Is Vancouver teetering on the edge of bankruptcy? Are you old enough to remember the federal immigration policy instituted by Brian Mulroney which encouraged capital investment from abroad via the immigration system? Come to Canada and invest a sum while guaranteeing to employee a few. This was the start of the of the real estate growth wave in Vancouver. The program was only loosely monitored and became the conduit for infusing money into the lower mainland thereby ousting those native born without ancestral ties access to the market.
The demographic of Vancouver changed dramatically in a short
time frame and there was a definite cultural shift amidst a policy of “multiculturalism”.
This was new vocabulary established partly to challenge the xenophobe while
complementing robust immigration policy. When we look around at the cultural
mosaic today in lieu of the government message, we see some success but greater
failure. The greater failures were middle aged and older Asians not really
making the strong effort to immerse along with a white contingent who was not overly
welcoming. So, there was a contrast between the government’s ideal and the
urban reality. When we look around today, we can give strong marks to the
immigrants of millennial and younger generations for gravitating toward their
own Canadian destiny.
The capital infusion into B.C.’s lower mainland didn’t stop
with the economic immigrant. Banking regulation in Canada has been lax.
Imported capital has not been scrutinized. Dirty money has been making its way
into Canada for decades and politicians have turned a blind eye. Bankers liked
it. Bank shareholders have liked it. It’s only been as recent as four years ago
that money laundering activity at casinos in Vancouver became targeted by
These two sources of capital have been substantial in the
real estate market in Vancouver. As of this writing during the COVID-19
pandemic, the City of Vancouver has suggested bankruptcy as an option in the
context of 65 per cent of Vancouverites missing their April 1, 2020 property
tax payment. Fifty-five per cent are projected to miss their May 1st
2020 payment. What’s the correlation between a hypothesized artificial rise in
real estate valuation and the failure of the city to collect taxes amidst the
COVID crisis? I suggest that the city’s budget and historic spending grew in
tandem within the context of a property tax system built on a weak structure of
property valuation and hence the house of cards is now teetering amidst a black
I’ve made a habit of calling out the bull way before
COVID-19. Satire is one way of illuminating the ridiculous. Facebook friend OB
has presented George Carlin as an eloquent broadcaster of satire from the
comedy stage. Another way of bringing attention to incidences of bull is by
doing a logic drill down to discover source motive. The trouble with this
method is you need to be well researched because one flaw in your theory
weakens your posture.
One thing for certain becomes evident. Your governments don’t
believe you can conduct yourself with common sense. Or, they perpetrate policy
with a surreptitious motive of executing one policy in concert with executing a
larger purpose. Here is where we start
running into conspiracy theories.
Saving lives and health care finance are obviously worthy
causes. However; I do question the imposition of regulation without the
resources to enforce such regulation. Our governments have never endorsed using
non deputized citizens as law enforcement agents. Issues around civil liberties
become acute during a time when one entity starts behaving with misplaced
The COVID-19 story line is one where we see dribs and drabs
of regulation coloured with statistics and surprisingly muddled facts from
folks who claim to be experts. Then we have the wannabe experts who follow on
with their perceived social media empires believing that their message can fill
in for the factual void.
Of course despite the well publicized health recommendations
from official health authorities, we have tenants and landlords who want to
suddenly play hygiene and six foot police apparently ignorant of the
patronizing tone it bestows in a landscape where commercial vacancies are at
all time highs. Long term relationships are potentially jeopardized with naive
Let’s not forget the establishments which remain open but
then don’t want to serve anyway given the hysteria generated about germs. Want to
get glasses fitted but then be denied service despite the place being empty with
the doors open? We’ll remember who not to visit when things get back to normal.
We certainly don’t want to alienate long term relationships
through paranoia over a situation where we should be able to apply common sense
in the context of a broad message well heeded and well publicized from the
Canada is facing a large increase to the money supply in the context of new social programs associated with COVID-19. Your government in conjunction with financial news outlets do not want to use language like “increase the money supply” because it may be deemed alarming or inflationary. Instead, it refers to the monetary system in bankers code.
In essence, government securities are floated for
distribution to commercial banks via the country’s “central bank”. The creation
of this “security” (example would be a treasury bill or bond) in effect
provides the directive for printing press operators to flip the switch. However;
in advance of the creation of the new security, the central bank will check its
“reserves” to ensure that the “vaults” are sufficiently equipped with an “asset”
to merit the production of a new “security”. This is where things get
It used to be the case that gold characterized the reserve
asset. However; gold lost its lustre as a reserve asset when President Nixon
took the U.S. off the “Gold Standard” in 1971. President Roosevelt Roosevelt in
fact ordered Americans to return gold for dollars as a mechanism to cope with
The Great Depression.
So now, we have the creation of new money without a tangible
assets being served as its foundation for existence. Furthermore, we are
presented with ever increasing national debts represented by the apparent financing
of governments by holders of such securities which will stretch way beyond ledgers
of domestic commercial banks. We also have the vast majority of economists
supporting such a system and special interest groups professionally organized
to acquire government funding.
What can happen when a Black Swan event such as COVID-19
compels governments to inject new money in the hands of consumers in the
context of a monetary system which has no tangible asset at its root? Inflation
or deflation of course. This is the great debate. Logic dictates that prices
should rise with a larger monetary base. However; when social conditions
deteriorate, a hoarding impulse may compel folks to store their cash thereby
producing deflation. Every economist will tell you that the worst economic
scenario is one of “deflation”.
any exposure to “Austrian Economic Theory” will naturally defer to “Keynesian”
(flooding market with currency during demand drop) doctrine of mainstream
economic thought. Will next generations be contented with paying interest on
seemingly unsustainable national debts or will there be a consolidation at some
point? Author Jim Rickard has referenced the “Special Depository Right” as a
new unit of currency established by the International Monetary Fund.
So, you’re still a Trump fan? You’ve now heard of the $2 Trillion COVID-19 U.S. stimulus package – right. You recall that there was a bit of a delay in getting it through in spite of general bipartisan support. Well, it’s 880 pages apparently and room was needed to help along the one percent club during this health crisis. Yes. While health professionals scrambled without sufficient PPE ( you will know the acronym now) to care for the overwhelming caseload, while masses digested news of job loss, and while families hunkered down in self-isolation, legislators were hard at work fine tuning an earmark to grant a new tax benefit for the richest one per cent of Americans.
You see, the way you grant benefits to the one per cent club
is you change a tax provision. Those
earning this kind of money have “multiple streams of income”. Tax rules
typically have restrictions when it comes to amortization (depreciation). The
U.S. tax code up until the corona virus stimulus package had a limit on the
ability to deduct excess losses generated from amortization (depreciation) from
real estate (buildings) against other forms of income. The limit was $500,000.
This limit has been removed. Let’s think this through. For those real estate
developers who are now going to encounter serious drops in market valuation,
the probability of experiencing “recapture” on written down buildings in the
future during an ultimate disposal is reduced (lesser capital gain or loss),
but today they’ll get the benefit of reducing aggregate taxable income by utilizing
unlimited excess losses. Actually, not only today but they’ve been granted
retroactive treatment back to 2018 by amending their 2018 returns.
Now, do you want to cut Trump a little slack with his
incoherent COVID-19 bafflegab when
behind the scenes he was distracted on how to potentially profit from misery
with an earmarked addendum to a stimulus package?
What would an honourable leader do if he wanted to grant such a benefit? He would float the topic to the public, debate it openly in parliament and grant it a vote within its own piece of legislation.
Credits to CNN and NY Times.
There was an untimely elimination of an epidemiologist position in China back in July of 2019. You know how much Mr. Trump liked to exclaim “you’re fired” back when he hosted “The Apprentice”. It’s Reuters and four of their sources who expose this stunning revelation. The key post administered through the American Centre for Disease Control was bestowed the duty of identifying disease outbreaks in China. Dr. Linda Quick served in the role prior to it being extinguished. This woman actually trained Chinese field epidemiologists in concert with monitoring the public health landscape. Chinese American Bao-Ping Zhu who served in the role from 2007 to 2011 expressed his dismay to Reuters. The four sources also confided to Reuters that no other foreign disease experts were embedded in China after the departure of Dr. Quick.
Who would have thought during the taping of “The Apprentice”
that the term “you’re fired” by one, Donald Trump would one day come back and
haunt hundreds of thousands of people around the world whose health depends on
the early detection of deadly viruses? Were there other variables associated
with the outbreak? Yes. One very important variable would have been the
strength of the relationship between countries and the goodwill of China in
communicating issues around public health to the U.S. and the World Health
Organization. I’ll leave it to you to speculate whether Trump fostered
trustworthy relations with the Chinese. If these sources are correct, the World
Health Organization may have also failed in its duty to deploy resources inside
The matter of corporate interests in the aviation sector,
the “travel bug”, and duties of repatriating citizens, and limitations of
airports in dealing with crowds have also been key elements associated with
this pandemic of COVID-19. The aviation industry as we see it today and the negative
consequences we’ve come to realize were likely unimaginable to the Wright
Brothers as they pioneered motorized flight.
Has cavalier Trump posturing as Chief Medical Man having made irresponsible initial remarks during outbreak tempted New Yorkers to ignore social distancing guidelines? Governor Cuomo was appropriately eloquent and stern yesterday when bringing attention to the non-compliant social distancing behaviour of New Yorkers
One might ask…what role must the U.S. federal government
play in back stopping a “for profit” medical system with idle inventory of medical
supplies in the case of a pandemic? Well….when you look at some the spending
decisions made by Congress…one might suggest that this has been one hugely
over looked budget line item.
Given the character of Donald Trump and his propensity for
vindictiveness, it was easy to predict his “blame” on China for not
communicating effectively with his administration. Oh yes, he couldn’t help
himself from labelling the virus the “Chinese virus” as a reference to where he
thinks the blames lies never mind the racist overtone. You’ll recall the remark
pertaining to the white supremacists marching against the removal of
confederate statues. “There are good people on both sides.”
Instead of deferring to medical professionals and heeding
their counsel, he’s compelled to stand at the microphone and spew defensive
rhetoric when faced with legitimate questions at his gong show of a daily
briefing. After pointing Pence as the front man, his unwavering ego of course demands
As one procurer of medical supplies has pointed out “it’s
the wild west”. Perhaps, a phrase which aptly characterizes the White House
operations tainted with nepotism, oppression evident by personnel turnover, and
skulduggery exemplified by Ukraine / Biden scandal. America, you had your
chance to oust him but were denied due to gutless senators holding the party
Recommendations for the federal government of Canada in lieu of corona virus pandemic and economic crisis. Will they listen? I don’t know.
- Permit the purchase and sale of unused RRSP contribution room.
- Permit the direct tax deductibility of net capital losses up to a maximum of $25,000 per year.
- Rewrite usery laws prohibiting lenders from charging more that a seven per cent differential from the Bank of Canada overnight rate.
- Reassess affordability of Canada Child Benefit program.
- Expropriate treaty land deemed necessary for commercial development from which fair negotiations have failed.
- Proclaim jurisdiction over tide water ports with constitutional amendment if required.
- Assign able bodied unemployed men to environmental remediation projects.
- Improve service channels to Canadians via CRA and Service Canada.
- Impose and enforce director liability for environmental negligence.
- Responsibly incentivize investors interested in the development of our natural resources.
If any reader finds this list appropriate, do feel free to
copy the items into a letter addressed to any Canadian politician you deem open
You’ll notice that your governments are speaking in code
much of the time when it comes to addressing the financial impact, consequences
to your household, and detail pertaining to your access to credit facilities in
the context of COVID-19. Your Prime Minister is once again scheduled to address
the nation at 11:30am EST. We’ll see if he get his “head of his a@s” and starts
speaking in terms of your household cheque book.
While the Bank of Canada rate has been reduced over the past
decade, margins between the “overnight rate”, “prim rate” and “retail lending”
has widened. That’s right…the banking system has done very well because you
my fellow Canadian has been too happy to pay interest in the wide margins.
This crisis has hit while you are highly leveraged meaning
that many more of you will now be faced with bankruptcy unless your government
starts REGULATING THE BANKING SECTOR in terms that assist you in managing your
debt. The board of directors of your chartered banks won’t be too warm to that
idea especially in lieu of their confounding argument that masses of Canadians
hold chartered bank stock in their registered investments.
From what I can see so far, your government is going to be
floating more “paper” in order to free up credit. The term “paper” refers to
securities which may take the form of derivative contracts. Oh ya…you
remember those – the ones that produced the financial crisis of ’08 / ’09 (mortgage
backed securities). Of course your government will also be referring to the “purchase
of bonds” which is code for creating new money out of thin air with a charge to
your grandchildren’s future.
This is what’s on my mind today as I receive emails
pertaining to COVID-19 from those compelled to exhibit their interpretation of
this virus in the context of their platform / agenda / business relationship
with you / notion of how think you now need to operate in the context of their
interpretation of the public health message.
Everybody’s got an opinion and they have needed to learn how
to type in order to convey it through the internet. Thanks god I took typing
class in grade 9 with all the girls while my friends took shop as their
elective. What were they thinking?
Anyway….I’m amused by superfluous posts and reposts of
value driven dogma which percolates occasionally on internet threads. Suddenly
an audience is illuminated through a key stroke when the more difficult gesture
would be a letter to a member of parliament (yes, I have written them in case
Then there’s the internet companies who literally dictate
terms and then await the fall out. I guess Apple app developers receive
automated bots for feedback on why their apps disqualify for hosting. I’ve had
a copyright claim on youtube within the first 30 seconds of upload. They couldn’t
have possible got through the full 1:58 in order to fully digest the
material. I’ll be at their mercy with my
28 subscribers having uploaded to “private” never intending to monetize the video.
Then there’s the government
with its tax collection and system of correspondence now pretty much dictating communication
through the internet as opposed to a live person. If you really want to talk to
somebody, you’ll have to navigate the phone auto attendant just to find the
queue to wait in for 30 minutes. Your music will certainly be interrupted frequently
with messages of education hoping you’ll find some nugget of information thereby
reducing the probability of being redundant when you finally get through to
talk to that agent. This agent will need to provide you their agent ID number.
Have your pen handy for those 30 minutes ‘cause they spout it off quickly
hoping you’ll not catch it thereby potentially not being liable for the
You get the drift. We have all these phones now but folks
don’t want to talk on them for anything relevant to their business or
professional life. Email or text only please – I’m now conversation inept
having been raised behind a computer screen.
One must ask, are we now more efficient? I suggest yes at
times and no oftentimes. Nobody wants to be controlled but they do want balanced
reciprocation. People know when they are being controlled and they will resent
it. When communication is compromised – so is the relationship.