SECURITY COSTS FOR THE OLYMPICS, A NEW BRIDGE?

Talk about creative financing!! 

Wow! The federal government is giving us a good deal on the security costs for the Olympic games. We only have to pay another $165,000,000.  But don’t worry we’ll call it infrastructure spending, that way the true cost of the games will still be on budget and no one will be the wiser.

I was under the, obviously wrong, impression that the Provincial / Federal infrastructure spending was part of the stimulus package to create jobs in B.C.

Now I have been watching the development of the Olympic story since it was announced and soon realized that there would be massive cost overruns in all aspects of the games. It would be amusing, even comical if it weren’t for the fact that it will be us the taxpayers and our children and grandchildren who will being paying for it.

This most recent announcement is I suppose somewhat refreshing in that it is not even attempting to hide the fact that policing the games is not a bridge, even if that is what they call it in their paperwork. In the past the government insisted that Olympic costs were just normal infrastructure spending. I still don’t understand why we can’t call it Policing costs but have to call it a bridge, and where does it go and who’s name do we put on it? Maybe the Gordon Campbell invisible bridge to nowhere? 

Your tax dollars at work. Zero jobs created, on time and on budget total cost $165,000,000.00

Trivia - Until the nineteenth century, solid blocks of tea were used as money in Siberia!

COST OVERRUNS AT OLYMPIC VILLAGE

And now Vancouver city will have to slash the social housing component of the Olympic Village. This is not what was promised when the Olympic proposals were put forward, it is however an economic reality.

Why they ever agreed to give subsidized housing to people in the most desirable and expensive jurisdiction in Canada is beyond me. 99% of us in B.C. cannot afford to live there but those people who are down on their luck get to live there at our expense. Go figure. 

If we are going the social housing route at least build it in a little bit less costly area. I fail to understand why those of us who have worked and slaved to buy a home had to make sure we did so in a place we could afford, not in the most expensive waterfront in the Country.

The cost of these social housing units is well in excess of $500,000. Per unit. Why not build them somewhere where they can be built for $100,000. Or less.

Our grandchildren are going to still be paying for this fiasco long after it has outlived it’s usefulness and fallen down.

Unfortunately this is just one of the many costs that we are going to be paying for for years to come involving the 2010 games.The powers that be are required to put the most positive spin that their high priced spin doctors can come up with on the whole thing.

Some of us feel the games are worth it at any price and some not so much. I find myself in the not so much category, but not having a say in the whole thing I just wish once it was a done deal they could have told us the truth about what it was to cost. I don’t for a minute believe that the people who devised the Olympic costs actually believed the numbers they put forth.

Trivia - A cockroach can live several weeks with it's head cut off  -  It dies from starvation.

CALIFORNIA IN FINANCIAL DISTRESS

Lawmakers in California are unable to pass a budget and keep the Government operational. Governor Schwarzenegger will start the laying off of government employees immediately. This will be an interesting problem for us to watch and possibly get a lesson in mismanagement from. One wonders if this is another case of the Emperors fiddling while Rome burns.

Trivia - The law states that more than 3000 sheep cannot be herded down Hollywood Blvd at any one time.

THE ECONOMY DOOMSAYERS ARE THE BIGGEST PROBLEM

The recession has caused a lot of pain to a lot of people, in fact pretty much everyone in my part of the world. The headline news focuses mainly on the banking sector which is and will be the sector most watched to lead us out of this downturn. The banks with their greed and vile ways got the world into this mess and will be vilified for years to come for it. If the banks are looking for  sympathy for their predicament they can find it in the dictionary between shit and syphilis. 

The greed of these bankers may have got us into this mess and the governments unwillingness to let them fail will mean that they will have to be relied on to lead us out of it. They don’t deserve the honor. 

The fact is that some CEO’s learned their lessons well, during the last recession, and have managed their finances well and are prospering in these hard times. Unfortunately even as good as their balance sheets are and as good as their company prospects are they couldn’t get financing to expand and create more employment because the banks in their infinite wisdom would not lend to them anyway.

Protectionism will not be the problem prognosticators are expecting it to be. Companies are so globally based that they have manufacturing plants and parts suppliers all over the world making it impossible for protectionism to take hold.

Credit card debt has not gotten out of control the same way that mortgage debt has and is not likely to, given the bank and credit card companies tighter requirements.

The US dollar as diluted as it is, is still the default currency of the world and is still the strongest because other world economies are in dire straits as well. 

India will be the bright spot in all this going forward because they are starting at such a low base that their GDP will still be up by 5 to 6 % simply because of their poverty stricken poor people being able to now afford to buy simple staples such as food and soap.

On the other hand, China has become reliant on world trade for their rise to their present level of prosperity and with the downturn in world economies China’s export based economy has begun to suffer as well. China’s growth rate will drop from 11-12% to, I would expect 3-4% before starting to grow again, which is still growth even if it is slower.

President Obama and his henchmen and allies are talking such disastrous economics in order to get their stimulus package into law. It’s true there are problems and we are in a recession, but we have been here before and it has to run it’s course to allow the economy to grow again. The stimulus will probably get the economy moving again but the way I see it, it will have to be reined in very quickly once the economy is on solid ground or the problems down the road will make today’s problems look like a walk in the park.

Trivia - In Providence, Rhode Island, it is against the law to jump off a bridge.

B.C. BUDGET DEFICIT AND THE OLYMPIC COSTS

Even after offloading the Olympic costs to other levels of government the Provincial government is having to spend millions if not billions on Olympic costs. The problem being that they will not admit to most of the spending being Olympic costs. I fail to understand why they refuse to tell the truth about the true overall costs of the games. It’s not as if there is any viable alternative to them in government making them sure to re-elected in May.

The fact is that projects such as the sea to sky highway improvement project would not have been done if the Olympics were not coming. Meanwhile other badly needed projects throughout the province had to be put on hold or cancelled to put resources to Olympic priority projects. Olympic organizers and government officials chose to ignore the people warning of the inevitable cost overruns and forge ahead, I believe knowing full well they would be over budget. When putting a cost for security of $175,000,000 without any consultation with the RCMP is a ridiculous way to do business. Now they are hoping to provide the required security for one billion, that’s not much over just a whole bunch more zero’s.

Not that I have any interest in going to the games anyway but the tickets have been priced out of ordinary working people’s ability to pay. Even events being held now, a year before the games, at venues paid for by taxpayers they are not allowing the public to attend. So much for all this expense being for the benefit of all citizens. 

Meanwhile Gordon Campbell has repealed the law against running deficits so they can borrow enough to pay for it all. 

The homeless are still homeless and I’m curious as to where and how the government plans to hide them from the world.

The drug lords are still doing business freely and openly on every downtown street corner. 

The gangs are still having their gang wars with daily shootouts in mall parking lots and street corners, putting the general public at some considerable risk. I’m sure these gangs have all registered their weapons just like the rest of us have been forced to do.

Hiding all this from the world for two weeks, a year from now will be very expensive but of course will not be considered an Olympic expense, if it can even be done at all.

Trivia - In Washington state, you can’t carry a concealed weapon that is over 6’ in length.

A CASE FOR OIL INVESTMENT

This ongoing recession has caused a decrease in the demand and therefore a crash in the price of oil. With the drop in price, oil companies have curtailed exploration and production of oil which will cause a corresponding spike down the road. While continuing to draw down known reserves without replacing them is foolhardy.

This downturn has quietly masked the arrival of peak oil, without replacing reserves the world will no longer be able to keep up with consumption. Peak oil being the point at which 50% of global oil has been used. With world populations growing and industrializing, the oil we have left will get used a lot faster than the first half did.

As the economy starts to recover and even a modest increase in demand for oil ensues the price of oil will increase as fast as it dropped. The lack of exploration will mean there will be no way to simply turn on a valve and increase production. Cheap oil is and was a thing of the past going into this recession. Future oil production is going to get more expensive and this present temporary drop in demand and consequent drop in exploration will only make the price more volatile going forward. 

I don’t relate to the doomsday theorists that predict anarchy and chaos as the oil depletes. The warnings are out there and civilization is and will continue to pursue alternative solutions such as wind and solar. As the scarcity of oil drives the price up it will drive even more investment into new and innovative forms of energy. Even with millions of dollars being invested in alternatives we will be dependant on oil for years to come.

It looks to me like big oil companies are so acutely aware of the difficulty in finding more large pools of oil that they are entertaining the invitation to go back to a jurisdiction like Venezuela after being evicted from there only two years ago.

Now, while the oil price is depressed, seems to me to be a prudent time to make investments in oil companies with large oil reserves and clean balance sheets. If the world economy sinks further it may delay the whole process but I can’t see how it can stop it. 

This is of course just my view, for what it’s worth.

Trivia - A car uses 1.6 ounces of gas idling for one minute. Half an ounce is used to start the average automobile.

ZIMBABWE HUMANITARIAN DISASTER IN THE MAKING

Zimbabwe has more than 60,000 cases of Cholera reported to date, health care workers are not reporting for work because they are not getting paid, thereby exacerbating the situating. The country’s financial and social system is in a state of collapse with inflation spiraling out of control, making their money worthless. The UN’s appeal for $567 million in humanitarian aid has received little response.

The best the World Health Organization can do is to set up some medical clinics in border areas to try and limit the spread of Cholera to other African countries.

The political situation in Zimbabwe is intolerable, President Mugabe has control of the army and steals whatever aid makes it into that country. Inflation has turned to Hyperinflation bringing the financial system to a complete standstill.

As far as I can understand in this situation there is little that the world communities can do but monitor the happenings and wait until the political situation stabilizes to help these poor souls.

trivia - About 3000 years ago, most Egyptians died by the age of 30.

SEC - CORRUPT OR JUST INCOMPETENT?

The Securities Exchange Commission, set up to protect investors from unscrupulous crooks and con artists oversaw the implementation of the largest ponzi scheme the world has so far ever seen. In my view the SEC having been informed of the fraud and ignoring the allegations for more than a decade must be itself corrupt or at the very least criminally incompetent.

http://beltwayblips.dailyradar.com/video/rep_ackerman_on_madoff_fraud/#links

It seems to me that a fraud of this magnitude to be perpetrated by one man able to carry it on for decades is not possible without help from regulators at the very least turning a blind eye to the allegations registered against him.

If it were not for this ponzi scheme doing what all ponzi schemes have to eventually do, run out  of more victims and implode, it would still not have been discovered. It took Madoff himself coming forward and confessing to it for the fraud to finally come to light.

The SEC is of course scandalized and embarrassed by this. The credibility of this organization is now totally trashed and they will have to put most of their resources into trying to rebuild their credibility. Making weak excuses why it didn’t investigate and how it’s not their fault will not be helpful in rebuilding their credibility.  

Trivia - In Virginia, the Code of 1930 has a statute which prohibits corrupt practices or bribery by any person other than political candidates.

HYPERINFLATION AND THE STIMULUS PACKAGE

The massive stimulus packages put forward by governments around the world requires the printing of trillions of dollars. If and when the governments are successful in getting a fraction of this money into the hands of the working masses of the world it will surely cause a round if inflation like we have never seen before. With so much money being pumped into the economy, and human nature what it is, there will be billions of dollars siphoned off by companies and individuals in positions of power. When what’s left finally trickles down to those to whom it was originally intended, the cost of the end projects will be horrendous. 

The trillions of dollars now being printed and pumped into the economy will surely devalue the greenback as there is nothing to base the paper money on. The devaluing of the dollar will cause prices of all consumer goods to increase. As prices go up more money will have to be printed and the value of the dollar will decrease accordingly. As the value of the dollar decreases the price of materials quoted in U.S. dollars will spike up again. Inflation will no longer be controllable and hyperinflation will surely occur. A vision of needing a wheelbarrow full of money to buy a loaf of bread is not at all comforting. 

China, one of the main purchasers of American debt has already shown a reluctance to keep buying more of it, having domestic problems to deal with as it is. World economies are not in a position to buy American debt in the proportion required to finance the stimulus. Those with some extra money are opting to purchase gold as a hedge against impending financial disaster.

With little demand for their debt American Leaders will have no other option but to increase interest rates to try and attract buyers. As inflation rises from moderate inflation to hyperinflation and the cost of money rises right along with it, we will all end up in a whole world of hurt.

President Obama is engaging in very dangerous economic policy and if his timing is off just a little bit it will be disastrous. If he manages to pull it off he will be a hero but he has to know it’s a huge gamble. The way I see it, even if he manages to engineer a soft landing, the American taxpaying public will be generations trying to pay off the accumulated debt brought on by this massive stimulus package.

Trivia - California law prohibits a woman from driving a car while dressed in a housecoat.

SCENES WE'VE SEEN

I'll share  some of our Switzerlsnd pictures today. It is such a beautiful country we Enjoy revisiting through the pictures we've taken. We were there in springtime.

GOLD - INVESTMENT OR INSURANCE?

Gold has been bought as an inflation hedge for years. As such it hasn’t worked well because of the U.S. Government’s ability to manipulate the price and make billions of dollars in the process.

 Until 1933 U.S. citizens were required to sell their gold to the gov’t at $20.00 per ounce, at which time, since the government now owned all the gold, President F. D. Roosevelt raised the price to $35.00 per ounce thereby allowing the gov’t to print more money since it was at that time a gold backed currency and they had just ripped the gold owning citizens off by 65%.

In 1971 President Nixon abandoned the Gold standard and allowed the price of gold to float with the world demand and opened it up to Americans to own gold again. Thereby allowing the government to print any amount of paper dollars they wanted because there was nothing needed to back the currency. Opening it up for U.S. citizens to again own gold, which the government sold back to them at free market price, was one of the factors that drove the price up. By 1980 it reached a price of $850.00 which in todays dollars would be over $2100.00

Since then the world governments have been effective at manipulating and controlling the price of Gold by buying and selling as they chose. Even though inflation rose by double digits in the 80’s the price dropped to $350.00. It did not work out well as a hedge against inflation.

Fast forward to today and you have the U.S. Government printing paper money as fast as the printing presses can print with nothing to back it up. With other world economies in trouble as well, it is keeping the greenback strong for the time being.

The price of Gold is now starting to creep up due to world demand. China has started to be a purchaser of gold, no longer confident in owning U.S. Dollars, it has allowed it’s citizens to now own gold, and has started a Gold ETF, thereby affording it’s citizens the ability to own small amounts of the metal.

With governments around the world In a financial bind the American dollar is remaining the strongest currency in the world and the go to safety currency. The question now is can it retain it’s strength in the face of the massive stimulus spending they are now proposing. If it does it will keep a ceiling on the price of gold.

As the world economies start to recover and confidence comes back to lesser currencies, people will start dumping their U.S. dollars. As the dollar weakens, the theory goes, there will be upward pressure on the gold price.

If the U.S. led recovery program does not go exactly as planned, all bets are off, governments worldwide will no longer be able to manipulate the price of gold and it will have the potential to spike to prices not even dreamed of in past.

So as an investment gold has not worked out well in the past.

As a speculation, if your timing is spot on, there has been an opportunity to make some money.

As insurance against a pending financial disaster, in my opinion, it is a very wise choice.

Trivia - It’s against the law to pawn your dentures in Las Vegas

EXECUTIVE COMPENSATION AND PRESIDENT OBAMA

President Obama has just moved up a notch in my opinion. Reducing executive compensation on companies that have received taxpayer funded bailouts was the right thing to do. The gall of these executives to vote themselves huge compensation packages while the taxpayers, some of them in dire straights themselves, are paying the bills, is incomprehensible. That these executives would even consider taking such compensation packages shows how out of touch with reality they really are.

Rewarding incompetent management for running a company into the ground should not entitle them to any kind of a pay package, at least the way I see it.

A salary of $500,000.00 per year should be enough for these people to scrape by on during these tough times. They may of course have to give up one or two of their weekend jaunts to Paris or London but so be it.

Trivia - Tipping at a restaurant in Iceland is considered an insult!

B.C. BUDGET DEFICIT

B.C. will have a Budget Deficit  this year and next at least. How fast he can turn around and recall parliament and repeal the balanced budget law of 2002 that was passed with much fanfare. 

We are stuck with billions of dollars of expense to host the Olympics, we won’t even know how much until the Olympics are finished. I expect the government will never admit to most of it being other than a normal run of the mill infrastructure cost. I don’t yet know how they will disguise the cost of Games Security but I expect they will come up with some story. Being upfront with the public in the first place would have been more palatable, at least in my view.

The Liberal government doesn’t have to concern themselves with not getting re-elected, simply because there is no viable alternative to them. 

The embarrassment of breaking his own budget law doesn’t seem to faze Mr. Campbell in the least. I expect his biggest regret is there will be a $9,000.00 holdback on his salary, unless he repeals that part of the legislation as well.

Trivia - It is illegal to wear spurs while walking through a hotel lobby in Phoenix, Arizona.

BANKERS BONUSES

Kudos to the Canadian bank CEO’s who are giving back their multi-million dollar bonuses for 2008 leaving them with only their million dollar plus base salary. This lends a lot of credibility to Canadian Banking executives who also are not looking for taxpayer funded bailouts.

Unlike their American counterparts who have made sure they received more compensation than they can responsibly spend in any given year. Although even the American executives are facing a cut in compensation packages, it still gives them more than enough to live comfortably. The taxpayers who are paying their bills are suffering some considerable hardship and are rightfully angry when they read about the people who got them into this mess still living so high off the hog. The fact that they have received billions in taxpayer funded bailout money puts them in a very bad light.