Trailer Park Boys Fire – RCMP Arrests Random Teenagers

This isn't that big of a story in Canadian news, but I happen to be a big fan of the show Trailer Park Boys and personal liberties. Apparently the former TPB set was being used as a 'hang-out' spot for young people and caught fire (no was injured). The fire was probably started by cigarettes (marijuana's scarcity over tobacco usually translates into joints being treated with better caution), or perhaps it was an electrical fire. Whatever the cause the cops have already decided it was arson.

Michael Ignatieff's Vision of the Future

Speaking to students at Dawson College in Montreal, The Montreal Gazette quoted Ignatieff as saying:

“The key thing is to make sure young Canadians aren’t crippled by debt as they go through post-secondary. They’re carrying a heavy load, and I want to take the load off their shoulders.”

All of us can pay for school with Michael Ignatieff's credit card?! Unless he meant 'I' as in the Canadian government. Then the taxpayers will be paying for Canada's post-secondary students. And since everyone pays taxes, students will still be paying for their own education, just now in a more systematic approach.

So what exactly is Michael proposing here?

Leader of the Opposition: “I have people touching my private parts all day long.”

Pat-downs at Canadian airports will be polite: Ottawa

That's Liberal Leader Michael Ignatieff for you, referring to airport security. I thought this guy was supposed to be a Harvard-Oxford educated elitist? This is what he says about the Canada Border Services Agency bureaucrats:

“It's not a great job. It's tough. You're wearing rubber gloves all day long.”

Does this sound like an intellectual? He hasn't even done his research on the full-body scanners.

“I don't know what they can see. I don't think it's a pretty sight. I don't want to know.”

It's one thing not to know that the machine your going through is giving you cancer, but to have no desire to even educate yourself on the issue?

Here's the entire quotation:

Canada's Debt Crisis

You know, the Carney-Harper-Flaherty Trio did an incredible job back in 2008. They saw the property bubbles around the world go bust and ensured Canada would do the same in a few more years. The Trio had no idea what the hell they were doing or powerful interests came in and said “do this” and the Trio obliged. Whatever happened, let it be known that we had a chance to bite the bullet in '08 instead of dodging it.

Canada's Housing Bubble

Have you ever read the book The Stand by Stephen King? It's about a biological weapon called Captain Trips that wipes out 99% of humanity. The symptoms of the superflu are interesting: at first the patient gets sick, then just as it looks like he or she is recovering, the patient gets sick again and dies. The reason I bring this up?

I think Canada may have the economic equivalent to Captain Trips.

Junk Food Counter-Economy

I once went to high school. It wasn't too long ago, before the Financial crisis but after 9/11. Days when everything – even in Canada – could be blamed on Bush and I could convince my mom to buy me cigars whenever she was in the city. And not just a few for personal consumption but a whole bunch I could sell to my classmates. The high school I went to was in rural Canada and items like Cuban cigars were in demand. For whatever reason it seemed like the more authority told us that smoking was dangerous and disgusting, the more appealing it became. And nothing said bad mother-fucker than a big fat Cuban cigar hanging out of your mouth.

2020 Doomsday Bill Shot Down in Senate

Well it seems like the old climate change issue is at our forefront again, no less just in time for Cancun 2010. What's happening up here in Canada? Not much, other than just an unelected body of government denied a bill that had support in the elected portion of our Federal Government. It's supposed to be rare event but it feels oddly familiar.

Basically the House of Commons voted for a climate change bill that would reduce Canada's c02 output by 40% in ten years. That's a lot of percent. 290 million tonnes to be exact. If eliminating 290 million tonnes of c02 from the economy in ten years seems hard to picture imagine “eliminating all the cars, trucks, bulldozers, railways and airlines in the country.... wouldn't get even halfway to meeting the requirements in the bill”

Opt Out of Health Care

It's National Medicare Week! Did you know that? Neither did I. Apparently this a week where Canadians use “Facebook, Twitter and blogs to pass along links to articles about health issues, share community health resources and encourage people to email Prime Minister Stephen Harper to speak up in defense of Canada's universal health-care system.” These Canadians range from health-care professionals, labour unions, other powerful lobbyist groups and ordinary Canadians volunteering their time and effort for the cause.

As for any real discussions on Canadian health-care the free market approach is an uphill battle. But eventually economic reality will step in and we will a dine a free lunch no more.

Let Scotiabank Help You Crash JP Morgan

Okay here's the deal – you have a busy day. You don't have time to go out and buy silver to crash JP Morgan. Although it's quite as simple as buying it online you want physical ownership, you want physical delivery. Well then Canada, let's stop into your local Scotiabank branch.

The Bank of Nova Scotia is a very old bank like all Canadian banks, and like all Canadian banks it is chartered by Parliament and is very big.

So whether or not you're a customer, whether or not you're Canadian, feel free to walk into any Scotiabank and purchase silver.

Buy Silver = Crash JP Morgan

Big fan of Max Keiser. Saw this story on the front page of his website:

http://maxkeiser.com/2010/11/19/silver-coin-sales-may-surge-50-as-demand-rises-canada-says/


I have some of those coins myself. Bought them right from my local Scotiabank branch.

A Rant About Canada

There's a currency war coming, and Canadians are foolish if they believe Canada can just stay on the side-lines and wait it out. Canada is one of the wealthiest countries in the world, backed by exportable resources like oil, agriculture commodities, forestry and mining (which includes gold). Canada is a major player in the world whether we act like it or not. But despite whoever is in charge, whether it be Harper, Layton or that Harvard neocon – if our monetary policy is going to be directed by the Federal Reserve, Canada is already fucked.

More gibberish from the Toronto Star

I don't know why I read the Toronto Star, I never seem to get anything from it other than relentless rage that motivates me to write on this blog. And that's what this is: another rebuttal to the Keynesian madness that is the Toronto Star's economic view.

Today's subject is an opinion piece by Arthur Donner and Doug Peters. One of these men work at the TD bank, the other is an economic consultant. Let's start with the very beginning sentence:

Canada is minor player in an economic policy drama being played out in Europe and the United States, where the main actors are governments and central banks.

In a world of increasing demand for natural resources like oil and gold, I don't see Canada as a minor player. We may be quieter than the louder actors, but that's just Canada's style.

Other players of note are consumers and businesses, with the financial sector occupying a key role in how the outcomes occur. And one would hope that this drama will dominate leaders’ attention at the G20 meetings this week in Seoul, South Korea.

I would think that consumers and businesses are the only players. Government is only an entity made up of individuals; without private wealth there can be no government services.

I hope no drama dominates leaders' attention at the G20. I hope common sense dominates their minds. Particularly the mind of Harper who should be allying this country with China while Japan cuddles up to the U.S. The U.S. will lose this currency war and we're apt to be dragged down too if we don't alter course now.


There is one central question: Can western economies grow at a sustainable growth rate and, at the same time, create meaningful numbers of jobs?

Absolutely we can. Just get government out of the way and return to sound money policies. If we used something other than debt-based paper as money and stop squandering billions on the federal level, we'd be okay. It'd hurt at first, but in the long run, we'd be okay.

Obviously a positive outcome requires major private sector participation. But what will spur businesses to invest and hire? Our answer is: only increases in total demand worldwide.

The entire recovery depends on the private sector. What will spur businesses to invest and hire will be a complete lack of interference from the government. Taxes and regulation don't help either. "increase in total demand" = lame justification for excess spending and loose monetary policy. It didn't work in the 30's, it didn't work in the 70's, it hasn't worked in Japan and it hasn't been working since '08.

Since the Great Recession ended in the middle of last year, deleveraging (paying down debts) has been the main priority of most Americans, Canadians and Europeans. But when everyone in the private sector simultaneously saves to repay debt, this weakens the economic recovery.

I know that "officially" the recession ended in June 2009, but let's discuss paying down debt.

Obviously paying down your debt is never a bad thing, in fact most sane economists will encourage it. Does this mean there's less money floating around for people to spend? Perhaps, but businesses and consumers that spend and spend without worrying about their debt will never lead to sustainable economic growth, let alone a sustainable system.

And spending doesn't drive economic growth! Going into debt leads to prosperity? That's bat-shit crazy.

When companies deleverage, this means they are under-investing in capital equipment and in new jobs. When households reduce debts, they constrain their expenditures on consumer items as well as housing.

They are three sentences above this. I could write absolute gibberish for now on and it would make more sense than what was just written above.

It is never a wrong time to save, and you can never save too much. Entrepreneurs can't rely on debt to finance their business and households can't continue going into debt forever. Since consumer spending doesn't drive economic growth there's no reason for them too. In fact it'd be better if they didn't.

The U.S. recovery is weak because there is too much saving at exactly the wrong time.

The U.S. recovery is weak because the Obama administration and the Fed keep getting in the way of the market correction.

The new frugality in the private sector also explains why government spending has been the only positive game in town since the financial crisis spread from the United States to other countries in 2008.

The government doesn't have money to spend. It only comes from two sources: the private sector and inflation.

The policy dilemma for governments and central banks is quite obvious. How do you stimulate an economy that is bent on saving to reduce debt?

It is quite obvious: get the fuck out of the way!

Despite the fact that high unemployment is a major problem in the United States, Canada and Europe, there is adverse public reaction to increases in government debt and indebtedness. As a result, many western governments (particularly those facing capital market problems) are “talking up” their deficit reduction strategies.

It should of read "in spite of..." because... well, yeah - obviously there's adverse public reaction to increasing debt. Why wouldn't there be?! Unless you're the one loaning out newly printed money that must be paid back with interest, then there is no joy in indebtedness.

However, this is exactly the wrong time to become preoccupied with high government deficits. Fortunately, the United States is less caught up in this hysteria, but the British coalition government recently announced a major austerity program.

And we'll see which country is better off in the long run. It probably will be the U.S. because of the real Tea Party and the resurgence of classical liberal ideas.


When interest rates are close to zero (as they are in the U.S., U.K. and the euro area), monetary policy, while not completely ineffective, is close to toothless.

Toothless? Ineffective? I'll repeat my previous term: bat-shit crazy. Because that's what it is. Low interest rates fueled the housing bubble and now the U.S. is doing the same thing with Treasury bonds. I can't imagine this turning out well for the rest of the world either; it's a race to the bottom of currency devaluation.

Economists describe this situation as akin to a liquidity trap. Yes, further quantitative easing (QE — printing money through expansion of the monetary base) helps in a liquidity trap but QE is no substitute for a vigorous new round of fiscal policy help.

What's that line from the Keynes vs. Hayek rap?

"Your so-called “stimulus” will make things even worse
It’s just more of the same, more incentives perversed
And that credit crunch ain’t a liquidity trap
Just a broke banking system, I’m done, that’s a wrap."

That pretty much sums it up right there.

But wait there's more!

We think that Bank of Canada governor Mark Carney was cagey in raising the Canadian overnight rate to 1 per cent in October. The increase hardly changed the low interest rate structure in Canada and likely was not a major deterrent to spending or investing. But it did provide the bank with the ability to spur the economy by lowering interest rates later, should it need to do so.

Who cares!? Mark Carney is Goldman Sachs scum and nothing will stop the Canadian housing bubble from bursting! Ha-Ha-Ha-Haaa!!!

There is much to learn from Japan’s recent experience with a liquidity trap. Japan’s economy fell into a period of prolonged stagnation in the 1990s despite the presence of near-zero interest rates. Since interest rates could not fall below zero, Japanese monetary policy proved nearly impotent, as is the case today in the United States.

There is much to learn -- over ten years of failed policy in Japan has made the case crystal clear: cutting interest rates will prolong the depression. Stimulus, bailouts, "quantitative easing" will only worsen the situation and make it that much longer.

In Japan’s liquidity-trap case, large government deficits didn’t translate into either high inflation or high interest rates. The analogy with the U.S. may not be perfect, but it similarly implies that high U.S. government deficits will likely not escalate long-term bond rates because of fears over higher inflation. Indeed, the risks are entirely in the opposite direction, a deflation risk and low interest rates.

That's correct, the U.S. government deficits will not escalate long-term bond rates, but the Fed printing money will. That's what QE2 was.

And the risks are not in the opposite direction. There is no deflation risk, hyperinflation is the name of the game. I can see deflation in some areas, but it's hardly worth noting. No one cares if iPods are $20 when everyone is trying to get their hands on food that keeps rising in price. Unless you buy your food before hand, or grow it. Then you can spend all your silver on an internet connection.

John Maynard Keynes pointed out in the 1930s that the most relevant policy instrument for creating and sustaining jobs in a liquidity trap is fiscal policy. Unfortunately, there is little hope of seeing a new round of fiscal stimulus in any of the G7 countries.

I stopped reading when I saw the name John Maynard Keynes. Everything that man wrote has been debunked. You can read it here for free.

In a world awash with too much savings, the governments of the large economies need to run large fiscal deficits until the private sector (consumers and companies) are ready to spend again. Only when private sector spending is sustainable should governments stop running budget deficits.


Canada and the U.S. don't have high personal savings rate so I don't know where Donner and Peters get the idea that there are "too much" savings. It is our savings that encourage private investment. Taxes and low interest rates discourage savings. One does not need to be an expert in economics to realize this.

When western economies are operating at strong and sustainable growth rates, deficits will automatically start falling and cuts to government spending will not hinder a continued economic recovery. Until that time, cuts to government spending will only delay the economic recovery.

I don't think I've ever witnessed deficits that automatically fall. But I'm young so what do I know?

Well I do know that cuts to government spending actually promote economic recovery, even if the short-term environment is less than favourable. One can look at the Great Depression of 1920-21 to prove this. I'm sure there are other examples where prolonged government interference inhibited economic recovery.

The G20 summit meeting this week is important with respect to the outlook for the global economy. Considerable attention will, no doubt, focus on the American central bank’s recent announcement of a second round of quantitative easing, which will likely weaken the U.S. dollar against the currencies of most of its trading partners.

I hope by the end of the week China will announce that they will no longer finance America's debt and use force against the American people. This force will be in the form of a dictatorship headed by Ron Paul.

But we hope that quantitative easing and currency issues do not sidetrack the leaders from addressing the real fundamental issue: The global recovery is weak because of too much savings and too rapid a pace of debt repayment by consumers and businesses.

Flip that sentence and we're good. We hope "too much" savings and debt repayment doesn't sidetrack the leaders from addressing the real fundamental issue: The global recovery is weak because of quantitative easing and all the other moronic things the U.S. is doing.

(and shouldn't it be written "too many savings" rather than "too much"?)

Canada -- let's not follow suit. What we need are some good Canadian economists in government. The kind that are well-read. If Canada returns to a gold standard, then the rest of the world will follow suit and the quicker we can get on with things.

I have a bad feeling that Finance Minister Flaherty is taking advice from these Keynesian hacks.

Do people actually believe The Toronto Star?

Now they've done great work investigating how Ontario cops can kill, beat and rape innocent people and get away with it, but their business section is locked into a mystical Keynesian everything-is-eh-okay-and-the-recovery-is-taking-hold illogical nonsense.

Take Bill Carrigan's article in the Saturday edition of the Star entitled: ‘Sell in May' and some other losing myths.

Let's break this down bit by bit:

I assume that by now most investors who bought into the “sell in May and go away” investing rule have once again been forced to return to the equity markets at higher prices.

In other words, sell high and buy back even higher.

The Sell-in-May rule (a.k.a. the Halloween axiom) is basically a market-timing model that would have you sell equities in May and return to equities at the end of October. According to my records, this has only worked once on the TSX Composite Index over the past nine years.

No argument from here. I believe in the buy and hold mentality, depending on what you're buying and holding. If you're adventurous to play the market and buy and sell as you see fit, go ahead. Just careful with your (or your client's) money.

Most of the market-timing models that are based on calendar or seasonal trends are investment myths that had their origins based on the U.S. business cycle, which is no longer relevant in today's global environment. That's because auto and cheeseburger sales in Beijing are more relevant than steel production in Pittsburgh.

In this short paragraph Carrigan spouts so many economic fallacies that I don't know where to begin. So I'll just focus on the one aspect: the U.S. business cycle, which is no longer relevant in today's global environment.

Clearly this man is an idiot.

Unfortunately, investor interest in market timing usually occurs during the late stages of a bear market as frustrated investors fret over not selling “at the top.” The reality is that a market-timing strategy is not suitable for investors who have at least a three- to five-year time horizon because bear markets are overrated in terms of their potential to inflict fatal damage to a well-structured portfolio. Bear markets can inflict serious damage only if we are forced to sell at the bottom due to pressure from over-leveraging or a personal crisis.

If you're buying and selling on a daily basis you should probably get a firm grasp of the Austrian business cycle theory. It'll help.

Another investment myth is that “buy-and-hold” is a failed strategy. Actually, it all depends what you buy and hold. During the technology bear market of 2000-2002, the financial and energy sectors actually generated positive returns. Stock sectors that are in long-term up-trends, such as the Canadian financials, materials and global gold sectors, regard most bear markets to be speed bumps on the way to ever higher prices.

The technology bear market of 2000-2002??? It was a burst bubble! After that Greenspan pushed us into the housing bubble and now Bernanke is sending us into Treasury bubble. Of course global gold sectors are looking bullish, the Central Planners at the Fed & BoC have perverted market fundamentals to the point that people are now rushing into what the planners can't touch. Gold. Silver. Commodities. Buy and hold these things, drop everything else.

The jury is still out on Canadian financials, but I wouldn't hold my breath.

How about the “doom and gloom” myth? The perma-bears continually warn of a pending crash. They revisit the crash of 1929, the Great Depression, the U.S. housing crisis and the recent global financial crisis. The disciples of the “Long Wave” predict the Dow Industrials will drop to 1,000 and tell us to sell everything because the next bear market will crush asset prices.

I think Carrigan is referring to the Kondratiev Wave Theory. Developed by Soviet economist Nikolai Kondratiev, the theory says that everyone once in a while there's a major down-turn in the business cycle. So instead of capitalism collapsing, it will just bounce up and down for centuries. Obviously Stalin didn't like his conclusion and sent Nikolai to the Gulag never to be heard from again.

I am not a disciple of socialist economists. Logic tells me that the amount of money printing going on is dangerous and that the US economy is in the shitter. The doom and gloom "myth" (a reference to Marc Faber no doubt) is not a myth. A wide range of economists were predicting the current recession and are warning us of more to come.

Meanwhile Carrigan was telling us back in '06 that inflation is a result of economic growth.

And no one is saying the Dow will drop to 1,000 (no one credible at least). I believe Peter Schiff has mentioned the future Dow being worth one once of gold. That's probably more true that Carrigan's prediction that there will be no double-dip recession. Of course, we never got out of the first recession, so I guess technically Carrigan is right here. But expect to see a fall in asset prices.

There's more to Carrigan's article, but I think I've got the gist of it:

Carrigan -- misguided
Austrian economists -- absolutely right

Look no further than this graph from Carrigan's article



I'm willing to bet all my 'buy and hold' investments that this generation will see at least one more of these Granddaddy Bears... I'm almost willing to bet it will happen before the end of Obama's first term.

But no one can predict the future.

We can however use deductive reasoning. Which is far better than Carrigan's mystical prediction that we're not looking doom and gloom in the face.

A few words on Potash...

There's a sense of economic nationalism in this country, that our natural resources or commodities or corporations should be owned by Canadians instead of foreigners.

It's absolute nonsense.

If foreign companies can offer better management than local Canadian companies then there is no reason why Potash (or a company like it) should be owned by a Canadian or a foreign corporation. Whoever does the better job. Let the market have the final word.

Remember that foreign companies have to use our currency to conduct business here. As long as our currency is strong there shouldn't be a problem... perhaps the issue should be the firing of Mark Carney from the Bank of Canada rather than blocking BHP Billiton's bid for control of Potash Corp.

From the Globe & Mail
Peter Brown, chairman of Toronto-based Canaccord Financial Inc. and one of Canada’s most experienced mining bankers, said Ottawa’s decision to block the deal is “very harmful.”

“Peoples’ political ambitions are interfering with fundamental economic principles that are quite important to Canada,” he said.

To quote the big Lebowski "Truer words were never spoken"

Contrast that to Frank Aquila, an American lawyer with a very wrong opinion:

“Everybody recognizes that governments have the right to step in when they see their national interests being threatened,”

Everybody? I can think of a whole bunch of people that don't recognize government 'rights'.

But I'm getting off topic. Point is -- Harper and his government have abandoned their free market principles in regard to Potash... but considering that this government has abandoned every free market principle since they got into office four years ago, I can't say that I'm surprised.