Category Archives: Economy

Jul 16 2015
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Business, Economy, Politics

The perfect picture-panic province

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What a marvelous time to be the youngest premier in Canada, representing the oldest population in the nation. Could anything in Brian Gallant’s professional experience be less desirable than the thankless job he now faithfully executes?

The 32-year-old’s to-do list would give Hercules a panic attack.

First, there’s the little problem of a $12-billion long-term public debt, and a $500-million annual deficit that just won’t go away no matter what tweaks he executes to civil-service spending.

Second, there’s a litany of campaign promises that inveigh against any reasonable tool to manage the province’s fiscal crisis.

There will be no new revenue streams in the foreseeable future – not from onshore natural gas development, not from a putative pipeline from Alberta into Saint John, not from the high-tech or natural resources sectors, not from manufacturing, not even from community economic entrepreneurship. Nada. Zip. End of story. Period.

Third, the cost of health care in New Brunswick is rising alarmingly, given the tax base that remains to help pay for emergency rooms, walk-in clinics, family physicians, fully equipped hospitals.

This province “boasts” the highest per-capita spending on “interventional” medicine (as opposed to the preventative type) in the country. We are, as a populace, fatter, drunker, and more likely to cough our lungs out than any other region of Canada.

Fourth, we continue to endure the steady outmigration of our “best and brightest” to other parts of the nation, the continent and the world. And, even when other parts of the nation (Alberta), the continent (the Midwestern shale patch) and the world (the European Union) fail to retain promise, our ex-pats routinely choose places other than home in which to roost (Brazil, Venezuela).

And then, of course, there are the awful employment numbers, reported far and wide around this tiny province.

According to a piece by John Chilibeck in the Saint John Telegraph-Journal, published last Saturday, “New Brunswick’s bleak jobless situation became even gloomier in June, with the unemployment rate shooting up into double digits again, to 10.8 per cent. . .Statistics Canada’s monthly labour force survey (reported that) employment in the province fell for the second consecutive month, down 3,500 in June.”

All of which must leave the impression, even in the minds of the most circumspect among us, that we are circling the drain. And that gives us the equipoise to blame the current office holders for their mismanagement, misalignment and even malfeasance.

Still, how much blame for what ails us can we properly assign to a new government, less than a year into its mandate, or even its one-term predecessor (party politics, notwithstanding)?

A friend of mine cornered me at a local grocery check-out recently and demanded to know why I haven’t been holding this young premier’s feet to the fire. “He’s obviously way over his head,” he declared as we surveyed the price of beef from Alberta. “So, what’s up with you? Have you gone soft, or something?”

To which I replied: “I was the first out of the gate telling the government to raise the HST by one percentage point. I was one of the first to tell this government to monetize shale gas, responsibly.”

My friend replied: “Well, I’m not for raising the HST, and as for shale gas, I’m for it as long it doesn’t affect me in any way possible.”

In other words, everything is better than the status quo, except for the status quo.

What a marvelous time, indeed, to be the youngest premier in Canada, representing the most calcified attitudes in the nation: The perfect picture-panic province.

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Jul 16 2015
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Economy, Municipal Affairs, Politics

On political acrobats and citizen arenas

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If, we once thought, a new downtown event centre in little, old Moncton would never support artistically inclined gymnasts, torturing their minds and bodies to make their daily bread, then fear not populace.

The acrobatics of acrimony and conciliation are, in equal measures, on display right now in the council chambers and parliaments of power. Though the players’ creaking bones and calcified ligaments might be past their prime, they are nonetheless fascinating for their late-game contortions.

Moncton-Riverview-Dieppe Member of Parliament Robert Goguen has devised an utterly splendid solution to the problem of funding a $107-million multi-purpose sports and entertainment facility in the Hub City’s downtown core.     As his federal Tory confederates say “no” to anything that smacks of hockey rink, Mr. Goguen, in his wisdom, has decided that all that money the feds owe to the tri-city area for regular road and sewer upgrades should be leveraged against a new downtown centre.

That is to say simply this: All the money we might have given you to upgrade your city’s urban core, we are now going to give you to expand your suburbs whose residents don’t give a fig about Main Street.

Take the municipal funds, Mr. Goguen sagely advises, that we would have otherwise invested in road repairs in the outskirts and pour it into an event centre, if, of course, we dare.

The problem with this “solution” is that it begs a problem.

It intimates that the feds have no real responsibility – notwithstanding a major build, such as an event centre – to upgrade the roads and sewers along routes in this city where people live and work. The Constitution declares otherwise.

It also suggests that a part of Moncton – the downtown core – simply does not contribute to the cultural and economic life of the greater urban area in ways and means that are sufficient to justify honest public investment. The evidence argues to the contrary.

Once again, I will trot out the fine work of my friend David Campbell, now New Brunswick’s senior economist. Three years ago he was on this file like a fly on honey. Here’s what he said:

“Like a successful shopping mall, a vibrant downtown will have economic anchors strategically located throughout the area. Moncton City Hall anchors a cluster of office buildings and services in the eastern part of the downtown and the Highfield Square Mall played this role in the western part of the downtown. “With the closure of that facility, it opens up the potential for another ‘anchor tenant’ that will drive economic activity and foot traffic in that area. There are not many large-scale opportunities that would apply on that site. The proposed Downtown Centre; however, is one such opportunity. It would be large enough to drive significant incremental economic activity into the downtown.

“The Sierra Planning and Management report reviewed for this brief estimated that the new Downtown Centre would cater to between 316,800 attendees (lower attendance scenario) and 396,000 attendees (moderate attendance scenario). These attendance estimates assume that 53 per cent of the traffic would come from regular season Wildcat home games. The lower attendance scenario is expected to result in over $12 million in new direct and offsite expenditures and the higher attendance scenario will bring in nearly $15 million in new expenditures to the downtown.”

In other words, a new downtown event centre does not need to be justified through political acrobatics. It justifies itself, and always has.

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Jul 07 2015
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Economy, Idiocracy

Arrrrg word!

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Is recession a natural phenomenon, attached to the human species the way the weather attaches to Earth, itself? Or, is it a conjurer’s trick of the imagination – a self-fulfilling prophecy – fated to repeat the more we utter its name?

Economic schools of thought are divided on the subject, though the literature and lore is abundant.

In a recent post to The Drum, the Australian Broadcasting Corporation’s online screed-fest, editorialist Greg Jerhico writes, “After such a long time without a recession, no treasurer would wish to be the one to preside over such an event. For (Australian Finance Minister) Joe Hockey, the path away from recession lies with his hope that the budget measures for small businesses will enliven investment in the non-mining sector. And given the current poor state of investment in that sector, his measures will need to work.”

Adds Mr. Jerhico: “Economists love to call recessions. The standard joke about economists and recessions is the one made by (the late American economist) Paul Samuelson that some economists have predicted nine out of the last five recessions. . .Australia has not had a recession since June 1991, which was the last time there were two consecutive quarters of negative GDP growth in seasonally adjusted terms.

“Of course, such a definition is utterly stupid, and really should be thrown out as soon as possible. Any definition where an economy could shrink by 0.5 per cent in one quarter, rise by 0.1 per cent in the next, and then shrink by 0.6 per cent the quarter after and not be in a recession is complete lunacy.”

If this doesn’t sound familiar, it should. According to a Globe and Mail piece, headlined “Economy’s dip stokes recession fears”, last week, “The latest reading of Canada’s economic health suggests the economy’s oil-induced coma extended into the second quarter, renewing fears of a mild recession and casting doubt about the country’s capacity to recover from the severe oil price slump.

Statistics Canada reported Tuesday that real gross domestic product (i.e. adjusted for inflation) shrank by 0.1 per cent in April from March. The economy was hit by a 3.4-per-cent drop in oil and gas extraction – the sharpest one-month drop in nearly four years, adding to declines in March.”

Australia is the southern hemisphere’s Canada; both are great, global lodestones of natural resources.

The Aussies have their extraordinary reserves of precious metals, rare-earth minerals, iron ore, coal; whereas, we Canucks can dine out on the fact that we are the largest exporter of unrefined petroleum products in the western world.

But a funny thing happened to both nations on their way to their respective commodity markets: The stalls were closed.

Now, Canadian and Australian pundits are concurrently convinced that recession is, again, a virtual certainty in both nations. Although they are separated by about 12,000 kilometres of ocean, they still share practically every doomsday instinct that is the common weal of two peoples forged by Anglo-Saxon principles of crime, punishment and – not for nothing – blowing the biggest of free lunches geology and history ever displayed before man.

Do we extract natural resources and denude the good earth solely for private pillage, or do we leverage our talent for plunder to obtain better, more efficacious, ends? What safe, reliable, environmentally benign technologies can we invent – from the wealth we extract from the ground – that will preserve and protect the biosphere on which billions of species depend, including our own?

This is the dialectic our times, of our condition. The answer is either our progression or our final recession into oblivion.

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Jul 07 2015
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Economy

It’s all Greek to us

We could sell the snow. There's plenty of that

We could sell the snow. There’s plenty of that

New Brunswick, fiscally considered, is not Greece. But are we getting there?

Canada’s second-smallest province, by population, endures a long-term- debt-to-GDP ratio of 32 per cent. That means dunning, theoretically, every man, woman and child in this province roughly $15,000 a year (more than $35,000 if you consider the federal shortfall).

Greece, in contrast, is Europe’s 14th-most populous country. Its debt now stands at an astounding 180 per cent of annual economic production.

For a while, this nation was relatively robust: Its tourism trade was second to none in the world; its agricultural and resources sectors were among the strongest in the Mediterranean region. Now, it is all but bankrupt.

Last week, the country’s government ordered the banks to shut down (to prevent a run on deposits); this week, the national treasury defaulted on a critical loan repayment to the International Monetary Fund; and just yesterday all heck broke loose on international stock markets as fund managers and moneyed investors around the world sent exchange prices tumbling by triple digits – all because a middling nation with unsustainable leverage couldn’t pay its bills.

The factors that contributed to the “Greek Crisis” (now in its fourth year) are complex. They include socio-economic mismatches involved with merging trade agreements and currency standards into the European Union, and political and fiscal traditions within Greece, itself, which have not tolerated high capital streams from public sources of revenue. (English translation: Though the country maintains comparatively high marginal and progressive rates, Greeks, themselves, are expert tax avoiders).

According to an article in The Economist two months ago, “Greece emerged from recession in early 2014, but its escape from contraction was short-lived. Figures released on February 13th showed the Greek economy still growing year on year, but shrinking in the final three months of 2014. Since 2008, the Greek economy has shrunk by about a quarter. Although not quite as deep a downturn as America’s Depression, Greece’s recession was more prolonged and is likely to take more time fully to recover from. Recent downturns in the euro area seem like minor hiccups in comparison.”

In fact, Greece’s pre fiscal-crisis conditions appear troublingly familiar to residents of New Brunswick, struggling to reconcile their own ambitions with backward circumstances. In Greece, The Economist states, “Even before the crisis struck, (the country) was a laggard. In 2008 only a third of households had the Internet, the lowest share in Europe. Levels of youth unemployment and government debt were already among the continent’s highest. Since then, the gap between Greece and the rest of the euro zone has grown. Unemployment has more than tripled to 26 per cent, and three-quarters of the jobless have been out of work for 12 months or more. Over a third of Greeks are considered to be at risk of poverty.”

The degree to which a country, region or province is a victim of forces beyond its control is a subject for bitter debate. But people who buy the proposition that individual initiative makes no difference to the health of the polity are very often the same ones who expect unchanging standards of public services long after the state has run out of money.

That is certainly the case in Greece, where the leftish government has resisted all efforts by its international lenders to impose austerity measures, while keeping its outstretched hands, palms up.

New Brunswick’s annual deficit and debt are absurdly high for a province of its size.

The question remains: How long can we afford to flirt with our own Greek problem?

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Jun 26 2015
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Economy, Municipal Affairs, Politics

A centre will build growth

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Was it only just the other day when New Brunswick Premier Brian Gallant appeared less than convinced by the multiplier effect in economic planning – specifically, by the wisdom in pouring public money into a new downtown events centre for Moncton?

My, what a difference a day makes – even though that day has taken three months to properly arrive. With his government now willing to invest $21 million in the form of a forgivable loan toward the estimated $107-million construction cost, Mr. Gallant is leaving himself precious little room for political wiggle, as the momentum for the project clearly swings forward.

In April, Mr. Gallant stated a commentary carried by this newspaper, “Much has been said about the Moncton Downtown Centre. . .To create jobs and have strong social programs we must invest our money strategically. . .This principle is an important one that requires us as a government to do our due diligence when making decisions. This includes the decision on whether or not to financially support the Moncton Downtown Centre. . .It isn’t responsible to rush into a $107-million project.”

Last week, his chief cabinet lieutenant Victor Boudreau was whistling a  somewhat different, and happier, ditty. “I am here to say the City of Moncton’s application has not only been reviewed, but approved. To date, discussions on this project have been a bit of a moving target. It is our hope our commitment to invest in this project will allow the City of Moncton to leverage funding from other partners.”

From the beginning (at least since 2010, when the City commissioned its first, full economic impact study), the issue was always whether or not a new multi-purpose event centre would become a catalyst for economic and commercial growth and diversification throughout the urban area and even beyond.

Two years ago, New Brunswick’s senior economist David Campbell – who was an independent economic development consultant at the time – told Moncton City Council that a new centre will annually “attract between 317,000 and 396,000 people. . .generating between $12 and $15 million in spending.” In the process, he declared, it will “support retail, food service, accommodation and other services in the downtown,” where it “should also support residential growth.”

In fact, the urban core “generates nearly 11.5 times as much property tax revenue, compared to the rest of Moncton, on a per hectare basis.”  

Still, not everyone was encouraged by last week’s funding announcement. Kevin Lacey of the Canadian Taxpayers Federation told this newspaper the province’s poor finances clearly argue against these sorts of discretionary infrastructure builds. “The government has hiked taxes, cut teachers and hospitals are in troubl., And the government is spending money on a hockey rink today?”

It’s a nice line, sure to generate buzz in all the right constituencies. But it’s not especially accurate.

There’s very little doubt in the calculating mind that a mix-use sports and entertainment facility (if it is large enough, designed well enough and comes deliberately equipped with cultural spaces) will, as Ben Champoux, CEO of Metro Moncton’s 3+ economic development agency, persuasively points out, take “the game” to a “much higher level. . .An announcement like this gives us the tools to turn around and (show) the can-do attitude that we have. . .As a result of this project, other projects going on in Greater Moncton that are tied to this one, there is more than a quarter of a billion dollars  right now in the pipeline of projects.”

Indeed, those are economic multipliers that any smart politician must be only too happy to endorse.

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Jun 18 2015
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Business, Economy, Energy, Oil and Gas, Politics

Green around the gills

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He bet the nation’s country farm on the Alberta oil sands. But, my, how Stephen Harper’s expectations have tarred and feathered the petro-industry’s chickens who have lately come home to roost.

The Canadian Association of Petroleum Producers (CAPP) now says that Canada’s western crude production faces a decade-long slide into something just this side of irrelevance – a condition no one saw coming down the pipeline of public relations even a year ago, when fossil fuel prices in this country first began to sink below levels thought possible, let alone reasonable.

Still, CAPP is fairly sure of itself this time:

“The Canadian crude oil industry is facing risks on multiple fronts in a market transformed by increased global crude oil supplies resulting in lower oil prices. Lower oil prices have challenged project economics and reduced capital spending intentions. These constraints have dampened the outlook for future production growth. Against this changed backdrop, highlights of this year’s outlook are”, well. . .not good. The organization expects the following calumnies:

“Total oil production continues to grow but at a slower pace than previously anticipated; total Canadian production grows from 3.7 million b/d in 2014 up to 5.3 million b/d in 2030, which is 1.1 million b/d lower than last year’s forecast; market diversity and access is still required to the U.S. Gulf Coast, the U.S. Midwest and Eastern Canada in North America.”

Meanwhile, “the timely development of infrastructure to obtain market access is a continuing concern. The in-service dates for many of the pipeline projects have already been delayed and could be even further delayed due to extended regulatory processes.”

All of which makes an Energy East Pipeline from the west, through Ontario and Quebec and, finally, into Saint John, a sudden long shot. And yet, here on the East Coast we’re still talking about it as if it were a sure thing, a done deal, from Ottawa (which cares less than nothing for Maritime fortunes) and Alberta (whose new NDP government is far more interested in further curtailing greenhouse gas emissions from the inconvenient truth of its underperforming bitumen deposits than it is in extending inter-provincial trade).

Indeed, it seems clear that the Conservative Government of Canada must now craft, in record time, a reason, other than resource extraction, to tie the country together and behind it – just as another federal election looms on the horizon. This may explain Mr. Harper’s unexpected, rhetorical withdrawal at the recent G7 Summit in Germany last week.

As Matthew Fisher of The National Post reported, “Although his children will not likely be around to see it. . . (Prime Minister) Harper committed fossil-fuel rich Canada to ending all production and use of carbon-based energy by the end of the 21st century. This cautious softening of the prime minister’s usual staunch defence of Canada’s energy sector was matched by the other G7 leaders in the closing declaration they issued at the end of their two-day summit. . .(Mr.) Harper seemed to have caught a break on Monday when a discussion on climate change that would have put Canada on the hot seat was cut to half an hour so that leaders could devote more time to global security.”

Obviously, those particular chickens have not yet come home to roost; but while we wait, it might behove our prime minister to acknowledge, finally, that climate-change politics is not merely the source of his own nausea.

It is also for a civilization that’s growing sick of all the fine-feathered friends of the earth it must endure.

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Jun 10 2015
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Business, Economy, Oil and Gas, Politics

Reversing our job losses

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In electoral politics, the easiest promises to make are always the hardest to keep. As the New Brunswick government recesses for the short, hot summer, it leaves with the uneasy certainty of that adage festering in the pit of its stomach.

No campaign vow is more facile – or more common – than the one that guarantees robust employment, despite evidence that strongly militates against its success. Still, every candidate for public office, regardless of his or her party affiliation, trots out the tired old trope, “job creation is our no. 1 job,” or words to that effect, as if his or her magic wand is loaded with something more substantial than good intentions.

Why elected representatives routinely beg to assume direct responsibility for an economic process that is quite eminently and obviously resides outside their wheelhouse is a question only the gods of political ambition can properly answer. The results, however, are as predictable as rain in the springtime.

As Statistics Canada reported last week, New Brunswick somehow lost 5,300 full-time jobs in May, just as nation, overall, picked up 59,000 positions.

“Certainly after a disastrous first quarter, the outlook suddenly seems a lot brighter,” a Financial Post article observed. “For that, we can thank an unexpected surge in hiring in May­ ­– the biggest gain in seven months, in fact, and more than six times larger than anyone had expected. And the majority of those new jobs were created in a previously unlikely location – Ontario, which had seen its prominence diminish in recent years as the manufacturing-focused economy turned to energy-heavy provinces for growth.”

All of which suggests that economists at the TD Bank were onto something earlier this month when they noted in letter to institutional clients, “The notion of ‘short’ or sell Canada became a growing theme in international circles, as falling oil prices added to concerns about an overheated housing market and high household indebtedness,” Derek Burleton and Leslie Preston wrote. “A few months later, however, it seems the bears have not been proven right. Data so far in 2015 show that investor flows into Canada have remained resilient and sentiment on the Canadian dollar has picked up.”

But as the country, on the whole, grows buoyant, the same cannot be said for New Brunswick, where the total number of employed in the unmerry month of May fell by 2,800 and 4,600 fewer people were combing the classifieds or pounding the pavement for even a glimmer of a job.

That performance was “bested” (if that is the correct word) only by Alberta, which lost 6,400 jobs. Newfoundland and Labrador shed 4,300 positions; Quebec lost 2,100; and Saskatchewan simply treaded water.

Never, however, underestimate a government leader’s sunny determination to put the best light on even the darkest circumstances.

Faced with the inevitable questions about his jobs record, New Brunswick Premier Brian Gallant insisted, “We’ve said from Day 1 that there will be ups and downs,” he told the Saint John Telegraph-Journal. “I think that’s (the province’s static job creation record in recent years) pretty positive when you look at what is happening nationally. Alberta, which is one of our economic drivers in the country, lost thousands over the last month. We have many companies and businesses here in New Brunswick that provide to the supply chain in Alberta, so obviously they are going to have some impact.”

Of course, if this provincial government insists on falling into the commonplace trap of issuing promises regarding job creation, it would do well to consider all the factors that are actually within its power to influence.

Shale gas, anyone?

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Jun 10 2015
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Business, Economy, Energy, Oil and Gas, Politics

Towards a clean-fracking future

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In a singularly breathtaking review of the facts, the U.S. Environmental Protection Agency – still, the gold standard on all matters ecological – says ‘yes’ to hydraulic fracturing, within limits, of course.

Its long-awaited, durably delayed report on one of the most controversial resource-extraction technologies in 15 years resolves thusly: “From our assessment, we conclude there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources. These mechanisms include water withdrawals in times of, or in areas with, low water availability; fracturing directly into underground drinking water resources; below ground migration of liquids and gases; and inadequate treatment and discharge of wastewater.”

Still, it insists in terms that could not be more certain, “We did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States. Of the potential mechanisms identified in this report, we found specific instances where one or more mechanisms led to impacts on drinking water resources, including contamination of drinking water wells. The number of identified cases, however, was small compared to the number of hydraulically fractured wells.”

To be clear, it reports, “This finding could reflect a rarity of effects on drinking water resources, but may also be due to other limiting factors. These factors include: insufficient pre- and post-fracturing data on the quality of drinking water resources; the paucity of long-term systematic studies; the presence of other sources of contamination precluding a definitive link between hydraulic fracturing activities and an impact; and the inaccessibility of some information on hydraulic fracturing activities and potential impacts.”

What does all of this mean to New Brunswick, where a potential 73-trillion cubic feet of shale gas nestles below ground, obstructed not so much by drilling technology than by public policy (a moratorium on the stuff is, after all, in effect)?

Well, say the pooh-bahs in Fredericton, ‘we’re just going to have to study the study, because, well, you know, that’s what we do.’

And so they will with all the enjoyable attention the issue deserves, given that New Brunswick currently ‘enjoys’ one of the highest jobless rates in the country, an absurdly high annual, per capita deficit and a long-term debt that would make a reality showrunner bleat for a chance to film the coming fiscal apocalypse for both prime time and Netflix.

The problem, of course, is that the Gallant government has moored itself to an ideological anchor. Its determination to utterly ignore the relevant research paid for by the previous government – for purely partisan and, therefore, spurious, reasons – has, in the light of new and independent findings from its largest international trading partner, forced its feet of clay.

If, as the EPA insinuates, fracking need not ruin the soil, water and air of this naturally pristine province (given proper regulations and industrial protocols), then what prevents the Province from engaging in the hard, indisputably contentious business of charting a ‘clean-fracking’ future? Technically, it now seems, the endeavour is not impossible. Politically, however, it remains untenable, as the gritty Libs try to ford the gulf between campaign rhetoric and pragmatic, responsible governance.

As for the EPA study, “it’s a major report,” a ranking member of the Province’s three-person Commission struck to examine the fracking conundrum here told the Saint John Telegraph-Journal earlier this week. Said Cheryl Robertson, who hadn’t yet perused the document in its entirety before her interview: “It will be an interesting read.”

More interesting, of course, will be hers and her colleagues’ own findings.

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Jun 03 2015
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Economy, Energy, Oil and Gas, Politics

Lies our province tells them

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When I go abroad, I never fail to remind my felicitous hosts that New Brunswick enjoys the finest temperatures in the western world: Here, it never drops below zero, and, here, it never rises above room temperature.

Gosh, friends, it hardly ever snows.

I also tell my international confreres that the province where I currently hang my many toques bustles with sustainable, environmentally benign industries; its rural communities are economic dynamos that support entrepreneurial vigor and verve; its cities are jewels of downtown, cultural development; its public accounts are balanced; and, oh gee-whiz let’s just be honest, its future is as bright as the North Star on a late November night.

When I yak this way the English think I’m mildly amusing; the Scots couldn’t care less. In fact, only the Irish know that I am lying through my rose-colored shot glasses (after all, in their post Celtic-tiger phase, they should know blarney when they hear it). Fortunately, for representatives of this provincial government, the Americans are just a wee bit more gullible.

For, when New Brunswick’s cohort of trade officers and assorted politicos tells a Texas crowd of energy poo-bahs just how wonderful shale-gas development opportunities in New Brunswick might someday become, they may as well be speaking to a roomful of kindergartners. (Oddly enough, that’s exactly how New Brunswick’s cabinet members prefer to address the citizens who elected them on just about every subject anyway).

As John Chilibeck of the Saint John Telegraph-Journal reported earlier this week, “a moratorium on fracking hasn’t stopped the New Brunswick government from advertising the potential for a shale gas industry in the province. At an energy conference in Houston, an officer with Opportunities New Brunswick recently set up a booth showing a poster of shale gas formations in North America, including the possibility of deposits in New Brunswick.”

Did someone not get the memo?

It reads something like this, courtesy of the provincial government’s own website on the matter: “The moratorium (on fracking) will not be lifted unless there is social license in place; clear and credible information about the impacts of hydraulic fracturing on our health, environment and water, allowing us to develop country-leading regulatory regime with sufficient enforcement capabilities; a plan that mitigates the impacts on our public infrastructure and that addresses issues such as waste water disposal; a process in place to respect our obligations under the duty to consult with First Nations; a mechanism in place to ensure that benefits are maximized for New Brunswickers, including the development of a proper royalty structure.”

That’s a fairly tall order and, if I’m not very much mistaken, you can’t put it on a poster even if your eat-and-have-cake heart desires to.

Lamentably, Energy and Mines Minister Donald Arseneault appears to struggle with the conundrum. Responding to the news, he noted, somewhat confusingly, “Putting a moratorium on hydraulic fracturing doesn’t mean you can’t have conventional drilling as well. And a moratorium does not mean you have to stop promoting the province as a place to invest. We can’t hide from the fact we have a moratorium on hydraulic fracturing.”

Fine, but then why advertise to an international audience the province’s vast shale-gas reserves – resources that can only be obtained through fracking – when we have not yet crafted a commercially viable plan for lifting the injunction on the very technology that makes the business rational?

When this government goes abroad, it should remember that truth is a far better drawing card for investment than the banal and wretched alternative.

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Jun 02 2015
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Business, Economy

Crowing all the way to the bank

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For ripping off the global economy between 2008 and 2012 – contributing to the worst recession since the Dirty Thirties, throwing millions of people out of their work, their homes and demolishing their sense that, in the end, universally applicable golden rules of fair play and decency trump the periodic predations of barbarians digging beneath the gates of civilization – some of the world’s biggest banks have just received slaps on their wrists.

Naughty, naughty boys you are. Oh, please don’t make us admonish you again. It hurts us to cut your allowance. Now, go forth and play nice.

According to a recent New York Times article by Ben Protess and Michael Corkery, the U.S. Justice Department has reckoned that Citigroup Inc., JPMorgan Chase & Co., Barclays Bank PLC and Royal Bank of Scotland PLC conspired to commit “multiple crimes” in the five years following the Great Financial Collapse of 2007 by “manipulating foreign currencies and interest rates”. These once-venerable institutions employed pinheads who executed “a scheme that padded the banks’ profits and enriched the traders who carried out the plot.”

Apparently, “The traders were supposed to be competitors but. . .they colluded to manipulate the largest and yet least regulated market in the financial world, where $5 trillion changes hands ever day.”

These criminals may have pilfered as much as $1 trillion from global markets, and yet the highest law enforcement agency in the United States has seen fit to level fines against these carpetbaggers (all of whom have plead guilty) in the collectively paltry amount of $5.6 billion – a book entry, given the value of their ill-gotten gains. No one is actually accountable. No one goes to jail.

Still, as the Times story reveals, the dimension of hubris was breathtakingly brazen:

“To carry out the scheme, which went for five years through 2012, one trader would build a huge position in a currency and then unload it at a crucial moment, hoping to move prices. Traders at the other banks agreed to, as New York state’s financial regulator put it, ‘stay out of each other’s way.’

“The banks also misled their clients about the price of currencies, the federal and state authorities said, imposing ‘hard mark-ups,’ which one Barclays employee described as the ‘worst price I can put on this where the customer’s decision to trade with me or give me future business doesn’t change.’ Or, to put their mission in the starkest of terms, the employee said: ‘If you ain’t cheating, you ain’t trying.’”

How exquisite is this, how predictably reliable are our runaway capital marketeers?

In fact, this sort of aberrant, sociopathic behaviour along the virtual highways that connect Wall and Lombard Streets should now be boring. But the sheer scale of the larceny sheds a bright light on the fundamentals that underpin growing income and wealth disparity, not only in the West but everywhere in the world.

When a small cartel of “players” can and do game global markets for their own fun and immense profit without fear, what hope remains for the rest of us who, playing by the rules, assume that our small chest of treasures in capital markets will keep us safe, housed, clothed and fed?

And, here’s the final insult, courtesy of the Times report: “For the banks, life as a felon is likely to carry more symbolic shame than practical problems. . .The banks have obtained waivers from the Securities and Exchange Commission that will allow them to conduct business as usual.”

Laughing all the way to the bank, indeed.

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