exposure to dodgy securitized mortgages and while we have private equity folks we have not, as a matter of national business, bunged a lot of money in hedge funds. While some of our banks have exposure to sub-prime risk and assorted doubtful corporate paper, these risks appear to be manageable within the private sector without calls on either the Bank of Canada or the federal government.
Our national debt is declining, not fast enough; but declining.
Imagine if you will that you are a high net worth individual in the PRC. You are selling assorted widgets as fast as you can make them and you are being paid in USD. Your banking system and government are all buying USD debt instruments to recycle the cash and because they seem safe. Problem is that they are not particularly safe especially with money supply growth running at 14% and the Fed lowering rates half a point today. Do you want all your eggs in the American basket with that sort of currency risk and the inevitable inflation which follows a radical increase in the supply of money?
I think not. And I suspect that the PRC people are not alone in their concerns. But where to put the money if not the US. Europe and the Euro are hardly the solution simply because of demographics, governmental paralysis and the utter absence of serious resources. Japan? Not likely for many of the same reasons.
Emerging economies look a good bet save that you never can tell how far the Chavez disease will spread or how quickly the next revolution or coup will occur. Worse, many emerging economies have stock markets which make casinos look legit.
Enter Canada. A strong dollar. A growing aversion to the mere mention of the idea of budget deficits. A central bank which is not at all interested in anything but keeping the inflation rate down. And, most importantly, elephant sized pools of oil, natural gas and mountains of iron, copper, zinc, silver, lead and gold.
If a person from abroad was looking for a safe haven for his USD he could do worse than to convert them into Canadian shares, direct investments or even bonds.
Which brings me back to Switzerland: leaving your money in a Swiss bank at no interest but with no fees over the last 47 years would have tripled its value in US dollar terms. At essentially no risk. But a little judicious investment would have taken that number up, way up.
If the Canadian dollar parts ways with its American friend it is not at all obvious where it will end up. After all, oil could go to $100 a barrel and gold to $1000 an ounce. Our federal government might pay off the national debt early. And people looking for a safe place to put their money might discover the virtues of the relatively transparent Canadian markets and the extremely stable Canadian banking system.
At the moment we run a significant trade deficit with China 15 billion to 3 billion in the first six months of 2007. however, as China’s need for energy and raw materials grows that gap is likely to close. This is offset by our trade surplus with the US which was running at 8.7 billion in January of this year.
Put simply, Canada has every reason to believe that our economy will perform as well or better than any OECD economy over the next decade. And with that will come a stronger currency and our emergence as a true safe haven for money from abroad. Somewhat like Switzerland in the 60’s.
Written by jay on September 19th, 2007 with 1 comment.
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Is it just me or are these the ugliest coins you’ve ever seen…
Washington looks pissed, Adams stunned, Jefferson mono browed and poor Madison simply distorted: give me a .90 loonie any time.
via fark
Written by jay on February 12th, 2007 with no comments.
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The left side of the American blogosphere will be cracking open a few bottle of organic champagn and basking in the glory of defeating three term Senator and Vice Presidential candidate Joe Lieberman in tonight’s Connecticut Democratic primary. Ned Lamont, to the manor born, will be sipping something a tad more vintage and being amazed at the power of insurgency.
For koskids and MyDDers and Firedoglake fans this is the first win in what they hope will be a reconfiguration of first the Democratic Party and, with a bit of a push, American post Bush politics. And they may very well be right; but I doubt it.
There is every chance that Lieberman will run as an independent with Republican backing. And if he does there is a very strong chance that he will be elected. After all, a primary is a perfect place for left liberal insurgents simply because it is an all Democratic affair. General elections are a whole other story.
More importantly, Republicans and moderate Democrats are going to be energized by the Lamont win. The history of single issue candidates - and Lamont was a 99% pure anti-war candidate - is pretty much a litany of defeat.
The tealeaves are going to be read regarding the chances of a “progressive” insurgency in the Democratic Presidential season. Something on the lines of “Dean was onto something.” there are few things which will save the Republican Party from the consequences of an increasingly unpopular war; but a George McGovern or Eugene McCarthy style campaign from the Democrats would make Rudy look awfully good in 2008.
Update: Captain Ed sees the tealeaves in much the same way:
As I posted earlier, this is the nightmare scenario for the Democrats. An outright Lieberman victory or a real butt-kicking by Lamont would have settled Connecticut, allowing the party and the media to focus on other, more important races.
captains quarters
Written by jay on August 9th, 2006 with no comments.
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Glenn Reynolds notes:
This week, crude spun out of Canada’s oil sands came all the way to this flat Oklahoma prairie town that’s known as the oil pipeline capital of the world.
Enbridge, a Calgary-based oil delivery and storage company, opened the taps to its Spearhead Pipeline, a 650-mile stretch of steel from Chicago to Cushing, and the first western Canada crude sloshed into the company’s mammoth Cushing terminal early Thursday.
For years the pipe, which used to be owned by BP, carried Gulf of Mexico crude to northern markets that needed the oil. But as the Gulf slowly but surely plays out, and Canada’s oil sands production picks up steam, the crude is flowing in a different direction.
instapundit
Now, about that softwood lumber boondoggle…
Written by jay on March 5th, 2006 with no comments.
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What fun. Gore has pretty much given up writing his alternative State of the Union message; but our own Ian Welsh at Tilting at Windmills and the Blogging of the President has picked up the torch.
The US is bankrupt.
tilting at windmills
Ian leads off. Well, to paraphrase Bill Clinton, “It depends on what you mean by bankrupt”. The United States owes a great deal of money as a government and Americans owe a great deal of money individually; but bankruptcy occurs when a) there is no one who will continue to finance the debt and b) there is no reasonable prospect of being able to repay the debt. At the moment, with a war on, a Congress obsessed with earmarks, assorted natural disasters and, frankly, a President who has forgotten the line item veto, the debt is around 61% of GDP. Not good. However, compared, for example, to Japan’s 162% of GDP position, the balliffs are not quite at the door.
The US is a propaganda state.
Gore used the much more sinister, America is a national security state. Ian has an earlier, but unlinked post, on this which I don’t have time to read. But his example is “on important issues, like who attacked the country, US citizens simply believe things that are lies”. It is possible that Ian has slipped on the full metal beanie and is going with Mossad, the Jews and Halburton as the 9/11 culprits. Me, I’m sticking with OBL and Islamofasism financed by mainly Saudi money. I have yet to see anything very convincing to suggest any other explaination as to “who attacked the country”.
The US has a military it can’t afford. That military is a battlefield superiority force and completely unsuited for colonial wars of occupation.
Yes to the latter: however, America is not in the business of fighting “colonial wars of occupation” no matter how devoutly Ian and the BOP folks want to characterize Afghanistan and Iraq as colonial adventures. As to what military American can afford that remains an open question. At this point decades long investments in high tech net war are paying off in fairly effortless battlefield domination. A lesson which may, or may not, be registering in the hearts and minds of enemies a wee bit more significant than Uncle Cuddles. In which case the investment is very definitely worth it.
The US political system is irredeemably corrupt.
has been since Mr. Shoddy first discovered there was money to be made selling goods to Union troops in the Civil War. however, the idea of irredeemably may not be entirely accurate. The growing “porkbuster” movement in the US is encouraging. So are some of the spending limit proposals. But, most of all, the fact that the institutional, bi-partisan, corruption of Congress is being exposed offeres some hope that anti-corruption insurgencies may break out. Not likely in this round of congressional elections; but 2008 may be a whole new ballgame.
Average Americans have not seen a wage increase in 30 years, in real terms.
This would not surprise me a bit. The problem is that “average Americans” are not the engines of economic growth which they once were. They have been priced out of world markets partially because of wage competition, partially because, in combination with largely inert managements in smokestack industries they relied upon protectionism to ensure their iron rice bowl remained intact. Unions resisted productivity measures and, with a speed which astonished them, saw their jobs go to Mexico or Asia or even Canada. That, I fear, is how free markets work.
The US has had a class war, and the rich won it.
The American economy moved from an industrial to a post industrial situation and the value added came less and less from labour and more and more from capital and ideas. There is an international market for capital and ideas and if a government chooses heavily tax either they will - for tax purposes - move elsewhere. Certainly the United States could have kept high marginal tax rates; but at the ost of seeing its one significant competitive advantage erode.
A proper correction of the US economy, including its various deficits would lead to a 15% to 20% decline in general standards of living.
This is largely meaningless as there is no serious way of determining what a “proper correction” is. There are plenty of circumstances in which the American economy might contract by that much or more. There are also circumstances in which it could expand at a greater than 5% rate for a number of years.
The US is currently a protectionist state, where agriculture, real estate, medicine, the prison/police industry, and the military industrial complex are where people make money.
This would seem to contradict the logic of Ian’s earlier statement about the absence of any increase in average people’s wages. But, no matter, if you look at the examples, they are all areas which cannot be easily exported. Nor are theyparticularily threatened by foreign competition. It is difficult to imagine why you would need protectionism, conventionally defined, for real estate or the prison/police industry.
There is, however, lots of evidence that Congress in a gang of theives bi-partisan manner are more than happy to pass absurdly protectionist legislation (and the President willing to sign it). See corruption above. The way, of course to bring this to an end is to elect really hard core free traders to the Senate and the House.
The US is an ignorant state with a decaying education system.
Well don’t tell Larry Sumner cause he might think it a good idea to have universities which actually teach rather than toe the PC line. It is a good point however so long as you largely ignore the fact that most of the world’s top universities are in the United States and that huge numbers of extremely well educated people graduate each year in Arts, Sciences, Engineering - broadly defined), Coputer Science and so on. Sure, there are lots of bogus BAs and there is far too much “credentialling” in the name of fairness which excludes rather than includes certificate challenged but competent people.
As for the “functionally illiterate underclass ” the roots of that trouble are partially in funding but mainly in the disintegration of particularily black family life in the US. Where the responsibility for that lies is difficult to determine; but I am inclined to think that Daniel Moynihan had a fairly clear view of the nature of the problem as early as 1965.
The US has a massive underclass which it keeps in line with a harshly punitive and injust legal system which incarcerates more people per capita than any other modern nation, even surpassing Russia.
Given that I think that the War on Drugs - which is how most of the “underclass” get to prison is a horrible mistake and a rolling train wreck of a policy which, tragically, has some resonance in key voting segments of the American population I agree. But I am damned if I can see what is to be done about it.
A ceasefire in the WOD without full legalization would, if anything, simply encourage more gang violence and drug use. Until the profit is taken out of drugs the same insane patterns will contiune to repeat themselves.
The US, in short, is a hegemonic power near the end of its golden era….Like most hegemonic powers in such a position there are still the necessary resources to turn things around. But like most powers the road to ruin has been chosen, because choosing life would require painful changes.
I am inclined to think that a part of the United States is, in fact, just on the threshold of a truely golden era. And one which will float all boats.
It is late and I’ve not the time to do justice to the future but the bullet is this: the intersection of genetics, nanotechnology, information science, intelligent energy design, longevity research, pharmaceutical specifics, space engineering and computation is a reality right now. The groundwork in everything from materials science to artificial intelligence has been laid. The rapid, within a fifteen to twenty year horizon, deployment of working technologies based upon the decades long investments in basic and applied science has already begun.
The old American economy is or will, very shortly be, dead. It is an economy which made things and there are now cheaper places to make things if it is people who are making them. Those things revolved around the quaint custom of buring dead dinos at 1% efficiency to drive places. That is over.
What will replace it are sets of technologies which eliminate the need to drive anywhere while offering the means to do so at first 5% and quite soon 30-40% efficiencies. And the amount of work, good work, well paying work, which will be creted as that particular transformation takes place will be astonishing.
However, along with the transformation of the 20-25% of the American economy devoted to the car, the advent of really good medical, nano technical and genetic therapy; the creation of relatively intelligent ipod like devices; the extension of productive life by several decades will all tend to create an economic powerhouse an order of magnitude greater than America’s current, transitional economy.
And yes there will be dislocations. And yes avian flu could set some of this back. And yes, a default on the soverign debt of America would create a worldwide depression. However, fundamentally, the technological train is on the rails and there is really no stopping it.
The only question will b whether or not the rest of the world, including Canada, will be bright enough to adopt the engines of radical change which are already arriving daily.
Written by jay on March 1st, 2006 with 7 comments.
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I can’t resist a furrther reflection on Ambassador Wilkins’ speech. Imagine the effrontery of the man, in the face of Rick Mercer, pointing out:
Wilkins noted the United States has a better track record on cutting its greenhouse-gas emissions, as a percentage of its total, than Canada does.
Since Kyoto was signed, Canada’s greenhouse-gas emissions have gone up 24 per cent over 1990 levels, while U.S. emissions have climbed 13.3 per cent from 1990 to 2003.
“I would respectfully submit to you that when it comes to a ‘global conscience,’ the United States is walking the walk,” Wilkins said.
cbc
The bastards!
Imagine reducing emissions without a bureaucracy or having to declare CO2 a toxic gas or even carbon credit trading….I blame Bush.
Written by jay on December 14th, 2005 with 8 comments.
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“It may be smart election-year politics to thump your chest and criticize your friend and your No. 1 trading partner constantly,” Ambassador David Wilkins said in a speech to the Canadian Club in Ottawa on Tuesday.
“But it is a slippery slope, and all of us should hope that it doesn’t have a long-term impact on the relationship.”
He said Canada and the United States have one of the best relations in the world, but warned that he often wouldn’t know it by comments made in the election campaign or stories in Canadian media.
“It’s easy to criticize the United States, we’re an easy target at times,” Wilkins said. “…But the last time I looked, the United States was not on the ballot.”
cbc
Sadly there is a long and inglorious history of the United States being on the ballot in every Canadian election. It’s there because there is a long and inglorious history of anti-Americanism in Canada which stretches back to the United Empire Loyalists and has never really left.
I am not talking about the day to day policy disagreements with the US. Sovereign nations will and should differ. I am talking about what amounts to an envy and a loathing which infuses out political debate.
If a Liberal or NDP politician wants crowd reaction he or she merely has to insert the words “US style” in front of a particular policy noun. Try it: US style healthcare/gun control/education. If a poll were to be taken with the question, “Would you be willing to eat potatos grown US style?” I have no doubt that a working majority of Canadian respondents would answer no.
US Ambassador David Wilkins is in a lamentable position. On the one hand he has goofy Paul Martin rushing to embrace liberal icon Bill Clinton and waggling his stubby little finger at the US for not agreeing to talk about more Kyoto (guess cutting emissions is not as important as talking about cutting emissions) and generally dissing the US. As the US Ambassador it is his job to defend American interests and speak out against this sort of irresponsible rhetoric. But, the minute he does he scratches the anti-American itch and actually increases support for the loathsome Liberals.
Damned either way the Ambassador decided, or was instructed, to speak his mind. Good for him. Too bad it will be good for the Liberals as well.
Written by jay on December 14th, 2005 with 3 comments.
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