YOUR MONEY Sept. 14, 2012

Recession, depression and fools – pay the piper

Today, North American financial analysts and stock market investors – read speculators – are overjoyed as Federal Reserve chairman Ben Bernanke announced that  the U.S. Federal Reserve, will ‘pump’ the economy with ‘quantitative easing” aimed at the housing market, and keep interest rates at around 1% prime into 2015. Spectacularly, he promises to buy up to $40 billion in mortgage bonds MONTHLY and INDEFINITELY, until the unemployment rate and economy improve.

Nice, fancy words, but in reality, they stand for a sham, a  delusional shell game of printing money, allowing –supposedly – U.S. home buyers to continue to spend, spend, spend -- while bankrupting pension plans and the savings and living resources of the elderly.

The problem of unemployment and slow economic growth is NOT due to a lack of cash flow to and from banks -- to generate new factories and businesses and construction. 

·        It is due to global outsourcing of jobs and importing of much cheaper products from China to Turkey to Vietnam – the names on the labels of much of America’s favorite products and brands – be it Nike, Hilfinger or  Apple.  Even exclusive, top end European brands such as Escada now do this.                                                                                                                                              

 

·        It is due to GM and Ford and Chrysler (now fallen to Italy’s Fiat) requiring their U.S. and Canadian employees in the upcoming round of contract negotiations to again accept cost cuts in salaries and benefits – to closer match the pay of their workers in Mexico or Eastern Europe or China. Already back from the financial brink of 2008 – with massive government bailouts – the Big Three , all porofitable again, are looking to squeeze out more and more from their employees; put simply, to lower their standard of living for the goal of increased capitalist profit.

 

·        It is due to the high cost of gasoline and diesel on which the U.S.A., Canada and most of the modern world run.                                                                                       

·        It is due to a ridiculous ‘floating currency rate’ system, introduced in the 1970’s, that allows currencies such as the U.S. dollar or Japanese yen or German mark to be held ‘captive’ by derivative funds, investment banks and super wealthy who can speculate on a fraction of a penny to earn millions of dollars!  

Dollars and marks and yen jump and drop in value by the minute on world currency exchanges and at least in Canada our dollar has fluctuated on the last few years between $0.62 U.S. to over $1.12 U.S.  --  affecting the purchasing power of consumers and making life almost impossible for exporters and importers – who need to know their costs and potential profit margins months in advance.

·        It is due to computerized stock exchanges that allow massive speculation and a super-short mindset focusing on instant profit (or loss) -- where holding a share for 2 days seems like an eternity.

Remember the quote from the movie Wall Street  “Greed is good”? .

 

So how does throwing more cash, as Bernanke is doing for the third  time in less than 4 years help?

It won’t.

It won’t do a drop of good for the people in distress.  (But it will boost the stock market, price of oil and gold and raw materials  for the next few days as investors – read speculators – think Valhalla is near!)  It will fail and leave no lasting benefits, like the two previous efforts of Bernanke, or those by the European Central Bank that has bought into the same ‘prime the pump’ delusion.

 

But it will do three things for the long run:  increase government debt; undermine the real value of the U.S. dollar and other currencies; ultimately trigger  stratospheric inflationary; and destroy pension plans, insurance company annuities and the retired and elderly -- who have saved for years and now get no interest at the bank.

In brief, it will perpetuate misery for another decade.

The so-called Great Recession that started in 2008 with a financial bubble crisis is not over, and with this American and European misguided hubris – that central bankers know best and can sway world economies – the ongoing Depression will last much longer than need be.

 Masaaki Shirakawa, the head of the Bank of Japan, finally figured it out in 2011. He said NO to more money printing or ‘financial easing’ as the Japanese central bank and government had done for over 20 years: printing money and keeping the prime rate well below the ‘emergency’ rate of 1% prime for 20 years to no avail!  Japan’s economy has not bounced up as a result but stagnated -- at the extra cost of billions of yen in government extra debt, and depleated pensioner savings.  

Even the justified multi-billion dollar rebuilding of northern Japan after the horrible earthquake and tsunami twin blows of 2011 has not made a difference, Shirakawa pointed out, so why spend – i.e., waste – more money in a futile, fools dream.

·        * * * * *

So what should be done?  What real hope is there?

If you look at the bullets above, there is some light at the end of the tunnel.

ü The U.S. and many other oil importing nations of the world will soon be self-sufficient in oil or natural gas  through new  extraction techniques– because the planet – everywhere - is really awash in oil and gas.

 

So local energy prices will drop and jobs increased in these resource areas.

 

ü Secondly, and most importantly, Globalization will ultimately -- in the next 10 years -- reach its logical outcome:  more or less parity of labour costs across the world; with wages equalizing upward – and  not to the lowest level --  as people in China, India, Vietnam and South America all buy into the American standard of life and expectations.

 

The net result will be a return to localization and self-sufficiency in many regions of the world– in industry and manufacturing to farming.  With wage parity, long distance shipping is not cost effective, so industries and jobs will return home.

 

These underlying realities are beyond a Bernanke’s control or spendthrift ways.

They are the invisible, if long range, hand of capitalism.

 

So say I,  echoing the recent investments and philosophy of that old “wizard of Omaha”, Warren Buffett. 

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P.S.:   My stress on seniors, now that I am 65, is not just personal but a look at the world’s furure. The baby Boomers are aging and into seniors territory. In Japan, as of 2004, 20% of the population was seniors and the percentage is rising with low birth rates and longer life expectancies.

China’s one-child policy is a demographic time bomb that is now reaching its tipping point.

In the U.S.A., as of 2000, there were 35 million seniors (12% of the population0 and this is predicted to rise to 17% of the population by 2040.

In that year, 2040, it is expected that there will be 1.3 BILLION seniors worldwide.

Did You Know

Move over Barbie and Bratz

Since 1959 Barbie has ruled the world of North American girl toys and dolls.  America’s first teen fashion doll led girls to fantasize about growing up and becoming older teenagers and young adults – with breast and hips and fashion sense; and with Ken’s arrival in 1961, the dating game.

The 2001 introduction of Bratz dolls both challenged the Barbie world while reinforcing the basic focus.  The original four Bratz dolls all have oversized heads, show more exotic and diverse multi-racial facial features, and dress in more hip hop and flashy, current styles. Barbie and company have always been more of a preppie crowd compared to the Bratz‘s street smart mall shoppers.

Yet, both have a common focus and message for their target audience --  young girls. It is a message about an ideal older teen/early twenties female body and fixation with the ever-changing world of clothing fashion.

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Today, in Chicago and 11 other major American cities, with Miami and Houston coming soon, a new challenger has arisen, the My American Girl doll.

At 18 inches, this series of dolls hearken back to the traditional doll given young girls in Europe: an almost life-size version of themselves at ages 3-5, with round and full face, glass eyes that close when lying down,  chubby arms and legs and a straight, if well fed body.

The doll comes in a variety of ethnic and skin colour versions and eye colours. Their hair also comes in a variety of shades and textures (though I could not see a true redhead among the ‘wig’ options). In all there are 44 combinations of skin tone, hair and eye colour according to the company website

They come with various outfits, from matching dresses with hats to riding costumes. They come with optional co-ordinated dogs, bicycles, roller blades, sailboats, braces or wheelchair.

And best of all, you, the young girl who is to receive the doll – at $104.00 plus clothing costs, accessories and taxes – gets to choose which of the above variables you want – either at the store or on-line --SO THAT THE DOLL LOOKS EXACTLY LIKE YOU DO.

Yes, I said exactly!  The goal is to choose a doll head, skin tone and hair that best matches your own!!  To create your ONE and ONLY twin or clone!!!

 

To accomplish this goal, the company goes to great lengths.

To start, all doll costumes also come in the full range of real young girl sizes, as do accessories.  So you and your doll can dress alike.

At the shop in Chicago on the Magnificent Mile, the 2 storey store also had its own:

1.     hair salon – so your doll can get the same hairdo as you

2.     ear-piercing centre – with a very long line up – so your doll can wear earrings just as you

3.      T-shirt embossing shop - so you can create a design or message to have on both you and your doll – like twins.

4.     café – which requires reservations - so you, an adult family member or two – and, of course, your twin doll, can eat together at your own table.  The doll gets served food too.   

And the café’s dress code requires that girls and dolls look identical in dress and hair.

 

 In brief, you and your doll become one; or, at worst, identical twins.

The numerous parents and grandparents and siblings that I saw at the Chicago store had no problem with this cloning, but I do.

Psychologists have long warned parents of twins to dress them differently and give them opportunities to develop their individual and unique qualities, not turn them into cookie cutter 1/2 persons.

The American Girl trend is, at least to me, (aside from the costs) a fixation on the self – a form of narcissism that denies a broader range of fantasy and exploration of life through toy dolls and play.

* * * * * * *

To be fair, the company also makes a line of historic girl dolls to highlight key events in U.S. history – slavery, the depression and WW2, for example.  These characters come with books telling their life stories and challenges, and can be educational.

There are also a few infant and toddler dolls available – for doll siblings or the mothering spirit.

The company also publishes numerous books for early readers through tweenies covering subjects that girls need to know about.  As the website states,

             “Our titles have garnered prestigious awards from leading parenting groups, in addition to gracing                                                                         the New York Times and Publishers Weekly bestseller lists.”

Finally, there is Innerstar University (at www.innerstarU.com) – yes, they use the word university –an online website where your doll can ‘play’ and learn to become successful at different sports – alone or as a team member.  It has a Facebook style interface to connect to other American Girls and promises to help you become more confident and explore your talents.  It ties nicely into the company’s motto or tag line: “follow your inner star.”

So, while its books, historic dolls and Innerstar University aspects sound positive --  a feminist, proactive message for the target audience of girls 8+, yet the basic premise is not.

Yes, the Lolita bodies of Barbie and Bratz are eschewed as is the future the world of dating, etc.,  so girls are left to be ‘young girls’ and ’pre-teens’ in the world of American Girl, but I seriously wonder how healthy is the need to clone oneself as a doll in the long run.

The focus is on “me, me, me”.  The focus is on costly dolls and costly accessories that only the affluent can afford.

Will the girls raised in the American Girl mold grow up healthier and wiser than those nurtured by Barbie and Bratz?

I think not. 

Remember the story of Narcissus** and the danger of fixating on one’s own image: in a pool of water, a mirror or a doll.

 

 

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** Narcissus or Narkissos  in Greek mythology was a hunter...  who was renowned for his beauty. He was exceptionally proud, in that he disdained those who loved him. Nemesis saw this and attracted Narcissus to a pool where he saw his own reflection in the water and fell in love with it, not realizing it was merely an image. Unable to leave the beauty of his reflection, Narcissus died.   [Wikipedia;  September 13, 2012}

CHARGE OF THE LIGHT BRIGADE – Canada Style

Early April Fool’s – or just fools?

The last few days has seen a revival of the Avro Arrow Jet fighter concept in Ottawa – and all sanity again has been lost outside of the Federal government. (See G&M Sept. 11, 2012, A3).

Retired Major General Lewis McKenzie, has been promoting the revival of the    60 year old, Canadian built (prototype) Avro Arrow jet fighter as a ‘better’ solution than the still-in-development and costly U.S. F35 to which the Canadian government has been committed for some 5 years now.

The government has politely rejected the Arrow suggestion, correctly pointing out the late 1950’s design is not suitable for modern, ‘stealth’ technology warfare.

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To even suggest the Avro Arrow --  a plane model that was never tested in real, daily use but only as a ‘prototype’ --  is better than any military aircraft that has been designed in the last 60 years, let alone the most recent and innovative – i.e., F35 category – is LUDICROUS to the point of being a bad joke.

Retired Major General McKenzie is an army man, not a air force pilot,  and his suggestions must be making air squadron pilots – current and past – either gagging in shock or laughing their heads off!!

For members of the opposition – or even the G&M which ran 2 stories which simply ‘reported the facts’ – not to check with any aviation experts on the Arrow revival first is embarrassing and gives credence to this loony concept.

Moreover, to abandon the F35 plane is far more than changing aircraft, as I have stated long ago on this site, when the ‘high costs’ first became political fodder for the irresponsible opposition.

Here are the key points in brief:

1.     The F35 is a NATO project designed to meet NATO intervention in future conflicts similar to Kosovo and more recently Libya.  These locations had poor anti-aircraft defenses which made NATO air superiority easy, but in all likelihood future missions will probably be against better ground missile defenses or face ‘super stealth’ Russian (now called T-50)  and  Chinese interception jets (models J-20, J-21 and new J-31) also under development. 

 

So:

Ø To opt out of the signed agreement for the F35 is to essentially to opt out of NATO.

 

Ø To rely on old and inferior plane technology for the future is to doom our pilots, their missions and, maybe, Canada itself.

 

2.     The opposition’s claims of ‘cost overruns’ are ridiculous in and of themselves. Any extra development costs are to be paid by the U.S.A. as the primary developer.  That was the deal!  

Also, for opponents of the government to claim “parts and maintenance cost”--for the next 20-25 year life expectancy of the plane -- should be included in the publically stated price is NEVER DONE by any government for any purchase, nor by any private company.  The cost of a Boeing 747 publically quoted in the press does not include the maintenance and parts costs for the next 2 decades.  Nor does Bombardier include these costs when promoting its Canadian made planes, subway cars or trains.

 

Ø No one does this!! So for opposition party members to clamour about this is the worst form of hack demagoguery and misleading of the public.

 

3.     If Retired Major General McKenzie is concerned about good jobs for the Canadian aviation industry, he need not worry.  All F35 member countries  were guaranteed a share of the parts and systems production up front.  Canadian factories and engineers will be kept busy - as they already are - in the process, and so too maintenance and part services.

 

I do not know if retired Major General thinks we need a new, mid-September, April Fool’s day, but in I my eyes at least he has become a ‘joker’ at best and a fool at worst.

Finally, for the silly Arrow idea to be re-launched publically on September 10 and September 11,  the anniversary of 9/11 attacks, is particularly shameful and an embarrassment. Today, the risk of conventional airplane attack and needed defenses is more clear than any time since Pearl Harbour.

It is not the time to put our heads in the sand of the past, but to prepare rationally for the future.

The F35, Russian now labelled T-50, and China’s similar creation (prototypes J-20, J-21 and now J-31) are the future; the Avro Arrow a quixotic piece of dangerous, Canadian nostalgia.

 

 

 

 

 

Did You Know

Chicago Tribune vs the Globe and Mail

While spending a week in Chicago I had a chance to read the Chicago Tribune daily.  While reading this venerable and highly respected newspaper, I was constantly making cross comparisons to my  daily read in Toronto, The Globe and Mail.

In many ways I preferred the Tribune. It has stuck to certain newspaper traditions unlike the G&M. 

Most noticeably, in the Tribune, colour is rare and black ink on whitish paper rules.  This starts with the masthead and applies to nearly all the images accompanying the articles and stories.  What colour there is is of the low, flyer grade, and is only common in advertising insert sections or a rare (and small) story photo.

The comic strip section is also black and white (allowing the ideas to flow without rainbowish distractions – at least so I see it). And there are 2 full broadsheet pages of comics daily, with all the great American classics: Peanuts, Hager the Horrible, Broom-hilda, Dick Tracy, Blondie and the like that no longer grace the G&M due to  its switch to a few, Canadian cartoonists.

The Tribune’s other ‘soft news’ sections, beside the comics, are standard everywhere – daily entertainment/arts/TV, and sports.  A real estate and an auto section appear once a week – as with the G&M.

As well, unlike the G&M of today, the Chicago Tribune eschews the elitist and gold-spoon crowd  in its food articles and home decor and auto sections.  Chicago has many world class restaurants and affluent people, and it hosts the Magnificent Mile which literally has a mile of the most expensive and well known retailers and brands in the world – starting just steps north of the Chicago Tribune`s home, but the paper seems to be more `folksy` in its choice of subject matter and lifestyle articles.

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So on many fronts the Tribune appeals to me: a comic lover, a fan of b&w news a la Marshal McLuhan and Neil Postman, and someone with ordinary, Everyman tastes.

Yet, unlike the G&M, the Tribune has a very limited range and focus. 

The Choicago Tribune covered city, state and national events well, but issues and events outside the boarders of the U.S. were absent!  I found numerous and important stories of foreign disasters and international politics in my back pile of G&M papers though none were given any space in the Tribune.  Not even Iraq, Iran or Afghanistan.  The military events that got attention were the navy’s influx of ships and sailors to take part in Chicago`s commemorations of the `victories` of the War of 1812, and the  air (and navy) show on the weekend.

 The  Tribune`s myopia on hard news also spills over to sports.  With four major league teams in town: two in baseball, one NBA and one NHL, there is a lot that  local fans want to know; but, outside-of-Chicago sports news, key injuries or scandals never got coverage.  It was all a local mindset.

In contrast, the G&M, to its credit – like Toronto`s other newspapers --reports on major league competitors and breaking stories and scandals.  It now includes soccer and the occasional cricket match – reflecting the ethnic and cultural diversity of the GTA . It covers Canadian Football and the NFL to meet the tastes and interests of its readers. 

It does not live in a sports goldfish bowl.

So, in the end, if I could only get one newspaper like the Tribune or the G&M, I would still choose the latter. For all its new faults; efforts to appeal to younger readers raised on brash Much Music/MTV and mind-blowing oversized wide screen TVs, and courting the trendy, metrosexual (financially) new upper crust, the G&M still retains many excellent reporters and columnists who ask important questions and write informative pieces – every day.

With its broader world view and range – even if I disagree with some staff biases – the G&M helps keep me much better informed of what is going on in our Global Village, unlike the ‘isolationist’ tendency of the Tribune.

YOUR HEALTH

Circumcision Rules!

Whether circumcision should be banned or not is a hot issue in Europe and especially Germany where it has come before the courts and even involved Angela Merkel, the Chancellor of Germany.

In Canada, since 1996, the pediatrician society (CPS) has considered circumcision unnecessary and so too did the American equivalent, the AAP, until very recently --  when follow up evidence made it now approve the procedure.

The wide benefits of circumcision and AAP findings were highlighted in a recent  article entitled” Should boys be circumcised? ...”  (G&M, Aug 28,12 A8)  by Andre Picard.  When current evidence and scientific pros and cons are examined – guess what -- there are no cons or harmful effects, just many and diverse benefits.

Circumcision significantly reduces instances of urinary tract infections in newborn males.  The absence of a foreskin has also been shown to prevent the acquisition (and further transmission) of many sexually transmitted diseases among sexually active males – be they teenagers or octogenarians. The benefits to female partners are also statistically significant.  Put simply, the removal of the foreskin eliminates a common ‘hiding’ place for various infections, bacteria and viruses -- including herpes.   

Removing the foreskin also reduces the chances of (rare) male penile cancer and, according to a medical study in 1982, some 15% of all males would need the procedure by adulthood as some foreskins are not elastic enough to adapt to the male’s increase in body size (from infancy to adulthood), and particularly  during sexual arousal.  The result is a painful squeezing of the penis head that can be excruciating.   Just ask Canadian Prime Minister Brian Mulroney, who had to be circumcised after he got to university.

Finally circumcised males have significantly reduced rates of HIV -- which can lead to deadly AIDS  -- and requires costly and daily drug cocktails for the rest of one’s life. The reduced HIV rate among gay men is 15% in North America and a whopping 60% among all males in Africa (where heterosexual transmission is the norm). 

On the other hand, the article notes that anti-circumcision claims  --  that removing the foreskin harms the organ and reduces sexual pleasure and functioning -- are WRONG and without medical or real scientific proof.

As a final note, it should be remembered that the procedure to remove the foreskin is the most common surgery in the world today and throughout Jewish and Muslim history, and has very little risk.

 While Jews and Muslims practice circumcision on religious grounds -- going back to the Bible and Abraham. Isaac and Ishmael (Jews at 8 days of life, Muslims between ages 2 and age 13), its medical benefits are surprising extensive and lifelong.

 It is therefore unfortunate that in Europe and among large parts of North America and elsewhere there are movements to keeping the foreskin and staying ‘natural’.  

In a world with HIV/ AIDS and a ‘blooming’ of new treatment-resistant   superbugs, maybe it is time the return-to-nature mindset gets a rethink.