Tomer Avital in the wake of the approval of the 2023-24 budget For the sake of the journalists and presenters…
Wednesday Night #1422
Written by Diana Thebaud Nicholson // June 3, 2009 // Canada, China, Economy, Education, Herb Bercovitz, Middle East & Arab World, Montreal, Nuclear, Order of Wednesday Night (OWN), Politics, Reports, Wednesday Nights // Comments Off on Wednesday Night #1422
The Fondation universitaire Pierre Arbour funds students in three disciplines that contribute to Quebec’s economic growth: business administration (M.B.A.), engineering and computer science. Beneficiaries are exceptional students, residents of Québec, attending one of the four Montreal universities at the Master’s and PhD levels, who are in financial need, have high academic records (minimum 75% average), and are active members of the community, doing volunteer work. In its third year of operation, the Foundation has awarded scholarships to 26 students, one of whom, Roxanne Obiama Wosu, was introduced to Wednesday Night by Pierre, his wife, Denise Langelier, and Priya Coelho, the Managing Director of the Foundation. Roxanne is doing a Master’s in Biochemical engineering with a focus on pediatrics.Pierre pointed out that the list of beneficiaries is a true indicator of the face of the new Québec, with many names that originate in Asia, Latin America and Africa. The Foundation does little advertising, relying on word-of-mouth and the relevant faculties of the four universities who identify and screen applicants, selecting the most promising. This keeps the Foundation’s overhead low and enables it to renew the scholarships, ideally bringing the students through their entire post graduate programs.
Diana introduced the newest resident of 33, Liqiong Liu, who has just returned to Montreal (where she attended HEC) following eight years in Paris and three in New York; she is joining the management consulting (financial improvement and performance enhancement) practice of Deloitte.
The market and the economy
The recent news of the Canadian deficit does not appear to concern our finance gurus.
Interest rates are believed to have hit bottom and are expected to rise dramatically. Bonds are vulnerable as deficits increase. Energy, commodities including agricultural commodities are expected to do well especially in Asia, and Latin America. We are witnessing strategic accumulation of oil – full tankers are parked with the price of oil at $67. It is likely that oil prices will rise again next year – to around $150. The cost of refining oil is high (tar sands) and new discoveries in the sea (Brazil) will be expensive to exploit. The high cost of refined oil versus the low cost of crude may also be linked to the sinking American dollar. Eventually, people will have no alternative but to curb their consumption.
Related to this is the discussion last week of the growing concern regarding climate change refugees – the number of countries that will become unsustainable because of drought, lack of clean water, rising seas levels that will flood small island states and low-lying cities- coupled with population growth. World hunger is on the rise and without adequate food supplies, even countries that are rich in natural resources will be faced with huge problems.
The Stock market experienced an impressive gain from March to the end of May when it was trading in a narrow range, breaking out decisively on June 1. The recent correction was predictable. This is a most difficult time to forecast. The rapidity of the rise in the market has left many portfolio managers with a lot of cash looking for a home for their money to be invested. It is important to look at supply and demand as many of the measures we rely on in a major bull market are not present today. The T.S.X. is expected to reach 11,500 with a rally in September. October will see a slight correction, but 2010 will probably be a very disturbing year. The expectation for the next six or seven months is for volatility in the market, especially in currency, with the fluctuation in rates between the Euro and the pound sterling. It would appear that the U.S. dollar has lost its place as the standard currency of exchange, to be replaced, some believe, by going back to the gold standard or a bundle of currencies known as S.D.R. (Special drawing rights), but gold would seem to be the more logical of the two. Taking into account the rate of inflation over the years, gold would be priced at $3,500 thus holding the same relative value as it had prior to the current era of floating value currency.
Although the Canadian dollar is rising closer to par with the U.S. dollar making it difficult for the export of Canadian goods to the U.S., historically there have been beneficiaries of higher Canadian dollar values and the challenge now is to identify what companies will benefit from the current rise. trade with other parts of the world becomes a more important part of our economy.
Asia and Latin America – China with 8% growth and India with 6% – when did we last see these numbers in Canada? Demographics are increasingly important. The aging population in the west makes it more difficult to compete with Asia, Latin America, China, India and even Europe, where the population is younger and dynamic, with a major cultural/aspirational shift – people want to live better, eat better and buy cars. What is important is that some of these emerging economies produce commodities while others are consumers. Commodities and agricultural products are being produced at a rate that was unforeseeable five years ago.
With the arrival mid-way through the evening of Peter Trent , the first member of the OWN, Germain Bourgeois was officially appointed to the Order of Wednesday Night, a fitting honor for one who has contributed so much valuable information to the discussions and great fellowship over the years.
Montreal – Mayor Louise Harel?
Wednesday Nighters expressed worry – if not dismay – over Louise Harel’s decision to run for the office of Mayor in Montreal. Her past decision to merge many cities, mainly in the urban centres was based on much misinformation and was designed, it is suspected, to lower the visibility of Québec’s Anglophone minority. As was predicted, in most instances, the mergers led to higher taxes and more difficult dialogue between citizens and their city government. Experience has shown that smaller cities within larger regions are more efficient than megacities in providing services to the citizens. Mayor Tremblay’s apparent unwillingness – if not inability – to engage in a campaign such as is likely to be run by Louise Harel, who is a tough campaigner, plus the loss of potential Anglophone votes from the now demerged municipalities, plus the strong support Mme. Harel will receive from the Parti Québécois, cause great concern about the post-election city of Montreal. As historically only 35% of eligible Montrealers vote in civic elections, a well organized group that is not necessarily representative of the population can win elections at great ultimate cost to the citizens. What is really required is an intelligent candidate of integrity with experience in government, maybe it is time for concerned citizens to actively seek good candidates, rather than waiting for someone to show up. Wayne Larsen: What the Harel is going on?
CTV and Minister Raitt’s folder
In light of the absence of a truly Loyal Opposition, the news media has assumed the role of opposition and thus it is their objective to obtain and distribute all relevant information, but it seems that CTV went too far in overstating the importance of the folder left at the studio by a member of Natural Resources Minister Lisa Raitt’s staff following an interview. The contents of the folder do not appear to have been of national importance, but did serve to motivate CTV to create news, magnifying an otherwise minor issue, and cause an unnecessary furor in government. The Minister retains her job, but the unfortunate Press Secretary has been forced to resign. Meantime Question Period and the media reports are filled with the trivia of this story, rather than the important underlying issues relating to the proposed break-up and sale of AECL. [Of course, the story got a lot worse in the following days, but the minister is still with us]
President Obama and Israel
It’s been a long time since a leader in the West has tried to bring a moral responsibility to the conflict between Israel and its Palestinian neighbours. 1967 was the watershed year because there was a constantly growing invasion of Israeli settlers into what was considered Palestinian land. President Obama is seeking to broker a peace between them but historically the odds are against his success. He has stated in an interview with Thomas Friedman that what he is trying to do above all is encourage leaders to a) tell the truth, not saying one thing in public and another in private and b) do their best to meet their commitments. Some believe that if Israel withdrew from the settlements, there would be peace with the Palestinians. Others point to the fact that the Palestinians were aggressors in the 1967 war, that it is not normally the losers who determine the terms of armistice and that whereas Israelis have a historical claim to the territory, Palestine has no history as a nation prior to Yasser Arafat. It is, however, to be hoped that the two peoples who are more alike than they are different can ultimately come to a lasting peace agreement between them.
North Korea and nuclear arms
North Korea has certainly attracted world attention. The rationale for testing nuclear weapons at this time escapes most Wednesday Nighters, some of whom believe that it was a means for a failing country to garner the support of its citizens, some believe that the nuclear weapons will be sold to other countries in order to gain much needed cash – They are so broke that they smuggle cigarettes and print money. Others express the idea that it may be that the missiles fired and the underground nuclear explosions are an attempt by a near-bankrupt country to feign affluence. Finally, a theory advanced in some media is that ailing ruler Kim Jong-il has used this event in order to solidify the succession of his newly designated heir, Kim Jong Un . Whatever the reason fo the country’s actions, nuclear proliferation is a major concern. As to counter measures, it has been hinted that the United States has supplied South Korea with appropriate arms for a surgical strike, but Seoul’s proximity to the DMZ makes it a very tempting target for retaliation. China is the best positioned nation to take firm action.
The great danger in all these conjectures is that they are based on logic, whereas the actions of the leadership of North Korea has been anything but logical.
T H E I N V I T A T I O N
Wednesday or Thursday – dates are quoted differently, so we suspect it has to do with which side of the international dateline you are on – is the 20th anniversary of Tiananmen Square. As we watch the coverage of this event , we cannot help but wonder why we do not remember where we were when we saw for the first time the iconic picture of the tanks advancing on that solitary figure. World opinion suggests that while China has made great leaps forward economically, the new generation knows little and cares less about the events of 20 years ago. Still, there exists now as then repression of any dissent, and as the impact of the world financial crisis is felt by the new bourgeoisie along with the millions of workers who are now unemployed, dissent and repression will again become widespread factors in that country.
As President Obama prepares to address the Muslim world from Cairo on Thursday, one commentator points out that “The tricky part of Obama’s speech is navigate the intricate relationship between (1) the need for the United States to establish strong, state-to-state relationships with autocratic and less-than-democratic leaders in the region, from pro-Western military strongmen like Egypt’s Mubarak to the conservative and kleptocratic Arab royal families of the Persian Gulf to Syria’s secular regime and Iran’s clerical one; (2) the challenge posed by the rise of political Islam, from the Muslim Brotherhood in Egypt, Jordan, and Kuwait to the power of Hezbollah in Lebanon and Hamas in Palestine to Iraq’s Shiite fundamentalist government and on to Iran, Afghanistan, and Pakistan; and (3) the question of democracy, elections, and representative government.” And that doesn’t take into account the problems posed by both Israelis and their government to meet the terms regarding settlements that the Obama administration consider essential in arriving at an equitable solution with the Palestinians. Meantime, it’s reassuring to learn that Saudi Ambassador Adel Al-Jubeir has indicated that the State Department’s warning that journalists may not report in the country is “inaccurate.”
With Peter Trent’s return after a noticeable absence, we shall certainly revert to municipal politics and the outlook for the November mayoralty race in Montreal : the line-up so far includes political gadfly Louise O’Sullivan and [Breaking news] Louise Harel replacing Benoit Labonté, along with Beryl Wajsman – if one is to believe the April 1st edition of The Suburban . Might any of these threats bring Mayor Trent out of retirement? Alan Hustak’s piece on Mayor Tremblay and Montreal in the latest issue of the MetropolitaIn is a must-read.
Meantime, Warren Allmand is stepping down from City Council – apparently in order to return to his first love: human rights – and most recently the (to us unexpected) news that Helen Fotopulos will not seek re-election. We are sad to see them leave. Both have served their constituents well and honourably and the political scene will be the poorer for their absence.
We are looking forward to Pierre Arbour’s assessment of M. Rousseau’s defense of the Caisse in his recent appearance before the Quebec Parliamentary commission [our favorite economist comments: Rousseau is a bit of a mystery. The Caisse owned shares in Coventree, the largest ABCP issuer. They really did not know??? ] and even more, an update on the activities of La Fondation Universitaire Pierre Arbour, which, recognizing the importance of the relationship between education and the well-being of Quebeckers, he established to assist scholars in three different disciplines (Engineering, Business, Computer Science) to pursue studies a the master’s and ultimately the doctoral level. Because Pierre and his board believe that the importance of the mission surpasses accolades for the Foundation, he has succeeded in keeping administration costs to a minimum. Interestingly, the first time that Pierre spoke at WN about his Foundation , another major topic on our agenda was North Korea and nuclear capability. Recent events make that another timely topic for this week.
For the feds we have several items.
1) The GM bailout – is it a good idea for us (the Canadian taxpayers) to own 12% of the restructured company? Are we happy to hear the PM say that the government is assuming it will be able to recoup the $1.3 billion it will hold in GM debt, but on the equity portion, “we will be assuming that that’s a 100 per cent cost”? And, oh yes, the Canadian and Ontario governments will also get about $400 million in new GM preferred shares. Meanwhile Frank Stronach appears to have hit a home run with his acquisition of Opel, but looking at his recent track record, we can only wish for the best – at least, it’s his money and that of Sberbank.
2) The announcement that a Federal Court judge has ordered that (former) KGB agent Mikhail Lennikov be sent back to Russia. We have been following this case quite closely and are appalled by the latest news. One post on the site pretty well sums up our feelings – although we might have put it slightly more elegantly; “How can this idiotic and totally useless “board’ rule this way AFTER HE WAS IN THE COUNTRY FOR 9 YEARS ALREADY? Obviously, after this length of time, if he was such a huge ‘threat’, then the board would be negligent for taking this inordinate amount of time for its ruling. What a waste of taxpayer money. Keep these good citizens here [we presume the Lennikov family] and send the Board to Siberia. A far better deal for Canada.”
3) The war of the Harper government on the CBC. According to Friends of CBC and other sources, “Don Newman, Brian Stewart, John McGrath, and hundreds more – in all, 350 of CBC’s on air icons and creative staff got their pink slip or buy-out package last week. These individuals, the heart and soul of what we cherish about CBC, will soon disappear from Canadian radio and television. Some of them are young people, recently recruited, who should be the future of public broadcasting.” As devotees of CBC Radio, the CBC website and certain television public affairs and news programs, we are both saddened and outraged. Please see the cogent argument of Pierre-Paul Noreau in Le Soleil: Nécessaire Radio-Canada, as valid today as in March when it was published.
Now we read that the sale of CBC, along with Via Rail and AECL is under serious consideration – AECL’s fate appears to have already been decided. We can only expect that much like the decision to privatize Air Canada (under Brian Mulroney), a privatized CBC would be less likely to render vital services to the remote communities of Canada for which it is an essential lifeline to the rest of the country. Update: The Globe & Mail reports that Sources say while all government assets are on the table for a review first announced last fall, it’s unlikely the minority Conservative government would move to spin off “highly iconic elements” such as the CBC or Via Rail in the short term.
Hurray! This week we should be able to avoid any discussion of the Mulroney-Schreiber inquiry – the only reference we have seen or heard in the past few days relates to Edward Greenspon’s departure from the Globe & Mail and may be a serious reach.
Lest you think that we are abandoning our interests in the economy, do see this from Ofer Avital: (Bloomberg) — Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company’s 152-year history to hedge against further asset declines. – and of course the GM bankruptcy filing is a must-discuss event.
And to conclude, we offer a thoughtful Dick Cavett column which asks Why Can’t We Talk Like This?
“How many people have you met whose conversation is instantly publishable?
There can never be more than a handful of such people living at any given time. My peculiar line of work has allowed me to meet a few. Of those I had the great good fortune to sit with on the air, first to mind come Noel Coward, Peter Ustinov and Jonathan Miller.” Do watch the Jonathan Miller interview; it is a delight.
Let us strive to meet Mr. Cavett’s expectations on this and all Wednesdays.