Wednesday Night #1884 with Peter Berezin

As always, Peter Berezin drew a crowd anxious to hear his views on the global economy and world markets.
In keeping with Wednesday Night tradition, we also featured a  highly original recent project organized by Sandy Wolofsky
40 new Canadians from 13 different countries, gathered at Ski Chantecler mountain to discover the world of skiing.
“From Columbia to Cameron, Israel to the Ivory Coast, on a perfect sunny Saturday, they gathered at Mont Chantecler. Forty newly-arrived Canadians, from thirteen different countries, gathered for their first-ever ski experience in Quebec’s Laurentian mountains.” Her idea that new Canadians should learn that Canada is not only about hockey was greeted with enthusiasm – although some wondered whether she might have thought of  curling – and many offers of support for taking the program beyond Quebec’s borders.

T H E  P R O L O G U E

The year 1884 was memorable for many reasons. From the adoption of Greenwich Mean Time to the far less praiseworthy acceptance of Belgium’s rule over the Congo, the siege of Khartoum and fittingly, on 27 March (David’s birthday), the 1st long-distance telephone call, Boston-NY. Dow Jones published its 1st stock index, the Dow Jones Transportation Average. On 4 July, the Statue of Liberty was presented to the US in Paris [the cornerstone was laid on Bedloe’s Island a month later] and the very next day, the US Congress accepted the 2nd Chinese Exclusion Act which sounds awfully like some of the steps the Trump administration has tried to take.
On a lighter note, John Buchanan may not be aware that the 10th Kentucky Derby was won by Isaac Murphy aboard Buchanan.
Finally, the Ringling Brothers circus premiered in 1884. Although it closed down in May 2017, its tradition lingers on in Washington.

We are very pleased to welcome Peter Berezin and to hear his thoughts on “Is China Heading For A Minsky Moment?”
Among the highlights of the BCA Special report on the topic:
• Slower nominal GDP growth explains virtually all of the increase in China’s debt-to-GDP ratio over the past ten years.
• The authorities were unwilling to restrain debt growth as it became obvious that nominal income was decelerating because this would have only exacerbated the economic downturn.
• Excess private-sector savings forced the Chinese government to rely on debt-financed investment by state-owned companies (SOE) and local governments in order to keep aggregate demand elevated.
• Financial deregulation also encouraged debt accumulation.
• Debt growth linked to speculative activity can be curbed without endangering the economy, but a lasting solution to the surplus savings problem will require consumers to spend more. This will take a while.
• At some point over the next few years, the central government will transfer a large fraction of SOE and local government debt onto its own balance sheet.
• The risk to investors is that this “debt nationalization” happens reactively rather than proactively.
Most interesting to us is this conclusion: “Both the U.S. and China have a strong incentive to reach a mutually-satisfying agreement over trade. President Trump has been able to shrug off the decline in equities because his approval rating has actually risen during the selloff. However, if the problems on Wall Street begin to show up on Main Street – as is likely to happen if stocks continue to fall – Trump will change his tune.
For its part, the Chinese government is also looking to strike a deal. The U.S. exported only $131 billion in goods to China last year. This is already less than the $150 billion in Chinese
goods that Trump has targeted for tariffs. China simply cannot win a tit-for-tat trade war with the United States.”

The Economist writes: New figures show that China’s economy grew by 6.8% in the first quarter of 2018 compared with the same period in 2017. The recent improvements in the economy can be traced to three factors: government efforts to tackle ingrained problems, the increasing stability of growth in a maturing economy, and good luck. Coming quarters are likely to be bumpier, though. The horizon is clouded by worries about a trade war with America and about the battle against debt at home.

Syria is the topic du jour. A good friend of Wednesday Night, who has deep knowledge of chemical weapons, comments: “While traces of nerve gasses can persist for a long time, chlorine is a gas that evaporates rapidly and can easily be washed out. The delay (it will be four days after their arrival in Syria and 10 since the presumed attack) before allowing the inspectors in to the site means that there will likely be no traces of chlorine remaining. If there was also a nerve gas mixed in and the physical site is still there they may be able to find them.” Robert Fisk gives a very different and unsettling view “The search for truth in the rubble of Douma – and one doctor’s doubts over the chemical attack.”
Syria’s Assad in a ‘good mood,’ scorns U.S. weaponry after airstrikes
(WaPost) Despite claims by President Trump that the operation was an “enormous success,” it is being interpreted in Syria as a win for Assad because the limited scope of the strikes suggested that Western powers do not intend to challenge his rule.

James Comey’s book is receiving very mixed reviews, the Trump scandals continue… and Comey is being eclipsed in the news by Cohen (Michael, that is) See: Michael Cohen and the Busting of the Trump Crime Family. Cohen is one of those characters who belong in a miniseries and the media are having a field day

Meanwhile, Trump left Washington on Monday for a two-day rendezvous with Prime Minister Abe in Florida at Mar-a-Lago. Reportedly to discuss North Korea and trade. Both leaders are in trouble for reasons of ethics/corruption. While we all know about Trump’s issues, most may not have been paying attention to what has been happening in Japan, where Tens of thousands of protesters demonstrate outside Diet, demand ‘liar’ Abe’s resignation over scandals
The prime minister has been forced in the Diet to deny his involvement in two controversies over land deals to close associates. An alleged cover-up over the activity of Japanese troops during the Iraq War is also casting a cloud over his government. A spokesman for Abe’s office didn’t immediately respond to an email seeking comment.
The scandals have pushed Abe’s approval ratings toward all-time lows, raising questions about his ability to win the ruling Liberal Democratic Party’s leadership election in September.

Back home in Canada, Justin Trudeau and the Liberals are confronting a major issue: Kinder Morgan (Canada: Energy, environment & pipelines 2018), one which, according to some, could precipitate a constitutional crisis. Predictably, those lined up on either side of the argument are adamant and the debate is likely to become heated, if not nasty.

Sad news on Tuesday evening. Barbara Bush, Wife of 41st President and Mother of 43rd, Dies at 92. We did not always agree with her, but we certainly admired her ‘spunk’. Barbara Bush, a First Lady Without Apologies. A remarkable person.

Too good not to share, however, only Montrealers will appreciate the delicious irony: Luc Ferrandez ticketed for biking infraction: report The Plateau-Mont-Royal borough mayor reportedly got caught riding his Bixi the wrong way on a one-way street.