Wednesday Night 1186

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Return of an early Wednesday Nighter
Christopher Halsted, a classmate of Marc Nicholson, returned to Wednesday Night for the first time in some 10 years. Chris had been a member of the Concordia Model UN team that participated in the first international meeting of such teams in Poland. After graduation, he taught English as a foreign language in Japan before becoming part of the first class of MBAs in Management of Technology at Queen’s. He now lives in Toronto where he is Senior Technical Account Manager with Siebel Systems Canada.

Ralph Klein – the perfect candidate
If you want to be successful in the world of politics, you must be diplomatic, well dressed, avoid wearing white shirts on television, avoid definite, well-defined, controversial statements and hide your warts. This represents conventional wisdom, but Ralph Klein is not a conventional politician. Although he has had many detractors, he has been re-elected to lead another majority government in the Alberta legislature. It is fashionable to credit zero provincial debt and fifty-dollar bills gushing from the earth in the form of black gold, but Québec also has cheap energy, the revenue from which it prefers to invest in enhanced social programs rather than in debt repayment. Without commenting on the wisdom of either option, it is clear that Alberta oil is there for all candidates to sacrifice, and Klein decided that the elimination of debt was more important than social issues. That decision is not the only, nor is it the most important reason for his success. Ralph Klein is the champion of the man on the street, talks likes him, dresses like him, and like the average Albertan, fails to hide his personal warts. He is seen to offer a sound, uncorrupt, uncomplicated, straight forward economic policy that everyone can understand and, like the late Jack Horner in the mid-1950’s, – who lacked Klein’s personality-, presents himself as the little guy who made good.

The Ukraine
The initial outcome of the flawed elections in Ukraine is front-page news. The implications give cause for uneasiness, not only on the part of Ukrainians and those of Ukrainian descent, but of many western world leaders as well. While demonstrations by Ukrainians at home and expatriates around the world push for a review of the results, it is feared that the Russians will take a strong stand in favour of Viktor F. Yanukovich, their candidate. Ukraine is regarded as a key zone of influence for Russia, which has already lost power in and over a number of its former satellites. If Russian troops are used to impose by force acceptance of the election results, it is highly possible that the Ukrainians will view this as interference in their newly-regained sovereignty. The situation will again widen the rift between Russia and the West, already having negative effects on the EU-Russia summit. Events will no doubt move swiftly, as appeals are made to the Supreme Court and Parliament, the Supreme Rada.
[Editor’s Note: “The fight over the election – over the country’s very future – is now moving on several fronts, each utterly unpredictable. It has been only 13 years since Ukraine became independent in the breakup of the Soviet Union; its democratic traditions are still being formed, and its branches of power are largely untested.” NYT Times ]
Events have indeed moved swiftly with condemnation of the election results coming from most Western leaders, including, notably, a very stiff announcement from U.S. Secretary of State Colin Powell. While Yushchenko and his supporters are demanding new elections, Yanukovich’s supporters in the eastern part of the country want a vote on partition of the country. For good background, we recommend the BBC Analysis “Divided Ukraine”: and cbc news/background/ukraine

Canada’s economic future through a clouded crystal ball
As the federal government repays debt there is no upward pressure on bond rates, hence low interest rates for borrowers. Thus, although real estate construction and sales are up everywhere in Canada and interest rates, although rising, are not expected to reach previous peaks, but will remain affordable, there is no fear of a real estate bubble. The Canadian economy is in good shape but the debt to income ratio is quite high. Canada has a fiscal surplus, external trade surplus rising, decline on the export side offset, rising inventories, rise in government spending.
The rosy near-term picture of Canada’s anticipated booming economy is somewhat tempered by the possibility of the devaluation of the Chinese Yuan within the next six months, as well as a possible devaluation of the Yen. This would cause the U.S. dollar to drop in relationship to world currencies, thus strengthening the Canadian dollar versus its U.S. counterpart, which would adversely affect Canadian exports. The Chinese economy will continue to gain strength and for those who can tolerate investing for the long term, there will be money to be made there in the next fifteen to twenty years.
Oil prices rising again, will take a lot of steam out of the U.S. stock market. The Canadian market will probably take a little breather, but it will do well for a while.

Namibia – another Zimbabwe?
Despite conciliatory statements from the political leaders, there is a potential crisis over land reform emerging in Namibia President Sam Nujoma backed President Robert Mugabe ‘s seizures of white-owned farms in Zimbabwe. Like Zimbabwe, much of Namibia’s best land is owned by a white minority and although a land reform programme on the basis of willing buyer/willing seller is in place, there is little movement. Land is an intensely emotional issue throughout Africa and although there would appear to be more than enough to go round in Namibia, the President is increasingly vocal in his support for reapportionment of farmlands that have been owned for generations by Europeans. The beneficiaries of the redistribution will be the Namibian workers on the farms. Both groups are equally attached to the land and have what they consider legitimate claims. Even though there seems to be every intention of recompensing the Europeans and no threat of the violence and wanton destruction of the economy that has been witnessed in Zimbabwe, there is no obvious happy ending for all in this situation.

Canada’s military
There has been harsh criticism of the Canadian government, alleging that Ottawa has been too stingy with our military. The same situation has occurred in most countries in the world with which we compare ourselves, one reason being that they have gone from conscripted national service to being all professional (volunteer) armies; another is the increasing complexity of modern warfare and equipment. Maintaining one soldier in Canada currently costs about one hundred thousand dollars a year and about another thirty thousand dollars (minimum) annually if s/he is sent outside the country. Another problem is technology, which should be kept current, but does not really maintain currency for long. The Sikorsky helicopters that are meant to replace the aging Sea Kings, are still at the design stage and are unlikely to begin arriving in Canada before 2008 – if then.
For some, buying second-hand equipment makes a lot of sense, if one buys a lot of different models and specialized equipment, thus encouraging the development and retention of different expertises among the military.
Considering the rapidly increasing interest in the Arctic, without nuclear submarines, the military will certainly have a problem protecting our northern coast in the same fashion as it does our east and west coasts. We have no capability to go under the polar icecap, nor to go into the Arctic, which is increasingly not under the polar icecap but in open waters. Necessity requires that we consider ourselves more as an adjunct to our close allies than as a great military power.

Academic entrepreneurship – an oxymoron?
Richard Bruno introduced his colleague Rachel Charbonneau from the Université de Montréal whose programme, policies and issues are very similar to those of McGill’s OTT.
Technology transfer is a great idea, benefiting the University, hence the student body, the investor and the inventor alike. Unfortunately until recently in Canada, the traditional academic culture bears little resemblance to the entrepreneurial culture, risk taking is somewhat restrained in Canada, the universities have limited resources to sustain the cost of maintaining a patent for the relatively long time between invention and realization.
The inventor who has spent much time and effort developing a patentable product and can demonstrate its value, finds it hard to believe that there may not be a market for it. In order to obtain a patent, he must do due diligence to ensure that he is not infringing on any other patent and can withstand an attack, which, if it occurs, can be costly. While the search for an investor goes on, maintaining the patent can prove very costly. Once the initial process is complete and a company has been set up for production, there is a probability of approximately twenty percent that the market may not exist for it and should it be successful, the current probability is that it will not return great gobs of money to either the university or to the inventor. The entire process may take almost two decades.
Despite the roadblocks, as academic culture changes and as universities and investors become more adept at the process, the prospect for better funding, more entrepreneurial academics and greater rewards for all is positive.

JACQUES CLÉMENT: REPORT ON THE ECONOMY
UNITED STATES
New home sales reached record levels in the third quarter, rising by over 19%. Existing home sales (October) flattened after rebounding 3% in September. Durable goods orders also declined last month after upward revision of September data. Jobless claims continue to decline as new jobs are being created. Employment data will be released December 3. With inflation rising by almost 4% annual rate, year to date, given strong energy prices and producer prices rising at the same rate (year/year), the Fed will definitely tighten monetary policy on December 14, for the fifth time this year by ¼% to 2¼%. As for next year, I think that the Fed will tighten by another 1¼%, given the strong economic outlook and higher inflation expectation (summary of November 17) with $1.2 trillion of fiscal and current account deficits.
The U.S. dollar that traded at a new record low today against the Euro which, at $1.3178 U.S., is heading for $1.35 U.S. as China and Russia will likely increase the Euros in their international reserves. Gold, which traded close to $449.00 U.S., today, will probably touch $475.00 U.S. before mid-year next year. Crude oil, which traded at $50¼ U.S. Tuesday, will exceed its October record of $55.17 U.S. during the same period. Why? Russia’s implication in auctioning Yukos, geopolitical problems in Venezuela and OPEC’s potential cut in production when they meet December 10. The Dow-Jones has gained over 500 points so far this month and should gain another 450 points next year.

CANADA
The Canadian dollar reached a new twelve-year high today (Wednesday, Nov. 24), closing at 84.70¢ U.S. and should reach 85¢ U.S. sooner than expected, perhaps before month end. The outlook for 87¢ U.S. has been advanced to mid-year next year, with 89½¢ by the fall of 2005, its high reached in the Fall of 1991. Leading economic indicator increased for the fifty-seventh consecutive month in October, although at a more moderate pace. Retail sales (September) have risen for the fifth consecutive monthly record, despite weaker auto sales. The economy is growing at full capacity. G.D.P. for the third quarter, to be reported next week, is likely to show real growth of 3½%. The housing sector was very strong in the third quarter, as was business spending on machinery and equipment. Inventory rebuilding continues to rise gradually. Corporate profits have been very strong, productivity outlook is good and business confidence is solid. Over 75,000 new jobs have been created in the last two months. Foreigners continue to buy Canadian stock (almost $30 billion in the first nine months of this year). The stock market has only gained 100 points this month so far, but is at its highest level in almost four years. Nortel and Bombardier, both of junk status, have really affected the T.S.X., which should recover about 500 points next year.
Behind the strength of the currency is the fact that Canada has still averaged almost $6 billion of monthly trade surplus in the third quarter, despite the decline of almost 5% in our exports. That compares to an average record monthly trade surplus of almost $7 billion in the second quarter. Also, the fiscal side is the strongest on record, with nine billion dollars of back-to-back surpluses and major debt repayment. In the first six months of this fiscal year, Ottawa has repaid $10.6 billion of debt by running down its cash balances by $11.5 billion to $5.7 billion. Bank of Canada is likely to tighten policy by another 1% next year, given the G.D.P. outlook of 3.2% average expected by the private sector.

* Near-Term Outlook: Euro: U.S.$1.35 U.S
* Crude oil: $55 – $60 U.S., given supply disruption in the Gulf of Mexico, delivery problems by Yukos and Iraq terrorism.
* Gold: Gold: heading to $450.
* Canadian Dollar : 82¢ to 85¢ U.S

QUOTES of the EVENING

*  Obviously, they (Albertans) have oil in the ground and at fifty dollars a barrel, they can’t miss, but every provincial Premier would like to be debt-free
* The Chinese will devalue the Yuan within the next six months. That is when the U.S. dollar will stabilize
* If you are a young guy, and you aren’t investing in Asian equities, you will be missing the boat … over the next twenty to forty years Asia’s role in the global economy will be much, much larger than it is today
* The stars are better aligned in terms of emerging market equities than they have been for a long time
* The purpose of our armed forces is to help our allies
* You can’t just go to Wal-Mart to get serious military equipment … you have to wait until it is designed and developed
* All defense policy is based upon what is going to happen. Only God knows what is going to happen and She isn’t telling
* It is hard to make them (the patent-seeking Professors) understand that their baby may not be the best
* Albertans are made of sterner stuff – there will be no mass exodus across the border to Saskatchewan (Rex Murphy)
* The biggest problem that the U.S. has is that Mr. Putin is our ‘weird’ ally, but in this situation he’s on the wrong side
* (Foreigners, mainly Americans) love the Canadian dollar, they love our metals, they love our oil, they love our banks
* Nortel is the largest supplier of secure telecommunications equipment to the U.S. government

T H E  I N V I T A T I O N

Subject: A Thanksgiving Poem
from Rick Sindelar

T’WAS THE NIGHT OF THANKSGIVING,
BUT I JUST COULDN’T SLEEP.
I TRIED COUNTING BACKWARDS,
I TRIED COUNTING SHEEP.
THE LEFTOVERS BECKONED –
THE DARK MEAT AND WHITE,
BUT I FOUGHT THE TEMPTATION
WITH ALL OF MY MIGHT.
TOSSING AND TURNING WITH ANTICIPATION,
THE THOUGHT OF A SNACK BECAME INFATUATION.
SO, I RACED TO THE KITCHEN, FLUNG OPEN THE DOOR,
AND GAZED AT THE FRIDGE, FULL OF GOODIES GALORE.
GOBBLED UP TURKEY AND BUTTERED POTATOES,
PICKLES AND CARROTS, BEANS AND TOMATOES.
I FELT MYSELF SWELLING SO PLUMP AND SO ROUND,
‘TIL ALL OF A SUDDEN, I ROSE OFF THE GROUND.
I CRASHED THROUGH THE CEILING,
FLOATING INTO THE SKY,
WITH A MOUTHFUL OF PUDDING
AND A HANDFUL OF PIE.
BUT, I MANAGED TO YELL AS I SOARED PAST THE TREES….
HAPPY EATING TO ALL –
PASS THE CRANBERRIES, PLEASE.
MAY YOUR STUFFING BE TASTY,
MAY YOUR TURKEY BE PLUMP.
MAY YOUR POTATOES ‘N GRAVY
HAVE NARY A LUMP.
MAY YOUR YAMS BE DELICIOUS.
MAY YOUR PIES TAKE THE PRIZE,
MAY YOUR THANKSGIVING DINNER STAY
OFF OF YOUR THIGHS.
MAY YOUR THANKSGIVING BE BLESSED!!

Time for Wednesday Night to focus on other parts of the world, after the saturation levels of U.S. politics.

On the eve of American Thanksgiving, let us give thanks that we live in Canada. Rather than four more years of GWB, we have something like 18 months more of Ralph Klein and most of us won’t be greatly affected by that. [Wednesday Nov 24, 2004 Voters in the western Canadian province of Alberta have re-elected Premier Ralph Klein and his Progressive Conservative party to a 10th consecutive Tory mandate, and the fourth for Mr. Klein. The party won 61 seats in the 83-seat parliament. But his party also lost ten seats. The Liberal Party and the New Democratic Party made gains and were pleased with their results.]

While the Internet has been filled since Election Day with redrawn maps of the U.S. featuring an enlarged Canada, now we learn that our expansion is more likely to come in the North, as Paul Martin announces his support for making the territories into provinces. There’s some interesting logic behind this move, including the implications for Canadian control of fresh water. Water inevitably brings us to the Environment and we are pleased to learn that the Quebec government is following through on an earlier promise to set up a watchdog to enforce environmental policy.

Odds and ends from the media, both serious and frivolous, that have intrigued us:

1. Jay Bryan’s piece on November 20 on the study by Gianmarco Ottaviano of the University of Bologna and Giovanni Peri of the University of California at Davis, which points out that Canada may benefit from tougher US immigration laws. We welcome the study’s conclusion that cultural diversity also leads to product and services diversity, furthermore: “Our main finding is that, on average, cultural diversity has a net positive effect on the productivity of [native-born] citizens because it is positively correlated to the average wage received and to the average rent paid … .”

2. In contrast with the happy thoughts of the above, we have pondered the comments and proposals of Dutch authorities in the wake of a series of recent politically-motivated violence. When a society as traditionally open and generous as that of the Netherlands has second thoughts about the conditions under which immigrants may be admitted and may remain, we believe that the topic requires thoughtful debate.

3. The small study that suggests back pain makes some people’s brains shrink

4. The National Post headline ” French kings … to hang in House”; if  “leaders” were to be substituted for “kings”, this would probably be a HUGE headline in the U.S. media

5. And now, best of all, we read in The National Post that The West Wing is set to shoot episodes in Toronto “Watch out for the Secret Service! TV’s The West Wing — the pleather to George W. Bush’s leather — is on its way to Toronto”. … Toronto is to stand in for – of all places – New Hampshire (?) We can only assume that Montreal was lacking in the character actors specified in the casting call. We wonder which former or future Ontario politicians might fit the bill?

Please join us bearing Atlas, political science primers and most important, your incisive brain.