Wednesday Night #1583

Wednesday Nighters have fond memories of Jacques Clément, who passed away this week. Impeccably dressed, with a strong sense of humour and penchant for accuracy, he was, for many years, Banking, or more specifically, Bank of Canada, reporter and interpreter of monetary issues to Wednesday Night. His abrupt departure from Wednesday Night Salons was cause for concern by hosts and guests alike, and the intellectual space previously occupied by Jacques has never really been filled. Although the financial information continues to be provided by others, Jacques’ unique style, humour and amiability have been greatly missed and have, alas, with his death, been lost for all time.
“If there were more like Jacques Clément, we would not have had the recent financial problems.”

– Wednesday Night guest

Debt
No matter how strong the evidence to the contrary, Homo Sapiens (so called) continues to believe in the inherent value of currency, whether it be in the form of an entry on a balance sheet, a fine engraved portrait of a monarch or former American President or gold, a metal of little inherent value other than its immutability. On reflection, the prize for both the best and worst innovation in the economy is the credit card, enabling consumers to spend money they do not own.
The United States has been in constant deficit which has, until now, not hindered the prosperity of that country which continues to successfully print money, thus delaying the need to face the issue realistically. It must be obvious that, whether it be citizens or governments, debt for the purpose of investment in the creation of employment is logical, but debt designed only to pay interest on current deficits can lead to difficulties.

Russia More to come
Considering its size and diversity, it is not surprising that Russia has always been a country in which strong leadership has been inevitable, so it is very probable that Vladimir Putin will be returned to office in the upcoming elections. Although the Russian version of democracy might be better described as non-dictatorial, it is a system that works for the Russians and Putin’s re-election appears assured. Russia’s recent history includes many traumatic experiences including the degree to which its participation and sacrifice in World War II, has not really been acknowledged by the West. Capitalism arrived in Russia in advance of the legal system. It was Vladimir Putin who attempted to put some order into the resulting chaos.

Mali
Sam Stein, newly returned from Nigeria – and our resident expert on Mali – described the atmosphere in Nigeria, where in the large cities such as Lagos and life goes on in a normal fashion, with only metal detectors at the entrance of one’s hotel to indicate any need for security arrangements. At the same time, the Boka Haram terrorize the citizens of smaller towns.
Mali still remains without a functioning government. The northern part of the country is controlled by the Al Qaeda-linked Islamist Ansar Dine which has many non-Malian adherents (Algerians, Libyans, Pakistanis) and is committed to the puritanical precepts of Salafism.The methodical destruction of the UNESCO heritage site of Timbuktu is a distressing expression of the strictures of this form of Islam.
The situation in Mali remains a constant concern for neighbouring countries and a constant reminder to the world that the imposition of national boundaries without taking into account tribal territorial differences continues to cause hardship and international concern.

Canadian (federal) politics
The regeneration of the Liberal Party of Canada continues to be painful, with Bob Rae’s decision not to run for the leadership and and Justin Trudeau, although undeclared seemingly the candidate of choice at present. One of the more intriguing developments is Deborah Coyne’s announcement (Ed. See Deborah Coyne enters Liberal leadership race]. She is certainly an interesting candidate and one who has put forward a number of concrete proposals rather than the usual generalities. Justin has demonstrated his showmanship but has as yet to demonstrate his leadership skills. In any event, the reconstruction of the Liberal Party will require a major effort, although a recent poll indicates that Polls show Canada actually more progressive after six years of Tory rule [Ed. The poll … if anything suggests the Harper government has gotten offside with the majority in some important policy areas, especially with respect to environmental protection.]

The stock market has been a bull market for over three years and so the time has come for the bears to take over. It is predicted that a rising market during July and August will mark the beginning of that bear market. Wednesday Nighters are advised to be heavily invested in cash by early Fall.

Higgs boson/”The God particle”
The announcement from CERN today that the existence of the Higgs boson, or more accurately, “Higgs boson-like particle”, has been established with almost perfect certainty leaves most Wednesday Nighters more mystified than overjoyed. The concept is difficult for the non-scientific mind to grasp (and not helped by headlines such as
“God Particle” Found? “Historic Milestone” From Higgs Boson Hunters -Newfound particle may be at the core of existence., and while the discovery will no doubt lead to tremendous developments, it is hard for the lay person to grasp the enormity of the possibilities (though time travel and Star Trek-type transponders are mentioned in some of the media reports).

Prologue
As many of you now know, our dear friend and Wednesday Night’s ‘Central Banker’, Jacques Clément, after a long illness has joined the Wednesday Night Table in the Sky. Jacques was a central figure of WN for many years, during which he shared his meticulous research and insights into the Canadian economy (and occasionally his gleanings from Cuban holidays). As Peter Trent said, Jacques was a one-off – and a lovely human being.

Last week’s agenda was filled with international topics, however, the small (but lively) group that gathered went off course, so much remains on the table. And inevitably there are new items or follow-ups this week. These would include the somewhat surprising U.S. Supreme Court (SCOTUS) decision on Obamacare and what this means to the U.S. electoral campaign, not only for the presidential candidates, but for many in Congressional races. In the excitement surrounding the SCOTUS news, almost overlooked was Friday’s passage of the transportation bill by both houses of Congress – what is most interesting about this development is that it appears that legislators have finally realized that they needed to do something to counter voter apathy (anger) over the continuing partisan gridlock that has crippled the legislative process.

The Euro Summit is over and the jury will be out for some time on who really won the battle, let alone the war (Euro defeat for Merkel? Only time will tell). Meanwhile, we are grateful to Tony Deutsch for forwarding >Reuven Brenner‘s somewhat provocative piece:Eurozone Bonds: Learning from Pre-Nuptial Agreements. Definitely a worthwhile read.
A sub text to the Euro Summit is the assumption of the revolving EU presidency by Cyprus at the same time that country is seeking a bailout.
On a much more positive note, Anne-Marie Slaughter writes in Reinventing the European Dream (Project Syndicate) about the possibilities offered by the natural-gas fields of the Eastern Mediterranean and the potential for a Mediterranean Energy Community.

Mexico has voted – no surprise, the PRI has regained power. The new president, Enrique Peña Nieto, gets mixed reviews (The Atlantic of October 2011, for one, does not appear to give him very high marks); it seems he is long on good looks and promises and short on the statesmanlike qualities one might hope for. We have read that he speaks only Spanish and, according to Gwynne Dyer, when asked on live television what three books had influenced him most, he struggled to name any books at all. Finally, he came up with two: the Bible, and a Jeffrey Archer pot-boiler. Shades of Sarah Palin?

Across the world, Hong Kong also has a new leader and the population does not seem thrilled.

As we celebrate the Glorious Fourth this Wednesday, it is surely worth examining the furor created by the article written by Derek Burney and Fen Osler Hampson for Foreign Affairs How Obama Lost Canada — Botching Relations With the United States’ Biggest Trade Partner ; there has been some strong – and articulate – reaction, including the mention by the Toronto Star of Mr. Burney’s close relationship with TransCanada Corp – a highly relevant piece of information given that the article states that Mr. Obama’s decision on Keystone XL was the nadir of the relationship.
We suggest the antidote is Roland Paris’ Whither Canada-U.S. Relations?
Speaking of Canada and trade (and again Messrs Burney and Hampson, two of the co-chairs of the Securing Prosperity project), the Norman Paterson School of International Affairs of Carleton has issued a report Winning in a Changing World: Canada& Emerging Markets, which was hand-delivered to Mr. Harper last week. The report was co-sponsored by Gowlings, SNC-Lavalin, Barrick Gold Corporation, AGF, CGI, Enbridge, CIGI, CIBC and iPolitics.
[It is probably rude of us to bring this up, but poor SNC is again in the news for the wrong reasons a) Bangladesh and b) Libya]

Also relevant to the Harper government’s public policy: we were intrigued by the CTV report on India’s Tihar Jail which seems to have discovered a success recipe that combines prisoner rehabilitation with revenue generation – quite a contrast to the philosophy that appears to be guiding Vic Toews and the cancellation of the prison farms program that even the National Post opposed, not to mention the recent news that the Harper government has slashed 20 per cent of federal funding for youth justice programs in Canada, cutting $35.6 million used to supervise and rehabilitate young offenders.

One of the more entertaining debates among Wednesday Nighters is that of David (Kilgour) vs David (Jones) on the all-important issue of Canada and the War of 1812 (a topic so dear to Mr. Harper’s heart that his government is spending some $28 million on its commemoration – bread and circuses anyone?). Our two Davids have marshalled their arguments with care – it’s an entertaining and informative exchange.

We admit that we were not present on Parliament Hill for the Canada Day celebrations, however, it all looked a bit tacky on TV, so we are pleased that our celebration was marked by listening to The Sunday Edition feature – the outstanding and delightful Michael Enwright interviews with Richard Gwyn on his two-volume biography of Sir John A. Macdonald. Michael has to be one of the most erudite and best interviewers and Richard Gwyn is a joy to listen to on his topic (or any other).
… Re CBC, there’s a new chairman, Rémi Racine , and a new director, Marni Larkin, the latter’s qualifications appear somewhat dubious.

Finally, some odds and ends.
Education is one of Wednesday Night’s on-going preoccupations. The debate regarding classroom versus on-line education continues, as does that of university fitted into a business model. On the latter topic, it is worth reading some of the excellent pieces regarding recent, disgraceful, events at the University of Virginia.
As we mourn the loss of the great Nora Ephron, we recommend her 1996 Commencement Address to Wellesley College – as always with her, a wonderful mixture of wit and wisdom.
We may not all agree on the on-line education model, but the Financial Times makes a strong case that academic researchers should Use video not journals to disseminate research

Holiday Hell was given a whole new meaning on the latest episode of Fifth Estate. Cruises have always seemed to us to be the ideal worry-free holiday, but not according to the first segment. Watch it and be warned.

On that note, we promise no holiday hell cruise as we celebrate July Fourth at Wednesday Night – just the enjoyment of good conversation in good company, guaranteed if you are with us! Do make sure you reserve your deckchair.