Back to Basics for Banks

The fat bankrupt bank beavers have been bailed out by the taxpayers, so it is time for them to get back into their proper social roles. Leveraged derivates can only lead back to another precipice, so how about some good old fashioned banking?

Canada built their rich banks on the backs of homeowners and entrprenneurs, not hedge fund gamblers. To move forward, we need the banks to get back in bed with ordinary Canadians who need ordinary loans to finance their property, capital equipment and inventory investments. These are the loans that stimulate our economy by creating new jobs and new industries.

We also need the porky government agencies to lose some weight and the high metabolism tax weasels to go on a diet. Everyday Canadian beavers need a chance to pay off their lines of credit, credit cards and car loans/ leases. Income taxes need to be cut much more than corporate taxes.

By improving the balance sheets of middle class and lower income Canadian beavers, we will be able to create a stable and growing job market for all Canadians. Canada has always needed a strong small business sector that provides 70% of employment.

Our government policies must not continue to favour international corporations who close plants and lock out workers as soon as a cheap labour market emerges elsewhere. We can not endanger our autonomy by signing international trade agreements that give these global players legal control over us. It is time to finance domestic businesses- not investments by foreign corporations and foreign government agencies.

Canada needs its own Sovereign Investment Enterprise, just like the Saudi's, Chinese and other wealthy nations around the world. We need a long-term strategy and game plan.

It just doesn't make sense to be generous to those who are making hay out of our oil reserves and forcing Canadians and our industries to pay "world" prices for our plentiful supplies of this important resource. The Saudi's and Americans are setting the price of our oil- not Canadians!

We can't be shy beavers anymore. The next round of world trade negotiations will be over our fresh water reserves. The oil rich persian gulf countries have invested $trillions in their new infrastructures while Canadians just puff up our government bureaucracies.

Come on you beavers. It is time to defend and take care of our own pond!

How about sharpening your teeth on the head of a wooden muscrat bureaucrat?

Bob the Beaver

Bill C-24 is SCARY!

So our paranoid cousins to the south want our government to pass Bill - C24 that gives them all the private info on Canadians boarding flights passing through USA airspace. Maybe with this info they can scramble some jets to force your flight to land on USA soil?

Canadian beavers are personally concerned about the rapid spread and integration of databases around the world that contain personal information that is quickly outdated and unfortunately contain erroneous or incomplete data. These databases are extremely difficult to modify or correct and thus often create more problems than they help resolve.

Bill C-24 is yet another process for creating huge collections of information that rarely, if ever, produce more effective investigations than standard security practices. There is a mythology developing that these databases will find a needle in a beaver dam or a beaver dam with a needle. But as anyone with common sense, who are not suffering from muscrat paranoia, will realize, criminals will have false identifications whenever they travel. Thus, the database will only identify beavers who have had minor past indiscretions or been afflicted by bureaucratic errors.

Canadians really don't feel that we should be creating a global digitized personal identification network for future generations of Canadians. I think this step will encourage more marginalization of individual thinkers and lead to greater mass paranoia and extremist groups. There is a crucial balance between individual rights and individual freedom that can be thrown into imbalance by excessive monitoring and control. We don't want to lay the groundwork for the world to become prison-like for future generations.

As you know, during the past twenty-five years there has been accumulating sympathy for an eventual global government. Such databases and international integration will pave the way for such a freedomless New World Order. Canadians must put their paws down now and refuse to participate in this perilous journey.

In the case of Bill C-24, it is crucial for the conscience and soul of our politicians to rise above party solidarity and stand against this further intrusion into personal privacy.

Also, real criminals or political terrorists will travel with fake ID anyway and these databases will not provide any advantages over traditional security investigations.

Beavers around the world are watching our response to this imperialist demand by our giant neighbours. Frankly, aren't they big enough to take care of their own security without creating the beginnings of a global personal database?

Frankly, it seems that we are turning into americanized Buffalo stampeding towards a precipice instead of individualistic and industrial Beavers which is our cultural heritage.

Keep your tails away from falling trees!

"Bob the Beaver"

Who Really Benefits From Quantitative Easing?

So the world is finally learning the truth about $USA, Yuans, Euros, $Cdn,Francs, Lira, Yen, Pesos, etc. Currencies are merely empty promises by governments to pay their currency promises with currency promises. They even eliminated their old promise on currencies to pay the bearer an equivalent amount in silver or gold. Now currencies are merely described as "legal tender", meaning they can be used to pay off debts.

(For those of you who are new readers of Bob the Beaver's commentaries, you should know that Bob uses plain, beaver on the pond, language and terminology as much as possible.)

Thus, countries in debt can just print legal tender, or create more electronic records of legal tender in computer databases, and use this extra supply of money to pay off existing debts.

Of course, if the creditors, public or the media saw what was happening they would slap their beaver tails in warning. But governments obscure what they are doing by selling new money at a discount to banks who can borrow cheaper than anyone else and lend it out at a profit or buy interest earning debts to make more profits.

The problem is that by loaning the banks all this cheap new money, the banks are borrowing more money than ever before. In fact, their deposits have dropped from 10% of their borrowings to less than 2.5% in the USA and many other countries and 3.2% in Canadian banks. This leverage of 31:1 and over 40:1 is way beyong the 14:1 ratio between loans and deposits considered sustainable for the past 70 years.

In ordinary beaver family terms it is equivalent to owning a $500,000 home with only a $7500 downpayment, (2.5%). Such a family would likley have their house foreclosed if the value dropped to $492,500. Any business with only 2.5% equity or collateral would be put into receivership the next day. In basic language the banks have drowned and only artificial respiration can save them. (No beaver would ever give them "mouth to mouth" resucitation - especially in Canada where they have free health care if they can tread water long enough to get treated.)

So the bottom of the pond is that governments are printing money for banks faster than Mexicans can grow pot, Afghanis can grow poppies or Canadian Beavers can chug-a-lug beers.

All this extra supply of national "yingos" means that by 2011, imports are going to cost these countries more "yingos". But the big problem will be that the average beaver will have to pay more for his needs when he isn't receiving more of these new "yingos" in his paycheck. In fact, he will have to either borrow extra "yingos" or cut back his consumption of goods and services. This causes a recessionary whirlpool.

However, the fact is that China, India and other developing countries have billions of people who want a middle class lifestyle. These countries have acquired the new technologies of the past 40 years from the developed economies and are creating the next generation of technologies for themselves.

The economic and social momentum they have begun will be impossible to stop. They will still need the goods, services and commodities produced by the countries with decreased value currencies. What is happening is that they are transiting from net exporters to net importers.

As the education and skills and technology of a middle-class workforce increases the cost of their domestic products and exports, other countries will find them to be less affordable. Similarly, as the new middle class prospers, imports will increase and thus lead to trade deficits.

It was this process that occurred in the developed economies during the past 60 years and that will likley occur in the developing economies during the next 40 years.

Financing this economic cycle during the past century was strongly influenced by monetary policies designed to remedy major recurrent financial crises. There was no real global monetary plan or perspective so financial markets were relatively free to do the expedient in an increasingly liberallized financial environment.

But the underlying problem throughout this period was a lack of capital and cash to meet the needs of an increasingly democraticed world. Inflationary fears kept monetary supplies tight for most of these years. Thus, the financial sector had to find new ways to leverage sparse financial resources. The financial crises of 2007 through 2015 have been brought about by the excess leveraging of capital which was caused by a lack of financial liquidity in a rapidly developing world.

Thus, the hope and expectation of quantitative easing is to increase financial liquidity and reduce capital leverage in the near term. In other words, by expanding the size of the financial pond it will enable more beavers to become middle class citizens.

During this transition, wealthy beavers want to hold onto their proportionate share of the pond so that they can remain big beavers in a small pond. In the past they could control the flow of capital and size of the pond. In fact, there is evidence that they are redirecting the growing flow of new funds into their share of the pond that they have damned up.

But the good news is that the pond will be bigger sooner than later and the little beavers may soon swim in the new pond of economic order. How this will take place is the subject of another commentary.

Keep your teeth sharp!

Bob the Beaver

Potash Sale is Treason?

Unbelievable! Canada supplies close to 50% of the world's supply of potash, a key ingedient in fertilizer. This is a non-renewable natural resource. It is sheer stupidity to give control of this essential natural resource to a giant global mining conglomerate.

According to The Economist, the purchaser already effectively controls and manipulates global supply and prices for a wide range of minerals. Aside from a short term bribe to the Canadian government, how will their price fixing help us ordinary Canadians and our potash customers over the next few generations?

This government is wrong to assume they can make a decision to bind future governments to a sell out deal to foreign interests. Canadian beavers have a right to own these resources for our future generations.

We all need to slap our tails on the water and make so much noise that these muscrats and weasels in Ottawa will back away from selling our heritage.

Keep your teeth sharp on the legs of politicians.

Bob the Beaver

World Leaders Gather in Toronto for "Pity Party"

(Bob the Beaver is excited about the official launch of the CFP - Canadian Federalist Party on Canada Day - July 1, 2010. Bob will be celebrating by travelling down Ontario's beautiful Madawaska River.)

Downtown Toronto is damned up like an over-populated lily pond as the G20 political leaders search for floating logs as they drown in debt.

In fact, about all they are expected to accomplish is to eat and drink so much that they will get stomach cramps and drown themselves. They just don't seem to realize that the solution to the global economic mess rests with China and the USA.

The fact that $trillions have been stuffed into the global economy will not make things more viable. Money has value when it is scarce - not when it is plentiful. There is an unlimited supply of electrons pretending they are money in the global banking and financial systems. At present, the number of electrons held by each country has mushroomed out of control and a new balance is needed.

The most significant balance is between China and the USA. Once they work out a balanced currency relationship, then everyone else can line up with them.

The USA needs to increase its' exports by having a cheap dollar value for its' goods and services. But to export stuff, it needs to make stuff the rest of the world wants. They haven't figured this part of the puzzle out yet, so their economy is not going in the right direction yet. This could take another 3 to 5 years.

China's problem is that they need to buy foreign natural resources. They need their currency to go up so that they can get more goods for their Yuan. While they held $trillions of over-valued $USA, they bought up vast tracts of natural resources and land all over the world. But now that this money has been spent, they need a new plan to balance trade with the USA.

Once these two countries find a workable balance, then the rest of the world's economies can get back into the game. Unfortunately, the Euro currency countries won't have much say and will have to wait for the giants plus emerging economies like India to get their economies rolling again.

The New World Economic Order will be focussed upon sourcing natural resources and energy supplies, both of which Canada has and what most other countries will want. The key for Canadians is that we need to conserve our natural resources and not get pulled into price wars for natural resources.

During the next five years, Canadians should be taking stock of what we have and plan for our future in this century. Us beavers have been diligently doing this planning as you can see at the CFP - Canadian Federalist Party website at http://www.canadianfederalistparty.com/ .

Keep you heads above water!

"Bob the Beaver"

Casino Bets Lower Risk than Stocks!

The media announced that with computerized stock buying and selling programmes trading shares in nano-seconds, regulators are calling for limits to speed of trading shares.

They noted that even race cars have engine limits for safety reasons. Obviously they feel that the world's stock markets aren't safe places anymore for peoples' savings and investments.

Only 20 years ago, stock values had some relationship to the actual values of company assets and equity. Nowadays, interim stock values are pretty much based upon the future cash flows and earnings guestimated by company managers and speculators.

But, instant values of stocks are not even based upon guestimates, they are based upon mathematical models that use probability theories about how many people will invest how much each time a stock begins to go up or down. This makes the 32 to 1 odds on a roulette wheel number look very attractive indeed!

But this isn't really what this blog is all about. It is about our government limiting us to invest our retirement savings in stock market RRSP's. These are extremely risky investments nowadays and many retirement investors have had their savings almost wiped out.

The government is limiting us to invest in the electron manipulation game of stock markets instead of offering us solid investments with hard intrinsic value. Land, property, gold and other precious metals are hard intrinsic investments. Portable intrinsic value investments could be held on our behalf by government. Our property and land could be held by us.

Canadians should be writing to the Minister of Finance and all their parliamentarians to get the rules changed. We should be allowed to transfer RRSP investment funds, tax free, directly into our mortgage principle.

In this way Canadians will have some control over our retirement wealth risk. We won't be easily victimized by financial speculators, incompetent stockbrokers, investment bankers and bank lenders.

The financial community is greatly tarnished and no longer deserves our unswerving confidence. (Did you know that American Bank reporting rules were changed in 2006 and allowed them to legally over-state their net worth by more than 100%?)

Canadians need to be protected. We need to be immediately permitted to transfer our RRSP's to fully pay down our mortgages without penalties from the Banks or the government.

Consumer debt includes our mortgages. Canadians need to reduce our debts to be able to fund our way into the future. RRSP's fund nothing but speculation.

Get off your tails Canada! Make some noise.

Keep your tails in the water.

Bob the Beaver

Budget Bludgeon

Whooee! Cough, Cough, Cough!

With all the smoke and mirrors, we can't help but be choked by this new federal budget.

With 33 blatant and generalized nice sounding "motherhood" statements in the Throne Speach, the 2010 Budget intoduced the next day in parliament served up more pablum than a 20 pound baby beaver could eat.

The only positive note was that the Conservatives are finally increasing their estimated budget deficits to the levels the CFP - Canadian Federalist Party forecast 12 month's ago.

Basically, we have no one holding the tiller on our ship of state as it is swamped by the international and US based monetary scandal.

The tricky language used by the political "spin-men" and government bureaucrats says things like "There will be a $3.2 billion personal income tax relief." What they mean to say is that since unemployment is going up, and EI is running out for hundreds of thousands of beavers, and since people are being transferred into contract jobs instead of full-time jobs, then incomes of the 17.5 million taxpayers are going down, so they will collect $3.2 billion less personal tax.

But since the new HST will baloon "provincial" revenues, the federal wing of the party has nothing to say.

The military cost reduction sounds nice financially, but it is merely a preposterous self-gratification and self-serving numbers game where the government takes credit for cutting the military budget increase from 8% a year to 4% a year. Duh, if you aint got the money, how can you take credit for not spending more?

Even the bureaucracy savings they mention are pure gass from under their beaver tails. The public sector is still guaranteed a 1.5% pay raise each year, while the rest of us in the private sector lose jobs by the thousands, take pay cuts, and take lower paying jobs!

The Treasury Department is supposed to be doing a full department by department review and then recommend cutting out low priority programmes. Do you really think this will amount to anything significant? Heck, just prohibit all but basic expense accounts for all government workers. The vast majority of beavers don't have an expense account to do their jobs, so why should government workers?

But the thing you didn't see in the Budget, or in mainstream media, is the debt each taxpayer is accumulating. Before the recession, each taxpayer was responsible for $26,500 of the federal debt.(I haven't looked up the provincial debt load yet.) With these recession budgets, in three more years our debt will grow $9000 each, to a whopping $35,500!

Government debt will soon cost $41 billion in interest payments each year and interest rates are bound to rise 50% during this same period.

Well, if our family of 4 taxpayers absorbes $142,000 more debt, ($35,500 x 4), to our balance sheet, we are truly "Up the creek without a paddle!"

The tragedy of all this is that the government knows they are going to plunge us further and further into debt until at least 2015. The plans they have come up with do not make any sense in the short or long term. The have no idea how to discipline our spending and begin investing where it will have the greatest positive impact upon the growth of our economy!

There is a naive misunderstanding that our middle classes will bail them out sometime in the future, and provide an unending growth in prosperity for government workers regardless of our economic health.

In spite of numerous missives directly to our political and government leaders, with solid recommendations on how to help grow the wealth of our middle classes, they are blindly drifting towards the waterfall.

You and I and everyone else with an iota of "common sense" knows that our country will prosper as the middle class prospers. We need to stop growing government, let it shrink quite a bit, and start helping the middle classes to get out of debt.

There are literaly a dozen excellent ways to do this. The question really is "Why won't the government transfer money directly to us instead of filtering it through thousands of government agencies and workers?" They have chosen to ignore the fact that all their resource revenues belong to you and me. They have chosen to ignore the fact that we deserve a say in how are taxes are used. They have chosen to ignore the fact that we aren't stupid. etc. etc.

Well that's enough insight for now. Watch for the brand new CFP website coming on-line sometime in March 2010 at: www.canadianfederalistparty.com .

Keep your tails in the water!

Bob the Beaver