Wednesday Night #1337

Of course the news this week for the inhabitants of this northern realm is all about the Speech from the Throne and the will-they-won’t-they reaction from the Opposition (Liberals above all). Incidentally, we are not overwhelmed by a great feeling of inclusiveness when the full text of said speech published on the Gazette website is linked from the Conservative Party home page. Is this normal? Isn’t this “our” government’s policy outline?
Nonetheless, our first impression was that the speech was pretty good and we look forward to your reactions.
We were surprised – and very pleased – by the proposal to confer Honorary Citizenship on Aung San Suu Kyi for her long struggle for freedom and democracy for the people of Burma. We hope that it will help her to obtain her own freedom, but the thugs who run the country are not likely to be impressed.
Meantime, the Liberals appear to be in ever greater disarray. Is this a true disaster, or possibly an opportunity for a major overhaul? There was an intriguing little clip tonight of Lisa Frulla discussing who might be the Québec Lieutenant and her rapid dismissal of Senator Céline Hervieu-Payette because “many people do not like her”. WOOPS! In view of the appointment announced shortly afterwards , it’s a good think that Mme Frulla has taken herself off the candidates’ list.
Since last Wednesday Night‘s informative discussion of the Tar Sands, we have had two headliners about Al Gore. First the decision of the UK high court regarding showing An Inconvenient Truth in schools and the very next day, the announcement of the award of the Nobel Peace Prize. While we are very pleased by the award, especially the balancing of Mr. Gore’s ‘promotional’ activities with the work of the IPCC in supplying the scientific basis, we know already that there are different views among our favorite Wednesday Nighters.
Here’s an intriguing bit on the Republican presidential candidates: “While many conservative commentators and editorialists have mocked concerns about climate change a different reality is emerging among Republican presidential contenders. It is a near-unanimous recognition among the leaders of the threat posed by global warming”.
On the same topic, Tom Friedman’s piece on the black environmentalist, Van Jones, makes an excellent point about one message not fitting all, and does it in a light-hearted way designed to imprint it on the intellect. It’s applicable to a lot of other situations. Our own politicians could learn something from it.
When we tear ourselves away from the local politics of North America, we will be watching the worrisome Putin Progress in Iran and examining the final declaration of the Caspian Summit. Not surprisingly, there seems to be no agreement on how to divvy up the resources of the Caspian Sea, but the prospect of an alliance between Mr. Putin and President Mahmoud Ahmadinejad gives pause for thought. As usual, the BBC has excellent in-depth coverage .
Libya has managed to obtain a seat on the UN Security Council, a development hailed by the Ambassador who stated that “It means, I can say, we are back to the international community, that all the problems we have faced in the past are now behind us.” We wonder ….
And then there’s the rumored announcement of the Sarkozys’ divorce which seems so unnecessary. It also seems to be the least of his troubles as the political honeymoon appears to be coming to an abrupt end.
While all eyes have been focused on Ottawa today, we should not ignore a series of developments closer to home with the opening of the National Assembly. We are disappointed to read that Monique Jérôme-Forget is taking Minister Flaherty to task over his proposal to consolidate securities regulation , but happy to learn that Mr. Charest is concentrating on economic development.
Last but not least, we look forward to Thursday’s publication of Pierre Marc Johnson’s commission’s report on the Laval overpass collapse. We doubt that it will have the melodrama of the Mulroney and Chrétien memoirs, but will certainly bolster the case for the $30-billion infrastructure investment recently announced by Mr. Charest.

The Report (Photos & additional items)

Alberta Tar Sands and royalties
Returning to last week’s subject of the Alberta Tar Sands (see Wednesday Night #1336), Gerald mentioned the issue of the proposed new royalties of 33%, noting that because of the sweetheart deal made by Alberta with the industry – and which was to last until 2015 – (1% until companies got all their money back, plus interest; 25% of the value of the bitumen thereafter), the big companies did very well at the outset. Musings about imposition of increased royalties have brought threats of job cuts and concerns regarding the unintended consequences of the increase which could mean reduced revenues for Alberta. However, in the opinion of some experts, there could be a compromise solution with royalties tied to the price of oil, which would take into consideration the risk the oil industry took at the outset of the tar sands development. Whatever happens, decisions must come quickly as otherwise the entire winter drilling season will have been shut down. Another factor is recent foreign acquisitions of oil & gas trusts, led by the Abu Dhabi National Energy (Taqa) – PrimeWest Energy deal, which will lead to loss of head office jobs and corporate taxes, leaving royalties as the principal source of income for the province.
If the price of oil falls to a certain point, maybe we shouldn’t be selling it – it is a non-renewable resource
The Brits had an interesting approach: no royalties but a 50% corporate tax which had the effect that companies ploughed profits back into more and more development, creating an incentive to produce the oil that England needs, but less income for the government
Where should natural resources be for the sake of the nation? Maybe Canadians should be given a break on oil prices
Advocates of exploitation of the Tar Sands maintain that environmental damage is minimal “everything will be put back just as it was”. However, to get at the bitumen, the muskeg must be cleared which causes a very significant release of carbon from the muskeg, in addition to the normal carbon released. If that is included in accounting for greenhouse gas emissions, the Tar Sands, in order to offset greenhouse gas emissions are going to have to pay an enormous premium over the Saudi oil.
More on the importance of muskeg/peatlands

The Speech from the Throne
The Throne Speech has set out an agenda (action on Arctic sovereignty, Afghanistan, anti-crime bill, limits on federal spending in areas of provincial jurisdiction, tax cuts and a non-Kyoto approach to climate change) with which Canadians may or may not agree, and Canadians are invited to join in the discussion. Some believe that it is time to go to the polls, maintaining that the Conservative government has created a strong and credible alternative to the Liberals, even becoming the default federalist option in Québec. This line of argument maintains that in Québec the voters are open to other options (as evidenced by defections of provincial Liberals to the ADQ), that the Conservatives represent the aspirations of a broad majority of the Canadian people who are tired of tax-and-spend Liberal policies, and it is therefore time for the voters to decide [and give Canada a Conservative majority government].
How much of the Canadian people’s money are the Conservatives willing to spend [on another election] in order to make a point?

The Storm Worm
Although it has been around for some time, the Storm Worm virus is back in the news. It doesn’t kill its host. In fact, most of the victims … will never know their machines are infected. It doesn’t cripple your computer (and can be removed once identified), but the Storm Worm does give its authors the power to quietly control your computer. What do they do with this power? Mostly they send out spam, but this virus is likely written by organized criminals looking to make money from fake offers.
Nobody knows who’s behind the Storm Worm, but they are very well financed and very smart. The best precaution is to always close your computer when you finish using it.

ABC Paper (ABCP)
This is a major global issue, not limited to the U.S. At this stage 120% of disposable income is in mortgage debt in the U.S. (Canadian statistics not available). The Montreal Agreement was designed to allow the major Canadian banks to take action to turn the short-term debt represented by the ABCP into very long-term debt (in some cases 10 years). Canadian banks control two-thirds of the $120-billion market in Canadian ABCP so, as the year-end for banks is October 31, the question today is how will they report these holdings – as a write-off, a loss or an asset?

Where are we heading? (Jacques Clément)
Video of Jacques’ comments
Before giving his brief summary, Jacques paid tribute to Ron Meisels, “the finest market technician in the country”, noting that he had accurately called for the recent market correction well in advance of the experts.
Continuing, he pointed out that the chief economist of the CIBC is now looking for $1.05 for the Canadian dollar by year-end, a prediction with which Jacques concurs.
Crude oil will reach $90-$95.
The U.S. dollar will continue to weaken which is basically beneficial. The trade deficit in August last year was $70 billion. Last week it was announced that it was at $57.6. The dollar will likely continue to weaken against the euro, with the latter reaching $1.42 – $1.43 U.S.
Gold prices will consequently be stronger, heading to $775 before the end of the year.
The TSX will continue to climb – 14,500, but not the record of 14,600. The Dow Jones will continue to decline 13,800 short term because of dramatic change in corporate profits. Third quarter profits likely to be negative and fourth-quarter results are not likely to be good.
The world economic outlook is being revised to 4.8% because of 10% growth in China and 9% in India while Europe revised down to 2 – 2.1%, Canada 2.3-2.6%, and the U.S. 1.9 – 2.1% because of the subprime crisis. The manufacturing sector has started to show fatigue in the U.S.; capital spending has receded. The Fed will likely ease a quarter on October 31 and another quarter in December. Bank of Canada will remain unchanged at 4.5% for the balance of the year because of the current strong economy and the fact that inflation is still above 2%.

News about Wednesday Nighters
We are delighted to hear that John Curtin has been awarded a Gemini for his brilliant biography of Terry Mosher (Aislin) “Dangerous when provoked“.
Robert Galbraith sends up-beat messages from Afghanistan, despite bureaucratic hassles that would try the patience of Job. Beryl Wajsman and The Suburban have been very supportive and helpful (not always the same thing!) and give great coverage to his articles.
Brian Morel is working with “De la rue à la réussite – From the Streets to Success” a new project founded by Susan McDougall and her husband Jean-Pierre Chartrand, an early-days Wednesday Nighter. [Note: The project website is under development by Bert Revenaz who has generously donated his time and professional skills] It is designed to ‘reclaim’ homeless people and integrate them into the work force through specialized job training suited to their skills. Brian reminds us that on Thursday, October 18, there will be a world premiere of the film Recyclage, based on the story of a classroom where the teacher tells the children to bring a musical instrument to class. One of the kids brings the Accueil Bonneau Choir and the film shows the exchange during which the members of the choir tell the class about their former lives. A number of very well-known Québec actors participated in the film which, it is hoped, will bring a new awareness to the public of the problems of the street people, reminding us that one-third of Montreal’s citizens live below the poverty line, a deep-rooted and immensely serious problem. The topic is particularly appropriate given that October 17 is designated UN International Day for the Eradication of Poverty and this year’s theme is People Living in Poverty as Agents of Change.

What was remarkable tonight was the divergence of opinions and the civility of the discourse. It was eloquent and it was charming