Wednesday Night #1629 with BCA’s Jim Mylonas

Written by  //  May 22, 2013  //  Wednesday Nights  //  2 Comments

camino de SantiagoWednesday Night’s intrepid Catherine Gillbert has returned from her eight hundred kilometre pilgrimage on foot along el Camino, the path of Saint James, over rough, mountainous territory, to the Cathedral and burial site of Saint James at Santiago de Compostela, walking twenty-three or twenty-four kilometres per day, sleeping at hostels each night. Many Wednesday Nighters have avidly followed her ecxcellent blog. Catherine was welcomed home as always following her physical feats favouring Our Harbour, a haven for people living with mental illness.

Politics and power

As the physical world revolves steadily on its inevitable axis along an unwavering, predictable path, important changes in the political world are becoming increasingly evident, with an apparent shift in financial, political and possibly, economic power.
In the U.S., the Obama administration appears to have rapidly lost its lustre. Dark clouds indicate inflation pressure, but how it will play out is, at this point, unpredictable. The declared U.S. unemployment rate is deceptive because it excludes the number of people who have given up looking for work, which  is certainly rising (also in Canada).
Ben Bernanke, Chairman of the Federal Reserve, continues to create wealth. The importance of this is that the price of investments may possibly rise with no corresponding increase in value. [See Anatole Kaletsky: The many interpretations of Ben Bernanke] The importation of goods from the Orient at relatively low cost and retailing them at inflated prices in Canada is claimed by some Wednesday Nighters who view the resulting profits as ¨huge profits being made on the backs of the unemployed¨.
Youth unemployment in Europe follows the same pattern as that in North America. In Canada, we have seen many unemployed educated people. Wednesday Nighters believe that what the economy requires is a different set of skill sets.
As well as Asia being the prime source of inexpensive labour, the more widely distributed intellectual skills have been increasingly duplicated in robotics. From the abacus to the smart carpet vacuum cleaner (demonstrated this evening by John Curtin) to pilotless drone aircraft to virtual employee-less manufacturing, the role of humans is changing at a much more rapid pace than are their adaptation skills. An unthinkable Armageddon or hopefully, a more reasonable adaptation of education to the needed skills, enabling a more leisured, human existence and a reduced work week might be the solution. It would appear that in this the twenty-first century, the youth are still being trained in twentieth century skills, leading to an even greater, more serious social problem.

Barring a miracle of Biblical proportions it is unlikely that, from a Western point of view, some good news will come out of the Iranian election as the only approved candidates are hardliners. A mixed blessing, perhaps, is that Israel has shifted its focus from Iran to Syria, with a possible conflict on the Golan, with anticipated support of equipment from the U.S. Europe is expected to play the role of stabilizer as the U.S. role of power base diminishes.

An easing of bond-buying is anticipated towards the end of this year and a solid growth in payroll as the economy continues to get stronger. The housing market is booming in the U.S., where capital expenditures are on the rise. What remains unknown at this time is the trend for the rest of the year, considered dependent on whether the Federal Reserve tightens and the effect of that possibility on the continuation of the upward trend for the remainder of the year.

Quotes of the Evening

“We can go down the road of Bernanke today or we can go down the road of Japan.”

“The U.S. has the resources to overthrow a regime but not to occupy a country that has been bombed to pieces.”

“I’m thinking of shrinking of the West`s influence in the world. You’re talking about a much smaller space for the West to operate in the world. There’s no reason to believe that this will go on for another twenty-five years.”

¨The U.S. will be involved in Asia, but not in the traditional way”

“We are on a turning point. The likelihood is that the present managed economy won’t be able to be managed for long; there is too much money facing too few assets. It can’t go on forever.¨

“People are afraid of dying alone, but don’t worry, the world is not coming to an end.”

“It would appear that the only jobs available in Canada are construction jobs.”

“Austerity is not over. It’s just not fashionable anymore.”

“That which cannot be sustained will be lost.”

¨It seems to me that huge profits are being made on the backs of the unemployed.¨

“I’m not sure of the twenty-first century skills of the kids today. ¨The social problem is greater than the skill problem. The time is coming when greater intellectual skills will be required.¨

“Even if the skills can come back, the jobs will not. A quarter of the jobs are at Wal-Mart. Everything that can be outsourced has been. Mining, oil and gas jobs are very few, maybe three or four thousand.”

“We will never be making T-shirts again in Canada…We have to optimize our resource advantage. It’s not only an economics problem; it’s a larger problem.”

“If the U.S. is okay, the West doesn’t worry. The U.S. isn’t okay.”

“Education at low salary jobs is better than non-educated unemployed.”

Israel Finding Itself Drawn Into Syria’s Turmoil
(NYT) … having followed through with a pair of airstrikes on weapons shipments this month and, on Tuesday, the destruction of a Syrian Army position, Israelis are asking what their options are, as if they feel it has become impossible to avoid deeper involvement. (23 May)



We are fortunate that Jim Mylonas of Bank Credit Analyst is joining us for a tour d’horizon of BCA’s Geopolitical Strategy monthly reports of April and May, along with a newly-minted special report on U.S. politics to be published on Wednesday.

The April report focuses on Europe, especially France as a weak link in the euro chain (“The fundamental problem is that French competitiveness has suffered since the introduction of the euro”.);  BCA’s concern was justified by recent news that France has slid into recession.
The commentary on Cyprus and the Middle East also reflects arguments heard at Wednesday Night.

In the May report, BCA underscores its previously stated skepticism regarding Austerity with the header Global Overview – Austerity Is Kaputt, joining our OWN Kimon Valaskakis and the New School of Athens along with a growing chorus led by Paul Krugman. The policy battle is not yet won, however, as the Christian Science Monitor reminds us: EU austerity hawks shrug off criticism of flawed academic paper. Despite a new paper detailing flaws in the Rogoff-Reinhart study that has been used to argue in favor of austerity policies, Europe’s austerity advocates are holding course.
Of equal interest is the section devoted to Evolution Of Cyber Security Threats,  especially in light of last week’s $45 million cyber heist. The report reminds us that:  Information technology is so completely interwoven into the social and economic fabric of modern society that the resultant interdependencies have created a new security paradigm; namely, that physical events have cyber consequences and cyber events have physical or tangible consequences.

The Special Report on the politics of the U.S.comes none too soon, given what is being characterized by some pundits as a scandal trifecta. But, are these really scandals; do they have legs or is much of the politicians’ and pundits’ outrage manufactured? [It’s Scandal Season! Why Obama is suddenly under siege.] What really counts, of course, is the impact these and other events will have on the mid-term elections.
In line with any examination of U.S. politics, it is appropriate to remember Kenneth Waltz, one of the world’s most influential scholars of international relations, who died earlier this week at the age of 88. His books Man, the State, and War and Theory of International Politics are classics in the field, and his influence on students, colleagues, and policymakers was profound. Waltz was a theorist who also delved into the most contentious debates in U.S. foreign policy, opposing the wars in Vietnam and Iraq and earning himself a reputation as a realist far outside the confines of the ivory tower. (Foreign Policy: Requiem for a realist)

Canadian politics – at all levels – offer far juicier fodder. While late last week  the two former journalists, Senators Mike Duffy and Pamela Wallin, were the subjects of  a scrutiny which they would have delightedly exercised in their previous professional lives, Victoria Day weekend brought explosive  revelations culminating in Tuesday’s apparently highly unsatisfactory meeting of Mr. Harper with his caucus. Now Mr. Harper is off to a meeting in South America, giving rise to Tom Mulcair’s remark “when the going gets tough, the tough get going … to Peru”. We try to keep score

David (Jones) vs David (Kilgour) debate the meaning of the BC elections

In Toronto, Mayor Ford continues to generate  headlines that are hard to top – but he always seems to manage. Good news (at least so it appears to us) is that the downtown Casino project for that city has been defeated.

Montreal, where Denis Coderre is at long last a declared candidate for the mayoralty – as of  Thursday –  celebrated the 371st anniversary of its founding  on Friday, 17 May. And (coincidence?)  in the latest twist in the Bill 14 debate comes the Open Letter by Jean François Lisée and Diane De Courcy – judged by most to be very cleverly worded propaganda masking the fact that the PQ’s proposals are essentially unaltered and remain unacceptable. Beryl Wajsman continues to militate against the Bill, pointing out in a closely reasoned and constructive piece Advance the attack! A response to the De Courcy-Lisée letter that “they failed to address the central point – Bill 14 is not necessary and is nothing but an attempt to solidify the `pur et dur` base through more politics of division. Not enough because the Bill demeans all Quebecers, francophones as well as non-francophones. Not enough because the government is still not willing to stop the economic destruction of Quebec by ceasing to put up these false issues of discord.”

In the furor over Senator Duffy et al. it was barely noticed that Canada, represented by Health Minister Leona Aglukkaq (an interesting departure from tradition) has assumed the chair of the Arctic Council for the next two years. We are relieved that at least this vitally important international body is deemed worthy by our government.

We hope you did not miss the story of the deliciously timed jewelry heist Cannes film festival suffers $1m jewellery theft
BBC reports that The theft [which took place according to the Washington Post at a hotel opposite a municipal police station] happened on the same day that the festival was shown The Bling Ring, a new film by director Sofia Coppola about some high-school students who find out when celebrities are attending red carpet events in order to break into their homes and steal their designer clothes, bags, and shoes. Stephen Kinsman comments: “I bet a pink glove was found in the safe but the French don’t dare tell us. The Pink Panther is alive and well ! Perhaps Inspector Clouseau will make an ‘appearance’…”

2 Comments on "Wednesday Night #1629 with BCA’s Jim Mylonas"

  1. Alexandra May 19, 2013 at 1:06 pm ·

    As someone who was very involved (on the Christy side of the equation), both
    David (Jones) vs David (Kilgour) were right-on on the meaning of the BC elections.
    Alexandra T. Greenhill

  2. Herb Bercovitz May 23, 2013 at 9:54 pm ·

    Scribe’s Monologue
    Never in the near quarter-century or so memory of my history of Wednesday Nights have I witnessed a more fascinating discussion. What has been brought to mind in this instance is the paradoxical diversity and similarity in mankind as well as the brotherly love evident in the excursions of our Catherine Gillbert, contrasted with the evident greed and cruelty of the majority of humans. The technological revolution, in a sense, mirrors the industrial revolution. It is to be hoped that humanity will once again surmount the turbulence following the latter, without the subsequent suffering and human conflict so evident at the time of the former. It is to be hoped that mankind will for once prove to be, if not more humane, at least as humane as the other creatures with which we share the globe.
    Many thanks to David, Diana and the super-intelligent, knowledgeable guests!

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