Monthly Archives: January 2017

Bits and Pieces – 20170131, Tuesday

Commentary: I’m pondering how to make my news reading and reporting more effective for myself – it’s currently taking up too much time and retrieving information from my site is not as effective as I had hoped. So look for changes.

In trying to understand the thoughtless position of the left, I came up with the notion of a ‘narrative’. A narrative is a belief system by which we operate. I’m sure this is a concept well explored academically and I may be using a term that I read somewhere. It’s more than an ideology, something which it subsumes. It manifests in behavior such as passive or aggressive. Religion would be a narrative. I’m comfortable with this one because it arguably goes back to the early days of humankind. It is responsible for Stonehenge, burial practices going back at least several thousand years, and more.

Today, Scott Adams discusses two “filters” in his blog post  The Persuasion Filter and Immigration. Apart from being a brilliant analysis of Trump’s behavior and operating strategy, it provides a perspective for the recent “Muslim ban”. What is really interesting is that events are moving so fast that we will likely be able to test Adans’ hypothesis in real time over the next couple of weeks. As a bonus, it gives me things to ponder fro my narative thesis.

Bits and Pieces – 20170128, Saturday

Commentary: Forget the left. Their view of Trump is so warped and limited that it is useful for nothing. If you want some real insight into Trump, listen to this 5 minute interview with Newt Gingrich: Newt Gingrich: Trumpism explained,

Civil Unrest: In Bits and Pieces – 20170117, Tuesday I wrote “The really interesting thought I found is that the next civil war has already begun.” Adding further support to this notion on a tip from a friend  is: America’s Second Civil War.

Trump: Trump appears to be setting up a weekly address to the people. Here is the first: President Trump’s First Address To The Nation. Note that he said that he met with the leaders of some of the country’s top manufacturing companies and labour unions. No mention of the world’s top leaders. He is consistent with his priorities.

Bits and Pieces: Here’s an opinion piece analyzing Obama’s term in office: Obama Bequeaths a More Dangerous World. It is partially sympathetic while identifying the forces working around him and against him.

Apparently legislation exists that would undo many of Obama’s executive orders. This is an interesting read: CRA: The “Regulatory Game Changer” That Could Wipe Out 8 Years Of Obama Regs In An Hour.

The leading university in snowflake protection has more to offer: Ohio State Offers Class On How To Detect Microaggressions And Be “Self-Aware Of White Privilege”. Can you imagine what the next generation will be like?

My wife and I were discussing the irony how shopping malls on the outskirts of small town North America hollowed out the downtown cores of the towns. As we walked around our neighbourhood mall today and noted new store closures (month end is approaching and likely the end of leases) adding to a number that have closed months ago. On-line retailing is hollowing out the cores of malls. The big store brands like Sears Holding, Macy’s, J.C. Penny and others are in deep trouble. Several are already in chapter 11 and history. The question to ponder is will Amazon take over the retail world? And while you’re thinking about it, consider this: Amazon Enters Trillion Dollar Ocean Freight Business: How Many Jobs Will Vanish?

Without comment because I can’t think of anything civil: Trudeau, Sturgeon Respond To Refugee Ban: “Welcome To Those Fleeing Persecution, Terror And War”.

The Fallacy of the Value of a Low Loonie

 

Conventional wisdom has it that a low dollar is a competitive advantage for Canadian manufacturers. It is easy to show that this is not the case. It does provide an advantage for natural resource industries whose primary resource values are not directly related to currency values, but that is a sector largely eschewed by our government.

To understand why there is no currency advantage to manufacturers, consider the case of Acme Widget Company. Acme Widget makes widgets in Ontario and Michigan. It wants to double its production capacity at one of its plants and has to decide which one.

A widget has three components, one made in Canada, one made in the US and one made in Indonesia. Let’s assume the Canadian dollar (CDN) is trading at 0.75 to the US dollar (USD). The Michigan plant pays $1.00 USD for the part from Indonesia. The part costs the Ontario plant $1.33 CDN because the trade is in USD. The Michigan plant buys the US part for $1.00 USD while the Canadian plant has to pay $1.33 CDN. The Ontario plant pays $1.00 CDN for the part made in Canada but the Michigan plant only pays $0.75 USD.

The total cost for materials for the US plant is $2.75 USD and for the Canadian plant, $3.67 CDN which is $2.75 in USD. In other words, the relative value of the two currencies offers no competitive advantage to either plant on a materials basis.

But there are other costs associated with production. Suppose the employees are paid the minimum wage. In Michigan, that is $8.50 / hour USD while in Ontario it is $11.40 / hour CDN or $8.55 USD. On wages alone, it is a toss-up. However, one must also include the cost of statutory benefits such as health insurance, EI, and pension plan premiums which in Ontario, are all costs to the employer.

Further, electricity costs are important. Time of day use, purchase contracts, and unbundled charges for distribution and other services are complex and require a case by case analysis based on projected usage characteristics. One might need to consider other utilities such as water and sewer rates also.

Finally, there are municipal, state or provincial, and federal taxes to consider. The regulatory framework may be important in terms of adding additional operating costs. With NAFTA coming under review, tariffs and border taxes may be a consideration.

In conclusion, the relative value of the Loonie has no impact in the long run, on the material cost of manufacturing. The costs that will affect a decision to build a new plant or extend an existing one are all soft costs associated with the local jurisdiction being considered, and what incentives might be negotiated with governments.

Bits and Pieces – 20170126, Thursday

Commentary: The next time someone you know complains that Hillary won the popular vote and should be president, show them this map (red is a Republican majority and blue is Democrat):

Bits and Pieces – 20170124, Tuesday

Commentary: If Trump achieves half or maybe a quarter of what he wants to he will go down as a “great” American president. I suspect a significant piece of what he would want is impossible, not because of political obstacles but because some things will not be possible.

A lot of jobs that went offshore don’t exist anymore and can’t come back. Companies on-shoring will build new plants populated with robots and highly automated assembly lines. They would have done so anyway for economic reasons and this trend had started before Trump.

His trade policies may backfire. Raising tax barriers and tariff walls will start trade wars – may already have done so – so the imports will be cut but so will the exports. How this will affect the balance of trade is a question. In fact the trade deficits were the only way the US dollar could become the world reserve currency. Trump cannot control the currency – at least not for long. Any attempt to declare China a currency manipulator will lead to the depreciation of the yuan and strengthen the dollar, affecting exports and negating the effect of tariffs on imports.

He has a deeply divided country and he can’t fix this because the divide is to a large part caused by people who hate him and this he can’t change. Read: Trump: America for the Americans! He has inherited trillion dollar deficits and a 20 trillion dollar debt that goes as high as 200 trillion with unfunded liabilities included. The only fix for this is to press the reset button and the reset will be global.

This is going to be a wild ride.

A Response to Ontario’s Minister of Energy

Like all material coming out of the Ontario Ministry of Energy, Glenn Thibeault’s Thursday column requires careful scrutiny. With his sophomoric prose he attempts to refute the Fraser Institute’s report that concludes that closing the Nanticoke and Lambton coal generation stations had no statistical significant effect on air quality in Toronto and Hamilton. He fails.

To refute a scholarly report of this nature that uses statistical models, mathematics, graphs and properly structured data, one must do so on the same level. Name calling such as “well-known climate change denier” and appeals to anecdotal evidence such as “black smoke rising out of coal smoke stacks” doesn’t do it. Nor does an extensive list of dropped names or an emotional appeal to a child’s health issues. And incidentally, my home town is a few miles from Nanticoke and no black smoke came out of those stacks.

He begins by stating that the report is “arguing against reducing greenhouse gas emissions”. In fact, on reading the report one finds no such argument. One does find reference to planned massive reductions in emissions from the coal plants from modifications that died with the plants. The report does observe that the lost generation would have to be replaced largely by gas-fired plants which produce their own greenhouse gasses.

He is closer with his claim that “According to the report authors, closing Ontario’s coal plants had a negligible effect on emissions in our province”. The report actually states that “Overall our results show that phasing out coal in Ontario had small but detectable effects on particulates and ozone, but not NOx” and that “Phasing out coal had a moderate effect on fine particulates that was statistically insignificant in Toronto and Hamilton.”

When Glenn attempts to use data to argue a point, he employs a technique called “cherry picking” – selecting data that supports your argument. Unlike the report authors who cite their sources, he throws out some numbers without citation or context, rendering them useless. He then causally associates these numbers with improvement in our air quality and by extension, the shutdown of coal plants.

To whit, he cites 2005 with 53 smog days, which is the worst figure found in a table on the website of the Ontario Ministry of the Environment and Climate Change. Now Environment and Climate Change Canada lists the annual output of CO2 by the Nanticoke plant from 2004 to its final decommissioning in 2013. The plant produced slightly more CO2 in 2007 than 2005. One would then expect by his argument to see roughly the same number of smog days in 2007 as 2005; but that year had 26% fewer smog days. Oops.

The third highest number of smog days was in 2012 with 30, 43% fewer than 2005. However, at that point Nanticoke output had been cut by 89%. In 2006 when Nanticoke was at its peak, only 17 smog days occurred, and in 2009 there were only 5. So you can see that the Ontario coal plants had no determinable influence on the number of smog days when all the data is examined.

But we can tease out one more tidbit. The Ontario Ministry of Agriculture shows the prevailing winds on hot days (smog producing days) in Southern Ontario as coming predominantly from the south west followed by the west and the south. This means that Windsor Ontario is upwind of both the Nanticoke and Lambton plants. But Windsor had more smog days in half the years shown than any other municipality listed, in Ontario. It tied for the most smog days in 4 of the remaining six years. So there’s a problem: Windsor’s smog can’t have come from coal generation in Ontario. Oops.

Sources

Bits and Pieces – 20170117, Tuesday

Commentary: From one of my favourite writers, an interesting piece on what the reactionary forces might do leading up to and into the inauguration: The Cheeto Cometh. The really interesting thought I found is that the next civil war has already begun.

We tend to think of major events as having clear start and stop points such as Pearl Harbor marking the start of WWII for the US. In actual fact, the US at that time had already enacted an oil embargo on Japan which might be said to have required Pearl Harbor as a defensive measure by Japan to the embargo which in turn may be understood as an act of war by the US.

Having said this, I just read a piece by George Friedman and Jacob Shapiro in which they state that their horizon for geopolitical analysis is independent of calendars and as such, specific events: Europe: The Process of Change Continues.

We are linear deterministic thinkers in a world where all action is individually determined and collectively emergent. So there is a continuum in any conflict among the protagonists in which specific points are purely arbitrary. We create such points to enable our (linear) thinking and discourse but in so choosing them, we lose the perspective of the true nature of the conflict. It also ensures our responses will not be optimal and may be very bad.

The conflict among the various political constituencies (I’m not talking Republican/Democrat) has become so polarized that an argument may be made that a civil war is in progress, has been for several generations, but has not yet entered a hot or kinetic phase. This is something to be feared.

I have been including links to speculation on a Trump assassination. It could, however be larger as: Putin Warns Of “Maidan-Style” Attempt To Delegitimize Trump; Doesn’t Believe Trump Used Hookers In Moscow. For those of you not recognizing the reference, “Maidan” refers to the events in the 2014 Ukrainian revolution during which it is alleged that right-wing extremist groups, supported by the State Department and the CIA, violently overthrew the elected government in a coup – classic CIA playbook activity.

Bits and Pieces – 20170116, Monday

Commentary: I’ve always said that two statements determine if a speaker is a Canadian. These are: “It’s my right …” and “It’s not fair …”. Scott Adams today adds his genius:
Dilbert Comic Strip for 2017-01-14

The Weather in 2016: An Average Year for Storms

This is our third annual review of extreme weather events following on last year’s  summary of major storm activity, The Weather in 2015: Hardly Extreme. In this report we look at tornado’s, Atlantic hurricanes and Pacific hurricanes (typhoons) for 2016. As we will show, all storm activity was at or below average for the year.

Bits and Pieces – 20170106, Friday

Commentary: I’ll be taking a break for a week after today while I travel.

Trump: A short read: Threats to Assassinate Trump. The left in all countries, has been traditionally violent. We have been witnessing the violence for months now, in the US. The threat to the presidency and to the Republic is greater from the left than from terrorist activity.

Cyber Warfare: If this doesn’t fly, what will they modify next in their unsupported claim: The “Russian Hacking” Story Changes Again?

WWIII: Escalation: The US Has Begun Amassing Troops On Russian Border.

Russia: When the West criticizes Russia for its imputed actions, what is never observed are the cases where the West has acted in a similar and often more egregious fashion. Pat Buchanan levels the playing field: Can Trump and Putin Avert Cold War II?

Climate: Something to be watched: Global Warming – Opps – Ice Age – Hits Europe. The problem is with the extreme political bias in climate science, we may be well into a mini-ice age before politicians will remove carbon taxes.

Cycle theory: As you know, I am a fan of the theories of cycles. I started posting Bits and Pieces to facilitate capturing the references in a searchable format for later discovery.  One of the prominent cycle theorists or modelers is Martin Armstrong. With that, here’s a later article: Bonds & Climate Change.

Bits and Pieces: Online retailing in perspective:

That gives the scale. This one gives the sense of early automation:

Trump will be successful in re-shoring companies. There will be few jobs to return, however. The old factories are leveled or converted to other uses. The new factories will be highly automated with the latest generation of robots and artificial intelligence systems. A primary driver of re-shoring is the ability of companies to maintain a higher standard of quality control over product inputs.

In contrast are the traditional ‘bricks-and-mortar’ retailers: Macy’s, Kohl’s Crash After Reporting Abysmal Holiday Sales; Cut Guidance; Announce Mass Layoffs, Store Closures and Sears Holdings Posts Another Ugly Loss: Bankruptcy Looms Ahead.

Looking at the global economy, what can possibly go wrong: Global Debt Hits 325% Of World GDP, Rises To Record $217 Trillion?

A warning for Canadians: The Canada Experiment: Is This the World’s First ‘Postnational’ Country? Garbage from The Guardian.

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