Seeking Alpha

Ian R. Campbell's  Instablog

Ian R. Campbell
Send Message
Ian R. Campbell is a recognized Canadian business valuation authority, having authored books used by lawyers, experts and Canadian Courts in business valuation litigation matters. He currently is developing, a Resource Research website that provides investment... More
My company:
My blog:
StockResearchPortal Blog
  • Canada - Stronger Today Than It Was Yesterday

    Last evening my wife and I watched the Canadian Federal Election returns.  We have done that same thing in Canada’s previous Federal Elections for as long as I can remember.


    At the onset of the television coverage, which began at 9:30 p.m. ET to accommodate the 3 hour time difference between our provinces of Ontario/Quebec and British Columbia, I said to my wife that I believed it important that the Conservative Party headed by incumbent Prime Minister Stephen Harper gain a majority in the Canadian House of Commons. I like to consider myself largely apolitical, but do lean to the right.  I voted for the Conservative candidate in my riding yesterday.  My wife leans at a fairly steep angle toward the Liberals, and actually might have voted yesterday for the NDP candidate – I haven’t asked her who she voted for, and don’t want to know.


    When I made the declaration I did about what I saw as the importance of a Conservative majority, my wife asked me why I was taking that position.  An easy question for me to answer.  From my perspective, I believe a majority government in any democratic country with a Parliamentary system is critically important in today’s country-specific and world economic environment.  For me, too much time and energy is lost in minority Federal Government posturing and bickering at a time when a number of hard decisions are likely to have to be made in an incisive manner – and will be more easily made with a majority government in place.  For some time now, I have been of the view that a Parliamentary political system is a better democratic form of government than is the American ‘Federal Republic’ system.  In my view, one only has to look at today’s ‘polarized Washington’ to understand my point.  The current U.S. Federal Government Congressmen and Senators in my view simply don’t have the ‘luxury of time’ they seem to think they have to endlessly debate their U.S. cumulative debt problems, and ongoing budget deficits.  But that interminable debate process is what almost certainly will happen, and America will be the worse for it.


    In Canada our Federal House of Commons has 308 sitting members.  Last night I got my wish.  Mr. Harper’s Conservative Party won 166 seats in circumstances where 155 seats would have constituted a majority.  Perhaps importantly the Bloc Quebecois party, which advocates Province of Quebec Sovereignty, was decimated in yesterday’s election, retaining only 4 seats.  That party’s leader, Gilles Duceppe, lost his own seat, and has now resigned as party leader.  As a practical matter, I think this means that any continued push for Quebec Sovereignty, at least in the current and prospective economic environment, has been dealt a harsh blow.


    Canada now has a stable majority government for at least 5 years (in Canada a majority government must call an election within 5 years of taking office) – which 5 year period I believe will be critical to Canada’s continued well-being.  It now remains to be seen whether the Conservatives will act in an even-handed way over the next five years.  My bet is that they will, and believe Canada is an even ‘better place to be’ on Tuesday, May 3 than it was on Monday, May 2.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    May 03 11:27 AM | Link | Comment!
  • Required U.S. Tax Rates?

    A short article in The Wall Street Journal 'Real Time Economics Blog' titled 'To Contain Future Budget, U.S. Must Raise Taxes By 35%, Cut Entitlements 35%' - reading time 1 minute - reports on an International Monetary Fund ('IMF') working paper titled 'Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?' - reading time 30 minutes.  The IMF paper states its findings are that:  "under our baseline scenario, a full elimination of the fiscal and generational imbalances would require all taxes to go up and all transfers to be cut immediately and permanently by 35 percent.  A delay in the adjustment makes it more costly".


    I have said in many of my commentaries that the 'U.S. piper has to be paid' at some point, and that the only source of funds available to any government are the various forms of taxation that either exist, or that government legislates.  Can you imagine the 'hue and cry' if the U.S. Federal Government today legislated a 35% increase in taxes, and all transfers to entitlement programs were cut by 35%.  Moreover, can you imagine what that would do to the financial circumstance and lifestyle of Main Street Americans.  Even wealthy Americans might 'feel the pinch'.  Even if you can print your own fiat currency, you can't continue to get further and further in debt without ultimately suffering serious consequences - and in the end postponement strategies won't work.  Whether or not the conclusions in the IMF paper are credible in their quantum, from my perspective I think that as a minimum they have to be 'directionally right' - meaning that there is an 'ill wind blowing'.
    Apr 05 1:03 PM | Link | Comment!
  • Country Risk - A Very Big Deal!

    An April 2 article included two what I think are very interesting PowerPoint Presentations.  The first of these, titled '8 chokepoints threatening the world's key commodity supplies' - reading time 5 minutes - discusses the current events in eight countries that are and may continue to affect the prices of commodities those countries produce.  The eight are (1) Cote d'Ivorie (Ivory Coast) - coaco, (2) The Democratic Republic of Congo - tin, gold, coltan, (3) Nigeria - oil, (4) India - coal, (5) Indonesia - thermal coal, (6) China - rare earth metals, (7) Russia - wheat, and (8) The Middle East and North Africa - oil.


    That first PowerPoint Presentation links to a second titled 'A Brief Tour Of The 7 Oil Chokepoints That Are Crucial To The World Economy'.  A map and write-up on the following 7 what are referred to as 'Oil Chokepoints'.  The seven that are featured, with the number of million barrels per oil per day that flowed through them in 2009 are (1) The Strait of Hormuz, between Iran and The United Arab Emirates - 15.5 million bbl/d, (2) Malacca, between Indonesia and Malaysia - 13.6 million bbl/d, (3) The Suez Canal, between Eygpt and Saudi Arabia - 1.0 bbl/d, (4) Bab el-Mandab, between Saudi Arabia and Sudan - 3.2 million bbl/d, (5) Bosporus, in Turkey between the Black and Mediterranean Sea - 2.9 million bbl/d, (6) The Panama Canal, in Panama between the Caribbean Sea and the Pacific Ocean - 0.8 million bbl/d, and (7) The Danish Straits, between the Baltic Sea and the North Sea - 3.3 million bbl/d.


    I recommend that if you have not given thought to these so-called commodity and oil 'chokepoints', or if you have but don't know precisely where geographically the ones related to oil are located, you ought to take the time to review these PowerPoint Presentations.  I found them quite informative.


    That said, these Presentations brought home to me once again the importance of understanding the country risk faced by resource companies operating in what are, or may become, less than stable from a political or economic point of view.  If you need further convincing, read a recent article titled 'Ivory Coast On Brink Of Climactic Battle As Forces Fight Over Capital City' - reading time 3 minutes.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Apr 04 2:29 PM | Link | Comment!
Full index of posts »
Latest Followers

Latest Comments

Most Commented
  1. U.S. Television Coverage (2 Comments)
  2. Coming Civil Wars (1 Comment)
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.