Monthly Archives: February 2009

The Patient is Dead Part I


President Barack Obama is in the hot seat with the right wing, again, as the U.S. Government now owns 40 percent, give or take, of Citigroup.  Media outlets with various axes to sharpen are calling it a nationalization of the banking system south of the border, creeping socialism, near-communist, New Deal II, yadda yadda yadda.

Let’s see what’s really up with this.  In the Dark Ages of 2003, investment companies and banks were required to keep a reserve of “cash” on hand in proportion to their debt. 

“Cash” was defined as tradable assets and valued by the market with a discount (or haircut), based on the type of asset.  If the ‘cash’ was a Treasury Bill, a very safe investment, the discount was 6%.  If the ‘cash’ was an investment in Sudanese mining stocks, the discount might be 15 percent, or higher.   

The broker would add up all the stocks, bonds and equities they owned, less the discounts and come up with a number.  Let’s call it $1,000 for simple math purposes.  According to the Security and Exchange Commission, they had to keep that $1,000 around, readily available, in the event something went bad.         

The ratio was 12 to 1, meaning the broker or bank had to have $1,000 worth of assets in a drawer somewhere, if they had $12,000 in debt. 

There were rules that broker-dealers had to maintain a certain level of rating with the various (privately owned) rating agencies like S&P, Moody and so on. 

If the broker-dealers got close to the 12 to 1, there were notifications they had to make to the government.  This is only prudent, as there will always be some investments that don’t work out and there has to be some kind of financial cushion to prevent the broker from tanking and taking all the investor’s money down too.

Where things got murky was in how you calculated what an investment company was worth.  Investment companies, to have a wad of money to play with, were usually owned by their own investment banks, which have large lumps of cash around, sitting there, doing very little or invested in very conservative things.

On paper, they’d have a huge market value, as the bank money was counted along with the investment dealer money.  The investment dealer money was significantly more risky, the bank money significantly safer, if something went bad, so there was a fudge factor and a bit of sleight-of-hand in how you calculated the real market value of a broker. 

That market value number became, using the 12 to 1 rule, the amount of money the investment broker could play with and still be legal.  The bigger the wad, the bigger the chance for a huge payback, but also the bigger the risk of losing it all.

The ugly question became:  Who’s value are we calculating?  Is it the holding company?  Is it the broker itself?  How much of that money the investment broker is risking, is actually backed up by something that can be cashed in and paid out if the investments turn out to be floating turds? 

Needless to say the investment holding companies and their hundreds of other companies underneath, had no real idea, as the ‘value’ was often stocks held in each other, again held in a separate company and loaned to another subsidiary, to borrow against, to juggle a big debt somewhere else.  In accounting parlance, it’s called a fuzz job. 

Somewhere in that chain of stocks and bonds, all under the same letterhead of “Citi” or “Lehman Bros.”, but different actual companies, there was a company that could be made to hold the floating turds without affecting the worth of the whole thing at the top of the letterhead. 

Then the tax accountants got into it.  Each company could post losses against profits and move into that whole murk of offshore, onshore, arms-length, closely held, privately held and so on.  The sole objective of the tax accounts was to hide profit and avoid paying taxes.  Profits had to be put somewhere and the Caymans or Bermuda, with their friendly tax laws, were often the location of choice.

Keep in mind, this is before the rules were changed in 2004.

In Part II, we’ll look at the rule changes in 2004.     

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Prez O Been Here Follow-up


It would seem that Prez O partially took some of my advice from a previous post regarding what he should see while in Ottawa.  The O-Man stopped at Hooker’s Beavertails and Le Moulin de Provence Bakery in the Byward Market.

Apparently in the dash to the airport, the motorcade swung by the Byward Market and Prez O did an unplanned walkabout, much to the joy of the folks in the Market and the consternation of the Secret Service.

A Beavertail, for the uninitiated is approximately related to the American fried dough, or elephant ear that you get at the state fair.  The Obama-Beavertail has cinnamon, sugar, maple flavoured eyes and a round chocolate “O” in Nutella on the top. 

A few steps away at Le Moulin de Provence Bakery, he scored a couple of “Canada” cookies for his kids.  Even more remarkable is he actually had Canadian money to pay for them.  Normally, US tourists proffer pictures of Washington or Jackson and rely on the clerk to do the math.  The owner of Le Moulin de Provence decided wisely and comped the cookies, as the calculations involved require a university degree in Nuclear Engineering. 

Canada has a lot of underemployed Nuclear Engineers working in the Byward Market, as it is a tourist destination for those with U.S. dollars.

There are no reports that the O-Man left with a pocket laden with Loonies (our one-dollar coin) or Toonies (our two-dollar bi-metal coin), but his aides likely did.  Sascha and Malika can have some of that weird Canadian money as a souvenir along with their cookies.  Heaven knows Canadian money isn’t worth anything in the US.

There are no reports of members of his entourage waking up somewhere in Hull or Point Gatineau in compromising situations involving a stuffed giraffe, ‘danceurs’ and a trampoline.  Perhaps just as well. 

Prez O Been Here


Unless you’ve been under a rock, or in protective custody for the last few days in Canada, President Barack Obama has finished his six-hour drive-by State Visit.  The national media, television and the wireless have been wall to wall with coverage.  Even CNN dropped in the occasional live shot of Prez O getting off the plane, getting into his limo, getting out of his limo, doing a two-handed presser with our Prime Minister Stephen “Call Me Stephen” Harper, and getting back on Air Force One, after breaking the speed limit going up the Airport Parkway.

When it comes to actual ‘content’, we are now assured that Prez O can actually get into and out of an airplane, a limo and a press conference.  There was much lip-flapping that Prez O actually turned around on Parliament Hill and waved at the gathered several thousand frozen citizens who had flown in to see him. 

As for the press conference, no surprises.  Everything had a “Sanitized for your Protection” stamp on it.  We heard that Prez O likes Canada and respects our banking system.  We also heard that relations will improve under the O-Man.  This is good as the previous incumbent, Jo Jo The Idiot Boy, didn’t know what street Canada was on in Kennebunkport.  Stevie even managed to crack a smile, despite cautions from his handlers to never, ever smile again.

For the American readers, imagine those old elementary school photos of Calvin Coolidge, then imagine him telling a fart joke with a big grin on his face.  Doesn’t work does it?  Harper made children cry during the election campaign when he’d smile at them.  Harper smiling makes him look like he needs to wear a helmet while out of the house and take the small bus to school; not the big bus.  According to the pundits, Harper came off as ‘statesmanlike’, which means as wooden as a pallet of 4 x 4 pressure-treated softwood lumber posts.

Just for giggles, I listened to the air traffic frequencies for Ottawa on the web and heard the pilot of Air Force One ask for wind speed, direction and runway, then confirm that he was over the Greely marker, wheels down and ready to land.  The landing was accomplished successfully. 

Other than that, Prez O has now taken “Canada” off the whiteboard list at 1600 Pennsylvania Ave.  Perhaps he got a fridge magnet from our Governor General, Michaele Jean.

There were no beavers harmed during the writing of this blog post. 

 

Prez O Comes To Canada


U.S. President Barack Obama is coming to Canada for his first official Presidential visit to a foreign country.  On Thursday, he’s coming to Ottawa, our national capitol, on a six-hour drive-by.  He’s coming up on Air Force One, jumping into a limo, spending some time with our PM Steve-O Harper, then flying back to DC.

Dubya, the last time he was up, commented that in America he was used to people waving with all five fingers, unlike Canada, where we only used one to greet him.  Dubya didn’t bother to stay the night either.  It seems that U.S. Presidents prefer to sleep in their own beds.  This is perhaps for their own good, or more correctly, for the good of the Presidential entourage. 

You see, Ottawa is right across the river from Hull, Quebec.  Hull is, shall we say, notorious.  Up until a few years ago, the Federal Ceremonial Route for foreign dignitaries, went by what was called the Ceremonial Route Sex Shop.  The window displays were what you might well think they would be for a shop selling adult lotions, potions, devices, clothing and attachments, all in a lurid shade of passionate purple and whorehouse red.  For some reason, The Accommodator was always in the window. 

Also in Hull, there are numerous licensed premises where the Arts of Terpsichore are on display.  Very much on display, as there are no g-string or pastie laws in Canada, so one can obtain a very educational and informative demonstration from the stage, table-side or in private rooms. 

NHL players who come to Ottawa for games against the local team always seem to wind up across the river in Hull and Pointe Gatineau, depositing large denomination bills in the garters of the artistes.  Apparently, the home games for the Ottawa Senators are regarded as extra paydays for the staff at some establishments.  As for drinking hours, the laws in Quebec are lax.  Technically, last call is 0300, more or less.  They just never said 0300 of which month or year.

Upon reflection it might actually be better for international relations that Prez O and the entourage go home Thursday.  “Secret Service Agents Found Drunk, Broke and Missing Pants in Hull Strip Club after Obama Visit” would not be a good headline to see.  That’s right up there with “WaPo Pool Reporter Wakes Up in Transvestite Rub and Tug in Pointe Gatineau”

Be this as it may, despite the shortness of the Prez O Visit, there are several dozen bus loads of out of towners coming to Ottawa to catch a glimpse of the car that he may or may not be riding in.  The local cops and the RCMP have all held press conferences inviting people to stay the hell away from downtown, Parliament Hill, most of the streets and the Airport Parkway.  There will be no spontaneous walkabouts and the presence of various snipers on rooftops will preclude anyone trying to get near President Obama alive.

As a public service then, here’s what President Barack Obama should see in Ottawa.  After meeting with Prime Minster Stephen “Steve” Harper at Parliament Hill, a quick walk down Bank Street to the Sparks Street Mall.  Stop at Morrow’s Nut House for a bag of cashews.  It also makes a nice statement about the meeting with Harper. 

Get in the motorcade and buzz down Sussex Drive to the Byward Market.  Don’t worry about traffic, the RCMP will clear the way.  Stop at the Continental Deli and get some of their pepperoni, the hot pepperoni, which is blindingly spicy and good.  While there, walk a block or two to Hooker’s and grab a Beavertail.  The Killaloe Sunrise (cinnamon, sugar and lemon) is the way to go Beavertail. 

Continue down Sussex Drive to the Rideau Hall and take a moment to have your picture taken with our Governor General, who is Queen Elizabeth’s representative in Canada.  You don’t have to bow, as you’re also a head of state.  Grab a snap with one of the full-scarlet and bearskin busby-clad Governor General’s Footguards in the guard house.

For lunch, double back by the American Embassy to the Chateau Laurier, specifically Zoe’s Lounge.  You can have high tea if you want.  Back into the motorcade and zoom over the bridge to Hull.  Whizz by the Museum of Civilization and a bunch of soulless government buildings next to a pulp and paper mill, then get back to Ottawa.  Get the motorcade to stop somewhere in the DMZ on Somerset Street.  Hang at a bubble-tea joint for a bit, or just go walking around.  You name the ethnic group and the Somerset strip has at least a few representatives. 

Swing down Preston Street to Dow’s Lake and see what a freakin’ big fourteen kilometre long skating rink looks like with people actually skating on it.  Through the Experimental Farm, then out to the airport via Riverside and you’re gone.

You’re welcome.  And thanks for dropping by.  

        

Nice Keyboard You Got There


Computers do so much for us at such a tiny price that we almost take them for granted.  Less than $2,000 and you’ve got a high-powered laptop that can all but organize the white blood cells in your liver into a Busby Berkeley dance number.

There is a downside to those low prices.  It is how those several hundred parts are assembled into a computer and who does the assembly.  In an article online here, the U.S. National Labor Committee has identified the working conditions of a few of the companies in China that assemble keyboards for the major manufacturers.  It is an eye opener. 

Now we both know that China is a fiscal tiger, using their population as one massive economic lever on the rest of the world.  When it comes to competing with China, you give up, as they will do anything at any price to get the business.  This is why North America doesn’t have an electronics industry any more.  For that matter, we don’t have a toy industry, or much of a furniture industry left either.

China can always beat us on price, as they have so many people, working at excruciatingly small wages, in a police state.  This certainly does simplify labour negotiations and allows a manufacturer to offshore things at very advantageous price points, but at what cost?

Some examples:  At the Dongguan Meitai Plastics and Electronics Factory in Guangdong, overtime is mandatory.  You work 12 hours a day at least.  Your dorm has eleven other people in a room not bigger than a North American bathroom.  There is no running water. 

You get docked 2.5 days’ wages for taking Sunday off, so nobody takes Sunday off, even though it is a mandatory day off in China.  Bathroom breaks?  Learn to hold it.  Not permitted.  Employees are not registered in the mandatory workplace insurance, maternity leave and Social Security programs in China. Putting your hands in your pockets?  A two-hour’s wages fine.  You can get the same fine for "Not lining up correctly while punching time cards, or in the cafeteria." or wearing work shoes in areas outside of the factory.   

The workers sit on wooden stools for twelve hours a day pounding keys into keyboard frames.  If you lift you head, you get fined.  If you walk on the grass, you get fined.  You get unpaid mandatory overtime to clean the factory and the dorm.  Plus you get to insert 3,250 keys per hour on a line that pounds out 500 keyboards an hour for Lenovo, Dell, HP and Microsoft. 

For this you are paid 41 cents an hour by the time your room and board is deducted.

In short, the keyboard I’m typing this on and the keyboard in front of your computer was most likely made in a sweatshop-cum-manufacturing prison.

The problem is that there is no alternative.  Products from China are given Most-Favoured Nation status in the US, which means no duty is charged.  The same deal holds true in Canada. 

Even if the Dongguan Meitai Plastics and Electronics Factory doubled the wages paid and cut the production rate in half, this would only add a dollar or two to the price of the keyboard.  Even if six different brokers passed this increased cost along with a hefty markup, the net change in the price of a keyboard would increase by, at most, five dollars. 

We both know this will never happen of course.  One of the middle brokers will ensure that the extra profit never makes it to China and to the factory workers.  Why?  Because we’re greedy.

Is there an alternative, fair-trade sort of keyboard?  None that I’ve found and I’ve looked.  Why?  Because we’re greedy.        

 

     

   

Maple Syrup


The season is coming, believe it or not, when the sugar maples start to run and maple producers start to think of the days and nights over the boiler.  For those who consider Aunt Jemima or Mrs. Butterworth as the pinnacle of pancake potions, please give your head a shake.  A vigorous shake.  A go-to-the-chiropractor-shoulda-worn-a-HANS-device head shake that makes your eyes go wobbly for a hour and loosens dental work. 

Jemima and Butterworth have as much to do with maple syrup as you do with Slovakian monetary policy and high school Calculus:  Distant, unrecognizable, confusing and a bit strange. 

For centuries before us white folks got here, the First Nations figured out that a small cut in a sugar maple tree would produce a sweet watery fluid in the early days of Spring.  If you collect that tree water and heat it for a while over a fire, it becomes sticky and outrageously sweet with a taste that is nothing like honey, or corn or anything else except maple syrup.  In exchange for tuberculosis and blankets, the First Nations taught us how to tap sugar maples and to make maple syrup. 

The sap from a sugar maple only starts to rise up from the roots of mature trees when the daytime temperatures are above freezing.  It is an initial harbinger of Spring being if not just around the corner, at least on the off-ramp to the boulevard a couple of turns away from the corner.

The first step is collecting the sap.  In The Day, buckets were used to collect the tiny drips of sap from a hole drilled and tapped into the tree.  The producer would use a horse-drawn sled to go from tree to tree, emptying each bucket into a big barrel, then bringing it all to the sugar shack.  Some producers still do it Old School, but most use tubing that runs from tree to tree in a plumbing nightmare through the forest.

Collecting the sap is merely the start.  Sap is almost all water, with trace elements of natural sugar and micronutrients up the wazoo.  ("Up the Wazoo" is a scientific, very precise measurement term)  To make syrup, the producer boils the sap for hours, boiling off the water, concentrating the indefinable flavours. 

As a Rule of Thumb, 40 gallons of the sap makes 1 gallon of finished syrup.  Most producers use a propane or oil-fired evaporator to boil off the water.  Some still stick to the traditional methods, feeding split, dried oak and other hardwoods into the furnace, creating that heady scent of wood smoke, hot metal and boiling syrup that is only found at a sugar shack.

When the syrup is judged by the producer to be right, he or she drains off the batch for bottling and starts again; another batch boiled down to produce the 40 to 1 ratio of sap to syrup. 

There are standards of course.  The lightest, Canada #1 Light, has a little more water and a delicate taste that subtly whispers "maple" (complete with italics), on your pancakes or ice cream.  That’s the grade exported most of the time, in tiny plastic decorative jugs emblazoned with "Souvenir of Canada".  The quantity is usually a couple or four ounces. 

At the other end of spectrum, Canada #3 Dark grabs your collar, slaps your face with the pancakes and screams "Yippy Kay Aye Yay MAPLE Motherf***er!"  Then it steals your car. 

This is stuff that we don’t export, as Canada is not keen on causing international incidents with a souvenir bottle of evaporated tree sap.  Canada #3 Dark is usually found in gallon bottles with a WHMIS warning to hide the car keys and to cover your ears when you open it.  Many Canadians are unaware of the existence of #3 Dark; they’re happy with Amber, the kind you’re most likely to find in a supermarket.

Which all leads to the gallon jug of Canada #3 Dark in my kitchen right now.  A certain producer of maple products always has a stock of #3 Dark in their store at an Undisclosed Location in the country.  While I was there today, they were running sap line and setting up a new set of trees they have adjudged to be ready to tap in a few weeks.  A sure sign that Spring is not far off.

 

 

  

You can be Impressed


Marylou was in Washington DC last week for work and as a token of her visit, obtained a President Barack Obama commemorative for me at the airport. 

A President Barack Obama 56th Inauguration January 20th, 2009, 44th President of the United States of America commemorative combination nail clippers and bottle opener, in deluxe chrome, with a full colour cloisonné seal on the handle attesting to the the fact that it is a President Barack Obama 56th Inauguration January 20th, 2009, 44th President of the United States of America pair of nail clippers and bottle opener. 

Not only that, if you aren’t already impressed beyond redemption, but it also has a photo of President Obama in the centre, his historic likeness in front of a stylized American flag.  Plus, if that weren’t enough, it also has a small length of chain, presumably so that I can fasten the chain though a belt loop on my pants and declare to the world that I, David Smith, personally, own a President Barack Obama 56th Inauguration January 20th, 2009, 44th President of the United States of America combination nail clipper and bottle opener in deluxe chrome. 

Not only can I commemorate the Inauguration of the 44th President, as well as stay on top of my grooming requisites, but there is more.  The combination bottle opener and nail clippers includes, at no extra charge, a discreet emery board – nail filing area underneath the full colour cloisonné seal, commemorating President Barack Obama 56th Inauguration January 20th, 2009, 44th President of the United States of America.  Are you impressed now? 

Wait.  There is more.  Not only does this commemorative include the full colour cloisonné, but when you are using the nail clippers, the cloisonné is rotated out of sight, to preserve the fine lustre of the portrait of the 44th President of the United States for years, nay, generations to come. 

Some day in the distant future my niece or nephews’ children will be going through the Late Uncle David’s possessions and will marvel at the wisdom of the designers of this President Barack Obama 56th Inauguration January 20th, 2009, 44th President of the United States of America commemorative nail clipper and bottle opener and wonder at the lack of scratches or marring on the seal, commemorating that historic day back in the mists of 2009 when President Barack Obama was inaugurated as the 44th President of the United States of America on January 20th, 2009. 

Yes, they will wonder and be struck with awe at the foresight, not only of the designers, but of the Late Uncle David, for having such a historical and valuable possession that commemorated President Barack Obama 56th Inauguration January 20th, 2009, 44th President of the United States of America.

Amongst the detritus that my grand nieces and nephews might also be going through, along with the President Barack Obama 56th Inauguration January 20th, 2009, 44th President of the United States of America combination nail clippers and bottle opener, with the discreet nail file and belt loop chain in deluxe chrome, with full colour portrait of President Obama, but they might also find another hidden gem:  A true rarity.

In September 1984, His Holiness Pope John Paul II visited Ottawa.  Uncle David obtained, with no expense spared, a 250 gram, full colour, metal tin of Papal Visit Travel Sweets.  A full colour portrait of His Holiness adorns the easily detachable lid, his hands clasped in prayer, mindful of His Mission, while beckoning you to partake of the Travel Sweets inside. 

Not only a commemorative of His Holiness and His Papal Visit, but it is an Official, Vatican Licensed Commemorative of the Papal Visit.  One can only wonder at the future value of such commemoratives, as His Holiness, John Paul II, is now in the arms of The Lord and no more commemoratives are being produced, let alone Official Vatican Licensed Commemoratives of the 1984 Papal Visit.

Uncle David’s Papal Visit Travel Sweets have been stored in controlled conditions since 1984 and are in impeccable, near-archival condition. 

Surely, this historical find, along with the President Barack Obama 56th Inauguration January 20th, 2009, 44th President of the United States of America combination nail clippers and bottle opener with discreet nail file and belt loop chain, will provide hours of wonder and inspiration to all of you and your families in these difficult times.

Now you can be impressed.  I know my grand nieces and nephews will be.