Towards a New Normal

The release of Forbes' annual list of billionaires last week seemed little more than a tired attempt to hawk a few magazines. It tried to create a bit of buzz by ranking a Mexican, Carlos Slim, at the top of the list at $53.5 trillion. Hoped to get America's panties in a bunch trumpeting the fact that Asia was home to more new billionaires than the US and Europe. Endeavoured to convince us the world's economy is turning around heralding the dramatic rise in wealth of the billionaire club, up 500 billion to $3.5 trillion. Guess it's lucky for Forbes that most people really hadn't been paying attention as a quick google search reveals more than a few reactions, from apocalyptic to benign,  fawning to condemning. Somehow they missed Fortune magazine's announcement that Slim was the richest man in the world nearly three years ago, that the West has already sold its future to the East and that the current brand of capitalism is working on the last course of its meal as it devours itself.

In case you missed it, Bill Gates isn't the richest man in the world anymore, nor is Warren Buffet. Gates had topped the list since 1994 then lost the title in 2008 to Buffett only to regain it last year. Neither did too badly last year, both seeing their fortunes grow by over $10 billion. Problem was, the Mexican's grew by $17.5 billion. Carlos Slim Helú's wealth grew from a paltry $35 billion to $53.5 billion in just a year. While the propagandists will peddle the Horatio Alger myth of a self made man whose business savvy has brought him to the pinnacle of power, Slim owes his over the top success to an inheritance head start and insider influence.

Still drinking the Kool-Aid that teaches us that motivation, innovation and education sets one on the pathway to success? Funny enough, Fortune featured at article alongside their rich list which asked "Are You Born to be a Billionaire?" which stresses optimism and risk taking, when in fact one of the best ways to get on Forbes' list is to be like Steve Forbes himself and be born onto it much like the Walton clan of Wal-Mart fame occupying the 12th, 15th, 16th and 18th positions on the list. Sure, you'll find a useful proportion of productive entrepreneurs who have enlarged the economic pie but looking at the rest of the list, one gets a feeling that the invisible hand isn't as important as the silver spoon in determining one's financial fortune.

Still, Slim wasn't granted the advantage of the Waltons, so how did the son of a Lebanese immigrant amass such a fortune in Mexico? Easy. You control the communication industry of not only your country, but an entire region. "Slimlandia" truly blossomed thanks to privatization of the Mexican telecommunications industry in the early 90's, which brought about a monopoly instead of diversity. His purchase of Telmex, facilitated by contributions to then president Carlos Salinas, was the springboard which has led to a Mexican economy that "is highly inefficient, and it is losing its competitive standing vis-à-vis other countries because of people like Slim." Almost every time a phone rings or text message is sent, Carlos pockets pesos from the 92% of subscribers in land-line telephony, while his mobile operator, Telcel, has almost 80% of users in Mexico. Oh, in the past five years his mobile telephone company America Movil has purchased most of the remaining mobile operators across Latin America, becoming the largest mobile service provider in the region. The reward for the people? Some of the highest phone hook up rates in the developing world. America Movil now has 201 million customers from Brazil to the United States. Slim also owns five insurance companies, a Mexican retail chain, a mining company, the Inbursa bank, the Cigatam tobacco factory, the Volaris airline company and the Progidy Internet provider. Oh yeah, chunks of Saks and Sears, plus he lent $250 million to the NY Times at 14% interest plus warrants convertible into 16% of the paper. All together, Slim’s companies have a value of half of the Mexican stock market, 7% of Mexican GDP, while much of the rest of the country gets by on a little over $4 a day per head (54-57 pesos).

Sure, your probably saying to yourself, "Yeah, sounds like Mexico, poor and corrupt, nothing like that happens in the developed world, after all they've got a drug lord on the rich list." Yet one could easily argue that Gates billions are largely thanks to the monopoly position he attained in his industry, but I won't. Or maybe bring up the culture of war that his seen a transfer of wealth measuring in the trillions to defense contractors’ whose growing use of offshore subsidiaries from 2003 to 2008 resulted in the loss of tax revenue and unemployment benefits for workers. How about you take a noble idea, say, granting health care coverage to your people, then twist it into an evil package that will deliver guaranteed profits to the insurance industry? I suppose I could point out that the entire financial industry was given trillions of dollars to keep them afloat in order to hand over billions in compensation to the guys who drove the world economy into the ground, but that would be too easy. How did capitalism become so corrupt?

Unlike the last depression when the gilded fortunes of most plutocrats dropped precipitously, along with the banks the rich have been well taken care of by the system. The government printing presses have been working overtime to maintain the illusion of stability in order to artificially propel stock and resource prices. This has clearly benefited Warren Buffett who has gorged himself on the buffet of buying opportunities that the crisis presented resulting in a $10 billion increase in his wealth. Sure, the "Oracle of Omaha" does his bit allocating wealth through Berkshire Hathaway while taking home a reasonable salary, but what has he produced? One can ask the same of these other 33 hedge fund managers on the list. How did they improve the world?

And who else's wealth is your tax payer money, along with your children's and children's children's children, going to support? Only 16% of the new members of the elite thousand were from the States while Asia added 104 moguls giving them just 14 fewer total than Europe, 234 to 248. The 4th and 5th richest people in the world are now from India, Mukesh Ambani and Lakshimi Mittal moved up from 8th and 7th respectively. Soaring resource prices helped the biggest gainer on the list, as Brazil's Eike Batista saw his wealth increase by $19.5 billion(!) thanks to his mining interests, moving him up to 7th at $27 billion. Russia rounded out the BRIC countries fine performance. As oil and gas prices bounced back, so did oligarch fortunes. Of the 164 returning members to the list, 28 were Russian, giving them a tally of 62 billionaires. Taiwan tripled its number of billionaires to 18 and Turkey more than doubled its own to 28. For the first time China, with 64 billionaires, has the most outside the US whose residents now command 38% of the collective net worth of the world's richest, down from 44% a year ago.

It wasn't until I read the BBC version of the story that my ears pricked up. You see, apparently the latest Forbes list is good news for everyone: "In a sign that the global economy could be improving, the average net worth of the world's billionaires is now $3.5bn, up $500m from last year." You hear that everyone? Yep, it's a good sign for the global economy that the super rich became super richer last year. It was just a year ago that the Beeb was lamenting "Rich list hit by economic crisis". Yesiree Bob, 2009 was a much better year for the world than 2008, a year that saw 332 names wiped off the rich list leaving a measly 793 billionaires who saw their wealth plummet by 23%. Things are much better now as the billionaire list is back in quadruple digits with 1,011 members.

The pursuit of wealth has clearly become an end in itself, with the wealth rankings taking on the importance of an Olympic medal table (yeah Canada, New Zealand or more likely India). Much of the rest of the list is being celebrated and debated over national lines with many cheering their country's inclusion (Finland and Pakistan got their first members) while others lament their nation's totals on the list. National pride seems to be at stake as we're fed the meme that having more billionaires means a better country and world.

Though they've convinced the apologists that this may be true, they couldn't be more wrong. We're seeing the fruits of the system planted by Nixon in which the treadmill of debt allows a nation to sell future generations into indenture in order to buy stuff made by the future slave owners, the price being held low thanks to the artificial peg maintained by the purchase of debt in the first place. Does that make sense (I mean the sentence and the system)? To my way of thinking, a world where hyper-wealth is celebrated has two basic flaws: a system that creates winners also breeds losers to scale, resulting in massive inequality and even more fundamentally, more stuff means more unhappiness.

As it stands, the US and much of the world suffers from more inequality than any time in over 100 years. We're taught to believe in this evil Gilded Age that existed before capitalism kicked in and distributed wealth away from the kings, queens and Rothchilds. Yet today these fat cats do more than throw off the standard deviation of wealth distribution. When a ruling class becomes entrenched it follows that mobility between classes inevitably declines - a lethal ailment for economies. Sadly, the tea partiers will believe it's the government control of the economy that destroys innovation but in reality it's the gilded class and true enough, the government is enabling their control. Funny how those Nordic 'socialist' countries feature much more intergenerational movement than the US (Italy and the UK are even more stagnant).

Whether you invent something or inherit your cash, there is no doubt money is an innovation driver, but 10 digit wealth takes a lot of cream off the top. Could this loss of incentive to move up have led to the decline in median wages in the US between 1998 and 2008? Yet it's facilitated by a tax system that has seen a fall of the highest marginal tax rate from 91% in the 1950's to 28% today (well, the IRS says that the top 400 richest tax filers actually paid a rate of just 16% in 2007 thanks to loopholes, a lower rate than your average Joe). In 1970 the compensation ratio of the top 100 CEOs compared to the average worker was 45 to one. By 2008 it was 1,071 to one. You think they got that much smarter? If given the choice of giving our money to these guys, the banks, the military industrial complex or health care it seems like you would choose door number four, no?  We're sold the fairytale image of the first man from the developing world to become the world's richest along with slumdog billionaires, but they're just replaceable cogs in the machine. It's the machines they operate that control the world's markets, employing armies of lobbyists to influence government, and a network of spies (yes, real spies, CIA, MI5, ex-KGB) in order to maintain their stranglehold on global wealth.

Finally, here's the kicker. More money and more stuff don't make you happier. Building upon the ideas of Thorstein Veblen, who in 1899 coined the term "conspicuous consumption" in his book The Theory of the Leisure Class (google books here), two professors of economics, Curtis Eaton and Mukesh Eswaran, believe they have shown through economic formulas that more things make us less happy. Veblen's work is considered to have been the first critique of consumerism where he argued that our modern division of labour began in tribal times when the "higher-status" group monopolized war and hunting while farming and cooking were considered inferior work. Veblen's ideas were discarded by neoclassical economists as he cast people as irrational creatures who chase after social status without regard to their own happiness, an idea that should be gaining more traction in light of the financial crisis. In the Middletown studies, for example, researchers learned that lower-class families were willing to go without basic necessities such as food or new clothes to maintain a certain level of conspicuous consumption, in particular, car ownership. The concept of conspicuous consumption has been carried forward to this day, and is often used to criticize advertising and to explain why poorer classes have been unable to advance economically. His views on the uselessness of "businessmen" have been adopted in modified form by none other than third-ranked Warren Buffett, who has harshly criticized the growth of practices such as day trading or arbitrage, which makes money solely through abstract means.

Well, according to Eaton and Eswaran it seems our drive to own more stuff is really a sort of zero-sum game, where the owners may feel happier but the rest of us are left feeling worse off. They state that once society reaches a reasonable standard of living and consumption shifts towards the purchase of status symbols with no intrinsic value, average wealth may rise causing people to be richer but unfortunately not happier. Worse yet, as people yearn for more status symbols they have less time or inclination for helping others. This, the authors argue, damages "community and trust", which are vital to an economy because they ensure the smooth running of society. They conclude: "Conspicuous consumption can have an impact not only on people's well-being but also on the growth prospects of the economy." Huh, sounds a little bit like what's ailing the west these days as we mortgage our futures in order to buy more stuff today, thus sacrificing our growth prospects.

Well, seems I've managed to ramble on quite a bit again. As usual though, these arguments will fall upon deaf ears of the true believers as the cognitive dissonance created between reality and their beliefs cause them to fall back on tired, disproven arguments. They'll blame my Karl Marx beard for my socialist rantings or accuse me of tall poppy syndrome while ignoring the words of their idol, Adam Smith who warned:

Of the corruption of our moral sentiments, which is occasioned by this disposition to admire the rich and the great, and to despise or neglect persons of poor and mean condition

There is little question that our current form of capitalism is failing us, while those in positions of power are doing all they can to protect and propagate their wealth. There's a frightening increase in momentum about it as the rich become richer and the poor poorer. In the meantime, panem et circenses will be fed to the masses while ensuring the next generation will be dumber than the last as places like Texas reinvent the history books and Kansas City closes half of its schools. Knowledge is after all nearly as powerful as the dollar.

This Week in Wingnuttery

A new semi-regular feature for my 5's of regular readers: a quick(ish) rundown on the thought process of those on the right - as in opposite from left - side of the political spectrum. As today's internet has enabled users to coral the shotgun blast of information into their own RSS'd version of reality, it's good to take a minute and try to understand where the beliefs that the other side of reality get their information. The 24/7 news cycle that has been thrust upon us in the last couple of decade has evolved into something even more dangerous as the deluded right has an even greater capacity to isolate themselves from reality. As more and more pay walls go up, we'll increasingly need this kind of insight to understand how misinformation gets passed onto an unsuspecting public.

We'll start with the Wall Street Journal where March kicked off with:

Milton Friedman has been dead for more than three years. But his spirit was surely hovering protectively over Chile in the early morning hours of Saturday. Thanks largely to him, the country has endured a tragedy that elsewhere would have been an apocalypse.

I'll save you the trouble of reading the rest of the WSJ article. After rattling off a few stats about the power of the latest Chilean earthquake, the writer, one Bret Stephens, goes on to thank none other than Milton Friedman, Uncle Milt, for the low death count in Chile relative to Haiti who sustained a much more powerful earthquake. Why? Well, according to the deluded, it was thanks to the Chicago Boys that Chile adopted strict building regulations which resulted in their housing being built of bricks instead of straw. According to rightwing mythology all the concrete and rebar came thanks to the economic policies adopted by the Pinochet regime under the advice of Uncle Milt.

Without knowing the reactionary press victim's condition it would seem inexplicable that one could think the man partially responsible for the slaughter of thousands is in fact owed thanks because he made building codes stronger in Chile. Responses to this assertion should begin with reminding the nutter of Richard Nixon's response to the democratic election of Salvador Allende - "make the economy scream" (hard to read copy here, 8th line of the semi-legible scribble). This was Tricky Dick's order September 15, 1970 to his CIA director Richard Helm, launching the soft line campaign to undermine Allende which paralleled the hard line Pepsi fuelled military coup.

But I digress, read more here. Back to Friedman and Chilean building codes. Even if we ignore the fact that the Chilean seismic building code was adopted in 1972, the year before the CIA assassination of Allende, there's the matter of Uncle Milt's view on government legislated building codes. Hint: He didn't like them. In fact, Chile's earthquake had the curious effect of destroying a disproportionate amount of modern buildings and highway overpasses. So, if anything Friedman is to blame for much of the destruction as building code standards and enforcement degenerated after Pinochet took power. Whether you're building highway overpasses or entire economies with only private sector oversight, both tend to collapse when the big one hits.

Next up, McCarthyism is in again. Last week's 'news' cycle featured media stalwart whore Wolf Blitzer giving air time to Liz Cheney and Bill Kristol's view that lawyers who aided Guantanamo Bay prisoners legal defense are unpatriotic. They went even further, suggesting the Department of Justice be renamed the Department of Jihad (get it DOJ, J for Justice or Jihad, sigh). Of course this is nothing new for the likes of Kristol or Cheney, but it gets ugly when it spills over to the main stream of CNN. The Kristol's and Cheney's of the world need to be kept in their boxes, not given forums to create perceptions of American patriotism. The hubbub arose when Liz's Keep America Safe propaganda unit made this ad which instead of getting them tarred and feathered has even reached the floor of the Senate:



If you're a NY Post reader, you don't read that as a lawyer, John Adams defended British soldiers accused of brutal crimes committed during the Boston Massacre calling it "one of the most gallant, generous, manly, and disinterested actions of my whole life, and one of the best pieces of service I ever rendered my country." Instead you get 9/11 scaremongering day in, day out. Oh, and they conveniently forget that the Bush/Cheney DOJ and Rudy Gulliani's firm also employed these same horrible types of people providing constitutional protection. Hat tip to Glen Greenwald, the timeline of events showed he was most prescient in his warning over watching how the media would play this story. Unfortunately, the (brain)damage is already done for readers of the Weekly Standard, they think witchhunts are a good thing, but don't hear about how 34 of America's 50 largest law firms represented detainees or filed amicus briefs on their behalf as Senator Grassley had to be reminded. Thanks to Wolf, while passively watching CNN many were exposed to the contamination. I hate Wolf Blitzer. Oh, and anyone named Cheney. There I said it.

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Seeing as the Jim Bunning crusade to kill the unemployed is over, just one more shocker this week. Bunning may have had some success making people forget that the nation's debt problem is mostly due to Bush and Republican congress era unfunded wars and Medicare prescription drug benefits that came along with two of the biggest tax cuts for the rich in history (all of which he voted for). If people can be made to forget all that along with the fact that the bank bailout was mostly Bush's, they will also now believe Sarah Palin is smarter than Barack Obama. Yes, it was only Sean Hannity saying it, but remember Faux News controls the minds of many zombiefied conservative neanderthals you may run into. Sorry, I know it's painful, but you gotta get to just past the 2:00 minute mark:


Keep in mind that their definition of smart is obviously different than the traditional one. For them, smart means writing down answers to supposedly unscripted questions on your hand. You're smart when you can only name one of the founding fathers of your nation while claiming to revere their ideas. Yes, smart is calling single payer health care socialist and then admitting that your family used to slip across the Alaskan-Canadian border in order to receive some of that commie medicine. I don't even know what to say, no matter, Zirgar says it better here. Just remember how the Inca were proved right when American's are mulling over the Palin/Cheney vs. Obama/Biden decision come 2012.

The misinformation rolls around the planet with Tsunami-like destruction. Is there any wonder why Canadian officials support torturing brown people in Afghanistan? How the only way Obama can improve national security standing among much of the electorate is to kill more people in a country he's not at war with remote control indiscriminate killing toys. You have to remember the information that these poor creatures are fed with the goal of retarding society. Gnashing your teeth about illegal Israeli settlement construction will get you nowhere without remembering why the right hates brown people. In a world where America is destroying itself like 18th century Poland while I'm living in a 21st century Poland still trying to imitate the States, it's not only the language that's hard to translate. Having a dictionary can help you understand the words coming out of the right-wingnutter's mouth but you'll never comprehend the meaning oozing out of their mind without remembering they get most of their 'information' from Rupert Murdoch controlled sources. Wow, didn't even mention Rush Limbaugh once in the inaugural installment of wingnuttery. D'oh!

Pwned by the Podium

The Olympic Games are competitions between athletes in individual or team events and not between countries

-International Olympic Committee

I don't like it one bit, it makes me feel somehow, I dunno ... unclean. Just as the Macbeths needed more than water to remove the blood from their hands, Monday's shower couldn't remove the stink from my hangover. The blood was symbolic of the stain left on the conscience of those royal usurpers by unchecked ambition while the stench of nationalism hangs in the air thanks to an all-out pursuit of medals and glory. I admit it, I'm proud that Canada won the most gold medals at this year's Winter Olympics; so why does it make me want to puke? Easy, as most foreign journalists have observed over the past couple of weeks it's just not Canadian, this kind of jingoistic flag-waving belongs to our neighbours to the south.

"Own the Podium". The program sponsored by the Canadian federal government at a cost of C$117 million is what got under the skin of most people. Seems that us canucks were fed up with coming in fourth place and seeing that as host nation, this would be Canada's chance to shine in the world's spotlight, funding was directed towards those events where we deemed our chances of winning to be greatest. Based on the results from the two previous times Canada hosted the Olympics, perhaps you can't really blame the Canadian Olympic organizers for wanting to improve on their past performance. You see, Canada failed to win a single gold in either Montreal in 1976 or Calgary in 1988, the only host nation in history who can claim such a dubious record. OK, Montreal was the summer Olympics, but Calgary? We couldn't even muster a gold in the winter games!

So, this time it would be different. Thanks to a $66 million infusion from the country's taxpayers, along with $51 million in sponsorship funds, the program offered Canadians who took home gold $20,000 apiece in a stated goal to take the overall medals title. While we may not have reached it, you can't argue with the result that was achieved as Canadians took home the most golds, 14. But hold on, it seems there is no agreed upon way of measuring who 'owned' the podium. Europeans generally tend to rank the countries by total golds won, while ironically North Americans usually rank by total medals. Both methods have their inherent weaknesses. Is a bronze really as valuable as a gold? Conversely, if a team wins only one gold while another country garners, say nine, but all of them silver and bronze, can you say the gold winners had a better Olympics? Such was the case in Turin in 2006 as the Japanese with a solitary medal, golden, were ranked ahead of the Fins with six silvers and three bronzes according to some tables.

But here's the rub: should it even matter? After all, the trappings of podiums and flag-raisings were not even part of the rebirth of the Olympics in the modern era. 1956 and Soviet domination brought it about as rivaling ideologies jockeyed for superiority any way they could. Those Italian Winter Games saw the Soviets come out ahead with seven gold and a total of 16 medals, but it wasn't until the Melbourne Summer Games that the world noticed politics taking over the event. The Hungarian Uprising and the Suez War combined to see multiple nations pull out of the games: Lichtenstein, the Netherlands, Spain, and Sweden boycotted due to the Soviet presence while Egypt, Iraq and Lebanon did likewise in response to the Israeli invasion of Egypt. The age of political boycotts was initiated, up to then no one had made such a political statement, not even of the Nazi games of 1936. Of course the fall of the Berlin Wall has brought with it the end of the age of politics, ushering in the age of economics which coincidentally hasn't seen a single boycott in the pursuit of the almighty dollar.

Sadly, 'Own the Podium' didn't begin and end with solely helping Canadians; it also hindered everyone else as non-Canadian athletes found their access to practice sites was strictly limited. It started last winter when speedskaters from several countries were denied access to the Richmond Olympic Oval. The benefits of familiarity vary by sport. It may be irrelevant for some sports, after all, an oval is an oval, but it is particularly important on one-of-a-kind new sites like the alpine skiing runs or the track for luge, bobsled and skeleton. At the Whistler downhill course, unfamiliar to most of the world’s best skiers, several medal contenders were left watching over a fence as the Canadian team trained. Meanwhile a gentlemen's agreement between the luge teams of the United States and Canada was ignored, cutting practice runs. Canadian athletes had hundreds of trips down what is widely considered the world’s most treacherous course while foreign athletes had a few dozen. Some have gone so far as to say that lack of access to the luge run was a factor in the death of Georgian luger Nodar Kumaritashvili.

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But really, who won? Just as in Beijing, where the Chinese led in golds while the US led in total medals, the US repeated the overall medal victory while again losing in gold, this time to Canada in Vancouver. So depending on your view, optimists may see it as two winners, while pessimists may see none. It's all academic anyway as even winning 'only' nine golds in Vancouver, the Norwegians continued there medal per capita dominance at the Winter Olympics. In fact the nation of 4.7 million has won more medals than any other country at the Quadrennial Cold Weather Athletic Competition (thanks Stephen Colbert). Norway has 290 total medals to the USA's measly 237, with Canada lagging well back in 7th with 127. Well, at least the success of "Own the Podium" allowed the canucks to move past the Swedes who are now back in 8th and in fact if measured by gold, Canada is now tied with Finland for 6th with 42.

Yes, the maple leaf was in your face at these games, but that's the idea for the home team isn't it? To show the rest of the world you kick ass, like they did in Sydney and more recently at the Beijing coming out party for the aspiring G2 superpower. Every country that is awarded the Olympics immediately prioritizes the winning of more medals than ever to inflate its national ego and help justify the enormous expenditure and effort. China was guilty two years ago of favouring the home team and don't forget their Project 119, named for the number of additional gold medals it might contend for by focusing on medal intensive sports. Yes, I guess what's ok in China is ok in Canada. And don't forget Salt Lake City in 2002 which saw a nation desperate to prove to the world that it was still the world's superpower and therefore needn't fear anyone. What's a few maple leafs jerseys when the stars and stripes were just as ubiquitous eight years ago? Oh yeah, that was the fringe benefit to these Olympics for the host nation's government, it distracted the people's attention from that little political fiasco that saw democracy shut down for over three months in the true north strong and free. Canada's national fascist rag admitted as much and even claimed the strategy a success. Yeah, that's right, it's ok to torture, or it least be complicit to torture, like the Americans too.

So, unfortunately for Canada, it seems it's alright that they have a leader determined to turn their once distinct nation into a watered-down version of their southern neighbour so long as he's a hockey fan. Somehow Harper has missed who's winning the global race these days, but he better wake up quick as the thin-skinned response of the Canadian media to comparisons between 1936 Berlin and 2010 Vancouver won't be in evidence at the site of the next winter Olympics, Socchi, Russia in 2014. I'm sure they'll choose more dramatic nationalistic maneuvers, anyone remember the Arctic? Medvedev has already demanded officials responsible for Russia's abysmal medal performance step down so we know that one of the stories of 2014 will again be the home nation's drive to top the podium. As China has raced to lock up resources around the world to feed their growing economy, Canada (and the US, Denmark and Norway) better watch the Russians close. After all, they did take advantage of the distraction that the opening ceremonies in Beijing afforded them in 2008 as the Georgian conflict kicked off. Guess we'll have to wait and see what they have in store for the world.

And then there's hockey. Without the gold medal victory Sunday night against the American squad, the Canadian Olympics would've been deemed a bust by most no matter the other results. Again, I must admit that my nationalism gene was activated as I walked into my local bar here in Poznan and in my Polish-English garble inquired whether the game would be on TV there. After a moment of confusion the owner/bartender broke into a smile and said "Oh, your friends!" And so it was, as my Canadian brethren took the ice, I was settled in comfortably on a bar stool, beer in hand enjoying 'The Game' on the other side of the world. The win wrapped up Canada's 14th gold from 17 days of competition, moving them past the Norwegian team's 2002 performance for most ever. The glow of victory remained Monday as everyone seemed to have seen the game as well and made sure to tell me what a good game we played, on the street or in school. But when the hangover finally cleared on Tuesday, this dirty feeling crept back, nagging me, demanding to know: what comes next for Canada?

The first week of the Vancouver Olympics threatened to turn the games into the worst ever, but by the end of day 17, the city and Canadians had managed to turn this perception on its head. The city seems to have come out a big winner, but I fear it'll turn into a loss for the country. Politically rudderless, a wasteland with no credible opposition and a megalomaniacal leader intent on burning the Reichstag; economically dependent on her sickly neighbour to the south and the biggest environmental disaster in the world (which coincidentally just welcomed billions in investment from, you guessed it, China); and morally corrupt, where the Olympics sponsors can snow the public with a green campaign while being the dirtiest corporations on the planet (and no, I won't go into the irony of trucking in snow to a Winter Olympic site bereft of snow thanks to trucking). My hangover has passed, the world seems less foggy. Now that the Olympics are over, Canada gets to have a functioning government once again. I think I can deal with the new Canadian attitude so long as the energy from Own the Podium gets turned into Own Your Government.

Dangerous Names and Games

Gunfire breaks out around the presidential palace followed by the tell tale military music broadcast over state radio while a few days later the president of it's neighbouring nation is whisked back under the cover of darkness after a 93 day absence. Another coup in one west African nation and a game of presidential hide-and-seek is played in another. Just two more stories crossing the news wire out of a continent with over a billion people and 50 countries but a political morass which has produced only a handful of good leaders. Being no exception, Niger and Nigeria share more than a border and west Africa's largest river which lent both countries the name that shocks the politically correct. Just as outsiders were ignorant of the Niger River's improbable course for centuries, observers today struggle to make heads or tails of the incorrectness of the two nations' politics.

Last week's military coup in Niger shouldn't have come as surprise to anyone. Now former President Mamadou Tandja followed the failed African leader playbook step-by-step after he first come to power in elections following a coup d'etats in which then President Ibrahim Bare Mainassara was killed on the tarmac of the airport outside the capital of Niamey in 1999. Mainassara, who had himself taken power in a coup from the first democratically elected president of Niger in 1996, was returning from pilgrimage to Mecca when his own Presidential Guard nearly cut him in half with machine gun fire. Before we get lost in the coup loop, let's just say that Tandja like so many African leaders grew to enjoy the privileges of power. Despite reassurances that he would step down after the constitutionally mandated two five-year terms, when the time came to bow out, he found he couldn't.

A quick glance at the length of time in power of leaders around Africa is enough to tell you this isn't an isolated incident. The situation has deteriorated to the point that the Ibrahim Prize, an award intended for democratically elected African leaders who served their term in office within the limits set by the country's constitution and has left office in the last three years went without being handed out this year. The only deserving candidates have already won; Botswana's Festus Gontebanye Mogae in 2008 and Mozambique's Joaquim Alberto Chissano in 2007 while Nelson Mandela was named Honourary Laureate the same year. The prize is intended to offer financial stability as a reward for good governance ($5 million plus $200,000/year for life), after all, these leaders most likely cling to power in order to maintain the life of luxury that goes along with their status.

Meanwhile, Nigeria had seen a much quieter transition of power which is now threatening to become louder. As the elected President Umaru Yar'Adua had been incommunicado for nearly three months in a hospital in Saudi Arabia, the Nigerian parliament promoted the vice-president in order to maintain "peace, order and good government". Neither coup nor election but serendipity brought Goodluck Jonathan to the pinnacle of political power in Nigeria February 9th. Despite questions about the constitutionality of the move, the uncertainty caused by the power vacuum had become unsustainable as problems flared up throughout the country and without. With the threat of violence breaking out in the oil producing south as a tenuous truce fell apart, civil unrest in the north with ethnic clashes leaving hundreds dead and of course a little diplomatic problem involving the US with Nigerian travelers being subjected to increased scrutiny after the underwear bomber tried to blow up a Detroit bound flight on Christmas Day.

Suddenly, just before the senate met to discuss amending the constitution to clarify the transfer of power, two planes landed in the presidential wing of the airport in the capital city of Abuja under the cover of darkness. President Umaru Yar'Adua's timely return threatens to throw the entire nation into chaos. A power struggle between the two camps was already intensifying as Yar'Adua supporters grew uneasy as Goodluck's assertiveness grew. Reshuffling ministers and forging ahead with an amnesty for militants in the oil-rich Niger Delta had led to talk of a Goodluck run for the presidency in elections due April of next year. Meanwhile, the senate resolution promoting Mr. Jonathan prescribed that he would cease to be acting president once Yar'Adua stated in writing to the leaders of both houses of parliament that he had returned from "medical vacation". His return has done nothing to clear up the true state of his medical condition, only adding to the uncertainty. In addition to a chronic kidney condition, it's believed he was taken to Jeddah last November to be treated for pericarditis, an inflammation of the membrane protecting the heart. Incredibly, this wasn't the first episode when Nigerians were uncertain about whether their president was dead or alive. During the presidential campaign in 2007, he was rushed to Germany for emergency treatment yet he went on to win the election despite the rumors of his death. Confusion reigns while political maneuvering has bordered on the surreal; a security detail stood guard over the presidential chair to ensure the acting President did not sit on it yesterday at the weekly cabinet meeting. Who will sit in the chair next is shrouded in mystery.

While the mystery behind the origin and course of the river from which both countries take their name was eventually solved, the etymological roots of the name itself remain inscrutable. Today we know the river runs from southeastern Guinea north east into the heart of Mali past Timbuctu where it cuts hard right, south east for the Gulf of Guinea through Niger and Nigeria. This unlikely boomerang shape even confused history's greatest traveller, Ibn Battuta, who believed the river near Timbuktu was part of the Nile. This was long held to be true, as even the Roman roadmap or Tabula Peutingeriana, records a Flumen (River) Girin presumed to be today's Niger, with the remark translated "This river which some are naming Grin is called Nile by others, for it is said to flow under the ground of Ethiopia into the Nile Lake". It took unlikely named Scottish explorer Mungo Park to simply discover that the great river flowed east and not west into the Senegal at the close of the 18th century (don't be put off by the title of a great book about his trip - Water Music). We find the name cringeworthy thanks to its false, and to many, offensive association with the Latin adjective niger - black. Further corroboration seems to come from the Sudan is the plural of aswan in Arabic - black.

Yet evidence to the contrary overwhelms the common perception. The first European explorers in the area were the Portuguese, and they would most likely have named it 'Negro' or 'Preto' but didn't. After all, the Niger is known as a 'clean' river, in that it carries a tenth of the silt of the Nile because its headlands are located in ancient rocks that provide little silt, therefore the reference cannot be mistaken for the water. Further back, the Greeks in the time of Ptolemy knew of two rivers in the area, the Gir and Ni-Gir. The Buduma, one of more than 250 ethnic groups that make up Africa's most populous country, had a word for river that may have been nijir. Others have argued the Niger shares a Semitic root with Senegal, naghar, meaning river as both rivers were often considered one and the same in the past. The most convincing argument of all comes via Tuareg, a Berber language transmitted from around Timbuctu to the Mediterranean, who called the river gher n gheren "river of rivers", shortened to ngher. Regardless, today the Niger basin is densely populated and home to the Oil Rivers, named after the palm oil once produced in the area. It's the modern petroleum pumped out now that has lead to the explosive situation in the south of the country. 

Speaking of explosive, it's the uranium found in Niger that makes sure their constitutional path has been just as uncertain as so many other African nations. Natural resource in Africa are all too often the bane of it's politics helping the wicked stay in power. It's far too common for leaders to simply change the constitution to extend their reigns and depending who controls the armed forces, they get away with it or don't. Uranium accounts for 70% of Niger's export earnings while the French and Chinese build more and bigger mines to enrich whoever has power. The wealth often goes directly to the politicians, sometimes they're caught like the Prime Minister in 2007, usually not. The people's slice is pared back until they fight back so the rulers hope their army holds the balance. Meanwhile, in Southern Nigeria, MEND (Movement for the Emancipation of the Niger Delta) rebels called off a truce January 30th, perhaps forcing the move to promote a new president, constitutionally or not, as the oil needs protecting. MEND attacks over the last few years are estimated to have retarded the production of 2/3 of the potential production (about $1 billion in revenue) of the fifth largest supplier to the US. The name problem reared it's ugly head on the oil market last week as news of the coup in Niger broke and geographically challenged traders caught wind of the story and confused it for Nigeria helping push oil over $80 for awhile.

Sometimes it seems a coup can be justified, such as when the constitution is altered by the leader simply to extend his rule. Mamadou Tandja did just that while also overseeing the starvation of his country and judging by the track record of too many African leaders he could've held on indefinitely. Gabon's Omar Bongo died last year after ruling for 42 years which made the little green book Colonel, Muammar al-Gaddafi the longest serving African leader - since September 1st, 1969. The list gets worse from there: Teodoro Obiang Nguema Mbasogo has been the President of Equatorial Guinea since 1979. He deposed his uncle on August 3, 1979 in a violent coup d'état, supported by 600 mercenaries licensed from Hassan II of Morocco. Rounding out the medals in third is Robert Mugabe, another who came in on a wave of optimism, only to have systematically destroyed his nation over the past 30 years. We're just waiting for them to die. Mugabe took another step as he turned 86 the other day and celebrated in the Chinese embassy in Harare, the first embassy he's visited his entire rule. Guess he likes that the Chinese spend tens of billions on resources as well as birthday cakes without any 'silly' human rights strings attached.

The coup in Niger is being denounced acrimoniously by the usual acronyms, yet it was the predictable inaction by the AU, EU, UN and ECOWAS that left the army with little choice as Tandja had suspended the constitutional court and rigged a referendum to clear the way for his perpetual installment in power. Coups can bring stable democracy, such as Mali's coup of 1991 in which leader Amadou Toumani Touré removed the blood thirsty regime of Moussa Traoré, drew up a new constitution and organized elections with return to civilian rule in a year. It's that whole organizing free and fair election thing where many stumble. Will Niger's military junta hand back power as they claim they will? While they are promising to return civilian rule, the vagueness of their claims is looking rather ominous. For every coup leader that offers a solution, there is a Bongo in the Gabon, Obiang in Equatorial Guinea, Blaise Compaoré in Burkina Faso or Omar al-Bashir in the Sudan to remind us of the perils. And those are just a few in power today, let's not even talk about Sierra Leone and of course you can't forget about Idi Amin in Uganda, Mobutu in Zaire or Abacha in, you guessed it, Nigeria.

Those who don't believe in coincidence would find much to ponder in these two stories. Since he left the country, Nigeria's political elite has been consumed by a power struggle between Yar'Adua loyalists, who wished to keep him in power, and those who argued that he was too ill to govern. His return to Nigeria closely follows on the heels of a ministerial delegations failed attempt to see the president the previous week. They were to determine the state of his health, the first step in declaring him permanently incapacitated from holding his office, but were prevented from seeing him by his doctors. If someone were to shout "olly olly oxen free" in this game of hide the president, the losers would be Yar'Adua's wife and followers. In Niger, former colonial master France has slowly seen it's grip loosened over uranium production, as agreements have been signed with Canada, Australia and most importantly, China. The coup occurred on the same day a US congressional delegation was visiting the capital of Niamey. Niger has recently moved away from the French monopoly of uranium production towards other countries such as Canada, Australia, the US, South Africa and most importantly China. The stakes are high as not only billions in investment are poured in but the Nigerien town of Arlit alone largely supplies France with the uranium required to power up the it's nuclear programme and power stations - generating almost 80 per cent of France's electricity via an estimated 59 nuclear plants. The French are denouncing the coup the loudest while the Chinese and Americans, while stopping short of voicing support, have been much more muted in their response.

It'll take a while to catch up to Abacha, after all he made it up to #4 on the modern most corrupt list having siphoned £3 billion out of the country's coffers, but the health care ain't bad either, three months in a Jeddah hospital doesn't come cheap. It isn't Nigeriens or Nigerians that the world is worried about, it's the uranium and oil. Apparently undreds of thousands in aid will keep trickling in to prevent a few of the starving from dying, but billions in graft will also be gushing out as a few reap from the rape. Niger may be little more than a hazy Dubya false claim recollection for many, but the yellowcake extraction is ramping up just as the never ending battle for resources is tilting towards China. And don't worry Nigeria, even if you've past the coup years, oil will be number one for awhile yet, so Nigeria's power struggle game of is he dead hide-and-seek will be just as rewarding.

Who's Afraid of the Big Bad Wolf?

Is it all Walt Disney's fault? Maybe if we had all learned the original story of the Three Little Pigs instead of growing up with the Disney version we would know to be afraid of the big bad wolf. You see, in the original story the two lazy pigs who built their houses of straw and sticks were both eaten, whereas in the Disney version they run to their hardworking brother's house of bricks for protection. With all the talk of PIGS and Greece in the financial world today, it seems only natural to see the situation as an allegory with people, companies and nations representing the little pigs and debt as the big bad wolf.

If you haven't heard of the PIGS yet, it's an acronym for what are also known as the Club Med nations in the eurozone, Portugal, Italy (or Ireland if you listen to the Italians), Greece and Spain. All have been thrust into the international spotlight recently as their soaring debt, deficit and a slight credibility gap have been undermining confidence in the euro pushing it down from over $1.50 to around $1.35. The focus started out on Greece, but has now widened its spotlight onto Spain and Portugal bringing with it the huffing and puffing about default and the implications for the euro, a German/French bailout and good old moral hazard or an IMF rescue package and their wicked witch guidance.

Of course there's a variety of reasons for problems in the eurozone: loss of competitiveness due to eastward EU expansion, a sharp drop in tax revenue brought about by the financial crisis, lack of monetary policy options as they now don't have the option to devalue national currency - but the main problem is debt, too much of it. Yet, it's not like any of this happened at once, all three countries, plus most of the western world, have been running astronomical deficits for as long as I can remember. The IMF says that the G7 nations owed a combined $30 trillion US. So, what happened to make this a crisis? Fairy tales, like debt, have predictable story lines, so just follow the money to the beginning as we already know they end the same, night after night, empire after empire.

It's not surprising therefore that the Greek story seems a little repetitive as it parallels the events that led up to crisis 1.0 in 2008. Step one, create the illusion of stability. While the banknotes weren't issued until 2002, the euro came into being January 1st, 1999 when 11 countries took part in conversion day as rates between the euro and national currencies were irrevocably fixed. Greece wasn't one of the 11 as they failed to satisfy all the stipulations of the Maastricht Treaty. Then, as if magically, I love fairy tales, they did; becoming the 12th June 19, 2000. It's since been shown that the EU bought a pig in the poke as we learned in 2004 that total debt was over 100% and worse yet, deficits have been running well above 3% of GDP since the 90's every year except 2006. How'd they get away with it? Of course it was the big bad wolf, Goldman Sachs, and the magic of cross currency swaps.

Remember the wolf in last night's story where he created the illusion of security by bundling mortgages and other debts together, magically obtaining triple AAA ratings in order to buy cheap insurance from the AIG's of the world? Surprise! He also helped Greece to do the same thing. Much as Goldman knew they could rely on the US government to bailout corporate counter-parties due to their TBTF (too big to fail) status, sliding Greece into the eurozone ensured that the ECB (really Germany or France as direct European central bank intervention isn't allowed) would now be standing behind Greek liabilities. These days it seems the wolf also sells the building material to build our financial houses out of straw and twigs.

Cross-currency transactions are part of normal government refinancing as nations issue debt in dollars or yen, swap it for euro debt for a certain period and then exchange it back into the original currency at a later date. However, in Greece "around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future." Bankers devised a special kind of swap with fictional exchange rates which enabled Greece to receive a far higher sum than the actual euro market value of 10 billion in dollars and yen. Basically, Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks disguised as a swap which didn't show up in their debt statistics allowing the books show in 2002 that the Greek deficit amounted to only 1.2% of GDP. After Eurostat reviewed the data in September 2004, the ratio had to be revised up to 3.7%. According to today's 2002 records, it stands at 5.2% (nothing compared to the 12.7% it had planned for this year). With bond maturities at between 10 and 15 years, it'll get even worse when Greece has to pay up for its swap transactions, while of course Goldman Sachs charged a hefty commission of $300 million for the deal and later sold the swaps on to a Greek bank in 2005.

In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways through a legal entity called Aeolos (god of the winds, they should of gone with Demeter to keep the pig theme) in 2001 which helped Greece reduce the debt on its balance sheet that year. In much the same way the wolf picks up the scent of a strapped homeowners forced to take out a second mortgage to pay off credit card debts, the Goldman pack has been stalking Greece to feed it's fairy tale debt habit. As late as November a team from Goldman Sachs led by president Gary D. Cohn arrived in Athens with a deal to create a financing instrument that would push Greek health care debt far into the future.

A similar deal in 2000 called Ariadne devoured the revenue that the government collected from its national lottery. Greece, however, classified those 'mythical' transactions as sales, not loans, despite doubts by many critics. The tide of fear caused by this uncertainty is now washing over other economically troubled countries on the periphery of Europe, making it more expensive for Italy, Spain and Portugal to borrow. For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin (sorry, I know mixing in biblical stuff now): countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments chose to artificially reduce their deficits by resorting to derivatives sold by and benefiting only the big bad wolf.

But are firms like Goldman really the big bad wolf? After all, they've done nothing illegal (so far, we think) and they're simply providing a service, supplying for a demand. They weren't doing anything wrong when they bundled junk debt into pretty packages, secured AAA ratings then bought insurance on default for low prices from companies like AIG. Neither was it illegal when they started selling those same securities short, causing their prices to fall and triggering massive contractual payouts from AIG when the value of the bonds fell below certain levels. They were simply playing by the rules of the game when they benefited from their timely trades and ensuing government bailouts. When will we sit up and take notice that the wolf is now as influential on the fairy tale genre as the Brothers Grimm? The same little piggy has roast beef whether the market goes up or down and the rest of us have none.

Much of that nasty debt that Wall Street bundled into pretty packages came courtesy of Main Street. Living within one's means sounds so simple; don't spend more than you can afford. Yet today's reality isn't that easy. Temptation is all around and folks need their flat screen TV's, new cars and homes to put all their stuff in. Governments play a roll here too; whether it's encouraging behemoths like Fannie May and Freddie Mac to give mortgages to people who can't afford them or offering tax incentives for people and corporations to take on debt; tax shields make corporate debt as much as 42% cheaper than equity. Individuals are able to write off all their mortgage interest, up to a million dollars, and companies can write off all the interest on their debt, but not things like dividend payments. Yet these incentives are clearly unnecessary; people will always need mortgages to buy homes, the deductions do nothing to increase home ownership while businesses already like debt as it offers leverage. The business-interest deduction, meanwhile, may lower an individual company’s taxes, but it also means that the overall corporate tax rate is higher, so its real impact is to give companies with lots of debt an unjustified advantage. So the system skews decision making in favor of debt and housing away from equity and other investment choices which magnifies risk making the economy more fragile and volatile.


Three Little Pigs from Guy Galer on Vimeo

The big bad wolf can even be re-branded; the leveraged buy-out firms of the 80's became the private equity firms of the 90's. Like the wolf in sheep's clothing though, the name change hasn't affected their modus operandi, company-flipping through debt which has squeezed the life out of any number of venerable companies and engorged many a Gordon Gecko. Sometimes they even set their sites on sports franchises. The Glazer family's purchase of Manchester United, the world's most valuable sports team, will provide a case study for future generations on how financiers enriched themselves while destroying our cultural icons. Thus far success on the field has managed to paper over the financial cracks but the creaking from the mountain of debt recently forced them to float a £500 million bond. While the demand for the bond issue was strong, it's only a matter of time until the interest payments (£325 million since the Glazier acquisition in May 2005) and the 'fees and loans' being issued to family interests sink the club. After all, you can't sell Cristiano Ronaldo to service your debt every year.

The wolf in Disney's Three Little Pigs was said to be an allegory for the Depression at the time of it's Silly Symphony 1933 release. Sadly, today's PIGS have been forced into responding to their financial woes by reducing many programs begun during that era; squeezing their people in order to keep the wolf from the door. Cutting social programs always come before financial reform or reducing spending on things like defense. Which of course brings us to the US, the Federal Reserve and it's magical printing press. Just as you fatten a hog before the feast, the US has been gorging on debt. With their 14 figure debt and $3.7 trillion deficit (yes just one year), optimistically it'll only take until 2020 for debt to reach 100% of GDP when yearly debt maintenance payments of 20% of GDP should be reached, a figure considered unsustainable.

Like a child believing this time the fairy tale will end differently, America and the neoliberal economic model are following the path of all empires. First, the ideology becomes corrupted and the believers lead us down an economically unsustainable model which inevitably forces the currency down until finally, military power loses its supremacy. Spending half of the world's total on defense every year won't help avoid the fate of the Habsburg's in Spain, pre-revolutionary France, the Ottoman and British Empires, or even the Soviets. Just google "Roman Empire economic collapse" to see how many results come up with the end of the American empire to see how most people think this story ends.

No government can ever balance their budget when the poor live hand to mouth, the working class and the middle class are mired in debt, and corporations and the wealthy can buy tax breaks and/or hide their money from the tax man in off-shore accounts. Yes, we need debt, without it we wouldn't have money apparently. Just as s a growing youth is said to have a wolf in its belly, it can quickly expand out of control; Einstein may or may not have said "compounding interest is the most powerful force in the universe". Conservatives rail against it while needing it to supply their pet projects and war machines, liberals feign concern while writing huge checks that necessitate it and all the while the balance of power in the world shifts inexorably east.

Financial regulation is the brick house that can protect us from the wolves. Having seen how their game of financial Armageddon chicken worked out in 2008 when the rest of the world blinked and handed over mountains of cash, this time the wolf has decided to stick it's snout directly into the carcass of sovereign nations. It's only America that can save herself and the financial world but she better act soon. Goldman Sachs and the gang are hunting ever bigger prey, taking an ever larger portion of the pie, living high on the hog if you will, while the rest of us make do with less. Breaking up the TBTF or limiting their size through taxation using ideas such as the Tobin tax on financial transactions is a first step. More importantly we need to change the consumption culture in which we simply make pigs of ourselves; here once again government can play a role by shifting to more consumption based taxes. If there's a moral to learn from this story it's that the only way to catch the wolf in the pot is to stop consuming more than we produce.