Wednesday Night #1342

21 November 2007
There are the obvious topics that have dominated the news over the last few days:

The OPEC Summit and what may or may not have been resolved in that wonderfully inclusive forum where the presidents of Iran and Venezuela railed against the U.S. and then everyone came together for a (relatively) warm and fuzzy final declaration that embraced the concepts of stability in global energy supplies, competitive prices and investment in clean energy technologies. We have prepared a brief round-up for your reading pleasure.

The final pre-Bali meeting at Valencia where the synthesis report of the IPCC was debated and released. No rantings of Venezuela or Iran there, but some reports indicate that the U.S. was fighting wording through every phrase. We know you will be delighted to hear that our federal Minister of Environment stated that he and the Prime Minister “understand that climate change is a global problem, requiring global solutions” going on to say that “Canada has been a leader in bringing the world together at the G8, at APEC and at the United Nations, and we will continue that work in Bali.” What a refreshing change from earlier days of the New Government of Canada. Now that they seem to have dropped the new , the Minister can say with a straight face “The science is clear and Canada, like the rest of the world needs to take immediate action on climate change [and] That is why we announced our Turning the Corner plan, which sets tough and achievable mandatory targets for all major industrial sectors which will cut greenhouse gas emissions by 20% by 2020 and by 60-70% by 2050.” background news stories on the report.

Oh yes, the Mulroney-Schreiber affair. What more is there to say at this stage after last Wednesday’s lengthy debate? What a pair of ruffians to be facing off! We do not envy David Johnston his job and we worry that the RCMP is no longer the shining Force in which we would have had the utmost confidence to probe allegations concerning the $300,000 — who paid whom when, where and for what??? Not too reassuring to read that “Brian Mulroney admits that accepting $300,000 in cash payments from German-Canadian businessman Karlheinz Schreiber was the “silliest thing” he has ever done” — ‘silly’ might not be the first adjective that comes to our minds.
[Editor’s note: Someone must have been reading this as we wrote it. In less than 24 hours the adjective has changed to ‘colossal’ and we are being told that when Mulroney left politics, he “had money pressures: he was the head of a young family with certain lifestyle expectations – and ‘not a rich man’.” Oh! That should make everything okay.]
We suppose (sigh!) that we must give at least a nod to the fact that the Reasonable Accommodation circus (aka Bouchard-Taylor) will be holding hearings in the Côte des Neiges area this Tuesday evening. We view with a certain amount of dismay the news that four more hearings will be held at the Palais des Congrès between Nov 27 and December 13 — Over 1000 individuals have registered for the forums and registration is now closed for presentations, but you may still attend.

Good news for those without a family physician? Quebec signs deal with family doctors Concerned that nearly one in three Quebecers doesn’t have a family doctor, the provincial government has signed an agreement with the province’s general practitioners offering them financial incentives to see more patients. Don’t get your hopes up too high — this will take quite a while for the impact to be felt.

The Montreal political scene seems to be heating up with the debate over the future of the Ville-Marie borough. Nice try by Mayor Tremblay at the Bill 22 hearings, but Benoit Labonté make sense when he suggests that “I cannot imagine that the government of Quebec will accept to create, de facto, two categories of citizens in Montreal – those who have the right to elect their borough mayors and those who don’t have those rights.” Aren’t we glad we don’t live downtown.

As some of you will have heard by now, Robert Galbraith is completing his tour in Afghanistan this week. His reporting has been brilliant and kudos to The Suburban – and Beryl Wajsman – for giving him some terrific exposure.The cover of the current edition is one of Robert’s photographs. Be sure to pick up a copy and read the harrowing account of his travels with a convoy en route to Kandahar

We also want to call to your attention the CBC documentary BEYOND THE RED WALL: THE PERSECUTION OF FALUN GONG that was not shown as scheduled after protests from the Chinese Embassy will be aired on Tuesday November 20 at 10pm ET/PT on CBC Newsworld.The documentary focuses on the story of Canadian Falun Gong member Kunlun Zhang, an artist and professor at McGill University, who was arrested and sentenced to nearly three years in a Chinese labour camp.

Market mavens, economists and other adherents of the dismal science will no doubt love the dreary market news, while the loonie’s downward slide should make our exporters happ(ier). We note that Jean Charest is still calling for a meeting of first ministers to talk about the economy.
Global stocks have slumped amid fears over the fallout of the credit crisis, after Goldman Sachs downgraded Citibank and forecast $15bn (£7.3bn) in losses.
UK bank HSBC has said its bad debts from the US sub-prime lending crisis were $3.4bn in the third quarter and more
This could have all been foretold according to the New York Times editorial board – read and weep:
Nov. 20 (Bloomberg) — Asian stocks fell, led by banks and commodities companies, amid concern U.S. mortgage losses will spread and expansion in China will cool, crimping global growth and reducing demand for metals.
Nov. 21 (Gazette) — Caisse boss to explain abcp mess next week: Rousseau to appear before public finance committee to explain the institution’s holdings of asset-backed commercial paper.

The Report

France – confrontation with the unions
Thanks to an infrequent visit from Jean-Marie Bergman, former Director of the France-Canada Chamber of Commerce, and his wife Joanne, there was a long and illuminating discussion of the current public transportation strikes in France and the root causes. It has been said that when France was falling apart, in the late 1960’s with riots and barricades in the streets, the people asked President Charles de Gaulle to remedy the situation to which he is reported to have responded that he would, as soon as a constitution had been written as a basis for him to act. Just as Canadian politicians are guided by the probability of re-election, the French appear to be dependent on tradition and structure.
Since 1981, the national debt of France has climbed from 20% of GDP to nearly 70%. When Alain Juppé was in office in 1995, and the debt/GDP ratio was not quite so high, there was a series of strikes that extended over a month, but there was not the same perception of inequality as exists today when the average wage in the public sector is higher than in the private sector. The 70% approval of Mr. Sarkozy‘s firm stand against the unions reflects the percentage of French workers who do not have the same working conditions, wage and pension benefits as public sector employees. The President’s first step was the law passed during the summer that requires public sector employees to contribute for 40 years in order to receive 100% of their pension (previously the contribution was set at 37.5 years).
With the evolution of increasing productivity, a system of pensions that are paid by the current employees in France exists as opposed to the system more prevalent throughout the world of investing in one’s own work group, union or personal retirement plan. In France the decreasing number of workers in many sectors has resulted in hardship in pensions for most current retirees in the industrial sector, while retiring professionals are doing very well. The only solution to this inequality appears to be government intervention, a costly move that would further significantly erode the deficit and national debt. The difference between today and 1995 is that more and more French people seem to understand the issue and are no longer suspicious that they will lose out with reform of the system.
In the climate of rigid financial conditions, where personal credit is not as easy to obtain as it is in North America and few French citizens (not even wealthy ones) hold credit cards because of the difficulty in obtaining them, the gap between the wealthy and the poor becomes very evident. Flexible mortgages are unheard of; there is a 15-year fixed interest mortgage rate when buying an apartment – which does mean that there is no subprime financial crisis – and almost no manoeuvring room.
Considering the current situation in France it is reasonable to question whether President Sarkozy will win another mandate. The answer is probably, yes, but there will no doubt be many ups and downs as he continues to bring in badly needed economic reforms.
[Editor’s note: the transportation strike came to an end on Thursday accompanied by inevitable grumbling from all affected.]

A new face at the Wednesday Night table was that of Jeremy Searle, articulate opinionated, and outspoken former Montreal City Councillor, who led the lively discussion of municipal politics and the failures of our infrastructures.

Infrastructure
Regardless of the country or the form of government, the quality of their decisions and actions appears to be a function of the length of their mandate and in a democracy, the susceptibility of electors to being bribed with their own money. Some evidence of this may be found in the short lifespan of physical structures in Québec as opposed to those left to us by the Ancient Greeks, Romans and even the more recent Europeans. The amazing Trophée des Alpes in La Turbie, France, the only remaining one of several built by the Romans upon having conquered the barbarian tribes, remains more or less intact, damaged not by age or use, but by the actions of vandals that totally destroyed the others. The Pont de Garde near Nîmes, built by the French has weathered many winters and heavy road traffic, intact, mirroring the Roman aqueduct beside it. It would appear that humans, both governors and governed have, more recently, traded the desire to be remembered for millennia for a four to five year period of celebrity. There has also been the rush factor of many structures – including highways – that have been built to complement other major projects (Expo 67 and the Olympics, for example), and the choice of reinforced concrete has been a poor one for the Montreal climate. Sadly, the huge budgets that accompany public works projects never include the life-cycle costs and therefore those public expenditures are made reluctantly, and often, only following a disaster.
It’s not a good photo op to maintain a bridge or any public infrastructure

Montreal
The principal problem with Montreal politics, points out one seasoned observer, is that the parties have been institutionalised, thus rendering it virtually impossible for any independent to be elected (it has only happened three times in recent memory), or have any voice in policy. In Montreal, despite the very considerable influence of Big Business, there has been talk, but not much action, on developing a business approach and long term planning in municipal government. When Gérald Tremblay was an invited guest to Wednesday Night as a mayoral candidate, he gave the impression of being one of the first, if not the only candidate to have a long-term vision for the city. The reality, however, has demonstrated the disastrous result of a city that is not run in a businesslike manner. The Mayor does not have a role in running the municipal government, he has no dossier, but acts as chairman of meetings, spokesman and representative. Most members of the Executive Committee are said to not have a dossier. Furthermore, the merger has proved to be a costly mistake; the ideal size of Montreal to make it a functioning city should be in the range of half a million inhabitants (like Boston), making it compact, dynamic, and with a solid tax base.
Municipal policy is driven by public pressure. However the members of the public who are actively interested and do express their views (perhaps 25%) are accused of having a personal agenda, while the silent majority neither takes an active interest in municipal policy, nor votes, and certainly does not have a long-term vision for the city. The consequence is disaffection and disinterest. The average voter is not interested in the big picture, but in the solution of whatever his/her individual issue.
If you can get the crosswalks to work, you will never be out of office

The Falun Gong
The story of executing Falun Gong prisoners to harvest their organs for sale to purchasers on order, continues to haunt Wednesday Nighters. [We are reminded that there are also many cases of kidnapping people in other countries such as Pakistan and Brazil for similar purposes, but it is the state sanctioned nature of the Falun Gong case that makes it particularly heinous.] In the experience of two recent visitors to China on a mission, people either do not know what is going on, or pretend not to. More recently the procedure may have changed and prisoners awaiting ‘legal’ execution are being asked their permission to donate their organs.
The horror of this story leads one to attempt to explain the reaction of the Chinese government to what is basically a religion that, like the Jehovah Witnesses, does actively proselytize, but does not seek to overthrow the government. It may be that it is a human need to have a belief system and that the Words of Chairman Mao currently have less impact than previously as China moves forward in the industrial world and the Falun Gong stands ready to fill the religious or spiritual gap. It is certainly not accepted by a large proportion of the Chinese population in China and elsewhere but even if benign in its motivation, maintains the possibility of transforming Communist China into a Falun Gong theocracy.

Paying Olympic athletes to win
Given David Kilgour’s advocacy of a boycott of the Beijing Olympic Games, it was a natural segue to Monday’s story that the Canadian Olympic Committee has decided that Canadian athletes who reach the podium at any future Olympic Games will be paid up to $20,000 per medal by the new Athlete Excellence Fund.
In Olympia, Greece at the site of the first Olympic games, busloads of visitors rerun the first race with the runner rewarded with a laurel wreath. This scene is repeatedly run to the delight of participants and observers alike; no drugs, no money, merely the joy of the competition. Some Wednesday Nighters applaud the rewarding of winners of Olympic medals with cash, while the majority mourn the apparent disappearance of the coming together of athletes of all nations to compete for the joy of the game and the pride in country. Some ask whether in paying successful athletes we are not rewarding drug users and penalizing those athletes who are clean, and if a proposed boycott of the Beijing games on moral grounds is a separate issue.

It wouldn’t be Wednesday Night without some discussion of real estate. With differences in the various regions of Canada, the booming real estate market appears to have peaked, with the extent varying from community to community even with the same city. This should come as no surprise to either investors or observers as the cycle continues in an unending loop.