WTF?

Day 610

Turns out Ericsson also has to be bribed to take some of Canada's most valuable, taxpayer-funded R&D assets off Nortel's hands. Just as failed bidder Nokia Siemens had demanded, anticipating a $300-million handout from the Export Development Corp. in exchange for guaranteeing about 2,400 Canadian jobs.

 

I'll repeat that.

Technology created with Canadian taxpayer handouts, which holds the key to the next generation of global wireless networks, is to be sold at a bargain-basement price by Nortel to a foreign company. Not content with the fire-sale price for Nortel's most valuable assets, the lucky foreign buyer expects still more largesse from Canadian taxpayers. 

Scenario: After emerging from the Tower of London one night with the crown jewels in a sack, I encounter Queen Elizabeth II. She pays me 300 million quid for my trouble. 

Well, here's a bitter pill for the free-market purists to swallow. One way or another, Ottawa is going to intervene in this deal. Either it will block the deal, a craven intervention in the workings of the capitalist system. Or it will intervene to lavish hundreds of millions of Canadian taxpayers' dollars on the successful foreign bidder, an outrageous case of corporate welfare.

And BTW, the job creation and retention "commitments" attached to these taxpayer subsidies to foreign buyers aren't worth the paper they're written on. Ottawa is actually suing U.S. Steel for job losses at Stelco. And there's evidence of similar reneging on jobs by Xstrata, new Swiss owner of Falconbridge-Noranda, and by Vale, new Brazilian owner of Inco. 

Ottawa will be pursuing complicance with these contracts in Ontario courts that have dubious jurisdiction over parent companies domiciled in the U.S., Switzerland and Brazil. So good luck with that. 

If Research in Motion, would-be purchaser of the Nortel technology, were to prevail, the Ontario-based RIM would be far easier to hold to such contractual obligations.   

The optics of abuse of Canadian taxpayers is becoming so evident that finally the Tories, Grits and Dippers are fully engaged in the dispute. Tony Clement, the federal industry minister, now says he will vet the Nortel-Ericsson deal to ensure it meets the Investment Canada Act's principal criterion of net benefit to Canada. Clement added there is a national security test the deal will have to pass - a notion ridiculed when RIM first raised it last week.

Michael Ignatieff wrote Harper yesterday demanding that "you undertake this review to ensure that the intellectual property developed with the investment of taxpayers' dollars continues to benefit us all."

Yesterday, the Nortel giveaway became an interprovincial issue, as Dwight Duncan (pictured above), the Ontario finance minister, went further than the federal opposition parties by demanding Ottawa block the Ericsson-Nortel deal. "We just think that every step should be taken to try to keep these patents in Canadian hands so that industry can continue to develop here in Canada," Duncan said.

"These have been developed over time, with enormous federal and provincial tax credits available, and we think it is in the interest of Canada, particularly Ontario in this case, to keep those [Nortel] patents here."

Ontario, the manufacturing centre of the country, has endured the loss of hundreds of thousands of traditional manufacturing jobs starting even before the current recession began. There is an urgency to Premier Dalton McGuinty's quest to transform Ontario into a knowledge-based economy - precisely the sort of economy based on the success of firms like RIM.

That RIM would be undermined in the export markets for its world-class smartphones, principally the U.S., by foreign-owned Nortel technology funded by Ontarians and other Canadians is for McGuinty a ludicrous proposition. Especially when RIM says it's willing to pay as much for these "game-changing" patents as Ericsson or Nokia Siemens.

In the blink of an eye, Harper let our mining, steel and much of our forestry sectors slip into foreign hands, With $10 billion of taxpayer funds, he bailed out two U.S. automakers in which we also have no managerial say.

Harper can let this episode drag out for months, suffering no end of abuse for "selling out" our industrial and technological sovereignty, because that's how long it will take for any Nortel deal to close. Or he can end his misery now by blocking any deal in which RIM isn't a bidder. He could do it this week.

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.

Ted Kennedy, patron saint of U.S. universal healthcare.

Day 610

Time was, Edward M. Kennedy often visited Canada to study our healthcare system. But, as the senior U.S. senator from Massachusetts writes in the current Newsweek cover story about his unceasing fight for healthcare reform, "I eventually came to believe that we'd have to give up on the ideal of a government-run, single-payer system if we wanted to get universal care. Some of my allies called me a sellout because I was willing to compromise."

The story of U.S. national health insurance begins with Teddy Roosevelt, who campaigned on it and lost in 1912. Harry Truman proposed it three decades later. For his trouble, Truman was widely denounced as a "follower of the Moscow line" intent on imposing "socialized medicine" on Americans.

Since then, the story of healthcare reform has been, to a large extent, the story of Ted Kennedy. He has been fighting for universal, affordable health care for 37 years.

Never losing sight of that larger goal, Kennedy in the 1960s established today's network of walk-in community health centres across the country. After the 1994 demise of "HillaryCare," Kennedy and fellow senator Nancy Kassebaum (R-Kan.) spearheaded legislation that has made health insurance more portable for people who change or lose jobs. And with conservative senator Orrin Hatch (R-Utah), Kennedy enacted CHIP, the Children's Health Insurance Program, which covers more than 7 million children of low-income families. So entrenched did CHIP quickly become that during the Dubya years, the WH and a GOP-controlled Congress did not debate the merits of CHIP, only how much additional funding to give it.

Diagnosed with a malignant brain tumour, Kennedy is conspicuously absent from the Senate chamber when his unsurpassed legislative skill and moral authority on healthcare is most needed. His friend  Barack Obama, whom Kennedy endorsed for the Dem nomination over Hillary Clinton, and later presented with a Portuguese water dog named Bo, is struggling to rally a divided Democratic Party around a consensus bill that would provide insurance for the 47 million Americans who lack it. Provide proper care for those with inadequate insurance. And force cost-reductions on a healthcare system that accounts for a frightening 16 per cent of the U.S. economy. (The figure for Canada is about 11 per cent.)

Not able to be in Washington, Kennedy marshalls the forces of progress by telephone. He still directs one of the Senate's most formidable staffs. And this week he tells the story of his and his family's health emergencies in a poignant essay titled "The Cause of My Life." 

At the Vatican recently, Obama gave His Holiness a note from the senior senator from Massachusetts. It's well past time to look beyond the Kennedy of Chappaquiddick. The passionate but oddly ineffectual presidential candidate of 1980, who so weakened incumbent Jimmy Carter as to help cause Carter's narrow loss to Ronald Reagan. And the unapologetic liberal Kennedy who has been the right's easiest target of ridicule. 

If you believe in miracles, as I sometimes allow myself to do, Teddy Kennedy will be at Obama's side later this year as the president signs into law the national health insurance bill Teddy Roosevelt campaigned for 97 years ago. Just as Lyndon Johnson in 1965 invited Harry Truman to witness LBJ's signing of Medicare into law. (In the U.S., Medicare is the government program for seniors.) 

And then Kennedy's honourable cause will have been served. "I believe the bill will pass," he writes in Newsweek, "and we will end the disgrace of America as the only major industrialized nation in the world that doesn't guarantee health care for all of its people." 

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.

Here's your ego, what's your hurry?

Day 610

You've noticed how well things have been going for Obama lately.

His economic stimulus package isn't working. A resurgent financial-services lobby has persuaded Congress to water down the president's (already mild) Wall Street reforms. Divided Dems have stalled progress on universal healthcare. The spendthrift Obama is driving the republic into bankruptcy. Also, turns out Obama was born outside the U.S., in - pick your wingnut - Jakarta, Nairobi, Burlington, Ont. (where he does have relatives) - and thus is disqualified from the presidency.   

I blame all this on Larry Summers, the WH chief economic advisor. Not because it's fair. But because, as GS readers know, I can't stand the belligerent blowhard and want him replaced. 

So thanks, Felix Salmon, edgy Reuters blogger, for helping grease the skids of Summers' exit. By highlighting how, as president of Harvard (2001-06), Larry's dabbling in interest-rate swaps has since cost the school a staggering $1 billion (U.S.) in losses. 

Here's Salmon:

"Of course, it's not uncommon to see the term 'rank hubris' applied in the general vicinity of Larry Summers. But let's be clear, here: what Summers [at Harvard] did could in no way be considered a hedge, under any common definition of the term. He was indulging in interest-rate speculation, just like Robert Citron. I think it's fair to say that no previous Harvard president would ever have considered himself qualified to do such a thing, but Summers never let such considerations stop him. And his alma mater is now paying the 10-digit price."

The aptly named Citron, you recall, so mismanaged the investments of wealthy Orange County, Calif. that it slipped into bankruptcy. 

I'm not entirely unreasonable. The "Gatesgate scandal," the verbal altercation between Obama friend and esteemed Harvard professor Henry Louis Gates Jr. and one of Cambridge, Mass.'s finest, and Obama's rare shoot-from-the-hip commentary thereon, Obama has to wear that.

Everything else I blame on Larry. 

And to think Summers was forced out of Harvard for sexism. How unfortunate for us Summers detractors that the looming billion-dollar loss wasn't revealed earlier, or Larry would have been passed over for his current post. He doesn't get gender politics or the market in interest-rate swaps, sheesh. And this bit of cyberspace could have been devoted instead to...more pictures of microcars!

Related

Reuters: But wait, there's more! Salmon updates Summers's Harvard saga.

* Economists For Firing Larry Summers (website).

 

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.

God bless the Queen...

Day 610

...for asking a pointed question on everyone's minds that the powers that be have been too embarrassed or ignorant to answer. And bless the 33 notables in British society who on Sunday submitted a remarkably candid response to her question.

 

The Queen in a November visit to the London School of Economics. LSE professor Luis Garicano used a chart to explain the cause of the global credit meltdown. Her Majesty wasn't satisfied, asking "Why did nobody notice it?" A recent letter to HM by 33 experts does a not-bad job of answering a question we all have.

On a November visit to the London School of Economics, Her Majesty asked, if the shifts in economic forces culminating in the global recession and financial credit were so momentus, "Why did nobody notice it?"

Eight months later, Elizabeth II and the rest of us have our answer. It was carefully pondered over by a thoughtful and eclectic group of 33 esteemed experts drawn from academe, investment banking, government and the financial media, mostly British but some American.

"It is difficult to recall a greater example of wishful thinking combined with hubris," the authors inform the Queen. A "psychology of denial" gripped "financial wizards" who failed to "foresee the timing, extent and severity" of the worst economic crisis since the Depression, and the first truly global one.

What the wizards were in denial about - shades of the alternate reality at work in the Bush White House over Iraq at the same time - was that their innovative schemes to spread risk more globally did not diminish it, as they expected, but merely widened the contagion.

They were in denial, or delusional, that property values would climb forever. That even the least credit-worthy borrowers would make good on their obligations. And that the enormous short-term profits they were reaping was proof in itself that their derivatives, collateralized debt obligations, default swaps and other clever inventions would not someday blow up in their faces, with massive collateral damage to the rest of us.

The crisis, say the authors, was "principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole." 

It's worth reading this succinct document for its clarity and honesty alone. I would quibble at the authors' suggestion it was an isolated event. Citigroup alone has century-long tradition of playing with fire. And some of the leading actors were not that bright, notably the London-based fellow who ran AIG's credit-default shop and brought down what was then the world's largest insurer. 

As to those who are genuinely bright, they took leave of prudence and the golden rule, supplanting the common good with self interest. And their anti-social behaviour would still be on evidence today had the roof not finally caved in on them. At which point the finger-pointing began.

It was President Bill Clinton's fault for relaxing regulations. Yes, but that was at Wall Street's incessant request and on Washington's good-faith expectations that the "wizards" would deliver the market efficiencies they promised. Instead, they went off and recklessly enriched themselves.

It was the regulators' fault for insufficient supervision. But under both Clinton and Dubya, regulators like the SEC were almost criminally under-staffed and starved of othe resources. And regulators, as Wall Street and The City well know, are always far behind the "innovative" new tricks the regulated are up to.

And it was the fault of "a few bad apples," that tiresome, inevitable argument. 

Except that almost every major lender in North America, Europe and Asia took at least one sip from the poisoned chalice. And the industry's "best and brightest" (and certainly biggest) - including Citi, AIG, Bank of America, Merrill Lynch, Wells Fargo, Royal Bank of Scotland, Lloyds TSB, UBS, Unicredit, Bear Stearns, Mizuho, Lehman Brothers, Freddie Mac, Fannie Mae, CIBC, Countrywide Financial, Northern Rock , most Irish banks and all three Icelandic banks and countless venerable others of sterling reputation took deep draughts of the toxic assets.

This massive failure of capitalism is a variant on Gresham's Law about bad money driving out good.

In the lead-up to our current crisis, irresponsible actors drove out those attempting to invoke common sense. Charles Prince, ousted CEO of Citi, famously confessed as this crisis reached its peak that he was obliged to join the other inebriants for no better reason than others were piling up mountains of lucre and he would look foolish not following their example. The culmination of which was the dethroning of Prince as a master of the universe, and Citi's current status as a ward of Uncle Sam. 

______________  

Only a Pollyana would believe the "wizards" and those charged with monitoring their conduct will learn any kind of lasting lesson from the miseries of this episode, which has so far cost 6.5 million Americans their jobs and several million people in the U.S. and Britain their homes through foreclosure.

For as long as there has been the possibility of effortless riches, there have been people challenged in both morality and common sense who have sought wealth blindly. This has resulting in an epic business disaster every decade. Mind you, the dot-com boom only seven years before the latest, and still greater calamity, makes one wonder about a return to late 19th-century America when "panics" were spaced only a year or two apart.

It's deeply troubling that even now, after the complete and utter discrediting of the "wizards," lobbyists for America's financial industry have succeeded in pushing back against Obama's proposed regulatory reforms. Which, in truth, were far milder than is merited.  

An FT editorial on the response elicited by the Queen made a predictable point:

"Those who saw danger had no easier task: even reminding people of gravity's existence is a hard sell when everything is going up. If predictions of physics-like precision are in demand, they will be supplied. Collective delusion must therefore be blamed as much on the consumers of economics - companies, investors, the media - as its producers."

Uh, no. Victims of economic crime do not share equally in the blame with its perpetrators. (Or "producers," as the FT quaintly has it). The principal odium attaches to the perpetrators. Let's be absolutely clear about that.

The miscreants who advance theories of instant riches with which they gull the gullible are credentialed, have prestigious titles, and they dress well. They have nice cars, speak glibly, brook no disagreement with their elegant theories, and in sum, have inordinate power over the victims of predatation. The low-income couple talked into signing a subprime mortgage, for instance.

And over the regulator who doesn't want to make trouble and risk losing his job in the Bush Administration. And over lawmakers like Chris Dodd (D-Conn.), whose constituents and campaign donors are disproportionately the big swinging dicks of Wall Street. In the Democratic tri-state region, Wall Street lavishes its campaign contributions on Dems since New York, New Jersey and Connecticut are a longtime Dem stronghold. And so the Dems, as much or more than Republicans, are to be found deep in the pockets of the nation's most powerful financiers. Yes, William Jennings Bryan was a populist Democrat, but those were the days when you could buy the voters' favour with a pint of apple cider and a stemwinder delivered from the back of a train or under a tree.

We shall come this way again. The centre once again will not hold. And we will wonder, again, how we let ourselves do this to ourselves.

 

Related

* Text of experts' response to the Queen.

* Newsweek: The greediest people of all time. No. 1? Marcus Licinius Crassus (115-53 B.C.), Roman general and Caesar supporter.

* Newsweek: A history of human greed. "Wall Street didn't invent excess. It just upped the ante."

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.

Nortel-Ericsson: Wait a just goddamn minute.

Day 609

Top 10 reasons for blocking the deal reached Saturday by which Nortel is selling its most prized assets to Ericsson:

1. Ericsson is paying a ridiculously low price for some of the most prized assets in the global telecommunications industry. Willie Sutton would be impressed.

2. By settling for diminished proceeds for Nortel's most valuable assets, Nortel is further victimizing creditors with this fire-sale.

3. Nortel's discredited board and its failed "turnaround CEO," having mismanaged Nortel's assets for years, are not to be trusted to put an accurate value on them. Having done so much to wreck what remains of Nortel, which has lost nearly $7 billion (U.S.) in recent years, they are not qualified to conduct an auction of Nortel assets. 

4. The sale of Nortel assets has been conducted in haste. And not for sound business reasons, but because of the stupidity of Nortel's board and management. By placing Nortel in bankruptcy in January, when Nortel still had sufficient funds to continue operating, Nortel frightened away its remaining customers. That triggered a free-fall in cash flow needed to service Nortel's $4.5-billion (U.S.) debt. Which in turn necessitated a fire-sale of assets in a buyer's market. The future of Canada as a telecommunications leader - its status for generations - should not sacrificed because of the incompetence of a handful of current Nortel directors and managers.  

5. Ottawa spent $10 billion bailing out the foreign-owned GM and Chrysler. Why will it not intervene to prevent technology invented in Canada from falling into the hands of absentee owners? That technology will, in foreign hands, be used against Canada's remaining telecommunications leader, BlackBerry maker Research in Motion of Waterloo, Ont.

6. Government deserves a say in the sale to foreigners of assets lavishly funded by Canadian taxpayers, dating from Nortel's autonomy from Bell Canada in the 1960s. As Canada's longtime tech flagship, and one of few major exporter of value-added goods, Nortel has reaped all manner of government assistance, from Export Development Corp. loans to offshore buyers of Nortel equipment to Nortel's massive accumulation of federal R&D tax credits.

7. The sale of Nortel's most valuable assets to a foreign company will result in a brain drain. This will occur precisely when Canada needs to transform itself into a "knowledge-based" economy, now that its manufacturing base is in rapid decline. In this sense alone, Nortel's first-in-class wireless and optical-networking gear is indeed of strategic national importance, as claimed by frustrated prospective buyer Research in Motion.

8. RIM is the best candidate to build the world's next-generation wireless networks, for which Nortel's technology holds the key. RIM long ago cracked the enormous U.S. market with its BlackBerry, and has a Japanese-style relentlessness in new-product development to hold and expand its market dominance. Formal bidders for Nortel's crown-jewel wireless assets, Ericsson and Nokia Siemens, are second-tier players in the U.S. Neither are they as financially strong as RIM, having each just posted large second-quarter losses.  

9. The assets auctioned last Saturday by Nortel managers behind closed doors in a New York law office are of much greater strategic value to Canada than those whose sale by MacDonald Dettwiler and Associates to a U.S. firm was blocked by Ottawa last year.

10. Every industrial nation paying lip-service to globalization and free markets intervenes to protect assets deemed of vital national importance. In recent years, the U.S., France, Germany and Australia have blocked foreign takeovers of major local firms and industries. In Japan, China and India, foreign investors are obliged to set up 50-50 joint ventures with local partners, which thereby gain revenue and expertise to eventually strike out on their own. With the loss to foreign buyers in recent years of Alcan, Inco, Falconbridge-Noranda, Abitibi, Stelco, Dofasco, Labatt, Molson, Sleemans, Masonite, Hudson's Bay Co. and others, Canada stands alone among OECD nations in placing a "For Sale" sign on our iconic firms. It is nonsense to suggest that a government intervention in this one case would give Canada a "black eye" abroad, any more than the U.S. Congress' thwarting of Dubai's plan to buy U.S. East Coast seaports diminished the attractiveness of America as a destination for foreign direct investment. The intervention would signal to graduates of Canadian engineering and computer science programs that Canada is serious, finally, about developing global centres of excellence in selected fields. Failing to intervene would send the opposite message.  

Update 1

Jack Layton informs me that NDP industry critic Brian Massey will Monday ask the Commons industry committee to hold "urgent" hearings on the Nortel-Ericsson deal. Layton and Massey will be talking with all parties on this, a similar route to that taken by then-NDP MP Peggy Nash in launching the successful effort to block the MacDonald Dettwiler sale of its satellite and robotics assets to a U.S. firm.

Said Layton: "We need answers on the fate of Canadians' investment in Nortel's technology and patents, employment in Ottawa and other Nortel facilities in Canada, why it appears Canadians were not fully engaged in the auction, and what options government has for ensuring the proper treatment of this economic crown jewel."

Layton noted that it was under the Competition Act, not the Investment Canada Act, that then-industry minister Jim Prentice blocked the MacDonald Dettwiler sale.

Update 2

Don Mazankowski, deputy PM and finance minister in the Mulroney era, has an op-ed in today's Globe urging Harper to inject Ottawa into the Nortel asset sale:

"In the current circumstances, it is incumbent upon the government to exercise its leadership in seeking a resolution that is in the national interest, and that includes using all the tools at its disposal to ensure Nortel and RIM thoroughly explore all options. I am encouraged that both Industry Minister Tony Clement and Finance Minister Jim Flaherty have given strong signals that the government is prepared to use both its regulatory power, if necessary, and its persuasive powers to promote a 'Canadian' solution.

"In the end, it may be that no meeting of minds between the two companies is possible, or that a non-Canadian bidder may have the best proposal in the national interest. However, it is difficult to conceive that the government has no legitimate role in this process and should be a mere bystander. As a former minister in a government that brought about free trade and supported a very open economy, I urge the government in this particular instance to use its authority and persuasive powers to ensure that the best interests of Canada prevail."

 

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.

A Calgary inferiority complex? Let's hope not.

Day 609

We have to disagree with Calgary's own Todd Hirsch in taking Cowtown to task for letting Vancouver eclipse it as the nation's top high-net-worth city, which we commented on earlier.

Calgary is a lovely, civil, dynamic city. Aspirations to be more like Vancouver don't make a lot of sense.

Hirsch is former chief economist at the Calgary-based Canada West Foundation think tank, and now holds the same job at Calgary's ATB Financial. In today's Globe, Hirsch dismisses Vancouver has having "long ago lost any claim to being a resource-based city; most of its mining and forestry giants have disappeared. Other than tourism, transportation and designing video games for kids, it's hard to identify any major sector in the city at all."

That was cute, slipping in the "for kids." A writerly trick, in this case to suggest Vancouver is neither a grown-up place, nor does it make things for grown-ups.

For the record, Vancouver handles about half of Canada's port traffic, more than the nation's other ports combined - as brawny an industry as one can imagine. So enough with the latte-sipping slights, already.

The Lower Mainland is also a growing branch office for Microsoft and other frustrated U.S. firms whose top imported talent threatens to give up on the U.S. Engineers and software writers native to Bangalore and Jakarta weary on return from visits home after the third episode of being detained for several hours at SeaTac by over-zealous personnel of U.S. Homeland Security. And Vancouver has eclipsed Toronto and Montreal as a home for what Hollywood curses as "runaway productions." The city's film industry is a substantial employer.

But Vancouver, recently chosen by the Economist as the world's most liveable metropolis of 132 cities studied, has real limits to growth - the sea and the mountains. Its urban planning has traditionally been chaotic; too many levels of bureaucracy. Victoria has traditionally shown less interest in the concerns of the Lower Mainland than of the B.C. Interior. And Vancouver is a more violent place, as one would expect of an entrepot.

It would be a shame to see an evolving rivalry between these two cities. They are wildly different, each blessed, and each pretty much making the most of those blessings.

Hirsch claims that "Calgary's greatest advantage isn't oil. It's not even lower taxes. What gives Calgary the edge on other beauty contestants is her ability to make impossible things happen. The entrepreneurial spirit is no joke in Cowtown, and it's been largely responsible for getting Calgary to where it is today."

I'd have to disagree with much of that.

Calgary's congeniality, much praised by Hirsch, and its entrepreneurialism, certainly were on display for the best-run Olympics, the Winter Games that Calgary so superbly hosted.

Otherwise, Alberta has been conspicuously lax in redeploying its oil and gas wealth into new, "knowledge economy" industries - currently a fixation of Ontario's Dalton McGuinty. As it should be, given that province's rapidly declining manufacturing base. Calgary entrepreneurs long ago gave up on their stab at creating a telecommunications-based tech cluster a la Ottawa, which fizzled not long after it began in the 1990s.

Calgary's greatest economic advantage, sad to say, is oil - or rather natural gas, which accounts for the bulk of Alberta petroleum royalties. With so few exceptions they're not worth mentioning, every significant oil and gas company in Canada is headquartered in Calgary, the world's third-largest petroleum centre after London and Houston. Agriculture still comes a respectable second as an economic contributor. There should be no rush to remove the grain from the provincial coat of arms, although the addition of grazing cattle would be sensible.

The legislature in Edmonton takes Calgary seriously, never more so than during the reign of former premier-for-life Ralph Klein, a former Calgary mayor. And in stark contrast with Vancouver, Calgary has infinite room to grow in every direction.

Calgary is a lovely town, with jogging trails clinging to the Bow River as it winds through the city - an unusual feature among major N.A. communities. Some of Calgary's architecture is of stand-out quality, including the landmark Saddledome and the newish, people-friendly City Hall. And the addition of Sir Norman Foster's dazzing EnCana Tower, tallest building in Western Canada, will reinforce that reputation. Calgary also boasts one of the continent's smartest surface-transit commuter systems.

Urging Calgary to adopt what works for Vancouver is, I think, a blind alley. Calgary needs to do two things only. Get serious about weaning itself off its reliance on the finite resource of petroleum. And, as many U.S. cities are doing, inject more vitality into the town with a heavy investment in the arts. The city doesn't lack for benefactors. But it could use more of the philanthropic leadership in aesthetic amenities that Jeanne and Peter Lougheed have brought to it.  

Hirsch uses the right word for Vancouver, "stunning." For Calgary to set its sights on winning a beauty contest with Vancouver makes about as much sense as Hogtown hoping someday to match Rio in beguiling charm. Ain't gonna happen. And really, there's no need for Calgary to do anything other than strive to be an even more civil and dynamic city than it already is.  

 

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.

And expressing dismay over their missing Pablo Cruise tapes.

Day 609

see more Funny Graphs

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.

Our microcar future.

Day 609

Sooner than later, most of us will be driving microcars.

Petroleum is a finite resource that's going to $200 (U.S.) a barrel by 2012. As we get to the point where traditional transportation fuels must be rationed, it will be reserved first for trucks, first-responder vehicles (police, fire, EMS, bomb and SWAT teams, etc.) taxis, and inter-city commuter trains and airlines (whose fuel cost per passenger miles is vastly lower than a guy driving an SUV).

Then there's the increasingly unbearable traffic congestion even in medium-sized cities, a problem of safety, economic efficiency (you can't run a "just-in-time" economy when the roads are clogged), cars-over-people urban planning, and of course, global heating. (That's right, global heating, not warming - let's call it the threat it is.)

Fortunately, most of the world's two dozen or so major automakers have at least one microcar in their lineup. Only Daimler's Smart line-up has yet made much impact in North America. Then there's the scores of automakers you've never heard of, in China, India and Russia especially, whose bread and butter is microcars. For reasons of upfront and maintenance cost, fuel scarcity, and traffic congestion, microcars already are the norm in many parts of the world.

India's Tata Motors has a microcar priced locally at $2,500 (U.S.) that will soon appear on our shores. India's Mahindra and Mahindra, and China's Geely Holding Group Co. and Chery Automobile Co. won't be far behind with similar models. The prices will be higher in retrofitting the cars to N.A. standards, but will be well below prices for today's N.A. small-car models.

Here's a peek at the North American passenger-auto fleet, circa 2020 or earlier (click on image for larger view):

 

 

    

 

Related

* Globe and Mail: Chinese automakers largely shut out of home market's luxury sector. 

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.

Quitter.

Day 608

It's official. Sarah (Barracuda) Palin today is the first Alaska governor to quit while in office, two years into her first, four-year term. She now will conveniently be M.I.A. when results of ethics probes into her conduct in office are revealed.  

  

Stephen Nowers / Anchorage Daily News

 

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.

Quotes of the week.

Day 607

The Nortel giveaway

  "When they were rescuing GM and Chrysler, they didn't ask the simple question: Could we restructure Nortel to preserve the enormous intellectual property and research capacity in Canada? It's a huge loss, and it means a leading Canadian player - RIM - is going to be faced with competition from intellectual property that was originated in Canada and is now being sold to foreign companies."

-Michael Ignatieff, on the looming sale of Nortel's next-generation wireless technology to an offshore bidder.

 

An unwise putdown of Russia, loser nation

"[The Russians

are going to have to make] "some very difficult, calculated decisions. They have a shrinking population base, they have a withering economy, they have a banking sector and structure that is not likely to be able to withstand the next 15 years, they're in a situation where the world is changing before them and they're clinging to something in the past that is not sustainable." -Joe Biden, July 24, U.S. vice president, during a four-day state visit to Ukraine, on crisis conditions in Russia that he believes will make the Kremlin more amenable to U.S. pressure to relax its influence over former Soviet republics and reduce its stockpile of nuclear weapons.

 

 

At times it seems America itself is a reality show

"California is about to whack the heck out of funding for its school system. But on the plus side, the Legislature rescued the money that localities needed to continue identifying dead bodies in their morgues. We hate it when they balance the budget on the back of the corpses...No matter what dreadful embarrassment your state is facing, you can always console yourself by remembering that you do not live in New Jersey. On Thursday, a vast corruption sweep there netted three mayors, two state assemblymen, five rabbis and a guy who had allegedly been running an organ-trafficking business that has left swathes of the population of Moldova walking around with only one kidney." -Gail Collins, NYT op-ed columnist, July 24.

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For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.