Normal Corruption, Move Along

Kelly McParland of the National Post has written a revealing piece on the corrupt tactics of a modern entitlement welfare state, Canada in this example linked below. He concludes with the following: Maybe that’s what’s so scary about the whole thing: that Liberals don’t see anything wrong with it. They think it’s all fine. And they want us to vote for more. Exactly. Many partisan supporters of the Liberals will simply adopt the attitude that the SNC scandal is old business. It’s time to move along and get the government of Justin Trudeau re-elected. As I’ve pointed out previously, in … Continue reading Normal Corruption, Move Along

Semi-Free Trade

I applaud the efforts of Canadian Prime Minister Stephen Harper to promote free trade. Over the course of many months we’ve heard about the Trans-Pacific Partnership (TPP) with the United States and several Asian-Pacific nations. Discussions are ongoing with specific countries or regions, including Europe, India, China and most recently, Japan. News reports suggest that free trade is a good thing for Canada and for Canadians.  It is indeed, if it is the simple concept of free trade they’re all talking about. Ordinary Canadians however, are distanced from the facts of the “negotiations” surrounding the multiple “free-trade agreements” currently being … Continue reading Semi-Free Trade

Loonie Tunes

The Canadian dollar—the so-called “Loonie”—has been flirting with parity against the US dollar in foreign exchange markets. This concerns some Canadian politicians, regulators and economists. An economy based on commodities relies on exports for economic growth, which bolsters the image of those who attempt to manage trade. A strong dollar makes Canadian goods more expensive to foreigners who must pay more to acquire the dollars needed to pay for Canadian goods. Some economists have suggested that the Bank of Canada should sell Canadian dollars to devalue the currency. This sort of fine-tuning would make exports more affordable to foreign customers. … Continue reading Loonie Tunes

Plan B?

“Government Motors,” doing business as General Motors (GM), recently concluded the biggest initial public stock offering (IPO) in United States history; it raised about $20 billion. The dog and pony show which promoted the offering was timed to coincide with the elevated level of public scrutiny following mid-term elections. President Obama commented on the big day. He saw a “pay off” after two years of making “tough decisions”. (It must be emotionally draining to condemn taxpayers to decades of penury with bailouts and privileges for the few, while hamstringing the economy with more regulations, taxes and other curtailments of liberty … Continue reading Plan B?

Things Could Go Better

A market bubble is commonly understood as a large asset segment overvalued by speculation. Speculators in related assets are primarily concerned with reselling to a “greater fool” at a higher price. The underlying assumption is that prices will continue to rise. An expanding bubble of air eventually deflates. Irrationally inflated asset prices must do something similar. As the asset supply becomes excessive, prices drop. Incentives change well before the situation can become a crisis. Price changes communicate market incentives. Misallocated capital must then be liquidated and invested elsewhere. Losses must be rebuilt by alternative employment, savings and investment. That is … Continue reading Things Could Go Better

Feeling Alright

The primary economic consequence of establishing a government policy of Prohibition is to drive the prohibited market underground. The primary political and social consequence is the creation of a criminal element in the market, which then spawns corruption of politicians. Note that the market does not disappear. There are numerous secondary and tertiary consequences of Prohibition. (I am using the term “Prohibition” to refer to any government policy of banning market activity.) We can look to the notorious example of alcohol Prohibition in the United States from 1920 to 1933 for instructive guidance, but the failure of attempts at Prohibition … Continue reading Feeling Alright

Chairman Obamao

A 39-year old Beijing businessman has found the “democratic” appeal of the greatest mass murderer in history to be similar to that of the prominent visitor coming soon to China. By incorporating an image of United States President Barack Obama outfitted with the peasant/worker garb of Chairman Mao Zedong and imprinting it on t-shirts and other items a brisk market has been created. Anticipating that Mr. Obama might not see the “funny side” in this initiative, plans have been made to take down displays of the products during the official visit by the US President. American businessmen might want to have a look at the video report on this … Continue reading Chairman Obamao

International Government Motors

Do you really think that the decision by General Motors to try and renege on the deal for the sale of Adam Opel GmbH to Magna International Inc. was untainted by politics? People aren’t calling it Government Motors for nothing. The structure of the German Trust holding 65 percent of Opel allows for an impasse between GM and German government representatives. There is no tie-breaking provision. The only way out is political. One analysis I heard offered speculation that the United States government may not “allow” GM to use its improved cash position to invest in European operations. Remember that the … Continue reading International Government Motors

Only Politics Eludes Logic (OPEL)

Prior to filing for legal bankruptcy protection on June 1, 2009, General Motors transferred 65 percent ownership of its money-losing operation in Europe, Adam Opel GmbH, into a German Trust. The five parties to the Trust include one non-voting Chairman, with two members representing GM’s now 35 percent minority interest and the remaining two representing several German governments, including the national government headed by Chancellor Angela Merkel. This Trust is supported with bridge financing of approximately $2.2 billion from Germany’s national government to continue operations until a new buyer takes over the controlling interest. Plans endorsed by the GM Board … Continue reading Only Politics Eludes Logic (OPEL)

News That Isn’t

Inflation will accelerate next decade, economists say (Bloomberg News via Canada’s National Post). The above article informs us that the US Federal Reserve will be unable to prevent inflation as a result of the trillions of “stimulus” the government has “pumped” into the economy. If you have read my previous article, Inflation of What?, you may not be surprised since you know that the excess money and credit in the US economy is in fact, monetary inflation. The Fed will not be able to “ease” the excess from the economy without courting some additional disaster of a recessionary nature. The result will be … Continue reading News That Isn’t