Gary Clement's take on Israeli settlements and the Middle Eastern peace process
10 Mar 2010 at 11:23pm

Israel plans building more settlements, and Joe Biden was displeased. Gary Clement's take:


A full archive of Gary Clement's comics

By Terence Corcoran

T

hat eerie hissing you hear may well be the air beginning to seep out of the green energy bubble. The sound is similar to the pfffffft and sshhhhsssssp noises we heard in the early days of the dot.com bubble collapse or the subprime mortgage meltdown. If you can’t hear it, you are not alone.

While investment analysts are telling their clients to get out of solar power firms and warning about the continuing risks in wind and bioenergy schemes, Ottawa and the provinces are on a mad populist stampede to throw billions of dollars at the green energy monster. The politicians don’t seem to be keeping up with the trends. “Don’t try to catch a falling knife,” warned J.P. Morgan this week in a report that told investors the market continues to fall out of the solar panel module market. It downgraded a bunch of solar companies that have already been in a tailspin since the fist signs of a solar crash back in 2008.

Other alternative energy sectors are hitting walls. Jurisdictions with wind power regimes face continuing issues related to the fact that the wind often doesn’t blow much, turning investments in wind farms into cash-draining albatrosses. In Ontario, the 1,100 megawatts of built wind turbine capacity are often running a few megawatts at a time, and even on the best of days have trouble producing 150 megawatts.

Despite the fundamental lack of economic justification for alternative energy, governments keep pumping air into the bubbles. They blew a small fortune on ethanol programs that didn’t quite work out, so now they’re betting vast sums on aggressive campaigns to create green industries using some of the most regressive interventionist methods known to economics.

Subsidies, trade protectionism, market-distorting prices, back-door tax hikes, carbon taxes, massive regulation, big secret deals with rent seeking corporations, cross subsidies from one industry to another — no policy option is too crazy for green energy. The Liberal government of Ontario Premier Dalton McGuinty has already billed itself as possibly the greenest energy jurisdiction in the world, a claim that seems plausible given the IMAX scale of its economy-distorting Green Energy Act.

Ontario’s main claim to power fame is a “feed-in-tariff” scheme under which the province will force power into the market at subsidized rates. Under the act, power distributors are obliged to pay 44 ¢ a kilowatt hour for solar power, 13.5¢ for wind power and up to 80¢ for solar power delivered from rooftop systems.  Loblaw, the grocery store chain, yesterday become one of the first companies to agree to accept the 80¢ subsidy for power from solar panels installed on the roofs of its stores. The cost of that 80¢ power will be borne by all electricity consumers in higher rates.

And now B.C. Premier Gordon Campbell is reportedly angling to topple Ontario for the greenest-of-them-all title. “There is not a jurisdiction that won’t try to win the clean energy race,” said Mr. Campbell. He promises to fast track alternative energy projects. The province’s B.C. Hydro monopoly is expected to announce new energy purchase agreements sometime this month. One of them is with a group headed by GE Energy Financial Services to revive the controversial Upper Toba Valley Hydroelectric Project. That project remains shrouded in financial mystery.

While British Columbia’s purchase-agreements are not quite feed-in-tariff structures, the economic reality is that green energy tends to cost more and the higher costs will be borne by all consumers. None of these technologies — solar, wind, bioenergy — are economical on their own in competition with natural gas or coal — or even nuclear. At 80¢ a kilowatt hour, Ontario could theoretically be better off building a dozen new nuclear plants.

Needless to say, all this is being driven by the fantasy of reducing and even eliminating carbon emissions so as to save the planet from global warming. Leaving aside the growing probability that global warming science will prove to have been a false alarm, little or no work has been done on whether any of the alternative energy spending will reduce carbon emissions. Ontario has yet to produce any evidence that its massive feed-in-tariff regime will appreciably reduce carbon emissions, even though consumers will pay billions of dollars more for electricity in years to come.

Internationally, the alt-energy movement has taken on bubble qualities. The solar report by J.P. Morgan documents the rise and fall of a half dozen companies that are now trading at a fraction of their market highs (see two examples below). Solar panel prices plunged last year and appear to be heading lower still this year. Stock prices, already battered, could go lower. “We believe significant downside risk remains even from these levels and continue to be wary.” Making money in solar is still a problem. ENER has annual revenue of $367-million, but lost $1.54 a share. Evergreen lost $21-million on $74-million in revenue

The dot.comish quality of the solar industry is obvious. Even worse from an economic perspective are the perverse government policies driving the market. Ontario insists on local content in solar and wind equipment, thus guaranteeing rate payers will pay high prices for equipment that is available on the open market at deep discounts.

Even more perverse economically is that the subsidies for alternative energy come on top of other carbon-reducing programs. Programs such as carbon taxes in British Columbia and smart meters in Ontario compound the cost burden on consumers. If cap and trade were to be thrown on top of the green energy programs and existing taxes, the irrationality of the green energy system would become even greater.

Maybe the hissing sound of deflating bubbles will eventually shake up the politicians and consumers. The worst is yet to come.

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Since the Bank of Canada was created, the dollar has lost 94% of its value

By Martin Masse

T

good start to understanding the real nature of central banking is the libertarian bumper sticker saying “Don’t steal! The government hates competition.” The whole purpose of the bureaucratic machine called central bank is indeed to steal from us.

How does it do this? By constantly printing money (or, nowadays, creating it out of electronic bits on computers) and increasing the money supply, thereby creating inflation.

When you get to the Bank of Canada’s Web site, it says “We are Canada’s central bank. We work to preserve the value of money by keeping inflation low and stable.” Do a little search on the same Web site, however, and you discover that since the Bank started its operations in 1935, the dollar has lost about 94% of its value. A basket of goods and services that cost $100 in 1935 would cost $1600 today. That’s some preservation!

Counterfeiting is understandably illegal and punishable by law. But central bankers do it all the time, the only difference being that they have a legal stick — their dollars are the only permitted legal tender — and they deploy a huge propaganda machine to force us to accept their funny money.

There are big stakes involved. Inflation is a way for governments to spend more without having to directly impose taxes. A central bank is an essential part of big government.

Central banking operations also serve as a permanent bailout for debtors. Interest rates are usually kept lower than they would be in a free financial market. And by reducing the value of the money being owed, they make life easier for debtors. So the modern era of central banking is one where debt, public and private, inexorably grows, to the point where the whole monetary edifice now threatens to collapse.

Finally, central banks protect the reckless practices of financial institutions, who lend money that they don’t have under the fraudulent fractional reserve system. With government acting as a lender of last resort, financial institutions are prone to taking greater and greater risks. As we’ve seen recently, wads of cheap cash are always at their disposal to keep them solvent and profitable.

It’s interesting to read (in A History of the Canadian dollar, a little book produced by the Bank) that the reason Canada went off the gold standard in 1914 was to rescue insolvent commercial banks. “On 3 August 1914, an emergency meeting was held in Ottawa between the government and the Canadian Bankers Association to discuss the crisis. Later that day, an Order-in-Council was issued that provided protection for banks that were threatened by insolvency by making notes issued by the banks legal tender.” Take my money, or else.

That 1914 move off the gold standard became one of the major steps towards creation of the Bank of Canada in 1935 and the full nationalization of money in Canada.

All the gobbledegook that passes for monetary economics nowadays aims to obscure the basic economic fact that central banks make us poorer. The Bank of Canada’s archives contain endless studies about ways to calculate money supply, fancy rules on how to manipulate interest rates, etc. This scholarship is supposed to help central bank bureaucrats better “preserve the value of money” when, in fact, the very existence of the Bank is the reason why money gets devalued.

For decades now, anyone raising issues about this has been tagged as a crank. Debates about monetary policy are monopolized by a handful of economists speaking in unintelligible jargon, almost all of them working at central or commercial banks or related one way or another to the network of central bank beneficiaries, as research in the U.S. has shown.

What is most amazing is that even most economists who claim to support free markets ­— apart from a small group who adhere to the Austrian School — approve of central banking, especially in times of crisis. But even if it were true that “flooding markets with liquidities” could kick-start the economy, this logically implies a fundamental violation of property rights and should be unacceptable to them.

Previous eras understood this much better than today, as the heated debates surrounding the creation and abolition of the two first banks of the United States attest. In a sane world, central banking would today be considered an act of expropriation and would be abolished. Let’s hope that an explanation to its logical conclusions will one day become part of the economics curriculum.

Financial Post
Martin Masse is publisher of the libertarian webzine Le Québécois Libre and a former advisor to Industry Minister Maxime Bernier.

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It's not easy to stump a parliamentary dining room waiter, but the query was a first and he drew a blank. When eating seal meat, red or white?

Red wine, he advised with some hesitation. It's an animal. White, we figured. It comes from the sea.
Armed with a swallow of Chardonnay and the bottle on standby in case it unleashed a nasty aftertaste, Newfoundland MP Gerry Byrne joined me for seal meat appetizers in a dining room above the House of Commons filled with MPs and senators lunching on fare without flippers.

Seal isn't yet on the formal menu. We had to sneak it in from an adjacent private sampling room overflowing with guests anxious to be seen in a culinary photo-op that attracted attention from Europe and the United States.

The seal pate swirl could've been beef, bison or caribou, lacking any distinctive taste after getting a drowning of seasoning. The slab of flipper didn't have a gamey taste either, but was plenty peppery and, frankly, had me reaching for wine to wash it down. Alas, the supply of bacon-wrapped seal steak was reserved for the invited guest list.

Mr. Byrne, the six-term Newfoundland MP, knows a thing or two about cooking seals, even though it's not a staple in his diet.  
"It's all in the preparation," Mr. Byrne says. "As soon as the air hits the fat, the Omega 3 starts to turn rancid so it has to be stripped quickly. That's the red you see on the ice. It's the hunters bleeding the seal and extracting the fat before it goes through the body."

Gosh, yummy.

But there's no denying this sacrificed seal served up a successful public relations stunt as MPs, ministers and party leaders jostled for media attention in a sea of cameras and microphones.

Federalist or separatist, coastal or Prairie, MP or Senator, Canadian parliamentarians of all parties stood united against world pressure to outlaw the hunt yesterday.

There is one minor exception. Liberal Senator Mac Harb, who has a reputation for enjoying lavish European hospitality during anti-sealing tours, never raised seal hunt concerns once during his 15 years as an MP.

But he's tried twice to legislate a ban on sealing with dismal results. His first bill failed to find a seconder in the Senate, the second will soon be soundly defeated.

The Prime MInister's office reacted poorly by attacking Mr. Harb as proof of divisions in the Liberal party, which served only to give this rogue an undeserved profile boost. Michael Ignatieff, to his credit, didn't return the cheap shot by pointing out Prime Minister Stephen Harper missed the seal sampling even though the Liberal leader showed up to defend the hunt as an historic tradition and economic necessity.

Unfortunately for Atlantic Canada, Mother Nature could beat politicians to a ban on the hunt this year and, if the climate keeps warming, in the future.

Sealers are usually on the prowl by now, but the hunt has been scaled back or cancelled in many grounds by the lack of ice - open water on a scale Mr. Byrne says locals haven't seen in 70 years.

Prices are freefalling, too, as foreign markets demand dry up. The $105 price of a whole seal four years ago, when roughly 350,000 were harvested, has crashed to just $15 - if a buyer can be found.

Sealers can take history to heart. Back in the late 1980s when actress Brigitte Bardot was in full anti-hunt attack mode, seals were selling for about $5 a pop, before rebounding to meet surging demand in Europe, Mr. Byrne says.

It's worth re-emphasizing this is not about those poster-friendly, white-coated babies, which have been protected since 1987. It's the humane harvesting of a cod-gobbling mammal, albeit a cute one, for human clothing or consumption during a gap in the Atlantic fishing season when the industry is underemployed

Canada's politicians have officially given the hunt their, um, seal of approval. To that we should raise a glass and, for future dining reference should you ever order a real seal meal, it goes down better with white.
National Post
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Some of the most innovative thinking in urban planning is going on in Detroit.

Weird, but innovative.

A while back, Tasha Kheiriddin wrote about the Detroit mayor's plan to forcibly relocate parts of the crumbling city's dwindling population, huddling them together in greater densities for the sake of efficiency.  Why spend good money sending garbage trucks out to neighbourhoods that have been all but abandoned, after all?

"If we don't do it, you know this whole city is going to go down. I'm hopeful people will understand that," said Mayor Dave Bing. "If we can incentivize some of those folks that are in those desolate areas, they can get a better situation."

Fair enough. Efficiency is good, though herding people out of their homes and forcibly replanting them elsewhere has some disturbing historical connotations. But let's ignore that for the moment; it still leaves the question of what to do with all those newly-depopulated areas. What, exactly, did Mayor Bing have in mind?

Well, now we know. Amber waves of grain, or something close to it. According to this report from Associated Press:

Operating on a scale never before attempted in this country, the city would demolish houses in some of the most desolate sections of Detroit and move residents into stronger neighborhoods. Roughly a quarter of the 139-square-mile city could go from urban to semi-rural.

Near downtown, fruit trees and vegetable farms would replace neighborhoods that are an eerie landscape of empty buildings and vacant lots. Suburban commuters heading into the city center might pass through what looks like the countryside to get there. Surviving neighborhoods in the birthplace of the auto industry would become pockets in expanses of green.

A verdant new Detroit. A pastoral paradise. The new Arcadia. Maybe they should even change the name. Let's see: The Arcadian Red Wings.  The Arcadian Tigers.  "The Arcadian Lions lost their 17th straight today as they completed another season of futility in the NFL..." I don't know, it's kind of missing something.

Anyway, the concept is interesting, and signs are the mayor fully intends to forge ahead. More details are expected in an upcoming state-of-the-city address (I think we all know the state of Detroit: Place is a disaster). But some aspects of the plan are known: 

The current plan would demolish about 10,000 houses and empty buildings in three years and pump new investment into stronger neighborhoods. In the neighborhoods that would be cleared, the city would offer to relocate residents or buy them out. The city could use tax foreclosure to claim abandoned property and invoke eminent domain for those who refuse to leave, much as cities now do for freeway projects.

Mayor Bing is already making noises about all the money he's going to need to make this happen. Detroit already has a $300 million deficit, and a tax base that keeps getting smaller. At its peak Detroit was home to 2 million people. Now it has maybe 500,000.  The AP says Bing has begun lobbying Washington for support, and has the backing of the federally funded Detroit Housing Commission.

Still, how's the White House going to like the idea of bulldozers demolishing the remnants of Motown, brought to you on the evening news? Especially after it just spent a gazillion dollars to "save" the city's biggest industry?

Kelly McParland
National Post

Photo: Detroit's mayor wants to trade urban disaster for rural idyll like this farm near Carmi, Illinois.  (Scott Olson/Getty Images)