Politics & Politicians

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You Owe $60,000 – Welcome To Alberta’s Avoidable $100B Debt Crisis

Last week the NDP Alberta Government introduced yet another budget without any cuts in it.  Instead they are relying on growth to balance the budget by 2023 leaving us with colossal debt of about $96B.

Citizens, including me, do not seem to grasp numbers larger than about $10M so some context is key to understanding.  To put that debt in perspective, there are just over 4 million people in Alberta, which makes YOUR personal portion of the Provincial debt $24,000.  Statistics Canada shows that Alberta averages 2.5 people per household.  This means your household will owe $60,000.

The Canadian Tax Payers Federation calculates that the Alberta’s debt is currently increasing at a rate of $315.80 per second.

Let’s contrast that number of other Provinces.

How Much Debt Do BC Citizens Owe?

Both the previous Liberal and current NDP governments in British Columbia have been on similar spending sprees and while certainly not as deep, BC has had many similar economic problems to Alberta in recent years.  Think about BC’s primary industries (Oil collapse, softwood lumber disutes…).  However, in February 2018 their NDP Finance minister announced:

“Government’s direct operating debt is projected to be eliminated in 2018-19, one year earlier than forecast. This will be the first time government has been direct operating debt-free in over 40 years.”

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By Ian Matthews, ago

US Government Again Reduces Bank Oversight, 10 Years After The 2008 Global Financial Collapse

After limited debate the US Senate overwhelmingly approved a further reduction in “Dodd-Frank” banking regulations introduced in 2010 to avoid another 2008 style bank generated economic collapse.

Dodd-Frank‘s primary mechanism for doing this was to require financial institutions that were “too big to fail” to withstand stress tests.  The idea being that if your bank was going to need a government bail out in the event of failure, effectively making you and me the banks insurance company, that such banks need to prove that they can withstand large economic downturns by keeping enough cash (and near cash) on hand to cover their immediate debts.

If banks pass the stress test, and ALL did in June 2017, they can issue dividends and buy back their own stock (financial engineering to raise their own stock price).  If they fail, they can’t.  The results and some key details are published so both the markets and individual investors know which banks are stable and which ones are not.

The principle Dodd-Frank change passed in March 2018, was to increase the threshold needed to be included in the stress test, from $50B to $250B.

Banks and other large financial institutions are not evil corporations but they are run by greedy people just like you and me.  When those people are given massive incentives to bring in large amounts of income to the banks, they are likely to take risks that are absurd in retrospect, just likely they did in the 2000’s.

When the money that is risked belongs only to shareholder, employees, and board members, there is not public issue with those risks; even ‘crazy’ ones.  The problem occurs when the company (bank) in question is so large that if it fails it will bring down the countries (globe’s?) economy.  This is also called “systemic risk“.  Such a failure cannot be allowed to occur, so governments step and transfer your tax money to those companies.

Put simply, if you are ‘too big to fail’, the public has a right to validate your stability.

While laws must be periodically updated to keep up with the products offered for sale and global political / financial environment, the problem with the March 2018 changes is that they are all reductions:

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By Ian Matthews, ago

How We Know The Trump Campaign Did Not Criminally Collude With the Russian Government

Let me start with the obligatory, I do not particularly like Donald Trump, believe much of what he says or think his campaign was shinny clean.  That being said I do like to listen to both facts and common sense, so let’s go:

How We Know Trump’s Campaign Did Not Collude With the Russian Government:

There are a few key points to consider when thinking about the claims that the Trump Campaign for President of the United States in 2016 was seriously aided by the Russian Government:

  1. It has firmly been established that almost no-one in the 2016 Trump Campaign, including Donald J Trump himself, thought that he had any serious shot at winning until a few days before the election (if then!).  Why would anyone intentionally collude with a foreign power unless they thought they were close to a victory?  The upside is questionable and downside is massive.
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  2. Most people assume that large scale ‘attacks’ need co-ordination.  This is false,  From Al Qaeda to political operatives, all that is needed for an effective campaign is a general direction.  Individuals and organizations know what do without centralized organization.  For example, in the US, the Koch brothers do not need to talk to the Trump or Bush campaigns to know their job is to bang on the Democrats and promote the Republicans.  Russia based organizations do not need direction from the Kremlin to know what to do.
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By Ian Matthews, ago

Will The New Canadian National Projects Review Mechanisms, Resolve Provincial & Municipal Disputes

At the heart of the Canadian Federal Governments announcement today about fixing the process that determines if a large scale project is in the best interest of Canada or not, is a desire to limit ability Provincial, Municipal and interest groups (like ‘First Nations’) to stall approved projects.  The idea is to:

  1. increase consultation so everyone’s voice is heard
  2. set firm and visible rules for industry so that “goal posts” are not being moved after the fact
  3. determine what is in Canada’s best interest, when that interest is at odds with local interest

These are clearly admirable goals.  To achieve those goals there are now going to be three structures that industry must pass through to get Federal Government support:

  1. A new ‘Impact Assessment Agency of Canada‘ will do the preliminary investigation to determine the environmental effects of a project
  2. The existing ‘National Energy Board’ is demoted and renamed ‘Canadian Energy Regulator‘ but still be responsible for determining the technicalities of a project
  3. The ‘Federal Minister of the Environment‘ will have the final say  if a project is viable and in Canada’s interest

So now the questions are, will these changes allow:

  1. Industry to decide that spending many millions of dollars to go through an elongated approval process that will have a definitive outcome be worth while?
  2. Provincial, Municipal and interest groups (like ‘First Nations’) to be heard and listened to?

There has been much debate over the process and all agree something big had to change:

  1. When industry works on large scale projects deemed to be in the Canadian national interest after years of consultation and vetting that are still blocked by local and regional interests, there is a big problem.
  2. When interest groups (i.e. some ‘First Nations’, Municipal governments (i.e. Vancouver) local and Provincial governments (i.e. BC) feel empowered to block large scale projects that adversely affect the rest of the country, there is an even bigger problem.

Dennis McConaghy, a former senior executive at Trans Canada Pipelines thinks these changes will not achieve the desired goals:

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By Ian Matthews, ago

10 Things Canada Is Doing Right In NAFTA Negotiations

Multinational trade negotiations are often accused being a closed door mess with a never ending series of mistakes, but Canadian negotiating strategies on NAFTA have been very successful.

Successful is a subjective word and this site aims to keep to the facts and avoid too much opinion, so let’s define success.  In the context NAFTA negotiations, success is defined as a trade agreement that is as favorable to your country as possible, with least amount of drama.

Canada, so far, has been “walking softly and carrying a big stick” with the following successful tactics:

1. Starting Negotiations With Demands: Canada laid out its criteria early in the process.  This instantly gave the Canadian negotiators important bargaining chips to potentially throw in at the end to close a deal.  Things like the dispute mechanisms and protecting the Dairy industry make great domestic politics, which bolsters your position with the other side, but are “nice to haves” and not truly critical to the success of a final deal.

2. Quietly Racking Up Negotiating Chips: In Canada’s case starting superficially unrelated proceedings, like attacking Boeing’s now demonstrably malicious claim against Bombardier, and starting a WTO claim against the US’ unfair trade practices, gives Canadian negotiators more “chips” to bargain with.  Massive deals like NAFTA often include side arrangements to terminate other proceedings.

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By Ian Matthews, ago

Trump Brings in 30% Tariff on Solar Panels, Temporarily Killing .25M US Jobs

On Monday January 22, 2018, the Trump administration brought in a 30% tax on imported solar panels.   This new solar tax will last four years and decrease over time to 15% in its last year.

“Over the last 5 years, nearly 30 American solar manufacturers collapsed; today the President is sending a message that American innovation and manufacturing will not be bullied out of existence without a fight… This is a step forward for this high-tech solar manufacturing industry we pioneered right here in America.”
pressreleasepoint.com/trump-imposes-tariffs-solar-panels 

PUNISH CHINA?

Of the few that have heard of this new tariff, the common misconception is that it is an attempt to punish China from dumping (selling below cost, to kill competitors) panels but the US only imports 10% of its solar panels from China (see the last 30 seconds of the video below).  As you can see in the video below, the US solar industry did not ask for and does not want this tariff.

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By Ian Matthews, ago

VIDEO: Short Summary of What is Happening With Net Neutrality in the US?

First world governments around the world, including Canada  have come down on the side of Net Neutrality (the idea that internet providers can not advance or block one website or stream).  The notable exception to this is the United States under President Trump’s appointed FCC leader (and former Verizon executive) Ajit Pai, which has eliminated the Obama era rules protecting an open internet in December 2017.

The Republican / Ajit Pai / Trump argument is that the infrastructure is owned by the internet providers so they should be able to do what they want with it.  The opposing view, held by most citizens is that the internet is like electricity or a phone; charge for the service but it is not the providers concern what is or is not connected.

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By Ian Matthews, ago

The Poor Are Getting Much Richer In Canada

In a world of ever increasing political division in which those on the ‘right’ side of the spectrum are forever vilified for cutting social programs and making tough choices to balance budgets, it was quite refreshing to see that under a Conservative federal government in Canada, the poor became much less so.

Quartz research released a study of Statistics Canada data titled “The American dream still exists—in Canada”.  It showed that between 2013 and 2016 poorest 20% grew TWICE as fast as Canada’s richest 20%.  Canada poorest had their incomes move up a staggering 24% in just 4 years.

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By Ian Matthews, ago

VIDEO: How The Left Plans To Win the 2019 Alberta Election

Recently I attended a Progress Alberta event titled ‘Emergency Town Hall: Why Progressives Can Win in 2019’.  This event had four notable presenters and I was very pleased that they allowed me to record the event.  Personally, I found sessions 3 and 4 (below) on how the left has to respect the United Conservative Party and Jason Kenny to be the most interesting.

The ‘Coles Notes’ version of the night would be:

  • Calgary will be the only notable battleground in the 2019 election
  • Alberta is far more left than presented in the media
  • Jason Kenny is a machine that must not be underestimated
  • The left has a natural role in governing that is not understood or accepted by the general public
  • Conservatives own the media, including social media
    • I find it amusing that every side thinks the other side controls the media
  • The center cannot consistently win elections, which could be extended to ‘people need a common enemy to rally around and that means left or right’

1: Why Progressives Can Win in 2019 Alberta: Alberta is More Progressive Than You Think – 8 mins

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By Ian Matthews, ago

Recycling Crisis as China Closes Doors To Junk Plastic & How EPR Can Help Solve It

There is a global crisis with municipal recycling programs that is affecting YOUR community as of January 1st 2018.  China is now rejecting all used plastic, except “high grades”.  High Grades are used materials that are fully sorted.  This means mixed plastics, aka Low Grade, will no longer be taken.  The problem for us is that we rely on China’s cheap and efficient labour force to sort low grade plastics for us.

This video explains the Chinese “National Sword” policies that bans 24 different types of products (read: mixed paper, mixed plastic and mixed clothing) and how the US is beginning to deal with this.

We talked to Dr. Christina Seidel, Executive Director of the Recycling Council of Alberta about this issue earlier today.  She said that “… (consumer) education is good.  We need to be more careful about what goes in…(to the recycling system).

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By Ian Matthews, ago

Alberta’s Carbon Tax: The Right Tax at the Right Time?

Alberta's Carbon TaxIt used to be very clear that Alberta had a spending problem and not a revenue problem.  However, since the 2014 oil crash, the world and Alberta have forever changed.  Historically, oil ‘busts’ were the result of a downturn in some key economy that reduced the demand for oil & gas products.  Today we have the worlds first notable price downturn caused by over production of oil, with no end in site.

Saudi Crown Prince Mohammed bin SalmanThis over production was started intentionally by Saudi Crown Prince Mohammed bin Salman in an effort to kill shale oil fracker’s and other non-state owned small players.  The idea was to have OPEC lead an over production that would drop the price of oil for a few years and force the marginal upstart players (i.e. US based frackers) out of the industry.  Then Saudi lead OPEC would reduce supply and drive the price back up.  Well, the Crown Prince was wrong and it didn’t work.

More importantly it won’t work in the future.  Saudi Arabia and friends can reduce the global price of oil by increasing production but they can no longer raise the price because they no longer control the global output, here’s why:

  1. American fracking companies scale up their oil production in a matter of weeks
  2. Canadian oil sands in Alberta and Saskatchewan have vast reserves backed by billion dollar upgrader investments that just keep coming online
  3. Iran, which has had its oil embargoed for decades, now is pushing 3 billions of barrels onto the open market as of the 2017 lifting of sanctions
  4. OPEC nations like Venezuela and Nigeria are desperate states the need cash and they will continue to cheat their OPEC agreements and produce produce produce
  5. Putin and Russia so desperately want to be a world powerhouse but only has an economy the size of Spain’s, with 20% of its citizens without even running water.  The Russian federal government gets nearly HALF of its revenue from oil so when the price drops, they just produce more which keeps pushing the price down.

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By Ian Matthews, ago

What Trump Got Right About US Foreign Policy:

Much has been said about the Trump administrations lack of a coherent foreign policy plan.  He seems to have changed to tone to an us vs them winner takes all approach without considering even the near term negative consequences of such an approach.

Even if that is correct, Trump definitely got something right on US Foreign Policy: US citizens stopped buying in the notional that the US should be the ‘Global Global Good Guy’.  Somewhere in the George Bush, Bill Clinton era, citizens saw an ever expanding, less than fully-coherent foreign policy that directly cost them billions of dollars, thousands of lives and the respect of many foreign citizens outside of the political class.

The US Government has thrown its weight around, with a view that it can do little wrong, since the end of World War II while US Citizens see and feel the losses.  The US Government has lost the ability to explain the vast positives that come from such interventions:

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By Ian Matthews, ago