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Sustainable Economics 101

2011-12-14T08:40:00.001-05:00

Markets, which are fair and free, eliminate unsustainable products and services. The problem for the world's economy is that the world's markets are far from fair and free.

Just as evolution's natural selection eliminates unsustainable biological traits, economies need to purge themselves of uneconomical activities. At present, economic policies and subsidies reward failures and punish successes. They limit the natural free flow of capital that would go to profitable products and services. Economies need to eliminate these policies and subsidies and allow economic natural selections to occur.

Economies also must be balanced and policed. Regulations and oversight that deter predatory competition and greed need to be enhanced and aggressively enforced. If governments worldwide co-operate and implement these measures and other measures that address the world's social and political disparities and environmental limits, a balanced sustainable prosperous worldwide economy could come to fruition.

Unfortunately, the past 30 years have seen developed, democratic economies relying more and more on deficit spending and credit creation to offset economic losses to new emerging economies. They have subsidized their economic growth by stealing from future generations. They have mortgaged their children!

The economic crisis cannot be solved with more bailouts, subsidies and quantitative easing. Real change is needed.

China 2012 Economic Crash

2011-12-12T12:18:00.005-05:00

A China Real Estate and economic collapse may be the news story of 2012. If that happens, 2012 may be apocalyptic, economically and socially throughout the world.

A China crash will cause major collapses in Canada and Australia because both countries greatly benefited from the last decade of Chinese economic expansion.

A China Real Estate bubble crash would play out worse than the 1989 Real Estate bubble crash in Japan. Before their bubble was started, Japan was already industrialized and developed. When their bubble started growing, a significant percentage of their population were able to buy into the early stages of their bubble and benefit from increasing Real Estate values. In China, the connected and early adopters to Chinese economic reforms quickly blew up the China Real Estate bubble. Only a very small percentage of China’s overall population were able to benefit from the Chinese Real Estate bubble. Even though the Chinese Real Estate bubble was not driven by a credit bubble, the rate of speculation quickly drove up prices way beyond what the majority of the growing middle class could afford. Combined with the insane amount of commercial development and corruption of local government officials, a property bubble / economic crash in China could be socially explosive. Additionally, a significant percentage of China’s economy is export based. China’s major export markets are in all decline.

It may be that Beijing has lost control of their economy and is implementing measures to delay and deal with the coming crash and social unrest.

Sustainable Economics Manifesto

2011-12-06T00:01:00.025-05:00

Objective: Establish a worldwide, fair and free sustainable economic model that rewards innovation, success and hard work and reduces social and economic disparities.

Core Systemic Issues / Solutions, Possible Methods & Ramifications

Increasing amounts of consumer credit
create asset bubbles, unsustainable demand and production inefficiencies. When credit is added, new products and services appear and/or the prices of products and services go up because there are more dollars chasing each product or service. When credit is serviced, capital is diverted from the economy. If the diversion of capital exceeds new capital inflows, then prices go down and/or products and services disappear. Predominately, most consumer credit is for consumption purposes. The resulting consumer debt is a tax on future economic activity.
The central banks of the world must gradually increase interest rates. Asset prices will generally go down and products and services will disappear. This will trigger recessions that may last a couple of years in most developed countries. If interest rates are not gradually raised, deeper recessions or depressions lasting much longer will occur.

Government subsidies including bailouts and tax incentives for any product or service create pricing bubbles, disenfranchise unsubsidized enterprises and sectors and hinder productive capital investments. For example, the housing sector benefits from government tax incentives.
Government must eliminate all types of subsidies. This will trigger failures of some financial institutions, manufacturers, builders, farmers and other private enterprises that benefit directly or indirectly from any government subsidies. Some failures will re-structure and re-emerge as profitable operations and others will have their assets bought by solvent private enterprises.

Government deficit spending subsidizes wasteful spending, entitlements and the wages and benefits of public sector workers that are substantially higher than the wages and benefits of private sector workers. (Read more)
Enacting balance budget amendments will force prioritized reduced funding for only necessary services and programs. Public sector labor unions have to be disbanded and the wages and benefits for all government employees have to be reduced to private sector levels.

Labor Unions are Labor Monopolies. Monopolies can inflate their prices because they have no competition.
(Read more)
Disband all labor unions and strictly enforce enhanced labor laws. This will enable previously unionized employers to more quickly innovate and adapt to their evolving markets, resulting in improved productivity. Wage and benefit contracts could be adjusted yearly based on the companies overall profit and inflation. Additionally, companies could offer profit sharing to their employees. Any disputes between employees and employers would go to arbitration. There would be no strikes or work to rule slowdowns.

Income disparity. The gap between society's richest and poorest is increasing. In the 1950s, the bottom 90% of Americans had 68% of the nation’s wealth. In 2009, the top 10% of Americans had 50% of the nation’s wealth. The top 0.1% of Americans had an astounding 10% of the nation’s wealth. The gap is increasing predominantly at the top because of the rise in earnings of celebrities attained from lucrative endorsement & performance contracts and the rise of earnings of the owners, founders and executives of financial institutions and publicly traded companies attained from stocks, salaries and bonuses.
Taxation and/or enacting regulations that reduce earnings of the top income earners. For instance, a regulation that requires the executive compensation package of a public company be approved by a majority of individual shareholders. Another regulation could require yearly bonuses be paid based on the performance of the previous 5 years. This would discount or eliminate bonuses accrued in good years if any bad performance years occurred. Ideally, if distribution of wealth was similar to the 1950's, there would be substantially less poverty.

This manifesto is incomplete. Please post your recommendations, comments and criticisms.

Europe's Solution to Debt Crisis is to Steal

2011-11-30T16:26:00.001-05:00

This article is a sequel to:

Europe's "Stealing from Children" goes into Overdrive

Politicians and economists say that the European Central Bank (ECB) must be the lender of last resort to solve the European debt crisis. According to this article:

"[Nouriel Roubini] argued the only way to avoid a breakup of the euro zone would be for the ECB to become a lender of last resort, for a fall in the euro's value in line with the dollar and for fiscal stimulus for the "core" euro zone and austerity in the periphery to take place."

The way the ECB lends money is by buying the European government bonds, that nobody else wants to buy. How does a central bank lend money to anybody? Where do they get their money from? By printing it.

Politicians and economists are pushing Germany to allow the ECB to print money. According to this article:

"Is Merkel ready to switch the ECB printing presses on?...to print trillions of euros in an attempt to save the single currency"

This is probably a way to prevent defaults.

However, whenever anybody prints or creates money out of thin air, it creates inflation. Inflation devalues the money you are holding and makes you poorer. As an example, if a criminal uses a photocopier to counterfeit a $1 million, did he create $1 million of additional wealth for his country? No. The country's money supply increased by $1 million, but the quantity of goods and services did not increase. Therefore, the prices for the goods and services will increase, which creates inflation. The amount of goods and services that you can buy, decreases. Effectively, the criminal stole $1 million of wealth from you and the population.

Some people say that printing money is a way for the government to tax the population. However, a tax is when the government tells you exactly how much wealth they are going to take from you. When they print money, the government does not tell you that.

When the U.S. Federal Reserve conducted Quantitative Easing 1 and Quantitative Easing 2, they did not tell you that they will take wealth from you. They told the public that they will boost the economy. However, there is no evidence of that. In fact, GDP growth dropped after QE2. There is a lot of evidence that it created inflation and enlarged the U.S. debt, essentially enabling the government to take wealth from the population and spend it.

In addition to stealing from children through deficits and debts, printing money is simply another way the government steals wealth. However, if and when the ECB starts printing money, the European politicians will tell you that they found a "solution" by getting the ECB to buy bonds. They will not tell you that the "solution" is to steal wealth from you and give it to the European governments and banks.

In fact, the ECB has already been printing money to buy government bonds (source), because there is insufficient demand from other lenders. According to this article:

"...ECB had been quietly buying bonds anyway."

According to this article:

"...analysts say the ECB may quietly increase its purchases of Italian bonds..."

The free-market, where the sane people are, are not willing to lend to the European governments or banks at a low interest rate. This is because they expect that there is a probability that the borrowers may not repay the loan. In fact, lenders are losing 50% on the money they lent to Greece. These European borrowers are essentially "subprime", low-income, risky borrowers. In the U.S., lenders lost a lot of money to subprime borrowers. Therefore, there is a probability that the borrowers will not repay every Euro to the ECB.

According to this article on November 30th, 2011, central banks of the U.S., Canada, England, Japan and Switzerland, through the printing of U.S. dollars, will lend to the ECB, who in turn will lend to their "subprime" borrowers (European banks) at a lower interest rate than what the borrowers can get on the open market. Your central banks are now stealing wealth from you and getting into the subprime lending business.

You are helping profligate Europeans borrow like crazy, enjoy 6 weeks of vacation per year and not pay back their debts.

Hence, you are forced into the subprime lending business. You are now part of the European "solution".

Free-market capitalism is a myth. The governments created housing bubbles and debt problems in Europe, U.S., Canada, Australia, China, etc. Now, they are either kicking the can down the road or forcing you to pay for it.

Whenever the government screws around with the economy with socialist policies, they always bring prosperity to a pocket of the population in the short term. Without fail, they always make the country poorer in the long run. This record is unbroken in earth's history.

Read more:

Europe's "Stealing from Children" goes into Overdrive

Stealing from Children

Socialism vs Capitalism

Fake Economy

Fake Wealth

Housing, the most manipulated market in the world

Housing: After the Bubble Bursts

2011-11-27T11:37:00.001-05:00

This article is a sequel to these:

Housing, the most manipulated market in the world

Bubbles - Extreme Maker and Breaker of Wealth

Real Estate - Ponzi Scheme?

Housing is a large percentage of the GDP. Therefore, housing bubbles fuel the economy. When real estate was booming in the U.S., Spain, Ireland and Japan, their economies were booming. People in the U.S. were living in big, expensive homes, driving multiple cars and installing new swimming pools and kitchens. Similarly, the economies in Spain and Ireland were flying high. People were living the good life and "partying like it's 1999".

However, bubbles are temporary and create temporary fake wealth.

What does a country look like after its housing bubble has peaked or collapsed? What happens to its people?

Some bubbles are still raging on, as in Canada, Australia and China. Some have started to correct, such as in the U.K. We will look at what happened to the U.S., Spain, Ireland and Japan, which have largely but not necessarily fully collapsed.

With their bubble collapsed, the U.S. became much poorer, with high unemployment, anemic economic growth and poverty levels hitting record levels.

Many Canadians believe that when this housing bubble bursts, they will have a soft landing, unlike the American's. They say that the outcome for Canada will not end in a disaster like it did for the U.S. economy, because Canada did not have AAA rated CDOs (Collateralized Debt Obligations), NINJA loans, etc.

True, Canada did not have these, but neither did Spain, Ireland or Japan. Nevertheless, Spain and Ireland are now worse off than the U.S. Here is a comparison:

Metric	U.S.	Spain	Ireland
Duration of the Great Recession in quarters (source)	6	7	13
Total GDP loss during Great Recession (source)	-4.14%	-4.89%	-12.2%
Unemployment	9% (source)	21.5% (source)	14.4% (source)
Youth Unemployment (source)	15%	44%	28%
Last quarter GDP growth rate	2% (source)	0% (source)	1.6% (source)
Public Debt as % of GDP (IMF)	94.4%	60.1%	94.9%
Empty Homes Yes, even a densely populated place like Europe can have lots of empty homes, thanks to the collapse of a bubble.	11.4% (source)	13% (source)	17.4% (source)

The collapse of the Irish housing bubble created a banking crisis, prompting their government to bail out the banks. Due to this, the government became so heavily indebted, they needed a bail out from the Euro Zone countries, exacerbating the European debt crisis. Ireland's economy is so bad many are emigrating to countries such as Canada.

As you probably know, both Spain and Ireland are part of the PIIGS countries.

Canada's and Australia's bubbles and household debt levels surpassed the peak of the U.S. bubble and household debt levels. (See household debt to income ratio chart in: "Bubbles - Extreme Maker and Breaker of Wealth") According to "The Economist magazine, House of horrors, part 2:

"home prices are overvalued by about 25% or more in Australia, Belgium, Canada, France, New Zealand, Britain, the Netherlands, Spain and Sweden (see table). Indeed, in the first four of those countries housing looks more overvalued than it was in America at the peak of its bubble."

This implies that it is possible that Canadian and Australian economies are more fake than their American counterpart in 2007. If their bubbles collapse, it is possible that Canada and Australia will become as bad as the U.S. or worse.

Unlike Europe and the U.S., Japan's housing bubble peaked in 1991. The collapse lasted for more than a decade. Ever since, the economy has stagnated and their public debt has ballooned. Now at 220% (IMF), Japan has the highest debt as a % of GDP in the world. One can argue that Japan would have fallen in a 20 year depression if their government did not balloon their deficits and debt in order to spend and support the economy.

Since the beginning of 1990 until November 25, 2011, the Japanese stock market (Nikkei 225) has declined by approximately 79% (source). Yes, you read that correctly. Minus 79%. "Buying and holding" Japanese stocks for 20 years would have made you very poor.

As explained in "Housing, the most manipulated market in the world", housing bubbles are mostly created by government. This is true for the U.S., Canada and China. (Chinese government officials are in cohorts with real estate developers as they take bribes from the developers and are getting rich in the process. Source. There are 64 million empty homes in China, many of which are owned by officials.)

Unlike other bubbles, such as the Dot Com stocks of the 1990's, a housing bubble takes many years to peak. This means that it is mainly the older generation, such as the Baby Boomers, who bought at cheap or reasonable prices and enjoyed the price appreciation. It is mainly the younger generation who paid the bubble prices. This creates huge injustices.

TWO SCENARIOS

There are two possible scenarios after a bubble hits a peak:

Flat line or soft landing: In this scenario, the younger generation spends the majority of their lives, paying the majority of their income towards their house. In essence, they will be much poorer than the previous generation. The older generation, if they sell near the peak of the bubble, will be much wealthier at the expense of the younger generation. This simply exacerbates the massive stealing from children that is already going on through inter-generational transfer of deficits and debts. Also, some of this stolen money was directly used to fuel the bubble. Read "Housing, the most manipulated market in the world".
Collapse or hard landing: The older generation may lose their capital gains. However, the young homeowners will be crushed and will face financial ruin. Ask the tens of millions of Americans who are underwater with negative net-worth.

Therefore, even if the bubble does not collapse, it creates huge injustices for the younger generation. If it collapses, it creates an even larger injustice for the younger generation. Also, a collapse can potentially ruin the country as well.

SPECULATION vs PURE INVESTMENT

Investing in a house is not a pure investment. It is speculation. A pure investment is putting money into a business that creates products or services that generate profit by realizing economies of scale during the production of the product or service (read Capitalism for explanation of how economies of scale creates wealth). A house does not create products or services, therefore it can never realize economies of scale.

A good example of a pure investment is Apple. Apple creates wealth for every stakeholder: investors, employees, suppliers and customers. It creates billions of dollars of wealth for society through economies of scale. It creates wealth for its customers by providing entertainment value, enabling them to save time and be more productive. Each year, Apple creates products with more features, more capabilities and better design for the same price.

Each year, homebuilders and speculators sell homes with the same features, same capacity but of poorer quality for a higher price. (The quality of new homes in Florida are generally poorer than homes built a few decades ago. Some are so poor there is visible water damage on the outside after a few years. Some builders cut costs to the bone by installing Chinese drywall, which is now eroding electrical wirings and pipes.)

Apple does not tell its customers, "buy our products because you can make money by flipping it to the next greater fool for a higher price". Real estate agents do.

Apple can increase the wealth of Americans by selling their products to millions of people around of world. Homebuilders and speculators cannot do this.

Housing, a speculative fixed asset, cannot create long-term, sustainable wealth for a country. Only businesses can. By putting a significant portion of a country's capital and time into housing, you end up with a misallocation of capital. The capital is wasted because it is not put to work to create long term wealth. This is why every country that has experienced a housing bubble has gone one step forward and two steps backwards. A country's capital should be invested in businesses and fostering entrepreneurs. We need more innovators like Steve Jobs, not more Joe Flippers.

GET LESS FOR MORE OR MORE FOR LESS?

As explained above, we get prosperity when we are able to buy more for less. Computers have advanced with more capacity every year and prices have stayed the same or dropped. Cars have more features and functions and the price have stayed the same. TVs have become bigger every year and prices have dropped. Smart phones come out with new bells and whistles every year and prices have stayed the same or dropped.

Now try to imagine if all of the goods that you buy go up in price every year like housing. You continually get less for more money. After a few years, you will be very poor.

INTER-GENERATIONAL INJUSTICE

The main beneficiary of housing bubbles, which lasts many years, is the previous generation. The younger generation becomes poorer. It is a massive transfer of wealth from the young to the old.

Some people argue that the older generation will pass their wealth to the younger generation through inheritance anyways. They may be right about this. But why make the younger generation go through the stress of having 482% household debt to income ratio and negative equity? (read more)

Also, not every young couple is going to get much inheritance. What if they had parents that have the same philosophy as Warren Buffet, who is giving away most of his wealth to charity? What if the parents splurged the wealth on themselves? What if the young couple has lots of siblings? Then there won't be enough inheritance.

Even if the young couple gets the inheritance, they'll likely be waiting a couple of decades before the folks kick the bucket. During that time, the young couple is much poorer than the parents were, stressed out with high debts and payments, and enduring a lower standard of living.

Some people argue that the older generation are not going to cash in at the peak of the bubble because they still need a place to live. The ones who can sell at the peak are the speculators who bought multiple homes, and there are lots of those. The speculators who captured most of the capital gains from the bubble are the older ones who bought many years ago.

Therefore, the government should do everything it can to prevent and/or suppress bubbles. If a government does not do this, then it is extremely irresponsible and reckless. It is bad enough that the government does not do this, it is even worse and self-serving of politicians to create and fuel these bubbles, which is what they have done (read more).

THROW THE BUMS OUT

You should fire every politician who helped create a bubble. You can start by firing our self-serving politicians (and don't kid yourself, they're buying votes) U.S. Senator Chris Dodd, Senator Charles Schumer, Representative Barney Frank, Canadian MP Mike Flaherty, Canadian Prime Minister Steven Harper and Australian Prime Minister Julia Gillard.

Read more:

Housing, the most manipulated market in the world

Bubbles - Extreme Maker and Breaker of Wealth

Real Estate - Ponzi Scheme?

Bubbles - Extreme Maker and Breaker of Wealth

2011-11-06T15:14:00.002-05:00

There are many myths in society:

World is flat
Mermaids exist
House prices go up forever

Because people believed that house prices go up forever, real estate bubbles were fuelled in the U.S., Spain, Ireland, UK, France, Dubai and Japan. All of which have since collapsed.

Real estate bubbles in China, Canada and Australia have yet to collapse. Real estate is just one of many bubbles. Multiple bubbles have occurred in your lifetime. They have happened throughout history and will happen into the foreseeable future.

One of the first recorded bubbles was the Tulip bubble in the Netherlands. In 1635, 40 bulbs were sold for the equivalent of 1,028,000 Euros (source). In the past decade alone, there have been several bubbles:

Dot Com
Oil
Commodities
Housing
Dubai
Stocks such as Netflix, LinkedIn, Salesforce.com and Groupon

There is a common phenomenon with bubbles. When people are in a bubble, they usually deny it, do not recognize it or explain it as the result of non-bubble factors. Even the smartest people may not recognize it and fall prey. One of the most brilliant minds in history did exactly this: Sir Isaac Newton lost the equivalent of 3 million current day pounds, to the South Sea Company bubble in the 18th century (source).

Even though most of us have lived through multiple bubbles, we still fail to recognize the next bubble when we get into it. After being warned during the Dot Com bubble by a few investment professionals and after recognizing it as a bubble after the fact, we find other reasons to explain a subsequent bubble: the exploding price of oil. Jeff Rubin, CIBC’s Chief Economist, appeared on CNBC and BNN many times in 2008 to espouse $200 oil and justified it with:

Peak production
Growing demand from China and India
Etc.

Only a few gave "bubble" as a possible cause of the $147 per barrel price. After the collapse of this bubble, 60 Minutes explained how the biggest oil companies were Wall Street speculators, not Exxon or Chevron, who hoarded the oil to maximize profits from the bubble (see episode , read transcript).

The memory is so short that only 5 years after the Dot Com bubble collapsed, most Americans believed that house prices will always go up.

EXTREME LEVERAGE

Bubbles are so powerful that it can affect one's wealth more so than one's salary. Examples include John McAfee, the founder of McAfee anti-virus software, whose net-worth dropped from $100 million to $4 million, due to the collapse of the recent real estate bubble.

The bubble effect, which is already very powerful by itself, is multiplied many times by leverage in housing. When you can buy a home with 5% down, you have more leverage than what most companies dream of having. To explain how leverage works, let us say that you invest $10,000 in gold and it increases by $1,000. You made 10% return.

However, let us say you use your $10,000 as a 5% down payment to buy a $200,000 house instead. The house price increases by 10% to $220,000. You made $20,000 return, or 200% return, on your $10,000 investment. Of course, the reverse is just as extreme. When the house price drops, you can lose all or more than all of your equity.

Yale University economist Robert Shiller compiled historical home prices dating back to 1890. His chart below reflects how the housing bubble has caused Americans’ net-worth to explode and collapse, to the extent not possible from regular salary. Yet, few schools have a course on bubbles.

EXTREME MARKET MANIPULATION

Bubbles are usually created and collapsed by the same two emotions that drive the stock market, commodities markets or any market:

Greed
Fear

When prices go up, people see and hear about others making money. Their greed emotion kicks in. They want a piece of the action, so they jump onto the bandwagon. The higher the price goes, the more greed there is and the more people that want to jump on.

However, it is questionable if greed initiated the U.S. and Canadian housing bubbles. Read "Housing, the most manipulated market in the world" to understand how government socialist policies massively manipulated the housing market and fuelled the U.S. and Canadian housing bubbles.

Household income has grown at a very modest pace, if any at all. Therefore, the fuel for the U.S. and Canadian housing bubbles was not income growth. It was bigger and bigger mortgages and debts, that the government encouraged consumers to take on.

At one time, mortgages normally had 25 year amortization and 25% down payment. In the past decade or so, this was relaxed to 40 years and down payments was allowed to come down to 0%. If the current mortgage rates rise, which they eventually will, this will make mortgages even more difficult to pay off.

Relaxing mortgage rules enables more people to borrow and buy, which fuels the demand curve, which pushes prices higher. Is there a limit to this relaxation of mortgage rules? Can we continue extending amortizations past 40 years? Can we reduce down payments to negative %? Using simple math, we know that there is a limit. This source of bigger mortgages have been reversed in the U.S. and decelerated in Canada.

Housing is usually a person’s largest expenditure. It has a significant effect on the GDP. In addition to government’s borrowing and spending, the more the government can get people to borrow and spend on housing, the more the GDP grows. According to this August 27, 2006 New York Times article, "...real estate sector has accounted for 44 percent of jobs created since 2000 and employs more than one in 10 American workers..."

However, household debt as a percentage of income has more than doubled in the past 30 years (see chart below). This is also part of what billionaire investor George Soros’ calls the “super-bubble” (source). The significant incline in the past 15 years coincide with the American housing bubble. George Soros expected this credit bubble to collapse in the late 1990’s. To his surprise, it kept growing for another ten years. Therefore, bubbles can grow for many years, even decades.

Note from the above chart that Americans' household debt to income ratio peaked at approx. 124% in 2007-2008, coinciding with the peak of their housing bubble and fake economy. After the bubble burst, they have deleveraged down to approximately 105%.

Canadians' household debt to income ratio continued soaring to 150% in February 2011 (according to CBC). Hence:

Homes in Florida now cost $30 to $100 per square foot.
Homes in Canada now cost $200 to $700 per square foot.

Is this a case of "monkey see, monkey do"?

Most of the market manipulation through relaxation of mortgage rules in Canada has happened in the past decade or so. However, is this sustainable? The U.S. has shown that is not.

In free markets, price tends to find equilibrium, which is where supply and demand curves intersect. Now that the price has dropped, the U.S. government is fighting this equilibrium every way they can. But, it is impossible to manipulate and artificially inflate the demand forever, without getting somebody to pay for it. To do this, the government is getting tax-payers and the next generation to pay.

EXTREMELY SIMPLE MATH

If household income increases at the same rate as house prices, this is sustainable forever. However, in a housing bubble, the price goes up faster than household income. This can happen for several years, but the laws of simple math show that it is impossible for this to continue forever. Using simple numbers to make the point, let us say that a household currently spends 50% of income to service the debt on housing, and 50% on everything else such as food, clothing, etc. When house prices increase faster than income, the percentage of income spent on housing will increase to 60%, 70% and so on. Mathematically, it is impossible to surpass 100%. However, the threshold is far lower than 100% as people still need to eat and clothe.

When prices cause debt-servicing to surpass this threshold, there will be fewer purchasers. When this happens, prices may stop increasing. When this happens, the speculators start behaving like speculators on the stock market. The shrewd speculators start locking in profits by taking money off the table. When they sell, price starts to go down. When this happens, more speculators lock in profits. When they do this, price goes down more. When this happens, the fear emotion kicks in causing the masses to sell, driving the price down even more. Note that in most markets, when it falls, it usually falls twice as fast as it rises.

Eventually, there might be panic which causes prices to drop so much that home-owners become underwater (which means that the price is lower than the mortgage). According to this article, half of Americans are underwater. According to this article, 25% of American home-owners who can afford to pay, are walking away from their mortgages because they are underwater.

THE CANADIAN HOUSING BUBBLES

This brings us to the Canadian housing bubbles.

In 1989, people with many years of real estate investing experience, stated that real estate:

is the safest investment you can make
prices have never gone down in history
you have to get into real estate now, or else you'll never get in

Yet, house prices have dropped before and after 1989. In this decade, real estate agents and others are re-creating the “buy now or never buy” mentality, according to Garth Turner.

You might hear or read these reasons, especially from real estate agents or the CREA, why bubble prices will not come down:

immigration
foreign investors
it's under-priced here compared to other world-class cities
they aren't making any more land
this time, most buyers are not speculators

Each of the above points are debatable.

There was immigration in the U.S. and foreign investors in Dubai. Yet, their bubbles eventually collapsed.

According to MacLean's magazine, Canadian real estate is not under-priced compared to other world-class cities. Vancouver has the most expensive housing market in the world (source).

Japan has less land per person than most countries in the world. It has less than half the land of Ontario and approximately ten times more people. Yet, their real estate bubble burst in 1989 and has never gone back to the peak. (Chart below is from March 2008.) Therefore, land is not be a valid argument for Canada’s high prices.

According to Finance Minister Jim Flaherty, condominium speculators are highly active in Toronto and Vancouver (source).

One can argue that, in Canada, condos may have been bought on speculation, but very few houses were bought on speculation. However, this was also true in the U.S. Just as in the U.S., Canadian house buyers are stretched to the limit.

One can argue that, in Canada, most mortgages have fixed rates, not variable rates, and therefore most home-owners will be insulated from rising interest rates. However, new home-buyers are not insulated. Even if current home-owners do not sell, if there is a drop in buyers, prices will drop. If prices drop, this might trigger speculators to lock in profits and start the domino effect.

EXTREME DEBT

CTV reported: “The level of household debt in Canada is rising, and has become "a key source of vulnerability" for the country's economy, the Central Bank has warned.”

According to McLean’s magazine (source):

‘“As the rest of the world saves, Canadians are getting dangerously deep in debt.”
“…this is about a lot more than just people paying too much for homes. In the same way house prices have defied the moribund economy, Canadian families, already saddled with record levels of debt, have continued to pile on mortgage and consumer loans at a blistering pace. In the last 10 years the amount of consumer and mortgage debt hanging over our heads more than doubled to $1.4 trillion, with $100 billion of that taken on in the last year alone.”
“Even before the recession began, Canadians were up to our eyeballs in debt. Since then, we’ve slipped below the surface. Over the last two decades, mortgage debt in Canada has nearly quadrupled to almost $1 trillion.”
“…look at how much debt households are carrying relative to their personal disposable income. The results are shockingly American in scale…”
“Over the past two difficult years of the economy, the total residential mortgage debt load in Canada ballooned 18 per cent.”
“When a household’s debt-to-service ratio… breaks past the 40 per cent mark, it’s considered to be “financially vulnerable” to financial shock. What the [central] bank found … was that if rates rose to [3.2 to 4.5 per cent], 9.6 per cent of households would find themselves in that danger zone… 4.5 per cent would still leave mortgage rates low by historical standards.”
“Over the past two years, the [Credit Counselling Society of B.C.], which helps consumers resolve their debt woes, has seen more people coming in for help carrying more consumer debt—that is, non-mortgage debt—than ever before. “Five years ago it was common to see debt loads of $40,000, but this year we’ve seen people with $256,000,” says…a counsellor. $150,000 is very normal now.””
“In all of 2008, more than 115,000 Canadians were insolvent. By September of last year, we’d already blown past that number and when the final tally for 2009 is in, the number of Canadians who went broke could easily exceed 160,000. And that’s with interest rates at nearly zero.”

There is debate in the media about Canada's housing and debt bubble:

Globe and Mail, April 27, 2010: “Report warns of housing bubble threat”
Toronto Star, April 2, 2010 : “…debt-to-income ratio…hit a record high"
McLean’s, February 2, 2010 : “Awash in a sea of debt”

According to the Canadian government (source), the far majority of household debt is in mortgages:

The chief executives of the big six Canadian banks pushed government to tighten mortgage rules (source). Why did they, when they make a huge bulk of their profits from mortgages? Is it possible that they are concerned about a housing bubble? Why would a collapse of the housing bubble be bad for the banks? The same reason it was bad for American banks. In extreme cases, borrowers declare bankruptcy, default and walk away from their mortgages. Banks are left holding the bag trying to sell homes that are worth less than the mortgage.

If the Canadian banks are concerned about lending money to borrowers who might default, then why don't they simply be more discriminate in who they lend to? If they do this, they are concerned that they will lose those customers to a competitor for the long term. They want the government to tighten mortgage rules for every bank. This way, the bank does not lose market share to other banks.

We believe that Canada's housing bubble surpassed the peak of the U.S. housing bubble in 2010 when Canada's household debt to income ratio surpassed the peak of the U.S. ratio in 2010. As mentioned above, Canada's ratio has continued soaring to 150%, past the American peak of 124%. However, this is misleading. For young couples who have to pay bubble prices, this ratio is much higher. In the example below, it is 482%.

Example of 29 and 30 year old Canadian teachers

Gross Household Income: $136,000 (average Canadian household makes approx. $80,000)

Net (disposable) Household Income: $98,520 ($8,210 x 12)

Assets:
House: $426,000 (Bought in 2010. House prices are higher now.)
Cash: $1,300
TFSA: $300
RRSP: $1,800
Total: $429,400

Debts:
Mortgage: $410,380
Line of Credit: $64,130
Total: $474,510

Negative Net-worth: -$45,110

Household Debt to Disposable Income Ratio: 482%

Mortgage amortization is 35 years. If they have a $410,360 mortgage, that means that their down payment was 3.7 percent. This is Canada's version of the American subprime mortgage. This couple has 96.3% leverage. Many companies, with positive net worth and significant profits, try but cannot get leveraged anywhere near this. If house prices come down, this couple will be crushed into financial ruin.

As public sector workers, they get a pension at age 55, which the majority of Canadians do not. This means that the majority of Canadians are even worst off.

The worst part of this bubble is that it was created and fuelled by the government by stealing money from children and non-homeowners and throwing it at housing, as explained in "Housing, the most manipulated market in the world". If the bubble collapses, this stealing will go into overdrive, because CMHC will lose money due to mortgage defaults. This loss will be taken by all taxpayers and children. This is what happened in the U.S. with Fannie Mae and Freddie Mac.

This criminal, reckless, irresponsible mismanagement by the government is what makes people prosper in the short run, but makes the country poorer in the long run.

With 96.3% leverage, real estate is exorbitantly more volatile than the stock market. If your stock goes to zero, you lose 100% of your investment. If that couple's house goes to zero, that couple goes "underwater" and loses 2,727% of their investment. (You are right that houses are not going to go to zero. Neither do most stocks. However, if the house price goes down by 3.7%, the couple loses 100% of their investment. Also, house prices can go very low. Houses in Cleveland are now selling for $28,000.)

Yet, the government (through CMHC) will force taxpayers and children to insure risky mortgages for bubble priced homes. But they won't insure loans to buy stocks or Florida real estate selling for $40,000.

If you were an insurer, would you be willing to insure those teachers' mortgage? No insurance company would ever touch a business with that kind of balance sheet and income statement.

TIMING

We know that it is impossible for house prices to continue rising faster than household income forever. What is not certain is the exact time that price stops rising.

We know that there is a probability that speculators will lock in profits by selling, when they see prices flatten. What is not certain is when they will do this after prices flatten.

We know that the U.S. government wants to keep interest rates near zero. We do not know when interest rates will change, so home prices can continue rising. However, we know that there is a good probability that nominal interest rates will eventually rise, since it cannot go below zero. Also, what the government wants and what it gets are not necessarily the same thing. Because Canada does not want an expensive Canadian dollar vis-a-vis the U.S. dollar (to help Canadian exporters), the Canadian interest rates are low because the U.S. rates are low. (High interest rates pulls up the country's currency.) The U.S. has been on a spending and borrowing binge. To borrow, they have to auction a good portion of their T-bills and T-bonds to foreigners, such as Japan and China, the two largest holders of U.S. debt. If Japan and China feel gorged on U.S. debt and does not want to buy anymore, especially at such low interest rates, the U.S. may have to offer higher rates to attract buyers. When this happens, U.S. interest rates go up and then Canadian interest rates go up. We know that rising interest rates may cause home prices to drop.

If Canada goes into another recession, this may cause prices to drop. In the last recession, the continued rise in Canada's housing bubble helped support its fake economy. If the bubble does not hold in the next recession, this could exacerbate the recession, which could in turn push house prices down further.

Astute speculators know that there is limited upside potential in real estate and significant downside potential. They are monitoring real estate very closely and will try to time the market by cashing out when they think it has peaked.

It will be very interesting to see how the Canadian housing bubble plays out. Hopefully, millions of Canadians will not be driven to financial ruin as in the U.S. Since it takes many years for bubbles form, it is mainly the older generation that benefits. Even if the bubble does not collapse, it is a huge injustice as it is a massive transfer of wealth from the younger generation to the old, making most young home-buyers much poorer.

Read more:

Housing, the most manipulated market in the world

Real Estate - Ponzi Scheme?

Housing: After the Bubble Bursts

News Media's influence over Voters

2011-11-06T13:06:00.000-05:00

The News Media have, arguably, one of the most important tasks of democracy. It:

disseminates information to the voters. Without this information, voters would be in the dark and would not be able to make an informed vote.
is the gate-keeper to information. It can decide what information to give the public and what not to give.

If a voter is asked to vote on two candidates and the only information that the voter gets about these candidates is from the News Media, the News Media has an enormous responsibility to ensure that the voter gets accurate information. Without accurate and honest information, the democratic process breaks down.

This means that the News Media has enormous power and is able to influence, sway and manipulate voters and therefore, shape politics and policies.

The challenge is that every TV network, newspaper or magazine are controlled by humans and every human has their own political biases and beliefs. Sometimes, the bias is so obvious that it is blatant, such as Fox's conservative views. If you owned a TV network and you are pro-choice, you would tend to lean that way with your news reporting. Every media has their own hidden-agenda. That is a fact of life.

Noam Chomsky claims that the elite institutions, which includes the government and large corporations, are able to "manufacture consent ". If the institutions want their own specific policy, they can manufacture consent from the public for their policy, by controlling the information that is disseminated to the public. At first, this sounds like a far-fetched conspiracy theory. However, the Iraq war proved that this "manufacturing consent" works. According to CNN in 2004, 70% of Americans believed that Saddam Hussein and Iraq were involved in 9/11, which is completely un-true especially when Saddam Hussein hated Al Qaeda. Through ingenious spin, the elite American institutions were able to manufacture consent to attack Iraq by associating Iraq with 9/11 and terrorism.

Almost every major TV network were beating the drums to war in 2003, with the exception of CBC. They helped the government manufacture the consent to attack Iraq. This has led to huge ramifications for Iraqis, Americans and many other countries including Canada.
After it became obvious that the Iraq war was a blunder and it became impossible to hide this, CNN adopted a new slogan in 2007: "Keeping Them Honest", where they attempt to investigate politicians and try to show the viewers that CNN is "keeping them honest". This is a joke. Where were they in 2003? They were four years too late.

CBC is one of the only News networks that was critical of the Iraq war from the beginning. It is possible that CBC maintained integrity because it is not as dependent on income from corporate advertisers and therefore cannot be as easily bought.

This seemed to be true with the internet, which seemed to have provided more accurate information than the mass media with regards to the Iraq war and George Bush. TruthUncovered.com is a good example. Everything they said in their 2003 documentary proved to be true. Almost everything the major news networks said about Iraq war proved to be false.

The News Media are such large conglomerates and control so much power, that they can control politics. This has proven to be very dangerous to the democratic process and their control of voters' information can easily thwart democracy again. We believe that people need to be educated to the biases of the News Media.

Read more:

Democracy is a Myth

Europe's "Stealing from Children" goes into Overdrive

2011-10-14T17:49:00.000-04:00

As explained in the Fake Economy article, most Western countries around the world have been over-borrowing and over-spending since the mid-1960's, spending mostly on socialist programs, to create fake wealth and fuel fake economies. The U.S. and Canada have been doing this since the mid 1960's. Europe is not much different. The result is ever increasing debts.

However, the generation that borrowed and spent, will not be paying back the debt. It will be the next generation. Effectively, we are stealing money from children.

When the American fake economy came down in 2008-2009, they stole even more from children to support it. They did this through dozens of programs that drove up their deficit and debt. Some of these programs are:

Stimulus
TARP (Toxic Asset Repurchase Program)
Cash for Caulkers (for a list of housing programs, read Housing, the most manipulated market in the world)
Cash for Clunkers
Extension of Bush tax cuts
Etc.

With super-sized debts, Europeans are now hitting a limit on getting more suckers to lend money. Therefore, they have to slow down or reduce their borrowing and spending. This is causing their economies to come back down, closer to a level where they are living within their means and where they enjoy a standard of living that they earned and deserve. Even though the economies are coming down, their economies are still fake because they still have huge debts.

The slowing European economies are causing deficits to persist, which continue ballooning their debts. Now, the lenders are fearful that these governments will not repay the debt. Many of the lenders are banks.

In a normal functioning free-market capitalist society, when a business is incompetent and makes bad decisions, the business should suffer the consequences. If a business is a failure, it should declare bankruptcy and go away. The banks made bad decisions by lending money to high-risk borrowers. Incompetent banks should declare bankruptcy and go away.

Let us say that I have a relative who makes $30K/year and he borrowed a million dollars to buy a big house and a fancy car. If I lent more money to him and I lose that money, should you bail me out or should I suffer the consequences? If I was a banker, I would be considered incompetent. I should be fired. The proper solution is this: my relative needs to lower his fake wealth and fake standard of living by paying down his debt, working harder to make more income, selling his assets or all of the above.

However, we have not had normal functioning, free-market capitalism for many decades. Europe is especially socialistic, that believes in saving everybody. Europe does not want to see my relative lower his standard of living and suffer. The suffering is passed to others, mainly to their children.

The banks are a special case as well, since they are the hub of the economy and provide credit. Businesses need credit to operate and the economy cannot expand without credit. However, we've had a credit bubble since the early 1980's. Nevertheless, politicians don't want the credit to shrink because the fake economies will shrink. If the economies shrink, unemployment will go up and therefore, politicians may have no choice but to maintain the bubble credit levels.

What will the European politicians do? They will steal even more from children to support their economies. How? By setting up their EFSF (European Financial Stability Facility) and its replacement, the ESM (European Stability Mechanism). The EFSF will borrow €440 billion (by selling bonds) and then give that money to their incompetent banks and incompetent countries who borrowed and spent too much. In fact, there is a push to lever up the EFSF to a whopping €1.5 to €2 trillion.

Essentially, this is what is happening:

Countries borrowed too much from the banks and investors
Banks and countries need to be bailed out
Other countries, especially Germany and France who already have large debts, will borrow more to give to the incompetent countries and banks

Can we say "moral hazard" to the extreme? America had "moral hazard" by bailing out car companies, banks and insurance companies. Europe wants to bail out whole countries. Using the personal example from above, what Europe is doing is giving more money to my pathetic relative with the fake wealth who cannot live within his means, and to me, who is incompetent for lending more money to my relative.

So, Europe is trying to solve a debt crisis by going into bigger debt. What got the Europeans into trouble was that they borrowed too much. Now, they want to step up the borrowing another notch.

This may or may not work. Nobody knows yet. However, we do know that these are long term debts which means that their stealing money from children will go into overdrive.

The IMF is funded by the U.S., Canada, Australia and other countries. These countries are already stealing from their own children. There is push for IMF to contribute billions of dollars to the European bailout, which means that Europe can potentially steal from children globally, including your children.

If we had true democracy, where the children got to vote on these policies, will they let these policies pass? When the children become adults and their debt-ridden economy needs to be bailed out, where will they get the money?

Before we agree to give away any more good money after bad, somebody needs to present a clear analysis and explanation, showing the long term, quantified advantages and disadvantages and cost / savings to the different parties, of the following scenarios:

Stop giving money to Greece. Let them default or restructure.

Let Greece stay in the Euro Zone. What is the cost of this to the current generation and to which countries?
Let Greece exit the Euro Zone and go back to the Drachma. What is the cost of this to the current generation and to which countries?
Let the other European countries save their banks. What is the cost to the current generation and to which countries?
Let the banks fail. What is the cost to the current generation and to which countries?

Continue giving money to Greece and watch them continue to waste it. What is the cost of this to the future generations and to which countries?

Where is this analysis from the EU, Euro Zone, European Commission, ECB or IMF?

Read more:

Europe's Solution to Debt Crisis is to Steal

Stealing from Children

Socialism vs Capitalism

Fake Economy

Fake Wealth

Steve Jobs of Apple

2011-10-05T20:57:00.002-04:00

This world needs a million more Steve Jobs.

Entrepreneurs are the MAIN reason that most countries become wealthier. They innovate and create new products and services that advance the world. They are the creators of jobs. They create wealth, not only for themselves, but for their employees, shareholders, customers, government and therefore everybody else in the country.

Nobody at Apple is in an union, and they make incomes that are far higher than average, not because they demanded higher incomes, but because they earned it by providing value to others in society.

The reason our doctors make thirty times more than doctors in Cuba, is because our economy is so much wealthier, not because our doctors are thirty times smarter.

The reason our baseball players make 1,000 times more than baseball players in Cuba, is because our economy is so much wealthier, not because our baseball players are 1,000 times better.

The reason anybody, including barbers, accountants, bus drivers, lawyers and plumbers, makes the money he/she does, is due to the economy.

The reason welfare recipients get any money, is due to the economy.

One reason our economy is so wealthy is because of entrepreneurs.

In any business, regardless if it is the lemonade or computer business, the two most important functions are:

Making the product or service
Selling the product or service

Every other function, including HR, Legal, Finance, IT, etc., are support functions.

In any country, the most important function is wealth creation. Therefore, the most important component of a country is its:

Economy

Every other function, including all aspects of government, legal firms, accounting firms, etc., are support functions.

Within the economy, the most important component is the:

Entrepreneur

Every other component are in support functions.

Steve Jobs, a god amongst entrepreneurs, died at age 56. We lost a huge wealth creator today.

PIIGS needs to be changed to PIIGSUC

2011-10-04T11:55:00.002-04:00

Everybody is now familiar with the acronym PIIGS, which stands for Portugal, Ireland, Italy, Greece and Spain.

According to the IMF (source), the U.S. has a higher debt to GDP ratio than Spain and close to Ireland. Canada has a higher debt to GDP ratio than Spain.

Therefore, PIIGS needs to be changed to PIIGSUC, to include the U.S. and Canada.

These countries have been borrowing, running deficits and debts since the mid 1960's (essentially stealing money from children) to create and fuel fake economies and fake wealth. When the fuel (debt) runs out, the fake economies stop growing.

The U.S., Japan, Germany, UK, France, Italy and Canada and Germany are part of the G7, because they are supposedly the richest countries. This is a joke because most of them have huge debts, fake economies and fake wealth.

Most people think that we live in rich countries. We do not. The European and American economies are struggling, even though they are still fuelling their economies with borrowing, spending, deficits and debts. They are becoming poorer because they are hitting a limit on the growth rate of the borrowing. As an example, these countries are trying to slow the growth of the deficits or to reduce them, by implementing austerity. However, as long as there are deficits, that means that they are still increasing their debts.

We would be very poor, in fact likely go into a depression, if we had to pay back our any of our debts. Hence, we do not. We kick the can to the next generation and let them become even poorer.

Read more:

Fake Wealth

Fake Economy

Bubbles - Extreme Maker and Breaker of Wealth

Democracy: Cause of Debt Problems

U.S. Poverty Hits Record Levels

2011-09-16T12:18:00.001-04:00

According to the U.S. Census Bureau, a record number of Americans, 46.2 million, are living in poverty.

This article shows a chart of the states and their poverty level.

The U.S. (and most debt-ridden countries) created fake economies and fake wealth over the past several decades by borrowing, spending and going into debt. Most of this debt is a result of socialist programs, such as "Housing, the most manipulated market in the world", Social Security, Medicare, Medicaid, etc.

As the borrowing, spending and debts slow down or hit a limit, the economies and wealth stop growing or shrink.

This is what is happening. This is contributing to the rising levels of poverty. The economy is coming back down towards a level that is actually more real and where we spend what we earn and deserve.

However, we haven't reached that level yet because the economies and standard of living for most countries are still fake and supported by debts. Most Western countries still have huge levels of debt. If they have to pay back any of their debts, they will become poorer and poverty will continue to rise.

The only way to stop this is to continue doing what we've done for decades. Steal more money from children to fund today's economy.

What most people around the world do not realize is that most "rich" countries are not rich. They are actually poor and bankrupt if they had to repay their debts.

Crooked Banks

2011-09-06T19:09:00.001-04:00

According to Your Guide To The MASSIVE Lawsuits against 17 banks:

"...lawsuits name over 130 current and former bank executives for signing off on securities documents that FHFA contends were misleading, contained omissions, or even fraudulent"

Essentially, the banks stole $196 billion from American children.

However, this does not include the fraudulent securities sold to foreigners. Wall Street stole $32 billion from Canadians and $60 billion from Germans. (Read: U.S. defrauds billions from the world.)

Ex-Citigroup VP Admits Embezzling Over $22 Million

When you see mansions in the Hamptons, many of those are paid for with money stolen from you.

Anecdote of Socialists and Capitalists

2011-08-26T09:37:00.001-04:00

This anecdote helps explains the difference between socialists and capitalists:

There are a bunch of socialists standing at a street corner, and a bunch of capitalists standing at another corner. A Rolls Royce drives by.

The socialists say to each other: "Look at that $#@! with the Rolls Royce. Let's take that wealth away from the $#@! and share the wealth amongst the all of us."

The capitalists say to each other: "Look at that $#@! with the Rolls Royce. Let's figure out a way to make that kind of money for ourselves and buy our own Rolls Royce."

Jim Cramer

2011-08-24T13:44:00.003-04:00

The most dangerous untruths are truths slightly distorted.

- G. C. Lichtenberg

Ben Graham worked on Wall Street for 44 years, wrote the book “Intelligent Investor” and was Warren Buffet’s teacher, employer and mentor. Here is a commentary from the book:

“Overall, Graham was as tough and cynical an observer as Wall Street has ever seen. In this rare case, however, he was not nearly cynical enough. Wall Street may have higher ethical standards than some businesses (smuggling, prostitution, Congressional lobbying, and journalism come to mind) but the investment world nevertheless has enough liars, cheaters, and thieves to keep Satan's check-in clerks frantically busy for decades to come. The thousands of people who bought stocks in the late 1990s in the belief that Wall Street analysts were providing unbiased and valuable advice have learned, in a painful way, how right Graham is on this point.”

The Oscar winning documentary “Inside Job” explains how Wall Street and Washington are rife with fraud, corruption and criminals. It explains that even the supposed un-biased economic professors from Ivy League universities, including Larry Summers, cannot be trusted because Wall Street pays them to write reports. At his acceptance speech, the producer reminded us that three years after our worst financial meltdown “not a single financial executive has gone to jail.”

A journalist is supposed to be objective, un-biased and give you the straight goods. Ideally, they are supposed to work for you. However, this is not always the case, according to the documentary “The Corporation”. The reporters are biased or quite often distort their information.

For proper compliance, when a person comments about a stock, he should disclose as to whether he owns that stock or a related stock. As an example, if the commentator is giving bearish (or bullish) comments about GM, he should ideally disclose whether he owns Ford as well.

How about the journalists who work for Wall Street firms that report negatively about certain stocks?

Do they own any related stocks?
Are any of their family, friends, associates or hedge fund managers shorting the stock?
Has anybody pressured them to report with a certain bias?

IBM was a leader in corporate sales, especially in the 1970’s and 1980’s. In their sales training, IBM used to teach their sales reps on how to use FUD (Fear, Uncertainty or Doubt). By spreading FUD about competitors, IBM was able to get customers to be scared of buying from a competitor. It was an effective scare technique.

FUD is also quite effective for short sellers.

Jim Cramer, who is the co-founder, largest shareholder, editor and Chairman of TheStreet.com, can get “infuriated” at negative media bias. See this YouTube video of Jim Cramer. He says the negative articles “twist the facts in order to be negative”.

According to TheStreet.com:

“Since its inception in 1996, TheStreet has distinguished itself from other financial media companies with its journalistic excellence, unbiased approach…”

This is interesting because Jim Cramer has said that every commentator is biased and has an agenda.

CNBC had the motto: “In Cramer We Trust”. Can Jim Cramer, Chairman of TheStreet.com, be trusted? Not according to Jon Stewart of the Daily Show (Comedy Central) who hammered Jim Cramer and CNBC during their fight in 2009. You can watch some of the fight here, showing Jim Cramer’s track record.

The full interview of Jim Cramer is a must-see. Jon Stewart exposes Jim Cramer as a perpetuator of shenanigans and a stock manipulator (stock manipulation is illegal), by showing a video of Jim Cramer being interviewed with "TheStreet.com TV" logo. Here are some excerpts:

Cramer: A lot of times, when I was short at my hedge fund and I was positioned short, meaning I needed it down, I would create a level of activity beforehand that could drive the futures. It doesn’t take much money.

Cramer: You can’t create yourself an impression that a stock’s down. But you do it anyway ‘cause the SEC doesn’t understand it. That’s the only sense that I would say this is illegal. But a hedge fund that’s not up a lot really has to do a lot now to save itself.

Cramer: Yeah. Apple’s very important to spread the rumor that both Verizon and ATT have decided they don’t like the phone. It’s a very easy one to do because it’s also you want to spread the rumor that’s it not gonna be ready for MAC World. This is very easy ‘cause the people who write about Apple want that story, and you can claim that it’s credible because you spoke to someone at Apple, ‘cause Apple doesn’t –

Interviewer: They’re not gonna comment...
....

Cramer: It’s just fiction and fiction and fiction. I think it’s important for people to recognize that the way that the market really works is to have that nexus of hit the brokerage houses with a series of orders that can push it down and we get to the press and then get it on CNBC. That’s also very important.

As in this article, Jim Cramer explains how to create lies, spread false rumors/FUD in the media and manipulate markets:

[Jim Cramer] calls it "a fun game, and it's a lucrative game." He suggests all hedge fund managers do the same. "No one else in the world would ever admit that, but I could care. I am not going to say it on TV," he quips in the video.

He also calls Wall Street Journal reporters "bozos" and says behaving illegally is okay because the SEC doesn't understand it anyway.

Here are some gems:

-On manipulating the market: "A lot of times when I was short at my hedge fund, and I was positioned short, meaning I needed it down,I would create a level of activity before hand that could drive the futures,"

-On falsely creating the impression a stock is down (what he calls "fomenting"): "You can't foment. That's a violation... But you do it anyway because the SEC doesn't understand it." He adds, "When you have six days and your company may be in doubt because you are down, I think it is really important to foment."

-On the truth: "What's important when you are in that hedge fund mode is to not be doing anything that is remotely truthful, because the truth is so against your view - it is important to create a new truth to develop a fiction," Cramer advises. "You can't take any chances."

Here is the full transcript.

Jon Stewart laced into Jim Cramer. Stewart said he and Cramer are both snake-oil salesman, only "The Daily Show" is marketed as such. He also said:

“I can’t tell you how angry that makes me. Because what it tells me is that you all know. You all know what’s going on. You can draw a straight line from those shenanigans to the stuff that was being pulled at Bear and at AIG…

…You knew what the banks were doing and yet we’re touting it for months and months. The entire network was. Now to pretend that this was some sort of crazy, once in a lifetime tsunami that nobody could’ve seen coming, is disingenuous at best and criminal at worst.”

Why would anybody trust TheStreet.com where its co-founder, largest-shareholder, editor and Chairman admitted to and explained how to lie, spread rumors and manipulate stocks?

At these videos, Jim Cramer explains how the game works:

"...the bears have to shoot first in order to color the earnings and get you frightened into selling. If you're not frightened, you won't panick. When the quarter comes out, it's absolutely imperative that the bears lie. It's imperative that they plant stories in the media that will then send the stocks down regardless of how great the earnings are. It's a life or death struggle out there, and the truth is the first casualty. Don't believe me? Think I'm being too cynical? Can't believe the system could be so corrupt or stupid that the regulators aren't out to help you, that the SEC is not all over this? Now come on. I've been in this game for decades and trust me, when the bears are out to destroy a stock, for a very brief time, they can do it. This is how it's played. A quarter isn't immediately defined by the numbers. It's defined by whoever manages to convince the press and the street that it was good or bad, but knocking the stock down, by selling or buying and then planting stories. To heck with the numbers. This is what's called painting the tape in the business and the bears will paint the tape bright red, as in SELL! It's what they do...after they do this, after they push the stocks down, after the analysts come in with their number cuts and they react to the same thing. They see the stocks go down and they panic too so then they downgrade. That's the kind of game that we're in."

What if you are a hedge fund manager and you needed to spread rumors and lies to drive down prices? It would seem ideal if you controlled a media firm that can help you spread those rumors and lies.

This blog explains in further detail, Jim Cramer's shady past and how he makes money by using CNBC to help manipulate stocks and drive prices down with naked shorting:

"This is Cramer's big secret. He figured out early that the way to make money betting on stocks was to rig the game - control the news and you control a stock's value. Now he has his own TV show."

Here is another blog that explains how Jim Cramer manipulates stocks:

Maier worked for Cramer until 1998, then left and wrote a tell-all book about his years with Cramer: Trading with the Enemy: Seduction and Betrayal on Jim Cramer’s Wall Street.
...
Trading with the Enemy is replete with examples of how analysts release information to favored insiders before a formal report is released. Maier recounts a social evening with a Smith Barney analyst. The analyst tells Maier that the Smith Barney analyst is going to change a “hold” rating on a stock to a “buy,” then adds this:

[Smith Barney analyst:] “Listen, Sherlock, just remember one thing. If you’re going to buy it, buy it with us. We get a cut of every trade you do in the stocks we cover."

[Maier:] Thus there was a quantifiable reason that such information was ‘leaked’ to good clients like Cramer & Company. This senior analyst received a direct kickback from getting Cramer & Company to traffic in stocks his company covered. Joe helped me to make money, and I was expected to return the favor. By the time the stock was upgraded from a hold to a strong buy, Cramer & Company had bought fifty thousand shares. All the trades were placed with Smith Barney. (Trading With the Enemy, page 90.)
...
Note the consistency in this progression from Michael Steinhardt to Karen Backfish to Jim Cramer. Steinhardt had a taste for “The Edge,” that is, knowing what analysts were going to say before the public knew. Then for Karen Backfish and Jim Cramer the Edge became telling analysts what to say. Eventually Cramer’s “edge” became writing the news himself and having it appear in his own columns, or spoon-feeding it to compliant reporters who would regurgitate it on cue.

What about TheStreet.com? Do people make trades immediately before TheStreet.com releases articles? According to the above blog:

"A question the reader might ask at this point is, did these hedge fund managers (Cramer and Rocker) own TheStreet.com because they thought it would be a good investment? Or is there anything in our story thus far that would suggest a benefit a money manager might enjoy in not just knowing what analysts are going to say before they make it public (e.g., Steinhardt’s “Edge”), not just being able to count on CNBC’s Maria Bartiromo to regurgitate tips she is passed, or even, writing one’s own columns in SmartMoney (i.e., Cramer’s techniques in the 1990’s), but in becoming an actual publisher of financial news?"

This blog explains how journalists can fail you and describes the shady characters at TheStreet.com:

"...if you have seen a negative story about a public company in recent years, the odds are greater than even that it was written by a friend-of-Cramer.

...

Many of Cramer’s friends are former employees of TheStreet.com, a financial news website substantially owned by Cramer. They have included the editor and top columnists for The Wall Street Journal “Money & Investing” section, top business writers for The New York Times, reporters at Fortune magazine and BusinessWeek, the editor of The New York Post business page, the editor of MSN Money, and others. Herb, a CNBC commentator and a star columnist for MarketWatch.com, was among the founding editors of TheStreet.com – “Murderers Row,” they called themselves.

I have analyzed well over a thousand stories written by this clique of journalists. The vast majority of them were sourced from a small group of short-sellers who are also friends of Cramer. Other popular sources for this group of journalists include convicted felons, mobsters, dubious private investigators, crooked lawyers, hired stock bashers, and gun-toting goons – most of whom are tied to the Cramer constellation of short-sellers.

...

in February 2006, the Securities and Exchange Commission would like to know whether a financial research shop called Gradient Analytics conspired with short-selling hedge fund managers...to disseminate false information about public companies as part of a scheme to manipulate stock prices. The investigators believe that Jim Cramer and Herb are central to this conspiracy and have issued them both with subpoenas. TheStreet.com got a subpoena, too.

...

A guy named Jon Markman was for some time running a hedge fund out of Gradient’s back office. So-called “independent” research shops aren’t supposed to run hedge funds. If Markman was trading in advance of Gradient’s research and Herb’s stories, as the firm’s former employees claim he was, this is yet another jailable offense....Markman is one of Herb’s close friends. He was, along with Herb [Greenberg], a top editor of TheStreet.com."

Stock Market Manipulation

2011-08-24T11:24:00.002-04:00

A stock trader can make money in two ways:

Long (trader expects stock price to go up):

Buy a stock and sell it later at a higher price.

Short (trader expects stock price to go down):

Buy put options. Put options go up in value if the stock price goes down.
Borrow a stock, sell it, buy it back later at a cheaper price and then return the stock to the lender.

News can move the stock price up or down, depending on if the news is positive or negative.

Manipulation of stocks, which is illegal, happens when traders spread false rumours to move the stock price. A trader may be long a stock and spread false positive news, or may short a stock and spread false negative news.

In the mid-morning of March 16, 2011, news came out that the EU energy minister had claimed the Japanese nuclear crisis is out of control. This caused the stock market to plunge. Later, the EU energy minister’s spokesperson tried to clarify it by saying that this was not based on anything new or privileged information. It didn’t matter. The damage was done.

CNBC explains how this was likely stock manipulation. You can watch it here (it starts 28 minutes and 18 seconds into the recording).

Here’s the transcript:

Melissa Lee: “What started as a quiet day on the market, turned into a violent sell off around 11 AM eastern time on the back of the EU Energy Minister’s comments about the Japan nuclear situation, talking about catastrophes happening in a matter of hours. But Dr. J actually saw some unusual activity which raised some eyebrows…”

Jon Najarian: “Yeah, well, in a host of indices and in particular Nasdaq and S&P. The S&P, if you took a look at the March 12 25…puts. They were bought, about 5,000 of them were bought like bang, bang, bang, bang. And then 4 minutes before 11 o’clock, to Melissa’s point, it’s started hitting on Twitter that they re-purposed some of that information, about that EU Energy Minister. Then, next thing you know, both Dow Jones and Reuters put it out, as if it was new news again, which to me was not new news. This was 8 hours old. And the markets went into a free fall. We went down from about 45, 50 points negative in the Dow Jones industrials to over 200 and the fear was lit in everybody’s trading room and the next thing you saw was people basically just run for the hills. And those options that were purchased for about 90 cents, in the case of the S&P March 12 25 puts, went to $7.60. [Jon Najarian snaps his finger]”

Melissa Lee: “Did you see them being sold immediately afterwards?”

Jon Najarian: “No, I did see most of them being sold around $3, and then they re-loaded, basically when, strangely enough, the US energy people came out and started commenting about moving Americans outside of Tokyo and telling them to stay in their homes, if they stay there, and all that sort of thing. I mean, the fear mongering here, folks, is on a level I’ve not seen before. Some of it’s suspicious, like I say because, it’s been repurposed, this information. If you’re just smart and you make a great trade, kudos to you. If you’re somebody who then basically puts out information to create fear to the upside or downside, that seems pretty close to criminal.”

Melissa Lee: “JJ…based on your experience, does this also strike you as odd?”

JJ: “Yes, I think Jon’s 100% right…”

Manipulation, front-running, insider-trading and quid-pro-quo are rampant on Wall Street, however very few of these crooks are caught and punished.

Please note that for capitalism to work effectively, there needs to be sufficient rules and rule enforcement. However, enforcement from agencies such as SEC has been impotent. Even when Harry Markopolos notified the SEC three times about Bernie Madoff, the SEC did nothing.

Harry Markopolos - Financial Fraud

2011-08-24T10:54:00.002-04:00

Harry Markopolos detected fraud with Bernie Madoff. There is now a documentary based on this story called "Chasing Madoff".

Here is an interview of Markopolos on CNBC exposing other frauds.

Foreign exchange (forex) bank custody fraud: State Street and Bank of New York stole billions of dollars in pension funds around the country. They stole 0.3% of every transaction. It's a 50 state case and it's going to be many billions before it's all over.

Forex trades $4.7 trillion every day with no government regulation and everything is over the counter...perfect recipe for fraud.

Foreign exchange can cost 0.03% to the bank. When you're in Europe and you use your credit card, the bank charges you 3% for the currency exchange. The markup is 2.97%.

Twenty percent of Bank of New York's net income (not revenue) is from foreign exchange over-charges.

On their contract, they said it was free...all in cost, no charge, best execution, straight through processing, real-time execution. They've back dated the trades up to 20 hours a day. That's not real-time.

Therefore, when you use your credit card, check to see how much your bank charges you for foreign exchange.

Europe's Dropping Stock Market and Economy

2011-08-20T17:19:00.006-04:00

The biggest asset in a bank is the money that it lent out. In 2008, these assets were mortgages. When the housing bubble collapsed, American bank stocks collapsed, due the collapse of the value of their assets.

In 2011, European bank stocks are collapsing, so much so that the market capitalization of Apple Computers is now equal to the market capitalization of the top 32 European banks combined (source). Some of these bank stocks have dropped approximately 50% year to date. The banks' assets include their loans (via bonds) to European governments. The perceived value of these bonds are dropping because the market does not believe that these governments will be able to fully repay these loans.

These governments might have difficulty repaying these loans because their debts are too high. Their debts are too high because of the extra high deficits during the past recession and because of the multiple decades of deficits.

These European governments ran multiple decades of deficits because of their socialist programs and because democracy is a contributor to the debt problem (read more).

Due to the collapse of the European bank stocks, the European stock markets are collapsing. The collapse of the stock market is reducing the "wealth effect". When people feel less wealthy, they spend less and invest less in their businesses. This reduction of wealth and the high government debt levels are contributing to the probability of another recession.

Due to the drop of the European stock market, other stock markets around the world are dropping, reducing the "wealth effect" for people around the world. The European economy is the largest in the world, larger than the U.S. economy. Many of the largest American and Asian companies trade with Europe. Essentially, the economies around the world are highly integrated. Due to the slowing European economy, the other economies around the world will slow as well.

If and when European banks go bankrupt, some people may think that capitalism failed. However, the root cause is socialism, which caused multiple decades of deficits (read more). Some people may argue that Germany has socialism and it works. Like most other Western countries, Germany also has fake wealth with their debt to GDP ratio at 74-78% (source) and are also stealing from children.

China: Communist, Dictatorship, Capitalist or Democratic?

2011-08-19T12:52:00.002-04:00

There are still many people, outside of China, who think China is a communist, dictatorship country.

China is communist by name only. It is not communist and it does not have a dictatorship.

Many people tend to confuse political with economic systems. Communism, like socialism and capitalism, is mainly an economic system. Democracy, dictatorship, totalitarianism and authoritarianism are political systems.

You can mix economic systems with different political systems. As an example, a country can have communism with democracy, or capitalism with dictatorship or socialism with authoritarianism.

China was capitalistic for most of its approximately 4,000 year history. It veered off into communism for a short while in 1949, when their Communist Party of China won their civil war. They have not changed their party name, but they changed their economic system since then. They started introducing capitalism in 1979 (source). Since then, China phased in more and more capitalist systems and is now more capitalistic than the West in many ways:

Lower taxes

income and sales taxes

Less socialist programs with very little or no subsidies for:

elementary, high schools, universities
healthcare
unemployment insurance
welfare
manipulation of the housing market (Washington had a policy to enable every American to realize the American dream of homeownership)

Since China stated "to get rich is glorious", the number of entrepreneurs exploded. Entrepreneurs exist mainly in capitalist societies, less so in socialist societies and essentially none in communist societies. Entrepreneurs start businesses and are the main, or only creators of wealth for any society.

China had a totalitarian political system under Chairman Mao Zedong. However, they now have an authoritarian political system under their one party rule with democracy at the local levels. Many outsiders are right to be critical of a country with only one political party that controls the media and limits political freedom. The positive side is that their political party is the largest in the world, with 80 million members. Also, it holds elections every 5 years, where the party members vote in a new President (source) to serve a single 5 year term. Therefore, China's leaders can change more often than leaders in the West where Presidents or Prime Ministers can serve multiple terms.

In countries with dictators, there are no elections and political parties are unlikely to exist. Dictators stay in power indefinitely.

Furthermore, China's democracy is growing as they are growing the number of levels of elections (source).

Getting the Right Leader

2011-08-16T11:51:00.010-04:00

This article explains how the most important issue to voters is money. This article explains how the most important job in the country is the manager of the economy. The only creators of wealth in any country in the world are businesses, especially new, innovative businesses. Therefore, the biggest creators of wealth are entrepreneurs.

This Lawyers article explains how we usually get the wrong leaders who do not have enough focus or skills on:

creating and growing businesses, or
quantitative matters, such as fiscal policy.

It also explains that we need CEOs/Entrepreneurs to be leaders of the country. Ideally, CEOs who were Entrepreneurs and has studied economics or worked as an economist as well, would be the best leaders.

We will explain here one way to get these types of leaders.

As mentioned in the Lawyers article, CEOs make far more money than the leader of the country. Hence, the first change that needs to be made is to increase the compensation of the leader substantially to attract CEOs.

Secondly, the leader's compensation package should be structured similarly to the compensation structure of CEOs. This would include a nominal base salary plus performance bonuses. The base salary should be close to what the current base salary is for the top CEOs. The performance bonuses, based on achieving targets, should be substantially more than the base salary.

Most governments run deficits during recessions and still run deficits when the economy is expanding. This is the cause of our huge debts and is unsustainable. This Fake Economy article explains how sustainable government budgets should work. It should run surpluses when the economy is expanding and if need be, run deficits during recessions. Therefore, the leader's compensation should be deducted if the leader runs a deficit during economic expansion. In addition, there should be a performance bonus tied to the percentage increase of budget surplus during economic expansion. The more surplus our government has during economic expansion, the more it can do during recessions. Therefore, we want to motivate the leader to build as much surplus as possible during economic expansion.

Since the most important issue to voters is money and the economy is what brings money to voters, the leader's performance bonus should be tied to the change in the GDP. However, any costs to the environment eventually reduces the GDP. Therefore, the performance bonus should be tied to the change of the well being of the country, where the well being is calculated by taking GDP and subtracting any cost to the environment. (This well being may be difficult to calculate at this time, in which case we would default to the GDP.) If the well being expands, the performance bonus is increased. If the well being contracts, the performance bonus is decreased.

Every Sales Rep or VP of Sales has targets, such as 5% increase in sales and 4% increase in profits. Similarly, the leader should have targets, such as:

Well being (or GDP) growth of 3%
Budget Surplus of 2% during economic expansion
Budget Deficit of 2% during recessions

A non-partisan group consisting of staff from the economic and human resources functions should set these targets, based on previous statistics.

The target income for the leader will be based on the leader accomplishing all of the targets. The target income should be higher than what the top CEOs currently make. This way, the likely or expected income for the leader will be comparable to what the top CEOs make.

With this system implemented, we can easily gauge the performance of our leaders. Voters will easily be able to see how well the leader has done to determine if the voter should re-elect him/her or replace him/her.

Then, as explained in the Democracy: Cause of Debt Problems article, we should do this:

"...the first problem we have is that we urge everybody to vote when many do not care about politics, do not know the difference between deficit and debt, do not know that we will make our country poorer in the long run or do not know that we are stealing from children. We do not allow people to drive a car unless they take lessons and pass tests. We do not allow people to sell stocks unless they take lessons and pass tests. We may not be able to be so draconian as to force voters to take tests before they are allowed to vote, but we should urge voters to get a minimum level of understanding of our finances, fiscal situation, economics and how we are stealing from children, before we urge them to vote. This should be the first and minimal step that we take to fix the problem with democracy."

Socialism versus Capitalism

2011-08-13T22:34:00.031-04:00

There has been a lot of bashing of Capitalism after the collapse in 2008. Many people blame Capitalism for our current economic problems.

Some notable critics include Nouriel Roubini in this article, where he states:

“Karl Marx got it right, at some point capitalism can destroy itself...We thought markets worked. They’re not working.”

Other critics include Michael Moore when he produced the movie "Capitalism: A Love Story". He blames Capitalism for the cause of the financial collapse and recession.

Their criticisms are debatable.

Michael Moore

Michael Moore's film, "Fahrenheit 9/11" was spot on and excellent. "Capitalism: A Love Story" was an excellent movie as well. It was very entertaining and thought provoking. It makes the audience laugh, cry, angry and frustrated.

Moore advocated Socialism over Capitalism.

However, as his movie points out, the problems are corruption and white collar crime, not Capitalism. Moore's film censured:

corruption
white collar crime
injustice
bailout of banks
control of government by corporations and ex-Wall Street executives
monopolies (he quoted Roosevelt and Adam Smith censuring monopolies)

Yes, 1, 2 and 3 are rampant. However, these happen in Socialist and Communist societies as well. Capitalism does not advocate any of these. In fact, Capitalism cannot work if these are rampant.

4, 5 and 6 are more related to Socialism, not Capitalism. Moore's film is actually critical of Socialism, not Capitalism.

Socialist governments believe in intervening and helping businesses survive, such as bail outs. Capitalism does not believe in bail outs. It believes that if the business is incompetent, it should die. The more involvement from the government, the more socialist that country is, until you have the extreme which is communism.

Therefore, the more intertwining of government with corporations, the more socialist it is. True Capitalism and Free Markets believe in separation of businesses from government. When Wall Street manipulates Washington with bribery, this might be corruption, but it is not Capitalism. Corruption exists in every country. The leaders of many socialist countries are corrupt and far more wealthy than their subjects. Look at Kim Jong Il, Lenin, Mao and Castro.

Moore's film was right to censure monopolies. Monopolies eliminate competition, which is fundamental to capitalism. However, socialist countries, especially extremely socialist countries which are communist countries, have many more monopolies than capitalist countries. Also, Moore supports unions. The purpose of unions is to form virtual monopolies (read more).

If competition is being eliminated, then this means that Wall Street is becoming less capitalist and more socialist. This is a problem.

Moore advocated Democracy over Capitalism. This is not an either/or. If you have more Capitalism, it does not mean that you have less Democracy. Democracy is a Political system, not an Economic system. Capitalism is an Economic system, not a Political system. You can have Democracy with Capitalist, Socialist or Communist economic systems. Examples include the U.S., Canada and Europe, which have become socialistic.

You can have a Dictatorship or Authoritarian political system with Capitalist, Socialist or Communist economic systems. China used to have an Authoritarian political system with Communist economic system. It now has an Authoritarian political system with an extreme Capitalistic economic system. Many people still think that China is communistic. It is not. It is more Capitalistic than the U.S. and thanks to Capitalism, the Chinese middle class has become far wealthier (read more).

Furthermore, Democracy is a cause of our debt problems (read more).

Moore advocates socialism and cites Europe (and Japan) as role models. These countries have fake wealth. Socialism usually involves increased spending, borrowing, deficits, debts and size of government. Japan's debt (as a % of GDP) is the highest in the world. Many European countries have higher debts than the U.S. They have massive, unsustainable debt levels. They steal from their children and grandchildren through government debts to fund their standard of living. The U.S. debt is out of control and still growing. The U.S. has become poorer and will become even poorer because it has become more Socialistic and less Capitalistic. Unfortunately, the U.S. will become even poorer because of corruption and crime.

Capitalism is like a Hockey game. Both systems motivate the players to work hard and be innovative because those who are the best will be handsomely rewarded with money and recognition. With sufficient rules and rule enforcement, which both need and advocate, both will produce amazing results. However, without rules and rule enforcement, the players will not hesitate to be violent and injure each other to win.

Wall Street has insufficient rules and rule enforcement. They are tripping and punching their opponents to get ahead and the rules have either been removed or not enforced. We think Wall Street is rife with crime, fraud and corruption (read more: Wall Street).

Moore criticized Wall Street for lobbying and spending money on Washington to ease regulations. Moore was right to criticize this. As mentioned, this is corruption, not Capitalism. An analogy is if a hockey player gives money to the referee to be easy with the rules and penalties. Capitalism does not advocate this. When this happens, Capitalism breaks down and the country becomes poorer.

Corporatism

Critics complain that companies have become too big and powerful. Hence, they control the politicians. This is a valid criticism. In fact, we agree that this is an issue (read more about lobbyists in Democracy is a Myth). However, this is not advocated by true Capitalism. This is corruption and the politics need to be changed.

Contrary to popular belief, capitalism does not necessarily advocate or equate to "big business". When companies become too big, they reduce competition. If they use their money to influence politicians, they might be able to thwart competition even more. As an example, if they become so big that they end up with an oligopoly, there is very little competition. Let us take the hypothetical extreme where a company becomes so big that it is the only company in its industry. This means that the company has become a monopoly, with no competitors.

When companies approach this stage, we have less Capitalism, not more. Competition is fundamental to capitalism. A monopoly is the anti-thesis to Capitalism. If companies are too big, we need to split them up like the way the government split up AT&T a few decades ago.

Greedy Capitalists

Critics complain that capitalists are greedy. They are correct. Capitalists are greedy. However, do not be disillusioned into thinking that the majority of the population are not greedy. The most important issue to voters is money. Due to voters' greed, voters have stolen trillions from children, far more than any Wall Street crook can hope to steal. Everybody wants more money. The main difference between the capitalists and the socialists is that the capitalists found a way to make lots of it. If they have too much and the majority have too little, then it is the government's fault. It is the government's job to distribute wealth, not the capitalist's.

If rich people are unfairly lobbying or manipulating politicians to keep income rates unfairly low, then this is a problem of excessive corruption and the political system needs to be changed, not the economic system.

Economy

Here is an executive summary of what happened to the U.S. economy:

Cause of Great Recession: Collapse of Banks
Cause of Bank Collapse: Collapse of Housing Bubble
Cause of Housing Bubble: Massive Socialist Manipulation

The main cause of the Great Recession is the collapse of the housing bubble, fake economy and banks. The main cause of the bankruptcies and meltdown of the banks is the declining value of their assets (mortgages) and defaults on those mortgages. Their assets plunged in value when house prices collapsed and homeowners stopped paying their mortgages. House prices collapsed when the housing bubble collapsed. The causes of the housing bubble were:

According to this article, the Community Reinvestment Act (CRA), a socialist policy, created the meltdown. The CRA required banks to extend loans to high-risk, low-income borrowers. These borrowers bought homes that they couldn't afford and therefore they eventually defaulted. There is debate about whether the CRA contributed to the meltdown. However, many of those who refute the CRA as a cause, are employees of the government. (Read more)
Interest rates kept too low by the Federal Reserve in the early 2000's. In fact, real interest rates were negative (interest rate was lower than inflation).
Washington's socialist policy, since two decades ago, to help every American realize the American Dream of home ownership. From this policy, Washington created Fannie Mae and Freddie Mac and gave them $1 trillion to give out as mortgages, especially to low-income, higher-risk borrowers. This enabled crooked Wall Street and Mortgage Brokers to take advantage of the situation by creating CDOs (Collateralized Debt Obligations). On top of that, Washington implemented many programs to get Americans to buy homes. Read "Housing, the Most Manipulated Market in the World". The housing market is so manipulated by the government that one can argue that it is similar to Communist Russia's "central planning" of the economy. Nobody can argue that housing was not a huge socialist program.

The corruption and fraud on Wall Street and at multiple levels of American society, exacerbated the housing bubble. (Read: How U.S. defrauded billions from the world)

The fake economy was created by excessive household debts, spurred on by low interest rates and government manipulation. Now that households are de-leveraging by reducing their debts, the economy is shrinking. Since we still have huge debts, the economy is still fake and we are still not at a "real", sustainable level, where we enjoy what we earn and deserve (living within our means).

Therefore, the root cause of the Great Recession is socialism, not free-market capitalism.

Debt Crisis

Furthermore, due to the high public and private debt levels, the economy will continue to be anemic or even go into another recession. As explained in this USA Inc. report, the main causes of the U.S. debt problem are the entitlement programs, which include Social Security (old age pension), Medicare (free healthcare for the elderly) and Medicaid (free healthcare for the poor). They account for 57% of total federal government expenses, up from 25% 40 years ago and are growing the fastest. These are socialist programs. Similarly, the cause of the high debts in other Western countries are due to socialist programs as well. For Canada and most European countries, the percentage of the federal budget spent on socialist programs is higher than 57%.

The amount that the U.S. federal government spends, averaged 3% of GDP from 1790 until 1930. Since 1930 until 2010, this has ballooned to 24% of GDP. The government does not create wealth. It takes wealth from people who create it and distributes it to others. Therefore, the larger the government, the less people there are creating wealth. In the U.S., only three out of four people are creating wealth. This is socialism. The extreme is communism where the government controls nearly 100% of the GDP.

Every country in history that has tried socialism, has succeeded in bringing prosperity to a portion of their citizens in the short run. Without fail, every one of these countries have become poorer in the long run. This track record is unbroken in earth's history.

Extreme Socialism

Communism, which is an extreme form of socialism, drove Russia and China into poverty. China was so poor in the 1950's that millions of Chinese starved to death.

Because of capitalism, China has increased their wealth many, many folds. People talk about their poor, rural peasants. Yes, they are poor compared to the millionaires created every hour in China. (Millionaires were unheard of a few decades ago.) However, because of capitalism, these peasants are now many, many times richer than they were 50 years ago. Nobody is starving. They have ample, cheap food to eat. They are now eating red meat. They are now buying cell phones and decent clothes and eventually will buy computers. Therefore, you can say that the peasants are rich, relative to the Chinese population under extreme socialism.

Economic System

There are thousands of different types of systems in this world. Each system shapes and motivates behaviour in different ways. If you want your sales rep to sell more, you increase his/her commission. If you do not want people to park on the street, you hand out parking tickets. The capitalist system motivates people to take risks and start businesses, by rewarding them with riches if they succeed. The socialist system retards that motivation. The main creators of wealth for any country in the world, are entrepreneurs.

Entrepreneurs create businesses and jobs. They create wealth not only for themselves, but also for their customers, employees, shareholders, governments and therefore essentially for every other person in society. Without computer entrepreneurs, such as Steve Jobs and Bill Gates, you would not be reading this article on your computer. Without phone entrepreneurs, you would not be able to listen to music or chat with your friends from your classroom or office. Without car entrepreneurs as Henry Ford, you would never enjoy the ride of a car. Without clothing entrepreneurs, you would not be wearing the clothes that you are wearing. Without restaurant entrepreneurs, you would not have enjoyed the hundreds of different cuisines. Without entrepreneurs, you would not have most of the things that you have.

Yes, most of those entrepreneurs are rich, very rich. They are the richest people in the world. But without entrepreneurs, your economy would not be wealthy. If your economy was not wealthy, you would not be wealthy, no matter what you do. The reason our doctors make thirty times more than doctors in Cuba, is because our economy is so much wealthier, not because our doctors are thirty times smarter. The reason our baseball players make 1,000 times more than baseball players in Cuba, is because our economy is so much wealthier, not because our baseball players are 1,000 times better. The reason anybody, including barbers, accountants, bus drivers, lawyers and plumbers, makes the money he/she does, is due to the economy. The reason welfare recipients get any money, is due to the economy.

Our economy is wealthy because of entrepreneurs.

A capitalist system encourages people to become entrepreneurs. A socialist system reduces that encouragement. A country cannot become wealthy and stay wealthy if there are no entrepreneurs.

Instead of spending more money to foster and nourish entrepreneurs, we spend the far majority of our money on socialist programs. In fact, we spend so much more than we can afford that we have huge, unsustainable debts.

The longer we stay socialistic, the poorer we will become. This is guaranteed. You just have to look around the world and see what other countries' experiences have been with socialism versus capitalism. However, we never seem to learn from history.

Every country that has become more corrupt, has become poorer in the long run. This track record is also unbroken in earth's history.

Every country that has adopted Capitalism, has become wealthier. This track record is also unbroken in earth's history.

Here is an excellent explanation of Socialism that has been circulating through e-mails (author unknown):

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on Obama's plan". All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A...(substituting grades for dollars - something closer to home and more readily understood by all)

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.

As the tests proceeded the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.

Could not be any simpler than that.

These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:

You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
What one person receives without working for, another person must work for without receiving.
The government cannot give to anybody anything that the government does not first take from somebody else.
You cannot multiply wealth by dividing it!
When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

In a controlled environment, where all other factors are removed, a socialist country will continue to become poorer. What governments around the world have been doing, to counter this, is to steal from children to create fake economies and fake wealth. This can maintain a fake level of prosperity for a number of years. Eventually, countries hit thresholds on how much they can steal from children and then they become poorer.

Read more:

Capitalism

Steve Jobs

Democracy: Cause of Debt Problems

2011-08-13T16:43:00.026-04:00

According to this report, USA Inc., America's debt and future obligations total $47 trillion, or $395,000 per household.

Our debt problems did not happen overnight. They started long before the 2008-2009 recession. Governments in most democratic countries around the world have been running deficits and debts for decades to fuel fake economies and fake wealth. According to the above report, the U.S. has been running deficits for every year since 1965 with the exception of five years.

Other nations are not much different. (Europe's debt crisis is decades in the making. Canadians tend to feel that they are in a much better position. However according to that report, the U.S. has a gross debt of 83% of GDP and Canada has a gross debt of 82% of GDP.)

Most people claim that it is the politicians' fault. It is not.

Why do politicians persistently run deficits?

The simple answer: If they don't, voters will fire them and replace them with politicians who will.

It's not that the voters want deficits (most voters do not know the difference between deficit and debt anyways). Voters simply want money, as explained here.

Politicians know this. Therefore, they are pressured to spend and to keep taxes low. Spending too much and taxing too little, causes deficits. Politicians are humans like voters, which means they are motivated to preserve their income or jobs. Hence, they run budget deficits, year in and year out, to keep their jobs. Ultimately, voters control what politicians do and get what they want.

Therefore, politicians are behaving as expected, given the "rules of the game".

So, one can argue that it is the voters' fault for these persistent deficits.

Not necessarily. Every human has a couple of common traits. Every human wants to:

Maximize income or wealth
Minimize expenses

Therefore, voters want politicians to:

provide many socialist programs:

free healthcare
pension
subsidized education
welfare
unemployment insurance
etc., etc., etc.

reduce taxes

Therefore, voters are behaving as expected, given the "rules of the game".

However, these voter demands cause deficits.

According to the above "USA Inc." report, 80% of Americans are concerned about rising deficit and debt, but 60-80% of them are concerned about cutbacks. In other words, voters are concerned about the debt problem but do not want to help pay to solve the problem. Hence, the deficits persist.

So, what are the "rules of the game"? It's democracy. It's the system. There are thousands of different types of systems in this world. Each system shapes and motivates behaviour in different ways. If you want your sales rep to sell more, you increase his/her commission. If you do not want people to park on the street, you hand out parking tickets. The capitalist system motivates people to take risks and start businesses. The communist system eliminates that motivation. The democratic system enables voters to maximize their immediate well-being at the expense of the future. Most people in the democratic system are behaving as expected.

As explained in problem with democracy, we still think democracy is the best system in the world. This is because it is the most effective in minimizing or replacing corrupt officials in government.

However, the first problem we have is that we urge everybody to vote when many do not care about politics and do not know:

the difference between deficit and debt,
how much deficit and debt we have,
the difference between fiscal and monetary policy,
how we are making our country poorer in the long run, or
that we are stealing from children.

We do not allow people to drive a car unless they take lessons, pass tests and get licensed. We do not allow people to sell stocks unless they take lessons, pass tests and get licensed. We do not allow people to prescribe medicine, give legal advice or do a lot of things unless they take lessons, pass tests and get licensed. We do not allow teenagers to drink. We make senior citizens take driving tests to confirm that they can keep their license. Yet, we allow any citizen over 18 to vote. We may not be able to be so draconian as to force voters to take tests before they are allowed to vote, but we should urge voters to get a minimum level of understanding of our finances, fiscal situation, economics and how we are stealing from children, before we urge them to vote. This should be the first and minimal step that we take to fix the problem with democracy. Read more about the problem with democracy.

Read more:

Housing, the most manipulated market in the world

Stealing from Children

Fake Economy

Fake Wealth

Socialism versus Capitalism

Democracy is a Myth

2011-08-13T14:32:00.007-04:00

Democracy is a myth for the following reasons:

Stealing from Children

As explained here, we have been borrowing for decades and racking up huge debts. These debts will be passed onto the next generation. Euphemistically, this is referred to as "inter-generational transfer".

However, none of the people from the next generation got to vote on these policies. They never asked us to borrow and spend like crazy. They never agreed to pay the huge debt we are passing on to them.

In fact, some of these people that we are passing our massive debts to, are not even born yet. In truth, we are stealing from children. Because the next generation never got to vote on this massive stealing of wealth, we do not have democracy.

Lobbyists

Lobbyists have far too much power over government. These lobbyists represent organizations with sufficient resources to carry out this lobbying. Unorganized groups or the "silent majority" do not have representatives, do not lobby the government and therefore, do not have the same influence over policies.

Manufacturing Consent

Noam Chomsky wrote "Manufacturing Consent" which was made into a documentary. In short, he claims that the media can shape and manipulate public opinion. Therefore, those who control the media can control public opinion and manufacture consent.

Here are excerpts and radio interviews of Noam Chomsky about this.

A recent example of this, is the Iraq war. Essentially, Washington was able to manufacture consent to invade Iraq, by brainwashing 70% of Americans into believing that Saddam Hussein was involved in 9/11 (poll). The way you can do this is through spin. The way spin works is by mixing true statements of different things, which in turn can make the listener believe something untrue. Here is an example:

Saddam Hussein is an evil man. The 9/11 terrorists are evil men. Saddam Hussein horrifically killed thousands of people. Thousands of people were killed by terrorists in horrific ways on 9/11. We cannot let terrorist kill any more people. Somebody must stop Saddam Hussein's killing spree.

Any of the above sentences are or can be true. However, if you say the above in different combinations and multiple times, you can make people believe that Saddam Hussein is a terrorist involved in 9/11.

Here are some non-mainstream documentaries that explain the multitude of lies leading up to the Iraq war.

The Founding Fathers of the United States wrote into the constitution that freedom of the press shall be protected. They stated that the purpose of the press is to investigate, criticize and censure the government, to keep it in check and ethical. The purpose of the press is to serve the governed, not the governors.

During the Iraq War, the media, especially CNN and Fox, did not carry out its purpose as advocated by the Founding Fathers. The media simply beat the war drums, did not investigate and acted as a broadcaster for the government. The reason the media failed is because the media competes to the get the latest "scoop". To do this, they need access to the highest ranking officials. For fear of losing this access, they do not criticize their sources. This is demonstrated by Meryl Streep and Tom Cruise in the movie "Lions for Lambs":

"...in Washington, D.C., a charismatic Republican presidential hopeful, Senator Jasper Irving (Cruise), has invited liberal TV journalist Janine Roth (Streep) to his office to announce a new war strategy in Afghanistan...The senator hopes that Roth's positive coverage will help convince the public that the plan is sound.

Roth has her doubts and fears she is being asked to become an instrument of government propaganda. Near the end of the film, she informs her commercially-minded boss of her plans to call out the senator's new strategy for what she feels is a ploy, but is shot down. Ultimately, Irving's version of the story is run without the critical interaction."

(Roth's boss was more interested in beating the other news channels in getting the latest scoop and did not want to risk losing access to Irving.)

A couple of years after the Iraq invasion, CNN tried to repair its image by using a new mantra: "Keeping Them Honest".

Manufacturing Consent documentary:

Read more:

News Media's influence over Voters

Housing, the most manipulated market in the world

2011-04-08T21:49:00.016-04:00

Here is an executive summary of what happened to the U.S. economy:

Cause of Great Recession: Collapse of Banks
Cause of Bank Collapse: Collapse of Housing Bubble
Cause of Housing Bubble: Massive Socialist Government Manipulation

Socialist Manipulation

Free-market capitalism is a myth, as shown by housing, which is the most manipulated market in the world.

One can argue that the US housing bubble started with the government's socialist policy of enabling every American to realize the American dream of home ownership. According to this article:

"For nearly a century it has been the policy of the U.S. government to increase American homeownership. Its efforts include (but aren't limited to) bouts of easy money from the Fed, the mortgage-interest deduction, the exclusion of capital gains on primary residence sales, direct and indirect subsidies from the Department of Housing and Urban Development, and artificial liquidity pumped into the mortgage market via government sponsored entities Fannie and Freddie."

Many policies and programs were put in place to manipulate the market, such as the 1977 Community Reinvestment Act, which required banks to extend loans to high-risk, low-income borrowers. These borrowers bought homes that they couldn't afford and therefore they eventually defaulted.

The manipulation of the housing market has not only created bubbles, but it has also created huge injustices.

The US government stole billions or trillions from non-homeowners, children (read "stealing from children") and taxpayers to fuel a housing bubble through vehicles such as:

Fannie Mae and Freddie Mac purchased and guaranteed $5 trillion of mortgages (half of all U.S. mortgages) which transferred the risk from banks to them (source). Even the riskiest mortgages were guaranteed. Consequently, the bailout for Fanne and Freddie were the most expensive (source), so much so, that the bailouts of Citigroup and Bank of America look like chump change.
$3.9 billion in CDBG grants to help homeowners in poor neighborhoods.
Treasury Department bought shares of Fannie and Freddie's stock to support stock price levels and allow the two to continue to raise capital on the private market (in order for them to buy and guarantee more mortgages).
Low interest rates fuel demand for housing. Fed kept interest rates so low that they had negative real interest rates in 2002-2005 (source) and again in 2008-present.
Fed bought $1.25 trillion of mortgage backed securities, to enable more lending to home-buyers and to keep mortgage rates low (source).
mortgage interest is tax deductible
$10 billion for Cash for Caulkers (source), compared to $3 billion for Cash for Clunkers (source).
$75 billion Making Home Affordable program, “a.k.a. mortgage bailout” according to this article .
Federal Housing Administration (FHA) guarantees $300 billion in new loans to keep 400,000 homeowners out of foreclosure (source).
$15 billion in tax breaks (article).
FHA’s Refi program for underwater borrowers (aka the FHA Short Refi Program)
HAMP (Home Affordable Modification Program)

According to this video, the government raised red flags in April 2001 stating that the size of mortgage giants, Fanne Mae and Freddie Mac, is "a potential problem" because trouble in either one of them could "cause strong repercussions in financial markets". In 2003, the government's warning of Fannie Mae and Freddie Mac (government sponsored enterprises) was upgraded to a systemic risk that could spread beyond the housing sector. In 2005, Alan Greenspan stated:

"...Enabling these institutions to increase in size - and they will once the crisis in their judgment passes - we are placing the total financial system of the future at a substantial risk."

Despite this, socialist politicians, such as Barney Frank, wanted Fannie and Freddie to do more to put low-income people into homes. According to the above video, in 2005, Senator Charles Schumer stated:

"...I think Fannie and Freddie over the years have done a incredibly good job and are an intrinsic part of making America the best-housed people in the world...if you look over the last 20 or whatever years, they've done a very, very good job."

In 2006, John McCain stated:

"For years I have been concerned about the regulatory structure that governs Fanne Mae and Freddie Mac...and the sheer magnitude of these companies and the role they play in the housing market...the GSE's need to be reformed without delay."

Our housing bubbles are created by huge socialist policies. Socialist policies have been tried by dozens and dozens of countries around the world. Without fail, they have always brought prosperity to a pocket of the population in the short run. Without fail, they have always made the country poorer in the long run. This record is unbroken in earth’s history.

Politicians, such as Senator Chris Dodd in September 2008, bragged about the government's [false] achievement. Starting at 3 minutes and 25 seconds into the video on the left, Dodd stated:

"...a great source of wealth creation in this country has been home ownership... Fannie and Freddie…created so much wealth for so many Americans…"

After the bubble collapsed, the fake wealth disappeared and the country became poorer.

Socialists are well-meaning, good-hearted people, but uneducated in economics and myopic. Essentially, they don’t know how to grow a country’s wealth. Capitalists appear cold-hearted, however, free market capitalism has been the only system in recorded history, other than killing and stealing, able to generate long term sustainable wealth.

Suggested viewings of Milton Friedman:
http://www.youtube.com/watch?v=RWsx1X8PV_A
http://www.youtube.com/watch?v=DvNzi7tmkx0&NR=1

Suggested reading:
Socialism vs Capitalism

Canada's Housing Manipulation and Bubble

Canada has a very similar socialist policy with a similar number of money stealing programs to fuel house prices:

Home Renovation Tax Credit
First-Time Home Buyers' Tax Credit
GST/HST new housing rebate
Home Buyers' Plan
Provincial credits and grants
CMHC insures mortgages to transfer risk from the banks
Self-Directed RRSP mortgages
Capital Gains exemption

To be fair, the government should provide this kind of support to every other industry. Why just housing and the people that benefit from housing such as construction companies and real estate agents? Why not provide this support to renters, furnitures, computers, books, phones, clothing, shoes, food, massages, web developers, programmers, janitors, maids, restaurants, etc., etc., etc.? Are citizens in those industries relegated to second-class? Why do they have less rights and privileges? Housing is so manipulated, that it is akin to "central planning" of the economy by Russia and China during their communist years. As we know from their experience, central planning drove their countries into poverty.

As in the US, money is stolen from non-homeowners and children (read "stealing from children") to fuel Canada's housing bubble.

So, if you sell your over-priced house, you are capitalizing on the stolen money. If you are a baby-boomer looking to downsize, and if you sell your house to a young couple, then you will be exploiting them to fund your retirement, in addition to the billions that you are stealing from children.

Canada's Sub-Prime Mortgages

TD Bank told me that for a couple of years, Canadian banks were giving out zero-down, 40 year mortgages to people who were one paycheque away from insolvency. These were Canada’s version of subprime mortgages. These seemed like a conundrum on the surface. Canadian banks are very conservative and risk-averse. Why would they give out so much money to such risky borrowers? I asked TD this question. TD explained that they were not taking any risk. Canadians are, through CMHC, which is owned by the government. CMHC insures these risky mortgages. If the borrower defaults, taxpayers would be on the hook. The banks do not take the risk, but get the reward. CMHC is Canada’s version of Fannie Mae and Freddie Mac. MacLean’s magazine now says the same thing in their article called "The CMHC: Canada's mortgage monster".

According to MacLean's magazine:

"The CMHC is a driving force in the housing market. But critics warn its policies could fuel a U.S.-style meltdown."

As the US has shown, housing can be as volatile as stocks. Why don’t taxpayers insure the banks to lend me money to buy stocks?

Canada is now more socialistic than China. The government needs to try a little free-market capitalism for a change. (Read more on Socialism versus Capitalism) If governments didn't insure any home-buyers, then we can let the free market decide on how much risk they should take. As this article concurs, I can assure you that the banks would never have given out zero down, 40 year mortgages if they took all the risk. Isn't this how it works on car loans? Isn't this how it should work? Should taxpayers insure car loans, business loans, and every other type of loan? Why should taxpayers be forced by the government via CMHC to insure mortgages, especially risky mortgages?

Political Motivation

Let’s say you’re a politician. You know that:

You’ll get re-elected if you:
- grow the economy, or
- make your voters feel wealthier

Economy will grow and your voters will feel wealthier, if you:
- boost housing sales and prices

Housing sales and prices will go up if more people buy houses
More people, even if they can’t afford it, will buy houses if they can borrow and leverage more
People can borrow and leverage more if you:
- reduce down payment
- extend amortization
- reduce interest rate
- enable banks to lend to risky borrowers

Banks will lend more, if you remove their risk
CMHC can remove the risk from the banks
As long as you get re-elected, that’s all that matters. This built up of un-sustainable debt and fake wealth is the next politician’s problem.

What would you do?

Is this why down payment requirements went from 25 to 20 to 15 to 10 to 5 to 0 percent? Is this why amortization went from 25 to 30 to 35 to 40 years? Is this why a Canadian politician justified GM’s bailout by saying he wanted to support home prices?

Financial Motivation

Most politicians are likely homeowners and not renters. Therefore, if they can continually increase home prices, they stand to benefit.

In China, government officials are making lots of money through grafts by helping the developers. According to this article, one of the largest real estate developers in China stated:

"Corruption is everywhere...No wonder public opinion of anyone who has money equals corruption."

"We are the number-one hated people in China."

"For the country, I think it's very dangerous."

"the real estate bubble is disserving the nation…"

"I happen to know that they don't need it so much. But it still doesn't stop me from producing so long as they are queuing up outside and want the product."

"there is no apparent need for more buildings"

According to this article about China:

"Corruption is particularly rife in the real estate market. Officials and developers often obtain choice pieces of property at bargain prices"

This corruption is not limited to China.

This Canadian CBC show called Condo Crunch (you might have to be patient as the video is slow to load) explains how condo buyers are taken advantage of and how the developers have the "ear of the parliamentarians":

(23:10 into the video) Lawyer: "If you go into a new car showroom and order a specific car with four-wheel drive, power steering, air conditioning, and a whole list of extras, and they deliver you something that has very little resemblance,...the automobile associations, the consumers, the ministers of parliament across the country and in Ottawa, would be up in arms. You can't do this. When you buy a car, that's what you're entitled to get…"

CBC: "So, why is it okay with the condo…?"

Lawyer: "Because the builders are not subject to the same regulations as the car industry"

CBC: "Why not?"

Lawyer: "…[long pause]…you want this on tape right?"

CBC: "Yeah"

Lawyer: "Why not? Because the builders have a lot of sway and the consumers don't. And the consumers do not have the ear of the parliamentarians who make these laws."

[scene break]

CBC: "We want to talk to the Ontario government about why condo buyers aren't better protected, but like the developer who sold us our condo, they don't want to touch this one either."

Why do "the builders have a lot of sway" with the politicians?

Marc Muzzo, Rudolph Bratty and Alfredo DeGasperis are real estate developers and former owners of Canada Homes and Greenpark. They are also amongst the richest Canadians (source). In the 1980's, the Globe and Mail implicated them for bribing city officials by giving a house to an official for three quarters or half price and dropping off baskets of cash in front of officials' homes. Numerous city councillors were implicated. The mayor of one of the suburban cities (Vaughan, Markham or Richmond Hill) received a house at a significant discount. In return, the developers got their land re-zoned ahead of everybody else. Other land owners were very angry. One of the mayors had to step down.

According to this article:

"...Muzzo testified that paying bribes was standard practice..."

In the 1980's, Torontonians were up in arms and protesting against the development of their water front. They argued that it should be park land and the water front should accessible to the public. Nevertheless, tall condos went up. Is it possible that the developers gave condo units to the politicians at significant discounts?

According to this article, an Ontario mayor involved her city in a $14.4 million land deal with her son, a real estate developer:

"people "fortunate enough to enjoy friendships" with the mayor have reaped benefits from those ties"

"If the deal had gone through...[mayor's son] might have made more money than he otherwise would in a lifetime"

Is it possible that developers and the CREA lobbied, befriended, wined and dined or gave incentives to:

CMHC executives to insure more and more risky mortgages?
politicians to relax the mortgages rules from 25 years amortization to 30 to 35 to 40, and down payment from 25% to 20% to 15% to 10% to 5% to 0%?

Knowing that the relaxation of mortgage rules will fuel housing, did these CMHC executives and Canadian politicians stock up on investment properties before changing the rules? U.S. Congressmen do insider trading before passing laws (source). Why wouldn't Canadian politicians?

In the Liberal Sponsorship scandal, suppliers provided condos, furnished with prostitutes, to politicians and took politician wives on shopping trips. (Read more) Could the CREA or real estate developers be doing similar things?

CMHC has nine directors on its board. Seven directors make or made their livelihood from real estate. Even if they are no longer employed with real estate related companies, is it possible that they own more real estate than the average Canadian and therefore would benefit from ever increasing prices? These directors are:

Dino Chiesa, Chairman:
"Principal, Chiesa Group commercial property investors...previously served as ViceChair of the Board of Trustees of the Canadian Apartment Properties Real Estate Investment Trust"
Karen Kinsley, CEO:
"Prior to joining CMHC, Ms. Kinsley was Vice-President and Treasurer with two real estate development companies...received the Award of Excellence in 2004 from the Canadian Home Builders’ Association in recognition of service to Canada’s home building industry. In 2006, she was inducted into the Canadian Mortgage Hall of Fame by the Canadian Association of Accredited Mortgage Professionals in recognition of her service to the Canadian mortgage industry."
Brian Johnston:
"Johnston is the President of Monarch Corporation, one of Canada’s oldest and largest real estate companies. In addition...Johnston is an active member within the home-building industry. He...is a Past President of the Ontario Home Builders’ Association."
André G. Plourde:
"Plourde has been President of Montreal Real Estate Group Inc. since 2001, an important commercial real estate brokerage firm in Montreal."
Sophie Joncas:
"...experience in the public and private sectors, including construction and real estate firms..."
Michael Gendron:
"...Gendron is Chief Financial Officer and part owner of Mancap Ventures Inc., a privately owned venture capital company with majority equity interest in a number of homebuilding and support companies..."
Rennie Pieterman:
"...served eight years on the Board of Directors of the London Home Builders’ Association, including as President in 2003. She has been a member of the Association’s Renovators’ Council since 1994."

Which of the following would the CMHC directors personally benefit from and be more interested in?:

perpetually raising home prices, or
lowering prices for first-time buyers

Would they care about making homes affordable for young or future Canadians?

Effect of Manipulation

Due to the massive manipulation, it fuelled house prices, which fuelled the housing bubble. One of the effects of a bubble is that the rising prices fuel two emotions:

Greed (Speculators jump on the bandwagon in hopes of making money.)
Fear (First time home-buyers panic as they rush to jump on, for fear of never being able to jump on later.)

Americans' household debt to income ratio peaked at approx. 124% in 2007, coinciding with the peak of their housing bubble and fake economy. After the bubble burst, they have deleveraged down to approximately 105%.

Canadians' household debt to income ratio continued soaring to 150% in February 2011 (according to CBC), coinciding with Canada's housing bubble and fake economy.

Homes in Florida now cost $30 to $100 per square foot.

Homes in Canada now cost $200 to $700 per square foot.

In the 1970's, blue-collar, first-time home-buyers were able to come up with 25% down payment and afford a mortgage with 25 year amortization. Now, with prices so high, white-collar, first-time home-buyers can only come up with 5% down payment and can only afford a mortgage with 35 year amortization.

What happens to the CMHC if the Canadian housing bubble bursts? Like Fannie Mae and Freddie Mac, it will lose billions and this loss will be passed to taxpayers.

Now that housing is a bubble, is that good for everybody? It is for homeowners, but what about non-homeowners and first-time buyers? The younger generation, first-time buyers will have a lower standard of living because they will spend far more to get the same housing as somebody who bought before the bubble.

What about subsidized, affordable housing? Now that house prices are so much higher, do taxpayers have to subsidize more affordable housing?

This is like taking one step forward and two steps back.

Read the following for explanation of how the housing bubble will make some people rich and some people poor:

Bubbles - Extreme Maker and Breaker of Wealth

Real Estate - Ponzi Scheme?

Read the following for explanation of how housing bubbles have ruined countries and screwed the younger generation and made them much poorer.

Housing: After the Bubble Bursts

Watch this video on CMHC's manipulation.

The Flaw of Democracy

2011-02-27T17:30:00.001-05:00

The fundamental philosophy of democracy insists that people have the right and the capacity to exercise either directly or through representatives’ equal control over the matters which affect their interests.

2000 years ago, democracy governed a society that was isolated, independent and simple, especially economically. Today, democracy governs a complex society that has many social and economic associations with other societies that compete with them in a global community.

Most voters of a democracy don’t understand economies of scale, the fractional reserve system, the difference between deficit and debt and so on. Yet, the only criterion required to vote is minimum age. Therein lays the problem.

The flaw of democracy is that everyone of age can vote

Voters tend to vote for the political representatives whose policies and proposals will monetarily enrich them the most. Greed is a common human trait, especially in a capitalist society. Because of this, prosperous capitalist democracies overtime evolve into indebted socialist democracies.

What to do?

Long term sustainable prosperous democracies could possibly exist if voters were tested to verify they were relevantly knowledgeable enough to vote and governments practiced Pay As You Go Governance by limiting their yearly spending to yearly tax revenues.

How?

Technology – An electronic voting system could prompt voters to answer 5 or more multiple choice questions presented to them. If they correctly answer all the questions, they get to vote. If they don’t correctly answer all questions, they don’t get to vote. The questions would be randomly selected in any order from a database of 50 or more questions.

Balanced Budget Amendments – At all levels of government, would force fiscal discipline and reduce discretionary and wasteful spending.

Is it fair?

The right to vote is considered a fundamental human right. Unfortunately, this right is exploited by political parties, pundits, special interest groups, unions and other collusive organizations and entities.

Article 29, section 2 of the Universal Declaration of Human Rights states that In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of meeting the just requirements of morality, public order and the general welfare in a democratic society.

By law, a human right can be subjected to a minimum age criterion and other qualifiers. Eliminating votes by people who are not relevantly knowledgeable enough to vote would greatly reduce the exploitation of voters’ rights and provide the people fair and just representation.

Society is better served when knowledgeable people make informed decisions.

Peter Tsirlis

Credit Bubble

2010-03-27T15:08:00.005-04:00

Are high levels of credit good for the economy? Ask many people that and most of them will say yes.

The Basics

When credit (unearned capital) is added to the economy, new products and services appear and/or the prices of products and services go up because there are more dollars chasing each product or service. When credit is serviced, capital is diverted from the economy. If the diversion of capital exceeds new capital inflows, then prices go down and/or products and services disappear.

The Problem

During the last 26 years, governments and financial institutions poured gluttonous amounts of unearned capital into world economies. Year after year, world economies have seen higher levels of credit. Now they are addicted and require higher levels of credit year after year just to sustain economic levels.

What does this mean?

World economies have mortgaged too much of their future economic activity. That’s what credit does. It creates current economic activity at the expense of future economic activity.

Why did this occur?

There are numerous reasons but the prominent ones may be US trade deficits and financial deregulation. Since 1975, the US has recorded trade deficits every year. To understand the net effects of long term sustained trade deficits, imagine ‘If you always spent more than you made’. You would eventually run out of money.

In-order to mitigate outflows of capital and the loss of jobs in manufacturing, the US economy evolved to become more serviced based and credit dependant, especially during the last 30 years.

During the 80’s, the Reagan Administration’s initiative to stimulate the economy by deregulating S&L’s caused an explosive growth of credit services. The lack of supervision led to highly speculative investments and eventually the S&L industry had to be bailed out. Despite this, deregulation continued and was expanded. In the 90’s, The Glass-Steagall Act which protected bank depositors from the additional risks associated with security transactions was dismantled. Commercial banks could now own brokerage firms and provide investments services and aggressively sell highly leveraged financial products. Consequently, the explosive growth of these brokerage firms was fueled by liquidity and credit sourced through their corporate parents.

During the last decade, ultra low interest rates combined with indiscriminate lending funded by Mortgage Backed Securities further inflated the credit bubble. Even with the past 3 years deluge of home foreclosures and personal bankruptcies, the credit bubble barely deflated because of the recent bailouts and stimulus programs which pumped massive amounts of credit and liquidity into the economy.

Where is the credit bubble?

The credit bubble has spread to most developed nations and emerging markets throughout the world via under regulated markets. Private and Institutional investors bought US and foreign financial investments and services that hedge commodities, leverage assets and overvalued securities. Additionally, foreign monetary policies were influenced by the US Federal Reserve’s policies. All the perceived wealth and credit generated from these investments, services and policies spilled over into and inflated stock markets all over the world, thus inflating prices for products and services and real estate all over the world.

Conclusions

(click on image to enlarge)

The above chart indicates that in Canada and the US, with the exception of the last 2 years in the US, the ratio of household debt to disposable household income has been generally increasing year to year for the last 26 years. I suspect that data from the respective charts for many if not most G20 nations would also generally show increasing ratios of household debt to disposable household income during the last 26 years.

From this data one can easily conclude that credit is responsible for a significant percentage of the economic gains (GDP) attained by many if not most g20 nations during the last 26 years. This trend cannot continue indefinitely and the last 2 years economic crisis was probably the 1st of many. In addition, each economic crisis will eliminate some products and services that leverage products and services. Economies will become less serviced based and credit dependant.

The current prices for most financial assets including stocks, securities and real estate as well as many products and services are unsustainable. It’s hard to ascertain how far prices have overshot their sustainable levels because the charts only go back to 1960. But reviewing the US chart data from 1960 to1984 shows a up and down cycle with modest gains each cycle. By charting minimum and maximum trend lines from the US 1960 to1984 cycles and sustaining these cycles average rate of increase would indicate that the US ratio today should only be between 65% and 75%, not 117.2%. Furthermore, even a sustained 65% to 75% ratio of household debt to disposable household income could still be too high. If left to their own devices, economies would evolve and eventually find their sustainable levels.

Peter Tsirlis

Most Important Job in the Country

2009-11-22T21:47:00.001-05:00

There are many jobs in this world:

Doctor
Lawyer
Stock Broker
Insurance Sales
Etc.

We will argue that the most important job in the country is:

Manager of the Economy

and why we rarely get anybody qualified for this job.

As explained here, the most important issue to voters, or the majority of the population, is money. This money can only be derived from a prosperous economy. Therefore, the person who can best manage the economy, will be the person who brings the most money, prosperity, wealth and highest standard of living to the population. This is what the majority values the most.

The person who has ultimate control of the economy and who is therefore the Manager of the Economy is the Prime Minister or President.

The problem is that most political leaders have no education or experience in Economics or business. Some would argue that politicians don’t need formal education in economics to understand it or to manage it. They can learn it outside of school or formal education. If this is the case, why do doctors, lawyers, engineers, nurses, programmers, etc., need formal education to do their jobs? Why can’t they learn their fields outside of school? Everybody advocates universities and higher learning. Why? Why bother wasting so many billions on universities if you can learn your field outside of formal education? Maybe we should shut down all of the universities.

Some people argue that political leaders don’t need to understand economics because they have economic advisors. If this is sufficient, then can I prescribe drugs if I have doctors advising me? Does it matter that I don't know what they are talking about when they use words like cortisone, hemoglophagia or dupuytren disease? Will you take the drugs that I prescribe to you, if I have doctors advising me but I have the final say on the prescription? If not, why not? Why is it illegal for me to do this?

If I have no medical training or experience, will I know which doctors are the best to pick as advisors? If not, why not?

Why is it illegal for me to give legal advice even if I have lawyers giving me advice?

Why is it illegal for me to sell stocks even if I have stock brokers giving me advice?

Does it matter if the Manager of the Economy doesn't understand Comparative Advantage, Economies of Scale, Oligopolies, Collusion, Diminishing Marginal Utility, Keynesian versus Friedman and Surplus on the Demand & Supply curves?

When an economy is sick, it needs somebody to prescribe a cure. Is it okay to have a Nurse be the Manager of the Economy if she has economic advisors? If not, why not?

Then why do we usually have lawyers become Manager of the Economy?

To manage somebody’s health as a doctor, to give legal advice as a lawyer, to sell stocks as a stock broker or to sell insurance, you must take numerous courses, pass numerous exams, and get licensed by the government before you are allowed to do your job. Before you are allowed to drive a car, you need to take lessons, pass a test and get licensed.

Why do our political leaders get to do the job of Managing the Economy when they don’t take any courses or pass any exams on Economics? If it can be rationalized and argued that they can, then why can’t you sell stocks without taking numerous courses, passing numerous exams and getting licensed first?

Hence, we think that most political leaders are unqualified to manage the economy. They might do an okay job because they might listen to their economic advisors. They might do a poor job because they don’t listen to their advisors or because they don’t know how to pick economic advisors. Most of the time, these leaders could be doing a better job if they were qualified to be Manager of the Economy. They would be more qualified if they took numerous courses, exams and got licensed like the rest of us, before being allowed to do that job.

U.S. defrauded billions from the world

2009-02-13T13:53:00.045-05:00

"Let's hope we are all wealthy and retired by the time this house of cards falters." - internet e-mail, Wall Street, 12/15/06

On February 12th, 2009, CNBC aired their documentary called House of Cards, which explained the origins of the global economic crisis and how the US defrauded billions of dollars from Europe, Asia and Canada to buy houses.

Typically, when a lender lends money to a borrower, the lender cares about the borrowers ability to pay back. Hence, a bank typically wants a borrower to prove that he has income and for him to put in a down payment and sometimes collateral.

It did not work this way in the US. Lenders in the US did not care about the borrowers' ability to pay back. This is because:

The people lending the money were not the true lenders. Home buyers got the mortgage money from mortgage brokers, who got the money from Wall Street, who got the money from American and foreign investors.
The true lenders were the investors. However, they did not know who they were lending their money to, nor that the borrowers had no way of paying back.

Wall Street got the money from investors by slicing up the mortgages, packaging them up as mortgage-backed securities, or CDOs (Collateralized Debt Obligations), fraudulently rating them as AAA and sold them to investors as high quality, low risk investments.

AAA rating is usually given to the top quality debts, such as bonds from the government or huge, profitable Fortune 500 companies that make billions, not to John and Jane Doe who average $40K/year in income, took out a mortgage that is much bigger than they can service and did not give a down-payment. Sometimes large Fortune 500 companies with audited and proven income of billions of dollars, do not get AAA rating. According to CNBC: "The credit rating agencies [Fitch Rating, Moody's and Standards and Poor] had an incentive to award a security the best possible ratings. That's because the agencies were paid for their appraisals by the very banks that issued the securities."

Canadian banks are amongst the biggest companies in Canada and safest banks in the world. Yet, only two of the five Canadian banks are AAA rated. Even though many Fortune 500 companies with billions of dollars of revenue and profit cannot get AAA ratings, Wall Street was paying rating agencies to give AAA ratings to home-buyers with a tiny fraction of the revenue and assets, many of whom took out NINJA mortgages (No Income, No Job, No Assets and no down payment).

Furthermore, Wall Street knew that mortgages were given to borrowers who did not have to prove income, net worth or put in down payment. According to CNBC, Michael Francis spent years at a major Wall Street bank that ramped up its business in mortgage-back securities. His bank was so eager that it dropped many requirements for the mortgages it was willing to sell. Francis: "We removed the litmus test. No income, no asset. Not verifying income... breathe on a mirror and if there's fog you sort of get a loan."

Yes, the CDOs were complicated and investors should not invest in anything they do not understand. However, most of these investors bought them because they were rated AAA. If the CDOs were not fraudulently rated AAA, the investors would not have bought them. 50% of these CDOs were sold to countries outside the U.S.

[Below was added on August 24, 2011]

According to this Vanity Fair article, Wall Street really took advantage of Germany:

"...German bankers … lent money ... $60 billion in various U.S. subprime-backed bonds..."

"Extremely smart traders inside Wall Street investment banks devise deeply unfair, diabolically complicated bets, and then send their sales forces out to scour the world for some idiot who will take the other side of those bets."

"...a New York investment banker [would] say, ‘No one is going to buy this crap. Oh. Wait. The Landesbanks will!’ ” When Morgan Stanley designed extremely complicated credit-default swaps all but certain to fail so that their own proprietary traders could bet against them, the main buyers were German. When Goldman Sachs helped the New York hedge-fund manager John Paulson design a bond to bet against—a bond that Paulson hoped would fail—the buyer on the other side was a German bank called IKB."

Wall Street traders made a killing while bankrupting their firms, and walked away free. German bankers made far less and were treated as crooks:

"The former C.E.O. of IKB, Stefan Ortseifen, received a 10-month suspended sentence and has been asked by the bank to return his salary: eight hundred and five thousand euros."

"Others do not behave as Germans do: others lie. In this financial world of deceit, Germans are natives on a protected island who have not been inoculated against the virus carried by visitors. The same instincts that allowed them to trust the Wall Street bond salesmen..."

[End of August 24, 2011 addition]

American home buyers lied about their income to get mortgages. In fact, mortgage brokers encouraged this fraud because they were motivated to sell as many mortgages as possible and to anybody. The brokers made fees by selling the mortgages. They did not care if the borrower ever paid back, because these brokers were not the true lenders. They did not care if the borrower was an "Arsonist with no income". As long as the home buyer had a pulse, the mortgage broker wanted to give him a mortgage and collect the fee from Wall Street. According to one example on CNBC, a mortgage broker "lied and exaggerated" the borrower's income without her knowledge.

Consequently, Americans bought houses that they could not afford and should never had the luxury of living in them. In CNBC's documentary, a family whose bread-winner made $46K per year, bought a $584K house. Another family, which used to live in the slums of Compton, California, bought a house in one of the richest neighbourhoods in the country, Yorba Linda. Everybody felt entitled to live the "American dream".

When the price of their homes went up, thousands of Americans re-financed their homes to pull out money so that they can pay off car loans and credit cards, and pay for kitchen and bathroom renovations and swimming pools. One loan officer on CNBC's documentary was refinancing some home owners every year. These home owners used their homes as ATMs to buy everything in sight. According to CNBC: "In 2004 homeowners withdrew an estimated $900 billion dollars by refinancing and spent the money on whatever they could buy. Homes had turned into ATM machines and the economy flourished."

Ultimately, these houses, renovations, cars and swimming pools were paid for by defrauded investors, many of them in Asia, Europe and even Canada.

The city of Narvik, Norway, a town of 18,000, were defrauded into buying $200 million of CDOs. Now the town has closed a school, slashed services for the elderly and spend 25% of their budget paying for this loss. CNBC goes on to say that Narvik's next generation will have to continue paying for it.

Almost nobody in China lives in a 2,000 square feet house with a swimming pool. Yet, they were defrauded into paying for these in the US.

Canadians were also defrauded into paying for houses in the US. Wall Street defrauded Canadian Banks into buying $32 Billion of Asset Backed Commercial Paper (or CDOs).

All of these new or big houses with renovations and new swimming pools are sitting in the US. Even though the prices are coming down now and causing foreclosures, it will be the Americans who will eventually and ultimately get to live in them and enjoy them, not defrauded foreign investors. Instead of paying $500K, other Americans will pay something reasonable, such as $200K. However, the investors, many of whom are in Asia, Europe and Canada, will never see their money again, nor will most of them ever get to live in 2,000 square feet houses.

Also, thousands of Americans made millions or billions from the housing boom from 2001 to 2006:

Home Builders
House Flippers
Real Estate Agents,
most of whom made more than $100K per year.
Mortgage Brokers, such as:
- Daniel Sadek of Quick Loans, who made $5 million per month
- Loan Officers (sales reps), who made $20K per month. Some of these people used to deliver pizza before selling loans.
Employees of Wall Street firms, many of whom made millions.

This money is still sitting in their pockets. It will never be returned to the investors.

Therefore, despite the recession in the US, their overall wealth has increased at the expense of foreign and American investors. Billions or trillions of dollars of homes, cars, renovations and new swimming pools, which are the biggest ticket items for most people, are sitting in the US, paid for by defrauded investors.

This is one of the biggest heists in the history of mankind. Like other white collar crimes, such as insider trading, it is almost a perfect crime. Many of the victims blame themselves for not understanding the CDOs sufficiently or for being gullible. In the case of insider trading, most victims do not even know that they were stolen from.

Now that the home prices are dropping and causing foreclosures, many of these American home owners, who should never have moved into homes that they could not afford, are complaining and adamant that they should stay.

Research In Motion (RIM)

2009-02-12T13:35:00.005-05:00

RIM executives and employees stole $100 Million from you (by backdating on options). Instead of going to jail, they return $68M and pay a $9M fine.

More info.

CBC reported that OSC is useless . The RIM case proves this.

Don’t bother stealing $100 from retail stores and ending up in jail. Steal big! White collar crime is spectacular. If you get caught, you simply return what you stole.

Fake Economy

2009-01-24T14:02:00.016-05:00

This is sustainable:

When our economy is expanding, our government should be running a surplus to build up a reserve.
When our economy shrinks (recession), our government can tap into the reserve, run a deficit and pay for stimulus, unemployment insurance, lower tax revenues, etc.

Instead, this is what we have been doing for approximately 45 years:

When our economy is expanding, our government runs a deficit.
When our economy shrinks (recession), our government runs an even bigger deficit.

Below is what the government's budgets look like on charts. The government should be building up a reserve with surpluses during economic growth years, as shown in Year 2 and 3. When the economy goes into a recession in Year 4, the government can tap into and spend the $30 in reserve from Year 3, to stimulate the economy, resulting in a $30 deficit in Year 4. Once the economy starts growing again in Year 5, the government budget should go back into surplus and start accumulating a reserve again:

Instead, below is what the budgets look like for most Western, debt-based governments. When they should be running surpluses during economic expansion, they run deficits. During economic contractions (recessions), they run even bigger deficits.

The government never has a reserve. It always has a debt, and has deficits for most years which keeps growing the debt. Is this sustainable? What happens when the government hits a limit on how much more they can borrow? What happens when one of the main contributors of economic growth, such as government borrowing, is removed? Most likely the economy will stop growing, or shrink.

Most of the deficits and debts are a result of ever-increasing spending on socialist programs. (Read Socialism vs. Capitalism)

In the future, the economy will have a tougher time growing. It might very likely be sluggish and have frequent recessions. This is what happens when you have a fake economy that has been fuelled and supported by debt for approximately 45 years. When you run out of fuel (debt), it stops growing.

In addition to our economy being fuelled and supported by government deficits, it has also been fuelled and supported by U.S. trade deficits, which in turn were supported by growing consumer/private debt.

For the past several years:

The Chinese economy grew because they were able to sell to the growing Western economies.
The Western economies, especially the US (and Britain), grew because Americans were spending like crazy. They did this by:
- massive borrowing through sub-prime mortgages, ABCPs, second mortgages and credit card debts. Americans were using their houses as ATMs by borrowing against them.
- massive consumption through trade deficits.
- stealing from their children (governments drove up debts even more).
The Canadian economy (and housing market) grew because their biggest customer (USA) was growing (artificially).

Therefore, the worlds' economies probably would not have grown so much and for so long if the West didn't borrow so much (that they never could pay back).

Now, the politicians want to save the economy. Save it from what? Save it from reality?

The politicians want the economy to return to the artificial level.

How will the politicians save the economy? They will spend money to "stimulate". Where will they get this money? They will steal even more from our children to stimulate OUR generation's economy. Where is the money going to come from to stimulate the next generation's economy?

When an economy is in equilibrium, it produces as much as it consumes, regardless if the economy has 300 Million people or 1 person. In equilibrium, it has zero trade deficit or surplus. This is illustrated below:

Here is an example of an non-equilibrium economy that consumes more than it produces:

The above is analogous to a farmer who produces 10 bushels of wheat but consumes 20 bushels (in year 2). To do this, he imports 10 bushels from another farmer, resulting in a trade deficit of 10 bushels. The farmer's economy may appear to be growing, because Consumption is increasing and is included in the calculation of GDP. In year 3, he still produces 10 bushels of wheat, but he consumes 30. To do this, he imports 20 bushels from another farmer, resulting in a trade deficit of 20 bushels. Again, the farmer's economy is growing because Consumption is still increasing. However, is this sustainable? When will he ever repay the other farmer for all of the imported bushels? Is this economy real or fake? In year 4, he still produces 10 bushels of wheat, but he consumes 20. Because he is consuming less than the previous year, his economy is considered to be in a Recession. Because he still has a trade deficit, his foreign debt continues to grow.

What is the right course of action here? Should the government step in? If so, to do what? Should the government stimulate the economy? If so, how? Should the government try to get the economy back into equilibrium? If so, how?

Below is what might happen if the government lets the economy get back to equilibrium on its own by not interfering with the free market and capitalism:

In year 5, the amount produced might equal the amount consumed.

Below is what most elected officials want to do, because they want the economy to be growing on their watch:

They will stimulate and grow the deficit and debt. This is what Bush did in 2001. The economy was growing in an unsustainable way through debts. Below is actual US trade data. It shows that in 2001, the Trade Deficit was decreasing:

Government spending, such as a stimulus, is also included in the GDP. Therefore, the government debt partly reflects the amount of stimulus spent on the economy. Below is US federal government debt (2009 to 2012 are forecasted data). It shows that in 2001, the debt (as a % of GDP) was decreasing:

(Source: Taxtips.ca)

According to Peter Schiff (who accurately predicted the housing bubble, housing collapse, financial collapse, Fannie Mae and Freddie Mac bankruptcies, and government bail outs), recessions are not the problems. Recessions are the consequence of government actions that artificially inflate the economy. Essentially, the government creates bubble economies and recessions are when the bubbles pop. The cycle keeps repeating because governments keep creating bubble economies.

Instead of letting the economy come down to equilibrium in a needed recession in 2001, Bush did not want a recession on his watch. To do this, he stimulated the economy by increasing deficit spending and increasing credit and debt to consumers through Monetary Policy (low interest rates), Fannie Mae, Freddie Mac and other mechanisms. This enabled American consumers to consume even more (with borrowed money) domestic and imported products, which resumed the increasing trade and budget deficits. Consequently, this grew the fake economy even more and created the housing bubble.

In the above "US Trade" chart, you can see that the Trade Deficit is decreasing in 2007. Year 4 in the same chart below can be used to represent 2007 and 2008 as well as 2001.

Instead of letting the economy come down to equilibrium in a needed recession and to enable people to save (saving enables investments and production), governments want the economy to go back to the previous artificial and unsustainable levels.

In the long run, these trade deficits and budget deficits are unsustainable to not only the US, but every country that sells to the US as well. If the US cannot sustain their Consumption and Import levels, this means they will eventually import less. This means other countries cannot sustain their Export levels to the US. This is why the economy may be fake for most countries around the world.

Even if the stimulus causes the economy to grow again, it will make the debt bubble even bigger. The next time it pops, the pop will be even bigger.

These are the sources of wealth and economic growth for most countries:

Hard Work
Innovation
Natural Resources
Killing and Robbing (for a few countries)
Steal from children (through deficits and debts)

As mentioned, elected officials want to grow the economy. The hard way to do this is to foster more Hard Work and Innovation. Hard Work and Innovation increases production and exports. However, an easier way is to borrow and spend (government deficits and debts, consumer debt, etc.).

Every politician is more motivated to grow the economy during his/her term in office than for the long run, as future terms are not his/her concern. Therefore they usually choose the easier way. Consequently, the debts tend to increase from one term to the next, as politicians pass mounting debt problems to future governments/administrations.

Consumers like borrowing and spending because they want immediate gratification. Businesses like this because they want the revenue today instead of tomorrow. Lenders love this because lending is one of the most lucrative industries in our economy.

Check out New York Times' article on debt. Appended below are a few screenshots from the article.

Debts are a result of socialist programs. When these debts accumulate, it means that we have fake wealth.

Most debt-based economies are fake and paid for by foreigners or by stealing money from children. There is also inter-generational transfer through housing, which is the most manipulated market in the world. When mortgages and home prices continue to rise, it means that each subsequent generation has to pay more and more for homes to the previous generation, which makes each future generation poorer.

Consumer debt has been going up mainly because of mortgages. Mortgages have been going up because price of homes keep going up. However, easier mortgages (lower down payments and longer terms) have fuelled the demand for homes, which in turn raises home prices. This has proven to be case in the US up until 2007. We need to reverse this trend.

To reverse the trend, we need to make it harder to get mortgages, such as increasing down payments and shortening the term.

In other words, to reduce the amount of debt that we hold, we need to reduce the size of our mortgages. To do this, we need to reduce the price of homes. To do this, we need to make mortgages harder and harder to get. If we extrapolate this to the point of banning mortgages, it may benefit the majority in the long run.

Read more:

Housing, the most manipulated market in the world

Fake Wealth

Stealing from Children

Bubbles - Extreme Maker and Breaker of Wealth

Housing, the most manipulated market in the world

Corruption - Bay Street

2009-01-20T13:56:00.003-05:00

According to CBC:

Bay Street is just as bad as Wall Street. They said that Corporate Fraudsters have stolen from 1 Million Canadian investors, stealing $20 Billion per year.

The Gambino family was one of the largest Mafia families in U.S. history. They generated $500 million per year in revenue. Bay Street makes the Mafia look like boy scouts.

This is because our police (OSC and IDA) don’t convict anybody. The staff at OSC and IDA are incestuous with the companies that they are supposed to police. OSC’s CEO used to be ScotiaCapital’s CEO.

In 2002-2007, the US convicted 1,236 white collar criminals. Canada convicted 2.

Is this why Dan Duic and Andrew Rankin, who were charged for the biggest insider trading case in Canada's history, never got any jail time?

In 1997-2004, SEC filed 328 Insider Trading cases. OSC filed 6.

Conrad Black and David Radler stole like crazy in Canada but never got charged. The US was pissed off at Canada that they had to convict them instead of Canada.

OSC’s CEO makes $707K/yr whereas SEC’s CEO makes $158K/yr.

Real Estate - Ponzi Scheme?

2009-01-12T13:18:00.005-05:00

A true investment is when you invest in a business, whereby the business will produce a good or service, resulting in profits. You get a Return On Investment (ROI) because the value of the business went up due to increased profits and wealth creation.

A home is a place to live in. It does not create wealth. A home does not produce any goods or services. It is not a factory. It is not a service bureau. It does not do any consulting. It does not create wealth like a business. Only businesses create wealth. A home has its highest value when it is brand new. Every year after that, it depreciates from wear and tear, unless the owner maintains it. The reasons home price goes up is due to:

growth of a city, thereby increasing the value of land closest to downtown
speculation and bubble (Ponzi scheme)

A Ponzi scheme is similar to a pyramid scheme, where no new net wealth is created. Both need an ever increasing number of investors or investments to provide a ROI. When the scheme runs out of new investors/investments, or when investors pull their money out, the scheme collapses.

In this sense, Real Estate is the biggest Ponzi scheme in the world. Its price goes up simply because more investors are coming in than going out. Real estate agents used to argue that prices went up because of lack of supply (“they aren’t making any more land”). This argument is proving to be false as prices are now collapsing in the US. If home prices continue to go up, its just another way to take money from children.

The stock market is supposed to provide true investments. However, it is also largely a Ponzi scheme. Fundamental factors, such as PE ratios, Profits, etc., are dwarfed by Technical factors, such as speculation. Every bubble, including the Dot Com bubble and the recent Oil and Commodity bubbles, is like a Ponzi scheme.

On this video:

Senator Chris Dodd was wrong about Fannie Mae and Freddie Mac creating wealth in Housing.

Dodd says: “a great source of wealth creation…has been home ownership…[which] created so much wealth for so many Americans”

A bubble is not wealth creation. It is temporary fake wealth.

Politicians have defended the auto bail-out by saying that we must save this (fake) economy because we must prevent home prices from falling. Why? Is it because he is a home owner? Doesn’t the government want to provide affordable housing for non-home-owners? The only way society can prevent home prices from falling is to continue pumping the bubble.

Read more:

Bubbles - Extreme Maker and Breaker of Wealth

Housing, the most manipulated market in the world

Housing: After the Bubble Bursts

Unions

2008-11-18T16:55:00.010-05:00

Monopolies are markets where there is only one supplier. This means that there is no competition and therefore the supplier is able to unfairly increase price and gouge the buyer. Monopolies are extremely profitable to the supplier and expensive to the buyer. Monopolies are only allowed, rightfully so, if the government regulates it. Price increases are subject to government approvals.

Oligopolies are markets where there are only a few suppliers, such as the phone carrier industry and to a certain extent, the oil industry. That is why Bell, Rogers and Telus are regulated by the CRTC.

Most industries have sufficient competition. Some industries have abundant and stiff competition, such as the Retail industry. Consequently, the Retail industry suffers one of the highest bankruptcy rates and lowest profit margins.

Competition is what brings down price for the buyers and fosters innovation and product/service improvements amongst the suppliers. Without competition, we have low quality products and services at high prices. This has proven to happen over and over again with countries that experiment with Communism.

The reason competition brings down price, provides better service and/or fosters innovation which results in better products, is because the supplier (company or individual) wants to beat his/her competitors to get the business. After the supplier gets the business, the reason the supplier keeps the price low, continues to foster good service and innovation is because the supplier wants to avoid being replaced by a competitor.

Therefore, it's important to foster competition and to avoid monopolies.

Collusion happens when suppliers in an Oligopoly try to form a virtual Monopoly. To do this, they may agree amongst themselves to stop competing against each other, such as stop undercutting each other's price. When they form a virtual Monopoly, they are able to gouge the buyers. Essentially, the buyers are no longer able to find alternative suppliers. All of the suppliers have become one virtual supplier and the buyers must buy from that one virtual supplier.

Collusions are illegal, and rightfully so. According to the U.S. anti-trust law:

"When competitors collude, prices are inflated and the customer is cheated. Price fixing, bid rigging, and other forms of collusion are illegal and are subject to criminal prosecution..."

The U.S. steel manufacturing industry was an oligopoly in the 1970's. They colluded and their executives were sent to jail. If Bell, Rogers and Telus tried to collude, their executives would be sent to jail. Sometimes gas stations will collude to fix their price, resulting in fury with the public.

Unions are essentially collusions that form virtual monopolies. Collective bargaining is an euphism for collusion. The suppliers in the union are in the business of selling a service (labour). The employer is the buyer of their service. By colluding to form a union, the suppliers form a virtual monopoly that forces their buyer to buy from one virtual supplier. The buyer is no longer able to find alternative suppliers. Thus, the union (monopoly) is able to unfairly drive up price and gouge the buyer.

This is why you will see transit workers behind toll booths making more money than bank tellers, even though their job is far easier than a bank teller's or flipping burgers at McDonald's.

Because competition is greatly eliminated, union workers do not need to work as hard to maintain good service or to innovate. The fear of getting replaced by a competitor, is greatly reduced.

According to this article:

"...labor unions were subject to U.S. antitrust laws in... 1890... However, organized labor managed to obtain exemption ... in ... 1914"

In other words, it is legal for unions to collude, but illegal for everybody else.

Is this good or bad for the economy? It is definitely good for the union workers in the short run. However, in any win-lose relationship, it usually ends up in a lose-lose relationship in the long run. The only sustainable relationship for the long run is a win-win relationship.

The landlords and tenants act is another example of how a win-lose relationship ends up as a lose-lose relationship.

Now GM is the latest company asking the government for more taxpayers' money. This is ironic because the average worker in our country makes $20 per hour. If we bail out GM, we will be taking money from $20 per hour workers to give to $73 per hour workers. This is stealing from the poor to give to the rich. This is worse than communism, which advocates equal distribution of wealth.

According to CBC, CNN, Globe and Mail, U of Michigan (source) and U of Pepperdine, union workers at GM cost $73 per hour ($39 per hour for wages and $34 per hour for benefits and pension). This is $146,000 per year. Despite this, they went on strike in 2007. $146,000 is great for the worker ($146,000 is great even for highly skilled and educated professionals), but is it fair to the buyer of their service?

Some argue that GM union workers make $39 per hour and not $73 per hour. However, $39 per hour is not a valid apple to apple comparison. Most Americans and Canadians do not get an additional $34 per hour for benefits and pension. Therefore, if an American/Canadian made $39 per hour, he/she would have to save a portion of that for benefits and retirement/pension. The GM worker can spend every cent of that $39 because there is another $34 to take care of benefits and retirement.

Because of the power of the union, GM workers have extremely lucrative pensions and benefits. For every car sold, GM pays $1,600 to employee health benefits. Toyota (non-union) pays $200. This article elaborates on how the union has gouged GM. GM, and possibly Ford and Chrysler, are on the verge of bankruptcy because of their payments to the union workers. When this happens, no union worker at GM will make $10, let alone $33 or more per hour.

Therefore, if anybody should bail out auto companies, it should be their own employees and managers by taking pay cuts, not other Americans and Canadians who make far less.

Collusion is illegal for everybody except unions. It should be illegal for unions as well, or it should be legal for everybody, otherwise it is another huge double-standard.

Government's Rampant Unions

The government is rampant with unionized employees, such as the post office, city transit, etc. When the union does not get what they want, they go on strike. The government also uses thousands of outside contractors, such as web developers and graphic designers. These workers make a fraction of what government union members make. If they can collude and form a virtual monopoly, they would be able to say to the government: "pay us what we want or else you will not get any graphic design work from us or any other graphic designer". This would enable the graphic designers to gouge the government and make much more money. Not only is this illegal, most buyers, especially the government, try to prevent the vendors or contractors from finding out who their competitors are.

Graphic designers are no less hard-working than Transit workers. They are not less intelligent than Post Office workers. They are not less educated than auto workers. However, they make far less money because they have tremendous competition. Union workers make so much more because they have eliminated competition through collusion.

If we allow the unions to collude, we should also allow the graphic designers, barbers, gas station owners, auto mechanics, dry cleaners, nannies, landscapers, self-employed contractors and the millions of businesses to collude. They make up the majority of the population. If we don't allow them to collude and gouge, then we should not allow unions to collude and gouge. They are all hard working citizens as well and should have equal rights.

Government employees work for the taxpayers. They work for you. You pay them. They are your employees. However, these union workers have gouged from you for decades, even though most of you do not get to gouge. They do not work harder than you. They are not smarter than you. They are not more educated than you, but they make more than you at your expense because they get to collude and you do not.

Leading Indicator of Failure

Yes, unions elevate wages for workers. This may last for many years. However, it is debatable if this is sustainable. In the long run, their wages can go to zero. Unions are a good leading indicator for industries that will fail, as many industries with unions tend to lose money and go bankrupt, as in the case of the auto makers. Unions are predicting governments to fail, as the extra expense from unions are exacerbating the debt crises. The difference between the government and a business is that the government can continue to lose money, by stealing money from children and you through deficits and debts, for a much longer period of time.

Another reason that unions have survived so long, is possibly because a politician can get more votes from unions than from employers. Union members outnumber their employers. It also gives the perception that the politican is fighting for the underdog, or the "working-class family" against the big evil corporation (even though union workers make more than the average American and Canadian). Therefore, politicians traditionally catered to unions and never illegalized them. This is another problem with democracy because the masses are not necessarily right.

If politicians truly understand economics, they would disband unions to save GM, and NOT steal even more money from children and taxpayers for another bailout. Besides, it was the union and management that gouged GM, not our children and taxpayers. If the politicians don't, then they don't understand economics and/or they are corrupted by lobbyists.

I.O.U.S.A.

2008-11-07T14:48:00.006-05:00

According to documentary I.O.U.S.A. (IMDB), American debt is out of control.

Ron Paul was the only Presidential candidate concerned about Fiscal & Monetary policy, and has been complaining for over 10 years.

Many quantitative thinkers have been screaming, but the politicians aren’t listening to their advice. Paul O’Neill, Bush’s Secretary of Treasury, was fired in 2002 because he disagreed with Bush about the debt problem. This supports our argument that political leaders (Obama and McCain included) are victims of democracy, pick advisors who help them win elections and discard advice related to the long term after they are gone from office.

With these huge debts, one generation is massively stealing from the young.

With a dozen people on the street, the movie asked questions like:

How much is our debt?
What does trade deficit mean?
How does the government borrow money?

They were clueless.

Most people do not know the difference between the deficit and debt, or what fiscal or monetary policy are. This is one of the problems with democracy.

Obama and McCain are offering lower taxes and increased spending, which will drive the country into bigger deficits and debt. This can only be explained by one of the following:

they care more about short term advice to win the election
they’re qualitative thinkers and don’t understand quantitative matters

This supports our argument that buying votes (offering lower taxes and increased spending) is an easier way to get votes than by showing how you can improve the economy for the long term, which voters won’t understand. This is the other problem with democracy.

Stealing from Children

2008-11-07T14:11:00.006-05:00

We have been running deficits and building up our debt for most of the years since the mid-1960's, spending most of that money on socialist programs and to create fake wealth and fuel fake economies.

When one generation spends like crazy, runs up the debt and then do not repay it, the next generation must pay for it. Some people euphemistically call this “INTER-GENERATIONAL TRANSFER”. However, this can be misleading.

Burdening people without their approval or knowledge, is immoral and illegal. This is what Baby Boomers do when they pass huge debts to the next generation.

Furthermore, "inter-generational transfer" implies that the receiving party agreed to the transfer. However, the next generation never agreed, nor want to give their money to the previous generation. They never said: "Please borrow and spend like crazy and pass the debt to us to pay off." This is no different than STEALING MONEY from the next generation. Stealing can be defined as taking something from somebody without that person's approval or knowledge. This is EXACTLY what we are doing.

Thanks to socialism for the past 40+ years, the Baby Boomer governments in US, Canada and Europe spent like crazy, piled up huge debts and will not be repaying the money that they spent. The Gen Xers and future generations will have to pay for what the Baby Boomers spent and enjoyed. This money is STOLEN from Gen Xers. It is no less than CRIMINAL.

The amount stolen is massive. It is by far the largest loot in history. It is also the perfect crime because most of the victims (and perpetrators) do not even know that this crime is happening or how much is stolen from them. Most people do not know how much debt their government has.

In fact, many people do not think that the government has a debt because of the years with budget surpluses. However, surplus years does not mean that there is no more debt. This is related to the problems with democracy.

Many lawyer-politicians are non-quantitative thinkers and insufficiently educated in finance, economics and math. Therefore, they will tend to STEAL even more from the young, to use that money to buy votes to win the election. This is another reason to stop electing lawyer-politicians.

In a true democracy, every person should be able to vote on decisions that affect him/her. The children whom we are stealing from, never got to vote on our decision to take money from them. Because of this, we do not have true democracy.

Read more:

Housing, the most manipulated market in the world

Socialism vs Capitalism

Fake Economy

Fake Wealth

Europe's "Stealing from Children" goes into Overdrive

Democracy is a Myth

Ban All Mortgages?

2008-10-19T17:41:00.017-04:00

Gen Xers and younger, are upset and frustrated with the Baby Boomers. They feel that Baby Boomers have screwed their generation in multiple ways:

Cost of Housing
Government Debt (Inter-Generational Transfer), resulting in higher and prolonged tax burden (which is really stealing money from children)

Since 1996, home prices have been growing much faster than personal income. This is another way for the older generation to take wealth from the younger generation. For many of the younger people, buying a house is unobtainable unless they get help. First-time home-buyers have to borrow money from their parents for the down payment and spend most of their disposable income on the mortgage payments. In essense, homes are so expensive that buyers have to borrow 100% of the price of the home. Essentially, these first-time home-buyers, which are usually young couples, are funding the retirement of the previous generation. The younger generation are significantly poorer than Baby Boomers for these reasons.

We've been complaining about Government Debt and Inter-Generational Transfer since 1985.

Since the late 1990's, the US government has been trying to enable everybody to own homes by making it easy to get mortgages. To do this, they have been:

keeping interest rates low
making it easier to get mortgages

Why is credit so easy to get and so cheap? The powerful forces that push for mortgages and credit in general, are businesses and government. With credit, you take future wealth and spend it today. By doing this, you increase economic activity today at the expense of the future. Businesses like this because they get immediate gratification by maximizing revenue and profits today. Politicians want this because they want the economy to grow when they are in office today, not in the future when they are no longer in office.

This has fuelled the demand for houses, and therefore driven up prices. With sub-prime mortgages, this has artificially enabled people to buy houses. It created fake wealth. As in any fake wealth schemes, such as Pyramid schemes, they come crumbling down.

Besides, should we enable everybody to own a house? Is this the correct mindset? Should couples who make less than $25,000 a year, own a house? Analogous to this is, should we enable everybody to own cars even if they cannot afford them?

The main reason that homes are unaffordable is the high price. The reason the price is so high is because of the huge demand curve. The factors for driving up the demand curve, are:

Massive market manipulation by governments (negative real interest rate according to Stanford University's professor John Taylor, Fed Reserve's purchase of $1.25 Trillion of mortgage backed securities to lower mortgage rates, Tax Credits (for first-time and existing owners to purchase, Cash for Caulkers, Cash for renovations), Deduction of interest payments from income (U.S.), Capital Gains exemption (Canada), Loan modifications and refi's, Fannie Mae and Freddie Mac insuring mortgages that are not really insurable, etc., etc.). To manipulate the market to this scale, billions or trillions are stolen from children and the unborn.
Speculation. Instead of viewing houses as simply a place to live in, people view them as investments and potential money-makers. Consequently, they spend more on a house then they would if they were simply planning to live there, or they buy more than one house. This speculator activity increase the demand curve and price.
Because price goes up, people feel that they need to buy, or else they will never be able to afford it.

All of the above drive up the price, but especially #1 and #2.

To reduce the price of housing, we need to reduce the demand curve. We need to eliminate #2 from our society's mindset. Of course, this is easier said than done.

Houses should be viewed upon as simply a place to live. It should not be viewed upon as an investment, or a second/main source of income. What would happen to house prices if all of society did this? Should people not should focus on their jobs or business as their main source of income?

Houses are so expensive now that most first-time buyers cannot afford them. Instead of letting the demand drop, banks provide 40 year mortgages, which makes it easier for people to buy and hence keeps the demand curve and prices elevated.

We all know that the lower the interest rate, the more people will buy houses or/and buy more expensive houses. Therefore, what would happen if the interest rate was very high? We know that this will reduce the demand and consequently reduce the house prices.

What would happen if we banned mortgages completely? If nobody can get a mortgage, we expect demand and the price to plummet. Is this not the desired effect? Is this not a way of creating affordable housing?

Let us say that the current average house price is $350,000. Let us assume that the price will drop to $200,000 if we ban mortgages. Below is how these two scenarios compare:

Status Quo			Ban Mortgages & Buy with Cash
Mortgage	$350,000	$350,000
Interest Rate	7%	7%
Monthly Payment	$2,150	$2,451	$1,700	Monthly Rent
Annual Payment	$25,796	$29,418
Property Tax Rate	0.8749%	0.8749%
Annual Taxes	$3,062	$3,062
Total Annual Payment	$28,858	$32,480	$20,400
Years	40	25	12
			$244,800	Total Rent Paid
			$16,667	Yearly Savings Needed
			$1,389	Monthly Savings Needed
			$200,000	Purchase House for Cash
	25	25	13	Number of Years of Property Taxes
			0.8749%	Property Tax Rate
			$1,750	Annual Taxes
Total Taxes	$76,556	$76,556	$22,748	Total Taxes
Total:	$1,108,388	$811,994	$467,548
			$344,446	Savings over 25 year mortgage
			$640,840	Savings over 40 year mortgage

As you can see, it is much better to rent, save until you have enough, buy a $200,000 house with cash, than to buy a $350,000 with a mortgage.

One might argue that this is destroying the wealth of seniors who might rely on their house's net worth to pull cash out. However, we believe that a tiny percentage of seniors do reverse-mortgages. If home-owners never need to do a reverse-mortgage and live out their lives in their homes, which we believe this is the case for the far majority of people, then this concept will have no affect on them.

Besides, why should people rely on their homes as a source of funding for their retirement? Did the previous generations do this? What about the next generation, and the generation after that? Should every generation rightfully expect prices to continue to grow faster than income in order to fund retirement? Is this sustainable, ethical or moral?

To enact this no-mortgage concept, we will need more rental units. This is addressed in our article about rental units.

With this concept, there will be a transfer of wealth from the Baby Boomers to the Gen Xers and younger. Is this bad or good? One can argue that this is fair because huge amounts of wealth have already been stolen from Gen Xers by Baby Boomers through government debts and inter-generational transfer.

What are the pros and cons of this concept of banning mortgages?:
Pros:

Create affordable housing.
Create huge wealth for people wanting to buy homes, mainly the Gen Xers and younger. Since the most important issue to voters is money, government leaders would be achieving their main mission, which is to create wealth for voters.

Cons:

People who bought at high prices with mortgages will lose.

However, it will be difficult to ban mortgages, for several reasons:

The people in power are Baby Boomers.
Most Baby Boomers are current home-owners.
Current home-owners who paid high prices with mortgages will reject it.

Even if the price of houses stayed at $350,000, the home owner still comes out significantly ahead if they bought the house with cash:

Status Quo			Ban Mortgages & Buy with Cash
Mortgage	$350,000	$350,000
Interest Rate	7%	7%
Monthly Payment	$2,150	$2,451	$1,700	Monthly Rent
Annual Payment	$25,796	$29,418
Property Tax Rate	0.8749%	0.8749%
Annual Taxes	$3,062	$3,062
Total Annual Payment	$28,858	$32,480	$20,400
Years	40	25	12
			$244,800	Total Rent Paid
			$29,167	Yearly Savings Needed
			$2,431	Monthly Savings Needed
			$350,000	Purchase House for Cash
	25	25	13	Number of Years of Property Taxes
			0.8749%	Property Tax Rate
			$3,062	Annual Taxes
Total Taxes	$76,556	$76,556	$39,809	Total Taxes
Total:	$1,108,388	$811,994	$634,609
			$177,385	Savings over 25 year mortgage
			$473,779	Savings over 40 year mortgage

The losers will be the banks who will no longer make billions from selling mortgages. The big winners are the millions of Gen Xers and younger who want to buy homes.

Read more:

Housing, the most manipulated market in the world

Bubbles - Extreme Maker and Breaker of Wealth

Real Estate - Ponzi Scheme?

Housing: After the Bubble Bursts

Where did the rentals go?

2008-10-19T15:45:00.002-04:00

Affordable housing is hard to find because there are insufficient apartment buildings. You will be hard pressed to find any company constructing new apartment buildings. This is because of the landlords and tenants act.

Over many years, politicians have changed the landlords and tenants act to be more and more in favour of the tenant over the landlord. This is because there are more tenants than landlords, and consequently politicians can get more votes by pleasing the tenants.

The landlords and tenants act is so out of balance that most business people will never get into the rental business. Consequently, there is barely any new rental buildings. This reduces the supply curve for rental units, which drives up rental prices. Instead, business people prefer to build condos where they can sell them and not be burdened by tenants and the unfair landlords and tenants act.

The tenants have benefited in the short term by the unfair landlords and tenants act. However, in the long term, they suffer, as rental units become fewer and more expensive.

In any type of relationship, the only sustainable ones are those in a win-win relationship. Any relationship that is a win-lose relationship, will inevitably become a lose-lose relationship in the long run.

Most Important Issue to Voters is MONEY

2008-10-18T11:08:00.010-04:00

During almost every election, the most important issue to the majority of voters is, by far, MONEY.

This is euphemistically referred to and broken down as other politically-correct issues, such as:

Economy
Jobs
Cost of Living / Food / Gasoline
Cost of Housing
Inflation
Taxes
Etc.

Polls are usually taken to show the percentage of voters who have picked each issue as the most important. Sometimes the percentage for Economy or Inflation is lower than for Environment, Healthcare, etc. However, when you add up the percentages for all of the money-related issues, then Money always comes on top.

Every one of the above is related to Money and personal wealth. If a voter was rich and could retire at 30 years old, Jobs would not be an important election issue for him/her.

In fact, even the other issues, which do not sound like they are related to Money, are related and cost money to provide. These include:

Healthcare
Education / Tuition
Welfare
Any social program
Wars

Voters want somebody else to pay and provide these for them. If most voters were millionaires and were able to afford these themselves and can afford top notch, private Healthcare and Education, then these would not be issues for them. This is the case for existing millionaires who can. These and any social program, are not issues for them. Taxes are.

For most voters, these are issues because they want high quality Healthcare and Education for free.

If there was no tuition or if most students had so much money that they can afford any tuition, then this would not be an issue.

If our economy was so rich that we can give $100,000 per year to every Welfare recipient, then Welfare would not be an election issue.

There are usually only three sources of wealth for any country (and most people):

Hard Work
Innovation
Natural Resources

Some countries have all 3, such as the US. Some have only #1 or #2, such as Japan. Some countries have only #3, such as Saudi Arabia, Kuwait, Venezuela, Africa, etc.

There is a fourth source of wealth, which has been used throughout history by most conquering countries, such as Rome, France, Germany, Russia, China, US, etc.:

4. Killing and Robbing

Wars or National Security is often disguised as “Defence”, when in reality it is used to acquire and protect land, resources, etc. Less euphemistically, it is used to rob, or prevent robbing.

The purpose of the Iraq War was to rob Iraq’s oil. The purpose of Desert Storm was to prevent Saddam Hussein from controlling Kuwait's oil. The purpose of assassinating Kasim, leader of Iraq in the 1950’s, was to prevent him from selling Iraq’s oil to Russia. One of the purposes for invading Iraq and killing Saddam Hussein was to stop him from using the Euro instead of the Dollar as his oil currency. The US military and CIA were used to rob for decades (overthrowing Chile’s and Guatemala’s Presidents, attempted overthrow of Venezuela’s Hugo Chavez, stealing land in Panama to build the Canal, etc.). The British military coalition, which included the US, Russia, Germany and France, was used to rob from China for 100+ years by helping them push in Opium and making the biggest fortune in the history of mankind.

To justify wars and invasions, countries have become extremely skilled at spinning and portraying them as self-defence.

An important benefit of keeping the Taliban out of power, is the ability to build the oil pipeline through Afghanistan. This is what Texan oil company Unocal wanted to do in 1999 but failed with the Taliban. More info.

Ultimately, nothing matters more than money.

This is why it’s so easy for politicians to buy votes, by offering lower taxes and increased spending.

Based on what most voters want, the most qualified leader is somebody who can make every voter wealthier. Which type of leader is best qualified to make voters wealthier? For a country, the economy is the most important factor, because it pays for everything in society:

personal wealth
anything from the government:
- healthcare
- education
- welfare
- social programs
- infrastructure, such as roads and sidewalks
- police and fire protection services
- etc.

The wealthier the economy, the more the country can pay for these. The reason a baseball player or doctor makes a thousand times more in the US than in Puerto Rico or Cuba, is because of the economy, not because of the skill level.

Therefore, the best leader for most voters is somebody who knows how to improve and manage the economy (but not by robbing). However, due to the problem with democracy and tradition with lawyers, we usually do not get the best leaders.

Corruption on Wall Street

2008-09-20T11:38:00.002-04:00

Wall Street is massively corrupt and criminal.

Fraud

Wall Street has scammed and defrauded countries around the world into buying their ABCP (Asset Backed Commercial Papers) crap. These foreign companies, have and will lose even more money. Canada did not lose nearly as much as China or Russia. Nevertheless, Canadians have lost billions to Wall Street. According to CBC, Canadian banks bought $32 Billiion of ABCP. Canadian banks do not want the bad PR and therefore, they have been hiding this loss with creative accounting. Read how U.S. defrauded billions from the world.

Insider Trading

Insider trading, which is illegal, is pervasive on Wall Street. Few people understand how insider trading works and how it steals from the average, retail investor.

Fannie Mae and Freddie Mac stock went up before the announcement of the Fed bailout. The only explanation is that the Investment bankers, who brokered the bailout, were doing insider trading. There are many backdoor deals where stocks would jump during after-hours. Again, this implies insider trading.

Because of all the insider trading going on after-hours, some traders think it is too risky to hold stocks past one day. Some of them now focus on day trading and make sure they sell all holdings before the day ends.

Pump and dump

Pump and dump, which is also illegal, is pervasive on Wall Street. This involves pumping up a company, such as telling potential investors how great the company is and how revenue and profit are expected to grow. When the investors buy the company's stock, the pumpers then dump their own stock, making a profit. The executives of Biovail and Nortel were accused of Pumping and Dumping.

Dump and Scare

Wall Street has been Pumping and Dumping for decades. They also do the reverse, which is what we call, Dump and Scare. They do Naked Shorts and then spread negative rumours to drive down the share price. This is illegal and happened to UAL. Somebody shorted UAL and then somehow got the press to publish a report that UAL was thinking of filing for bankruptcy. However, this report was 7 years old. Nevertheless, this scared many shareholders into selling. Even though the exchange found out about the false report, they didn’t back-order the trades. Consequently, the guys who shorted made a fortune. The government believes that the Dumping and Scaring was the cause of the plummeting stock price of many firms during the financial market crisis. This is one of the reasons that the government halted short selling.

Stealing from You

When Wall Street does insider trading, pumping and dumping or dump and scare, they are essentially stealing capital gains from other shareholders/investors. These other shareholders include mutual or pension funds. If you own funds or stocks, you have likely been one of the millions of victims.

Moral Hazard

Between the Bear Stearns bailout and Lehman Brothers bankruptcy, the Fed provided low discount rates to encourage lending between the firms. The firms knew that they had toxic balance sheets. Instead of lending, the firms used the money and took hugely risky gambles to recoup their balance sheets. They didn't fear bankruptcy because they saw how Bear Stearns got bailed out. They ran up oil and commodities. When these dropped, they shorted their own firm’s shares.

Mafia Comparison

The Gambino family was one of the largest Mafia families in U.S. history. They generated approximately $500 million in revenue. Wall Street makes the Mafia look like boy scouts.

When you see mansions in the Hamptons or villas in the Caribbean, many of them are paid for with money stolen from you.

Government

The US government controls the economic numbers: Inflation (CPI), Housing, Unemployment, etc. However, they have motivation to make them look better than what they really are, and they are able to do this by including or excluding different factors and by doing creative accounting. It is already a fact that the US and Canada uses different formulae to calculate Unemployment. Consequently, the street doesn’t believe the US numbers, and think that they are much worst.

Wall Street has become the world's largest Casino.

Incompetence

Bernie Madoff's fund was the largest ponzi scheme in history. Yet, the SEC did not even detect this. Harry Markopolos warned SEC repeatedly about Madoff, but to no avail. Rightfully so, he gives harsh criticism of SEC's incompetence.

Imagine the number of Wall Street crooks that the SEC would catch if the SEC was competent.

When the police catch 10 drivers speeding on the highway, does that mean that only 10 people were speeding? This is analogous to Wall Street except the highway police are probably doing a much better job than the SEC.

Washington Insider Trading

On 60 Minutes, Jack Abramoff explained how he bribed and corrupted 100 Washington politicians at a time. He explains how representatives of Congress and their staff, who have no business or finance background, were consistently beating the stock market. They were doing insider trading.

This 60 Minutes episode elaborates on this. Senators and representatives of Congress trade with insider information, before laws are enacted, on a regular basis. Consequently, these politicians outperform even corporate insiders. The Senators average 12.3% annual return, whereas the corporate insiders average 7.4% and households average -1.5%, as shown in chart below (source). The game is rigged.

Prosecuting Wall Street...Not

This 60 Minutes episode explains how the government has not prosecuted any executives of Wall Street banks.

A former Vice President of Countrywide states that people at Countrywide belong behind bars and would give their names to a grand jury, if asked. She explains how Countrywide was committing pervasive fraud and the executives, such as CEO Angelo Mozilo, broke the Sarbanes-Oxley law, which is punishable by prison time. However, the government does not investigate.

A former Senior Vice President at Citigroup explained how 60 percent of the mortgages were defective. He informed his superiors. Despite this, CEO Charles Prince signed the Sarbanes-Oxley certification, effectively defrauding investors. Citigroup's comptroller told CEO Vikrim Pandit that it questioned the value of its mortgage securities and found internal controls to be deeply flawed. Nevertheless, Pandit and CFO Gary Crittenden signed the Sarbanes-Oxley, certifying to investors that everything is okay.

60 Minutes said: "If you had said two years ago that nobody was gonna be prosecuted on Wall Street for the subprime mortgage scandal, I think people would think, "It's not possible.""

It's possible.

The police have arrested a lot of people on Wall Street, but only protesters. No executives have been arrested.

Read more:

U.S. defrauded billions from the world

Financial Fraud

Stock Market Manipulation

Jim Cramer

Crooked Banks

Inside Job - This won the Oscar for Best Documentary. Producer Charles Ferguson began his Academy Award acceptance speech by reminding us that three years after our worst financial meltdown "not a single financial executive has gone to jail." This documentary is a must-see, as it clearly explains how Wall Street have been committing fraud and corruption. Here is a news interview of the producer:

Raj Rajaratnam, billion hedge fund manager, sentenced to 11 years for insider trading. How much of his $1.8 billion was made legally and ethically?

Former Goldman Sachs board member, Rajat Gupta, surrenders to criminal charges related to massive hedge fund insider trading. How many other board members from other companies do illegal insider trading?

Note that Wall Street is no longer a true capitalist institution. Read Socialism vs Capitalism.

Foreign Policy - China/Tibet

2008-04-12T21:59:00.000-04:00

In March 2008, Tibetan protesters killed innocent people according to the Washington Post. By Western definition, these Tibetans are Terrorists. The Irish want independence, killed innocent people and are called Terrorists. The best way to stop Terrorism is to give these oppressed groups what they want: independence. Osama Bin Laden offered Truce in 1996. He wanted the US to pull their military out of Saudi Arabia. If the US did that, the war on terrorism with Al Qaeda might be over by now.

In addition to Tibet, there are many oppressed groups all over the world, such as N. Ireland, Scotland, Iraq, Confederates in the southern states, Chechnya, East Timor, Kurds in Turkey, to name just a few. This article explains how various groups around the world are much more oppressed than Tibet and why Tibet has been chosen in 2008.

This article explains the good and bad of both China and Tibet. Tibet is of military importance to China. This is how the West can free Tibet:

1. Prove to China that Westerners will never steal from China again. China has a huge distrust of the West, due to:

Britain stealing Tibet in 1904.
Britain stealing Hong Kong.
Britain, US, Russia, France and other European countries stealing Shanghai.
Portugal stealing Macau.
Britain's Coalition (included US, Russia, France) invaded China twice to push in Opium for over 100 hundred years. This made China poor and Britain rich. The coalition killed, stole, raped and pillaged the entire coast of China.
US helped Tibet's 1959 revolt and have been financing their separatist movement until the 70's.
China thinks that Taiwan was stolen from them because US backed Kuomingtang.
Japan stealing Manchuria.
US "accidentially" bombing the Chinese embassy in Belgrade.
US spy planes in Chinese air space, such as the one that crashed on Hainan.

2. Prove to China that the following is not true:

US/CIA is behind the recent Free Tibet movement, as they were from the 1950’s to 1970’s.
Dalai Lama is still on CIA’s payroll.
US is secretly funding Free Tibet organizations, such as NGOs and Students for Free Tibet.
US is having a covert war with China over Tibet’s resources and Tibetans are just pawns.
US is trying to divert public opinion away from the war crimes and human rights abuse committed by the US, Britain, NATO and Israel in the Middle East.

The following articles claim that the above is true:

http://www.globalresearch.ca/index.php?context=va&aid=8442
http://www.globalresearch.ca/index.php?context=va&aid=8462
http://www.globalresearch.ca/index.php?context=va&aid=8673
http://www.globalresearch.ca/index.php?context=va&aid=6530
http://www.globalresearch.ca/index.php?context=va&aid=7355
http://www.globalresearch.ca/index.php?context=va&aid=8697
http://www.globalresearch.ca/index.php?context=va&aid=8693
http://www.globalresearch.ca/index.php?context=va&aid=8617
http://www.globalresearch.ca/index.php?context=va&aid=8656
http://www.globalresearch.ca/index.php?context=va&aid=8731
http://www.globalresearch.ca/index.php?context=va&aid=9109

3. China won't do anything unless we walk the talk. We are leaders of the free world. We need to lead by example. We need to:

give all of the land in Canada, Australia and US, unless purchased, back to the Natives
give independence to N. Ireland, Scotland, Iraq, Talibans, Chechnya, East Timor, Peurto Rico (which was invaded in 1898) and all the small Confederate groups in the southern US states.

4. Get our countries to take over the aid and economic development that China has been putting into Tibet, which was $600 million according to the above article (US gave $800 million to 600 million Africans).

Once the above is done, then China has no argument, justification or even need for keeping Tibet.

Therefore, not only will the protesters need to protest the Torch and boycott the Olympics, they will need to also lobby and protest to their politicians to do the above.

5. Protesters will need to change Dalai Lama’s mind as well, since he does not want Tibet to separate from China: Dalai Lama's letter.

As you can see, the above is very difficult to do. Therefore, it is not realistic to expect China to free Tibet any time soon.

Democratic Representation

2007-10-10T15:55:00.000-04:00

There has been an extreme unbalance of representation in the government, to the detriment of Ontario, the largest province in Canada.

The Prime Ministers of Canada have been mainly from Quebec (Trudeau, Mulroney, Chretien, Martin) and leaders of most parties have been from outside of Ontario, mainly from Quebec (Stéphane Dion, Stephen Harper, Jack Layton, Gilles Duceppe, Elizabeth May). The leader of our party will be from Ontario and then from other provinces until there is an equitable distribution of leadership.

Problem with Democracy

2007-08-10T16:45:00.003-04:00

We believe that democracy is the best political system in the world. However, it has some faults that should be corrected.

One of the reasons that democracy works, is also its fault. Democracy enables the population to choose the country's leader. However, the majority of population do not care about politics or do not know how to choose.

When democracy was invented over 2,000 years ago by Greece, life and government were far simpler. Villages barely traded with each other, let alone trade globally with multitudes of countries. There was no such thing as Monetary Policy or Inter-Generational Transfer. There was essentially no Economies of Scale. Most voters can understand the simple issues, the candidates' simple qualifications and what is needed to solve the problems. Most people were farmers and society only had a handful of different occupations. Most voters can understand all of the occupations.

2,000 years later, there is an extremely complicated global economy and financial markets. There are hundreds of thousands of different types of occupations, specialties and skill sets. No one person can understand all of these. Most voters can only understand one. The issues/problems and what it takes to solve them, have become vastly more complicated and beyond the scope of the average voter. Therefore, even though democracy is still the best political system, some aspects of it have become obsolete.

When voters are polled, voters usually say that the most important issue to them is "jobs", "unemployment", "cost of living", "taxes" or "economy". Ultimately, it's related to money. Personal wealth is more important to them than abortion, education and even healthcare. Personal wealth and Jobs are dependent on a healthy economy. Furthermore, a healthy economy pays for everything in society through salaries and taxes. Without a healthy economy, a society wouldn't have much in the way of healthcare, education, welfare, etc. One can easily argue that the economy is the most important thing in any society because it pays for everything else.

Therefore, the best leader is somebody who knows how to manage the economy. However, most voters do not understand economics. This is not an indictment on the population. It is normal for the majority to not understand economics. Similarly, the majority do not know how to tune up a car, program a computer, fix a laundry machine, prescribe medicine or wire a house. The majority do not understand the majority of skills in a society. People are usually skilled in only one field. This is normal for any country.

With economics, the majority do not understand the difference between debt and deficit, the difference between monetary and fiscal policy, economies of scale and comparative advantage which is the logic behind free trade. Most people do not know what the Demand and Supply curves look like or how they can move. In fact, it takes years to understand economics and decades to master. Yet, we ask the population to vote for the best manager of the economy.

Politicians work for us. They are our employees. Essentially voters are the hiring managers who are responsible for hiring the best job applicant (politician) to manage the economy. However, most voters are ill-qualified to be hiring manager. If a hiring manager was going to hire a sales rep, the hiring manager should understand sales. If a hiring manager was going to hire an engineer, the hiring manager should understand engineering. However, most voters do not understand economics. Consequently, we usually do not get the best economy managers.

Bob Rae, ex-premier of Ontario, had a finance minister who was a school teacher. This finance minister was completely under-qualified to manage a multi-billion dollar budget. Thousands of accountants, business-people and economists in Ontario were multiple times more qualified. Consequently, the Bob Rae government drove Ontario into serious debt that we are still trying to get out of to this day.

Based on voters' priority, John McCain, Barak Obama, Sarah Palin and Joe Biden are the wrong leaders. If voters' top priority is winning the war in Iraq, then McCain is the right leader. If voters' top priority is healthcare, then Clinton is the right leader. If voters' top priority is anti-war, then Obama is the right leader. However, the voters' top priority is the economy. None of these candidates are the best to manage an economy. They've never run or managed a business before. They weren't schooled in economics or business. Clinton and Obama are more educated than McCain, but they are lawyers. Like most politicians, they have never even sold lemonade at the street corner. Most lawyer-politicians do not understand Supply and Demand curves, Comparative Advantage, Economies of Scale, risk taking, the difficulty of starting a business, raising capital, going bankrupt, Sales, Marketing, Finance, hiring, EBITDA, how to create jobs, ramifications of debt and deficit, etc., etc., etc., etc. Economics and Business take 1-2 decades to learn and master.

The most qualified candidate is Mitt Romney. Other better qualified candidates include Ron Paul and Dennis Kucinich, but they will never get elected because they aren't charismatic enough and they cannot give great speeches like Obama. (Unfortunately, speech-giving skills is more important than knowing how to manage an economy.) There are thousands of successful business leaders who are thousands of times more qualified than lawyer-politicians. You probably know, personally, people who are more qualified, who are executives, business-owners, sales/marketing managers, accountants, economists, entrepreneurs, etc.

Since the majority do not understand economics, candidates' qualifications or the different party platforms, we should not urge people to vote, which is one of the common mistakes during every election. At every election, there are numerous TV messages urging everybody to vote. When we urge people to vote, we are potentially getting un-informed voters who are uninterested in politics to nullify informed voters. If an informed voter chooses candidate A, the uninformed voter can nullify the informed vote by choosing candidate B. Many un-informed voters tend to base their vote on the candidate's speaking skills, charm, good-looks, religion, race or last-name, rather than the qualifications.

Informed voters usually do not need urging to vote. They want to vote.

We are urging people to do the wrong thing. Instead of urging people to vote, we should urge people to get informed and to learn economics. Once that person is informed and educated, he/she will want to vote.

If you need surgery, would you ask the population to choose the best surgeon for you, if the majority of the population is uninformed or uninterested in surgery? Or, would you ask medical professionals to choose the best surgeon?

If there was an election for the best Pharmacologist, should we urge everybody in the country to vote? Or, should we urge everybody to understand Pharmacology first?

Some argue that our political leaders have economic advisers. Would you prefer to have a lawyer perform surgery on you with surgeons advising him? Why not have a surgeon perform surgery on you? Why not have a business leader who knows how to manage an economy, with lawyers advising him about legal issues? Why not have a business leader who has a proven track record on managing and growing a business (which is a micro-economy)? Even with this scenario with a Business/Economic professional as the leader, one can easily argue that Educators advising on Education issues and Medical professionals advising on Healthcare issues will be much more valuable than Legal advisors. (More info on why lawyers are the wrong candidates.)

Therefore, we do not believe that it is necessarily a bad thing when a smaller percentage of the population votes. In the example of the surgeon, the smaller percentage will likely lead to a better outcome.

This should not be confused with taking away the right to vote, which we are not advocating. We believe that the right should be there for everybody. We just believe that pushing people to do something that they are not interested in or don't know anything about, will lead to undesired results.

The other problem with democracy is that it is easier for a politician to get votes by buying them, than to manage the country responsibly. If a politician does a good job of managing the economy, most voters won't know that it was a good job or what he/she did. An example of this is when Brian Mulroney introduced the GST and signed the Free Trade Agreement (FTA). Both of these benefited the country tremendously, but most voters do not know this. Most voters do not know how much the trade surplus/deficit has changed since Mulroney signed the FTA. Most voters were against the FTA when Mulroney was signing it. Most voters think that the GST was put in to reduce the debt, which it wasn't. Most voters do not know the real purpose of the GST.

There are two types of people:

those who pay to the government (through taxes)
those who receive from the government

Since the most important issue for most voters is economy/jobs (ultimately it is money), it is far easier for a politician to get votes by offering lower taxes to #1 and more payments (welfare, subsidies, free programs, etc.) to #2. If you pay taxes and I said to you "vote for me and I'll lower your taxes by 10%", you'll likely vote for me. If you collect welfare and I said to you "vote for me and I'll increase your monthly payments by $300", you'll likely vote for me. Consequently, most governments run deficits because they are buying votes. This is why most democratic countries accumulate huge debts, and have fake wealth.

News Media

2007-08-04T15:34:00.000-04:00

The News Media have, arguably, one of the most important tasks of democracy. It:

disseminates information to the voters. Without this information, voters would be in the dark and would not be able to make an informed vote.
is the gate-keeper to information. It can decide what information to give the public and what not to give.

This means that the News Media has enormous power and is able to influence, sway and manipulate voters and therefore, shape politics and policies.

The challenge is that every TV network, newspaper or magazine are controlled by humans and every human has their own political biases and beliefs. Sometimes, the bias is so obvious that it is blatant, such as Fox's conservative views. If you owned a TV network and you are pro-choice, you would tend to lean that way with your news reporting. Every media has their own hidden-agenda. That is a fact of life.

Noam Chomsky claims that the elite institutions, which includes the government and large corporations, are able to "manufacture consent ". If the institutions want their own specific policy, they can manufacture consent from the public for their policy, by controlling the information that is disseminated to the public. At first, this sounds like a far-fetched conspiracy theory. However, the Iraq war proved that this "manufacturing consent" works. According to CNN in 2004, 70% of Americans believed that Saddam Hussein and Iraq were involved in 9/11, which is completely un-true especially when Saddam Hussein hated Al Qaeda. Through ingenious spin, the elite American institutions were able to manufacture consent to attack Iraq by associating Iraq with 9/11 and terrorism.

Almost every major TV network were beating the drums to war in 2003, with the exception of CBC. They helped the government manufacture the consent to attack Iraq. This has led to huge ramifications for Iraqis, Americans and many other countries including Canada.

After it became obvious that the Iraq war was a blunder and it became impossible to hide this, CNN adopted a new slogan in 2007: "Keeping Them Honest", where they attempt to investigate politicians and try to show the viewers that CNN is "keeping them honest". This is a joke. Where were they in 2003? They are four years too late.

CBC is one of the only News networks that was critical of the Iraq war from the beginning. It is possible that CBC maintained integrity because it is not as dependent on income from corporate advertisers and therefore cannot be as easily bought.

This seemed to be true with the internet, which seemed to have provided more accurate information than the mass media with regards to the Iraq war and George Bush. TruthUncovered.com is a good example. Everything they said in their 2003 documentary proved to be true. Almost everything the major news networks said about Iraq war proved to be false.

The News Media are such large conglomerates and control so much power, that they can control politics. This has proven to be very dangerous to the democratic process and their control of voters' information can easily thwart democracy again. We believe that people need to be educated to the biases of the News Media.

Foreign Policy - Afghanistan

2007-08-03T21:57:00.007-04:00

According to the CBC documentary, "Secret History of 9/11", Richard Clarke (head of counter-terrorism for Clinton & Bush, who had been chasing Al Qaeda & Bin Laden for almost a decade) said:

"In meetings on 9/11 and 9/12, defense dept officials, including...Rumsfeld, began talking about the need to attack Iraq. At first, I thought they were kidding. It became clear they weren't. Rumsfeld said ‘we can attack Afghanistan but there aren't very many targets to bomb there and they aren't worth very much, so we should bomb Iraq where there are much better targets'.

I thought...but there's no connection between what just happened and Iraq. That didn't seem to bother them. I said, attacking Iraq will make it more difficult for us to get the support we'll need in the world, particularly in the Muslim world. That didn't seem to bother them. ....(Colin) Powell said the world's not going to understand if we don't go after Afghanistan...where the 9/11 attack was launched from. So, reluctantly, during the course of the week, the defense dept came around to a consensus...called Afghanistan First. And that's what the President approved, an Afghanistan First policy. It was very clear what was Second. What was second was Iraq."

So, why is Canada in Afghanistan when Bush doesn't want to fight there?

The documentary showed Condoleesa Rice claiming and lying that nobody could've predicted that Terrorists would fly planes into building. However, the government knew that terrorists would use airplanes to attack the US and several warnings were given, including warnings from Clarke to Bush.

The documentary said that from the beginning of the Bush Admin, Richard Clarke said that he did everything he could to coax Bush to fight Al Qaeda...without success. Within hours after 9/11 attack, Bush was ready to go to war, but with Iraq, not with Al Qaeda or Afghanistan.

We do not believe that Canada, NATO or the U.S. should be in Afghanistan if the only reason the U.S. attacked Afghanistan was for public perception.

Some people argue that we should be there for humanitarian reasons because the Taliban is so religious and oppressive to the Afghani women. If we are to use our limited resources, there are many other countries around the world that have much more significant humanitarian problems, such as genocide.

Here is the "Secret History of 9/11" documentary:

There are many websites that explain that Afghanistan is about oil. Here are just a few of them:

From Afghanistan to Iraq: Connecting the Dots with Oil

“The wars in Afghanistan and Iraq were not prompted by the terrorist attacks in New York and Washington. … They were conceived and planned in secret long before September 11, 2001 and they were undertaken to control petroleum resources.”

“The Caspian Basin contains up to $16 trillion worth of oil and gas resources, and the most direct pipeline route to the richest markets is through Afghanistan.”

“Unocal wanted exclusive control of the trans-Afghan pipeline and hired a number of consultants …[including] Hamid Karzai.”

“Unocal wooed Taliban leaders at its headquarters in Texas, and hosted them in meetings with federal officials in Washington, D.C.”

“Unocal and the Clinton Administration hoped to have the Taliban cancel the Bridas contract [Argentina competitor], but were getting nowhere. Finally, John Maresca, a Unocal Vice President, testified to a House Committee of International Relations on February 12, 1998, asking politely to have the Taliban removed and a stable government inserted.”

“Immediately upon taking office, the new Bush Administration actively took up negotiating with the Taliban once more, seeking still to have the Bridas contract vacated, in exchange for a tidy package of foreign aid. The parties met three times, in Washington, Berlin, and Islamablad, but the Taliban wouldn't budge.”

“Behind the negotiations, however, planning was underway to take military action if necessary. In the spring of 2001 the State Department sought and gained concurrence from both India and Pakistan to do so, and in July of 2001, American officials met with Pakistani and Russian intelligence agents to inform them of planned military strikes against Afghanistan the following October. A British newspaper told of the U.S. threatening both the Taliban and Osama bin Laden -- two months before 9/11 -- with military strikes.”

“State Department official … told the Taliban at their last pipeline negotiation in August of 2001, just five weeks before 9/11, "Accept our offer of a carpet of gold, or we bury you under a carpet of bombs."”

“The pre-planned attack on Afghanistan, as we have seen, was meant to nullify the contract between the Taliban and the Bridas Corporation. It was a matter of international energy policy. It had nothing to do…with apprehending Osama bin Laden…”

“…the monumental fraud of the "war on terror" is crystal clear. In Afghanistan the Taliban was overthrown instead of bringing the terrorist Osama bin Laden to justice, and in Iraq there were no terrorists at all. But Afghanistan and Iraq are dotted today with permanent military bases guarding the seized petroleum assets.”

“On October 7, 2001 the carpet of bombs is unleashed over Afghanistan. Hamid Karzai, the former Unocal consultant, is installed as head of an interim government. Subsequently he is elected President of Afghanistan, and welcomes the first U.S. envoy -- John Maresca, the Vice President of the Unocal Corporation who had implored Congress to have the Taliban overthrown. Mr. Maresca was succeeded by Mr. Zalmay Khalilzad -- also a former Unocal consultant.”

“With the Taliban banished and the Bridas contract moot, Presidents Karzai of Afghanistan and Musharraf of Pakistan meet on February 8, 2002, sign an agreement for a new pipeline, and the way forward is open for Unocal/Delta once more.”

“The Bridas contract was breached by U.S. military force, but behind the combat was Unocal.”

“Bush Administration stood ready with financing to build the pipeline across Afghanistan, and with a permanent military presence to protect it.”

“Then came the smokescreen of carefully crafted deceptions. The staging of the Jessica Lynch rescue. The toppling of the statue in Baghdad. Mission accomplished. The orchestrated capture, kangaroo court trial, and hurried execution of Saddam Hussein. Nascent "democracy" in Iraq. All were scripted to burnish the image of George Bush's fraudulent war. The smokescreen includes the cover-up of 9/11. Initially and fiercely resisting any inquiry at all…”

Afghanistan, the Taliban and the Bush Oil Team

“Hamid Karzai, … Prime Minister of Afghanistan, was a top adviser to …UNOCAL … which was negotiating with the Taliban to construct a … pipeline from Turkmenistan through … Afghanistan to Pakistan.

Karzai's ties with UNOCAL and the Bush administration are the main reason why the CIA pushed him for Afghan leader…”

Surprise, Surprise: Iraq War Was About Oil

After waiting for several years, the clincher finally came. Here is Lawrence Wilkerson, Colin Powell's former Chief of Staff, explaining that Afghanistan and Iraq are about oil:

Foreign Policy - Israel and Middle-East

2007-08-03T15:56:00.004-04:00

We would like to see a peaceful Middle-East, however, the Middle-East is not the only part of the world that needs help or peace-keeping. It gets most of the media attention.

Ideally, we would like to see the Jews live peacefully in Israel and for the Arabs to accept this. This is easier said than done. The Arabs have a valid argument. They claim that if Israel, which was created in 1949 by Europeans and Americans, is a solution to the Jewish problem in Europe, then why wasn't it created in Europe?

We think that there is a possible solution that hasn't been tried. We think that Israel, Europeans and Americans should attempt to buy the land in Israel from the Arabs. Instead of spending billions of dollars on nuclear weapons and other WMDs for Israel, those billions can be possibly used to negotiate a peaceful ownership of the land and co-existence.

Separaton of Church and State

2007-08-03T14:58:00.001-04:00

The founding fathers of United States believed in a secular government and wrote in their constitution that there will be a separation of church and state. We agree with this belief for several reasons.

If the government is led by a religious leader, that leader will impose his/her religious beliefs onto others. This is in conflict to the belief of religious freedom, where citizens should be allowed to practice whatever religion they want. In fact, many of the original settlers immigrated to North America to flee religious oppression in Europe, including the pilgrims on the Mayflower that landed on Plymouth Rock.

Canadians follow many religions. If the leader is religious, oppression and discrimination can happen to Canadians who follow religions different to his/hers, as well as Atheists, Agnostics, homosexuals and women.

Religion is one of the reasons that United States has engaged in continuous conflict in the middle east.

At one time, Canada and United States were dominated by WASPs (White Anglo Saxon Protestants). Protestants, who were moderate Christians, believed that Catholicism was more extreme. Catholics have now dominated Canada, but are moderate compared to Baptists and Evangelicals. The Baptists and Evangelicals do not believe that Catholics are true Christians. In the 1970's, Evangelicals such as Billy Graham, Oral Roberts and Jimmy Bakker were thought of as radical, as they yelled out their preaching on television. Now, Evangelicals are part of mainstream USA and has become the largest and fastest growing religious group in the U.S. This transformation in the US has affected US foreign policy, which in turn has affected many other countries including Middle-East, Canada, Europe and Australia.

Most Canadians and Europeans do not realize how religious United States has become. British Professor Richard Dawkins has called United States, the "Taliban of the West".

George Bush is an Evangelical and was put in power by Evangelical voters.

Unlike other Christians, Evangelicals interpret the Bible literally and believe in Armageddon and the second coming of Christ. Armageddon will be a big war in Israel coinciding with the end of the world. This war will be between the Muslims, Jews and Christians, where millions of people will die. Jesus Christ will return to Earth. The survivors will accept Jesus as their savior. Those who do not, will perish. After this event, all humans on Earth will be Christians.

Due to this belief, Evangelicals are the only non-Jews who are Zionists, as they want to fulfill their prophecy of Armageddon happening in Israel. Therefore, they support the foreign policy of Zionism, advocated by Jewish Americans such as ex-Assistant Secretary of Defense, Paul Wolfowitz. This policy includes the removal of Middle-East governments who are anti-Israel, such as Saddam Hussein of Iraq. Wolfowitz's "Roadmap to Peace", which was adopted by George Bush, advocated the removal of other Middle-Eastern governments who are also anti-Israel. Due to the bog-down in Iraq, they have not been able to carry this out.

Unfortunately, millions of Americans are paying for Zionism with thousands of lives and billions of dollars of tax money and yet most of them do not know what Zionism is or how to spell it.

We do not support this policy, or any policy that causes so much violence and death.

We believe that most people are Atheists to a large extent because most do not believe in dozens of Gods except their own. Most people do not believe that Jupiter, Saturn, Venus, Mercury or Mars are Gods. They do not believe that Zeus is the God of Gods. They do not believe in the Aztec or Mayan Gods. The Jews, Buddhists and Muslims do not believe that Jesus Christ is a God. The Jews, Buddhists and Christians do not believe in Mohammed. Many Christians do not believe that Mormons are Christians. Baptists and Evangelicals do not believe that Catholics are true Christians. Most people do not believe that Scientology is a religion. All of them cannot be right about their own Gods.

Some religions, such as the Evangelicals, tend to under-prioritize the environment. We believe that the environment should have very high priority.

Corruption - Liberals

2007-06-11T19:02:00.010-04:00

If you're thinking of robbing a store, don't bother. Become a government or business leader and steal millions.

Get taxpayers to pay for love nests (condos furnished with prostitutes) in downtown Montreal. Get taxpayers to pay for your wife's shopping sprees in Montreal. Based on the GOMERY report, there was ORGANIZED MONEY LAUNDERING and THEFT to the tune of approximately $400 Million. There are dozens in this Liberal organized CRIME FAMILY.

However, only two is being charged. Gagliano spent most of his summers golfing in Montreal. Chuck Guité is retired in Florida.

If you get caught, your chances of going to jail is almost nil. You might be burdened like Jean Chretien who is "fighting to keep his reputation".

White collar criminals won't get punished because laws are written and enforced by white collar people.

Even though Paul Coffin, one of the Liberal Mafia members, pleaded guilty to 15 charges of fraud in 2004, he didn't get any jail time and as part of his sentence, he agreed to give talks about business ethics. What a concept. Be a criminal and give talks about ethics. It's interesting that criminals are more qualified to give these talks than ethical people.

You can be a criminal and be on the speaking circuit like Bill Clinton.

But, if you're going to steal, steal for a province other than Quebec for a change.

_____________________________________

Info on Sponsorship Scandal

http://www.theglobeandmail.com/servlet/story/RTGAM.20051101.wgomchaps1101/BNStory/Front

Jean Brault and Groupaction

Jean Brault, president Groupaction Marketing Inc. He is the founder and president of Groupaction Marketing Inc., a company that recently bought two other major federal advertisers, Lafleur and Gosselin. Groupaction was one of the government's favourite advertisers, bringing in about $60-million in sponsorship contracts. Mr. Brault and sponsorship has been charged with six counts of fraud and faces a trial next year. Mr. Brault's Gomery testimony caused a sensation. He alleged that $1.2-million went to the Liberal party through various means, including fake invoices, fake jobs, donations and cash.

Jacques Corriveau and Pluridesign

Pluridesign, design firm owned by Jacques Corriveau that provided publicity materials for Liberal election campaigns in 1997, went on to earn millions under the sponsorship program. Charged $4,500 for neckties with a Canadian flag on them, including fees for "strategic research" and other creative services. Received $5.8-million in subcontracts between 1997 and 2002 from Le Groupe Polygone Editeurs, a company that received major sponsorship deals. Got $1.8-million from ad agency Lafleur. Corriveau is a friend of Jean Chrétien. Groupaction's Jean Brault alleged he paid him almost $500,000 through fake invoices, money that was supposedly going to "the cause" or the Liberal party.

Luc Lemay and Groupe Polygone Editeurs

Groupe Polygone Editeurs Inc., a little-known company whose events and publications became the favourite destination of federal advertising dollars. Over five years, Polygone obtained $40-million to put federal advertising at its hunting-and-fishing shows in Quebec and in its outdoors magazines. The sponsorship money was handled through Groupaction. Over all, Polygone received almost 20 per cent of all the funds that went through the sponsorship program, while the rest were spread out between hundreds of organizations. Mr. Lemay testified at the Gomery inquiry that Jacques Corriveau raked almost $6-million through bogus, unverified invoices.

Jean Lafleur and Lafleur Communications

Jean Lafleur, head of Lafleur Communication Marketing (LCM), a company that relied almost solely on government work -- his company got $65.4-million in sponsorship contracts. He had contact with senior Liberals -- including socializing with them -- and a Crown corporation head. Jean Lafleur's son, Éric Lafleur, worked for the Prime Minister's Office while vice-president of Lafleur Communications and president of Publicité Dezert, a company that got subcontracts. Jean Lafleur said Quebec Liberals Joe Morselli and Benoît Borbeil asked him to donate money to the party. He gave In total, there was $42,213 in official donations to the party. The firm was bought in 2001 by Groupaction.

Gilles-André Gosselin and Gosselin

Gosselin communications stratégiques of Ottawa awarded subcontracts to Unicom Inc., a company owned by Nicolas Gosselin, the son of Gosselin Communications founder Gilles-André Gosselin. In October 1998, sold his firm to Groupaction, worked there until 2002. The company got $21.2-million in sponsorship contracts. Gosselin's employees and relatives charged the government for 3,414 hours of work, mostly to attend events at the Corel Centre. Gilles-André also charged the government for 3,673 hours of sponsorship work in one year, which drew skepticism from Gomery.

Paul Coffin and Coffin Communications

Paul Coffin's company received $8.7-million in sponsorship contracts. He pleaded guilty to 15 charges of fraud in 2004, and agreed to pay back $1-million of the $1.55-million. He avoided jail time (the Crown sought 34 months) and as part of his sentence, he agreed to give talks about business ethics.

Claude Boulay and Groupe Everest

Claude Boulay, head of Groupe Everest. He is the president of Groupe Everest, a company that was long associated with former Conservative leader and current Quebec Liberal Leader Jean Charest. Media IDA Vision, a subsidiary of Everest acts as the government agency of record, placing all government ads on television, radio and newspapers. Everest is also a major player in the government's sponsorship program, having gotten $67.7-million in contracts. He has had connections to Paul Martin during 1993 campaign, but the Prime Minister said he barely knows Mr. Boulay and Mr. Boulay says he didn't get contracts because of his contacts.

Chuck Guité

Mr. Guité ran the sponsorship program from its inception until 1999 when he retired. He is charged along with Groupaction's Jean Brault of six counts of fraud related to sponsorship contracts. When he retired, he set up a consulting firm, Oro Communications, and received about $1-million consulting fees from a number of ad agencies that got sponsorship contracts.

Corruption - Corporations

2007-06-10T18:29:00.001-04:00

According to CommonDreams.org, "...corporate...corruption on an almost unfathomable scale. They put to shame those petty government bureaucrats who stole a few thousand dollars or even a few million. The numbers bandied about in the Enron, WorldCom and other scandals are in the billions, greater than the GNP of many countries."

When executives steal, they steal millions of dollars instead of the $200 that robbers steal from convenience stores. Also, executives steal from thousands of people (shareholders, employees, pension-fund holders, mutual-fund holders, RRSP/401K holders, etc.). Most people in society own stock directly or indirectly through funds. Unlike retail stores or banks that get robbed, victims of corporate crime rarely know that they are victims. Therefore these executives are likely stealing from you and you don't know it. Hence, there is very little public outrage, as there is when people see robbers steal a purse.

Furthemore, white-collar criminals rarely get jail-time. If you steal from a banking machine, you get can 10-15 years of jail-time. Executives steal tens or hundreds of millions and they rarely get that kind of jail-time. This problem is compounded by the lack of media coverage of corporate corruption and crime. According to Wikipedia :

"Weissman and Mokhiber (1999) catalog the silence and indifference of the major media in the face of the widespread corporate corruption. Only in part is this justifiable. The news media find it difficult to respond to corporate crime both because reporting may compromise the trial by tainting the jury's perceptions, or because of the danger of defamation proceedings. Further, major corporate crime is often complicated and more difficult to explain to the lay public, as against street or property crimes, which may provide graphic visual evidence of harm to victims injured, or of property that has been damaged or vandalized in spectacular fashion. But, more significantly, the news media are owned by large corporations which may also own prisons."

Remember:

North America is just as corrupt as Latin America. The only difference is that the Latin Americans know that their countries are corrupt. Most North Americans are clued-out as to how corrupt their countries are.

Many of the mansions and villas that you see in the Cayman Islands, Barbados, etc., are paid with money stolen from you.

Here's a short sample list of corporate criminals:

Nortel

Conrad Black

Eugene Melnyck (owner of Ottawa Senators hockey team): Making C$122 Million in 2001 and C$66 Million in 2002, CEO of Biovail was the highest paid executive in Canada. More than 98% of his compensation were from sale of stock options. However, there is strong suggestion that he "pumped and dumped" and conducted illegal insider trading. Biovail gave glowing reports and forecasts of revenue and profit. Investors bought shares. Shortly after, Biovail executives sold their stocks (or options). Shortly after, finanical numbers are reported and are much less impressive than expected. Share prices plummet. It was a classic roller-coaster ride where the executives get out at the top of the ride. Both SEC and OSC allege that Melnyk failed to report his insider trading .

Andrew Rankin and Dan Duic: biggest inside traders in Canadian history. However, neither got any punishment.

Enron

Worldcomm

HealthSouth (biggest healthcare company in North America): FBI arrested CEO for fraud.

Bre-X

Tyco: CEO and CFO steal $150 MILLION

Adelphia: John Rigas and his son Timothy Rigas, who were convicted in 2004 of participating in a massive corporate-looting and accounting-fraud scandal costing $60 billion to investors.

Krispy Kreme fires 6 executives amidst investigations from the U.S. Attorney’s Office and SEC.

Corruption - Must-See Documentaries

2007-06-10T18:03:00.028-04:00

The main difference between a Latin American and a North American, is that the Latin American knows his country is corrupt.

Many of these documentaries, you will never see on mainstream media such as CNN, Fox, ABC, CBS, NBC, CTV, Global:

Inside Job. This won the Oscar for Best Documentary. Producer Charles Ferguson began his Academy Award acceptance speech by reminding us that three years after our worst financial meltdown "not a single financial executive has gone to jail."' News interview of the producer:
The Corporation: This film explains how the corporation has the same traits as a psychopath. Sounds ridiculous but their explanation makes sense. Some of their revelations are shocking.
UNCOVERED: The War on Iraq. Their website is lobbying Canada to take in 5,500 U.S. Soldiers who refused to fight and are in grave danger of persecution by the Bush Admin.) This film came out on Nov 2003 (before Fahrenheit 9/11). It explained how the Bush Administration lied, defrauded, deceived and committed multiple federal and international crimes. Noam Chomsky was right. The only government leaders that get charged with war crimes are the ones that lose the war. The winners never get charged with their war crimes.
Why We Fight This explains how the American Military Industrial Complex is a factor in the string of wars that the US have engaged in.
Fog of War This is a documentary of Robert McNamara, who was the Secretary of Defense during the Vietnam war. McNamara explains how the war was a mistake.
Missing: This movie is based on true story and shows how spreading democracy is another lie. Chile is one of several countries that had a democratically elected government, only to be replaced by the US with a dictator. The ambassador's lecturing to Jack Lemmon at the end explains volumes. (Missing on Youtube)
Smartest guys in the room: This documentary shows how evil executives can be and how they can steal so much from so many people.
Lord of War: Excellent, suspenseful, very disturbing, insightful and educational. Nicholas Cage is an arms dealer. Based on actual events and real arms dealers. Approximtely 15+ years ago, Forbes had an arms dealer as one of the top 10 richest men in the world. This movie shows how lucrative this business is and how corrupt the world is.
Noam Chomsky's lectures. You can see some of them by searching for "Noam Chomsky" on YouTube
The Jesus Factor. Without separation of church and state, you get leaders like George Bush.
CBC documentaries, such as Fifth Estate (The Lies that Led to War) , The Lens and the Passionate Eye (The Ground Truth: After the Killing Ends, Iraq's Missing Billions, No End in Sight, etc.)
The Lies that Led to War

The Ground Truth: After the Killing Ends

Iraq's Missing Billions

No End in Sight - 1 of 3

No End in Sight - 2 of 3

No End in Sight - 3 of 3
War Made Easy with Sean Penn and Norman Solomon. Explains how you've been lied to and duped, again and again. Democracy can only work if you know the truth, otherwise you have an illusion of democracy.
I.O.U.S.A. This came out in 2008, which warned of the pending debt crisis, shocking fiscal condition and potential economic disaster.

Environment - How Big is your Carbon Footprint?

2007-05-03T20:56:00.003-04:00

If you believe in recycling, then read on.

It may be more important to reduce your Carbon Footprint, than recycling.

The average North American produces 0.7 ton of garbage per year. However, this same person produces 18-20 tons of CO2 per year, which is equivalent to the weight of 3-5 elephants.

Calculate your Carbon Footprint at Zerofootprintoffsets or various other sites. (Note: some of these sites will plant trees to offset your Carbon Footprint for a fee, however, some of them can be scams.)

Your Carbon Footprint is the cause of Global Warming, which can leave a destroyed environment for your children. So, don't be greedy, or hypocritical. As you would tell your children, "leave it as clean as you found it".

According to a UN report, natural disasters are on the rise, killing more people:

The earthquake/volcanic disasters have not risen. The climate related disasters have.

Between 1950 and 1959, there were 20 disasters, costing $38 billion in economic loss.
Between 1990 and 1999, there were 82 disasters, costing $535 billion in economic loss.

Note that each disaster has become more expensive. Number of disasters has increased 4X, but the cost has increased 14X.

Therefore, Global Warming can cost you a lot of money and reduce your standard of living, not to mention a possible refugee crisis banging on your country's border.

Supposedly, in the past 10-20 years, the size of houses have exploded but the size of families have shrunk. Houses are huge generators of CO2.

We need to deter people from buying such big houses. We need to provide incentives for people to live in condos or apartments.

Of course, SUVs are huge generators of CO2. They carry 700+ lbs of extra gears and machinery so that they can go over rivers, creeks, logs and up rocky hills. Yet, nobody drives over logs and up rocky hills, not even the SUV owners in small rural towns. SUVs are the extreme form of pretentiousness, as the owners pretend to be outdoorsy and rugged, yet the majority of them are as urban as you can get.

Therefore, we should immediately stop the sales of SUVs.

We need to provide incentives for companies to allow people to telecommute, since commuting cars is a huge contributor to CO2 emissions.

Sources:
http://www.uneca.org/wssd/Env_Rprt.PDF
World average: 1.13 metric tons of CO2 per person per year

http://abcnews.go.com/Technology/TenWays/story?id=2049304&page=1
American average: 22 tons per person
World average: 6 tons of CO2 per person per year

http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions_per_capita

http://en.wikipedia.org/wiki/Image:CO2_per_capita_per_country.png

http://hypertextbook.com/facts/2003/EugeneShnayder.shtml
http://www.upali.ch/weight_en.html
Elephant weight: 3500-7000 kg

20 metric tons = 2.8 - 5.7 elephants

http://www.recycling-revolution.com/recycling-facts.html
Garbage per person: 4.4 pounds per day = 0.72 metric ton per year

http://en.wikipedia.org/wiki/Debris
Garbage per person: 4 pounds per day = 0.66 metric ton per year

Economic loss:
UNISDR

Over-Population - Balance of Animals to Humans

2007-05-03T16:33:00.003-04:00

There are 370 of these left:

Below is how populations have changed over time:

The animal population curves in the above chart are too close to zero to see (even if they were multiplied by a thousand), compared to the human curve. However, instead of going up, they've all gone down. Below are their numbers:

Year:	1900	2000	reduction
Tigers	100,000	7,000	93%
Orangutan	315,000	4,800	98%
Cheetah	100,000	25,000	75%
Blue Whale	400,000	12,000	97%
Elephants	10,000,000	530,000	95%
Chimpanzees	2,000,000	150,000	93%
Year:	1970	2000
Rhinoceroses	65,000	2,500	96%

This does not show the thousands of species that have already gone extinct because of humans.

Humans don't need help to survive. Animals do.

Here's how the current populations compare:

The animal populations are so small that their bars are effectively zero compared to the bar for humans.

Canada is one of the most sparsely populated countries in the world. Its map has little dots that represent towns scattered throughout the country. The population for most of these animals would not even be a dot on a map of Canada, forget about trying to be a dot on a more populous country. In fact, your high-school probably had a larger population than most of these animals.

Contrary to popular belief, Whales have the biggest brains on earth, not humans. They are intelligent animals that communicate and even sing. Bonobo looks like a Chimpanzee and is the most closely related animal to humans. 98% of their DNA is identical to yours.

Even if we hypothetically increase these animal populations by a thousand times (x 1,000), as shown below, their bars are still relatively zero compared to the human bar:

If the human bar was the same height as the World Trade Center, the bar for Blue Whales would be 0.11 millimeters (0.0045 inches) high and the bar for Siberian Tigers would be 0.02 millimeters (0.0009 inches) high...the same height as a dust particle...effectively zero height.

Help the animals. Don't let them go extinct. They are loving, majestic, beautiful, stunning, intelligent and INNOCENT. It took millions of years for them to evolve and we are making them extinct in a matter of decades. Once extinct, they will NEVER be back.

Don't buy products with Ivory, Tiger or Whale parts. When you do, you are conspiring with evil poachers to illegally kill these animals and contribute to their extinction.

There are 30 of these left in the Far East:

There are less of these whales in the whole world than there people in one average high-school:

Blue whales viewed from the air:

More than 95% of their DNA is identical to yours. There are 4,800 of these left:

If you love animals, send this link:
http://newworldparty.org/2007/05/over-population-balance-of-animals-to.html
to as many animal lovers as you know.

Somebody should check out the validity of:
http://www.savethetigerfund.org
http://www.savechinastigers.net

Sources:
http://www.bergen.org/AAST/Projects/ES/AP/
http://www.itv.com/news/4d42d34b12b4b79fc5e02c561b834ec6.html
http://quest.arc.nasa.gov/antarctica/QA/animals/Animal_Population,Species
http://www.iwcoffice.org/conservation/estimate.htm

Gorillas:
http://www.cotf.edu/ete/modules/mgorilla/mgbiology.html

Tigers:
http://www.wcs.org/international/Asia/russia/siberiantigerproject
http://en.wikipedia.org/wiki/Tiger
http://en.wikipedia.org/wiki/Amur_Tiger

Far Eastern Leopard:
http://www.wcs.org/international/Asia/russia/transboundary

Save the Tiger
http://www.savethetigerfund.org

Orangutan
http://www.wwf.or.id/index.php?fuseaction=press.detail&language=E&id=PRS1165194301
http://biology.plosjournals.org/perlserv/?request=get-document&doi=10.1371%2Fjournal.pbio.0040025

Bonobo population
http://diglib1.amnh.org/articles/Africa/Africa_environment.html

Chimpanzee population
http://www.abc.net.au/worldtoday/content/2006/s1686721.htm (Jane Goodall)

http://diglib1.amnh.org/articles/Africa/Africa_environment.html
http://nationalzoo.si.edu/Publications/ZooGoer/1998/2/savingthetiger.cfm
http://biology.plosjournals.org/perlserv/?request=get-document&doi=10.1371%2Fjournal.pbio.0040025
http://www.bergen.org/AAST/Projects/ES/AP/africa/animalsb.html#gorilla
http://www.answers.com/topic/blue-whale
http://diglib1.amnh.org/articles/Africa/Africa_environment.html
http://www.honoluluzoo.org/indian_elephant.htm
http://diglib1.amnh.org/articles/Africa/Africa_environment.html

http://www.deh.gov.au/minister/env/2004/mr18jun04.html

Environment

2007-04-08T22:07:00.000-04:00

Protecting the environment is crucial to, not only the quality of life for humans and animals, but to protecting our economy and wealth as well.
For future generations, we believe that we should leave it the way we found it or better.
We need to meet Kyoto targets ASAP.
North American Carbon Footprints are much too high. Instead of flattening, our Carbon Footprints are still growing! Even if we are able to flatten it, the globe will still get warmer. We have to reduce our Carbon Footprint to stop Global Warming.
- House sizes have exploded but family sizes have shrunk.
- North Americans have been brainwashed by car marketeers into thinking that driving a S.U.V. makes them more rugged and outdoorsy.
- S.U.V.s have 500-700 extra pounds of gear to enable them to drive over rivers and logs and yet, almost nobody does this. It has become one of the most superficial and pretentious fads in our society. At the same time, it has been extremely damaging to our environment, but making millions for car-makers.
Due to human over-population, we have livestock over-population. According to a 2006 report from UN's Food and Agriculture Organization (FAO), livestock produce more Carbon Dioxide than all of the cars, freight trucks, railways, airplanes and container ships in the entire world. The planet's livestock animals breathe out three billion tonnes of Carbon Dioxide a year. Humans breathe out two billion metric tonnes of Carbon Dioxide a year. Quotes from article:
- "UN...described the spiralling increase in greenhouse gases from livestock as 'massive' and asserted that the world governments must urgently address the problem.
- "As Pogo astutely observed so many years ago: 'We have met the enemy and he is us.'"