Canadian Court System Awards Children of Russian Spies Citizenship

The Canadian judicial system for the second time in a number of months has betrayed citizens and what it means to be Canadian.

The Federal Court decided to award Timothy and Alxander Vavilov Canadian citizenship in separate rulings despite being the children of Russian Federal Security Bureau agents who had been actively operating clandestinely in Canada.

The spies were operating illegally in Canada under aliases Donald Heathfield and Tracey Ann Foley before being arrested in the United States and being indicted on charges of conspiring to act as secret agents on behalf of the Kremlin.

Under the Canadian Citizenship Act, children of employees of foreign governments are not Canadian. Despite this clear doctrine, the court felt that because the spies were not registered as diplomats they did not fall under this category.

Another great decision by the court that devalues Canadian citizenship and empowers the children of our strategic opponent - Russia. 

The Federal Government is appealing the decision to the Supreme Court. More to come....

Gender Neutral Pipelines, Emotionally Sensitive Nuclear Reactors and Intersectional Mineral Resource Development (Not Making this Shit Up)

A year flies by and the world seems to have moved crazier faster - really reminding me of the need to try and provide slightly sarcastic yet rigorous commentary on the shit show that we call news, business, finance, politics and life in the 21st century.

So let's get started - first on our hit list for the year.

The Canadian Liberal government recently passed Bills C-68 and C-69 to change federal environmental impact assessments pursuant to the Canadian Energy Regulator Act and the Nuclear Safety and Control Act.

I remember when the Liberals in their run up to the previous federal election committed to evidence based policy.  Apparently, they have abandoned that principle in a cynical power play to co-opt support from the near collapse of the federal NDP under Jagmeet Singh.

Gender-based analysis may very well have some merit in evaluating social programs and the effectiveness of social policy as it relates to minority social groups. Fair enough.

It is however is not science and does not use the scientific method. It is an ideology, and religion that has turned identity politics into god over all else including science. Not unlike Mao's Red guard during the Cultural Revolution.

Imposing gender based and intersectional analysis on government administration is the equivalent of imposing religious belief tests on government.

Now - as it relates to pipelines, nuclear reactors and mines - there is no tangible or measurable outcome that benefits Canadians by adding these highly subjective and non-evidence based requirements to enviromental impact assessments.

What this will do - is undermine the credibility of environmental assessments by making them political and subjective in nature and will drive investment away in major Canadian infrastructure projects.

Environmental assessments are worthwhile. 

Unfortunately by making them ideology and not evidence based, the Liberals are playing into the hands of the alt-right populists who want to destroy the regulatory state.

Trudeau's legacy will be one of bringing the American culture wars up North.

Beating Dead Unicorns (Uber, Twitter, Snapchat,......)

Silicon valley loves to think of itself as the center of disruption and living on the very front edge of innovation. Everything is disruptable - systems, laws, labour, tradition, culture and everything else under the sun.

To be fair, the culture has resulted in grassroots overhauls of access to knowledge (Google), individual productivity (Microsoft), community (Facebook), sales (Amazon), style (Apple) and possibly more.

Recent unicorns Uber, Twitter and Snapchat are symptomatic of a much bigger problem however. None of them make money...

Uber, seeking to revolutionize the transportation sector, is the fastest money losing company in US history and is going to get crushed because of its supportive role in stealing Google's self-driving technology.

Twitter, the oldest of the really sick unicorns if you don't consider Yahoo to be half buried in the graveyard, hasn't made money in 10 years, its founders divested most of their stock with the IPO in 2013. Aside from the new US President who is obviously a fan - user growth is near non-existent, and what user base is left is getting overrun with trolls.

Snapchat - worth $22 billion, just listed on the exchange, has never made a profit, but the brand is valuable because it caters to young people.

Get ready for a ride :-)

Mortgage Backed Zombies (MBS Edition)

Return of the zombies... Mortgage backed securities almost blew up the global market in 2009 after shady mortgage originators packaged liar loans, securitized them, and distributed "rock solid" real estate backed securities to investors around the world.

Apparently, Capital Direct, a Canadian originator of mortgage backed securities is now trying to pawn off high risk, high interest mortgages tied to the Alberta, British Columbia and Toronto real estate market.

The advertisement in the newspaper (above) details an annualized 7.64% return in 1 year. Although, the loan to value ratio is healthy at 53.1 - the composition of the security in question is high questionable.  Interest rates are at historic lows and residential mortgages from banks are widely advertised at 2.35%.

Which means, either the security is being subsidized  by Capital Direct for the first year over a multi-year holding - so they can get rid of a bad mortgage.

Or -

The debtor is very high risk and paying an interest rate effectively 3 times the market rate.

The rise of securitization prior to the financial crisis in the United States functioned as a primary means of allowing over valued real estate markets to access global capital markets and moved risk away from mortgage issuers to global investors.

It would appear that Capital Direct is looking to push risky assets on unsophisticated investors. It will be very telling and likely will bode poorly for Canada's real estate market if this industry grows substantially in the short term.

French Resistance or French Surrender?

France is easily one of the coolest countries on the planet. 

Between its cultural vivacity and the independent intellectual esprit de coeur of its citizens, France arguably more so than any country  influences global culture on a per capita basis. 

France's empire may be long deceased however French culture today spans the globe. 

The country's great cultural industries and exports depend on free trade, cultural openness, and a willingness to engage the world.

And yet the dreary reality of politics, society and upcoming French Presidential elections threatens the country's outward looking successes.

French cool.... unfortunately can't fix French reality. The country's de-industrialization over the last quarter century has brought on a brutal world where youth unemployment exceeds 25%.

A long march towards the same old crazy story... Donald Trump... no Marine Le Pen.

The European Union is burning. America is retreating. Russia is gaining. Britain is bonkers. France needs to hold the line but will it? 

The upcoming French Presidential elections will determine the fate of Europe as a political body and with it a large part of the globalist project.

Pollsters predict a run-off between Marine Le Pen and another. It is unclear as to whether any mainstream political candidate has the capacity or popularity to deal with this menace.

Marine Le Pen is a bigot, a fraud and possibly (hopefully not) the next President of France.

Grabbing Mexico by the Pussy

Reddit

The Mexicans are the real losers of the US election.

Mexican companies and workers have been one of the greatest beneficiaries of the North American Free Trade Agreement and globalization. The country in nominal terms is the 15th largest economy ($1.1 trillion USD) and 11th ($2.3 trillion) when measured by purchasing power parity globally. It climbed out its nearly frozen economy and became a major exporter of consumer electronics, OEM manufacturing, and vehicle production.

Donald Trump's singling out of Mexico and globalization as the source of the collapse of US manufacturing seems inspired by Ross Perot's 1992 statement that trade agreements were sending jobs overseas and that an agreement with Mexico was a "giant sucking sound [of US jobs] going south".

As a good friend, the Canadian Government is already looking at throwing Mexico under the bus as part of preliminary discussions with the new US Government to set up a bilateral trading agreement to replace NAFTA. Prime Minister Trudeau is scheduled to meet Donald Trump's son-in-law Jared Kushner in Calgary on January 24th as part of efforts by the Trump administration to reach out to Ottawa.

Meanwhile, President Henrique Pena Nieto faces difficult questions at home on a projected slow down to the Mexican economy and very large uncertainty linked to its primary export market the US.

If indeed NAFTA collapses into a bilateral Canadian-US agreement the real question is what happens to Mexico? The country has sought to expand trade in recent years and signed free trade agreements with 44 countries such as the EU, Israel, EFTA, Japan and various other countries. This has not brought the necessary gains in export markets as still nearly 80 percent of exports went to the US in 2013.

In other words, Trump's got Mexico by the pussy.

2017 - The Year of the Trump Card on Trade

This week global decision makers are meeting for the 2017 World Economic Forum in Davos, Switzerland. The post-Cold War global institutional order arguably faces its most serious challenge with the election of Donald Trump, Brexit, looming elections in Italy and France, the European migrant crisis and worsening economic equality.

Donald Trump's pre-inauguration threat of imposing a 35 percent tax on the US import of luxury German cars just days before Davos epitomizes the fundamental discord between populist and globalist value systems.

However, the likelihood that Trump will successfully pass legislation that imposes new tariffs on European exports to the United States is unlikely given that the majority of Republicans in Congress are pro-free trade.

This institutional opposition to his populist and local mandate means that other more radical strategies could be pursued by the incoming administration.

President-elect Trump does have the constitutionally mandated power to withdraw from treaties without congressional input. There is recent precedence with President George W. Bush's unilateral withdraw from the Anti-Ballistic Missile Treaty in June 2002.

The post-WWII international framework in trade and politics was largely established by the international treaty system and there is very little to stop the incoming Presidential administration to simply pick-up and leave where it chooses to do so. Indeed, trade agreements such as NAFTA could very face a Trump chopping block. Alternatively, Trump could use this threat as a bargaining chip to force congress to impose modest tariffs against countries instead of an executive forced total withdraw.

It is going to be an interesting year. In particular, the future appointment of a new Justice to the US Supreme Court could be very influential in determining the future interpretation of the separation of legislative and executive powers.

A Trump appointment not surprisingly may be distinct in their support for the expansion of executive purview, something that contrasts deeply with Republican lawmakers' policy over the last 30 years.