Canada as an island of sanity in chaos

Walter, this reminds me of “counter-factual” or “what-if” history. As Taleb argues, we play tricks on the dead (Napoleon’s definition of history) when we impost a cause-effect logic on past events that in fact were not there and only reflect the angst of our times. We select facts, which is the theme of axiology in philosophy – we seek what is of value to us.

I just finished reading The German Crisis published in 1932. An American named Knickerbocker wrote it after a year’s field study of Germany, and the last chapter includes a person interview with Hitler by the author! I read this book with the same frame of mind you suggest. Nobody in 1932 knew what was going to happen, and this is reflected in the book.

Moreover, his observations of an economy in collapse may serve as a theme, warning for us today, which also overlaps with your interest. I happened to find it by “accident” at the Canadian Bible Society thrift store in Chatham, Ontario, one of our must stops when we visit. It cost $.50, but its intellectual stimulus is worth far far more.

The seminal ideas today are Chaos Theory and Complexity, which are at the heart of Taleb. We are in effect watching the crack up of highly-centralized systems as the network logic of Internet technologies begin to reshape how things work best now. I am not saying we are going to return to a pastoral life, but we are going to Reset as Richard Florida at U of T puts it in his latest book, 2010, The Great Reset, which I highly recommend.

Here, we are watching the collapse, ongoing, of the middle class, or what is left of it. We are also moving toward institutional failure, which is a byproduct of greed and over-centralization. Dalton Camp predicted both of these trends in 1976 when I lunched with him in Kingston, Ontario after a teacher conference. He warned about the trends toward middle class collapse and institutional failure.

Thank God, in Canada, the Scottish values of hard money have prevailed to shield, buffer you from what is coming here. In fact, I keep my sanity by knowing that a place like Canada does exist. It is possible to live peacefully, productively, sanely in this world yet. Yes, it is possible. Canada is proof.

Here, we more and more have social depression on top of individual depression. We have people who cannot find work, and those who have it are more and more exploited by the system, 60’s talk there.

So, as far as your humble servant here can see, chaos and complexity are in the saddle, and what comes from this, self-organization and creative destruction, remains to be seen, but we can pick up the pieces. We will not put Humpty Dumpty back together again. Humpty Dumpty is yesterday. We can invent a saner future, tomorrow

The Future of Business in Canada

Joshua, yesterday, my lawyer and I had a short debate about the purpose of business. He gave the pat answer, "Make money." I quoted Peter F. Drucker, "Create jobs." Profits exist as a measure of efficiency and as a surplus to reinvest in operations and training to keep the business competitive - not take the money to Swiss banks and gut the business.

Joseph F. Schumpeter, an economist at Harvard at the start of the 20th century made this argument. Profits exist to reinvest to create more jobs and profits. People needs jobs to live; society has the absolute right to devise any rules it wants to make sure its members live. Drucker recyles Schumpeter.

Germany today in fact follows Schumpeter, and it has the second highest export business in the world - after China. Moreover, its workers receive some of the highest pay and benefits in the world. It is because Germany reinvests the profits into improved operations(equipment, techniques, processes) and training of the workforce and management.

Germany is proof that we need not to be a Third World country to be competitive today and have jobs enough for our people. See the website of David McWilliams, an Irish busineess analyst, writer, for an excellent article on this by him.

Without a profit, you have nor surplus. Without a surplus, you cannot innovate to remain competitive. This writer is totally for profits if we reinvest those profits to stay in business and to create more business. Business is about jobs in the final analysis. The sooner American digest this the sooner we will know how to "set our house in order."

It is not take the money and run.l It is take the money and recycle it into competitive equipment and training.

Thus ends the sermon for today.

Amen.

Dr. Rux

Canada and the Future of Food Prices

As a food-rich country, Canada can profit from the coming jump in world food prices.

The Future of Food

The low cost of food in the history of America, which has shaped its economy, is probably coming to an end. Here is why.

Wanda, yes, look for food prices to rise, not fall. Therefore, commodities could be a smart investment, field of work. I am not a financial advisor; however, it is logical. China wants more food. India wants more food. Both China and India are gaining purchasing power. They, and others, will begin to raise the bidding for food. The same process will happen to oil and other commodities.

Nassim Nicholas Taleb, author of the fabulous book The Black Swan, the 2007 classic on how chaos theory and complexity theory impact economic behavior, and one of my intellectual heroes, last week that two fields will be growth fields in the coming economic collapse: health care (demographics) and food (commodities).

Yesterday, I told this to an old friend who is now manager of a new health food store here. He is on trend with Taleb. People will eat better to better manage health care costs.

In short, for Americans, the era of low food prices is going to come to an end. More and more of our paychecks, if we have one, will go to purchase necessities.

This is why trend forecasters like Gerald Celente advise their clients to invest in farm land, start their own gardens, and pay close attention to supply and demand dynamics for food.

My Canadian hero: Prof. John S. Moir

Friday, October 15, 2010
Education from the heart for the heart
Walter, wow, this is a beautiful story.

Mine centers on John S. Moir at U of T. I had the good fortune to take his one-year graduate course on Canadian religious traditions.

In it were Moir, myself, and a woman from Montreal! The three of us met from September to May, 1969-1970.

It was like the old Oxford system. He simply said, "Go to the library and read on this topic and tell me what you find next week."

When Christmas came, he was the only professor to invite us to his home! The other faculty with whom I worked prattled about humanity, and their love for it. But it was John Moir who invited us into his home, and since we had lost our country, this gesture was very powerful. Ever since I have a disgust for professional sentimentalist who are really careerists.

When I had flu in the spring of 1970 he called our apartment to check up on me. He expressed concern about my losing weight, down to 145 pounds in my desire to do straight A work, which in fact I did for my Toronto M.A.

Later, when I was in Wiarton, Ontario, he invited me to become his Ph.D. student. My wife resisted. Moir and his wife Jackie invited us down to their living room in Markham. The four of us sat in his living room, and he asked my wife, "Will you help him." "No" was her answer; it was one of the first nails to go into the coffin of our marriage.

John S. Moir has remained my hero, and whenever we can we stop to visit with him in Brantford, where he lives now to take kidney dialysis. He can no longer write or type; his granddaughter must copy his notes to me. At my best, I try to be to my students what Moir has been to me.

He was the Ph.D. student of Donald Creighton, probably the greatest historian of Canada to date. He would walk with Creighton during the lunch hour in Queen's Park, Toronto. I wanted, longed to be the next link in this chain of loyalty to what matters.

Moir loved to tell Diefenbaker stories, and his wife Jackie and he enjoyed highland dancing. He did not engage in the politically correct drivel that permeated the rest of the curriculum, thank God. He kept track of the battle order of the army regiments of Canada as they would be called to the flag if Canada mustered for war. He had served in army intelligence in Ottawa during World War II where he translated German documents.

I shall always remember him bringing a brick of Stratford cheese to one of our weekly "classes," actually a tutorial. He bought it on a return trip from Windsor, where had had attended the annual meeting of Canadian Historical Association! He was proud, proud, proud of that cheese! My God, Walter, it is sanity in this crazed world to know, respect good cheese when you find, taste it!

Only three other men come close to Moir in my list of educational greats, but John S. Moir stands above all of them. To this day, this very minute, your humble servant here wants to be worthy of his faith in me.

As I told him during our first Brantford visit, "You will always be my professor, and I shall always be your student." Yes, it is about people if it is about anything.

Or as Parker Palmer, a Madison, Wisconsin Quaker writer puts it, "It is education from and to the heart." It is more than facts, techniques. It is caring about and sharing from the heart. God has blessed me with these memories. God has blessed me with and through Professor John Sargent Moir, Ph.D., D.D., Professor Emeritus, University of Toronto, Canada.

The future belongs to small and medium-sized countries like Canada

Ancient Chinese Taoism teaches that small and medium-sized countries in fact are superior to super powers. The super powers simply bully others.

Small and medium-sized countries on the other hand must offer value to other countries, since they are not strong enough to bully other countries.

For example, Canada offers American know-how to other countries without the threats.

Canada also exports food, products, and services in large quantities to the USA. My wife, for example, purchases tomatoes grown in Ontario, Canada here in Wisconsin!

This writer also purchased a snow blower recently at the local Wal-Mart. Yes, it too came from Canada!

The bank down the street just became part of the Bank of Montreal's American subsidiary Harri Bank!

Americans are so busy waging war, bullying others, that they no longer seem to know how to grow tomatoes, build snow blowers, or run banks.

Thus ends our lesson on Taoism for today.

American obsession with guns will benefit Canada.

Annette, in fact, your humble servant is reading a 2007 book by Richard Florida entitled The Flight of the Creative Class. In it, he argues, observes that talent today has many geographic options. America, the USA, is no longer the only destination of talent. Options like Toronto, Canada and Auckland, New Zealand exist, and we in effect are competing now internationally for talent, not just locally. The best talent will not automatically consider the USA its first choice.

This will become a huge issue if and when people are allowd to carry pistols in holsters openly in public in the USA. This is, believe it or not, a key rising political issue in our Madison, Wisconsin area. People are going to public places, e.g. restaurants, with loaded weapons in holsters, and they are claiming a constitutional right to do this in America. If this becomes legal, accepted practice, look for the flight of the creative class from America to become a race for the exits from the USA to other geographic locations that do not allow cowboy antics in the Information Age.

The local politicians here claim to want to bring, create jobs; after saying this, they start pushing public display of loaded weapons! Your humble servant literally heard a candidate for Wisconsin State Senate say this at a dinner last night. Canada, where this writer has options, looks better and better. Your professor is an example of the new creative class who has geographic options and is not place-bound as in the factory, farm age.

This writer has placed an election sign for the opponent of this "gun nut" in his front yard now.

The other danger is the public arming of persons of a certain political persuasion could result in overt violence against persons who disagree with them. Imagine having a political rally and your opponents show up with loaded weapons. It would have a chilling effect on politics and could quickly degenerate into "politics by the gun," not the ballot. This is a very real potential and lethal danger to democratic processes. It is not just the danger of increased, random public violence because of "bad hair days" or drunken feuds in and outside taverns.

The Flight of the Creative Class by Richard Florida sadly sounds a warning about the future loss of critical human resources from the USA if this trend toward Wild West gun-slinging takes root.

Canada and world economy decouple from US economy

Wall Street Sees World Economy Decoupling From U.S.
By Simon Kennedy - Oct 4, 2010 Wall Street economists are reviving a bet that the global economy will withstand the U.S. slowdown.

Just three years since America began dragging the world into its deepest recession in seven decades, Goldman Sachs Group Inc., Credit Suisse Holdings USA Inc. and BofA Merrill Lynch Global Research are forecasting that this time will be different. Goldman Sachs predicts worldwide growth will slow 0.2 percentage point to 4.6 percent in 2011, even as expansion in the U.S. falls to 1.8 percent from 2.6 percent.

Underpinning their analysis is the view that international reliance on U.S. trade has diminished and is too small to spread the lingering effects of America’s housing bust. Providing the U.S. pain doesn’t roil financial markets as it did in the credit crisis, Goldman Sachs expects a weakening dollar, higher bond yields outside the U.S. and stronger emerging-market equities.

“So long as it doesn’t turn to flu, the world can withstand a cold from the U.S.,” Ethan Harris, head of developed-markets economic research in New York at BofA Merrill Lynch, said in a telephone interview. He predicts the U.S. will expand 1.8 percent next year, compared with 3.9 percent globally.

That may provide comfort for some of the central bankers and finance ministers from 187 nations flocking to Washington for annual meetings of the International Monetary Fund and World Bank on Oct. 8-10. IMF chief economist Olivier Blanchard last month predicted “positive but low growth in advanced countries,” while developing nations expand at a “very high” rate. He will release revised forecasts on Oct. 6.

‘Partially Decoupled’

“The world has already become partially decoupled,” Nobel laureate Joseph Stiglitz, a professor at New York’s Columbia University, said in a Sept. 20 interview in Zurich. He will speak at an IMF event this week.

Sixteen months after the world’s largest economy emerged from recession, the U.S. recovery is losing momentum, with factory orders falling 0.5 percent in August and unemployment forecast to increase to 9.7 percent in September from the previous month’s 9.6 percent, according to the median estimate of 78 economists in a Bloomberg News survey.

Their predictions don’t include another contraction, with growth estimated at 2.7 percent this year and some indicators showing progress. Orders for capital goods rose 5.1 percent in August and the number of contracts to purchase previously owned homes increased 4.3 percent; both were higher than forecasts.

China Manufacturing Accelerates

Even so, emerging markets are showing more strength. Manufacturing in China accelerated for a second consecutive month in September, and industrial production in India jumped 13.8 percent in July from a year earlier, more than twice the June pace.

“It seems that recent economic data help to confirm the story of emerging-markets outperformance,” said David Lubin, chief economist for emerging markets at Citigroup Inc. in London.

The gap in growth rates between the developing and advanced worlds is widening, he said. Emerging economies will account for about 60 percent of global expansion this year and next, up from about 25 percent a decade ago, according to his estimates.

The main reason for the divergence: “Direct transmission from a U.S. slowdown to other economies through exports is just not large enough to spread a U.S. demand problem globally,” Goldman Sachs economists Dominic Wilson and Stacy Carlson wrote in a Sept. 22 report entitled “If the U.S. sneezes...”

Limited Exposure

Take the so-called BRIC countries of Brazil, Russia, India and China. While exports account for almost 20 percent of their gross domestic product, sales to the U.S. compose less than 5 percent of GDP, according to their estimates. That means even if U.S. growth slowed 2 percent, the drag on these four countries would be about 0.1 percentage point, the economists reckon. Developed economies including the U.K., Germany and Japan also have limited exposure, they said.

Economies outside the U.S. have room to grow that the U.S. doesn’t, partly because of its outsized slump in house prices, Wilson and Carlson said. The drop of almost 35 percent is more than twice as large as the worst declines in the rest of the Group of 10 industrial nations, they found.

The risk to the decoupling wager is a repeat of 2008, when the U.S. property bubble burst and then morphed into a global credit and banking shock that ricocheted around the world. For now, Goldman Sachs’s index of U.S. financial conditions signals that bond and stock markets aren’t stressed by the U.S. outlook.

Weaker Dollar

The break with the U.S. will be reflected in a weaker dollar, with the Chinese yuan appreciating to 6.49 per dollar in a year from 6.685 on Oct. 1, according to Goldman Sachs forecasts.

The bank is also betting that yields on U.S. 10-year debt will be lower by June than equivalent yields for Germany, the U.K., Canada, Australia and Norway. U.S. notes will rise to 2.8 percent from 2.52 percent, Germany’s will increase to 3 percent from 2.3 percent and Canada’s will grow to 3.8 percent from 2.76 percent on Oct. 1, Goldman Sachs projects.

Goldman Sachs isn’t alone in making the case for decoupling. Harris at BofA Merrill Lynch said he didn’t buy the argument prior to the financial crisis. Now he believes global growth is strong enough to offer a “handkerchief” to the U.S. as it suffers a “growth recession” of weak expansion and rising unemployment, he said.

Giving him confidence is his calculation that the U.S. share of global GDP has shrunk to about 24 percent from 31 percent in 2000. He also notes that, unlike the U.S., many countries avoided asset bubbles, kept their banking systems sound and improved their trade and budget positions.

Economic Locomotives

A book published last week by the World Bank backs him up. “The Day After Tomorrow” concludes that developing nations aren’t only decoupling, they also are undergoing a “switchover” that will make them such locomotives for the world economy, they can help rescue advanced nations. Among the reasons for the revolution are greater trade between emerging markets, the rise of the middle class and higher commodity prices, the book said.

Investors are signaling they agree. The U.S. has fallen behind Brazil, China and India as the preferred place to invest, according to a quarterly survey conducted last month of 1,408 investors, analysts and traders who subscribe to Bloomberg. Emerging markets also attracted more money from share offerings than industrialized nations last quarter for the first time in at least a decade, Bloomberg data show.

Room to Ease

Indonesia, India, China and Poland are the developing economies least vulnerable to a U.S. slowdown, according to a Sept. 14 study based on trade ties by HSBC Holdings Plc economists. China, Russia and Brazil also are among nations with more room than industrial countries to ease policies if a U.S. slowdown does weigh on their growth, according to a policy- flexibility index designed by the economists, who include New York-based Pablo Goldberg.

“Emerging economies kept their powder relatively dry, and are, for the most part, in a position where they could act countercyclically if needed,” the HSBC group said.

Links to developing countries are helping insulate some companies against U.S. weakness. Swiss watch manufacturer Swatch Group AG and tire maker Nokian Renkaat of Finland are among the European businesses that should benefit from trade with nations such as Russia and China where consumer demand is growing, according to BlackRock Inc. portfolio manager Alister Hibbert.

“There’s a lot of life in the global economy,” Hibbert, said at a Sept. 8 presentation to reporters in London.

Asset Bubbles

The increasing focus on emerging markets may present challenges for their policy makers as the flow of money into their economies risks fanning inflation, asset bubbles and currency appreciation. Countries from South Korea to Thailand have already intervened to weaken their currencies, along with taking steps to restrict capital inflows.

Stephen Roach, nonexecutive Asia chairman for Morgan Stanley, remains skeptical of decoupling. He links the optimism to a snapback in global trade from a record 11 percent slide in 2009. As that fades amid sluggish demand from advanced economies, emerging markets that rely on exports for strength will “face renewed and formidable headwinds,” he said.

“Decoupling is still a dream in much of the developing world,” said Roach, who also teaches at Yale University in New Haven, Connecticut.

‘Year of Recoupling’

The Goldman Sachs economists argue history is on their side. The U.K., Australia and Canada all continued growing amid the U.S. recession of 2001 as the technology-stock bust passed them by, while America’s 2006-2007 housing slowdown inflicted little pain outside its borders, they said. The shift came when the latter morphed into a financial crisis, prompting Goldman Sachs to declare in December 2007 that 2008 would be the “year of recoupling.”

The argument finds favor with Neal Soss, New York-based chief economist at Credit Suisse. While the supply of dollars and letters of credit that fuel international commerce dried up during the turmoil, that isn’t a problem now, so the rest of the world can cope with a weaker U.S., he said.

“Decoupling was a good idea then and is a good idea now,” Soss said.

To contact the reporter on this story: Simon Kennedy at skennedy4@bloomberg.net

To contact the editor responsible for this story John Fraher at jfraher@bloomberg.net
.®2010 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Dalton Camp's Crystal Ball

Dale, in 1976, I had lunch with a man who predicted this collapse of the middle class.

His name was Dalton Camp, who died in 2003. Camp was the media director for the Conservative Party of Canada, and he also ran the Camp Associates advertising agency in Toronto. He clearly knew his market research.

I have not forgotten his prediction! We are now living it.

Camp also expressed concern about institutional failure. He said it is very dangerous for people to lose confidence, faith, trust in their systems of government, economics, politics, etc. In fact, he said, he went into politics in Canada to make sure it did not experience institutional failure!

I have not forgotten this comment. He said he was in World War II, and Germans were shooting at him in Europe. He started to wonder about how he got into this situation. His conclusion was institutional failure of the government in Germany after World War I and its aftermath!

Shortly before she died in 1984, the famous American historian Barbara Tuchman gave an interview. Bill Moyers asked her what her greatest concern for America is, was. She answered, "Institutional failure." She said American had lost the value of "honor," the good opinion of decent people. The result would lead to institutional failure, the lack of trust by the American people in their system.

Note Tuchman and Camp agree. Institutional failure creates a vacuum into which the devil can jump.

The Tea Parties are an expression of this growing disconnect. The State of Vermont has activists who want to pull it out of the Union of states! When this kind of stuff emerges, there is a serious disconnect between the system and the people in it.

I shall never forget that lunch with Dalton Camp. I was going to write his biography; last night, I discovered another person has beaten me to it. I shall have to buy and read it now in any case.

Watch this business about institutional failure. It is very real; it could sadly happen in the near future.

Canada - US - Water Wars

Debbi, your research paper on the growing shortage of potable (drinkable) water on earth is very important. We likely will have water wars in the future. For instance, the Southwest of the USA has no water. How much are we in Wisconsin willing to let them drain off our water tables and the Great Lakes? Your humble servant here would send none, unless the end-users of the water paid for it, good and hard. Water is more valuable than oil in the long run. Also, Canada is fearful of our tapping into its water resources - for free or at low cost. The Pentagon in fact has done "war gaming" scenarios and strategies on how we will respond to this growing shortage of potable water with armed force.

Will we ever be able to solve the worlds water problem is something that every nation should be working on. The problem is world wide, not just here in the United States. In years to come everyone is going to have a foreseeable water problem and we, as a nation, should be working to solve this problem now so in the future we do not have to worry about where our water is coming from. The generations that are coming after us deserve a solution to this problem and it is our responsibility to make sure that they have one. Clean water for everyone is a necessity; not a luxury.

Canada backs away from war with Iran.

The danger of the USA and Israel going to war with Iran in the near future became very real March 30-31, 2010 with the following two, connected announcements.

1) Canada yesterday announced the withdrawal of its coalition soldiers from Afghanistan. The mass news media in the USA has not carried this decision.

2) President Obama announced suddenly today that we are now going to drill oil in formerly restricted offshore areas. This counters his campaign promises and alienates part of his base.

The timing of the two messages is this.

1. Canada does not want to be on the ground in Afghanistan when war spreads to Iran, so it finds itself at war with a country that has not harmed it.

2. The USA put Iran on notice that we do not need its oil if we go to war with it.

The fallout will include the following:

1. The military draft will return to the USA.

2. Terrorism against the USA will escalate inside and outside the USA.

3. Distraction of the American people from the economic Depression on its way.

We are closer to danger today, March 31, 2010 than most Americans realize.

The Maple Leaf Forever - Canada's Future

The Maple Leaf Forever – Paul Rux, Ph.D.

Ramsay Cook, a professor of Canadian history at York University in Toronto, Ontario, Canada, gave a series of guest lectures at Harvard University on Canadian-American relations.

Cook, in fact, argued for American empire, because as long as America is fighting in Iraq, Afghanistan, Vietnam, etc. it has little time and energy left to mess with Canada!

While the American cat is away the Canadian mouse can play!

Cook argues when America reaches the limits of its capacity to mess with other countries, it will start to return its focus homeward, which will make America dangerous to Canada, for it is on our doorstep.

Cook pointed out how the Romans reached limits of expansion when they ran into German tribes along the Rhine River. Cook believes America is going to reach such limits to expansion, also, good and hard.

Your professor by the way earned a M.A. in Canadian History from the University of Toronto; this has provided him with a unique perspective on America. It helps him to step outside our media bubbles and to gain perspectives from a "distance."

I share Ramsay Cook because he provides a highly creative insight into our American history as it may impact his country. He also draws comparisons with Rome, which seem to fit.

His lectures at Harvard subsequently appeared in a book entitled "The Maple Leaf Forever."

- Dr. Rux