Some thought on the mondern economy

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Some thought on the mondern economy

Lets talk sad tale Austrialia and some warnings for Canada.  In 2017 they closed the last car plant and now they domestic shortage of natural gas.  The economic planners of there are an inept bunch.  I writng this some powerful people want Canada to follow the Australia path.

1.  The idea of giving up on manufacturing is silly and counterproductive.  Here in Canada the auto and aerospace industry do more domestic and R&D proportionally than other industry.  Why would you allow the market to destroy the most intensive R&D sector in the economy?  I am those people believe we need minimum reserve basic manufacturing and today we are well below that level.  The simple reason is that factories produce added economic value product compared mining and farming.  The trick to the touch product and alter it in some way that benefits the customer or buyer.  I live in a community that has a lot farming in the area, sadly farming but it nature is very difficult add value too.  I know there efforts here in the area change that and add value to products people farm here. In the economic history of countries you move up the value added train and so industries disappear.  I want caution people some may thinking that a picking on farms, that is not the case.  I believe there has to be a robust farming sector.  Here is the scenario if for the logistical chain fails and there no imports in a country that left its farming to decline.  Many could go hungry for the lack farming, look at Japan its region that has much military tension.  If things go  hot and shipping curtailed Japaesse people face my starvation because high population of almost 130 million people.  Closer to home letting farming to decline, if we a situation that local production is curtailed, then we can ask our ally the US to move some production north.  But if they have troubles as well.  There would natural response to satisfy of the US population.  What kind country would transfer farming resources if they there need on domestic of the market.  So I believe Canada need a strategic reserve of farms that could be tapped any time where is need.        


There more coming but I need to rest my eyes for now.


I mentioned in above the sad tale of Australia, I addressed car par where let the auto industry go. I know talk the natural gas debacle in Australia.  Imagine it a situation where you an Australia native live to your soil.  Yet you pay a higher price for nature gas than customer who imports your gas.  I make sure that dear rabble viewers understand I am talking about. 

1.Australia sold there rights to natural supply to foreign countries.

2.Because of the contracts their now a shortage of gas on the domestic market.

3. I would not call myself a nationalist by any means I question  why politicians who decide export these and now refuse to cancel those contracts.  What happening there is artificially shortage of gas on the domestic market because of those exports.  You think the government would address the needs of the population of Australia first.  Whoever party runs that country is use backward thinking.  First you supply this needs of the local population then address you address the need the export market.  But this government got this idea backward, the product is supposedly held in common trust for all Australian.  Rather than it actually is held in trust foreign interests.  This lesson is all countries especially Canada who dabbling with natutal gas exports.   


I have something else on my mind I should address later in the day.



Let's discuss the illusion bank safety and who pays for that safety.  There is a new bill in the implantation stage that is going solve the issue of who pays if the banks fail.  The governments says you that you the public is now for safe from bank bails bailouts.  Unfourtanely for the public they may not realize they still we be bailing outing the banks again if a crisis like 2008 returns. Despite what the government says.  

The dirty secret lies with  Canada deposit insurance corporation.   If you have certain assets in the bank you will lose those assets or them be covered in case of bank failure in case of failure.   Here the list from CDIC website.


What's Covered?

Notice: The Government of Canada has approved changes to the CDIC Act to modernize and enhance CDIC deposit protection. These changes will be reflected on this website when they take effect. Until then, current coverage rules apply.


We insure eligible deposits at each member institution up to a maximum of $100,000 (principal and interest combined) per depositor per insured category.

To be eligible for deposit insurance, deposits must be payable in Canada and in Canadian currency. We do not cover foreign currency deposits including US dollars.

Eligible deposits include:

  • Savings accounts
  • Chequing accounts
  • Term deposits, (such as GICs) with original terms to maturity of five years or less
  • Debentures issued to evidence deposits by CDIC member institutions (other than banks)
  • Money orders and bank drafts issued by CDIC members
  • Cheques certified by CDIC members


What's Not Covered

Uninsured financial products include:

Under the CDIC Deposit Insurance Information By-law, member institutions must notify depositors when a deposit (or deposit-like) product is not eligible for insurance. For example, if a term deposit is in a foreign currency, the deposit certificate or receipt must state that it is not insured by CDIC.

deposits held at financial institutions that are not CDIC members.

1 There is an official reserve that has 2ooo set aside and 2500 potential reserves. 

2.  CDIC’s second key funding resource is its ability to borrow funds, if necessary. The CDIC Act permits us to borrow from the Government of Canada or from capital markets. This limit is adjusted each year as insured deposits grow. As of December 31, 2017, the borrowing limit was $23 billion.

That's total of  28 billion to reserves the cover another 2008 event. Let assure me you that is a fraction that you need that is address another 2008 crisis event. 

3 Furthermore, Parliament could authorize additional funding if the available funds were not adequate to cover CDIC’s obligations in the event of a bank failure.

At 3 point bank failure is socialized, where the general public will pay again for the loses, but certain bank investors will walk ago.  

The solution is not socializing bank risk, rather than curtail their risky behavior.  We provide the insurance that bank to do and there risky and financial gambit.  If the Bank wins they keep the profits for there shareholders, if they lose they use government insurance they walk away free of any financial cost.  This current solution is very bad idea vs the idea of breaking up the banks and making no longer to big to fail.  More on in this later the morning.


The Right has a crazy notion that taxes cuts pay themselves, let's explain the standard mantra of the right is magical thinking and saying a tax cut will produce more revenue that it will take away revenue basic.  These days this argument standard fair the right.  I wonder personally if right-wing politicians like Trump and Doug Ford here in Canada believe in that sayings. If it comes from just pure ignorance depending on the politician or just to use tool to further the political agenda of tax cuts for the wealthy. Before the 80's this notion it was not on the mainstream agenda on right.  I believe Reagan introduced the idea when he ran for office.  His opponent at that time Senior Bush called this tax notion voodoo economics.  

Let's talk about how voodoo economics has created its industry in North America, it largely dismissed in Europian politics as dubious in nature.  The idea has attracted many followers in North America for not its educational merit or a proven record which has been largely has been one failure.  But the idea has popularized and spread through modern culture do it think thanks to their economists and consultants. Let tell a fact little known about these "educational" institutions that funded be the rich who happen benefit from tax policy they spread.  Lets a recap of the mechanics of the idea is spread.

1.  The rich found these institutions.

2. These right wing thinks tanks give educational cover to these powerful myths like voodoo economics.

3.  The right wing politicians use these ideas buttress then political campaign ideas with match the campaign founders demands.

4. And then right-wing politicians ended up giving tax cuts to rich.

This practice which ethically repugnant is one of many gambits to get rich and stay rich at the rest of us.  The best known founders of these think tanks in the US are Koch brothers.  Plus here in Canada sponsor many dubious thank tanks like the Fraser Institute.