Sorting Through an Economic Mess

I think the history books will remember the 2000s as the being similar to the 1970s. That era was well known in North America for its malaise with the OPEC embargo, the unpopular war in Vietnam, economic recession, Watergate, etc. Right now we're in a bit of a mess that's eerily familiar. The United States is fresh off its sub-prime lending crisis which had been threatening recession for a while. Combined with the high Canadian dollar this caused, we knew out export industries would have some problems. However, federal and provincial governments all assumed Canada could weather the storm if a recession in the US came to be. April truly is the cruelest month given that what's happened in the past 30 days has shattered this assumption. Fuel costs soared throughout April. In Toronto alone, gas prices for regular unleaded shot up 15%. Diesel has seen even greater increases. Canadians on average are paying $1.26 on average for fuel compared to $1.15 a month ago. This means shipping costs are rising dramatically. The move towards ethanol, fuelled by environmentalism and agri-politics has led to massive shortages of staple grains. This has triggered a global food crisis which is even hitting North Americans hard. Unfortunately, it seems that recession now is inevitable and Canada will not be able to weather this storm.

There's really a lot I want to talk about here. We'll start with GM's job cuts due to the ailing auto industry. 900 jobs are being axed in Oshawa, mostly due to high gas prices reducing demands for trucks. Giving the auto industry government handouts is a bad idea in my opinion since it only encourages poor business decisions. GM and the CAW should have seen this coming a mile away but did nothing to combat it. Canada is the most expensive country in the world to produce vehicles. However, if the auto industry does go under, reports from TD indicate that Ontario, once the economic engine of Canada, might become a "have not" province in two years time, comparable to the likes of Newfoundland. This would mean that Ontario would begin receiving billions of dollars in equalization payments. This has been a touchy issue in the past since the big provinces always felt they were getting the short end of the stick on equalization. The National Post also pointed out that this system was never meant to have vast sums of money going to Canada's most populous provinces. This could spell disaster when it comes time to draft federal budgets. Even if the smaller provinces loose their have-not status, it is unlikely they will be able to afford such payments to the likes of Ontario and Quebec, causing political turmoil.

Jim Flaherty was correct in lambasting Ontario recently for not cutting business taxes to encourage investment in the provice. I have long said Dalton McGuinty was an ineffective premier. When he was first elected in 2003, Ontario's economy was going strong and the future seemed bright enough. Even in 2007 when he was reelected, there didn't seem like there would be a sudden economic downturn on the horizon. With three and a half years left in his term, McGuinty is going to have to make some tough decisions. So far, all he has announced is that there will be no cuts to government services, translating to mean no budget cuts. Keynsian economics, on which modern liberalism is based, does say government spending should increase to stimulate the economy. However, there doesn't seem to be any plans to do that. Bail out packages as I have said do not work as they encourage poor decisions. McGuinty has given no clear indication of plans to help the economy other than that. The fact is that Ontario is no longer competitive and it's not the fault of NAFTA or Asian trade but rather stupid mistakes made by our own leaders. You can't simply shut your boarders anymore and hope for the best since no country is self sufficient. You also can't close your eyes and plug your ears in times of crisis and hope the problem simply goes away. Inaction usually breeds the opposite of the desired result.

That's not to say that the federal government has no responsibility in the matter. Like McGuinty, the federal Conservatives seem to have no plans to do anything to curb rampant inflation due to high fuel costs. Kim Campbell rightly noted in an interview with the National Post that Harper has become far too controlling. He's trying to do everything himself rather than relying on the tallents of his MPs. This has led to an unclear agenda as the Conservatives are begining to loose steam. As for the Liberals, Stephane Dion seems to think a carbon tax on gasoline would lower fuel prices, as he noted on an interview with CTV. That logic has holes big enough to drive the Queen Mary 2 through. I can't see how charging more for something would make it cheaper given fuel is an economically inelastic product. That means that as price goes up, demand doesn't change much. This is because fuel is an essential commodity. The NDP I have not heard much from. Jack Layton has been unusually quiet lately at a time where they should be making a fuss. I think the NDP on the federal level has become too much of a bleeding heart party and has forgotten its labour roots. The primary issue is that the Green party has been stealing votes from them, so they now focus on green issues. Unfortunately, green doesn't put food on the table or money in the bank for the average Joe. This mess must be a wet dream for these radical environmentalists though, who have long envisioned a "cooler but poorer" world as being the solution to anthropogenic global warming.
The Liberals are smart though by not pulling the plug on the Conservatives. If an election were to be called in the near future, it would truly end up as a battle royal between the three national parties. None of them have enough support for a majority and at this point, it could go either way. I'm leaning towards another Conservative victory at this point, but it would be by an even tighter margin than in 2006. The time for bickering in the House of Commons is over now. Both the Liberals and Conservatives need to start working together constructively if Canada wants to try and escape the worst of the inevitable recession on the horizon. I'm not an economist so I really can't provide specific suggestions. Right now, the best things to do would be to ban the use of ethanol for fuel as well as cut gas taxes in half at the vary least. This would help ease the pain at the pumps for consumers and businesses.

Clearly something needs to be done. If fuel goes up, that eats into profits of businesses that rely on it. That means wages go down and prices go up. I know for a fact that many people are going to be in serious trouble. Just look at all the people who live off their credit cards and only pay the minimum balance per month. Though I'm usually in favour of government staying out of business, it just can't this time around. Inaction will only breed the worst recession in decades.

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Global Warming Hysteria: Ethanol's Human Cost

Global warming is killing people, but not in the way people like Al Gore and David Suzuki want you to believe. A couple years ago, British documentary the Great Global Warming Swindle noted that environmentalism was an anti-human movement, citing pressure being placed on Africa to adopt green yet inefficient and prohibitively expensive forms of energy generation. Most of the debunkers saw that the mass hysteria of global warming was going to cause some sort of human crisis. However, many of us were surprised by how quickly it happened. 

Not too long ago, biofuel was supposed to be the great saviour since it was said to be cleaner than gasoline and also had the side benefit of cutting our dependency on foreign oil. Originally, biofuel was mostly biodiesel, which is made from old cooking grease. More recent efforts have pushed ethanol as an alternative. Ethanol is an alcohol made from distilling grain such as corn, wheat, rice, etc. It's essentially what is in booze. Rather than being used to make your favorite whisky or sake, corn and rice instead are being made into a pure ethanol solution for car fuel. This is what gives us fuels such as E10 (10% ethanol, 90% gasoline) and E85 (85% ethanol) which you can use to fuel your car. E10 fuel is required by law in Ontario. Of course, there's one obvious problem with this. 

In Peru and Colombia, there is a major problem with cocaine. Everybody knows that. Lets take Peru for an example since coca (the plant which cocaine is made from) can be legally grown. There, unprocessed coca leaves are chewed for an energy boost. It has the same effect as drinking Red Bull and is not nearly as potent or addictive as processed cocaine. So why am I talking about coke? Well, coca is a very hardy plant and grows just about anywhere with minimal human involvement. Poor farmers grow it illegally where it is sold to drug cartels, processed into cocaine, and shipped to North America and Europe for consumption. While farmers don't get even a fraction of the final street price, they do make more money than they would by growing food crops. Therefore, illegal coca plantations are a convenient cash crop for poor farmers. The same also bodes true for heroine poppy growing in Afghanistan. 

Growing ethanol grain is similar. It nets the farmer more money. The difference is that due to global warming hysteria, environmentalists have pushed governments to encourage farmers to grow ethanol grain. As if they even needed encouragement since fuel sells for more than than flour. Unfortunately, this saviour of the environment that will magically cut us from oil dependence has caused one of the greatest food crises in sixty years. 

In Asia, there is a major rice shortage. People are rioting in the streets trying to grab any scrap of grain they can get their hands on. For many people, it's forms the bulk of their diet. Similar situations have been seen in Latin America and Africa. Even us here in North America are feeling the pinch as prices at the grocery store rise. CTV described it as a perfect storm. A bad growing season in poor parts of the world has driven prices way up. Also noted was the increasing number of farmers converting their operations to grow grain for ethanol instead of food. Rice and corn are two such grains, which are major staples in the third world. Rather than going into a hungry mouth, that grain is going strait into your gas tank. It's no wonder the third world is so disgusted with the West. It is our fault for putting human lives at risk to solve a non-existent crisis. 

So what do we do to solve this. I think its time to stop beating around the bush. There is absolutely no proof that using ethanol for fuel lowers carbon dioxide emissions. As a fuel, it is also less efficient than gasoline. Laws requiring E10 fuel need to be revoked or at least put on the shelf until this food crisis is over. It would be a crime against humanity not to do so. Mr McGuinty, I'm speaking to you. 

Next, we need to address the problem of how we produce food and fuel. Free trade is needed to keep third world food moving into the West. This will encourage industrialized agriculture and overproduction in those countries. Countries in Africa have been wanting free trade for agriculture with Europe for years. Subsidies to Western farmers have become a road block since our food is actually cheaper and floods third world markets, shutting out their own farmers. International investment and genetically modified foods (drought and disease resistant) could be used to help farmers in less fertile regions to achieve this goal. We have the technology yet we don't share it, especially the boogie man of genetically modified foods. We fear them yet they could make the difference between famine and a bumper crop in many regions. We should encourage Western farmers to produce ethanol since they've long complained about how low their profit margins are. Making ethanol would generate them more money. It's not so much that we stop producing ethanol for fuel but we need to realign how the world does agriculture in order to keep food supplies in balance. Nations need to work together to accomplish this. We can't simply shut our borders on these issues. The United Nations needs to stop worrying about global warming and do something to solve this real crisis. Come to think of it, there is absolutely no reason why we should be using ethanol to begin with. Oil and natural gas are still abundant and hydrogen vehicles are on the horizon. Feeding humans should be top priority and feeding cars should always be secondary. 

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Green Hysteria = Tax Revenue Gold

I opened up the paper this morning and was met by yet another story on global warming. This one disgusted me more than most since the fears of many GW debunkers are coming true. BC has become the first government in North America to institute the much dreaded carbon tax. Who will pay this tax? Not businesses but you, the ordinary citizen. Namely motorists and those who heat their houses with hydrocarbon fuels such as oil and natural gas. In other words, most BC residents will be footing this bill. The tax will be set at $10 a tonne of carbon dioxide, increasing the price of gas another 2.4 cents per liter. As you probably know, BC already has some of the highest gas prices in the country. They play to increase the tax to $30 over the next five years. They gave an example of a person driving a pickup truck $40,000 a year. This is a typical vehicle a construction worker or trades-person would drive. The tax alone would add another $500 to their fuel bill. I find that utterly outrageous. What makes this more upsetting is other provinces, particularly with less cool headed liberal governments will likely follow suit. Quebec is already talking about instituting a tax.

BC Finance Minister Carole Taylor said "We promised you green and today we deliver green." Noting that "This is an important turning point for B.C., and we think for Canada because we are out in front on this," she said, suggesting the new tax could raise up a new "social movement." So basically, this social movement means that already overtaxed Canadians will have to stretch their budgets even further in order to pay for a problem that does not exist? This is just another blatant cash grab by left wing governments looking for any excuse in the book to tax their citizens further. What makes this particularly outrageous is legions of people, brainwashed by the lies of the global warming people, will buy into it and gladly pay. This needs to stop NOW. I personally refuse to pay any carbon tax, regardless of the consequences, because I feel that the government should not be using fraud to extort even more money for citizens. This is wrong and yet nobody can see it. Global warming is the biggest money making scam since the Papal indulgences of the 16th century. Scamming lower class people to pay for lavish expenditures. At least one man was smart enough to stand up and say that was wrong. Where is the Martin Luther of global warming?

Source: National Post

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Lakeview Demolition Symbol of McGuinty Failure

Today, demolitions are planned for the old Lakeview coal fired plant in Mississauga, ON. In many ways, Lakeview is a symbol of the incompetence of McGuinty's Liberals as well as the energy crisis in this province.

Back in 2003, McGuinty promised that all coal fired plants in Ontario would be shut down by 2007. Well, it's 2007 now and they're all open save one. However, just taking that one power plant off the grid has created an energy crisis. Every hot day in the summer, the electricity operators are literally praying for rain. Further feeding the crisis and displaying the incompetence of local and provincial governments is the out of control development. Each year, thousands of new houses and condos are being put up where we barely have enough electricity for the ones that already exist. Therefore, the province has to rely on fear tactics (threatening rotating blackouts) and forced conservation (smart meters) because there simply is not enough to go around. We live in a digital age in which we rely on electricity. Our economy relies on it yet governments have no interest in improving the system, just charging more and telling us to use less.

Once again, the biggest problem is the fear of investment in infrastructure. Windmills and solar panels simply cannot provide the electricity we need. They are expensive and inefficient. We need nuclear plants. We also cannot be shutting down coal fired plants either for the same of reducing smog and "global warming".

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