Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.

Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Friday, February 27, 2015

Why Stratfor is Wrong on the US's Future

Stratfor, a US "geo-strategic " global intelligence company, recently published its "Decade Forecast:2015-2025" here . The essential nuts and bolts premise of this forecast is the US will remain the unchallenged global super power, while Russia, China etc fragment under social chaos and democratic forces. It even predicts Poland will become the dominant player in Europe... I kid you not. Stratfor, in all its conclusions couldn't be more wrong.

First, and probably most important, Stratfor's conclusions are based on the current system of world commerce and consumption. It brags that the US still produces 22% of the world's economic activity. That may be true, but it misses the key point - all that is about to change. Brazil, Russia, India, China (BRIC countires) are establishing a singular trading bloc among themselves. Importantly, the bloc's transactions are to conducted in respective national currencies - not pegged to the US dollar or even using the US dollar. In effect, they are recreating the world economy to the exclusion of the US and major European powers.

The practical effect of this monumental shift can be seen already today. In the last three months BRIC has announced a new world bank that will challenge the world bank (that operates in US dollars) for global supremacy in sovereign lending to countries in need, or between themselves for major projects. One such project is the new canal to be built in Nicaragua, financed by China, and guaranteed military protection by Russia. Again, neutralizing the US controlled Panama canal. Then, last week, the BRIC countries announced they would be creating a supra-national parliament that in essence would mimic the European Parliament. Also, in the last while, countries like Egypt, Greece, Argentina, Venezuela, Turkey, etc have been gravitating to the new BRIC economic bloc - not wanting to be left out in the cold.

But what does the new bloc have that will unseat US dominance? One word: markets. With the creation of the new bloc, the US and Europe will lose significant markets for their businesses. The loss of those markets cannot be replaced. The US and Europe will be faced with massive deflation in their economies as a result, large scale recession if not depression, and the very social unrest Stratfor predicts for China and Russia will instead be taking place in the US and Europe.

Here are some real numbers that tell the tale. By 2025 the populations (markets) of the new bloc will be approximately 3.1 billion. By contrast, the North American/European bloc will have a population of 1.1 billion. That is if the current western trade partnerships remain intact in the face of closed markets in the new bloc. Consider, for example, Australia, which does massive trade with China. Australia will be forced to decide whether its political/military alliance to the West outweighs its economic survival. Other countries, particularly in Europe, face the same tough choices. By way of example, France has lost a few defence contracts lately with India - Russia being the benefactor.

Here are some even more staggering numbers. In a word: debt. The ability to borrow to consume. The necessary requirement to grow and drive any economy. You can check the current numbers of all countries here . There are two sets of shocking numbers - gross government debt as a percentage of GDP (Gross Domestic Product - annual) and debt per person. The three main countries power the new bloc shake out this way:

China -          20.9% (debt vs GDP)            $1,489.00 (per person)

Russia -        14.6%                                     $2,297.00

India -          68.1%                                     $  946.00

The main powers in the Western block look like this:

US -             107%                                     $58,604.00

Japan -         242 %                                    $99,725.00

Germany -     78%                                     $35,881.00

UK -              95%                                     $38,938.00

The lesson here is two fold. Firstly, the debt per person and overall gross sovereign debt of the powering nations behind the new bloc are minuscule, and they are ripe for growth. Secondly, in the case of India, its large gross debt as a percentage of GDP, yet minute personal debt, means once it economy is properly stimulated its Debt vs GDP ratio will fall drastically. None of these things can be said for the Western bloc. In a phrase: the West is maxed out. It has nowhere to grow, and certainly no ability to dominate the new bloc politically, militarily, or economically. Stratfor is just plain wrong. Very wrong. Surprisingly wrong. Money and markets do not have a soul. It has no national agenda or pride. It only exists on numbers. Those numbers heavily weigh to the favour of the new BRIC alliance. Just as assuredly, they condemn the West to a time of severe and fast decline.

Monday, February 23, 2015

Muskrat Falls Injunction Update

Over the last few weeks, a number of people have contacted me through social media and other means to find out what's happening with the Muskrat Falls injunction application. So here it is.

After the Appeal Court of Newfoundland overturned all of Justice Butler's decisions on the first injunction application, and imposed an unprecedented ban on her for having anything to do with any future cases I may be involved in, I resubmitted a new Statement of Claim and injunction application. The first Statement of Claim was based too much on ethical principles and not enough on legal principles in a sense. I can't go further than that, because the issue of costs I was awarded has yet to be settled with the Government and Nalcor.

The new Statement of Claim focuses on one primary theme - unlawful action by the Government, Nalcor, and CFLCO in the development and building of Muskrat Falls. Specifically, the Government committed the unlawful tort of "unlawful interference with economic relations" (description) . Essentially, one party, by its actions against a second party, knowingly causes harm to a third party. One Party = the provincial government. Second Party = Hydro-Quebec. Third Party= taxpayers/ratepayers. The adage goes that the Government knows the water management agreement imposed on CFLCO breaches the Power Contract, which gives Quebec sole access to the power of the Upper Churchill until 2041 (except a small recall). By proceeding with it, and building Muskrat Falls based on it, the government has violated Hydro-Quebec's rights. Hydro-Quebec is now suing us for that breach. We, the taxpayers and ratepayers, will be responsible for the damages awarded and the costs of a useless dam that can only operate at 20% firm capacity without the water management agreement. Hence, the unlawful interference with our economic relations.

In addition, I have included the unlawful treatment of the Nunatukavut and Nunatsiavut governments. The Government is bound by a land claims agreement with the Nunatsiavut that it has broken, and is bound to the Nunatukavut government by constitutional requirements for consultation and accommodation. These three issues of lawfulness have left taxpayers in a position of risk, and all three matters are before the Courts now as a result. To put it simply, my new suit focuses on protecting our economic rights against unlawful government action. It's what is commonly referred to as a "taxpayers lawsuit".

In order to prosecute a "taxpayers lawsuit" I have to qualify for "public interest standing". A hearing date was set to determine public interest standing with Justice Stack presiding over it. However, Justice Stack had already presided over the permanent injunction application granted to Nalcor against the Nunatukavut so I requested he recuse (step down) himself from hearing the matter. The day before the recusal issue was to be heard in Court, the new Chief Justice of the Trial Division named Justice Stack to be Chair of the Independent Boundaries Commission to reduce our seats in the House of Assembly from 48 to 40. I was notified in writing by the Court that, as a result, he would not be hearing the matter - or any matters.

A date still exists on the books for March, so I am hoping a new Justice can be named for that date, and the matter of public interest standing can be successfully determined, so the important issue of an injunction stopping the development of Muskrat Falls can be heard and implemented. This whole process started in November, 2012, and here's hoping it will come to a conclusion within the next 4-6 months. That is my update.

Sunday, February 15, 2015

The Middle East on Fire

The Middle East is a complicated place in some ways, but it is understandable. It's firstly about religion. Secondly, it's about power. Then it's about money. In that order. Often I hear people discuss the Middle East as if it was "all about oil", but that is very naive and simplistic. Then I hear people say "well they've been killing themselves since history began". Well, that may be true somewhat, but so have people in the rest of the world. Also, oil has only been a factor for 100 years. What about the rest of history?

The key to understanding the Middle East is realizing everything in the Middle East is anchored in religion. In the Arab sense that means either Shia or Sunni branches of Islam. From the same beginnings, but divided in history, and at war ever since. Throughout most of recent history, western powers of one kind or another have attempted to impose order on these divisions by imposing "countries" on them, with strong dictatorships to keep those two branches in some sort of working order. The cruelty necessary to do so was never at question, only the result. Order no matter what. That became increasingly necessary after oil was discovered.

The "deal" if you will was blown apart by George W. Bush in Desert Storm II when he invaded and conquered Iraq. Essentially, he let the genie out of the bottle. When his father forced Hussien out of Kuwait, he stopped the invasion before toppling Hussien. As an ex-director of the CIA, Bush senior knew that Hussien was all that held Iraq together, and giving the people there democracy was akin to lighting the house on fire. His son chose differently.

What happened in Iraq was as predictable as the sun rising and setting. The majority Shia won the elections. The minority Sunni, who had controlled Iraq via Hussien, turned on the Americans causing them 4000 plus deaths. The Shia hated the US even more than the Sunnis and happily watched and assisted as the US became embroiled. It wasn't until the US decided to buy off the Sunnis, literally, by paying insurgents a salary via "awakening" councils, that the heat went off them in Iraq. But, it never went out between the Sunnis and Shia. In fact, it opened the door for Shia Iran next door to gain vast influence in Iraq that it never had before.

The US invasion also had the affect of driving Iran (Shia) and Saudi Arabia (Sunni) into the fore front. Since that time, the two have been engaged in a not so covert war to dominate the region for their religious branch. Not for oil, but rather for the bragging rights that their half of the Muslim religion was righteous, and prevailed over the other... as was destined. Both countries have massively armed themselves. One fed by the US (Saudi) and the other by its own industry and Russia (Shia). Iran supported groups in the region that supported the Shia like Hezbollah, etc. Saudi supported the other side. Same goes for every "country" in the Middle East. I use quotations on country, because countries are a mainly European/Western imposition on the area. The Middle East is better described as Tribes. That is their nature, their history, and their loyalty - even today.

The US added some gas to the fire when it and NATO, by abusing the UN enforcement of a "no-fly zone" in Libya, toppled another dictator and opened the area to religious tribalism. The same can be said for the covert, not at the time overt, US involvement supporting anti-Assad rebels in Syria. Assad equals Shia (Iran) and the rebels including ISIS equal the Sunni (Saudi). What the US has been doing is undoing the system of order and control it either helped or unilaterally imposed on the religious tribes of the Middle East. In other words, it is hauling truckloads of the driest wood you can find, soaking it in petrol, and throwing the flame on top. A rather curious dance of creating the conditions for competing extremism, and then deeming itself to be at war with it.

The latest Middle East "country" to implode on the US is Yemen. Situated at the mouth of the Gulf, Yemen is very geo-politically important. The Houthis have taken power there after overthrowing, you guessed it, the Saudi (Sunni) dictatorship. The Houthis are of the Zaidi branch of, you guessed it, Shia. As I write this post, the United Nations security Council has been called to a meeting to discuss the Houthis takeover of Yemen. Simultaneously, the US has just announced it is sending 4000 plus troops to its base in Kuwait. Whatever happens, you can be sure that either Saudi Arabia, or the US, or both will invade Yemen at any time now. And so it goes.

What is at fault for all the chaos in the Middle East? That depends on how you rationalize it. However, there are some truths that remain so no matter the rationalization. The Middle east is a land of tribes that hold their religion, Shia, Sunni, or Jewish, more dear than any other thing. It is who they are, and it is the source for all they are - including politics. Values there are not based on democracy, or any kind of "free society". For them, in many ways, democracy and freedom are counter to what is expected of them by their religions. Human freedom, if followed to its logical conclusion, would go against the teachings of the Koran, and that is as offensive to them as watching people be decapitated is to us. But, the US and other Western nations never seem to learn that lesson. Our governments continue to try and impose the "white man's burden" on them. Even though it has no chance of ever succeeding. We stir the pot, and then cry foul that the pot never ceases to stop boiling.

Now, though, the US has raised the heat in the Middle East so drastically that the ominous tales of Armageddon come to mind. The bear vs the eagle. The great war in the Middle East that consumes millions. Scary stuff. Very scary stuff. But ask yourself: what is the logical conclusion to the fires burning in Syria, Egypt, Israel, Iran, Libya, Iraq, and now Yemen? It has to all be going somewhere - such is the nature of our human condition. So where? The Shia and the Sunni aren't going to happily toddle off to their particular corners and allow one side or the other to freely reign over them, The US, Russia, China, etc are not about to walk away and leave what they perceive to be their pawns toppled from the board. Where are all of these competing interests leading us? To one big explosion of violence or to one big reconciliation? If the US government wasn't the "power" on earth that they seem to be, I would say we have a chance of creating some sort of respectful co-existence in the Middle East. Whether that be by attrition or agreement. However, if the US remains free to dance in the china shop, well, let's just say people should start reading their Bibles' story of Armageddon. It's a story about lighting the Middle East on fire.  

Thursday, February 12, 2015

Minsk 2.0 Bound for Failure

Two hours ago the powers of Europe and Russia, along with Ukraine and representatives of the Donetsk and Luhansk republics, signed a new "peace deal" in Minsk. Problem's not new. In fact, it's a regurgitated version of the first one that failed so miserably. Here's why the first one failed and the second one will as well.

1.  The war in Ukraine has been witness to war crimes enmasse. Thousands of civilians have been slaughtered by the Ukraine army, and many more thousands have been maimed for life. During the first few months of the war, a deal like Minsk may have worked. After a year of the national government turning the guns of war against "its own" cities and villages the blood and destruction is far too great. Then there are the thousands of dead and wounded troops on either side. And their families. Are they supposed to submit to an agreement that allows the Ukrainian government to rule over them once more after such massive human rights abuses?

Almost as astonishing, the new Minsk deal calls for those who were responsible for these crimes against humanity to be pardoned from prosecution. An action that leaves human spirit betrayed. It defies the basic tenets of justice in the most vile way. A politically expedient hand shake that washes the blood of tens of thousands from the hands of those responsible.

2. The agreement ignores the referendums held by the people of Donetsk and Luhansk. It effectively ignores their democratic wish to be separate from Ukraine. That type of expression of will cannot be washed away with the stroke of a pen. It remains in the hearts and minds of the people. It was an expression of their will. A will that has been tossed to the wind again for political expediency. A betrayal of their collective hopes and aspirations.

3. Ukraine retakes its border with Russia effectively leaving the people of Novorossyia trapped and separated from their "guarantor" Russia. That leaves the door open for Ukraine to reverse all the battlefield losses they have suffered in the last year, and free to implement their will against the people of Donetsk and Luhansk.

4. The provisions for decentralization of powers and "special status" for Donetsk and Luhansk are left meaningless as Ukraine President Poroshenko so blatantly showed by declaring Ukraine will not federalize at a press conference held before he even left the venue of the talks. In other words, a meaningless promise.

5. Disarming of the military forces of Donetsk and Luhansk. The only real guarantor of security, safety, and defender of the will of the people of Donetsk and Luhansk. In other words, the very army that has been shelling their cities and villages will now be patrolling their streets. In other words, they will become occupied by their oppressors. Distasteful to any person with a shred of human dignity and pride.

The list goes on and on. Minsk 2.0 is nothing but a shallow, "diplomatic" attempt to appease the interests of Russia and Ukraine while ignoring those central to the equation: the people of Luhansk and Donetsk. A betrayal. An insult. Such an agreement can never have a long shelf life. It is doomed to failure because it ignores the human will and its need to see "justice done". Such an agreement leaves the wounds of war to fester and breeds deep routed hatred and resentment. It is not honourable and it is not practical. It is but a grand gesture, in a grand hall, that disrespects honour, sacrifice, and the human will to be free of one's oppressor. Shame on all involved.

Monday, February 9, 2015

Minsk is Dead

On September 5, 2014, after six months of fighting, the powers in Europe drew up the Minsk Agreement with Russia to end fighting in the Ukraine. The plan had 12 points primarily centered around stopping the fighting, with some ink devoted to a special status for Donetsk and Luhansk within Ukraine and some economic investment to spur the republics economies. Looking back on the Minsk Agreement now, well, it seems pretty hollow.

Depending on which casualty reports you want to believe, there have been between 5-15,000 people killed in the conflict and ten times that wounded or maimed. A majority of those are civilians. The majority of those civilians killed and wounded were at the hands of Ukraine army artillery - multiple rocket artillery (GRAD) to be exact. In fact the cities of Donetsk and Luhansk have suffered indiscriminate shelling for close to a year now. Before that it was Slavyansk, Kramatorsk, Artemivsk, Gorlovka and so on. It wasn't until fairly recently that the separatist forces (NAF) got a hold of GRAD systems in any significant numbers. Now they are pounding cities too around the Debaltsevo pocket east of Gorlovka.

In short, far too much blood has been spilled too subject the people of the Donetsk and Luhansk republics to the authority of Ukraine. That time has come and gone, and any agreement that even hints at that will be worth less than the paper it's written on.

The practical implications of allowing Ukraine to rule the two republics again speak for themselves. The Ukraine army has destroyed  vast areas of the republics with primarily artillery. Bridges have been blown, water and sewer plants destroyed, electrical grids damaged, hospitals and schools destroyed, and so on. The bill to replace this mass of infrastructure alone is in the tens of billions. Ukraine doesn't have the money to fix what it has ruined. As we speak it is weeks away from a possible default, but even if that doesn't happen, the Ukraine financial position is at best Greek-like. In fact, in the last year Ukraine's currency has lost about 65% of its value. There is no up side here. So how could Ukraine rule Donetsk and Luhansk again in any case? They would be left in abstract poverty and decline for decades at least.

Many nations are formed in blood - actually most. Donetsk and Luhansk are no different, albeit they remain pawns in a larger game of geo-politics - each side spurring on their choice in one way or another. How can the woman whose man has been killed in battle by the Ukraine army live under its flag? How can the man in the NAF maimed by war do the same? How about the civilians with now tortured minds from being under shelling far too long, or seeing far too much death and destruction, ever stand and sing the Ukraine national anthem. These are not matters of geo-politics. These are matters of humanity.

As the leaders of France, Germany, Ukraine and Russia gather in Minsk to ink the latest deal on Donetsk and Luhansk they need to realize the people of Donetsk and Luhansk cannot be forcefully or diplomatically reunified with Ukraine. If that is to happen in any way it must be by the will of the people of the two republics, and that can only happen by referendum - UN supervised referendum. Demarcations lines from this town or that town are also meaningless. They do nothing but "freeze" the conflict. The only real and meaningful lines that matter are the boundaries of the republics. Those should be respected, and those must be the only demarcation lines implemented.

The Ukraine government may not like it, but it gave up the right to deal with a free hand in Donetsk and Luhansk when it turned the guns of war on what was essentially a separatist revolt. Live by the sword, die by the sword. The water has been poisoned. The dye is cast. Minsk is dead. Minsk 2.0 must reflect reality and NOT the whims of fanciful politicians smitten with the idea of territorial integrity.

Saturday, February 7, 2015

End of Days for World Order

Our world today didn't happen in the last few months, or even years. It's the natural consequence of a financial system that in many ways can be understood as a "ponzi scheme". A ponzi scheme starts with a basic assumption that wealth can be built from nothing. The first into the scheme benefit the most, and as the scheme grows the returns diminish until finally there is not enough money going in to pay out those that are owed - and it collapses. That in a nut shell is the nature and state of our world wide financial system, and thus our civilization.

Every national currency represents a "right to consume". There are limited amounts of resources the earth can produce, so the limit to consuming them is represented by currencies. Since World War II national and international economics have been driven by debt - a promise to pay currency at some point in the future for resources consumed today. In effect the promise to pay, as opposed to actually paying,  has allowed nations to live far beyond what they can produce compared to what they consume. In other words, debt has fueled and allowed the ponzi scheme to continue. In other words, debt has become currency, and currency has become a tool to measure debt.

The greatest enabler of debt, and the supreme master of the ponzi scheme is without doubt the US stock market. As it goes, so goes the national banks in each country - and area banks like the European Central Bank. The killer if you will is that the stock market has become addicted to cheap debt from central banks. With that cheap debt the wheelers and dealers of the market place can leverage, buy, sell, and make currency. Without that cheap debt profits shrink and investors can't meet interest payments. Without that cheap debt the system collapses as company's earnings don't meet margins required to pay their debt obligations. In other words, there isn't enough revenue coming in to cover the interest costs of their debt, and they collapse.

This is where we are at today - on a world scale. The ponzi scheme is living out its last days. Central banks have lowered their prime borrowing rates to below 1%, and in many cases a half or quarter of that. Some call that "quantitative easing". "Easing" meaning the lessening of pressure to repay currency for debt. In other words, staving off the inevitable pay the piper day. The logic is that the cheaper the prime rate set by central banks, the cheaper the interest rates set by banks, which allows consumers and corporations to continue consuming at an unabated pace - and therefore allowing the world economy to do the same.

However, what happens when individuals, corporations, and countries become so leveraged with debt that they can no longer borrow to finance their consumption - no matter the interest rate? That is the proverbial "tipping point". The point of no return. Very recently the Bank of Canada, and even the European Central Bank cut back their prime lending rates - in Canada's case to .75%. What happens when it goes to zero and yet can no longer spur or maintain economic growth? It has to go to zero. There is no other way. At this stage of the game debt is so high that it would take individuals, corporations and countries decades of non-borrowing to reverse the need for cheap debt. If that were to happen for even a year the world economy, led by the stock market, would collapse into depression. Hence the end of the ponzi scheme.

We are very close to that day now. Any significant event will trigger panic in the stock market and international debt markets. A major war or a default could quite likely be the trigger point. Greece for example could be that trigger point. So could Ukraine. Both are European countries so to speak, and both are members in some way of the European Economic Community. Without a massive debt infusion within a month Ukraine will financially collapse. Its currency has already collapsed. Greece has already been bailed out, and forced into that position of non-borrowing that I mentioned above would be necessary to avoid a collapse. They're in it now, and they're looking for a way out. Will they accept a kinder, gentler bailout from Russia or China? It's quite possible. Will they leave the Euro, or be forced to leave the Euro? That's even more possible.

The thing with Greece is it represents the future for us all. At some point we are all going to reach the position Greece is in. If Greece defaults on its debt the message becomes debt is not a guarantee to control consumption. And, if it can't really control consumption, or responsibility for over consuming, then in reality it is meaningless as a control mechanism. That is where we reach the trigger point. If the guarantee to pay one's debt for currency used, and goods consumed, becomes meaningless then so does the world economic order. In reality, that is what Greece represents. The geo-strategic question remains - will Russia and/or China bail out the current world economic order by bailing out Greece, or will they let Greece implode to foster their own currencies as the bench mark?

Both China and Russia have minuscule national debts compared to almost every country in the world. They are positioned to pickup the pieces of the ponzi scheme from what can only be imagined as a desperate world. How will they change the nature of economic order? What discipline will they impose on consumption and debt to ensure a similar collapse does not happen again? All this is yet to play out, but it will. That you can take to the bank.