derryl

Canadian Dollar Rattled by Shanghai Meltdown, Interventionist Talk

Very thorough and useful article, Mr. Dorsch.

Donald Ingram wrote, "No. I don't think so. Not enough of a population base, with the US at ten times the size. I'm afraid that Canadians will continue to be "hewers of wood and drawers of water" for some time to come. Almost all the natural resource exports are in a form just one step up from their raw natural state.
Until there is secondary and down the line added value production and refining, the economy will continue to be held captive by resource speculators."

There is truth to this. Aside from Southern Ontario and Quebec (where most of Canada's large scale manufacturing takes place) and Vancouver, most potential Cdn manufacturing or value added centers are too far from their markets to be viable. Cdn manufacturing tends to be specialty (like oilfield tools in Alberta) or other high value added but relatively low volume goods.

Alberta wants to upgrade and refine more of the bitumen it produces but labor costs here (I am Albertan) have been spiking since the recent run of tarsand plants construction. Chinese tarsands investors want to bring in their own labor from China. Texas and other US states in Alberta's downsteam can build refineries for half the price we can, so we ship raw material. The Alberta gov't has made deals to take bitumen in lieu of royalties in order to get raw material for an Alberta upgrader, which shows you that without subsidies this is an uneconomic endeavor. The newly combined Suncor and Petrocan will be upgrading, taking advantage of Suncor's low cost tarsands extraction and Petrocan's wide retail presence in Canada to make the economics of tarsand-to-gaspump work for them.

Alberta only has 3 million people and already much of our labor force is Cdns from other provinces, and immigrants. Alberta is nearly the size of Texas, which gives you an idea of how sparsely populated the province is, and most people live in the Edmonton to Calgary corridor. Alberta's population distribution is fairly typical for Canada as a whole, so it's easy to see why Cdns continue to be hewers of wood and drawers of water.

On the upside, there's (usually) lots of money to be made producing commodities so if that's Canada's near term future I can think of worse fates. The Montreal Institute recently published a plan for large scale water diversion through Quebec into the Great Lakes, with hydro plants along the route, which could make future water and electricity sales to the US a profitable venture. And as Gary Dorsch notes, Alberta has massive reserves of oil, plus coal and natural gas, and Canada is rich in a range of other resources.

Besides all that, from Canada's Northwest Territories you can see not only Russia but Sarah Palin too!

Rapid Loan Growth Pressuring China's Banking System

After the AAA derivatives debacle how is S&P's opinion of Chinese corporate governance and risk management given any credibility whatsoever? What would S&P's advice to Chinese banks be? Take sociopathic risks with your nation's currency, convince every grandma and pension fund in the land to buy 'tranches' of your neighbors' unrepayable debts as 'investments', charge extortionate fees on every trade, suck out half the profits for bonuses and use the rest to become too big to fail, run the scam until it collapses and virtually bankrupts your country, and we'll stamp you AAA all the way.

Or does S&P actually understand risk, which means they knowingly practiced fraud stamping AAA on MBS and CDOs as finance grew to 40% of US GDP?

Krugman to China: Go Green or Pay the Price

Solar doesn't work at night or when it's cloudy. Wind power doesn't work when it's calm. Battery technology to store power on a utilities scale does not exist. Exactly which science fiction alternate energy does Krugman advocate the Chinese should immediately adopt?