kevinwhope

Hi There,

Wow, how time flies - almost a week since my last entry - a welcome break, I know...

There are sure lots of interesting things going on to talk about, I hardly know where to start.  By the way, it would sure be nice to get some feedback to let me know you are still out there.  If I have alienated everyone with my political incorrectness (aka: common sense) I would like to know that.  If I am attracting new readers, I would like to know that too.  This medium is quite different than the retail business we are in - there you know quickly how you are doing - lots of immediate feedback for better or worse, and lots of solid metrics with which to measure and compare performance.  This operating in cyber space is completely different and not ideal if one needs constant feedback.  I thought I did, but then I have now been doing this for nearly one year, most of the time not knowing who, if anyone, is reading it.

So give me a note please.  If not here ( I can understand one's hesitating to do it publicly), then to my email:  hopekevin@hotmail.com
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Let's see...I will start with the Indian Residential Schools (and dive right in).  I hear them advertise on the radio all the time now, they seem to have rec'd money, what a surprise(?), to continue rubbing our noses in it for who knows how long.  Normally in Law, when you reach a settlement there are releases signed and that is the end of it.  Here it appears we have not ended it, but given money to be spent on beating us up on into the future.  So can someone explain what is the point of settling (with our money) if we don't also put an end to it??  I must be too simple, because this really confuses me.

If I have it right, they are now embarking on a cross-country tour of hearings to let us know how bad we all are.  Again, why did we settle then?  Shouldn't we get something out of the settlement - like finally dropping this so we don't have to hear about it and feel (apparently) guilty all the time for something that someone else did 50 years ago, when I was, let's see, 11 months old?!

And the traveling road show - the circus of horrors - encourages all "survivors" to come and speak out - beat on the rest of us.   What is with this language?  We have helped turn them from "victims", bad enough, into "survivors".  But to be a "survivor", doesn't that imply that someone must have perished?  Who?  Isn't this escalation to the ridiculous?  And we are paying for this?  What kind of lawyers do we have working for us anyway?  I guess a "survivor" is the ultimate victim. 
We have inadvertantly turned all this up a notch rather than settle it - on very generous and suspect terms I would suggest.  The only thing I must say that I have enjoyed in the whole mess is the way the Natives turned on their own scum-bag lawyer, Tony Merchant.  He went looking for it and got in bed with these 'victims', er, "survivors", so now he had 'victimized' them too, what a surprise.  This is the closest semblance of Justice I have seen to date, but I digress.

And doesn't this denegrate all real "survivors"?  It is a travesty.  Think of the Holocaust, Cancer, etc - doesn't this take something away from true survivors of such horrible close encounters with death?  But we let this go unquestioned because it is politically incorrect to do so.  What next?  Monuments to the survivors - no wait, they already have plans for that.  A museum?  I wonder if Iran's Ahmadinejad will eventually get around to questioning whether it ever happened at all...uggh.  Whether they like it or not, these parallels to other "survivors" are not parallel at all - not even on the same field. 

For starters, the residential schools were created with good intentions and to help the students get an education and become equipped to participate in the reality of Cdn society - a mistake perhaps, but still open to some question I would suggest - that went awry because of some religious predators who took advantage of an opportunity and betrayed their country and their church, as well as the students.  It has since been blown way beyond that.  But my point is that Hitler did not start out with good intentions to help the Jews.  Nor were the Jews being put to death by their parents in gas chambers at home before hand.   And six million innocent  Jews died, far fewer survived than perished,   We are talking about something entirely different - black and white - and to call them both "survivors" and try to fit them on the same page makes me ill.  And for the natives themselves, surely this is not a promising start to the future.  As long as they remain 'victims', they will be stuck in their own dependency rut.  Already subsequent generations are being told that they too are victims.  To think my tax dollars are being used for this purpose....enough said.
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Next on to more pleasant topics, elections.  I feel like my teams won the grey cup and stanley cup in successive evenings.

First, Danny Williams.  I wasn't such a fan until he stood up to Harper and called a spade a spade.  Actually, he called a chameleon a chameleon, exactly what I have called Harper all along.  Harper will betray promises, go back on his word, reverse policy, etc and not bat an eye if it suits him politically - he is all about getting elected as opposed to principles.  Nice to see the people of Nfld rewarded Williams and by implication, thumbed their nose at Harper. 

I know by the way of the age-old ploy of winning popularity at home by beating up on the Feds - an old sport that is sometimes unfair.  This isn't one of those times....

And now Harper has struck a deal with Nova Scotia on their resources, a compromise, again not on principle, but to get elected there.  Nfld and Sk have been written off?  Or is he banking on Sk supporting him again, either because we are too stupid out here, or because who else can we vote for.  I'm thinking a little of both, but it makes me boil to be insulted in this manner.  I, like Danny Williams, will vote for anybody but the (Reformed) Conservatives (ABC, he calls it).  I know I will have to hold my nose voting, but so be it, it won't be the first time I have voted strategically, and I believe in the principles of democracy and one of them is accountability.  I can't have it all ways - this time accountability is more important to me than my political leanings.   Who knows, I may vote Green - yes you can pick yourself up off the floor now, I said "Green".  In fact I really think I am more an environmentalist in fact and action than most of the greens themselves.  Maybe they can use an infusion of some common sense?   Al Gore, David Suzuki, move over...
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Next on politics, the second big victory for me to enjoy in recent days, the Ontario Liberals.  I am not a McGuinty fan, but I have no use for John Tory as my readers will have known for some time now.  He is a remnant of the dinosaur species known as the Big Blue Machine - dating to the Bill Davis era of Conservative rule in ONtario.   Sort of the equivelant to the Peter Laugheed era and legend in the West.  Tommy Douglas in Sk?    The problem with these guys is that they were so darned smug and thought they knew it all and could do no wrong - listening to others wasn't their long suit as they came to believe in their natural dynastic right to rule.

John Tory had it in spades.  He proved it once again, but this time on display for all to see.  He really believes, really, that we need him and he knows what is best for us.   That is fine, but the voter has something to say about it too.  They sure spoke up last night, and I enjoyed every minute.  And did he resign?  Of course not, he won't unless pushed (never mind the electorate tried).  He honestly believes we need a guy like him to save us from all the others.  You almost have to admire such self-confidence in the face of all evidence to the contrary.  And McGuinty did not win the election, Tory lost it.  McGuinty is the luckiest politician around - he has an opponent who willingly hands him his head on a platter, and still doesn't get it.

Mike Duffy summed it up best last night (this will sound familiar) - 'what can you expect from a guy (John Tory)  who brought you the Kim Campbell campaign?'   Yet to this day it is Campbell who wore it,  not those geniuses behind the debacle.  Then too, the boys from Ontario knew best, they never even called Maz for advice, no matter how desperate things got - what would he know, he only won 7 elections.  Westerners are fine, but have nothing to add to the brain trust with which we are endowed.  The sad thing is that in my experience, a lot of westerners involved at the time were only to keen to accept this crap and bend down at the feet of their gods...another one is pollster Allan Greg.  He is smart and has the gift of the gab, but arrogant!?  Tell me what you think next time you see him on TV - the CBC has bought into this worship thing too - I gag every time I see him - he is God's gift to the rest of us. 

The irony in all of it, I get so much glee, is that in the Campbell debacle, they decided to run on style and she wasn't coy enough to keep shut up - she too being a bit arrogant (a bit) - and buying into it - so she came out with the strategy - 'an election is no time to discuss policy' - instead, 'do you like my nice broach?  Its a K for Kim'.  And how did that go?  So this time, John Tory himself, instead decides an election IS the time to discuss policy (he learned from the debacle in 93), but nobody told him that it has to be policy the people want and will vote for.  And in fact he was told.  Apparently some Univ Prof (Biss, UofT I think?) told him that his proposed election announcement on religious schools was sure to backfire and result in a disaster.  No kidding.  But does he listen?  He knows better.  So they told Campbell elections are about style not substance.  That didn't work, so he now goes substance, not style.  What comedy - what irony.  What next?  And he likely had the election and Premiership in the bag - pulled defeat from the jaws of victory as they say...good sport.
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Finally now we have the Sk election to watch.  And the Roughriders are doing well too!  Now if only the Habs could get their act together...

I would not count the NDP out just yet.  As McGuinty proves, sometimes you just get lucky and watch the shoe-in opponent self-destruct for no good reason - an issue that comes out of the blue as an apparent gift.  Another one I can think of is the Free Trade election of 88.  It was never intended to focus on Free Trade.  We were prepared to run on the record since 84, and not plans for the future (GST too was not seen as a winner, go figure, so it was left for after the election and the more popular elements of tax reform, of which GST was an important part, following on the Don MacDonald (yes a Liberal) report from a few years earlier under Trudeau, were enacted prior to the election call.  Suddenly, the Liberals, John Turner, in their wisdom, latched onto Free Trade as an issue they could confuse and scare Cdns on.  All our election materials and preparations were blown out of the water - it was suddenly all about this one issue and few of us really knew much about it - we had to learn on the fly - and the deal itself was like a phone book - how John Turner intended to rip it up with his bare hands, I'll never know! 

Anyway, we did get our act together and won the election which was not a forgone conclusion before hand at all.  Turns out the Liberal issue was a gift - a wedge issue that among other things, kept the upstart Reform Party from splitting the vote as they would do in subsequent elections and likely would have done in 88, ensuring a Liberal victory five years sooner.  I can remember very specifically at the door steps being told that people were fed up with us and intended to vote for Preston Manning (I won't go into it here), but felt they had been 'hood winked' and now had to vote PC (despite Mulroney and his CF-18 maint contract etc - we got an ear full!) in order to ensure free trade and keep from splitting the vote in favour of the Liberals - ie they still hated the Liberals worse than us!  We didn't so much win that election as the Liberals lost it.  Nobody would want to admit it today, but it was a surprise gift, courtesy of John Turner, much like yesterday's result was John Tory's gift to McGuinty. 

So back to Sk, will the Sask Party hand the NDP a gift?  Who knows.  If I were the Premier, I would sit back and play safe, be the nice guy and hope for the others to self-destruct...that is their best chance.  The NDP has nothing with which to win, but the others can certainly lose if they screw up.  Further, in Sk you have the Sk Party and the Liberals, so the opposition vote can easily end up split, esp in the Cities where the NDP is strongest.  I am not predicting an NDP victory - who knows - I am just not writing them off yet either.  Should be good to watch.  the one to self-destruct on some red herring would be the Sask Party - if they are smart, they too will play it safe and coast along knocking the NDP but avoid any big policy gaffs like John Tory or John Turner committed.  If they have any brains, these lessons will not be lost on them...I won't comment on that.

The other thing the NDP have going for them is the fight with the Feds on equalization, this time it is legit, not just trumped up election rhetoric.  I am with the NDP on this 100%, that in itself will make this next month interesting.  I bet there are about 10 or 11 MPs also watching with interest as their necks will be on the line in Sk soon enough.
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More on Harper, the chameleon.  He has drifted way left as I have said before, the priority being re-elected, not the principles upon which they claimed to stand.  He is annoyingly going on the assumption that the traditional conservative vote has no where else to go (for the most part he's correct, but that doesn't make it right), so he can cater to the center/left and take the rest of us forgranted.  All the others are duking it out on the ever narrower left hand margin of the bell curve, perfect!  (time for another protest movement out of the West, but I guess we are all fatigued, Harper knows it!).  So the latest evidence - industry minister, a Calgarian of all things, Jim Prentice announces new measures to review and screen foreign investment.  But wait a minute, isn't that like FIRA?  Didn't we fight the Trudeau Liberals all those years (since I was a kid) to get rid of policies like this?  Mulroney was elected to do it, and did it, now we had the Reformers do in the old PC Party and eventually get elected just to reintroduce FIRA?  Again, I am totally confused.  But it isn't about principle, it is about getting re-elected with a majority and that means central Canada, not us.  Full circle, but this time I am not wasting my life trying to be involved in changing it - why bother...I can do more good chirping from the side lines...pointing out a little history for those who forget.  And that seems to be a common problem - what ever happened  to all those Western Reformers?  Are they just whipped and tired too?  There must be some lessons in all of this...silly me.
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The most recent Economist issue has a cartoon which I won't try to explain other than to say that Ahmadinejad claims that the Holocaust is a myth, they are not building a nuclear bomb, and now they have no homosexuals in Iran.  What a guy, a comedian if it wasn't so serious.  If they have no homosexuals, would it have anything to do with their persecution of them?  Are the closets just strangely more full over there?Does he really think we are dumb enough to believe anything he says?  Oh yes, I forgot, many of us ARE dumb enough....
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Also in the same issue of the Economist a piece on the Cdn Loonie at par with the $US. 
Just an aside here, I know that the C$ has risen when I predicted it was set to fall.  In fact the C$ has remained stable while the US$ has fallen, but no matter, my exchge prediction has been wrong, (uggh - I bought US$ in a big way at 93 cents, and more since), so far...the game is not over and I stick to my guns.  Nothing has really changed to dissuade me, just the pendulum has swung futher than I expected, but it is a pendulum - this is cyclical, not linear - I know, I know, you've heard it all before.  And lately anyone wanting to make money just has to watch what I short and buy it long, uggh.  It will all come around, just wait and see.
Back to the Economist.  "The Loonie takes Wing".    They quote pollster Darrel Bricker who I knew well from my days in Ottawa when he worked down the hall in Langevin in the PMO  "When the C$ was trading just above 60 cents, people thought there was something wrong.  Now it seems that we are doing something right."  With all due respect to Darrel, a nice and smart fellow (over-shadowed in the media by competitor Alan Gregg), I disagree.  We are not doing something any differently than we did at 60 cents.  In fact outside of the US, our currency has changed very little.  What it shows is that things are cyclical and right now commodities are hot and that is what we sell.  Nothing has changed, except the point in the cycle and that too will change.  If we were doing something differently and "something right", that would suggest that the exchange rate at par is now relatively permanent - it isn't - time will tell.

Also, the article refers to Bank Governor David Dodge (another old friend and colleague), saying that, "he thinks that prices for minerals and energy will remain strong for the foreseeable future."  It then concludes, "If he is right, that will help Canada ride out a looming recession (catch that?  ...a looming recession, not a possible recession...) south of the border.  But Schadenfreude is a dangerous sport.  Although Cda has withstood mild American slowdowns in the past, a deeper slump across the border might well bring the loonie, and Canadian pride down to earth with a bump."   (and remember the Brits have an amazing sense of understatement and wit...heads up, I am not alone in my predictions- I would hate to match twits with a Brit!).
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Next, and just at random here, I read that certain Quebecers are holding a "worst traitor of Quebec" contest.  So far Trudeau has a lead with Chretien (presumably the kitchen in Langevin with McMurtry and Romanow on the repatriation deal that excluded Que), and Dion (presumably the Clarity Act -and what is wrong with defining terms of a divorce if it should come to that?).  While I am not a big fan of any of these guys, I think it is sad that they have to do this.  Why not focus on the greatest?  Quebec has certainly produced plenty - Rocket Richard,Jean Belliveau,  Howie Morenz, and I am sure there are more...
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I read that the trade deficit in the US is falling as it should - as I have outlined here previously, things in the economy tend to self-correct if left alone (that is the challenge).  The US$ is down, which makes imports expensive, so people consume less. and it makes US exports cheap, so they produce and sell more.  Eventually the economy recovers in this manner.  In the meantime it is bad news for us - we sell to the US so if they consume less...we sell less.  We follow their economy with a lag.

And meanwhile same-store sales (retail) in the US are down unexpectedly in the US in september.  But I certainly expected it - the consumer is taking a hit with housing down,  a poorer currency, etc.  The housing bubble bursting, the resultant credit crunch, etc - even Alan Greenspan is now clearly saying over and over again that consumer spending is next to fall.  Then just watch as employment takes a hit, then more consumer confidence problems, etc.  Then eventually we will see it all here in Cda - same script, different recession.

But in the meantime, the market interprets the fall in same-store sales as a positive - they figure that this means the economy is in trouble therefore they can expect more interest rate cuts, and that is good for companies and the stock market.  Would someone please tell these idiots that what these numbers will mean is a fall in corporate profits, which means the stocks will appear suddenly to be overpriced and that a rate cut will not save us from all of this???  Right now it boggles me that bad news is seen as good news.  Any news is good news.  Silly times I guess, and silly times don't usually end very well...
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Next and in no particular order, I read that Merill Lynch is writing off $5.5B (Billion) for losses on subprime mortgages and loans to "highly indebted companies".   This isn't over by a long shot, and we still lack transparency - who knows what is going on?  Perhaps nobody?

And the latest I read is that in the absence of home equity loans in the US with housing prices now falling, consumers are turning to their credit cards to support their spending.  This tells me things would be even worse in retail if not for credit card debt.  But again, this is just softening the drop for now, but worsening the ultimate day of reckoning - when we all max out our credit cards and creditors stop issuing more becuase we aren't able to keep up the payments, then what happens to spending?  profits?  emplyment?  govt surpluses?  etc, etc.  Credit cards are not the solution, they are a big part of the problem.  First subprime mortgages, what next - a credit cards bust?
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At this stage of the cycle, when corp profits have reached a top and share prices are heading for Mars, that is when typically, corportate fraud goes into overdrive.  Intuitively one would think fraud would be used at the bottom of the cycle when things are most desperate.  My observation is the opposite, fraud occurs as a result of greed not fear.  Greed is now peaking - everyone is looking to pump up numbers and defy gravity - the temptation is also at it's peak.  We won't hear about it until the bubble bursts and all these rosy projections (that proved so wrong) come under the microscope for scrutiny.  I want to go on record now, not then, pointing out what is likely going on right now unbeknownst to the rest of us.  RIM is a good candidate, but I have no facts of course, just a hunch, esp after their little hickup with back-dated stock options which demonstrated for me a propensity, and not a good one.  We'll see.
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The other day at the lake I was working on my rock wall when a neighbour came to speak to me.  He is quite successful and a smart guy, having retired from a good career in the oil patch.  By the way, my investment in my rock wall is a good one - has certainly proven more solid than some of my others recently, but I digress.

He mentioned among other things that we will never see $30  oil again.  He may be right, but who knows, he may be wrong.  Who would have imagined $10 oil in the late '90s, less than 10 years ago?  Seems to me that Alberta is bad for repeating the same mantra of the day until everyone believes it, whether anyone has really given it any actual thought or not (usually the latter).  I am not predicting $30 oil, but nor would it surprise me.  If not for geo politics, something that ebbs and flows, I suspect that we would have oil in the $40s based on supply and demand now, and heading into a recession, who knows?  All we do know is that recessions reduce demand and that tends to depress prices.  On the other hand if someone bombs Iran, we could see $130 oil over night.  Repeating some mantra that everyone else accepts because they've heard it so often, makes no real difference.  Just means we are taken by surprise if we are wrong, and that is nothing new.
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ON real estate, my neighbour, a smart guy, was talking about selling his lake front lot at Turtle (prices are high now) and buying more property in Stoon, because the market is "hot" here.  I recommended he do the opposite.  I feel prices will fall in Stoon ( he now already bought two condos here renovated and put them back on the mkt), and will eventually go higher at the lake.

More specifically, I told him I figure that recreational property will also take a hit in the next couple of years here as the bubble bursts.  But in recreational pty the future is different - demographics are in it's favour over the next ten years.  We will likely see the market soften for a couple of years which means nothing will be moving - but prices won't really fall much either (unlike in the city), then things will recover within 3-5 years for those who can afford to be patient.  After that, prices will be on the rise again, but in places like Stoon, it may take 10 years or more to recover.  Now is likely not the optimum time to buy recreational pty, but the coming slump will be the last good chance before the boomers take over through their retirement years.  It will be cottages and condos that are in demand, while everyone is dumping their family homes in suburbia.  It is going to be a particularly good time to buy in the US - everything is coming together in our favour - our strong currency, the real estate bust, demographics, etc.  5 years from now we will look back and everyone will agree it was a no-brainer -  those who buy a recreational/retirement pty in the US sunbelt will have numerous forces pushing the price of their investment highter, and they will be reading about it on a deck chair in the sun!

I am also told that just a cold winter will turn things around in the natural gas market.  I am not expert, but I wonder what then if we get another warm winter?  Isn't it equally likely?  There has been so much drilling activity in the past few years that we are now over-supplied - too much reserves drive prices down.  And what about oil?    I think that the service companies in the oil patch are still good short candidates - PD, TCW, ESI, TEO, etc.   Also the US builders - RYL, TOL.  These are shorts I have done well on and I think there is still plenty of room.  The pendulum tends to over swing and shoot right past any notion of a new equalibrium, but caveat emptor.

Same in city condos - they are on fire in Cda - construction starts breaking records.  At what point do we become oversupplied, esp at such high prices.  And once the tipping point is reached, it can drop like a stone because prospective buyers will be in no rush if prices will be lower later - why buy now if it will get cheaper?  That is where we are in the US now - and it has to get pretty bad before you can reverse it once that psychology sets in.  Anyone buying a condo now is crazy not to wait.  Renting is not money thrown away, it is money saved.  But many people buy into the mantra that you can never lose on real estate.  It just isn't true.  Timing is everything.
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ONe final thought, that is enough I think, we are off to Edmonton for a recreational property show put on there to learn what we can about the state of the market, the demographics, trends, etc (we won't be buying anything). 

It is very much the 'IN thing' to beat up on America these days.  Many of us in Cda like to do it any time, but now it seems to be hitting a fevered pitch.  There are lots of reasons, I won't enumerate them, everyone knows the hit parade.

My point is that we should be careful never to bet against America - My belief is they will recover and be as strong as ever.  They have a lot more right than wrong, and they are a great people and neighbour.    Unlike our new fare-weather friends, the likes of China, the US values freedom, and that is a human quality that will always emerge and prevail.  It sets the US, and the West, apart from most of the rest of the world.  Freedom (not to be confused with peace) makes all the difference.

They are our friends, although you wouldn't know it with how we behave at times.   We love to dump on them and right now they are down and make an easy target.  This has happened before and then reversed.  Watch for that to happen again.  And let's hope so, because whether we like it or not, we depend on them for our good fortune and lifestyle.  I am thankful for them and wish them well, I hope for better times for them.  Every time I holiday there, several times a year, I am reminded just how lucky we are to have such great people right next door.  Thank goodness it isn't China (and us, Tibet?)  I predict their strong recovery and that is what I am hoping for.  I benefit from their strength and gain nothing from their pain.  Let's hope for better times ahead.  That's what friends are for...
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Give me your comments and pass this on if you think there is something worthwhile

Regards, Kevin