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)

Wednesday, June 9, 2021

Modern Israel, and Old Promises

 Israel has the right to exist as a nation. Let's just get that one off the table right away. Israel, or more accurately the descendants of Jacob, whom according to the Bible the Lord named "Israel", finally became a reality for the Jewish people in 1949 after a guerilla war for independence with the British Empire. Initially restricted to a tiny strip of land sandwiched between Lebanon, Syria, Jordan and its old friend/nemesis Egypt, Israel has slowly gained in territory after consecutive successful wars with their neighbors.

According to the Bible, the Lord promised Abraham (Abram at the time):

    " On the same day the Lord made a covenant with Abram, saying: To your descendants I have given this     land, from the river of Egypt to the great River Euphrates." (Book of Genesis)

In other words, this:

Now many people refer to this Israel as an evil "Zionist" conspiracy to consume much of the Easter Mediterranean. However, that's not the truth. It's not a conspiracy at all when it has been laid out in the Bible for Christians to follow. There are a few problems with the concept though. 

The very first problem that immediately comes to one's attention is the sheer vastness of the Biblical Israel. It would include areas of the Middle East that are currently populated by between 40-50 million people, and those people have been there for thousands of years in most cases. Prior to 1939 Jewish communities were thriving in Europe, although often persecuted to one degree or another. After World War Two, and the horror of the Holocaust, there were six million less Jewish people in the world which could have helped populate a "Biblical Israel". Today, modern Israel has a population of  8.7 million people, of which 21% are Arab and another 5% are "other". On the face of things, Hitler's massacre of the Jews of Europe tended to undermine the fulfilling of  the Lord's promise to Abraham. Perhaps that was part of the purpose, but who can truly understand a hatred that deep. 

Another problem, and one that haunts Israel through out the world is the Israeli government's treatment of the Palestinians, and to a lesser extent its neighbors. Again, returning to the Bible, the Lord tells Moses that before taking the Jewish people out of Egypt he must gather up all the gold and silver from amongst the Jewish people and turn it over to the Pharos in order to ease the sting of his loss - in a sense compensation. It didn't work as the Pharos chased them down shortly afterward, but Moses had done his part. So even though Moses had vanquished the Pharos, and the Exodus was happening as a matter of fact, an ethical attempt to remove the "sting" was still necessary.

Unfortunately, modern Israel has simply lost this lesson in humbleness. In fact, it can be easily argued that the government of Israel has attacked with arrogance and impunity whomever it deems as a "threat to its security". Of course it is not alone in crying wolf. "National security", "terrorism", etc are phrases that are bounced around now by many governments seeking to restrict freedoms and impose their will upon other nations. The problem for the Israeli government is that it has always claimed the high ground. It also claims to have the "most moral" army in the world. Despite the boasts, the Israeli army has been absolutely brutal in dealing with dissent from the Palestinians and others. While on the one hand it has become far more wise in its dealings with Iran insofar as it strikes critical components of their nuclear regime while avoiding an Iraq-like  conventional bombing of Iranian facilities,  it blows its own feet off by "knee capping" hundreds of Palestinians who are simply protesting, albeit angrily.

In its dealing with the protesting Palestinians and even Israeli Arabs, the Israeli government has lost all sight of  proportion, moderation and wisdom. It has committed multiple crimes against humanity during the Palestinian uprisings. It has in effect broken its covenant with the Lord:

            Thou shalt not kill;
            Thou shalt love thy neighbor;
            Thou shalt not covet thy neighbors house, 
            or anything that is your neighbors.

Now, inside Israel itself, the Orthodox Jewish people are in near full revolt of the non-Orthodox Jews. Issues such as compulsory military service or observance of the Sabbath, for example have sparked deep anger. Even the idea that Israel is a nation-state has provoked joint protests with Palestinians and Orthodox Jews walking side by side against conventional Israel. In other words, the Orthodox Jewish community appears to believe that modern Israel is breaking its covenant with the Lord as well.

I suppose in the end we are just simple people,  and it isn't our place to judge a covenant made thousands of years before us between the Lord and Abraham. We can only guess and observe at whether it has been broken and what ramifications may come from that - if any. That being said, whether you agree or disagree with the approach Israel takes, we must not bring ourselves to the point of heaping hatred against them. Israel, or the "descendants of  Jacob", have a place of prominence with the Lord. Whether you agree with that is irrelevant. If you don't believe me ask Nimrod...

Monday, May 11, 2020

The Coronation of Andrew Furey - Part 3 - Paddick, Risley and Nalcor

On March 3, 2010, Doctor Andrew Furey announced (officially) that he was running to take the leadership of the provincial Liberal Party, and by ricochet the premiership of the province. The video of his announcement can be found here . He makes two very telling statements in his address:

at 8:49 on the tape:

"This change will not be just generational - it will be transformational" ; and

at 14:59:

"Our thriving technology sector has shown the world that geography means nothing when it comes to bold, new ways of thinking in areas such as ARTIFICIAL INTELLIGENCE, ON-LINE SECURITY AND INNOVATION. Our brightest minds can be see as far as SILICONE VALLEY, the technology giants are taking notice."

I've capitalized the parts of his address that give a simple glimpse of the truth that Andrew Furey and his associates have in mind for the province, the country and the world. Before we start, I would like to draw your attention to Furey's promise of a new politics of transparency. You can listen to the whole spiel in his speech at the link above. The ink had literally not dried on the Liberal Party's postponement of the race when Furey deleted every leadership/Liberal tweet from his account. Almost insignificant if it didn't hint at a lack of transparency lying just over the horizon.

In Parts 1 and 2 of this series I outlined a series of business relationships between the people behind Furey - Paddick, Myles and Risley (to a lesser extent). It's time now to focus on that threesome, and their friendship with Furey. As mentioned before, Myles recruited a young and ambitious Paddick and mentored him. Myles and Paddick then partnered with Risley. All of which is detailed here . It all gets a little tangly after that. Suffice it to say that Risley acted as the banker through his Clear Water Fine Foods company, while Paddick acted as the brains and Myles as the facilitator. They became a very successful team.

However, and it's a big however, Paddick entered the realm of public life when he "volunteered" to become Chair of the Board of Nalcor Energy, the province's energy crown corporation, in November, 2016. It just so happens that Paddick and Risley have another business together. A big business in fact. An electricity based business to be precise. Yes, the current head of Nalcor Energy's Board, a crown corporation, is run by  a man who is, and always was, in a potential conflict of interest. You may be aware of a Salt Wire story last year on Paddick complaining he and the Board weren't being paid enough.  The story put it like this:

"Brendan Paddick volunteered and was appointed chair of the Nalcor Energy Board of directors in 2016. He says he took the position largely because he felt a sense of patriotic duty."
But is that true?

Paddick and Risley's venture into the electrical utility market started in 2014 according to their company's website, which you can find here . The website states:

"Mr. Paddick and Mr. Risley founded Cormorant and in 2014, purchased Power Tel and Power Traxx. 2 years later, the acquisition of Eptcon Limited and its fully owned subsidiary, One Line Engineering was finalized in 2016. With the addition of the two companies, our group is becoming one of the largest Ontario-based contractors in the power transmission and distribution industry, and the future synergies will allow us to become a significant player across entire Canada and North America"

(their English, not mine)

In reality, What is Cormorant Utility Services started out as 9099166 Canada Inc on November, 24, 2014. That corporation was amalgamated into another corporation on February 25, 2015 (one quarter later) named Power North Holdings Inc. On March 1, 2017, four months after Paddick "volunteered" to Chair Nalcor's board, Power North Holdings, and another Paddick/Risley company named Columbus Utility Services were amalgamated into what is now today Cormorant Utility Services Inc, Cormorant Atlantic Utility Services Inc. In addition to the four companies listed as controlled by Cormorant (above), it also has a controlling 50% interest in a Calgary-based electrical corporation named BowArk Energy Limited.

As of this time I cannot find any disclosure whatsoever of these interests by Paddick, Nalcor Energy, or the government. Their various press releases on appointments of Paddick can be found Here: Provincial Government here ; and Nalcor here . This failure to publicly disclose the energy/electricity holdings that Mr. Paddick does own creates a serious and palpable potential for conflict of interest. The question to be asked is why? Why don't the various bios and announcements include his experience as an owner in the electrical power/transmission industry? Would it not be common sense to show the man is just not a "cable guy" who got lucky, but also a man deeply experience in the power industry?

There are now some real questions here. Have any of Paddick's companies being doing business with Nalcor on Muskrat Falls or any other supply and services contracts. Given Paddick's business interests, is he steering Nalcor toward privatization? It is very suspicious that the President of Nalcor is a man who built and has holdings in a private energy corporation, and now the Chair of the Board has the same (albeit less). What are the Liberals planning to do with Nalcor and even the liquor corporation for that matter? After all, Wayne Myles, the Chairman of the Board of the Newfoundland Labrador Liquor Corporation also owns Terra Nova Foods Inc ( a large distributor in the province) and sits as Chairman of the Board of Distribution Group Inc (which he also owns).

That brings us back to Andrew Furey. For a man that claims to be bringing in a transformational change to the province, an administration based on "transparency" (can we not just say "the truth"), the facts say otherwise. Furey's biggest immediate, and most public backer (politically as well as to his charities) Paddick is most definitely not being transparent with the public. He is most definitely in a potential conflict of interest, which as the chair of the province's largest crown corporation is a big deal. Have you heard Andrew Furey talk about that? No you haven't. That may not be surprising from a man so concerned about health he starts mercy missions to Haiti, but also has owned a bar with two other gents in Harbour Main for decades - drinking not being the most healthy past time...

The next part to this series will involve Furey's involvement with artificial intelligence. Those Silicone Valley folks he talks up in his campaign address, Paddick, Myles, Risley and a few others will all feature in this. Their intricate web of companies have been established for years now, operating quietly on the sides. Now that Furey is attempting to become Premier of this province people must know exactly who they are selecting to lead them. This series is intended to do just that. They won't get in through the side door without scrutiny. The public deserves no less.

Sunday, March 29, 2020

Economic Implosion for Newfoundland and Labrador

It's not news to anyone that Newfoundland and Labrador is in a complete financial collapse. 2003 rang in the era of reaping rewards from the oil industry for the province, but it wasn't long before a new industry, fracking, was revolutionizing the oil industry in the United States - a revolution that is still reverberating through international oil markets and alliances. In any case, the province had ten years to reap what it could before the fracking revolution really kicked off in 2013. The graph below helps show that era:

As you can see, from 1998 until 2007 the province's production was greater than the value created by those barrels. In 2008 production and value finally met, then in 2009-2010 production was again greater than value, but from 2011 until 2014 the province really reaped a massive windfall from its production. Oil's value vs production petered out after 2014 and remains that way to this day. The nuts and bolts of it is that out of 22 years of oil production, the province had only 5 years where we made money on oil by its pure value over simply producing as many barrels as possible.

All that seems a little academic now though. Upwards of $3 billion of that money the government managed to save in the bank was spent as its share of the Muskrat Falls project. The remainder was blown and no provincial rainy day fund was created. In fact, people like Danny Williams and Kathy Dunderdale often said that Muskrat Falls was that rainy day fund, and that just seems outright scary at this point. Nonetheless, given that oil's best days have come and gone, where are we left today?

Some facts:            18%     of the budget is funded by oil revenue

                               49%     of the budget is funded by taxpayers income tax, sales tax,
                                           booze and smokes revenue

                               4.3%    of the budget is funded by corporate tax

                               18%     of the budget is funded by the federal government

That's the nuts and bolts of it. The average working person in the province and oil (a distant second) pay most of the place's bills.  A real eye opener should be the measly 4.3% corporations in the province contribute to the well being of the bottom line. Another, perhaps more ominous number is 20%. That's the amount that the province must pay on every dollar it makes to service its debt annually.

All these numbers would be enough on their own to paint a foreboding financial picture, but it gets worse - much worse. The key for the province is that 18% of oil revenue, because that revenue actually represents new wealth rather than simply recycled money. It allows the government to pay for the roughly 30% of the province's work force that it employs. Newfoundland and Labrador's 2019 budget pegged oil at $65 a barrel, but then revised it to $63. Either way, the province pretty much hit the market price and its budgeted revenue was for the most part in tact.

However, and its a huge however, once again international strategic events have blind sided the government's best laid plans. The advent of the US fracking revolution created a massive strategic shift in the control of international oil markets - specifically market share. Initially the US essentially satisfied its own oil needs, but as its fracking industry grew the US became an exporter of oil for the first time in history. It was no longer dependent on the Middle East for oil. Now, it can be easily argued, it has used its military and covert forces to knock other players out of the market to make room for its own product. Major oil producing countries like Iran, Venezuela, Libya, Syria, Sudan and even Iraq have been partially or completely removed from the oil market place. Even Russia, until fracking the largest oil producer in the world, has been targeted by US sanctions and attempts to wrestle its market share from Europe.

On March 6, 2020, Russia and Saudi Arabia decided to start an oil war. The story goes that Saudi wanted Russia to sign off on a three year production agreement that would limit each country's oil production - even further than it had already been cut. Russia backed away from that so Saudi opened the valve and promised to flood the markets, bringing Russia to its knees in the process. Russia, especially Putin the judo master, likely saw an opportunity to starve US oil companies by killing their stock values and driving them out of the markets. While all this plays out, innocent bystanders like Canada have seen their own domestic oil industries crippled in the cross fire, and by ricochet, their budgets. While this province escaped 2019 with a break even oil projection of $63 a barrel, it won't be as lucky in 2020. The graph below gives a sense of oil prices for the first quarter of 2020:

Newfoundland and Labrador's stated budget price for oil this year is $65 a barrel (US). As you can see on the graph above, oil was already falling from that point by mid January. Much of the decrease can be attributed to the corona virus outbreak in China, which resulted in oil demand from the world's largest oil importer drying up. The price continued to get worse as things got worse in China, then globally. Then, on March 6, the bottom fell right out as Russia and the Saudis threw in the towel. The market has been trying to find its bottom ever since.

The cost for the province is potentially catastrophic. The average price of oil for the first three months of this year was $51.73 per barrel (US). If oil recovers to a consistent level around $50.00 a barrel the hit to the treasury will be about $300 million. Unfortunately, as bad as that would be, there is no reason to expect either Saudi or Russia will pull back in this market share battle. If oil settles at $30.00 a barrel for the rest of fiscal 2020, the treasury will lose $600 million dollars. For perspective, the province budgeted oil revenue of  $1.09 billion, in other words the government will receive a mere $400 million or about 40% of what it had budgeted for. If, as many analysts have suggested, the price of oil drops to $25 a barrel and remains there, the hit to Newfoundland and Labrador's budget will be a striking $670 million leaving the province with a mere $300 million to fund 18% of its budget for fiscal 2020. It must be remembered that Russian President Putin has stated publicly Russia can withstand a $25 per barrel price for at least 6 years, and lower if necessary.

Now lets turn the page on oil for a moment, and focus on the Coronavirus pandemic's effect on the economy, and therefore budget. The most conservative projections in Canada place the country in a three month shut down. Many others are putting it at four to five months - likely dependent on how bad the pandemic ravages the US. Those will impact the budget:

Scenario One:

The Newfoundland economy shuts down for 3 months, and takes 2 months to regain normalcy. The government will lose in every category of its budgeted revenue. Everything from mining royalties to personal income taxes, and all areas in between. The potential direct cost is in the vicinity of $809 million (cdn), or a 13% loss in budgeted revenue for 2020. Once combine with a $30 per barrel price for oil, the combined loss to the budget will be about 1.5 billion (CDN). Some of that will be slightly offset by the fact Newfoundland and Labrador receives its oil funds based on US dollars - but not a lot. Given the province's budget for 2020 had already pegged a deficit of $1.1 billion, a new deficit projection of $2.6 billion would not be out of the question.

Scenario Two:

The Newfoundland economy shuts down for 4 months, and takes 2 months to regain normalcy. The budgetary losses will be in the vicinity of $869 million, or a 14% budget loss. The combined loss, oil revenue included, is about $1.6 billion, or a total budgetary deficit of  $2.7 billion.

And so it goes.

None of these figures address business losses, or the compensation they may receive for those losses, or what form that compensation will take (ie: loan vs grant), or even whether or not the compensation will be taxable. It does not address the economic costs of closing the tourist industry, or potentially the fishing/processing industry. They don't reflect the costs in interest and financing of shutting down the completion of the Muskrat Falls project. It goes on and on. Bottom line, for a place that was already expecting a terrible financial year, with a preexisting $1.1 billion deficit projection, an oil war and pandemic are especially devastating. Newfoundland and Labrador risks a complete financial collapse from these turbulent times and, perhaps even more deadly for the province, a new 1980's ish exodus of people escaping a doomed ship - so to speak.

It all sounds very negative, but people need to know the truth of what they and their families are facing. Premier Ball said Newfoundland and Labrador is facing a financial crisis once the pandemic crisis is over. He wasn't kidding folks. Reality bites and this will be one hell of a bite. God guard thee Newfoundland and Labrador.