Wednesday Night #1322

4 July 2007

The Invitation

We hope we have not exhausted all the verbal fireworks during last week‘s “lively” discussion , which will surely be reviewed and reprised many times. Andrea was a great guest and participation from Right to Left was enthusiastic.

After that demanding exercise in public policy, we turn to a more eclectic collection of topics to entertain and provide sparkle to this week’s evening.

Canada’s 140th birthday celebration is over with little if anything to spoil the general jollity despite – or possibly because politicians of all hues and levels failed to show at Montreal’s parade. Would an appearance have spoiled their long weekend? Likely nobody much would have noticed as the eyes of the world were turned to the spectacular celebrations of the 10th anniversary of the handover of Hong Kong

Has anyone noticed the welcome disappearance from the news of most of our politicians? Today, only André Boisclair is mentioned, and he’s going to spend the summer pondering his future.

The iphone is here! At least in the U.S. and now that Apple has sold 700,000 in the first weekend, everyone is rushing to de-engineer or denigrate this latest craze item.

First and foremost among news items is the near-disasters in the UK. It strikes us as extraordinary that the principals are all linked to the National Health Service and mostly doctors – what is it that they don’t understand about their professional role in preserving lives? How incredibly fortunate that whatever their skills in medicine, they turned out to be the Terrorist Gang who couldn’t shoot straight – or even use a cell phone properly.

The Lobster Summit at Kennebunkport seems more of a costly exercise in inconveniencing the local inhabitants for the sake of some misbegotten PR than a serious event. So far no concrete results, but then, as the Washington Post says, nobody expected much. At least Mummy and Daddy were there to keep an eye on things.

News of China is environmental rather than political – and not good – It seems that research for a World Bank Report suggests pollution causes hundreds of thousands of premature deaths annually in China – but this is being left out of the report. (Beijing engineered the removal of nearly a third of a World Bank report on pollution in China because of concerns that findings on premature deaths could provoke ‘social unrest’) One might conjecture that the facts are far more likely to be widely published now that the Financial Times has uncovered the information than if it had been quietly inserted in the report which few outsiders would have read.

Medical issues are always on our agenda. There is good news tonight that Montreal will not lose the Shriners Hospital: Shriners Vote Overwhelmingly to Build at the Glen and this despite all of the to-ing and fro-ing on the MUHC project. Congratulations to Arthur Porter, Russell Copeman and all the others involved.

We are dismayed by an item sent on by Terry Jones stating that Canada lags behind the US in use of implantable cardioverter defibrillators, small devices that require only a minor procedure to implant and even more dismayed by the op-ed piece in today’s Gazette by Dr. Emmett Francoeur, who wrote it on behalf of community pediatricians at the Montreal Children’s Hospital, that maintains that Quebec is deliberately limiting the number of pediatricians

The news that Québec Immigration Minister Yolande James was attempting to make it easier for health-care professionals arriving in Quebec to get into the professional corporations was music to our ears, but we have seen no follow-up and wonder whether any of our medical practitioners can tell us what (if anything) is happening on this front.

Business news

The BCE story has slipped down the ladder somewhat, but made it into the Economist which gives a far better and more intelligible account of developments to date than any we have found in the local media

Meanwhile, still on part of last week’s topic, it is reported that Alcan Inc. has rebuffed several overtures in recent weeks from rejected suitor Alcoa Inc. about a possible sweetened bid, while Teck Cominco Ltd. is planning to buy copper and zinc producer Aur Resources Inc

Blackstone has bought Hilton Hotels – we cannot resist asking if the acquisition included Paris.

On that happy note, we look forward to seeing you for a seemly celebration of July Fourth.

The Report

Terrorists in London
With the exception of absolute dedication of both human and presumably, divine support to the validity of a cause, the nature of warfare has changed. No longer do opposing armies face one another on the battlefield for territorial gain. Until now, civilian populations, with the possible World War II exceptions of the bombing of Coventry and Dresden, have not been deliberate targets of aggressive military action. It is for this reason that the attempted targeted destruction of large numbers of civilians in the U.K., most of whom would have been women, should be cause for concern. The fact that the attempted bombings were to be carried out not by the underprivileged, but by well-educated individuals from upper middle class families, and all working within Britain’s National Health System, is of particular concern. It underscores the dramatic change in the type of individual who is now a militant.

[Editor’s note: The unexpected profile of the modern terrorist: 26, from a caring family, married, with children, graduate … For an excellent and thoroughly disquieting dissection of the “second wave” of Al Qaeda militants, we recommend http://www.timesonline.co.uk/tol/news/uk/crime/article2039865.ece]

This phenomenon is not new, considering past threats in the U.S. by the Black Panthers, Ku Klux Klan and communist cells. However, the religious nature of the current threat and the apparent disregard by the perpetrators for their own personal safety indicates that traditional responses constitute an inadequate reaction to these threats. Whatever the ultimate goals of Al Qaeda and its associated groups, one inescapable factor is the repressive attitudes towards women thus reducing the potential of those societies by 50% wherein one half is not contributing to their development. Once women in those regimes are educated, the economy improves, the birthrate drops and the fundamentalists lose power.

Should western countries under threat be putting more pressure on the nations harboring terrorist groups? Could this be effective given that often these countries (i.e. Saudi Arabia) are subject to not one but two governments, namely the secular and the religious and it is not unusual that one (secular) may be friendly and the other inimical to the West. It has been suggested that the press is sometimes guilty of sensational reporting of perhaps managed, mundane events.

The western world, especially the U.S. is the subject of admiration and disdain by those segments of the population that either aspire to western religious, intellectual and personal freedom, or fear its proliferation.

My Virtual Model
Manufacturing, the word derived from ‘making by hand’, was once dreaded as the instrument of eliminating variety from the goods offered for sale, a fear never realized as, in fact variety increased with mass production. A Québec innovation, virtual modeling, through computerization of individual body size, shape and form, carries personal choice a step further. Through this medium, clothes can be selected that fit and match one’s shape and personality, make-up and hair styles can be tried on the virtual model, all leading to the possibility of allowing people to visualize the consequences of today’s decisions on savings and therefore their lifestyle in retirement and old age, and thus to embrace proactive financial planning. The use of the virtual model generally leads to more honest presentation of the individual and thus could enable better decision-making. Young people are also attracted by the possibilities that this evolution of MVM offers as they contemplate not only their parents’ and grandparents’ situation, but also their own lives.

In collaboration with Université de Montreal’s HEC and the Media Lab of MIT, MVM is organizing the 2007 World Conference on Mass Customization & Personalization (MCPC) this October 10-12. Bridging between academic research and management practice, the conference provides an interactive platform to learn about mass customization strategies and to discuss the latest technologies and enablers. It will start at MIT in Boston, with Extreme Customization an interdisciplinary focus on the new advances in the field. The second part, a business seminar – Extreme Make Over of Retail – hosted by HEC (Hautes Études Commerciales) of l’Université de Montréal, will address opportunities to bring mass customization and personalization to retail.

Pension Funds
Financial projection is not always linear and projection of the past is not always a reliable indicator of the future. While corporations may sometimes view pension funds as an unnecessary expense and waste of capital and employees, as a guarantee of a comfortable lifestyle in retirement, neither is necessarily the case. In addition to the financial skills of their guardians, most pension funds are heavily invested in bonds hence their relative financial health is dependent on variations in interest rates. Human lifespan is increasing at an unpredictable rate and increased productivity, shorter length of employment at a given job and technology may reduce numbers of contributors to a given pension fund.

Many pension fund managers in Canada are very worried. Long-term interest rates will be rising, but not by much. The typical pension fund here is about 40% bonds and 60% stocks. The only way pension funds will survive without difficulties is if the stock market performs well. Therefore, the need to find new strategies to compensate, one of which is investment in infrastructures with more stability (airports, seaports) and regular cash flow. In Québec, there is a fear amongst pension fund administrators and board members of devastating lawsuits, causing them to be overly cautious in their decisions.

In the U.K., a pension protection fund has been established as well as the position of Pension Regulator, who, when necessary, is involved in takeover bids of companies in financial difficulty. There has been a constant shift from defined benefit to defined contribution plans resulting in much lower contributions by employers, resulting in less satisfactory pensions for employees down the road. There has been a noticeable increase in activity by pension fund administrators at the board level.

The economy (see also Jacques Clément’s Report on the economy)
The stock market is expected to increase over the summer, (15000 on the TSE) with a significant drop this autumn, followed by the next bull market. With the increase in private equity financing, mergers and acquisitions at a record pace, also leveraged buyouts, the central bank must cool things off. Although it is likely that there will be criticism, the Bank of Canada is likely to tighten monetary policy on July 10 by ¼% to 4½%.

The search for David Dodge’s successor continues, with one new criterion added: he [we have seen no suggestions of female candidates] must have excellent communications skills. Although possible candidates include: Kevin Lynch, former deputy minister of finance and now chief clerk of the Privy Council; senior deputy governor Paul Jenkins; former senior deputy governor and now head of the Bank of International Settlements, Malcolm Knight; deputy governor Tiff Macklem; and senior associate deputy finance minister Mark Carney, it would not be surprising to see a candidate from the private sector. One reason for this is the questioning of the accuracy of the economic forecasting from the Bank of Canada.

Emerging markets are expected to decline over the next few years.

India, China, as well as other countries, are currently building reserves of petroleum, nickel and copper, boding well for Canada as a major supplier in that area of the market.

There are some reports of changes in Canadian laws governing capital gains. Possibilities are the total elimination of capital gains tax, which contributes only about 3% of the government’s revenues, with, possibly, an offsetting increase in income tax and/or the delay in tax on capital gains until death.

Impact of rising oil prices on inflation and lifestyle
The fuel market is [so far] a very flexible one with price increases absorbed with little or no reaction or decline in sales. Petroleum prices are expected to continue to rise, while the price of natural gas is declining. Other than the rising prices of transport, food and plastics, the inevitable increase – and decline in oil supplies – may well have an unpredictable [Editor’s note: not unpredictable if one has seen The End of Suburbia] ultimate effect on such things as urban sprawl, transportation to and from work and changes in choice of investment of public funds on mass transport, or perhaps, ultimately, greater conservation and the development of alternate energy sources, including the development of nuclear energy.

Nuclear energy
The Economist recently carried a piece on the split of the environmental movement which indicates that despite long-standing solidarity on opposition to nuclear energy, many environmentalists are now agreeing that, provided certain safeguards are ensured, it is the cleanest and best source of energy]

Although some hold up China as an example of early adoption (1970) of nuclear energy, it is pointed out that the technology of that time was not sophisticated. Although there are further important nuclear developments, today, China is building an average of two large, coal-fired plants per week, almost all of which use out-of-date, high-emissions equipment rather than more expensive, clean-burning technologies.

Québec politics
At least one observer believes that unless Jean Charest’s poll numbers improve drastically by December, there will be a change in the leadership of the Québec Liberals with Monique Jérôme Forget the most likely successor to Mr. Charest. This presents the unique possibility of women at the head of both the Liberals and the PQ, possibly promising a more civil demeanor in the National Assembly.

A recent CROP Poll showed that the vast majority of Quebeckers – 68 per cent – believe the PQ should abandon its sovereignty option and instead fight for more powers for the province. Accordingly, Ms. Marois’ has decided to put more emphasis on seeking greater provincial autonomy, rather than place Quebec’s political independence at the forefront of her priorities.