"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'
The chart above is from an Australian Government Live Fire Watch map and if one tuns on the "lightning strike" graphics from the last 72 hours, the display almost obliterates the map details.
Tracking Climate Extremes Around The World In 2019
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The CBRE Group, Inc. trading on the New York Stock Exchange under the symbol “CBRE.” is the world’s largest commercial real estate services (2018). Their recently released study "Scoring Canadian Tech Talent" provide insights into how the growth in demand for tech talent is impacting cities and real estate markets across Canada.
CBRE Report Snippets
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For years I have been highlighting the demand in Canada for tech workers. The October 2019 employment data is typical of the obvious trend: Professional, Scientific and Technical Services employment is up +7.4% Y/Y while Service Producing is up 3% Y/Y and Goods Producing is up 0.1% Y/Y.
Yes, the information revolution is producing new data consumption markets at the corporate level, but what about our social contract and our environmental needs? We need to direct capital and labour towards complex issues like environmental remediation, infrastructure, education, health, wellness, and electoral and taxation reform.
Tax reform should be taken on by the tech sector, because the political institutional approach towards taxation is built upon generations of carrot and stick incentives which end up benefiting one voting constituency over another.
If we are to take on the the greatest challenges to our well being, the Automated Payment Tax developed by Edgar L. Feige, Professor of Economics Emeritus at the University of Wisconsin-Madison would indeed kick start stubborn 20th century institutional thinking into a progressive 21st century that the new tech sector generation dreams of. How?
The APT (Automated Payment Tax) is a micro tax taken at every financial transaction where each side of the transaction gets debited a small amount of capital that is credited to the government in a revenue neutral algorithm. Professor Feige's team modeled the U.S. economy from late 1990's data and realized that it would take less than 2% of every financial transaction to produce a revenue neutral state where all the government's fiscal objectives were met.
The APT would eliminate the need to file tax or information returns. That in itself should provide enough incentive to read the 41 page PDF study by Feige.
Yes, the information revolution is producing new data consumption markets at the corporate level, but what about our social contract and our environmental needs? We need to direct capital and labour towards complex issues like environmental remediation, infrastructure, education, health, wellness, and electoral and taxation reform.
Tax reform should be taken on by the tech sector, because the political institutional approach towards taxation is built upon generations of carrot and stick incentives which end up benefiting one voting constituency over another.
If we are to take on the the greatest challenges to our well being, the Automated Payment Tax developed by Edgar L. Feige, Professor of Economics Emeritus at the University of Wisconsin-Madison would indeed kick start stubborn 20th century institutional thinking into a progressive 21st century that the new tech sector generation dreams of. How?
The APT (Automated Payment Tax) is a micro tax taken at every financial transaction where each side of the transaction gets debited a small amount of capital that is credited to the government in a revenue neutral algorithm. Professor Feige's team modeled the U.S. economy from late 1990's data and realized that it would take less than 2% of every financial transaction to produce a revenue neutral state where all the government's fiscal objectives were met.
The APT would eliminate the need to file tax or information returns. That in itself should provide enough incentive to read the 41 page PDF study by Feige.
The foundations of the APT tax proposal—a small, uniform tax on all economic transactions—involve simplification, base broadening, reductions in marginal tax rates, the elimination of tax and information returns and the automatic collection of tax revenues at the payment source. The APT approach would extend the tax base from income, consumption and wealth to all transactions.
Think about the desirability and feasibility of replacing the present system of personal and corporate income, sales, excise, capital gains, import and export duties, gift and estate taxes with a single comprehensive revenue neutral Automated Payment Transaction (APT) tax.
In its simplest form, the APT tax consists of a flat tax levied on all transactions. The tax is automatically assessed and collected when transactions are settled through the electronic technology of the banking/ payments system.
The APT tax introduces progressivity through the tax base since the volume of final payments includes exchanges of titles to property and is therefore more highly skewed than the conventional income or consumption tax base.
The wealthy carry out a disproportionate share of total transactions and therefore bear a disproportionate burden of the tax despite its flat rate structure.
The automated recording of all APT tax payments by firms and individuals creates a degree of transparency and perceived fairness that induces greater tax compliance. Also, the tax has lower administrative and compliance cost.
If we want to take on the challenges of the 21st century, ie: the urgent generational "moonshots" facing us, then tech sector - take on the challenge of tax reform.
Simon J. Thorpe agrees in his 12 page PDF:
A Flat Rate Financial Transaction Tax to replace all taxes?
What an excellent idea! Shame that more people didn't take notice - there are just 17 citations to his (Edgar Feige's) paper in Google Scholar. It's about time he got the recognition he deserved- and about time his forward thinking ideas got taken seriously.
Advantages of a Flat Rate FTT (Financial Transaction Tax) October 2010 by:
Simon J. Thorpe, CNRS Research Director (DRCE), CerCo (CNRS-UT3), TMBI (Univ. Toulouse), BrainChip Inc
- A Flat Rate FTT is fair.
- A Flat Rate FTT is cheap to implement.
- A Flat Rate FTT would be virtually impossible to avoid.
- Removing conventional taxes would make tax havens largely irrelevant.
- A Flat Rate FTT would provide a level playing field.
- A Flat Rate FTT taxes those actors in the economy who can pay.
- The abolition of taxes on profits would be a major incentive to the economy.
- Increased incentives to short production supply chains.
- Increased incentives for local exchanges.
Read the full argument.
"The global financial crime wave is no accident Financial crime is a feature of our global financial system not a bug." said pioneering economist Susan Strange. November 28, 2018 by Naomi Fowler
Financial Secrecy Index - 2018 Results
Canada ranks 21 out of 112 jurisdictions after Switzerland (1), the USA (2) and the Cayman Islands (3).
“Canada and the U.S. are the two most lax jurisdictions in the world when it comes to the rules for preventing the incorporation of anonymous shell companies. What’s more, corporate service providers operating in those two countries are less compliant than those operating in Ghana, Lithuania, or Barbados, and follow laxer rules than those in Malaysia or the Cayman Islands.”
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"Chinese Yuan makes up a lower portion of global reserves than the British Pound and even the Swiss Franc, and is just ahead of Canada." Hat Tip to @anilvohra69 for the note and graphic in my Twitter feed. US dollar credit to non-bank borrowers outside the United States grew by 4% year on year to reach $11.9 trillion at end-June 2019. This represents a slight acceleration relative to the 3% annual growth rate observed at end-2018. Bank of International Settlements October 2019 Foreign borrowers of USD denominated debt is accelerating. What gets borrowed in USD has to be repaid in USD and as the USD rises in value, so does the demand for USD. I update my USD vs CAD Canadian Housing Price chart as well as my Canadian Household Debt chart every month. Our chronic negative Canadian Balance of Trade means that OUR debt obligations continue to provide more stimulus to offshore than onshore producers. A rising USD is not good for most Canadians. |
INVESTOPEDIA KEY TAKEAWAYS, July 2019
> A dollar shortage occurs when a country spends more U.S. dollars on imports than it receives on exports.
> Since the USD is used to price many goods globally, and is used in many international trade transactions, a dollar shortage can limit a country's ability to grow or trade effectively.
> Most countries try to maintain a reserve of currencies, like U.S. dollars or other major currencies, which can be used to buy imported goods, manage the country's exchange rate, pay international debts, or make international transactions or investments.
Pierre Trudeau’s Washington Press Club speech
“Living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.” Pierre Elliot Trudeau, the March 1969 speech to the Washington Press Club.
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While we wait for the October real estate data to start coming out later this week, BNN yesterday reported on Warren Buffett's plan to invest in a new Alberta Wind Farm. "The Rattlesnake Ridge Wind Project" will be located southwest of Medicine Hat and produce enough energy to supply the equivalent of 79,000 homes. Apparently demand is bankable because an "unnamed large Canadian corporate customer has signed a long-term power purchase agreement for the majority of the Rattlesnake Ridge energy output..." The Government of Canada chart mashup shows Alberta to be the 3rd largest renewable energy supplier via wind energy in Canada, and BNN goes on to report that Buffet's Berkshire Hathaway Energy "...also owns AltaLink, the regulated transmission company which supplies electricity to more than 85 per cent of the Alberta population."
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Warren Buffett's firm invests $200M in Alberta wind project
Bill Christensen, V.P. corporate development at BHE Canada, discusses an Alberta wind farm that the company has invested in. BNN Bloomberg OCT 29, 2019
AND SOME KEY DATA
- Wind and solar energy are the fastest growing sources of electricity in Canada.
- In 2017, Canada obtained 17.3% of its energy supply from renewable sources. For comparison, OECD countries, on average, got 10.2% of their energy supply from renewables sources, while the world average was 13.4%.
- In 2017, hydro accounted for 67.1% of Canada’s total renewable energy use, followed by solid biomass at 23.1%, wind at 5.3%, ethanol at 1.7%, municipal waste and landfill gas at 1.2%, solar at 0.6%.
- The installed capacity of wind power has grown from 444 megawatts in 2004 to 12,817 megawatts in 2018. The amount of annual new capacity peaked in 2014 with 1,891 megawatts. In 2018, 578 megawatts were added.
- In 2018, there were 246 wind farms in Canada with at least 1 megawatt of capacity. There are 17 wind farms with at least 150 megawatts. The largest wind farm is Lac Alfred with 300 megawatts.
Neil Young - Four Strong Winds (Live at Farm Aid 1993)
In the late 1950's and early 1960's, 79% of us voted.
In the last federal election, only 68% of us voted.
Your future is in the count; get out and vote.
In the last federal election, only 68% of us voted.
Your future is in the count; get out and vote.
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The chart below comes from Environmental Defence, a leading Canadian advocacy organization "that works with government, industry and individuals to defend clean water, a safe climate and healthy communities."
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Their October 10, 2019 piece "The oil lobby is lying. Canadian oil isn’t clean oil." documents that "46 countries produced oil with a lower per barrel carbon footprint than Canada. Only three countries were worse: Algeria, Venezuela, and Cameroon. We’re 47th out of 50 countries."
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As the report concludes in part:
"Governments must stop spending financial and political capital to further the interests of one industry whose aspirations will literally devastate the planet, at the expense of all of us." NEWS ITEMS:
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Methane: The Arctic's hidden climate threat.
Natalia Shakhova's latest paper. Jun 23, 2019
Even with existing levels of warming and melting of the Arctic region, submarine methane releases linked to clathrate breakdown have been discovered,[32] and demonstrated to be leaking into the atmosphere.[5][34][35][36] A 2011 Russian survey off the East Siberian coast found plumes wider than one kilometer releasing methane directly into the atmosphere.[32] According to monitoring carried out in 2003/2004 by Shakhova et al., the surface layer of shelf water in the East Siberian Sea and Laptev Sea was supersaturated up to 2500% relative to then present average atmospheric methane content of 1.85 ppm. Anomalously high concentrations (up to 154 nM or 4400% supersaturation) of dissolved methane in the bottom layer of shelf water suggest that the bottom layer is somehow affected by near-bottom sources. Considering the possible formation mechanisms of such plumes, their studies indicated thermoabrasion and the effects of shallow gas or gas hydrates release.[4] Wikipedia Arctic Methane Emissions Page
New Arctic lakes could soon be a major source of atmospheric methane. August 20, 2018
For centuries, a massive store of carbon has been locked underground in the Arctic's permanently frozen soil known as permafrost. As Earth's climate continues to warm, that carbon has begun to leach into the atmosphere, the result of microbes waking up and digesting once-frozen organic materials. A new NASA-funded study focuses on a mechanism that could accelerate the release of this atmospheric carbon, the result of thermokarst lakes. These lakes form when thawing permafrost causes the ground to slump, creating a depression that collects rain and snowmelt and perpetuates a cycle of further permafrost thaw. NASA August 2018
Now that Trump is plummeting into a straight jacket of impeachment we can look for fallout that may affect Canadian Real Estate over the next year. Trade war, cyber war, military war and the ideological war of words and memes will no doubt affect the animal spirits of investors.
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The bigger influence on Canadian real estate values will be the next decade of our reactions to the exponential growth in climate problems ("very high confidence") global migration pressures and the inevitable expansion towards technological solutions and a new generation of research and development; a new generation of critical thinking. “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.” that is, "Science advances one funeral at a time" Max Planck 1949 |
From Wikileaks comes the 1217 page PDF 2017 U.S. Global Change Research Program 'Climate Science Special Report' (CSSR). Below is a screen shot of the key findings page:
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Here follows, a text version of the screenshot of the key findings page of the 2017 U.S. Global Change Research Program 'Climate Science Special Report' (CSSR):
1. Our Globally Changing Climate
KEY FINDINGS
- The global climate continues to change rapidly compared to the pace of the natural changes in climate that have occurred throughout Earth’s history. Trends in globally-averaged temperature, sea-level rise, upper-ocean heat content, land based ice melt, and other climate variables provide consistent evidence of a warming planet. These observed trends are robust, and have been confirmed by independent research groups around the world. (Very high confidence)
- The frequency and intensity of heavy precipitation and extreme heat events are increasing in most regions of the world. These trends are consistent with expected physical responses to a warming climate and with climate model studies, although models tend to underestimate the observed trends. The frequency and intensity of such extreme events will very likely continue to rise in the future. Trends for some other types of extreme events, such as floods, droughts, and severe storms, have more regional characteristics. (Very high confidence)
- Many lines of evidence demonstrate that human activities, especially emissions of greenhouse gases, are primarily responsible for the observed climate changes in the industrial era. There are no alternative explanations, and no natural cycles are found in the observational record that can explain the observed changes in climate. (Very high confidence)
- Global climate is projected to continue to change over this century and beyond. The magnitude of climate change beyond the next few decades primarily on the amount of greenhouse (heat trapping) gases emitted globally and the sensitivity of Earth’s climate to those emissions. (Very high confidence)
- Natural variability, including El Niño events and other recurring patterns of ocean-atmosphere interactions, have important, but limited influences on global and regional climate over timescales ranging from months to decades. (Very high confidence)
- Longer-term climate records indicate that average temperatures in recent decades over much of the world have been higher than at any other time in the past 1700 years or more. ( High confidence)
1.1 Introduction
Since the Third U.S. National Climate assessment (NCA3) was published in May 2014, new observations along with multiple lines of evidence have strengthened the conclusion that Earth’s climate is changing at a pace and in a pattern not explainable by natural influences.
Swedish climate activist Greta Thunberg chastised world leaders Monday, Sep. 23, for failing younger generations by not taking sufficient steps to stop climate change. "You have stolen my childhood and my dreams with your empty words," Thunberg said at the United Nations Climate Action Summit in New York. "You're failing us, but young people are starting to understand your betrayal. The eyes of all future generations are upon you. And if you choose to fail us, I say we will never forgive you," she added. Thunberg traveled to the U.S. by sailboat last month so she could appear at the summit. She and other youth activists led international climate strikes on Friday in an attempt to garner awareness ahead of the UN's meeting of political and business leaders.
PBS NewsHour Sep 23, 2019
 CLICK CHART TO ENLARGE  CLICK CHART TO ENLARGE | The charts from visualcapitalist.com show the global breadth and momentum increase in Chinese shipping. In 2006, only 3 of the top 10 ports were located in China. In 2019 that ratio grew to 7/10. Canada does not have any ports in the top 20 and according to 2015-16 StatsCan Data "the Chinese fleet, national & foreign flag combined, is ranked 3rd in terms of dead weight tonnage. Canada is ranked 29th." A conversation with a neighbour inspired this post. Among other projections, the Neighbour thought that Canada is due for a big increase in manufacturing volume. I countered that thought with the reality of my chart on Household Debt which includes a plot of Federal Direct Investment which clearly shows that FDI has been negative for the last 20 years and the spread between investment into and out of Canada has grown much wider in the last 3 years to 2018 year-end. That's a solid trend. We Canadians in less than a generation have become dependable and dependent (on China) consumers. |
In my opinion, even if we can muster the societal will, it will take at least another new generation of Canadians to reverse the trend because after more than a decade of global ZIRP & NIRP and Canada's slide into becoming one of the most unaffordable countries to live in (Demographia), Canadians are up to their necks in household debt.
From: mortgagebrokernews.ca Sept 16, 2019
The Credit Counselling Society also reported that on average, Canadians are carrying a debt load of $30,000 each – far above the $12,000 level just 20 years ago.
“Canadians continue to rely on their credit cards or lines of credit to supplement costs of living,” CCS president Scott Hannah said.
“If the economy continues to slow amidst trade tensions and other factors, Canadians need to prepare now for a potential recession in the future.”
Hannah also cited the latest survey of employed Canadians by the Canadian Payroll Association, which found that 1 in 3 consumers currently hold credit card debt, and 38% will need more than a year to pay off said debt.
Additionally, 1 out of 3 Canadians indicated that their debt loads have increased since last year, and that they are spending more than their net income. As much as 43% are forced to live paycheque to paycheque, while fully 83% confessed anxiety over growing daily living costs.
“We are not surprised by these latest statistics, as we continue to hear from Canadians, who are having difficulty managing their rising debt levels and how to effectively manage the increasing costs of living without relying on credit,” Hannah stated.
 CLICK CHART TO ENLARGE  CLICK CHART TO ENLARGE | “Commenting on the flash PMI data, Tim Moore, Economics Associate Director at IHS Markit said: “August’s survey data provides a clear signal that (U.S.) economic growth has continued to soften in the third quarter. The PMIs for manufacturing and services remain much weaker than at the beginning of 2019 and collectively point to annualized GDP growth of around 1.5%. “The most concerning aspect of the latest data is a slowdown in new business growth to its weakest in a decade, driven by a sharp loss of momentum across the service sector. Survey respondents commented on a headwind from subdued corporate spending as softer growth expectations at home and internationally encouraged tighter budget setting. “Manufacturing companies continued to feel the impact of slowing global economic conditions, with new export sales falling at the fastest pace since August 2009. “Business expectations for the year ahead became more gloomy in August and remain the lowest since comparable data were first available in 2012. The continued slide in corporate growth projections suggests that firms may exert greater caution in relation to spending, investment and staff hiring during the coming months.” Tim Moore |
Meanwhile Canadian Net Trade has been negative
in the last 10 out of 11 quarterly prints (July 2019 data)
 CLICK CHART TO ENLARGE | While we wait for the July Canadian housing data to trickle out, let's return to Japan and their housing price experience after nearly 20 years of ZIRP and NIRP. I have posted charts about Japan since 2012 to illustrate the folly of global central banks and their monetary policies of instituting ZIRP & NIRP to stimulate inflation > consumption > production, the by-product of which, has been the manic search for yields as the underlying asset class values became stretched to perfection under pressure from the FOMO crowd. Instead of using fiscal policy which requires long term planning and socially cohesive agreements directed towards production and well being, the quarterly knob twiddling monetary policy has in part, along with the rise of a digitized global financial network, unleashed "megabyte" money laundering which the UNODC estimates at 2-5% of global GDP per year. It has also crushed the incentive to save for a future funding of investment into productive assets. The Household Saving Rate in Canada has decreased to 1.1% in the first quarter of 2019. |
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Commodity Super Cycle - 10 Years into the Bear
After 20 years of monetary suppressed-yield policy in Japan and 10 years in Canada we still see long term inflation in a grinding downtrend, and peak commodities have come and gone.
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| Here is a chart I published in a 2012 post "What Do You Do During a Housing Bust". The answer is "save". If the CRB chart above has correctly identified a cyclical swing between bull and bear commodity production, then we should expect another "lost decade" of balance sheet repair especially in the over-speculated and now depreciating housing asset markets of Canada. |  CLICK CHART TO ENLARGE |
A Housing Bubble "doesn't just warp the real estate market, the knock-on effects can throw a region's entire economy into disarray."
Bloomberg via Visual Capitalist
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House Price to Rent Ratio ... Canada Ranks 2nd
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House Price to Income Ratio ... Canada Ranks 2nd
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Real House Prices ... Canada Ranks 3rd
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Household Debt to GDP ... Canada Ranks 5th
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"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense
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