TURN THE OTHER CHEEK...

Granted our neighbours south may not have quite as much to be thankful for this Thanksgiving Holiday long weekend as in the halcyon days of the American economic Juggernaut of decades past. One inalienable aphorism remains: Americans should be thankful for Canada.

The week's cover story in our national news magazine, "Maclean's" aims at the heart of the matter in a thought provoking review of recent concerns and political developments which should occasion reflection on both sides of our shared international border: "The U.S. and Canada: We used to be friends."

The Peace Arch:Children of a common mother

However as Washington State "MarketWatch" contributor Bill Mann writes today..."we Americans should take the occasion of our own Thanksgiving here to be thankful for having such a friendly (and understanding) neighbor(sic) as Canada. We could, but we probably won't. That's because like the vast majority of Americans. I know all too well from personal experience, know very little - and care even less - about Canada. This could have negative repercussions in the future. Bad karma and all that."

Former Presidential candidate and U.S. Senator John McCain told a Canadian television audience last Sunday that he believes it's "legitimate" for Canada to feel snubbed by (recent) moves from south of the border. McCain was commenting specifically about the Obama Administration's decision to postpone approval of the Keystone XL oil pipeline beyond next year's Presidential election.  The Senator says: "there's a strong suspicion on my part and many others that this was a political decision rather than one based on facts." - Though his are hardly comforting words from a political "has-been" accused of similar political expediencies during his own failed 2008 Presidential bid; still there is a strong element of truth in his claim: "When we do things that seem to take our Canadian friends for granted and take your allegiance and friendship for granted, there's an understandable reaction in Canada."

On the pipeline, to a limited degree, there may be agreement that an extremely well organized environmental lobby of movie stars and personalities, perhaps financed (in part at least) by wealthy and powerful corporate land owners in Nebraska, backed Obama into a corner as he struggles to re-rail his political career. - There are several other irritants between us which speak of an America indifferent of a best friend, closest neighbour, powerful ally, and the biggest trading and economic relationship on the planet. - The "Buy American" provisions of the jobs bill before Congress; A $5.50 head tax (starting January first) on Canadians flying or sailing into the United-States; the post 9/11 "thickening" of the (once proudly) longest undefended border in the world, including not very neighbourly Predator Drones overflying the Canadian border.

Our neighbours either don't know, or collectively choose to ignore, that Canada (not the Saudis, nor Libya, or Iraq) is the largest supplier of oil to the United-States; that more North-American automobiles are assembled in Ontario than anywhere else in the world; that more trade flows in each direction over ONE SINGLE  BRIDGE  - The "Ambassador Bridge" between Detroit and Windsor - than between all of the United-States and Japan!

This weekend at border crossings into small communities along the 5000 miles from Calais, Maine to Point Roberts, Washington; Canadians will wait in line for hours at security/inspection check-points, fight through American shopping mall crowds, hopefully to score "black Friday" bargains - Dozens of cash strapped U.S. border towns and cities are banking on the strong Canadian dollar for their economic survival...and we'll oblige by being friendly, neighbourly and helpful.

United States "MarketWatch" contributor Bill Mann concludes: "I don't know if Canadians have long memories, but I know they've been long on patience with the U.S. And for that if nothing else Americans should be thankful this holiday. Let's just hope Canada stays as understanding as it always has about Americans' mistreatment of its good neighbors(sic)."  - I'm Canadian - I'll give him the last word. - Happy Thanksgiving!

THE BURST BUBBLING UNDER THE SURFACE

Unrealistic mortgage rates and super-inflated home prices imploded the American economy in 2008, and despite what the politicians would want us to believe, it's an economic disaster from which the United-States (now saddled with a $15-Trillion national debt) may never recover.

Now, as the Euro-Zone's economic Titanic sinks below the water-line, a cynic from 'across the pond' remarked sarcastically this week that the only thing keeping the U.S. economy afloat these days is that it's owned by China: Alas! I digress.

Handyman fixer-upper - Not cheap!

I note with a certain level of of dread and apprehension the monthly (October) report of the Canadian Real Estate Association which now pegs the average price of a Canadian home listed and subsequently sold on the MLS service at $362,899 - an increase of almost 6% since October of 2010 - Clearly we too north of the border are being lulled by unrealistically cheap credit which is bloating housing prices substantially beyond their "real" value. And as (inevitably) that wave of bad credit and worthless debt from overseas eventually crashes upon our shores; credit rates will rise, over leveraged mortgage holders will fold, housing prices will collapse - Well...just look south of the 49th parallel for the rest of the story.

The international Organization for Economic Co-Operation and Development (OECD) has already singled-out Canada as a country facing significant challenges from our steady climb in consumer debt. Experts note that with the Canadian and U.S. economies so closely linked to one another, what happens in the United-States has a significant impact in Canada.

Recently, OECD's concerns motivated Pacifica Partners, a Capital Management business based in Surrey, B.C.,  to take another look at the "Misery Index", a tool which faded from the political discourse during the economic halcyon days of the 1980' and 90's.  In the 1960's, an adviser to U.S. President Lyndon Johnson came up with the idea to measure the general economic hardships felt by the masses. The "Misery Index" is calculated by adding the unemployment rate to the inflation rate.  Pacifica Partners believes that..."with rising inflationary rates and stubbornly high unemployment rates in both Canada and the the US, this index may be more relevant than ever." - The "index" calculated currently for ordinary Canadians isn't anywhere near the "gleeful experience" we have been told by bankers and (especially) politicians that we are experiencing.

Pacifica Partners concludes that the Canadian Misery Index..."has stealthily marched higher after hitting a low in the first quarter of 2008." Fueled by unemployment, inflation and cost of living,  "misery" has risen sharply to levels above the psychological level of 10%. South of the border, Wall Street's recovery may have brought back the market for mansions in the Hamptons, on Long Island, and for luxury co-ops in New York City. The "real" reality Canadian homeowners could be about to face is pretty much that with which middle-class Americans have been dealing for almost 5 years.

In the housing market inhabited by most Americans, prices have fallen 30% or more since 2007. That is a steeper decline than during the Great Depression. Some people have had their homes on the market for over a year without a single offer. Almost a quarter of American homeowners owe more on their house than it's worth. Another quarter have less that 20% equity and about half of all U.S. homeowners could not get a mortgage if they applied for one today.

Not very pretty, but a reality far too many over-leveraged and mortgaged Canadians may be about to encounter.

BORDER ACTION PLAN

In this country the Government of Prime Minister Harper has been fixated on affixing the "Action Plan" label to just about everything it's attempted since launching the $50+Billion rescue of the economy in the wake of the 2008 world financial collapse. No surprise then that in the absence of Mr.Harper's grand-vision of an integrated Canada-U.S. "Perimeter Security" deal as announced with fanfare last winter, the government will now take to calling the recently negotiated perimeter security lite - "Canada's Beyond The Border Action Plan."

Doubtless despite intense efforts from Canada's perspective; just about all that's been accomplished since the two sides began meeting in February is the establishment of a "working group" which will attempt to peel away at international layers of bureaucratic red-tape, and re-double efforts to establish better communications on matters relating to Customs levies and procedures, and most important to the United-States: Security issues.

That's a very far cry it seems from the Harper "big-vision" which up until just very recently his Government had hope to implement. And that's also why the Prime Minister's office has failed to convince authorities in Washington to make the President available for any announcement, let alone a signing ceremony of any sort. Just slightly more than a year out of the next Presidential elections in the United States the last thing the Obama Administration wants is to focus his moribund jobs creation record over improving cross-border trading relations with the neighbour north of the 49th parallel.

Fortunately perhaps for Mr. Obama's re-election efforts he's now far more likely to focus his attention on the Mexican neighbour south of the U.S. border in the wake of last week's failed alleged Iranian backed terror plot which Homeland Security claims to have been coordinated down Mexico-way.  On Tuesday last, President Obama himself announced that Iranian Forces had sought to assassinate the Saudi Ambassador to the U.S. by bombing a popular Washington restaurant with the help of Mexican desperadoes. Ay, Caramba! (As is frequently the case in such matters; details are sketchy).

Most Republican Presidential hopefuls in the United-States have seized on the matter to redouble demands that America must secure its southern border by sending more troops to the area, adding predator drone surveillance aircraft,  and building more fencing to separate the U-S border from Mexico. On Saturday Republican candidate and Minnesota Congresswoman Michele Bachmann signed a a formal pledge committing that as President she will build a double fence across the entire border with Mexico before the end of 2013.

A Raleigh, North-Carolina group called "Americans for Securing the Border"is behind the pledge initiative. It's current focus is on matters related to the problems along the border with Mexico including drug smuggling, illegal immigration, human trafficking and in light of these most recent developments, potential terrorists. But the group's Chair and co-founder, a Washington defense lobbyist named Van D. Hipp, Jr has claimed in the past that the Government of the United-States has been derelict in its duty in defending the "borders".

When the U.S. House of Representatives defeated President Bush's proposed "guest worker programme" for undocumented immigrants in December 2005, the bill the House adopted ordered the Department of Homeland Security to obtain "complete operational control" of borders within 18 months, including studying the feasibility of erecting barriers on the border with Canada.  In follow-up reviews, (most recently in May 2011) the Government Accountability Office (G.A.O.), the U.S. Congressional watchdog, noted that in its opinion just 32 of the nearly 4000 northern border miles had reached an acceptable level of security.

Canada's focus remains on trade with our southern partner which is essential to our own economic security. The focus on border relations in the United-States seems to be from an altogether different perspective. I'm not quite sure we will ever see it with the same optic and intensity.

GREED BROKE THE SYSTEM.

Our modern economic system is broken and there's mounting anecdotal evidence to suggest efforts to effect repairs are slowly tearing apart the fabric of our political system. The Arab spring has morphed into a fall of economic turmoil. Just last week Egyptian activist Mohammed Ezzeldin told protesters in New York's "Washington Square" park that he sees a connection between the spreading Occupy Wall Street movement and the spring protests against (former) Egypt President Hosni Mubarak.

"It's time for democracy, not corporatocracy, we're doomed without it" - That's the rallying cry the Canadian based magazine "Adbusters" issued to its subscribers in July in an article asking readers to protest corporate greed by staging an "Occupy Wall Street" demonstration in New York on Saturday, September 17th. They are still there, and they've been (and continue to be) joined by like-minded supporters in hundreds of cities around the developed world.

Welcome to middle-class poverty! Since that mid-September weekend in Manhattan the protest has unleashed a global outcry against the notion that the rich are getting richer and the poor are getting poorer. In the United-States (primarily) as elsewhere, there is anger and frustration over gargantuan bailouts that lined the pockets of international corporations and which have done little to help individuals and families squeezed between rising expenses, historic job losses, stagnating wages and thinning benefits. 

I wasn't around during the Great Depression but the images of  protesters in Zuccotti Park across from New York's Wall Street, at the dozens of other tent cities in town squares, or most probably later this week on Toronto's Bay Street are hauntingly similar to those of the "dirty thirties".   And, it's not just the issue of image: In the United-States inequality has reached just about the same level as at the end of the 1920's.  The 7,000 American millionaires who paid no income taxes in 2011 excepted; - Everyone has been affected. Just as with the case of the Arab Spring, it's the social media savvy young people faced with bleak economic futures, political grievances and the perils of climate change who are now effecting this demand for change.

Though some politicians have expressed sympathy with the anger towards the role the international banking and investment community has played in this endless financial crisis  paralyzing the world's economies, because there is no firm grasp on solutions; perceptions remain that governments indulge the financial elites. In the absence of tangible evidence of a dramatic shift in thinking, political institutions and economic assumptions; and in the face of (what seems to many) a "big black hole," the legion of protests grows unabated into a second month.

The onset of winter is not very far. Regardless of whether the movement has unleashed the politically creative and productive changes which are clearly needed, the "Occupy Wall Street" protests are a crystalline message that a significant number of people no longer feel they have meaningful representation from those they've elected to political office. Accordingly, they are increasingly prepared to do something about it.

OVER A RAINBOW

It has been (sometimes) painfully obvious during  the last 48 hours that players along the investment food chain - big and small, institutional and individual - have clearly been spooked by this worldwide debt debacle and credit rating(s) downgrade.

Of course it isn't just within the United States. The European banks once again are having to rescue yet two more of their own (Spain and Italy) from the near precipice of total financial failure.  Though China is not itself without financial sin, it was a darn rude awakening over last weekend for our American friends to be lectured about their mountain of debt by the Communist government of the country's largest lender. The $14+Trillion hell-hole the United States Federal Government is into is just one component of the macabre imbroglio the folks at S&P and debt holders worldwide had to mull-over and consider to arrive at the credit downgrade which has now shaken confidence in the American "greenback" to the very core.

Individually, each man, woman and child in the United-States owes about $150,000 when their share of the Federal debt is combined with State, Municipal and personal borrowing commitments. That is a $45-Trillion drain on the world's largest economy. Be that as it may, much of it (about 40%) is being borrowed from offshore lenders despite growing anecdotal evidence of America's right-wing political agenda desires, efforts, and tendencies to insulate and isolate itself from the rest of the world.

On the Canadian side of the border where the Federal Government deficit is about $50-Billion and the total national debt roughly $1-Trillion, (though still cautious) politicians are sounding somewhat more smug about the long-term effects on our economy of this debt downfall. Though probably not a lesson for our partners south of the border, there is interesting evidence that Canada's embrace of the spirit of multiculturalism has worked in surprisingly strong terms to favour the economy. It comes in the results of a survey of rich Canadians undertaken by Bank of Montreal (BMO) and the Harris polling organization. The survey which was conducted amongst people who have more than $1-Million in "investable" assets found that about one-third of those investors were "new" Canadians (not born in Canada).  Even more interesting was that pollsters found 96% of those new rich Canadians had no plans to invest outside of the country.

There are about 250,000 immigrants who arrive in Canada each year. Clearly the very vast majority are not wealthy and are simply seeking a better life for themselves and their families. But,  as a
spokesman for BMO told the Financial Post of the survey results: "These findings speak to the spirit of Canadian multiculturalism and how this country fosters an environment that helps individuals to succeed and thrive. Attracting the best and brightest demonstrates the relative prosperity and openness of Canada's economy. This bodes well for long-term wealth generation."

The net result is that although about one-third of rich Canadians weren't born here, most of them are keeping the bulk of their money in their adopted home country. That's a worthwhile lesson learned.

IT'S A DEAL, NOT A SOLUTION

My first reference on these pages to the looming American debt crisis dates back to October 2008 in a post related to that month's Canadian Federal Election. (See: "Crucial Debate..." 01/10/08). Despite the congratulatory afterglow of America's Congressional leaders, as the designated curmudgeon on the matter, I note now the nervous, restive skittish and muted response of the North American Stock Markets to Washington's last minute decision to avert an unprecedented international financial crisis.

Perhaps America has somewhat salvaged its crippled credit, but it really has plugged just one hole in an uncontrolled leaky dike of debt.  Had I been posting thirty years ago, I may then have noted the shift to a right-of-centre ideology that began in the United States under President Nixon and continued incrementally during the terms in office of Ronald Reagan through to George W. Bush's 21st Century. That's as far back as this multi-trillion dollar debt hole reaches. Manifest in the current "Tea Party" Republicans, the right-wing ideologists  have reached their extreme, and have evidently evolved into a movement willing to visit economic calamity on the civilized world in the name of minimal taxes and smaller government in the USA.

There is a resounding great disconnect between the politicians of Washington and for that matter those here in Ottawa and the electors they expect will bring them to (or keep them in) elected office. Modern journalism's hysteric incessant need for updates and reams of mostly irrelevant information means that at crucial moments in our times, politicians who play along are reduced to talking "at" each other through a third party (the media); rather than "with" each other directly to solve a crisis. It's become a dangerous sport; one which may affect the well being of an entire country, or as we've witnessed over the past two weeks, the welfare of the world. In June the departing host of "The House" on CBC Radio, Kathleen Petty, weighed-in on these media hysterics: "We keep score, assign penalties, and generally treat politics as a sport. But as sports go, politics might be a great game for participants, but not spectators or listeners."

Americans like the rest of us in the world that surrounds them think that the last couple of weeks have been a disgrace. In fact according to "Time" (on-line) the words most frequently volunteered to pollsters following-up on the theatrics in Washington were "ridiculous," "disgusting," and "stupid".  - Lest I too belabour the sports analogy, there were no winners in the last few weeks in the debt debate.

Though I am not terribly hopeful of the outcome; what remains to be seen is whether political leaders in the United-States and those who watched events unfold from this side of the our common border have learned any lesson from the drama?  There are five provincial elections on the docket in Canada this fall. With more than a third of the country's population living in Ontario its call-out to voters on Thursday, October 6th is crucial to Canada's well being. While in the United-States what's abundantly clear from the debt debate is that President Obama has significant challenges ahead to alter dynamics and perceptions to secure a second term in the Presidential Election in 15 months.

MIXED SIGNALS ALONG THE BORDER

There's plenty of anecdotal ammunition to suggest that the "Council of the Federation" meeting of Canadian Premiers just wrapped-up in Vancouver accomplished almost nothing in unifying the provinces: The founder of the "council" Quebec's Jean Charest didn't attend and Ontario Premier Dalton McGuinty upped and left early to deal with matters back home.

Perhaps it's because there are five Provincial Elections in the works for the fall (and potential for a possible record seven elections) that just about everyone brought an intransigent series of wants and needs to the table. Quebec and Ontario want to re-open the Canada Health Act discussions; the Atlantic Provinces agitate for greater Federal Transfers; Saskatchewan is still smarting over the sale of Potash Corp. debacle; and Alberta and British Columbia want trade deals with the Far East.

With the provinces bickering over regional matters and without any common accord to raise pressure on the Federal Government, it's pretty clear that Prime Minister Harper's parliamentary majority in the House of Commons will remain free to set both the agenda and the course of debate come the return of Members of Parliament in the latter part of September.

Though the Obama Administration is somewhat pre-occupied with a debt crisis which threatens to flatten the planet's most powerful economy. Canada's Federal Government seems undeterred by evidence of the sputtering thirty year old "Mulroney" Conservative ideological belief that what ails Canada is easily fixed by increasing trade south with the Americans. If in a post 9/11 reality this simplistic solution worked then everyone assumes the provincial governments could easily be brought "on board" and their demands for additional funding from Ottawa (for whatever cause) would be satiated.

Unfortunately border perimeter security has been the all consuming top priority of the Government of the United States since the heinous attacks on the homeland ten years ago this fall. And, the reality no Canadian Government seems willing to acknowledge under the current circumstances is that trade and security are mutually exclusive. Add the ongoing melt-down of the United-States economy in the aftermath of the great-recession of 2008 and the attendant rise of American protectionism, and the pop-up perfect economic storm risks leaving Canada's export dependant provinces and Federal coffers battered and bruised beyond reasonable recovery.

Mr. Harper has vowed to press forward negotiating with the Americans to cut "red-tape" and bureaucratic inefficiencies which frequently trump reason at the border. But in reality, with the prospect of a bitter and divisive Presidential Election campaign just over the horizon, Mr. Obama's adversaries are sure to make sure America's security boot on Canada's economic throat remains firmly in place. Already the Homeland Security Secretary Janet Napolitano is being pressed to respond to a sharply critical report of the U.S. Government Accountability Office (The GAO) which claims that the American Customs and Border Protection Agency provides an "acceptable level of security along less than one percent of the border." The study commissioned by the GAO applied the criteria used by the US towards guarding its border with Mexico, and concludes that Border Patrol agents can exercise proper control over just 51 kilometers of the 6400 kilometer border between Canada and the United States - Based on its Mexican model, the GAO implies that the U.S. "does not have the ability to detect illegal activity across most of the northern border."

The Mulroney era free-trader model may have been good for business 30 years ago. Excepting Canada's finite vast energy resources; it now seems essential for our future prosperity as a nation to look outside of the immediate neighbourhood to modernize our trading model - Whether the provinces can agree or not on what precisely it is they want.

A BULLWINKLE MAGIC HAT TRICK?

The western world has been watching with troubled fascination and concern Greece's slow march into financial collapse. The proud crucible of modern civilization and our democratic institutions begging with extended hand for relief from European neighbours while its people riot in despair along Athens historic avenues.

Greece's twice bailed-out multi-billion dollar national debt is roughly equivalent to $44,000 for each of the small country's 11.5 million inhabitants. Yet each of its economic tremors has rocked investors and banks in the financial capitals of the world for much of the last 12 months.

Ponder a nation with a population of 311.5 million people with a multi-trillion dollar national debt which (in fact) equals $45,000 for each of its inhabitants? Such is the looming brick-wall of the debt crisis facing the United-States of America. The Government of the United-States reached its statutory $14.29-Trillion debt limit on May 16th: But for the grace of God, and only by using a series of accounting techniques and voodoo economics has the Obama Administration been able to continue issuing debt and paying its bills for now just short of two months...and time is running-out rapidly.

Last Friday, on the eve of the Independence Day weekend, the U.S. Treasury advised that it can only maintain the "illusion" for another month: Max! The gloomy Fourth of July forecast confirmed that the Government of the United States of America, the world's most powerful economic engine,"could begin defaulting on its $14.3-Trillion debt on August 2, 2011."

The world's foremost debt rating agency, the financial services giant Standard & Poor's, has already confirmed it will lower the U.S. credit rating from AAA to D - its lowest rating - if political Washington can't find a way out of this morass. Unlike Greece there is no conceivable possible world bailout for a fourteen (plus) trillion dollar bill that the American Congress with the tacit approval of its people has accumulated on the country's credit card.

With now less than a month to go, and shadowed by a looming Presidential re-election bid in 15 months, the Obama Administration needs a compromise just short of a miracle with the Republicans who control Congress...



So far the Republicans have said they will not agree to resolving the country's debt ceiling problems unless a deal is struck first to cut the United-States deficit by $4-Trillion in the next 10 years. Those talks are at an impasse over the President's insistence on increasing taxes.

Economists are plenty alarmed, and in financial and banking circles the talk of a financial Apocalypse is thick. There are clear warnings of credit markets in a state of panic, and of steep interest rates, coupled with Draconian spending cuts and tax increases if the U.S. defaults.

But at least so far, among most Americans the dire warnings appear to be falling on unconvinced ears. Why? It's not unlike the bumper sticker sported on some cars when the world as we know it was supposed to end back on May 21: "After the Rapture, can I have your car?" - Some experts blame "doomsday fatigue." They say in recent times Americans heard that things were going to go haywire with the turn of the millennium (Y2K), and they didn't. They were primed for post September 11 terrorist plots that did not unfold. Time after time they've seen Congress come to the brink, only to pull something out of its hat. In short this could be one critical instance where Washington's past tendencies to cry wolf and stage histrionics on issues of the day has left everyone unprepared for an eventual economic shakedown with worldwide ramifications.

HARK! ISN'T THAT THE PERIMETER SECURITY DEAL SPUTTERING INTO OBLIVION?

It's all out war along the Great Lakes, the testiest battle in decades. And it's about building a bridge to Canada. A conflict of monumental proportions which pits a multi-billionaire, Matty Moroun, against the Governor of the bankrupt State of Michigan, Rick Snyder.

The bridge proposal between Windsor and Detroit is a cornerstone of the Harper Government's plan to develop a joint Canada-U.S. border agreement on "perimeter security." Both the long suffering bridge plan and the security deal which was announced six months ago when Prime Minister Harper and President Obama met, appear stalled and well on a rapid track to the "back burner" of American politics. The Obama Administration is being otherwise distracted with plans for the 2012 Presidential election. And, facilitating or sharing American business with (or as opponents argue transferring jobs to) another country is not on their agenda.

Just a month ago in Washington at hearings of the Congressional "Subcommittee on Immigration, Refugees and Border Security," the Chief of the U.S. Customs and Border Protection Agency, Alan Bersin, told Senators on the panel that the Canadian border is a "more significant threat" to American security than the Mexican border. This was no doubt music to opponents of the Detroit bridge deal. Mr. Bersin explained that: "It's commonly accepted that (the northern border is) the more significant threat, because of the people who can enter Canada and come across our bridges into the United-States."

Back to the war of words in Michigan: The wealthy Manuel (Matty) Moroun owns outright the Ambassador Bridge, a toll span which is the busiest land border crossing in the world. He hasn't taken lightly to Michigan's plan for this second bridge financed with loans from the Government of Canada to compete directly with the estimated $60 to $100 Million/year profits generated by the tolls collected by CenTra Inc., Matty's holding company. As most Canadians who watch American television know, Mr. Moroun's company has been running scathing TV commercials against the project for months. The "Detroit Free Press" daily fingered company goons recently for delivering "fake" eviction notices to the owners whose homes could be in the path of a new bridge. With no money to fight back against the campaign, Michigan Governor Snyder is left muttering pious words: "there's a lot of misinformation out there...This is a great thing for our state...It's about international trade and job creation."....Blah, Blah, Blah!

It's clear that the recession of the last two-and-a-half years down south of the 49th parallel has raised a significant climate of American protectionism which, when coupled with the now decade long paranoia over border security matters, do not bode well for any Canadian initiatives. Whether its a new bridge and/or a perimeter security framework with the ultimate aim of integrating and harmonizing law enforcement measures along the border. - Perhaps critics argue with some significant concessions on Canadian sovereignty: I digress!

Last month at the G-8 Summit in Deauville, France; Prime Minister Harper indicated that the Government's "action plan" (an over used Tory moniker) on border security would be ready this summer. Perhaps: But I'm quite unsure that the Obama Democrats, facing an uphill challenge towards the 2012 Presidential election and its appended tea-party hysteria, will be welcoming another "foreign" trade initiative with reciprocal enthusiasm.

REALITY CHECK

When Atlantic Canada's four provincial Premiers met in southeastern New Brunswick a few days ago they came-out resolved to ask the Federal Government for more transfer funds. Although Prime Minister Harper did promise in last month's Federal election campaign to maintain a steady level of transfers; I'm guessing given Ottawa's deficit budget measures that any "new" money is not soon to flow down towards the east coast.

Residents in two of the Atlantic Provinces will go to the polls in provincial elections this fall; Prince Edward Island on October 3; and Newfoundland & Labrador a week later on October 11. The get-tough posturing with Ottawa over transfer payments to the "have-not" may be good fodder for provincial politics but quite likely to fall on deft ears federally, in particular in those two jurisdictions which voted overwhelmingly against the Harper Conservatives in the May 2nd Federal encounter. And, from the perspective of the other three Atlantic provinces, though they may be envious of Newfoundland's recent offshore oil wealth, it probably doesn't help the "one-size fits all" argument favouring increased transfer funds from the Feds either.

Lest I digress: Flush from his majority win in Ottawa Mr. Harper has promised to pass his budget; scrap the long-gun registry with its 250 jobs based in Miramichi, New Brunswick; deliver on his omnibus "get-tough on crime" agenda; and kill subsidies for political parties - while at the same time chopping more than $4-Billion per year in annual spending. In addition to massive Federal job cuts, experts predict that means painful reforms to the Employment Insurance Program and (you guessed-it) Equalization payments to the provinces.

When Statistics Canada's April inflation numbers were published at week's end no one, least of all New Brunswickers, were surprised that theirs was the highest in the land: A reflection of the usual "sin tax" increases foisted on them by the Progressive-Conservative government of Premier David Alward in an effort to stave-off provincial bankruptcy. Sadly the same measures contained in the province's March provincial budget played a significant factor in a double-whammy which resulted in the loss of 2000 full-time jobs and kicked the provincial un-employment rate to more than 10 Percent.

The trend was in sharp contrast to the rest of Canada with a national unemployment rate of 7.6%; which added nearly 60,000 jobs in April. Commenting specifically on the New Brunswick situation a senior economist with the research think-tank Conference Board of Canada described Premier Alward's austerity measures as..."necessary to address the inevitable long term impact of crumbling finances."

Across North America less than 7% of the population has in savings more than the $500,000 which is estimated to get us through our "Golden-Years." In reality 63% either don't know how much they have; or admit to having less than $25,000 in savings. And; that same Conference Board of Canada predicts that specifically New Brunwick's aging population will scuttle any long term potential growth for at least the next generation. In North America, economic growth is set to ease overall as "Baby Boomers" retire. Pretty much since the end of the great sailing ship era of the 19th Century Atlantic Canada's problem has been to retain it's young workers. I was a product of that great migration west 45 years ago. It is a migration which has shown little sign of moderating over the past 5 (or more) generations.

In demographics alone, New Brunswick already has less than one young person entering its workforce for every person leaving it. And; that does NOT account for the 41.4% of provincial students surveyed a year ago who indicated that would be "likely" or "very likely" to leave their native province in order to find work. Despite noble efforts to turn around its provincial fortunes, New Brunswick's economic problems will only get worse. That's the reality of the Boom, Bust and Echo cycle of the post war euphoria of the mid-20th century which demographers have been warning about since the halcyon days of the "sixties".

For reasons theorists and economists may debate for decades; it's happening first in one of the country's smallest regions...but New Brunswick's slow agony into economic chaos should be a clarion call to every other region of the North American Continent that we are poised for, and headed down the same path. If magic somehow produces an effective remedy to the woes that ail my native province; it will be an experiment to watch, and a lesson to be learned.

PARADISE FORECLOSED

Amidst a surprising litany of political scandals on Parliament Hill, some reaching practically all the way into the inner sanctum of the Office of the Prime Minister; Mr. Harper has travelled to Europe to a hastily convened meeting over Libya's civil war. A calculated effort to bolster the illusion that, just as it did in the Great Wars of the Twentieth Century, Canada can still affect the course of human history.

Marching into war, even if it's only with a token force of six ageing jet fighters, is the cost we'll be paying for the Conservatives to show (at least if you believe their barrage of TV advertising) the Prime Minister's firm grip on the tiller of power - As was the case when he (single handily) rescued the planet's battered economy a couple of years back.

To no one's surprise, to proffer an illusion on the eve of tabling next Tuesday's Federal Budget confirms it almost seems, despite rhetoric to the contrary, that the Conservatives are preparing to launch into a national election campaign by week's end. It becomes thus safe to conclude that Tuesday's budget will itself be an illusion, without hope of passage, designed to springboard Mr. Harper's ruling party into the election ahead of their competitors.(see: Abusing Power - March 16/11)

But beware! Dark economic clouds may be gathering once again as the list of crises grows; not the least of which is Libya's civil war; to nip the world's recovery at its roots, and set the stage for another meltdown.

For the first time in more than 10 years, the U.S. Federal Reserve Bank intervened in currency markets on Friday as a direct result of the twin disasters of the Japanese earthquake and tsunami, which have brought the world's third largest economy to its knees. There are fears of runaway inflation with the developing economies of China and India; geopolitical uprisings and potential oil disruptions in the Middle East and North Africa; debt crises in Europe (most recently in Portugal); and pretty much a stalled recovery in the United States.

And (Alas!) Canada is stuck with the economy of its closest neighbour and very largest trading partner. The news south of the border is somewhat gloomy:
Unemployment in the United-States remains about 9%; growth is slow; States are slashing spending to balance budgets; investment is shaky; the Federal budget proposed by President Obama is a disaster with little prospects of American politicians doing anything constructive about it. The American Dream of owning a home has evaporated...the Census Bureau says that a staggering 12.1% of all residences (18,394,000 homes) are vacant mainly as the result of Foreclosures by lenders and their subsequent repossession by the sheriff. In short, the net worth of America is about $54-Trillion, still 23% below the pre-recession peak of $65.8-Trillion.

Mr. Harper's handlers wish to convey his skillful handling of the last recession and his decisive grasp of erupting world crises as we are quite obviously perched on the edge of another Canadian Federal Election. Budget illusions and voodoo war making on a grand scale ultimately may not serve any of us very well.

BOOMER FRET

It is maybe the reality of our ageing demographic that causes every small tremor in economic news - Employment, Interest Rates, Manufacturing output (you name it) - to terrorize the stock market. We are the "Boomers;" the nation's largest population cohort and we're fretting whether there will be anything left for life in blissful retirement.

Perhaps sadly...well we should. Though most of the world's great economic thinkers agree that Canada is in damn good financial shape; in at least one respect we're one of the world's basket cases. Canadians are drowning in debt: In 2009 our government debt amounted to 82% of the nation's entire Gross Domestic Product (GDP), compared for example to Great Britain (68%) where the national government has just imposed Draconian restraint measures. And even the United-States, the world's economic disaster poster boy, which is just one point above us; 83.2%.

Canada's Federal government debt is as bad as ever, and climbing at the rate $135-Million per day. It peaked at $563-Billion in 1998 before the Liberal Government of Jean Chretien wrestled it back with its own drastic cuts. In the past five years it has now risen back to what the Canadian Taxpayers' Federation claims will be $567-Billion on March 31 - A new record.

That's just the Federal Government debt, add in provincial debt where some economies - New Brunswick, Ontario, Quebec (to name just three) - are their own basket cases, and Canada's total government debt will be well over $ One Trillion on March 31 when the books are closed for the fiscal year.

Lest you think that it is just our elected officials who are doing a bad job at minding the nation's purse strings - They are - But the rest of us are "maxed-out!" Spending by Canadian consumers over the past two years is the most leveraged in history. Canadians hold more than their own $-One Trillion in mortgage debt alone; up about 8% since 2009, and an eye-popping 194% since 1995. It's not just the family credit cards that are maxed-out either. Last year (2010) about 2,000,000 Canadians took out equity loans from the value of their generally mortgaged homes - The average withdrawal was $46,000.

Fueled by historically low mortgage interest rates, it has been Canada's housing market which buffered the country against the economic recession which shook most other parts of the developed world. But the pent-up demand for an average Canadian home which is now priced at $331,000 is rapidly evaporating amongst the record personal, national and provincial debts we have accumulated as a nation. It may be later than our American cousins' or the homes of our ancestors in the United Kingdom and in France; but the party is probably over for us too.

Just this week the International Monetary Fund (IMF) downgraded Canada's GDP growth predictions for 2011 to 2.3%. In recessionary times, that ain't bad but it pales against the IMF's world economic predictions of 4.4% growth. At the very height of the recession one Canadian Imperial Bank economist called Canada..."a safe harbour in today's global economic storm." For the most part, witness to the turmoil abroad, Canadians were pretty smug about our country's fiscal position.

If our reasonably safe economy was fueled by an unprecedented housing boom which has now spent itself out; there may be good reason to fret that it was all along an illusionary boom built on a somewhat expensive house of cards.

GIVE AND TAKE

Since I am not a citizen of the United States, it is not for me to offer insight into the wisdom of the Obama Administration giving-in to pressures from Congress to extend Bush-era tax cuts for the wealthy.

As a close Canadian neighbour, I can advance a foreigner's perspective on the seemingly widening gap between rich and poor; the have and the have not; the destitute and the wealthy.

Our American cousins are an extremely generous people. Just in the past few days for instance an unknown donor has dropped a total of six gold coins at several Salvation Army Christmas kettles in the Fort Myers area of Florida. It's precisely that generosity and the belief that the streets were paved with gold that at the turn of the last century attracted so many from Europe; and that a hundred years later continue to beckon masses from central and south America. Other than countries of origin, about the only difference is that back then they were described as WOP (with out papers) and now they're the more politically correct "illegal aliens" - I digress.

Indeed over time, some have become quite wealthy, and ever since Henry Flagler opened-up the state with his Florida East Coast Railway a hundred years ago; the wealthiest have flocked to the Palm Beaches to escape winter's rigours. Flagler was John D. Rockefeller's partner in Standard Oil; and a New York contemporary of Andrew Carnegie and Meyer Guggenheim. Palm Beach is America's enclave of "old money": Descendants of Horace Dodge (automobiles); the Lauder family (cosmetics); the DuPonts(chemicals); Marjorie Post and E.F. Hutton...you get the picture.

Congregated somewhat like book ends at either ends of Palm Beach, are America's "nouveau riches." Not so much hard working entrepreneur industrialists who forged the continent -Rather a microcosm of America's new obsession: Fame, instant gratification, entertainment and sports heroes. (Some might suggest: Precisely what is wrong with the country) At the North end, Jupiter Inlet which is home to Rod Stewart, Celine Dion, Burt Reynolds, Tiger Woods et al. And, Boca Raton at the southern tip. The old moneyed of Palm Beach have an expression..."That's so Boca!" for the local wannabee who include tennis champ Chris Evert, "Charlie hustle" - Pete Rose, Maury Povich his wife Connie Chung, and Nascar driver Jeff Gordon.

Yet again; lest I digress: Canadian ex-pats Jean Francois Roy and Marc Issenman made international headlines in their failed 2005 bid to buy-out all 411 residents of the Briny Breezes "trailer park" for $510-Million which (besides making each trailer owner a millionaire) would have bridged the last remaining real estate gap between Boca and Palm Beach. New money itching to mix-in with the old: "That's so Boca!"

Though I suspect just how the hard-earned "moneyed" of the Palm Beaches will react; the "nouveau" moneyed of Boca have something new to brag about: A shiny bank machine that skips cash all-together and spits-out gold bars instead. The "Gold-To-Go" ATM in Boca's ritzy "Town Center Mall" is a first in North America though the German company that owns it says they'll unroll a few hundred of them worldwide in 2011. The company (Ex Oriente Lux), installed its first machine at the Emirates Palace Hotel in Dubai last May. Shoppers insert cash or credit cards and use a computer touch-screen to choose the weight and style they want...the machine spits out the gold in a classy black box. Gold is currently trading at about $1,400 / ounce. Boca's fancy ATM reconfigures it's prices automatically every 10-minutes to reflect market trends and adds packaging, certification and a 5% markup.

Thirty years ago, Ronald Reagan was elected President on the conservative premise that government is always the problem, never the solution. It's not as if the story of America's ongoing financial woes is particularly obscure. It's that the divide between the rich and the poor just keeps getting wider and little of anything worthwhile is being done about it.

DERAILING THE "TOMMOROWLAND EXPRESS."

From Woody Guthrie's hobo lullaby "The City of New Orleans", through Billy Strayhorn's "Take The A Train", and Glenn Miller's "Chattanooga Choo Choo"; musicians, troubadours and poets reflect the nature of their times with their compositions. Though troubling, it wasn't all surprising that songs performed during last weekend's "American Music Awards" in Los Angeles included "Times Like These" performed by Kid Rock; and "Pray" by teen-pop idol, Justin Beiber.

It was just about one year ago that U.S. President Barack Obama in a much publicized speaking engagement in Tampa, Florida rolled-out his Administration's plan to develop a nationwide multi-billion dollar high-speed rail system as a significant element of his nation's efforts to reduce energy costs; get cars off choked highways; and fight the release of CO2 gasses into the atmosphere. Florida was among the first state expected to benefit from the program with a 168 MPH train link between Tampa and Orlando, and future plans to extend the system south to Miami and then north along the Atlantic coast to Jacksonville.

Now Florida is on the verge of becoming the biggest train wreck yet along Mr. Obama's much touted plan. So far the state has received $2-Billion (70% of total cost) from the Federal Government for the rail link set to launch in 2015. But; brimming with confidence from this month's mid-term Congressional elections, and vowing to rein-in government spending; Republican conservatives have zeroed-in on "high-speed rail" as wasteful and too expensive at a time when all levels of governments are dealing with horrific budget pressures.

Critics claim the projects will only worsen the U.S. debt and will not attract sufficient riders in an American culture built around highways, automobiles and cheap gasoline. The backlash against rail projects as relief for congested roads and highways is rippling across the country. The "New York Times" has identified several projects already chopped: An $8.7 tunnel and rail line to connect New Jersey and New York has been cancelled by the Governor of New Jersey. - The Governor-elect of Wisconsin ran on a promise to kill a high-speed rail link between Milwaukee and Madison. - And; the Governor-elect of Ohio has promised to stop plans for a similar project in his state. As for Florida the Republican Governor-elect, Rick Scott, claims it isn't too late to knock the train off the tracks here as well.

In Canada, the government of Prime-Minister Stephen Harper has already signalled it plans to reign-in federal spending to slay our ballooning deficit closing-in on $60 Billion in the current fiscal year. It's already withdrawn funding for Edmonton's plan to host the 2017 "World Fair"; and may be setting the stage to kibosh the Quebec City bid for the 2022 "Olympic Winter Games" by denying funding for a new arena which might also accommodate a new "Nordiques" NHL franchise. If America is to set the trend: The City of Ottawa's plan for a $3-Billion underground "light-rail" system; VIA Rail plans for high-speed links in the Quebec City/Windsor corridor; and subway extensions in both Toronto and Montreal; might very well be tempting targets to "spread the pain" as pressure intensifies to control spending.

PREPPED FOR ARMAGEDDON!

At the apogee of the Y2K frenzy exactly ten years ago, many North Americans (perhaps elsewhere as well) prepared for the chaos that would ensue with the arrival of the 21st Century a few seconds past midnight on December 31, 1999.

Now, the world wide hysteria leading to the arrival of the new millennium sounds somewhat trite and ridiculous viewed through the prism of the last decade. No one could have anticipated that the terrorist attacks of September 11, 2001 would so focus the world's attention on an altogether overriding series of concerns, panic and paranoia. Today some might argue with conviction that the worldwide economic crisis which began with the collapse of millions of highly leveraged home mortgages in the United-States in 2008 can be traced back to that country's reaction to the attacks sparked by radical Muslim extremists on New York City and elsewhere.

Whether its the Y2K panics and/or the post September 11 hysteria, for some unclear reason there has existed amongst our cousins south of the 49th parallel a fringe element of survivalists who have been preparing for the disruption of social or political order and the general collapse of society and widespread world chaos. Perhaps in fact from time to time, even ready to kick start their own version of Armageddon - Timothy McVeigh, a U.S. Army Veteran executed for the Oklahoma City bombing of the Murrah Federal Building in 1995, amongst the more notorious.

Well: With economic chaos looming from America's massive $14-Trillion debt and its out of control spending; and the forecast of the true "Believers" in the abrupt end of our world foreseen in the 5000 year-old Mayan civilization calendar just before Christmas 2012...They're back:



...This time, "Survivalism" has gone mainstream: I am not making this up! Just in time for the holiday season Cotsco is selling everything needed to serve a feast after "The End"!

I have little need for 5 gallon jars of "Cheez-Whiz", and/or barrel-sized containers of dill pickles. Some years ago I gave-up my Costco membership and I am unlikely to reconsider. But! - Doubtless a sight to behold: The "Shelf Reliance Thrive" now in Costco stores in the United States features more than 5000 servings of freeze-dried or dehydrated rice, winter wheat, green peas, diced onions, sweet corn, sliced apples, raspberries, Lima beans and elbow macaroni with a guaranteed shelf life of 30 years. And there's more; including 30 litres of imitation bacon, beef and chicken: Something the retailer describes as textured vegetable protein apparently "consistent with real meat." Yum...

Allan Abel, who is a Canadian living in Washington, reported recently in an American syndicated publication that the products are marketed to our cousins in America as..."everything you'll need if the world goes to heck in a hand basket."

Major retailers such as Costco are just cashing into the prevailing paranoia, catering to perceptions over our "final days." It wasn't that long ago that in a "blog" post I wrote of the Illinois based promoters of "survival seeds" which were then being shilled by TV Evangelist Jim Bakker. Now you may add neo-con Fox News mouthpiece Glenn Beck amongst the proponents..."A desperate lower class demanding handouts. A rapidly diminishing middle class crippled by police state bureaucracy. An aloof, ruling elite that has introduced us to an emerging totalitarianism which seeks control over every aspect of our lives...if you don't have the ability to grow your own food next year, your life may be in danger."

Never mind that (apparently) no one has ever wondered just how the heck they're going to cook all those red beans, grind the wheat, or know how to make bread over a campfire. Back to the frenzy on over at Costco; as America's Thanksgiving shopping "black" Friday gets set to beckon: For $149.99 (USD) you can get the "Food For Health Extreme Emergency Preparedness Kit," including 25 servings of Western Stew; 25 servings of Potato Soup; 20 servings of Oatmeal; a water filtration system; a crank operated flashlight/Radio/Cellphone charger; a survival knife; emergency blankets; Safety Masks; duct tape; toilet paper. Everything, Costco claims, for up to 4 people to survive in the event of an earthquake, pandemic, wildfire or displacement emergency.

I wish (only) that I was making this up. Fortunately I am comforted knowing that Hamilton born comedian Steve Smith, a.k.a. "Red Green," would consider this amongst his proudest achievements.

SHARE THE GRIEF

When you share your bed with an elephant what ostensibly matters most is if (when?) it rolls over. Roughly ten days out from the November 2nd mid-term elections in the United-States, Americans appear to be coming to grips with their nation's massive financial shortfall.

America it seems is fed-up with Federal Government spending particularly since there's no apparent end in sight to their nation's staggering employment melt-down now entering a third year. The frustration down south of the 49th parallel appears ready to boil over into a bruising election for President Barack Obama and the Democratic Party forces.

At its current monstrous $1.3 Trillion, America's annual deficit has spiralled out of control and threatens to unravel the very foundation of the world's free market economy which the United States has dominated for the last century. With their national debt now about to top $14 Trillion - $40,000 for every man, woman and child in America - And, in a clear indictment of their national spending sickness: Americans will abandon the Democratic Party controlled Congress for a hard right turn to the Republicans. For additional good measure, it is all but certain they will also shave-off several Senate seats away from the Democrats.

More than four years ago, from the very start of his bid for the Presidency, Mr. Obama campaigned on a platform goal of reducing the country's deficit. Subsequently faced with a banking collapse, mortgage meltdowns, and mounting unemployment, on taking office the President's administration felt obligated to keep spending to save the American economy. Mr. Obama recently described that as the most frustrating part of his presidency.

As it is, North Americans live in an age of exaggerated expectations. Mr. Obama more guilty than most perhaps with creating overstated anticipation that he could wrestle down the gargantuan malaise which afflicts his country through the latter half of the century's first decade. During a preceding decade of growth and healthy economic indicators, When Bill Clinton left the Presidency in 2000, the budget surplus was $236-Billion, the highest in U.S. history. But Mr. Clinton only succeeded in setting a national course to successive years of surplus in his second 4 year Presidential mandate. When reduced to a lowest common denominator, Because the American Constitution limits the Presidency to 8 years; it is only when (and if) a President is re-elected to a second mandate that his administration is effectively freed to take hard, difficult, effective, and some times unpopular decisions without the risk of imminent defeat. It seems that lame-duck President's (as they are called) have their advantages.

If he plans on running again in 2012, (no one doubts he will) that is a luxury Mr. Obama does not yet have, and the neo-conservative movement is making it abundantly clear that it will stop him from putting any additional emphasis on fiscal discipline in Washington. As a Professor of Government at American University, James Thurber, put it to the Associated Press on the weekend - "It's going to be very hard (for him) to find common ground" - While Mr. Obama and his Republican opponents share the same goal of reducing the American debt and creating jobs, they disagree fundamentally on their approach. All of which leads many observers to believe that Mr. Obama may bend and reshape his post-election presidency in the hope of improved chances at a second term in 2012.

Of course, unfortunately there is a downside to diluting one's convictions: It aggravates society's loss of much of the nobility that used to be the hallmark of public service and politics.

MOOMBEAMS?

I am trying to detect a lesson worthwhile - Ah Hell! Anything worthy - Over this kerfuffle out on the country's left coast about what the conventional media has been describing as the "ticking HST time Bomb."

In Canada's La-La-Land, British Columbia locals lined-up, 700,000 strong, behind their former disgraced Premier, William Vander Zalm to pony-up on a petition to (a) overthrow the Government of Premier, Gordon Campbell; - (b) Force the Legislative Assembly into reversing an earlier vote - (and/or) (c) Hold a province-wide Referendum.

The issue is British-Columbia's dreaded HST, a 12% Value-added tax which went into effect on July first, the same day Ontario's HST of 13% also kicked-in. In fact, there are now just a couple of provinces without their own Harmonized Sales Tax, which combines the national Goods and Services Tax (GST) with their provincial sales tax.

The difference is that British Columbia is Canada's only province with a "direct democracy law", a concept borrowed from a handful of States south of the border whereby if sufficient names are collected on a petition; elected officials and the measures they represent can be "recalled from office." In B.C. apparently everything has been forgiven of their former Premier, Bill Vander Zalm, forced-out of office in 1991 over allegations of "conflict of interest" involving his family owned theme park: 'Fantasy Garden World.'

"Recall Measures" have been practiced foremost in California the "Land of Fantasy" where the recall of Governor, Gray Davis, in October 2003 over the cost of energy production (electricity) promoted strong-man, turned actor Arnold Schwarzenegger into the Gubernatorial Mansion on promises of strong tax-cutting measures - Governor Schwarzenegger will step-down from office on November 2nd this year; amidst California's worst economic slump since the collapse of the gold-rush of 1848...



Former Governor Jerry Brown hopes to be returned to California's highest office to replace Governor Schwarzenegger. Mr. Brown who twice sought and lost the U.S. Democratic Presidential nomination three decades ago was known as Governor "Moonbeam" back in the late 1970's after pop singer Linda Ronstadt described her relationship with Brown as "My little Moonbeam" in Rolling Stone Magazine. - I digress!

Whether in California, British-Columbia or elsewhere the issue is clearly just who will pay the bills if taxpayers continue to demand better services but refuse to provide the funds necessary to cover the costs? An issue which is all too real for the residents of my native province of New Brunswick on Canada's east coast. regardless of the B.C. recall law, or California's November election; New Brunswick ratepayers will be first at the polls this fall, on September 27. Second smallest of the country's ten provinces, the 750,000 people of New Brunswick face a staggering debt of almost $10-Billion or about $13,000 for every man, woman, child. And; while this untenable provincial debt should be the main focus of the election, the province's main political parties are using every measure to avoid talking about it.

Just like in British-Columbia, California and all of those other places which have come before it seems everyone is counting on "moonbeams," miracles and prayers, maybe a little "Pixie Dust" to avoid the inevitable payoff to the piper.

MORE THAN A CHARM OFFENSIVE

President Obama's appearance as a guest on the morning talk-show "The View" is a desperate move by an embattled U.S. administration to reconnect as that nation's fall mid-term elections approach.

Many of the critical issues facing the American government: the wars (Iraq / Afghanistan); the environment; plus the debt and the economy have reached a point where they transcend political parties. But, partisan political games continue to be played at a fever pitch, though we're clearly well beyond the time when governments in North America can any longer afford to play them.

In high level financial circles expectations are that Mr. Obama's government will back away from shutting-off the stimulus taps in the face of lagging job growth and an alarming retreat in consumer confidence. In the past 60 days, the U.S. Consumer Confidence Index has dropped just short of 15% to 50.4%. Economists watch those numbers closely because they determine consumer spending which is now edging towards the start of the back-to-school shopping season. A reading above 90% would indicate a solid economy. Then, who better for President Obama to bring his "charm offensive" to than the mothers of school aged children who watch "The View?"

Across North America economic threats are still lurking. Though Canada's healthy banking industry has been credited with our relatively soft landing from the recession of the last couple of years; we still haven't stepped completely away from the material danger of a so-called double-dip recession. The Canadian government will be forced by the next Federal budget to shut-off our own $60-Billion economic stimulus program and account to Canadian voters for putting our spending back into serious deficit territory in a series of ill-conceived tax cuts followed by the subsequent downturn. Though it was ignored for political expediency by all parties; that downturn was looming at the time of the last Canadian Federal election in October 2008. Reigning-in the deficit through a series of unpopular cuts with the electorate is fueling speculation of another Canadian national election early this fall before the "shoe-drops" on these expected tough Government measures. Which brings us back to playing political partisan games.

South of the border just last week, the American Federal Deposit Insurance Corporation chalked-up another Half-Billion dollar hit when it was forced (once again) to seize the assets of seven failing banks. What's even more notable is that so far in the first seven months of 2010, a total of 103 U.S. Banks have failed because they have not been able to recover from their portfolios of bad loans mostly tied to real-estate mortgages. In Florida for example, 81% of all mortgages exceed the current value of the home they secure. (In fact running at an average 138% of value). Wait! There's more: Last year's rate of bank failures down in the United-States was slower than in 2010. Not a proud accomplishment: But, it took until October of 2009 (not July) before the number of bankrupt banks surpassed 100. The FDIC estimates that the cost of bank failures looking ahead from 2010 to 2014 will be more than $60 Billion.

With mid-term Congressional elections in the U.S. looming, and the very real potential of a second Canadian Federal Election in two years; knocking-down the economic turmoil and the subsequent elephant-sized debts and deficits hiding behind the closet doors will require Herculean political will and control. What both countries will need are people and leaders running for office for the purpose that they can "serve" far more than to merely get elected. I sure hope the politicians and we voters are up to the task.

G-20 REDUX

I was introduced recently to Denis Cochrane, an academic who is the President of St. Thomas University. I've been subsequently reminded that Mr. Cochrane has a substantial political background. He has been a Member of Parliament, and was Leader of the Progressive-Conservative Party of New Brunswick in the aftermath of Richard Hatfield's 17 year reign as Premier. At that time, the knock against Cochrane was that he was "too nice."

In a series of conversations with prominent New Brunswickers which is being published by the Saint John daily, the "Telegraph Journal", Denis Cochrane muses about politics. He believes modern politicians are losing their ability to govern because they depend almost exclusively on opinion poll results, before making the critical (sometimes unpopular) decisions required of public policy makers.

While Canadians are mired in the controversy over police security tactics during last month's G-20 Economic Summit of world leaders in Toronto. The real issue: The Summit's consensus on pulling back "stimulus funding" has been all but forgotten. In fact after a poll this week in the United States that only 42% of Americans approve of President Obama's "handling of the economy" - The taps on the potpourri of federal stimulus money will likely continue flowing even as the country's nearly Trillion Dollar package adopted by Congress last year ends. At stake for President Obama and the Democratic Party are the mid-term Congressional and Gubernatorial elections this November: That's the point!

Making decisions may be part of leadership; but running the risk of losing the next election for making sometimes unpopular (though right) choices seems no longer a valid reason for seeking office. As Dennis Cochrane sees it, politicians surely have..."an obligation to consult with their constituents. They have an obligation to have a dialogue and get all the information they can...but ultimately they have to make the decision."

Essentially in the case of last month's G-20 the dialogue and the consultations have taken place and the combined wisdom of the leaders of the world's great economic powers resulted in a consensus that the recovery would best be served by growing fiscal consolidation and boosting national savings. That's what the Summit Declaration says. Though for most countries, boosting national savings is unlikely to see the light of day. In the United-States stimulus relief raised the national debt to $14-Trillion, and the bad news is the administration isn't sure what to expect next year when the stimulus funds run out. Amongst the European Union partners, there is real fear that some more partners, like Greece earlier, will default later this year on Bond issues. At the very least the economies of Ireland, Spain, Portugal, Italy, and Iceland remain on life-support. To say nothing of the United Kingdom in the event that its largest corporation, British Petroleum (B.P.) were forced into liquidation over the Gulf of Mexico oil disaster. Billions of British Pounds, primarily retirement and pension funds, are invested in B.P.

Here in Canada politicians have taken credit for our relatively soft landing from the financial turmoil of the past three years. But, it's the prospect of a further soured economy which is fueling speculation of an early fall Federal Election before "the other shoe drops." Statistics Canada has just reported that the month before the Toronto Summit (May), Canadians bought more than we sold abroad: Our imports outpaced exports by $503 Million. At the very least, the Federal Government faces the prospect of wrestling down the $60-Billion fiscal hole that was dug keeping the economy from tanking further.

Just when it seems they may be most needed; elected officials have abandoned honesty, trust and integrity as principles of leadership in favour of opinion polling and political expediency. In return, little wonder that fewer people engage and vote, and that the apathy and the cynicism grow.

TOO BIG TO FAIL?

It was once a Goliath of Biblical proportions and North America's largest corporation. But; General Motors failed and needed massive government handouts from the United States and Canada to survive.

In an unrelated post ten or so days ago, I opined on the challenges and difficulties of predicting the future by gazing through a crystal ball. There is extreme volatility in the global economy. The volatility is reflected almost on a daily basis in the wild roller-coaster fluctuations of the world's major trading exchanges when investors react nervously to each rumour and new issue.

One ominous sign is over the exchange of words and public spat between the United-States and Great-Britain over the plunging stock prices of that country's industrial Goliath: The giant petroleum producer BP, which is Britain's largest corporation.

It no longer seems too far fetched to foresee that along with the "speed of light" Internet social media commentaries; the Gulf of Mexico disaster which is playing-out daily on the television screens of the world, could eventually threaten the very existence of the BP Corporation. Not only has the giant oil producer failed at each effort to contain the worst oil spill in North American history. There is no applicable precedent for the situation BP now finds itself in. Experts in Crisis Management believe the company is even failing spectacularly at managing the issues over which it still has some degree of control.

From its own gasoline retailers in the United-States and abroad and on up; BP has failed to stop people from losing faith; and much more importantly losing money in the corporation. Share values have collapsed close to 50% since the oil rig explosion on April 20 erasing as much as $80 Billion of BP's value. The Obama Administration is making it clear in an increasingly aggressive manner that it holds BP accountable for a clean-up effort which could go on for decades; and which some Wall Street analysts say could be more than $50 Billion and still counting.

Most every public and private pension fund in the United-Kingdom owns a bit (and frequently much more) of BP. Because of the current public backlash some British analysts believe the company's operating position in its largest market, the United-States..."could become untenable."

Fearing the collapse of BP, the British government could be faced with just two equally disastrous choices: a) Bail-out the company to keep it from going under; b) Allow it to collapse under the weight of the Gulf Coast mess. Because of the state of the weakened global economy, either scenario would result in a world financial and economic crisis which, like the oil spill clean-up, would reverberate for decades.