Canada's Place in the Global Economy

[a_majoor]

Heh

 

[Xiang]

I have a feeling things are going to be getting much worse in the future, not better. 

If any of you have any investments, I would suggest putting those assets into precious metals (ie: gold and silver).  Paper currency is doing to be hitting a wall soon with the risk of hyper inflation.

 

[a_majoor]

While this should not be a surprise after the thuggish treatment of Chrysler bond holders, it is very instructive to see and understand. Should Canadian business or political interests conflict with "The One" or his political supporters, expect pretty rough treatment for our side. Even our trump card; plentiful oil, might not be enough to help us:

http://gatewaypundit.blogspot.com/2009/05/even-gop-congressman-loses-chrysler.html

Even GOP Congressman Loses Chrysler Dealership ...Plus Peoria GOP Supporter Losing "5 Star" Business

More Hope and Change...

** Earlier it was reported that the Obama Administration may have targeted GOP donors in deciding which Chrysler dealerships would have to close their doors.
** Last night it was discovered that a Big Dem Donor Group was allowed to keep all 6 Chrysler dealerships open.... And, their local competitors were eliminated by Obama's task force.
** The closings also tend to be in "Red" Counties where Obama lost.

Now this...
Rep. Vern Buchanan (R-Fla) lost his Chrysler dealership in Florida.

Rep. Buchanan found out about it from a fellow colleague.
Again... It was Obama's task force who made the decision about which dealerships would close and which would stay open.
News 10 reported:


Even a member of Congress is on Chrysler's dealership hit list.

Rep. Vern Buchanan, R-Fla., a businessman who has owned car dealerships since 1992, learned Thursday that his Venice, Fla., Dodge dealership was among those scheduled to be terminated.

"It's an outrage. It's not about me. I'm going to be fine," said Buchanan, the dealership's majority owner. "You're talking over 100,000 jobs. We're supposed to be in the business of creating jobs, not killing jobs."

Chrysler LLC disclosed that it intends to close about a quarter of its 3,200 U.S. dealerships by June 9, saying in a bankruptcy court filing that the network has too many stores competing against each other. Buchanan's dealership is the first listed on the court document specifying the dealerships scheduled for closure.

Buchanan owns five dealership locations in Florida and North Carolina. He once owned 23 car franchises and sold off about 60 percent of his car dealerships before entering Congress. His Dodge dealership in Venice also includes a Nissan store.

"This doesn't do anything but hurt Chrysler. This doesn't help Chrysler. And they're going to be hurting a lot of working families," said Buchanan, who was first elected to Congress in 2006 to a seat previously held by Rep. Katherine Harris, R-Fla.

While many dealers learned the news through United Parcel Service letters, Buchanan found out from a House colleague.
Then there are the Uftring dealerships in Peoria, Illinois...

Car dealer Gary Uftring speaks during a press conference in front Uftring Chrysler in Peoria Sunday morning. The Uftring Chrysler dealership is one of the thousands of dealerships being forced to close by bankruptcy proceedings against the ailing automaker. Congressman Aaron Schock, left, has joined with several of his colleagues to officially question the forced closures that will be affecting local economies across the nation. (PJStar)

Rep. Aaron Schock's supporter Gary Uftring from Peoria, Illinois is losing two of his franchises even though they are "5 Star Dealerships" that make money.
PJSTar reported:

U.S. Rep. Aaron Schock blasted Chrysler's decision to shutter nearly 800 dealerships across the country, including two here that he and others say are making money and not costing the automaker a dime.

Joined by Gary Uftring, owner of Uftring Auto Mall, Schock stressed that there should be greater accountability of the governmental task force tapped by the Obama administration to review the overhaul of the domestic auto industry.

"This happened not because they failed, not because of market pressure, but because of a third party, the government, which intervened," the congressman said, saying the government shouldn't be in the business of dictating business decisions to an entire industry.

To him, the decision to close shop makes no sense. He claims he met all sales expectations and never cost Chrysler money. Rather, he said, he was a "Five Star" dealership, the highest rating Chrysler gives, and one of the better-selling dealerships.

Terry Allen, whose Chrysler dealership in Mason City will be eliminated, said his business was the top sales tax generator in the area. He, like Uftring, said he met or exceeded all expectations from the car maker but in the end, has about three weeks left as a dealer.

More... George W.Bush attended Aaron's fundraiser. Local libs threw a fit about the cost for security. Aaron left his campaign to return to Peoria to announce he'd pay for it, other costs were covered through the fundraiser.

Previously:
Hope, Change & Marxism: Did Obama Target GOP Donors In Chrysler Dealer Closings? (Video)
Shock! Big Dem Donor Group Allowed to Keep Their 6 Chrysler Dealerships Open
More On Chrysler Closings-- Did Team Obama Target Red Counties?
Posted by Gateway Pundit at 5/27/2009 05:24:00 AM 

 

[GAP]

Sure starting to look like Obama and Mugabe have a lot in common.

 

[a_majoor]

The real question should be; when will the repudiation of the debt take place?

http://business.theatlantic.com/2009/05/us_debt_668621_per_household.php

U.S. Debt $668,621 Per Household

No that's not a typo: that's the statistic according to USA Today. The folks over there have done some really great work this week with another interesting interactive chart attached to an article about the nation's debt. If they keep this up, I'll have to stop considering it a useless free newspaper I step over when leaving a hotel room. The numbers it reports are staggering.

Again, I wish I could include the interactive chart it shows, but it breaks down the $668,621 by various components of federal government debt ($546,668) and personal debt ($121,953). Presumably that means this astronomical figure does not even include state and local government debt. I thought it might be fun to put this number into perspective.

Because it's pretty hard to identify what the weighted-average interest rate is for this debt, I show a few different scenarios. That way you can decide for yourself which scenario you find most plausible. The interest rate is shown, along with two different time horizons for each scenario. I then provide the amount of money that would be needed to pay off the debt per household, per year.

Scenario #1: 5%
30 years: $43,469
50 years: $36,603

Scenario #2: 3%
30 years: $34,092
50 years: $25,971

Scenario #3: 0%
30 years: $22,274
50 years: $13,364

So in the hopelessly optimistic best case scenario, each American household would have to pay $13,364 per year for 50 years. That is, of course, assuming that the federal government closes the deficit (fat chance), and each household does not incur additional debt (doubtful). And recall: it does not include state and local debt. According to U.S. Census Bureau data, the 2007 median household income was $50,233 -- before taxes. So you can kind of imagine how impossible even the best case scenario of $13,364 per household, per year would be anyway.

I admit this is a gross oversimplification. It does not consider inflation, which is sure to happen, and which will help a bit. But if you assume the above interest rates are real interest rates (nominal interest rate minus inflation), then this might make the 0% scenario a little more likely -- but probably not for 30 or 50 years, I hope. My scenarios also do not consider U.S. population growth, which there undoubtedly will be.

Despite its simplicity, I think this analysis shows just how dire a situation the nation's debt poses. I know there's a popular argument that we've always been in debt, so it's nothing to worry about. As these numbers continue to grow, however, I think the plausibility of that argument wanes.

 

[a_majoor]

Market forces are always at work, how they reveal themselves is sometimes tricky. The Obama Administrations spending plans are drawing out "Bond Vigilantes" who will push interest rates ever higher as they factor in risk, or the US Treasury will resort to massive inflation to monetize and devalue the debt.

Either outcome (and it is actually possible to end up with both) will make Canada's economy sputter. Possible outs for us include (but are not limited to): opening new trade agreements with Anglosphere partners like India and Australia, so we are not totally swamped by the effects of the US economy; making deep cuts in taxation and spending in order to really stimulate the economy and attract capital and talent from the US and EU; make changes to your personal portfolios and transfer assets to items with real value (the "bricks and mortar" referenced in the post):

http://www.dustmybroom.com/index.php?option=com_content&view=article&id=11775:the-sixth-estate&catid=42olitics

The Sixth Estate
Written by Publius 
Wednesday, 03 June 2009 05:15

Edmund Burke is suppose to have coined the term Fourth Estate, referring to the print media of his era.  The emergence of electronic broadcasting earned it, in some quarters, the title of the Fifth Estate, which was also a long running investigative program on CBC.  The modern welfare state, avaricious in its demands, often exceeds the tax base of its citizenry.  To make up for the shortfall the state turns to global capital markets and the printing press. Memories of Stagflation are still fresh enough to make inflating away the fiscal crisis, in effect a form of taxation, a unpalatable first choice.  When President Clinton attempted to spend his way out of the recession of the early 1990s, he was rewarded with a Republican Congress and rapidly increasing yields on government securities.  The global bond market balked as his spendthrift ways and earned the sobriquet of "bond market vigilantes."  They seem to be repeating the trick today.  Acting like a Sixth Estate of government, checking the fiscal recklessness of the legislative and executive branches.  As President Obama finds it more and more difficult to finance his massive government expansion, he will be forced to abandon his plans - unlikely - or resort to monetizing the deficit.  Getting yourself into bricks and mortar right now would be a good idea. 

 

[Edward Campbell]

One of the most significant problems facing Canada is: low productivity.

Canada’s poor productivity is rarely discussed. First: productivity discussions tend to be technical and, therefore, for most people, boring; they are not “good” news; they do not attract viewers/readers; they do not, consequentially, sell soap. Second: there is a broad, ill informed, perception that improved productivity means workers doing more for less; this means that political and opinion leaders are reluctant to discuss productivity lest they be accused of “bashing” labour.

Labour can be, frequently is, part of the productivity problem but, usually – even when we see too high labour costs in e.g. the auto industry – it is a minor part of a deeper problem. Most of the “blame” for Canada’s poor productivity can be laid at the feet of two groups: business/industry leaders and managers, and political "leaders."

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, is an editorial that deals, correctly, with one part of the failure in political leadership:

NAFTA did its best to help
The ‘buy-American' problem for Canadian exporters and manufacturers might well have been averted

From Wednesday's Globe and Mail, Wednesday, Jun. 10, 2009 03:27AM EDT

The “buy-American” problem for Canadian exporters and manufacturers might well have been averted, if a series of federal Canadian governments – or any or all of them – had pursued the goal explicitly set out in NAFTA of extending free trade to state, provincial and municipal government procurement.
In Article 1024 of NAFTA, Canada, Mexico and the United States agreed to start negotiations, before the end of 1998, on further liberalization of government procurement. And even before that, these three national governments undertook to try to get states and provinces to commit themselves to be covered by NAFTA's procurement chapter.

But according to Lawrence Herman, a leading trade expert at Cassels Brock & Blackwell LLP, the government of Canada has not taken serious action to fulfill this section of NAFTA since the agreement came into force 15 years ago.

Both Liberal and Conservatives governments appear to have taken the path of least resistance in not leaning upon Canadian provinces and municipalities to agree to at least some degree of free trade in procurement with the United States.

Meanwhile, Britain, France, Germany, most of the rest of the European Union, Australia, Chile, Mexico, Peru, Singapore and other countries have negotiated reciprocal sub-federal procurement rights with the U.S., and thus protected themselves ahead of time against the “buy-American” provisions in the U.S. infrastructure-stimulus measures.

Not all American states have granted full procurement rights to those countries, but the 40 that have done so include such large states as California, New York, Illinois, Massachusetts and Michigan.

“Canada blithely went along,” says Mr. Herman, “thinking we didn't need these rights, while almost all the other major trading partners of the U.S. secured them for themselves. What were we thinking?”

The answer to that rhetorical question is probably, “Not much.”

This past weekend, the Federation of Canadian Municipalities implicitly expressed the tardy repentance of many such entities. They would have been wise to press Ottawa to pursue this issue before the recession struck.

The FCM passed a resolution that may do some good by bringing attention to this problem. Though it makes a threat not to procure goods and materials from countries that put trade restrictions on Canadian goods and materials, the wording is full of support for “free and fair trade,” and it suspends any retaliation for 120 days, in the hope that bilateral U.S.-Canada negotiations will do away with the buy-American clauses. That will be difficult.

The moral of the story is that such matters should be dealt with in good times, before panic tempts governments, large and small, into protectionist measures.

The key is: ”the path of least resistance”. Canadian politicians, heavily influenced by business/industry leaders, are too timid or too lazy or, perhaps, just too disinterested, to “do the right thing” or even to “do things right.” (In case anyone is wondering, that maxim – leaders do the right thing, mangers do things right - is from Prof. Warren G Bennis  - see: here.)

Whether it is R&D (policy and funding), immigration, or treaty negotiation and internal trade barriers, Canadian politicians, Conservatives, Liberals, NDippers and PQistes alike, have failed in their duties to their country. This failure began with Sir John A Macdonald and extends, in an almost unbroken line, through to Stephen Harper - and anyone who thinks Michael Ignatieff might be any different is too naive to be allowed out alone.

Our national political culture rewards failure, so long as that failure doesn’t upset the parochial, counterproductive status quo.

The national hand wringing by e.g. municipal politicians is misplaced outrage. America is not the enemy; the enemy is in Ottawa and Victoria and St. John’s and Toronto (on Bay Street and at Queen’s Park) and so on. Ill informed, lazy and cowardly Canadian politicians – not Barak Obama’s Democrats – are the authors of our (quite unnecessary) problems with Buy America.

Of course, low quality politicians are just a symptom: the disease is stupid, lazy, greedy and envious Canadian voters. We get the governments we deserve.

 

[a_majoor]

Get used to our largest market sputtering:

http://online.wsj.com/article/SB124753106668435899.html

The Small Business Surtax
The Obama Democrats pick income redistribution over job creation and economic growth.

Jason Furman owes an apology to Michael Boskin, the Stanford economist who wrote a year ago on these pages that Barack Obama would raise American income tax rates nearly to 60%. Mr. Furman, then in the Obama campaign and now at the White House, claimed this was wrong and that Democrats would merely raise taxes back to their Clinton-era level.

House Democrats are now proving that Mr. Boskin had it right, and before it's over even he may have underestimated how high taxes will go. In the middle of a recession and with rising unemployment, Democrats have been letting it leak that they want to raise U.S. tax rates higher than they've been in nearly 30 years in order to finance government health care.

Every detail isn't known, but late last week Ways and Means Chairman Charlie Rangel disclosed that his draft bill would impose a "surtax" on individuals with adjusted gross income of more than $280,000 a year. This would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study. That study also found that almost half of the income taxed at this highest rate is small business income from the more than 500,000 sole proprietorships and subchapter S corporations whose owners pay the individual rate.

In addition, many more smaller business owners with lower profits would be hit by the Rangel plan's payroll tax surcharge. That surcharge would apply to all firms with 25 or more workers that don't offer health insurance to their employees, and it would amount to an astonishing eight percentage point fee above the current 15% payroll levy.

Here's the ugly income-tax math. First, Mr. Obama has promised to let the lower Bush tax rates expire after 2010. This would raise the top personal income tax rate to 39.6% from 35%, and the next rate to 36% from 33%. The Bush expiration would also phase out various tax deductions and exemptions, bringing the top marginal rate to as high as 41%.

Then add the Rangel Surtax of one percentage point, starting at $280,000 ($350,000 for couples), plus another percentage point at $400,000 ($500,000 for couples), rising to three points on more than $800,000 ($1 million) in 2011. But wait, there's more. The surcharge could rise by two more percentage points in 2013 if health-care costs are larger than advertised -- which is a near-certainty. Add all of this up and the top marginal tax rate would climb to 46%, which hasn't been seen in the U.S. since the Reagan tax reform of 1986 cut the top rate to 28% from 50%.

States have also been raising their income tax rates, so in California and New York City the top rate would be around 58%. The Tax Foundation reports that at least half of all states would have combined state-federal tax rates of more than 50%.

Mr. Rangel also wants to apply his surcharges to investment income like capital gains. So the combined effect of repealing the Bush tax cuts and the new surcharges would be to raise the tax on stock appreciation by at least 60% -- to as high as 24% from 15% today. President Obama has been worrying about a capital squeeze on small businesses, but raising the capital gains tax would only further starve them of funds.

Democrats claim these tax increases on the rich won't do any economic harm. They should read the work of Christina Romer before she became chief White House economist. Ms. Romer and her husband, David Romer, a Berkeley economist, have published multiple studies on the impact of tax policy changes over the past 100 years. One of their findings is that "tax increases appear to have a very large, sustained and highly significant negative impact on output." In other words, tax hikes are an antistimulus.

Another implication of the Rangel plan is that America's successful small businesses would pay higher tax rates than the Fortune 500, and for that matter than most companies around the world. The corporate federal-state tax rate applied to General Electric and Google is about 39% in the U.S., and the business tax rate is about 25% in the OECD countries. So the U.S. would have close to the most punitive taxes on small business income anywhere on the globe.

Mr. Rangel and House Democrats are also banking on the idea that raising tax rates by 20% will raise 20% more tax revenue, but that's like telling Wal-Mart it can raise prices by 20% and get 20% more profit. When taxes on the rich rise, their reported income tends to decline. The last time the top federal income tax rate was 50%, the richest 1% paid only about 25% of all income taxes. Today, at a 35% rate they pay nearly 40%.

A new study by the Kaufman Foundation finds that small business entrepreneurs have led America out of its last seven post-World War II recessions. They also generate about two of every three new jobs during a recovery. The more the Obama Democrats reveal of their policies, the more it's clear that they prize income redistribution above all else, including job creation and economic growth.

Our plan should be very clear at this point, offer countervailing tax policies to attract American small businesspeople and capital to Canada, and power up our economy. If Canadian business leaders and politicians are not interested in productivity, then import the people with the talent and money to make it happen.

A combination of energizing our internal economy through tax cuts and importing talent and capital, and seeking alternative markets such as India for Canadian goods and services will go a long way to countering the effects of an American economic contraction.

 

[tomahawk6]

As the tax bite gets bigger more companies will look for attractive markets. Capital flight will be a big problem for Obama.
Many punditd here think the democrats are intentionally tanking the economy by shredding the private sector and moving that capital into government control. National healthcare would enable Obama to fully control the lives of every citizen. This is all about control.

 

[SeaKingTacco]

I don't think its that sinister, T6.

A more likely scenario is that they don't have a friggin clue about basic economics and are just incompetent.

Never underestimate the damage that a well-meaning busy-body can do.

 

[observor 69]

I don't think its that sinister, T6.

A more likely scenario is that they don't have a friggin clue about basic economics and are just incompetent.

Never underestimate the damage that a well-meaning busy-body can do.

The majority of US economists recognize that the national economy is in a place it has never been before and traditional solutions don't apply.
Obama is fortunately a pragmatic leader who problem solves by seeking the most qualified advice available.
Unfortunately he is restricted from following this best advice by the political reality of Congress.
This scenario applies to virtually all the national issue he is confronting.

 

[Edward Campbell]

...

Our plan should be very clear at this point, offer countervailing tax policies to attract American small businesspeople and capital to Canada, and power up our economy. If Canadian business leaders and politicians are not interested in productivity, then import the people with the talent and money to make it happen.

A combination of energizing our internal economy through tax cuts and importing talent and capital, and seeking alternative markets such as India for Canadian goods and services will go a long way to countering the effects of an American economic contraction.

Thucydides is correct: we need to find and set that fine balance between low enough costs to attract and maintain business/jobs, including taxes – they are only one cost, and high enough taxes to maintain public goods and services, including public works like sewers and roads, and public services like garbage collection, fire protection and health care.

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail is a girlishly hysterical diatribe from resident tax-and-spend-Liberal Jeffrey Simpson in which he tells us that the sky is falling:

http://www.theglobeandmail.com/news/opinions/a-very-scary-pm-i-dont-believe-that-any-taxes-are-good-taxes/article1216778/

A very scary PM: ‘I don’t believe
that any taxes are good taxes’
Did Stephen Harper misspeak on taxes? Was it a figure of speech?

Tuesday, Jul. 14, 2009

You know, there's two schools in economics on this. One is that there are some good taxes and the other is that no taxes are good taxes. I'm in the latter category. I don't believe that any taxes are good taxes.
– Stephen Harper, July 10

This assertion, from an interview the Prime Minister gave The Globe and Mail after the G8 summit in Italy, is one of the most stunning, revealing and, frankly, ignorant statements ever made by a prime minister, let alone one who keeps purporting to be an economist, despite doing so many things that economists deplore.

Think about it: The prime minister of a country is saying, “I don't believe that any taxes are good taxes.”

There is no “school,” to use Stephen Harper's word, anywhere in economics that says “no taxes are good taxes.” Not even Milton Friedman and the Chicago school think that. Nor do Mr. Harper's former mentors at the University of Calgary.

They, like right-wing politicians, might think taxes are too high, maybe way too high. They might think the private sector can do lots of things better than the public sector. They might believe taxes should be lower. But anyone who says “no taxes are good taxes” and “I don't believe that any taxes are good taxes” is wrong economically, and very, very scary socially and politically.

Only libertarian anarchists believe that all taxes are bad, and that society can get along without them. But who will pay, if not citizens, for the military on which the Harper government is lavishing billions of dollars? Who will pay for the police, the courts?

Who will provide, if not the taxpayers, the revenues to pay for the two services that even the most right-wing ideologues agree only public authorities can provide: the defence of the realm, and law and order?

Maybe the Prime Minister misspoke. Maybe he was just using a figure of speech, although he could have said something like “all taxes are a necessary evil.” But even that “necessary evil” idea is different from saying all taxes are bad, because the “evil” of taxation is “necessary,” as indeed it is in any civilized society.

Presumably, there lurks inside the Prime Minister an anger about much of contemporary society that has been built with taxpayers' money, an anger contained by the political reality that the Prime Minister can't do much about this state of affairs.

Indeed, the comment harkens back to Mr. Harper's days shilling for the National Citizens Coalition and early years with the Reform Party, when he believed that just about everything governments were doing was bad and wasteful and led to huge deficits. Since then, and especially as Prime Minister, Mr. Harper has shelved many of those views, since a distinguishing characteristic of his government has been a reluctance to cut government spending.

Not a single major government program has been eliminated since he took office, perhaps because of minority governments, or perhaps because political reality has shackled Mr. Harper's deep instincts that all taxes and, by extension, the programs for which taxes pay, are bad.

His governments cut taxes, which is in line with the Prime Minister's ideology, the problem being that the GST was the wrong tax to cut, as almost every qualified economist in the country has underscored.

Now, with deficits burgeoning, Mr. Harper insists again (the ideology returns) that he will never raise taxes, even though future deficits are going to be much larger than his government has forecast.

The Parliamentary Budget Officer and TD Economics have both destroyed the government's rosy deficit projections (and much else) in recent reports that show deficits stretching well beyond 2013-2014, when the government insists the budget will be balanced.

By ruling out tax increases, and refusing to indicate that big spending cuts will be needed, the government is shackling Canada with deficits stretching into the distance, with more accumulated debt - a strange state of affairs for a nominally conservative government.

Politically, of course, this aversion to tax from a prime minister who believes “no taxes are good taxes” has terrified the Liberals, who are afraid of being honest by telling Canadians that resumed economic growth alone will not restore Canada's balanced budget.

Actually, there is a respectable economic “school” that asserts that taxes are, broadly, bad, even though some, of some sort, are necessary.

Harking back to positive (bad) and negative (good) liberties, there are public goods and services that are “best" provided by the state and those that can and should be provided by the private sector. Very often public goods and services are best funded by the state and provided by the private sector; consider, for example: garbage collection, health care and sewage treatment. Those goods and services, like national defence, fire and police, must be provided, freely, to all, but, unlike soldiers and policemen, there is no good reason why trash collectors, doctors or water treatment plant engineers need to be public servants.

A fine balance is required to keep taxes low enough to attract and maintain savings and investment – otherwise known as jobs - and to keep consumers spending, and to raise enough revenue to provide adequate public goods and services – which also contribute to productivity.

 

[observor 69]

The majority of US economists recognize that the national economy is in a place it has never been before and traditional solutions don't apply.
Obama is fortunately a pragmatic leader who problem solves by seeking the most qualified advice available.
Unfortunately he is restricted from following this best advice by the political reality of Congress.
This scenario applies to virtually all the national issue he is confronting.

And more on the same theme from Paul Krugman of the New York Times :

July 12, 2009, 6:57 pm
Vegematic policy advocacy
Like Brad, I’m not too happy with the policy justifications we’re getting from the administration. It’s perfectly clear that the stimulus was too small; I think they know that too. But they’ve made a political judgment that (a) they can’t push another round through and (b) the thing to do right now is defend the policy they already have.

Maybe they’re right. But it does bring back unpleasant echoes of what I thought of as the Bush administration’s Vegematic approach to tax cuts: it slices, it dices, it purees! In other words, whatever policy they had been advocating in the past was still the perfect answer to whatever problems the economy faces now.

To be fair, Obama is nothing like Bush; the stimulus was designed to solve a real problem, and the Obamanites, unlike the Bushies, don’t go around inventing crises to solve. But I still think that Obama’s greatest strength is precisely his obvious intelligence and ability to talk to Americans like adults; it’s a shame to see him and his advisers saying something they have to know isn’t quite right.


LINK

 

[a_majoor]

More predictions:

http://cjunk.blogspot.com/2009/07/living-on-credit.html

Living on Credit

Deleveraging from excessive national debt is a painful and long task ... just ask Canadians. Now in America, we have what may be the most incipient cabal of progressives to ever run a country, anywhere. America's Democrats are about to cause a catastrophe which will ensnare Canada. Simply put, tax strapped Americans won't spend ... which means Ontario is apt to become a rust-belt; and, as always happens when progressives get frustrated that things aren't working, they lash out ... the result this time being that any protectionism Canada suffered during the Bush years will seem tame in comparison to what the dolts down south will unleash.

Truly, we are witnessing history in the making ... history that is racking up a bill of enormous proportions:

And today? Obama's first budget will consume 28 percent of the entire GDP; state and local governments another 15 percent. While there is some overlap, in 2009, government will consume 40 percent of GDP, approaching the peak of World War II.

The deficit for 2009 is $1.8 trillion, 13 percent of the whole economy. Obama is pushing a cap-and-trade bill to cut carbon emissions that will impose huge costs on energy production, spike consumer prices and drive production offshore to China, which is opting out of Kyoto II. The Chinese are not fools.

[...]

"The United States is declining as a nation and a world power with mostly sighs and shrugs to mark this seismic event," writes Les Gelb, president emeritus of the Council on Foreign Relations, in CFR's Foreign Affairs magazine. "Astonishingly, some people do not appear to realize that the situation is all that serious."

 

[Edward Campbell]

Globe and mail columnist Jeffrey Simpson is just about ready to pee his pants; he is soooooo annoyed at Stephen Harper and the Tories because they will not raise our taxes. Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from yesterday’s Globe and Mail, is his latest whinge:

http://www.theglobeandmail.com/news/opinions/our-politicians-take-the-easy-way-out-and-leave-us-with-the-bill/article1222872/

Our politicians take the easy way out and leave us with the bill
Outside economists believe the federal budget will not be in balance in 2013-14

Saturday, Jul. 18, 2009

Now the respected economist Dale Orr joins the Parliamentary Budget Officer and TD Economics showing the federal government's fiscal forecasts are off, way off.

So what? Almost nobody believes the government's fiscal forecasts anyway, and with good reason.

The government predicted a balanced budget in its November statement. Nobody believed the prediction, with reason. The government produced a budget in February. Soon thereafter the budget numbers were outdated. Four months later, in June, the government adjusted the numbers to take account of a worsening economic situation.

This fall, the fiscal numbers will be adjusted again, presumably to bring them into line with what those outside of government are already saying. So if we're thinking about what lies ahead, economically and politically, forget what the government is saying. Pay attention instead to the outsiders.

What the outside experts are showing presents Canadians with a choice.

We can start moving when the recession is over to bring the budget back into balance through tax increases and/or spending cuts. Or, we can push off those decisions, and just let deficits roll on for a decade or so.

Outsiders unanimously believe the federal budget will not be in balance in 2013-14, as the Harper government had predicted. Far from it. Mr. Orr and the Parliamentary Budget Officer think deficits might still be at least $17-billion in that year, with deficits stretching on for some years thereafter.

Mr. Orr, for example, sees at least $60-billion in additional debt in the five years after 2013-14. On that debt, of course, Canadians would have to pay compound interest that might be in the range of $4-billion-a-year in additional costs. To service that extra $60-billion debt, we'll have to raise taxes or cut spending to pay for the interest costs on the debt.

Make no mistake: When you incur steady deficits, you pay for them eventually. The political choice therefore is whether Canadians should start paying soon after the recession ends by raising taxes and/or cutting spending, or delay but pay a larger amount later.

The easy way out won't happen: that a resumption of normal economic growth will balance the budget by 2013-14. That had been the Conservatives' hope; that remains the government's spin. It is almost certainly wrong.

By 2013-14, it is doubtful that Stephen Harper will still be around, unless he startles everyone and wins a majority. Why should he court short-term unpopularity by making the hard choices of raising taxes and/or cutting spending to balance the budget, when the easy political choice beckons - doing nothing and letting some other leader clean things up.

Apparently, the easy choice is the one Mr. Harper has chosen. He is already saying he will neither raise taxes nor cut spending, but rather just let deficits run on if economic growth alone won't balance the budget.

As for the Liberals, if Mr. Harper is going to take the easy way out, why shouldn't they? Honesty just courts trouble. Talk of hard taxing and spending decisions risks scaring voters and leaves an opposition party open to nasty attacks.

So the Liberals, who once proudly ran on balancing the country's books, are scared of their own legacy. They, like the Conservatives, won't engage Canadians in a serious debate about which taxes to raise and which spending to cut. Instead, they and the Conservatives will just let deficits stretch on, while promising vaguely to get a grip on them, at some point, somehow, whenever.

Canadians have seen this movie before, and it wasn't pretty. Deficits started in 1975. They were thought then to be “temporary,” a tonic against slow growth. For the next two decades, in good times and bad, under Liberal and Conservative governments, there were always reasons why tomorrow, not today, was preferable to doing something serious.

It had appeared that Canadians had learned the terrible lessons of compounded debt from those decades, but today's political leaders are again sounding like those of the 1970s and 1980s, preparing to invent excuses, putting off until tomorrow what should be done today, essentially asking people a decade or two from now - and therefore long after the next election - to pay the price.

It is sad, really, to watch the parties turn their backs on the best moments of their own recent histories. It was the Reform Party, to which Prime Minister Stephen Harper then belonged, who railed against deficits, before it was deemed politically correct. He and his colleagues contributed to a better understanding of why ongoing deficits store up future trouble in the form of higher taxes and reduced services.

The Liberals, who were grossly irresponsible on fiscal issues while in opposition from 1984 to 1993, are forgetting that the federal deficit disappeared under prime minister Jean Chrétien and finance minister Paul Martin.

The outside economists are inviting Canadians to think now about the serious choices ahead; politicians are inviting Canadians to avoid them.

Now, strange as it may seem, I agree with Simpson on one key point:  ”We can start moving when the recession is over to bring the budget back into balance through tax increases and/or spending cuts. Or, we can push off those decisions, and just let deficits roll on for a decade or so.”

He’s right; that’s it: a simple, clear choice. Clear and simple if, big IF, one believes that balanced budgets are vitally important. I do. But some, actually many, do not share that view. They believe that low taxes are essential to stimulate investment and productivity. They also believe that most spending is, either:

• Productive; or

• Politically impossible to cut.

The exceptions that prove the rule are high culture (symphonies and ballet companies) and national defence. Both can be cut without any hue and cry from either productivity conscious economists or voters.

But:

• Our GDP is about $1.2 Trillion;

• The Government of Canada (not including the provinces and cities) spends about $160 Billion each year. That’s 13% of GDP; that’s too high. The national government must be able to find $30 Billion+ in spending that can be cut – not shifted to provinces.

 

[Edward Campbell]

Jeffrey Simpson makes his case, again, for higher and higher taxes everywhere, in this column reproduced under the Fair Dealing provisions (§29) from today’s Globe and Mail:

http://www.theglobeandmail.com/news/opinions/the-worst-may-be-over-but-sustained-recovery-is-a-long-way-off/article1259135/

The worst may be over, but sustained recovery is a long way off
Canada's economic prospects are uncertain to grim until the U.S. deficit and trade balances are rectified

Jeffrey Simpson

Friday, Aug. 21, 2009

We are told, by officials here and abroad, that the recession has ended. We learn that “green shoots” of economic recovery are appearing. Economies have stopped nose-diving; a few are displaying tiny improvements. The worst is over.

We can only hope so. Sustained worldwide economic recovery, which by definition means sustained Canadian recovery, depends more than anything on two developments. The prospects for both, however, are uncertain to grim.

The first requirement is a significant reduction in the size of the U.S. budgetary deficit, slated to be about $1.7-trillion this year and well over $1-trillion next year. The second is an adjustment in trade and capital flows between the United States and Asia, principally China, so that Asia imports more and the United States exports more.

If neither of these developments occurs, the U.S. economy will not resume robust economic growth, the U.S. dollar will drop in value (perhaps even plunge), the fear of inflation will return with a vengeance and we will remain in a period of slow growth with a chance of more upheaval. Canada's prospects under these circumstances would be difficult, to say the least, since our economy is so tightly tied to that of the United States. Any hope for a strong economic recovery, and an accompanying gusher of money into government coffers, would be dashed.

The Harper government and its provincial counterparts need that gusher to return to balanced budgets. Neither big spending cuts nor tax increases will be required to balance the books, Ottawa insists – economic growth will do the trick. By contrast, Oliver Blanchard, head of the International Monetary Fund's research department, wrote this week, “In nearly all countries, the costs of the crisis have added to the fiscal burden, and higher taxation is inevitable.”

Some combination of higher taxation and very large spending cuts will be required to significantly reduce Washington's deficit, its swelling debt and its burgeoning borrowing requirement. But ask yourself: Have you ever seen the U.S. Congress or administration raise taxes or cut spending in living memory? There were some defence budget cuts after the end of the Cold War. Otherwise, whether under Republican or Democratic control, Congress has proven adept at lowering taxes and raising spending, but not the reverse. If anything, Congress is busy adding to the country's fiscal obligations with a health-care package that will cost the treasury more, no matter what reformers say about offsetting new costs with cuts elsewhere.

Democrats are known to prefer spending to solve social and economic problems; Republicans believe lower taxes are the answer. Put the spenders and the tax-cutters together, and ask whether either will be prepared to take necessary decisions to restore some semblance of budgetary sanity.

Huge, enduring deficits will raise inflation and drop the value of the U.S. currency, big-shot investor Warren Buffett warned this week. “The dollar's destiny lies with Congress,” he said. If so, we should all tremble. The U.S. dollar has lost about 16 per cent of its value against the Canadian dollar since March. A sinking greenback will push up the relative value of the loonie, further hurting the manufacturing and tourism sectors and slowing Canada's economic recovery.

How about the second critical long-term factor: a change in the current account flows between Asia (read China) and the United States? A lower U.S. dollar should help U.S. exports, but the budgetary deficit will have to be financed somehow, mainly with foreign exchange (again, read China). Or, and here is the nightmare, the deficit can be falsely financed by inflation. Yes, the Chinese can spend a lot more money on their internal challenges, such as the lack of a national pension scheme or health insurance, but they also need those export-driven jobs.

The world may be emerging from recession, in the sense that negative growth has stopped. But the immense imbalances in international money flows, and the grave doubts that the U.S. political system can make any hard decisions, should leave us all very nervous.

Simpson has the fundamentals right:

1. Canada’s recovery depends, in very large measure, on a US recovery. It is our biggest market – by so much that nothing else, not Europe, at all, and not Asia, very much, really matters;

2. The US budget deficit is a very real threat; and

3. US legislators are, like their Canadian counterparts, reluctant to raise taxes or cut spending. That means deficit reduction is very, very difficult.

It may well be that taxes are too low in the USA. It is a fact that spending is too high and is getting higher. California is just the leader – America may well follow.

The sorts of (relatively) low skill/(relatively) high paying manufacturing jobs that have migrated to Asia matter. Many, many young men – still the “main” wage earners in lower middle class families – are and will remain unsuited for the “knowledge economy” and the “service economy” does not pay enough; they need those low skill/high pay manufacturing jobs, or something equivalent. Jeff Rubin argues that steadily rising oil prices will bring some of those jobs back to “local” markets because the transportation component of price will get too high. But that is still some time away, maybe at the oil ≈ $250.00/bbl price point. But those jobs are “why” the auto subsidies are politically necessary.

The Chinese do not want, indeed cannot afford to lose too many of those low skill/low pay (in their case) manufacturing jobs. They will take whatever steps are necessary to keep them.

Rubin’s argument is based on the presumption that the ratio of costs remains relatively static. The Chinese will be looking for ways to lower the transportation component of overall product cost – maybe “better’ transportation systems, maybe even lower production costs (wages and raw materials), to offset higher fuel costs. The Chinese will aim to prevent Rubin’s small world model and retain the advantages they have from Friedman’s flat world.

One of the things China may do is, gradually, sell off its US dollar reserves to protect itself from US inflation. It may, also, keep pressing for a “new” global reserve currency to replace the US dollar which, de facto fills that role now. Both of these actions would help to isolate China from US inflation and “expose” everyone else in the world to China’s economic imperatives.

The American economy remains strong and vital. For us, Canadians, it is also close, safe and friendly. It will, for generations remain our biggest market. We need a US recovery but we will suffer, hugely, from US inflation – a much bigger threat than the recent recession.

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provision (§29) of the Copyright Act from today’s Globe and Mail, is an item that might make a good election platform for Prince Michael and the Liberal Party of Canada:

http://www.theglobeandmail.com/news/politics/ottawa-needs-a-clear-debt-busting-plan-watchdog/article1271251/

Ottawa needs to plot a clear debt-busting plan, watchdog says
Government officials are worried it may be premature to lay out a detailed strategy to balance the books

Parliamentary Budget Officer Kevin Page speaks at a 2008 news conference

Steven Chase

Ottawa
Tuesday, Sep. 01, 2009

Canada's federal budget watchdog warns that Ottawa, already awash in red ink, risks a slide into even deeper deficits and debt if it doesn't set concrete targets this fall for balancing its books and shrinking the swollen national mortgage.

The Canadian government is fond of pointing out that the United States is in far worse fiscal shape, but Parliamentary Budget Officer Kevin Page says it's not good enough for federal officials to simply take comfort in the fact the U.S. faces much heftier debt problems.

“Without these targets, there is a risk that Canada will face a policy drift towards higher deficits and debt,” Mr. Page says.

“This is not a drift we can afford,” he says, noting that as the large “boomer” generation starts to retire in 2011 Ottawa will face increasing pressures to spend more on health care.

The clarion call by Mr. Page, who was appointed in 2008 to scrutinize Ottawa's budget-making, touches on a major dilemma facing the Harper government this fall: How much of a plan to slay the deficit should it release now?

Mindful of their legacy, the fiscally conservative Tories loathe the fact that Ottawa has racked up tens of billions of dollars in federal debt under their watch to fight the recession and are eager to plot a course to balanced budgets.

But at the same time, senior government officials are worried it may be premature to lay out a detailed plan to balance the books before their cloudy economic crystal ball clears.

Such a course would require Ottawa to implement some tough measures, including spending cuts or at least restraining future spending growth in areas.

But if what appears to be a fragile economic recovery collapses, Ottawa will be forced to pull its budget-balancing plan and start over – plotting a second, more painful path out of deficit under a gloomier outlook. Those concerned about this scenario argue for a pause until the economic picture sharpens.

Mr. Page however, is anxious to avoid a repeat of the 1970s and 1980s when Ottawa gradually slipped deeper into debt each year and the imperative to balance the books was lost in the face of other priorities. For instance, the generous 2004 federal-provincial health accord expires in a few years and provinces, facing the increased medical costs of an aging population, are expected to bring Ottawa fresh demands for more cash.

Mr. Page also urges the federal government to resurrect a target for shrinking the national debt as a percentage of economic output so that the obligations are less of a drag on the economy following a recovery. In the face of the 2008-2009 recession, Ottawa jettisoned plans to shrink the national debt to 25 per cent of economic output by 2011-12. This ratio is already climbing again and the parliamentary budget officer estimates it could top 30 per cent.

“I would argue we don't have any targets right now,” Mr. Page said.

In January, the Harper government forecast it would eliminate the deficit within five years – but that was before the economic outlook turned bleaker in the late winter and spring of 2009. This year's projected deficit quickly ballooned past all expectations to $50.2-billion and Finance Minister Jim Flaherty has acknowledged he is under pressure to offer a more detailed plan for balancing the books in the fall economic statement.

Ottawa is on track to add more than $100-billion to the federal debt, or national mortgage, over the next five years as it runs a string of deficits. The red ink reflects a $46.6-billion stimulus spending package designed to soften the impact of the global recession as well as an erosion of personal and corporate tax revenue collected by Ottawa.

Mr. Page says to help inform Canadians the Finance Department should also divulge its own internal economic forecasts, data it now keeps secret.

As a card carrying Conservative I am grateful that the Liberals appear to remain wedded to their campaign left and govern right strategic tradition. They will be loath to tell Canadians that we must stop spending (stimulus) like drunken sailors and return to our frugal, even niggardly Scots roots.

But, Mr. Page is right: it is past time to start identifying and quantifying the spending cuts – cuts that will, sadly, include cuts to or, at least, containment of defence spending – and it is nearly time to start implementing them.

 

[Edward Campbell]

China, according to this item, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, is going to meet part of its ever growing resource needs from Canada:

http://www.theglobeandmail.com/globe-investor/chinas-bold-move-into-the-oil-sands/article1271058/

China's bold move into the oil sands
PetroChina's $1.9-billion acquisition of stake in Athabasca Oil shows deep-pocketed investors still see value in Alberta resource

Nathan VanderKlippe

Calgary — Globe and Mail
Tuesday, Sep. 01, 2009

A major Chinese energy company has delivered a jolt of confidence to Canada's oil patch with a $1.9-billion investment that marks China's biggest entry into Alberta's oil sands.

In a deal that many took as proof of the oil sands' continued attractiveness to deep-pocketed investors, Calgary-based Athabasca Oil Sands Corp. on Monday sold a 60-per-cent interest in two of its undeveloped projects near Fort McMurray to the international unit of PetroChina Co. Ltd. (PTR-N109.75-3.44-3.04%) .

The transaction will hand approximately three billion barrels of Alberta oil to PetroChina, whose parent is the state-owned China National Petroleum Corp., but will leave operation of those projects, named MacKay River and Dover, in Canadian hands.

Chinese companies have engaged in a months-long buying spree of global petroleum assets, snapping up a refinery and oil and gas properties in Asia, Russia, South America and Africa. But for those in the oil patch, the acquisition of Alberta assets serves as a much-needed vote of confidence.

Canada's energy industry has spent more than a year watching oil prices fall and, in their wake, tens of billions in capital spending cancelled or delayed. Many see the Athabasca deal as a sign that stability – and even growth – is returning.

On a day when falling crude prices sank shares in most energy companies, several small oil sands players, most notably UTS Energy Corp. and OPTI Canada Inc., saw big gains on hopes that they, too, could become acquisition targets.

“It signals the return of a higher level of capital spending in the oil sands,” said Mike Tims, the chairman of Calgary investment firm Peters and Co.

“When Kearl was approved, it lifted the psychology significantly, because people could see the return of capital spending again. And I suspect this will have the same kind of effect.”

In May, Imperial Oil Ltd. decided to begin construction of its $8-billion Kearl oil sands mine, the first major oil sands project to be revived after last year's crash.

The Athabasca deal will provide the Calgary-headquartered company, which is 25-per-cent owned by management and directors, with enough capital to finance its share of a planned series of oil sands extraction plants that could one day produce between 400,000 and 500,0000 barrels of crude per day. The company estimates the capital required for those plans at $15-billion to $20-billion, but says it will benefit from technological advances being developed by PetroChina at some of its heavy oil assets in China, which have similar characteristics to the oil sands.

“From our perspective, we're very excited about having the opportunity to partner with such a large and substantial company that has the technological capabilities to help move this forward,” Athabasca chairman Bill Gallacher said.

The deal does not commit the company to delivering oil to the Chinese, he added. “At the end of the day, there was nothing tied in terms of transporting or pipelining. This was just strictly an energy venture that PetroChina identified that had very high quality, and had a great management team that can move this forward in a timely manner.”

The deal also includes a “financing arrangement” that Athabasca will use to refinance a $400-million bond it secured last year, although the company declined to provide any details. Athabasca will continue to operate the rest of its assets independently. It expects the PetroChina deal to close Oct. 31, and said it expects government approvals to pose little obstacle.

Chinese companies have attracted attention for their bids this year to buy two Canadian-listed companies with foreign assets – Verenex Energy Inc. and Addax Petroleum Corp. – but they have made steady inroads into the oil sands as well. Earlier this year, Sinopec raised its stake in French giant Total SA's Northern Lights project to 50 per cent. In 2005, the Chinese National Offshore Oil Corp. spent $150-million for a 16.7-per-cent stake in privately-held MEG Energy Corp, while in 2007, CNPC bought 11 oil sands leases containing reserves of about 1.9 billion barrels.

For many, however, the Athabasca deal was notable for the value it assigned to oil sands assets, whose worth has been debated ever since Total made a hostile bid for UTS earlier this year that analysts said ascribed no value to its oil reserves. Analysts calculated that PetroChina will pay just over 60 cents a barrel for Athabasca, which marks a return to some of the valuations seen in 2007 and 2008, and implies a value for companies like UTS that is roughly double their current trading price.

“I think you'll probably hear UTS speak up a lot more and saying, ‘Look, here's the valuation,'” said FirstEnergy Capital analyst William Lacey.

Athabasca's MacKay River and Dover projects contain an estimated five billion barrels of recoverable bitumen. Athabasca plans to extract those barrels with technology known as steam-assisted gravity drainage (SAGD). Unlike oil sands mines, SAGD operators use underground injections of high-pressure steam to coax the thick bitumen to the surface.

Athabasca has applied for permission to build two pilot projects, but does not expect to begin commercial production until at least 2014, when it hopes to turn on an initial, 35,000 barrel-a-day phase of production from MacKay River.

See, also: Edmonton-to-Kitimat pipeline

The Chinese economy continues to grow, albeit at a slower rate than in the recent past, and will, likely, increase its rate of growth for several more years. This growth is fuelled by oil and creates increased demand for it. The oilsands are a logical place for Chinese investment – both for sound economic reasons and for security of supply. The African resources markets are cheap but unstable. Canada provides a nice balance.

 

[GAP]

I wonder how they are going to transport it to the coast....thru the States or over the Mountains?

oops...ER already answered that....

 

[Edward Campbell]

There is no need to worry about this report, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, China will gobble up as much of the oil sands as America and Europe will sell off:

http://www.theglobeandmail.com/report-on-business/oil-sands-under-attack-on-environment/article1286239/

Oil sands under attack on environment
The industry is accustomed to defending its image in North America, but it now faces a multifront war, with opposition growing from Norway to Washington

Shawn McCarthy

Ottawa
Monday, Sep. 14, 2009

The environmental battle over Alberta's oil sands is going global, forcing the industry to respond to new attacks on its record and putting fresh pressure on Ottawa.

The Calgary-based industry is accustomed to defending its image in North America, but it now faces a multifront war. That growing global opposition is highlighted by its role in today's federal election in Norway, where the state-owned oil company's plans for the oil sands have sparked controversy.

As well, a documentary that premiered in Switzerland and is now playing at the Toronto International Film Festival depicts the projects' devastating environmental impact; and a delegation of Chinese journalists is planning a visit to the scarred landscape of northeastern Alberta.

At the same time, U.S. activists are continuing their attacks in Washington, scheduling a news conference this week ahead of Prime Minister Stephen Harper's visit with President Barack Obama to highlight the dramatic increase in emissions that would occur if oil sands production is expanded as planned.

The industry expects the anti-oil sands campaigns will heighten in the runup to the international climate change conference in Copenhagen in December, which aims to replace the Kyoto Protocol with a new, binding international treaty to control emissions.

“We're not surprised that the discussion has migrated overseas to some extent, and we would expect that certainly in the lead-up to the international meeting in Copenhagen, we may see more of that,” said David Collyer, president of the Canadian Association of Petroleum Producers.

Critics are seeking to discourage foreign investment and force Canada to make more-aggressive commitments on climate change by targeting what has become a symbol of Canada's failure to cut emissions: Alberta's massive, open-pit bitumen mines.

The backlash goes beyond some adverse publicity.

Global companies such StatoilHydro ASA or Royal Dutch Shell PLC are encountering growing pressure in their home countries to revisit plans to invest in the oil sands, while Ottawa will have to table a credible climate-change plan – including real limits on oil sands emissions – or face international censure and perhaps even barriers to trade.

The industry is responding. Statoil chief executive officer Helge Lund wrote an op-ed piece in a Norwegian newspaper defending the company's role in the oil sands, while companies are themselves inviting international journalists to visit the Fort McMurray region.

Mr. Collyer expressed optimism that Canadian governments will balance environmental needs with economic development and energy security, and expects the U.S. government to take a similarly “balanced” approach. But he acknowledged there will be mounting pressure on Canada – and on the oil sands – in some international capitals.

The industry executive said oil sands represent only 5 per cent of Canadian emissions, and the country produces a mere 2 per cent of global greenhouse gases.

He said the typical oil-sands project produces 5- to 15-per-cent more carbon dioxide per barrel of oil than conventional oil supplies on a so-called “wells to wheels basis,” which calculates emissions from the production, refining and consumption of the petroleum.

Later this month, Mr. Harper will travel to Pittsburgh to attend a meeting of the Group of 20 nations, where leaders will attempt to narrow the gaping divisions between developing and developed countries, and Europe and North America, in hopes of reaching a climate treaty in Copenhagen.

Mr. Harper has insisted developing countries like China and India must accept some commitment to reduce greenhouse-gas emissions.

But Canada's credibility is undermined by its own modest targets and its failure to even come close to meeting its commitments under the Kyoto Protocol, said Andrei Marcu, a climate-change adviser with Calgary-based law firm Bennett Jones LLP.

The federal government is slated to release a revised climate-change strategy this fall that is expected to force companies to further reduce their emissions per barrel of oil produced, but not include absolute caps that would limit expansion of oil sands projects.

Environmentalists argue the oil sands represent one of the fastest-growing sources of emissions in the world.

They say that in order to protect its domestic oil industry, Canada has been a laggard in the international climate-change debate.

In a report to be released today, Greenpeace calculates total emissions from the oil sands region will triple by 2020 if proposed projects come on-stream.

Environmental writer Andrew Nikiforuk, who wrote the report, said the oils sands will have larger emissions than some mid-sized European countries, including Belgium, Ireland and Denmark.

That prospect has prompted politicians in Norway to assail Statoil for its plans to expand in the oil sands. In fact, Greenpeace has helped instigate the backlash in the Nordic country, hosting Norwegian journalists visiting northeastern Alberta, and sending a delegation, including Mr. Nikiforuk, to Oslo prior to Statoil's annual meeting in May.

In advance of today's vote, virtually every party in the country's multiparty system has said it will review the state-owned company's Canadian strategy after the election. Minister of Environment Erik Solheim is a member of the Socialist Left Party, a member of the governing coalition led by the Labour Party.

He said his party will demand new environmental laws that “will make it impossible for a company like Statoil to enter such [oil sands] projects,” he told the Norwegian daily Aftenposten.

Statoil moved aggressively into Alberta in 2007, when it paid $2.2-billion for North American Oil Sands Corp.

The company says it is committed to reducing emissions in the oil sands, including possible adoption of carbon capture and storage (CCS) technology.

Though many in the oil industry tout CCS has a key to improving its carbon footprint, the technology remains untried and prohibitively expensive without major government subsidies.

With a file by The Canadian Press

Some (many? most?) American and European investors are looking for excuses to get their money out of long term, expensive projects so that they can solve immediate liquidity problems – pay their bankers and bond holders. The Chinese – who often are the bankers and bond holders – have oceans of US dollars that they are itching to invest in energy projects.

America still matters, but less than it did a year ago, but Europe doesn’t matter at all.