Monthly Archives: June 2015

It’s Worse Than You Think

The Fraser Institute came out with a new report today titled Ontario vs. the US Rust Belt: Coping With a Changing Economic World. The report challenges the political narrative that a high dollar and deindutrialization due to global forces are the main factors driving the deficit in Ontario. It does so by comparing the economies of the US “Rust Belt” states to Ontario’s.

In terms of the Canadian dollar vs. the US dollar, the repot notes that:

… the appreciation of the Canadian dollar versus the USD of the 2000s was a reversal of the unusual weakness of the 1990s.

and

… the exchange rate is currently near its long-term average,
so Ontario policymakers cannot continue to cite this as an excuse for
chronic budget deficits.

In other words, exchange rates are not a major factor in Ontario’s deteriorating fiscal position and industrial decline. So let’s look at the issue of the deindustrialization of Ontario.

Water Wars

Of this theme, long predicted, but now emergent, we will start to cover. Currently, the issue is developing in California where water rights have a long history of legal assignment. Zero Hedge posted an article giving some background on the nature and history of water rights in In Unprecedented Move, California Farmers With Guaranteed Rights Cut Water Use By 25%.

Chronology of references and events:

Sam Collins – June, 2015

  • Short-term:
    • mildly bullish
  • Midterm:
    • Sideways until October.
  • Long-term: the long-term trend is still up.

The Middle East: A Simmer Or a Rolling Boil?

This morning we decided that it is time to put together a current view of the Middle East centered on ISIS. To this end, we link several very comprehensive articles but with little commentary of our own other than a bit of glue between the pieces.

A Net Assessment of the Middle East

By George Friedman

The term “Middle East” has become enormously elastic. The name originated with the British Foreign Office in the 19th century. The British divided the region into the Near East, the area closest to the United Kingdom and most of North Africa; the Far East, which was east of British India; and the Middle East, which was between British India and the Near East. It was a useful model for organizing the British Foreign Office and important for the region as well, since the British — and to a lesser extent the French — defined not only the names of the region but also the states that emerged in the Near and Far East.

Today, the term Middle East, to the extent that it means anything, refers to the Muslim-dominated countries west of Afghanistan and along the North African shore. With the exception of Turkey and Iran, the region is predominantly Arab and predominantly Muslim. Within this region, the British created political entities that were modeled on European nation-states. The British shaped the Arabian Peninsula, which had been inhabited by tribes forming complex coalitions, into Saudi Arabia, a state based on one of these tribes, the Sauds. The British also created Iraq and crafted Egypt into a united monarchy. Quite independent of the British, Turkey and Iran shaped themselves into secular nation-states.

The Perfect Storm

The Brookings Institute continued their series on Metropolitan America with the article Population surging in drought-stricken areas. Their observation is that the areas of greatest population growth are coincident with the areas of extreme drought. We reproduce their two maps below.

We have been following the drought aspect for over a year for California (read California is the Canary and the links within it) and Nevada (read Jeopardy Question: This Body of Water Determines the Fate of the Modern Day Anasazi).

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