Sunday, April 15, 2018

A disastrous weekend with three political clowns

I have been watching the bungling of our so-called governments over the [last] weekend.  A prime-minister and two NDP provincial premiers show how to divide and bankrupt a prosperous country in under three years. A prime minister so spineless and stupid that he barely could manage to interrupt his overseas vacation trip at the expense of Canadian tax payers to try and heal the rifts he created in this country with his ill-advised policies. From the quiet of my Calgary living room, I can barely fathom the resentment and anger this weekend’s circus has created in Alberta and Saskatchewan.  And, for that matter in Northeastern BC and in BC’s interior.  I can not begin imagining the damage this has done to the relations between people living in B.C. and in Alberta. This will take years to heal.  And just imagine what this will do to Alberta’s separatist movement.  They now have gotten a fire in their belly that may take decades to burn out.  Justin, if you think that the NEP scarred the West then just see what the fall-out from this weekend's circus will be.

So, it is without much doubt that Jason Kenny will be next year’s premier. I don’t know how much damage he plans to cause to B.C.s economy, but they better prepare for life as an island nation.  Maybe they can make a living of the palm trees they don’t really have. Imagine blockading coal transport or worse grain transport to their ports?  And tariffs on anything B.C. even if it only moves through Alberta. Justin Trudeau you really screwed this country with your small business tax reforms and your environmental drivel. I wouldn’t be surprised that you are only a one term very forgettable prime minister.  Ontario small business hates you with a vengeance.  Wynnie is using the old ‘bigot’ scare techniques against Doug Ford the new leader of her province's P.C. party. That is probably not going over well after all the corruption and document destruction her party imposed - all in the name of a green Ontario. So I am pretty sure, that will flow over into federal voting patterns as well.
I don’t know the immediate reaction from investors, but I hope that we don’t wake up Monday morning with a big fall in Canada’s stock markets. A stock market that will become more shakey with every minute that it takes to resolve this intolerable anti-business climate created by these three political charlatans, in particular over this weekend.  I for one have moved a lot of investment stuff out of Canada. Its stockmarkets are already such a brilliant performance disaster since 2014 and now this. The global investor is likely to stay away even more, while Canadian savings look for more fertile investment grounds beyond Canadian borders.  Whether this will go slowly or with a big bang, who knows?  But as matters stand today, with the three clowns at each others throats, I don’t think we offer an appetizing sight to anyone.


Epilogue

I publish this post with some delay (April 21). Initially I thought it was too harsh. Someone reviewed it for me and felt it was dead-on.  No matter whether you agree with it or not, government interference has created the pipeline mess and now it tries to nationalize the project by buying it at a rock bottom price. This of course, as the Canadian Tax Payer Federation and others say is inappropriate: governments using tax payers' money for projects that should have been funded with private capital rather than spending said taxes on social and communal issues. This is exactly what I so oppose, a government that gets more and more invasive in our daily lives. 

Do I want to live in the Wild West?  No, but I do not only want a clear separation between religion and state, I also want a clear separation between state and private. This latter is thrown under the bus these days. 

Some may say, how does this jive with your view that we're going to see an oil boom?  I struggle with this, I guess I am still too much tied to this country to see it entirely objective. The answer lies in my actual investment behavior. I believe in an oil boom. I think that this mess ultimately will be settled by economics. Canada is likely to lag and so I will invest more and more in overseas opportunities. But I know the  Canadian oil industry well enough to see opportunity here as well.  CNQ is not only heavy oil, far from it. There is lots of oil in Saskatchewan of the light variety and with an infrastructure independent of dillbit. I see Montney relieve in B.C.'s planned LNG facilities and we do get better access to the U.S. through Enbridge Replacement of Pipeline no3 and TransCanada's Keystone - at a discount. 

I also am concerned about corporate, state and private subprime debt.  I am not so concerned about mortgage debt because of the increased value of underlying real estate. But even there government can't keep its claws away and they will probably screw it up, especially for the Millenniums who have voted for this government and will, ironically, get screwed by it.  It is this generation that has no eye for economic reality yet and that does not see that they will have to repay this ballooning government debt. So, yes they will become the tenants of the baby boomers who after years of low interest on their assets, will own real estate with escalating rents.

So, with destabilizing levels of debt, I see lots of financial uncertainty on the horizon and an economic system with few tools left to encourage economic growth and the lowering of investment returns. To be protected, you must accumulate assets.  I heard a great statement by Porter Stansberry, the libertarian founder of wildly successful Stansberry Research:  The rich accumulate assets not income. So they don't pay income taxes. (I rephrased). Well, Millenniums set themselves up to become income earners rather than asset builders - even worse than their parents, the baby boomers. Ironically, many Canadian baby boomers have become suddenly wealthy in several parts of Canada due to the explosive real estate markets. However, by doing so, they have taken away the opportunity from their children to own a residence.  This world of ours is truly a strange place.

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