Random thoughts on a busy diplomatic week past.

What Harper's U.N. no-show for the head-of-state speeches says about Canada.

Compare and contrast. Stephen Harper was AWOL during speeches by fellow heads of state at the opening session last week of the 64th U.N. General Assembly. But Angela Merkel, the German chancellor facing a tough re-election vote at home in less than a week's time, was present and accounted for. Indeed, the leader of the world's third-largest economy gave one of the more compelling speeches on climate change - the pressing topic of the gathering - while our head of government was purposefully not even present.

So Canada had nothing to say to the world about climate change that morning, alone among this remarkable gathering of 32 global leaders. That number included Chinese President Hu Jintao, worth listening to because:

(a) China handled the world financial crisis with greater alacrity than any nation, with the earliest and one of the most massive stimulus packages

(b) Hu broke, finally, with China's longstanding resistance to action on climate change, making a series of progressive commitments on curbing global warming in front of a world audience.

(c) The leader of the world's biggest nation doesn't get out much. This was a rare opportunity to listen in person to the leader of a nation whose economy will equal in size that of the U.S. by mid-century. And is racing to become a leader in solar, wind and other alternative technologies while still trapped in a 19th-century coal economy, as the U.S. is.

(d) By traveling to the U.N. confab on the East River, Hu was taking an important symbolic step in bringing a traditionally insular China more forcefully into the community of nations.

Jim Prentice, the Canadian environment minister, was Stephen Harper's stand-in as a remarkable gathering of 32 heads of state addressed the U.N. General Assembly on climate-change last week. The PM had better things to do than absorb what his peers had to say and articulate Canada's position in a speech of his own. Prentice distinguished himself by chastising China for its laggard progress on climate change. China in fact leads Canada and most nations in many aspects of alternative-energy R&D. And a nation home to the Athabasca and Sydney Tar Ponds environmental disgraces is in a dodgy position to fault other nations. Such was our contribution to a turning point in saving the species from global heating.  

Instead of contributing to that exchange of ideas about how to save our species, or even sit there and listen to the progressive ideas put forward by Hu, Merkel, Gordon Brown, Nicolas Sarkozy, Obama and so on, our nominal PM was meeting with Michael Bloomberg, the New York mayor, to complain about the "Buy America" provisions of the U.S. federal stimulus package. The Gotham mayor has zero authority over U.S. trade policy, except as it applies to stimulus-related procurement practices of the five boroughs. (Even then, the borough presidents each have more authority than Hizzoner.)

Our PM acted in the narrow self-interest, as he perceives it, of Canada. His peers uptown were helping shape the future of a planet in trouble. For all the world to see, Canada, which used to "punch above its weight" diplomatically, chose not to be a leader. The head of state of the Maldives was there, but we weren't. A bad day for Canada diplomatically, and it will be long remembered.

The misguided walkout on Ahmadinejad.

The representatives of Canada and some other nations walked out of the General Assembly chamber when Iranian President Mahmoud Ahmadinejad rose to speak. Even if he wasn't a Holocaust denier, there would be much to detest about Ahmadinejad.

But a mass walkout wasn't the no-brainer it appears to be. Yes, the recent Iranian election was disputed by tens of thousands of protesters, many of whom were jailed, many severely injured by riot police. But admittedly not for better, Ahmadinejad is the public face of Iran, its representative on the world stage, because the supreme council of mullahs for which Ahmadinejad is a mere frontman has decided it shall be so. As such he speaks for that council, and we need to know what it's thinking. Ahmadinejad also speaks for the most important nation in the Middle East, in that its nuclear ambitions could trigger a Mideast nuclear-arms race.

Those tens of thousands of Iranians who protested the outcome of the recent election, knowing they were risking their lives in doing so, are representative of millions of Iranians who oppose the Iranian status quo. For them, and for moderate Iranians of unsettled regard for the status quo, the surest way of driving them into the extremist camp of the mullahs and Ahmadinejad is to insult their country. Whatever faults they recognize, and protest against, in their country, their pride as Iranians eclipses those greivances when their nation is insulted - no matter how richly Iran deserves to be insulted and isolated in the minds of many outsiders.

A more judicious way of handling this admittedly difficult diplomatic challenge, I think, would have been for Canada's seat in the General Assembly not to be vacant during Ahmadinejad's rant against Israel and capitalism, but instead to be occupied by the second-in-command of Canada's U.N. mission. We would do this to show our respect for the roughly 70 million people of Iran. More practically, we would observe the body language of Ahmadinejad, a theatrical attention-seeker playing to his base, to assess just how seriously we are to take various of his comments. To assess when he is speaking for the theocratic regime for which he is a stooge, and those moments when his comments accurately represent the populist sentiment of Iranians. And we would do it in order to occupy the high ground. In condemning a vile, racist rant, one is more credible in having witnessed it than merely having read a transcript.

It was protest enough for Canada's head of state and our U.N. ambassador to boycott the Iranian leader. It was protest enough to later join other nations in condemning the hateful things Ahmadinejad had to say. But we should have been represented in the Assembly chamber to endure what the man's address. What those leaders who walked out on Ahmadinejad, including ourselves, fail to grasp is that in Tehran and Shiraz and Esfahan, the walkout was regarded as Western intolerance for Iran, not its current president.

(Photo of Mahmoud Ahmadineejad addressing the 64th session of the U.N. General Assembly on Sept. 23 by Richard Drew, AP.)

Enjoy your weekend.

Mr. Harper repatriates the Timbit. And suffers a sugar high.

Our PM, who couldn't find the time while in New York on Tuesday to watch the speeches of fellow heads of state at the emergency U.N. meeting on climate change, rushed to Oakville for an appearance the next day at Tim Hortons training centre. He was in the Toronto ex-urb to praise himself for the donut chain's decision to return from the U.S. to its Canadian birthplace. Said Mr. Harper:

"Since first coming into office, our government has helped set the conditions for Canadian businesses to succeed and to make Canada a great place to do business. Tim Hortons' decision shows our strategy is working." 

This news is of such import that it merits a posting on the Prime Minister's official website ("PM welcomes Tim Hortons back to Canada"), where there is no mention of business events of more moment this year - the bankruptcy filings of Nortel Networks Corp., General Motors of Canada Ltd., Chrysler Canada and AbitibiBowater Inc., for instance.

In the press release it issued today, Tim Hortons Inc. makes no mention of taxes, only that its shareholders have voted to relinquish a Delaware corporate registry - an accident of fate arising from Tim Horton's 1995 acquisition by Ohio-based Wendy's International in 1995. Canada's tax rates being what they are, one expects that many other Delaware registered firms - it is the domicile of choice for Fortune 500 companies - will similarly be relocating to Oakville in due course. 

The subject of taxes did come up in a June press release when Tim Hortons first announced its decision to come home, it having been spun off by Wendy's:

"Management and the Board believe that the proposed reorganization would be in the best interests of the Company and our stockholders by creating operational and administrative efficiencies over the long-term, enhancing the Company's ability to expand in Canada and internationally, and improving the Company's position to take advantage of lower Canadian tax rates commencing in the year following implementation. The Company currently earns the substantial majority of its income in Canada. We expect to incur certain charges for discrete items, the majority of which would be non-cash tax charges, and various transactional costs in the year of implementation."

It would appear that the actions of the "Harper Government" (formerly the Government of Canada) had something but quite everything to do with Tim Hortons being a Canadian-registered company once again.

Other factors: The firm was founded in Southern Ontario and has always been headquartered here. Eighty-five percent of Tim Hortons' 3,475 outlets are located in Canada. The Canadian stores make a lot of money. The firm's 536 U.S. stores, not so much. Tims has struggled in the U.S. ever since it entered that highly competitive market more than a decade ago.

Oh, but do go on, Mr. Harper (I'm quoting from the Harper Government's press release, not the PM's speech at the Tim Hortons training store, transcript here):

"The Harper Government has made Canada more competitive by reducing the general corporate income tax rate from over 22 per cent to 19 per cent today. Through these and other policies the Government is helping to create jobs now and is laying the foundation for long-term economic growth. By 2010, Canada will achieve the lowest overall tax rate in the G7 on new business investment."

"Our government has reduced taxes, paid down debt and invested in the infrastructure projects that businesses need to succeed."

Yes, well, that's one way of looking it.

Since last October, about 486,000 Canadians have lost their jobs. On Sept. 17, the OECD forecast the Canadian jobless rate will be close to 10 per cent for next year. When the "Harper Government" came about, Canada ranked first in the U.N.'s Human Development Index, as it had done for many consecutive years. We now rank third. We are but the 9th most-competitive nation, according the World Economic Forum (WEF), trailing such higher-tax jurisdictions as Switzerland, Denmark, Germany and Japan, which invest more heavily than we do in education, enriched pre-school and other social programs.

In the past year, Toronto has slipped to 13th-most important financial capital from 11th, trailing among others Sydney, which may be coincidental with the WEF finding that lack of access to financing is the biggest problem for those doing business here. After the 11 stright federal budgetary surpluses of the Chretien-Martin years, the Harper Government disclosed earlier this month that Canada will be in deficit for the next six years, totalling a projected $164.4 billion in red ink, including a record deficit this year alone of $55.9 billion - double what the government, a bit uncertain in its grasp of Canadian economic conditions, predicted just eight months ago.

Oh, and an across-the-board price increase for coffee, ice cappaccinos and so on just went into effect at Tim Hortons, notwithstanding the tax windfall it anticipates next year. 

The next time I see Mr. Harper holding forth in a donut shop with a sneeze guard for a backdrop, I'll be thinking of Mary McCarthy's admittedly cruel assessment of bitter rival Lillian Hellman: "Every word she writes is a lie, including 'and' and 'the.'"

Update

Canada now ranks 4th in the U.N.'s latest Human Development Index, trailing Norway, Australia and Iceland.

 

Today's top news, Thursday, Sept. 24.

GUSHERS | Oil explorers on pace for their best year since 2000.

More than 200 discoveries so far this year, in dozens of countries on five continents, amounting to estimated reserves of 10 billion bbl. Discoveries in Russia and northern Iraq aren't a surprise, but who knew there are substantial oil reserves in Israel?

Off-shore oil rig off Brest, France, now operating off Angola. (Photo: Ken Childress/Transocean.)

 

G20 SUMMIT | As Pittsburgh confab opens today, signs of accord on urgent financial reforms.

Wide agreement on need for bigger capital reserves to cushion banks from sudden losses, long a characteristic of Canadian banking. On proposed bonus caps, to which Yanks object, EU might settle for "clawbacks" of bonuses for deals that later sour. No progress likely on monetary "imbalance" between U.S. and China, though. It's a cultural, not legislative, thing. Chinese and Indians boast household savings rates of 40% and 32%, respectively; spendthrift Americans and Canadians, 3.2% and 4.9% respectively. Basically, U.S. wants China to become a spendthrift consumer culture like the U.S., rather than hoarding the greenbacks it earns peddling its wares at Wal-Mart, and funding America's cheap-money economy with its purchase of Treasuries. And basically neither China nor India want to abort their fast-track industrial revolutions by letting their currencies soar, making their export goods less competitive.  

 

THAT OLD AMERICAN ARROGANCE |  A cranky Obama hectors world leaders at U.N. American president chides world for "an almost reflexive anti-Americanism which, too often, has served as an excuse for collective inaction." He's right about, say, Darfur. But America went AWOL for eight lost years on climate-change and stem-cell research, trashed the U.N. on the Iraq invasion and the Geneva Conventions on torture. Then it gifted us a made-in-the U.S.A. global economic crisis. So a little more humility, maybe contrition, would have suited Obama's otherwise welcome promise of a more collaborative U.S.

LOONIE WORRIES CONTINUE | Strong Canadian recovery jeopardized by soaring dollar. Bank of Canada expects surprisingly strong second-half growth. Thank low interest rates, government stimulus, and rebounds in consumer sentiment and commodity prices. But high-flying dollar is a brake on export recovery. Loonie, currently 93.08 cents U.S., is up 13.5% against the greenback so far this year - making it one of the world's best-performing major currencies. But "persistent strength in the Canadian dollar remains a risk to growth,” Bank of Canada deputy governor David Longworth tells audience in Summerside, PEI.

MALPRACTICE CRISIS |"Defensive medicine" driving up costs. Fear of malpractice lawsuits compels U.S. docs to order unnecessary tests and costly procedures, pads America's healthcare bill by an estimated $60 billion (U.S.) a year. Meanwhile, payouts in malpractice suits actually are miserly. NYT's David Leonhardt has thorough analysis of dysfunctional malpractice system here. Atlantic wonders why lawsuit-fearing docs stubbornly refuse to wash their hands and properly sterlize equipment, a factor in America's estimated annual 100,000 infection-related hospital deaths.

EXTRAVAGANT CEO PAY | Equal pay for work of equal value? Not in global banking. Tough to see why Jamie Dimon needs $19.7 million (U.S.) to run J.P. Morgan Chase & Co. when Michael Geoghegan gets by with $2.8 million (U.S.) heading the larger, UK-based HSBC PLC. Our own Gord Nixon ($9.6 million U.S.) does handsomely at RBC, one-third the size of HSBC.

ROCKET RIM | BlackBerry maker expected to report good numbers today. Globe analysis finds Research in Motion is already outperforming Apple Inc. and other rival smartphone makers.  

ON THE AIR | For John Tory, road to Toronto mayoralty runs through talk radio. The star-crossed former Ontario Tory leader is now an afternoon-drive man for CFRB. Hey, it worked for erstwhile broadcasters Rene Levesque and Ralph Klein.

SALVATION DOWN UNDER | Troubled CanWest to sell its stake in Australia's TEN TV network. Estimated $650-million (Cdn.) proceeds from sale of 50.1% stake, plus removal of TEN's debt from CanWest's books, are aimed at cutting CanWest's $3.8-billion debt by about one-quarter, staving off bankruptcy. TEN was part of late CanWest founder Izzy Asper's global ambitions, which once embraced New Zealand, Ireland and Israel as well.

"CLEAN-COAL" GAMBIT | Premier Brad Wall touts Saskatchewan advances in coal sequestration. Visiting U.S. politicos are impressed. But the science and economic viability for so-called "clean coal" aren't favourable, as shown in this NYT study of America's first, newly opened coal-sequestration power plant.

IPO FOR HBC? | U.S. owner muses about "returning this company to Canadians." The Bay and Zellers are poised to double profits this year, after about $300 million in cost cuts and heavy recruitment of merchants by HBC and Lord & Taylor owner Richard Baker (left). He tells an industry conference that HBC has been "a get-your-hands-dirty cleanup of an operating company that had not made hard decisions in hundreds of years." (Photo: Aaron Harris for the Globe and Mail.)

SMART COOKIES | U.K. business execs say serving the right biscuit a key to dealmaking success. About four of five British firms surveyed by Holiday Inn say the variety and quality of cookies served at business meetings can influence the outcome. Chocolate digestives seem to make the best impression. Messy cookies that crumble are a no-no. Also dunking. Also taking more than two biscuits from a communal plate. 

QUOTE OF THE DAY |  “Hilariously, they're calling this the year of the woman director. But how many are there? 10? Look, I think of myself as a filmmaker first, and appreciate that many men are as sensitive as women. But, to your larger question, it's really about the fact that men still rule the world. That isn't what interests me as a director, but it's a fact. They do.” -Jane Campion to Globe film critic Rick Groen, who has a compelling profile of the director of the John Keats biopic, Bright Star, here.  

 

Courtesy Matt Davies,Tribune Media Services.

I guess that just leaves pest exterminators and female impersonators.

There will, it appears, be a few exclusions among financial operators affected by the hyped new U.S. watchdog agency to protect financial consumers. Rep. Barney Frank (D.-Mass.), who's spearheading Obama's proposed Consumer Financial Protection Agency through Congress, has opted to exempt a few snake-oil salespeople financial-service providers from coverage by the bill.

These are merchants of esoteric goods and services, mind you, the kind of shills you're unlikely to come across.

They include, for instance, businesses dealing in "securities, commodities, investment and general insurance products; accountants and tax preparers; real estate brokers and agents; lawyers; auto dealers; communications providers; and providers of retirement and pension plans," Reuters reports.

The remaining 3.7% of financial-service providers, man, this bill covers them like wasps on a jelly sandwich.

 

Oh, say, Barney, which of these can I sell you?

 

 

Did I mention my doubts of substantive reform in financial services?

 

 

Today's top news, Wednesday, Sept. 23.

U.N. CLIMATE CHANGE SUMMIT | Leaders reject historic chance to act with urgency.

Barack Obama, conceding domestic politics are an obstacle to change, merely recites previous commitments. Hu Jintao, his Chinese counterpart, also refuses to set a target on CO2 emission reduction, unlike EU and Japan. China is eager to lead in exportable alternative-energy technologies. But, like U.S. and Canada, it's still obsessed with potential cost to GDP of meaningful action. Jim Prentice nervily chides Beijing on its weak global-warming goals, which actually surpass ours in some ways. For instance, Hu yesterday promised to plant a forest the size of Norway, one of his few tangible commitments. Harper, AWOL for the leaders' speeches, was instead at City Hall inviting Bloomberg to the Vancouver Olympics and whining (again) about "Buy America" trade policy. At the WH, Congress and now in New York, Harper's the special pleader with nothing to offer.

Barack Obama and Hu Jintao, the U.S. and Chinese presidents, respectively, address the U.N. General Assembly yesterday on climate change. Watching Obama is U.N. Secretary-General Ban Ki-moon.

MAJOR RETHINK OF AFGHAN WAR | Setbacks prompt WH debate on 180-degree shift to "Plan B."

Obama is having second thoughts about sending more troops. Mounting casualties, Afghan election fiasco, and McChrystal report Monday on potential for failure have triggered review of WH strategy laid out only six months ago. Biden and Clinton at loggerheads. Veep, whose advice was rejected in March, still wants "surgical-strike" focus on al-Qaeda and its Pakistani safe haven, forget about Taliban. Clinton still adamant Taliban must be flushed from Afghanistan or al-Qaeda will return. Obama's quandary: He campaigned on Bush's negligence in abandoning Afghanistan to fight in Iraq. Obama would now have to explain a volte-face in abandoning a failed eight-year counter-insurgency in favour of Biden's counter-terrorism strategy. "Plan B" (a.k.a. "cut and run") is described here and debated here and here. McChrystal's report appears to cite a Canadian counter-insurgency effort as model worth emulating.

TAXING SOFT DRINKS | An anti-tax movement that's tough to swallow, says ethicist Randy Cohen.

RIM'S NEXT BOOM | Updated BlackBerry line expected to goose sales.

GREED CONTROL | RBC sets new, more restrictive pay rules for "top producers." RBC is not the pacesetter here, but is following other Big Five examples.

HYPOCRISY | Gotta love Felix Salmon, who blogs at Reuters. Here, in toto, is a link he offers: "Man with two Jaguars, two Audis, a Range Rover and an Aston Martin rails against car culture." Like Felix, I will let you go to Telegraph to discover mystery man. You will not be surprised.  

GROUNDED | Delays in Boeing's 787 Dreamliner debut point to risks of outsourcing. Boeing ragged archrival Airbus for ages over stalled progress of its A380 super-jumbo. Seems Airbus will have last laugh.

FORD MOTOR | My favourite N.A. automaker posts third month of record Canadian sales. Gets a big lift from, of all things, an SUV - a hot-selling Escape. Recall that two Fords were only N.A. vehicles to make top-10 list of new vehicles purchased in "cash-for-clunkers" program.

GOLD-BUGGED | Globe financial analyst makes good case for shunning the yellow metal, which seems to have stalled at $1,000 (U.S.) per ounce. Gold primarily is a hedge against inflation. Deflation has lately been the primary concern of central bankers. Joe Weisenthal (chart) notices that absolutely everyone is long gold. What goes up...

SHOCKING IDEAS | Slums are efficient, argues founder of Whole Earth Catalogue (1968). They're an improvement over "ecologically devastating subsistence farming," says Stewart Brand. Slum moms have more power and fewer kids, on whom they can better dote. Slums should be spared bulldozing, and instead be rehabilitated with proper sanitation, safe water, electricity and effective policing. See all of Wired's "12 Shocking Ideas That Could Change the World" here.  

The Dharavi slum in Mumbai. Photo: Kounosu via Creative Commons.  

THE RUSSIANS ARE COMING | Nickel baron Mikhail Prokhorov bids for New Jersey Nets. Success would mean the first non-N.A.-owned N.B.A. franchise. Perhaps Balsillie should go after the Timberwolves.  

BIRTH-RATE BONANZA | Canadian birthrate is rising. Mini baby-boom underway, particularly among women 30 to 34. Most industrial nations, U.S. excluded, are experiencing such low fertility rates that shrinking populations are a near-certainty for Japan, Russia, most of Europe.

WOMEN DOMINATE GILLERS LONG LIST | Women take 10 of 12 nominations. Some usual suspects appear (Margaret Atwood for The Year of the Flood and Anne Michaels for The Winter Vault), but also two first-time novelists, Jeanette Lynes (The Factory Voice) and Annabel Lyon (The Golden Mean).

BREAKING THE MOLD | Betrayed by husband, Jenny Sanford (right) signs memoir deal. Estranged wife of South Carolina governor Mark Stanford is not the type to suffer in silence - a departure, at long last, from the wronged-but-loyal political spouse. Literary agents are besieging Elizabeth Edwards, as you can imagine.

YOUR TAX DOLLARS AT WORK | Lobster-fisher helpline turns out to be sex line. Feds still can't get it right, after aboriginal community seeking help with expected swine-flu outbreak was sent body bags.

QUOTE OF THE DAY | "Once in cabinet we had to deal with the fact that there had been an outbreak of assaults on women at night. One minister suggested a curfew: women should stay home after dark. I said, 'But it's the men who are attacking the women. If there's to be a curfew, let the men stay home, not the women'." -Golda Meir, Israeli prime minister, in 1974.

Courtesy: Tony Auth, Philadelphia Inquirer.

Today's top news, Tuesday, Sept. 22.

Ahead of G20 summit in Pittsburgh, Obama to push for new world order of fairer trade and coordinated global financial supervision. China expected to resist U.S. pressure on "correcting" longstanding trade imbalance between the two rivals. Globe analysis also sees little hope for new banking "framework." U.S.-China trade spat over tires is really over looming threat of Chinese low-cost-auto exports. Philly's G20 haiku winner is local poet and community activist Angele Ellis, with "We harvest leaflets / blown like autumn leaves: our hopes / speak truth to power." I prefer less earnest entry, by retired high-school English teacher Mary. M. Shirey, 77: "Known for friendliness / We won't be greeting you / thanks to congestion."

G20 host site Pittsburgh, where summit takes place Thursday and Friday. At the confluence of three rivers, former Rust Belt city, now a tech centre, is known as City of Bridges, boasting more water crossings than any city but Venice.

China's President Hu, at U.N. tomorrow, expected to push for climate-change progress, contrast with long perception of China as global-heating laggard. True, China reliant on coal for 70% of power, but has taken global lead in wind and solar power. British Airways CEO, at U.N., will unveil plans of global airline industry to cut emissions by half. Obama to make first U.N. address as president tomorrow.

Commercial vacancy rates soaring across Canada, notably in Calgary, where mid-decade boom brought many new skyscrapers. Leasing agents expect four to five years before "see-through" buildings are fully tenanted.

Pentagon call for big troop increase in Afghanistan, where mission "could fail" otherwise, doesn't change Ottawa plans to withdraw our combat forces July 2011. Then again, if Obama strategy - which U.S. president is yet to device - shows progress against Taliban, Canada likely will recommit to some kind of involvement.

In flagship speech laying out Grits economic platform, Ignatieff stresses "good government," no tax cuts. Had it been the other way around, the headlines in today's papers would have been much bigger.

Stunning 115 million case of Alzheimers and other variations of dementia expected worldwide by 2050.

Russian maker of legendary, 62-year-old AK-47, world's most famous assault weapon and named for inventor Mikhail Kalashnikov (left), a World War II veteran, is poised for bankruptcy, a victim of knock-offs and recessionary cuts to arms budgets.

Latest grim numbers show newspapers yet to hit bottom. Ad revenues still declining.

Bay Street slips to 13th among global financial centres, from 12th last year, but overtakes Boston to become #3 N.A. financial capital. Three of top five are Chinese: 1. London, 2. New York, 3. Hong Kong, 4. Shanghai, 5. Shenzhen.

CN Tower reclaims "tallest" status, no longer as world's tallest freestanding building but as world's tallest tower, according to Guinness. Asian rivals that have long-since eclipsed Hogtown landmark in height are "buildings" with offices and apartment residences. Soon enough, though, two rising Asian towers will eclipse CN Tower. But Toronto icon may retain status as having world's tallest wine cellar.

____________________

Quote of the day

"History teaches us that men and nations behave wisely once they have exhausted all other alternatives." -Abba Eban, Israeli statesman.

 

Courtesy: Mike Keefe, Denver Post. 

 

Today's top news, Monday, Sept. 21.

Big debate on pace of economic recovery. Veteran market watcher Jim Grant sees rocket-paced recovery, based on pent-up demand. But analyst Joe Weisenthal says no hope for a powerful "V"-shaped revival, because prosperity earlier this decade was fake, based on air (credit). Researchers Peter Boone and Simon Johnson in NYT op-ed rule out recovery - and anticipate another crash - if, as seems likely, Wall Street pay and risk-taking practices aren't reformed.

Debate, too, on bankers' pay. Even U.S. Conference Board, business lobby, sees need for restraint in golden parachutes and "golden coffins" (hugely generous death benefits for CEO heirs). But G.O.P., Obama and some Hill Dems opposed to interference in private-sector pay decisions.

Ahead of G20 summit in Pittsburgh this Thursday and Friday, host Obama sets agenda of more integrated global financial-markets regulation to prevent another Crash of '08-'09. Also wants this G20 to be showcase for green technologies. But EU leaders will come to Pittsburgh with doubts about U.S. resolve on climate-change progress.

Real men tax gas: NYT columnist Tom Friedman makes compelling argument for carbon taxes - including at your local gas pump - to accelerate conservation of ever scarcer fossil fuels. No doubt a necessary step, but remains a political no-sale for now.  

Red October scare: Stock market has recovered so much ground lost since crash, so quickly, that many market watchers are bracing for big "correction" next month.

Big winner from fraud-tainted Afghan election appears to be Taliban, says WaPo report. Botched vote reinforces insurgents' propaganda about rampant corruption of Karzai regime.

Time to take pending Chinese auto assault on N.A. market seriously. Goldman Sachs makes $250-million (U.S.) investment in Geely, one of the most export-focused Chinese automakers. Buffett earlier profited from ground-floor investment in Chinese auto-tech innovator BYD Co.

Magna long way from inking deal to acquire stake in Opel-Vauxhall, but already pilloried by thousands of Spanish workers taking to the streets yesterday to protest rumoured deep job cuts at firm's Spanish plant.

U.S. airlines expected to recover faster than Europeans, having been more brutal about cutting routes, frequency, payroll.

Four-day workweek winning fans in U.S. New term enters language, T.G.I.T. (Thank God It's Thursday).

Detroit (left) tops BusinessInsider's list of "America's most depressing places." Average house price is $7,500 (U.S.). When murder rate dropped last year, mayor joked reason was "there is no one left to kill."

Oprah Winfrey-backed Precious takes TIFF's top kudos, People's Choice Award. Previous winners Slumdog Millionaire (2008) and American Beauty (1999) went on to win Best Picture Oscar.

 

__________________________

Quote of the day

"It means you're at mortal risk." -Dr. David Himmelstein, associate professor of medicine at Harvard Medical School, on a study by his research team released last week that estimated 45,000 deaths in the U.S. each year can be attributed to lack of health insurance.

 

An imperfect president. Deal with it.

I sometimes wonder if U.S. pundits understand the political system they explain to their audiences. This generally applies more to progressive commentators.

Frank Rich, in a rare extended criticism of Barack Obama, whom the New York Times columnist has supported more consistently than almost any of his peers, faulted Obama for losing control of the healthcare-reform debate. For letting the lunatic fringe define it. Rich lauded a U.S. historian's recent reminder that FDR, by seeming contrast with the current president, welcomed the "hatred" of his enemies. He fought back. Obama lays back, waiting too long to counter-attack.

Rather than engage the opponents of his agenda, "No Drama Obama" in his "squandered summer," as Rich's headline writer has it, let them reduce his stature, weakening Obama for the tests to come after a healthcare bill.

Here's Rich, on the poor timing of Obama's otherwise "brilliant" healthcare speech to Congress:

"As a style of governing...this repeated cycle of extended above-the-fray passivity followed by last-minute oratorical heroics has now been stretched to the very limit."

That speech, though it hit all the right notes and was a devilishly clever assault on his opponents, came too late:

"In the meantime, a certain damage has been done - to Obama and the country. The inmates took over the asylum, trivializing and poisoning the national discourse while the president bided his time."

Obama's vagueness through the summer on the details of the proposed healthcare reforms left him, and them, needlessly vulnerable to attack:

"Much of the public didn't know what his ideas were. Even now I'm not convinced that most Americans know what a 'public option' really means or what Obama's precise position on it is. But I'd bet that many more have a working definition of 'death panels'. The 24-hour news cycle abhors a vacuum, and the liars and crazies filled it while Obama waited for his deus ex machina descent onto centre stage."

Frank Rich has few equals in chronicling the mendacity of the Bush years. in outing the lies and distortions of the Hillary Clinton presidential campaign, and enumerating the promise of the Obama agenda.

He falls into a few traps here, though. And he's hardly alone.

For starters, Rich's focus this time out is Obama's failings, as if Obama alone is supposed to lead America to the promised land of universal healthcare. I've seen far too much of this. It's an American syndrome Tom Wolfe identified in The Right Stuff as the wish for a "single-combat warrior," the good guy dueling against tough odds against a black-hatted villain. And we all sit back and watch the show.

But no president, no corporate CEO, no choreographer of a ballet company, takes us to that promised land. Balanchine offered guidance and encouragement along with the occasional reprimand. He did not dance. It is not Obama's job alone to deliver unto Americans something they gave him and the current Congress a strong mandate to do on healthcare. Yes, the lunatics did claim the spotlight in August. They were abetted by a media fixated with conflict. But where was the American majority, who support universality and indeed the "public option," as they've consistently told pollsters? At home, cutting the lawn. Where were the unions, with their organizing skills? The ultra-progressives of Daily Kos? I'd like to be polite and say the progressives abandoned the field, leaving it to the lunatic fringe. But they never showed up in the first place. Let Obama do it.

As Rich himself notes, Obama's above-the-fray M.O. served him extraordinarily well as a most improbable candidate for the presidency. You would think Rich and others who wish Obama had intervened more often - on a 24-hour basis, Rich wishes - to knock down every absurd falsehood from the reactionaries have forgotten that this was the style of the media-paranoid Clinton administration. As president, Bill Clinton was continually taken to task for remaining in "campaign mode," his war-room mentality so celebrated during the campaign later seen as a liability. How soon we forget what a figure of ridicule Clinton became for being entirely too much with us. For his "verbal flooding." For his unfailing candor. ("Boxers or briefs.")

Yes, FDR once said of his adversaries, in a 1936 campaign rally, that "I welcome their hatred." He said that, or even words to that effect, precisely once in public. And during a campaign, at that. Rich faults Obama by contrasting his masterful campaign oratory with peek-a-boo appearances once in office. That's  pretty much how FDR governed.

So far as sparing public appearances go, it's FDR's playbook Obama is using. As Arthur Schlesinger Jr. reminds us in A Thousand Days: John F. Kennedy in the White House, FDR made just four of his famous "fireside chats" in his first year in office, and just four more in the balance of his first term. Why so few? Because, as Roosevelt explained to allies exhorting him to remain front and centre in advancing his reform agenda:

"People tire of seeing the same name day after day in the important headlines of the papers and the same voice night after night over the radio...Individual psychology cannot, because of human weakness, be attuned for long periods of time to constant repetition of the highest note on the scale."

Any student of Obama the orator will notice that his speeches are relatively brief, given the complexity and enormity of the reforms he's proposing. And that he has a seasoned performer's knack for leaving 'em wanting to hear more. Concerned as FDR was with over-exposure, Obama is calculated about keeping his public appearances to a certain minimum. It's a fine line, between becoming too familiar and appearing not to care (the bane of G.H.W. Bush's presidency), and Obama walks it well.

Having said that, Obama has embarked on two extensive multi-city selling campaigns for his healthcare reforms, one last spring and the one currently underway. How Rich could write this column without reference to all the commentary in recent weeks by Obama opponents and disinterested parties alike that this president has been giving too many speeches is beyond me. The Hill, a Beltway Bible, warned of the "big risks" for Obama in campaigning so strenuously for his healthcare reform proposals. Of Obama's one-day whirlwind of TV appearances Sunday on healthcare reform, Peggy Noonan, the former Reagan speechwriter and now WSJ columnist and talking head, told George Stephanopoulos on ABC's "This Week" that Obama was "boorish" to get himself booked on so many shows, and the effect of his "getting in your face" is that "people lean away from you." (Ms. Noonan is in my face about 48 times a year, and paid handsomely for it.)

It is true that a great many Americans don't know the details of the proposed health care reforms. But guess what? Neither do the members of Congress who are fashioning the proposals, along with the G.O.P. leadership, which cheerily acknowledge they have not bothered to read the proposals coming out of the five Hill committees to whom Obama deferred in developing the reforms. Certainly the pundits haven't set time aside to read them, or they would have shot down "death panels" at their first mention. And, really, if the media really is the Fourth Estate, it should fall to journalists and not the president of the United States to expose everyday lies. And to block out "trivialization" by reading and reporting on those differing Hill proposals. Instead, the media waits for another opportunity to make Sarah Palin look ridiculous, and Time magazine puts hatemonger Glenn Beck on its cover.

It's worth noting this president campaigned for office expecting that Iraq would consume the better part of his first two years in office. It's just possible that another chief executive, confronted with the worst recession since the Depression, would have found it impossible to deal with anything other than that. That and the two wars, in Iraq and Afghanistan, and an al-Qaeda whose strength has been barely diminished. No one would be surprised if Obama had taken a pass on healthcare reform under those circumstances, particularly since both John Edwards and Hillary Clinton were faster out of the gate early last year with healthcare-reform proposals which, in the main, were superior in comprehensiveness than Obama's.  

It's also worth noting that the "Hillarycare" of 1993-94 was presented to Congress as a fait accompli. And U.S. senators, reputed to have the largest egos on the planet, were none to pleased at being cut out of the process of developing those proposed reforms. We know how that story ended. Hillarycare was D.O.A., and the Dems lost both houses of Congress just two years after Bill Clinton took office.

So, as he did with the unprecedented $787-billion (U.S.) stimulus bill, Obama gave Congress, with all its self-importance and undisputed expertise, the heavy lifting on healthcare reform. They, not he, would develop the detailed proposals. The downside was that having provided only a handful of principles that must inform whatever he signs - universality, reduction of U.S. healthcare costs over time - Obama really didn't know, and thus could not explain to Americans, precisely what he would be signing. At this writing, Congress is still shaping the legislation.

The "death panels," for instance, began as a Republican Congressman's failed bill years ago, recently revived by one of those five Congressional committees as a proposal to have Uncle Sam pay for routine "end-of-life consultations" between medical teams and their patients' loved ones rather than have it remain an out-of-pocket expense for everyday Americans. It's a good, compassionate measure. But like scores of other ideas percolating in those lawmakers' committees, it probably will not survive to be included in the bill that gains passage in both houses for the president's signature.

But the upside of Obama's deference to Congress is that, in contrast with the healthcare-reform debacle of 1993-94, Congress will have been the prime architect of these reforms. Which is why a healthcare reform bill more substantial than any since Medicare in 1965 will gain passage.

Here's the New Yorker's Hendrik Hertzberg, who toiled in Jimmy Carter's speechwriting shop, on that point:

"President Clinton...dumped a detailed, already-worked-out bill in Congress's lap. The implication: Take it or leave it. Obama has left the bill-writing to the legislators (with intense White House kibitzing, of course) and has waited until the stretch to take the reins...Obama's approach made it difficult for him to stump for 'his' plan, because its shape was necessarily unknown; now his numbers are slipping, too. But slipping poll numbers are less apt to panic members of Congress who have invested themselves in the shaping of the legislation and have had time to reflect on what followed failure last time: the Democrats lost control of the House for the first time in 40 years."

Obama spent 10 years as the most popular professor of constitutional law at the University of Chicago. Somewhere along the way - I'm guessing long before he showed up on that campus - he heard the ages-old Congressional maxim: "The president proposes, the Congress disposes." To say, as Rich does, that Obama allowed his public-approval ratings to sag because he deferred to Congress is to misunderstand the process. If you don't defer to Congress, particularly on domestic issues, in which all 535 senators and members of Congress regard themselves to be expert, you don't get a bill. George W. Bush learned that when a Congress controlled by his own party shot down a massive energy bill he proposed mid-decade, assailing it as a mere pork-fest.

Like Rich, I have to catch myself in appearing to be "in the tank" on matters Obama. Candidate Obama warned that he would disappoint many Americans. I'm not disappointed, but angered, that Obama has twice now asked his Justice Department to fight court challenges to the odious Defense of Marriage Act. The law was spawned by a G.O.P. Congress and signed by Clinton signed in the late stages of his presidency as a sop to the right.

Candidate Obama was candid about not favouring same-sex marriage. But Obama also has consistently supported civil unions and legal prohibitions against discrimination, and indicated his mind is open to change on this issue. Concerned about not repeating the bad stumble Clinton took early with "Don't ask, don't tell," it's understandable Obama wouldn't seek to overturn that terrible law. Not without more legislative victories under his belt.

But by consistently failing to defend this discrimantory legislation from court challenges - which a new administration routinely does with all manner of laws it would not have inspired or condoned - this administration could weaken that legislation in the eyes of a judiciary mindful that time has passed since the late 1990s. And that the current government never seems to show up in court to defend this particular law of the land. Only die-hard homophobe interest groups would have paid heed; there's little if any political price to be paid here for doing the right thing.

There there's renditions of enemy combatants, a vile, Bush-era practice Obama inexplicably continues. He has also green-lighted the building of an "enhanced interrogation" centre in Kabul to replace Guantanamo. Which makes a mockery of the fanfare surrounding Obama's "closing" of that facility.

Obama is much more conservative, and far more willing to flex America's economic and military muscles to advance U.S. interests, than either progressives or reactionaries seem to appreciate. In fact, Obama is a conservative, at least in the Red Tory sense with which Canadians once were familiar, before the right-wing of our political spectrum was hijacked by neo-cons.

Red Tories see an essential role for government. But they're also fiscal hawks. And they have a mild, Burkeian distrust in the people's instinct to act in their own best interests. And so we have a current U.S. president whose speeches, even the ones on foreign policy, admonish parents to turn off the TV and ensure their kids do their schoolwork. Who kills wasteful military boondoggles but otherwise hasn't touched the defense budget - bigger than everyone else's combined - in order to meet the spending burden of his healthcare reforms.

We still haven't quite figured this guy out. We'll have to study his tactics through at least two major tests - healthcare reform and some kind of feasible plan for Afghanistan are my guesses on the first two we'll see - to determine if he's the victim of self-inflicted aloofness - the kind of person we once described as "too clever by half." Or if he's another crafty FDR, whose like we thought we'd never see again.

Related

Al Hunt (Bloomberg): Obamacare will require concessions by liberals.

NYT: Labour groups launch campaign for "public option." (video of ads)

 

A new model for newspapers.

Last winter I began floating an idea, born of necessity, for a new approach to newspaper publishing. In a nutshell, I advised that we drastically shrink the newsprint product to a 32-page broadsheet or tabloid featuring only staff-written feature-length content and the best material available from other publications worldwide - a book review on the new Keynes bio from the Guardian, a Dutch urban-planning journal's take on the remarkable waterfront rejuvenation that is Chicago's Millennium Park.

And all of the "generic" news - the news developments of the day that everyone from CBC Radio to Yahoo makes available free to millions of consumers - would be shunted to the Web. It would still professional newspaper journalists editing that generic news, "ordering" it in importance in traditional newspaper style, segmenting it into traditional Life, Sports, Business and other sections. The generic news would still be refashioned by the newspaper's staff, adding local angles and content to make it as relevant to as possible to an audience in Indianapolis or Vancouver - something papers in those cities would have to do to make their flagship websites competitive with the same generic news as it appears on the dime-a-dozen news roundups made available by everyone from Google News to Yahoo to Sympatico to the BBC.

I learned that Arlen Spector, the longtime GOP U.S. Senator of Pennsylvania, had crossed the aisle to the Democrats - a stunner for any political junkie like me - from the widescreen TV tuned to CNN in my dentist's waiting room. I first learned of Magna International's interest in buying Opel-Vauxhall from my girlfriend, who got the news from one of those mini-TV sets in the elevators of downtown office buildings. Traditional papers now have a near-impossible job competing in breaking news. So maybe, in our print editions, we should just stop trying - and consuming tonnes of newsprint in the process.

Can we compete in breaking news online? You bet. We can do it better than anyone. Newspapers alone have the large staffs of professional journalists expert at rapid gathering of accurate information. We have graphic artists expert in making maps and compelling charts. We have the librarians expert in pulling together at short notice previous events of a related nature. We have columnists expert on terrorism, the use of steroids in sports, and the evolution of Harper's position of aboriginal rights and living conditions. On the Virginia Tech massacre, the Star's Web team was taking real-time news feeds from more than 100 sources within 15 minutes of the initial reports. Unlike our print edition, online we could get that information to our audience with maybe a 5-minute delay to ensure the veracity of it.  

I confess this new model is as much a survival strategy as an exciting, drastic change in newspapering. And there are big risks. Chief among these is that online penetration rates in North America trail those in Europe and Asia. Many readers of North American newspapers still don't have a computer, much less an Internet provider. Many of these folks will not be satisfied with the new, vastly shrunken newsprint edition U propose for their daily paper.

The other big risk is how successfully can we "migrate" newspaper advertisers to the newspaper's bulked-up online edition? Even at the traditiional papers most successful in this regard, online ads represent only 8% or so of total ad revenue. There are plenty of ads now to be seen in newspaper online editions. But their price is heavily discounted. Newspapers still have a lot of work to do to convince traditional advertisers - as conservative as newspaper proprietors, if not more so - that their online ads are powerfully effective. Why effective? Because they can move, talk, and be hyperlinked direct to a faux car showroom where you can design your own vehicle. And perhaps most important, the ad client has more measurable assurance than ever in newspaper history that his or her ad is being read.

As I mentioned, survival. Every broadsheet page of newsprint, published 400,000 times, costs a fortune. Given the paucity of ad revenues in the current recession, every big city North American paper has had to focus on cost reduction. And so traditional dailies have shrunk. In particular, we are shrinking the all-important "newshole," the portion of space available to journalists after the ads have been placed. We have been significantly shrinking the newshole for the past two years, without lowering the subscription or cover price we charge readers. Thus we are, without acknowledging it, giving our readers less and less content and charging just as much for it. In 30 years of business journalism, I've never known of a business that succeeded by offering less value for money. Meanwhile, in our online products, these same newspapers give away their content. That too is unsustainable.

So squarely confronting the new reality, as Peter Drucker would call it, I propose that we provide a vastly enriched though must smaller print edition. Its virtue is that it provides "essential" content. The meaning of the news. What the events of the recent past tell us about how the future is likely to unfold. Articles that delve into the complexities of things, from our confused mission in Afghanistan to the root causes of the intolerably high rate of medical error in our hospitals.

The quality threshold would rise immeasurably. There's no shortage of content in the world, especially as it becomes McLuhan's global village with the advent of "citizen journalism" and the technology making that possible. In future, the print edition of your daily newspaper will provide only the best, most reasoned of this content. It will be a lean, efficient read, shorn of fluff and the 90% of content we currently provide that most readers have no use for. Bulky newspapers are clutter, difficult to "navigate," and long ago became an environmental issue for thousands of readers that traditional papers have lost on bulk alone. People actually feel guilty taking a subscription to a hefty paper, and then foolish when as so often happens they never get around to reading it. You can only take a pile of two weeks' unread papers out to the recycling about a dozen times before realizing it's time to cancel your subscription.

It goes without saying that the new 32-page paper, likely in tabloid or "Berliner" format, is more accessible and far less physically intimidating than the broadsheet model favoured by today's general-interest hometown dailies. Conversely, the space available on the Internet is infinite. The savviest operators of newspaper websites will be those who make the tremendous volume of content we provide there easiest to navigate. Who put an interpretive and local "spin" on generic news that makes it the preferred version of news that's otherwise available in hundreds of other places online, including now cellphones, and from free traditional broadcasting.

How this model marks a return to commercial viability is that we charge a stiff cover price for the new, smaller print edition - at least $2 and more like $3  the cost of a latte from Timothy's or Starbucks. I'm confident that in the case of a big-market daily, at least 50,000 customers will buy that product every day. Which means for the first time in modern newspaper publishing, circulation revenues will actually cover the cost of newsprint and distribution.

There will be advertising in this new print product. The cost per thousand (CPM) will rise dramatically. But the quality of that readership - as measured demographically in reader income and education levels and spending habits - will also be much higher. That will justify a high enough CPM to cover our other big expense, the compensation for those producing the editorial content.

The online edition, meanwhile, offers the advertiser a massive audience, and thus a dirt-cheap CPM. The interactivity, real-time reporting, citizen journalism, blogs, vlogs and intense local coverage offered online will make it a compelling read. Yet the editorial CPM - the number of journalists and technical and support staff required to serve every 1,000 readers - will plummet as ad revenues gradually rise to cover, and then surpass, the purely editorial cost of producing the online edition. No paper and ink costs for an online edition.

What I'm proposing, simply, is to vastly reduce print-edition costs while greatly improving the quality and essential-reading nature of the print product. And at the same time, greatly increasing the revenue potential of the online product as ad-buying practices gradually change to more fully embrace this new medium. Our much smaller new print edition will pay for itself and eventually become lucrative. Our online edition, with its comparatively low production costs, enormous audience "reach," and selection and editing of content to be powerfully relevant to a given audience, will see it, too, become lucrative in time.

It will not be an easy transition. But the transition already is underway. At most traditional papers, some of the best reading is to be found in their online editions. And everything in the print edition is made available online in any case. Should we charge readers for this online content, as the Wall Street Journal and Financial Times do? Probably not, since the online-pay model has been tried widely and usually failed.

There certainly may come a point at which we might charge for select high-value online offerings. But not now. For now, the nascent Web - and it is nascent compared with the 400-year-old history of newspaper publishing - remains a realm where users expect content to be free. One might as well try reversing the flow of Niagara Falls as change that reality. In 10 or 20 years, after online newspapers have proved their value to readers, and the N.A. Internet penetration rate exceeds 100%, we might then find ourselves reaping considerable subscription revenue from all or part of our online products.

It's gratifying to see that a few newspapers now are willing to at least contemplate a new way of newspapering. In Toronto, both the Star and Globe now are giving serious thought to this model, among other substantive alternatives to traditional newspapering. 

Unfortuntely, though, the industry's current "silver bullet" is to form an ologopoly, championed by Rupert Murdoch, in which all major newspaper publishers agree to start charging for online content all at once. The players know they can't be the first to do so, risking an audience exodus. So Murdoch all year has been furiously signalling his peers that he's about to charge for online access to his general-interest New York Post (which he gets away with at his specialized Wall Street Journal). But this would drive at least half the audience of the Post, already a chronic loss-maker even before the advent of the Internet, to Mort Zuckerman's New York Daily News. Which means Mort and every other big-city publisher has to follow Murdoch lock-step or the thing doesn't work. Which is why, for all his pronoucements about paid online beginning early this year, Roop has yet to charge even for flagship Post features like the Page Six gossip round-up.

So, without disturbing the sleep of the anti-trust folks in Washington, Murdoch is burning up the phone lines with his peers, and overcoming his personal press-phobia to grant interviews to anyone willing to listen, in which he explains his idea for reversing the flow of Niagara Falls. Murdoch's transparently desperate gambit is notably lacking in the brash innovation we've long known Roop for. It's the strategy of a man running scared.

And of course it won't work. The Web leaks like a sieve. A paid-up subscriber to the Indianapolis Star will promptly re-post a supposedly "firewalled" article on his or her blog. And from there it will show up in a hundred free-access places on the Web before the sun rises again over the Indiana capital. The music industry, or what's left of it, learned its hard lesson about focusing on protecting its intellectual property rights - to the point of bringing charges against 13-year-old girls who improperly downloaded a copyrighted song. Result: the traditional music business, as we knew it from its origins in 1920s-era sheet-music publishers, is effectively dead.

How much better, I think, to offer readers a higher-quality print product and a higher-quality online product. And ask audiences and advertisers to pay a tariff that reflects genuine value for money.