Accounting for Profit

The Economic Crisis has become a crisis of trust between people, business, banks and government - and now you can add accountants into the mix.

Recent changes to the way the global body on accounting, the IASB, keeps books, will soon show a global recovery that is non-existent. Last October, the IASB, changed the rules to enable companies more leeway in disclosing assets and liabilities to favour the balance sheet. Deutsche Bank, for example, shifted $32b off their balance sheets. This enabled them to post a profit of $120m istead of a loss of $970m. When the profit was announced shares in the bank's stock soared 19%.

The accounting changes were made because of pressure from the EU. The IASB was formed to standardize accounting practices globally so investors and auditors could compare apples with apples. 130 countries have agreed to the new international standards - the major holdout to date is the US.

In the US, accounting standards are maintained by the Financial Accounting Standards Board. The FASB standards are considered more conservative and transparent than those elsewhere in the world, because of the larger number of lawsuits in the US. But pressure is being brought to bear on the US to change their standards. The SEC has ordered all companies to adopt the new standards by 2016, but 100 selected American companies can use the standards in 2009.

If Deutsche Bank's experience with the change is any indication, US banks will report startling turnarounds in Fiscal 2010. If just one of the major banks, probably Citigroup, accepts the new standard and reports a profit, then the other banks will be forced to follow. Just like derivatives trading, nobody will want to be left behind. Pundits and spokespeople will celebrate the end of the recession and the start of a new bull market. But in fact, it will be a bull with no balls.

Pause to Reflect

The global recession happening around us will leave very few people untouched, but rather than focus on the negative, there is an opportunity for people to make major shifts in their lives for the better.

From birth, we soon learn the words, "I want!" or "It's mine." Through our developing years we were rewarded by getting things. In adulthood we measured our success in terms of the stuff we have accumulated: like houses, cars, and electronics. But in truth our families have not prospered. Drug and alcohol use is problematic for many families; just as crime and violence has become the cultural norm in many of our communities.

Here in Godzone , New Zealand, young people are roughly divided into three categories; gang prospects, athletes, and victims. Although I live in a moderately affluent part of town, weekends are binges that see roving groups of drunken youth chasing the next event. Fights break open when these groups collide and generally the nights are occassioned by girls screaming and cars squeeling around town. Dogs bark and the sound of breaking glass and assaults on such things as street signs and mailboxes ring out.

I wonder how parents can sleep at night knowing their children are out there. Probably, they have become acclimatized to the whole scene and are generally content when the morning comes and their kids are back home. Two weeks ago there was an incident when one drunken teenage girl returned home in the company of three older boys at 3:00 in the morning. The mother came out and ordered her daughter inside the house. The daughter rained abuse at her mother who stepped in and grabbed her daughter. The daughter's screams prompted calls from to the local police, but as soon as they pulled up the daughter ran down the street in a great drama. She cried out for help to the police, saying her mother had assaulted her. The mother was arrested. I wonder where the father was?

As the economy forces us back to basic living, I hope many of us take a fresh look at our values and take stock of what is truly important. Family time and activities are generally cheaper than handing cash to the kids and telling them to have fun. At a time when stock dividends are becoming worthless, perhaps now is the time to invest back in our families.

The sun also rises

Just a little something to remind us all of the symbiosis between hope, spirit, and music.

Bonfire of the Vain and Stupid

The Dow is up for the third consecutive day. No doubt some are thinking the bottom was reached last week and we have a long slow recovery ahead of us... but I'm not one of them.

I am reminded of 1929: The stock market crashed and came back then too. It wasn't until 1932 that the impact of a mangled manufacturing base hit with full force. It's easy to look back at Harry Hopkins and FDR as heroes for getting the nation out of the Great Depression, but it took a full ten years of fiscal tweeking and a wartime economy to get millions of people back to work. It was hardly a miracle.

In the end it was greed that got us. For once in recent history, the market was allowed to operate without intervention or regulation. The past decade has been the story of manifest entitlement by the privileged few. The creation of new investment facilities that enabled investment bankers to multiply their profits by selling MBS's to second tier entities that later repackaged and sold the risk to trusts and corporations in the form of CDO's and Credit Default Swaps. Complicit, and critical to all of this were the bond and rating agencies - like Moody's, that assigned AAA ratings to these trusts and corporations - the "shadow bankers" a requirement before shares of these products could be sold to thousands of pension funds, hedge funds, and municipal and state fund managers.

That any third party - completely unrelated to any of these transactions, could later take out insurance policies that paid off in the case of a default of these trusts and corporations is clearly bordering on, if not outright criminal. These derivatives paid massive returns to holders of the paper so long as people kept borrowing and buying houses. They paid even more when the bottom dropped out of the housing market and millions of new homeowners defaulted on their mortgages. Those betting on a collapse could then cash in their default swaps for insurance remissions from companies like AIG.

Perhaps the best first-person account of Wall Street culture, written to date, is a story written by Michael Lewis in Portfolio.com, entitled "The End of Wall Street's Boom".

The solution is far from a done deal. There is an old saying, "use a thief to catch a thief." If there is any truth to that then President-elect Obama has assembled a first class team to lead the nation through the crisis, because most of them had a hand in creating it. As for me, I am growing weary of reporting on the ups and downs of it all. I'd like to get back to writing about the sorts of things that contribute to the growth of the human spirit. But, I'm an addict, and as such will no doubt be drawn back to what is the biggest story of my mature years. In the meantime, I am going to get on to some other subjects.... if I can.

"Too big to fail."

Citigroup should be getting split apart today, but it didn't because it was deemed too big to fail.

The $25b taxpayer handout proved insufficient to stem confidence among shareholders who tripped over each other to unload their stock last week. When Lehman Brothers were allowed to crumple, the damage gained force the further it spread from the host - such was the tangle of debt. But Citi crossed every country's border, dominating financial markets in everything; from student loans to credit cards, Mortgage Backed Securities, Collateral Debt Obligations, Hedge Funds and placed massive bets on Credit Default Swaps.

If Citi had gone down then more than $3 trillion dollars in paper assets would have been exposed as worthless, affecting every country in the G20. Too big for anyone but the Chinese to buy it out, it would have taken years to sell off the individual tentacles that made up this giant.

Of course it helped to have Robert E. Rubin on your Board of Directors. Rubin was Treasury Secretary under Clinton and has acted as the principal advisor to Barack Obama through his election campaign and with the transition team. His proteges will run the Treasury and Federal Reserve in the next administration. Rubin also chairs the Council on Foreign Relations.

TARP, Market chaos, Automakers and Hedge Fund Managers in front of Congressional committees, and Cabinet appointments have all captured our attention while a much bigger, more dangerous game is taking place behind closed doors in Washington and New York. The Federal Reserve and Federal Deposit Insurance Corporation have pledged a further $7.76 trillion dollars to guarantee corporate short-term paper and deposits. Not in the headlines is the $139 billion in loan guarantees for General Electric (no wonder their stock went up) . Not in the headlines is a further $200 billion for Freddie Mac and Fannie Mae.

The total amount of bailouts from all Agencies would run New Zealand for 100 years or pay off half the mortgages in the United States. Incredible.

So as the United States commits the equivalent of half its GDP to saving the finance industry, the question has to be asked: Is the United States too big to fail?

Housing Co-operative Model

If it were left to me, I would take the bailout money and form a new secretariat and call it Public Housing. I would find someone, like Ralph Nader, to set up local bodies in each area affected by high foreclosures. Homeowners would have the option of joining up or not. The mandate would be this:

1. Re-value houses in foreclosure, or in danger of foreclosure, to establish their real worth.
2. Purchase them using TARP monies.
3. Establish a monthly housing charge, based on the cost of renting those properties in their respective marketplaces. (ie. draw a 10 mile radius around the house and average out the rent for a similar property)
4. Offer the previous owners right of tenure in those homes based on a contract requiring upkeep, taxes, and regular payments. (In some communities, say Detroit, these housing charges could be geared to income)
5. These neighborhoods could be organized into corporate bodies, where members would have an equal vote, elect officers, and conduct their business.
6. When the housing charge contribution reaches a 20% percent equity with respect to each home, then members can purchase their homes at 0% down and take back possession.

Something like this makes sense to me. What do you think?

The Currency of Trust

It seems that every Monday morning, before the stock market opens, either the Fed or SecTres makes an announcement to encourage people to keep pouring money into stocks. This morning the Fed announced manufacturing had risen 1.3% in October; describing it as a "return to normal" after the Boeing strike and hurricanes. This despite record job losses, bankruptcies, and foreclosures. Does anyone believe anything coming out of the mouths of Bernanke and Paulson these days? If you had cancer wouldn't you want to know? But if the doctors say you are fine; when every day you are getting weaker and losing weight, what do you do? If you can't trust what public officials are saying anymore then maybe all we have left is to pray... and trust God.

Paulson to be next Chairman of Citigroup

At the same time Henry Paulson announced he was making TARP funds available to financials holding credit card and student loan debt, reports started filtering out that the Citigroup board was maneuvering to get rid of Citigroup Chairman, Win Bischoff. Perhaps it is only a coincidence that Henry Paulson will be looking for a new job in two months.

Fraud of Historical Proportions

Treasury Secretary Henry Paulson should be placed behind bars. He is bailing out of the bailout, yesterday announcing his intention to provide funds to financial institutions holding credit card and student loan debt obligations. (See New York Times ) Congress is not in session and the lame-duck President is... well, ducking; and not one single step has been taken to put in place audit and oversight for the first half of the $700b bailout package. (See Washington Post )

Citigroup shares will soar on the news that they'll be getting more billions on top of the $25b they received in the first of the handouts to banks. You may remember from previous posts that it was Citigroup lobbyists who pushed for the Gramm-Leach-Bliley Act of 1999, removing regulations and restrictions that set the stage for the derivative market in the first place. Citi lobbyists steerheaded the more than $100 million in incentives to congressmen and senators to get the bill passed; thus enabling Citibank to merge with Travellers Insurance to form Citigroup. This same Citigroup issued 40% of America's credit cards and 60% of American student loans.

If this isn't the biggest fraud in history, then what is? There is little hope that Obama and the Democrats in the House will be able to do anything to get the economy on anything like an even keel. The only hope for sanity in all this is for the G20 to play America's game and begin cashing in their US Treasury bills and dumping their US dollars. After all, America can't go to war against everybody.

Taking the Piss

Treasury Secretary Henry Paulson continues to spend T.A.R.P. bailout money, announcing additional loans to A.I.G. today. Was it just a couple of weeks ago that the giant insurer pronounced themselves secure? It seems that $85 billion, the entire GDP for New Zealand last year, was not enough. So its been doubled.

The amount of taxpayer money given to A.I.G. alone would provide health insurance for every child in America, rebuild every school in America and provide 120,000 teachers, with enough left over to build 2 million affordable housing units. God only knows how far this money would have gone providing health care, water, and housing in the Third World.

Is anyone out there doing the math? Does it not seem strange that this $700b (oops, $850b) never seems to shrink. Every day tens of billions are earmarked for this, or that, but somehow the original figure stays at $700b. The first tranch of $250b has only $60b left. The next lot of $100b needs the President's signature. The $300b left over requires Congressional oversight.

Wells Fargo Chairman Dick Kovacevich was rewarded for his purchase of Wachovia by being kept on, past the company's manditory retirement age. And why not. TARP money paid for half of the purchase price. More importantly, a recent story in the Washington Post indicate that Wells Fargo's recent $25b quarterly losses will be absorbed by the taxpayer too. While everyone was looking at the bailout package, Henry Paulson announced changes to the IRS tax code (Section 382) that would permit companies to write off tax obligations against losses in companies absorbed in mergers and acquisitions. Effectively, this doubles the taxpayer bill for those Investment banks that were bought out.

In the end these numbers boggle the mind. It seemed absurd when the Fed bailed out Chrysler for $5b in 1979. Today's figures are surreal.

Economic Recovery - Begin with the Foundation

President-elect Obama is taking the wheel of a ship of state in danger of sinking. From a global perspective, the world outside the United States will no doubt suffer an economic depression that may last the rest of this decade. Rightly, comparisons are being made between The Great Depression and the current meltdown. I expect historians will use our current calamity as the benchmark to compare future downturns.

The World hitched their stars to the US economy and if America is to recovery its predominance in world economic affairs, they will have to lead the way out of the mess - and lead by example. This means that the world will need evidence that the USA is suffering worse than the rest of them. Bubbles and recessions are a part of life, much like the seasons, they provide opportunities for fresh vegetation to grow. It would be easy to blame Alan Greenspan for the mess we are in: He judged people to be adult enough to not eat too much ice cream; and instead, watched as hitherto responsible people gorged their way to obesity and diabetes. But in truth, the problem probably started when the United States and the G7 abandoned the Gold Standard and tied their currency to a US dollar valued by their Gross Domestic Product. This may have made sense when American factories powered the economy, during and after WWII, but made little sense after America stopped producing and became a consumer-based economy.

When the G20 meet in Washington, I expect quite a lot of the discussion will be about the failure of Bretton-Woods II. I doubt whether decisions will be made, this year, concerning a return to the gold standard, or a re-valuing of world currencies based on precious metals, but such discussions will become more prolific as the Global Depression deepens. Interesting, that even after 70 years, economists cannot agree on why the last Great Depression happened. Troubling, that bailouts and other solutions currently being instituted, are exactly what Hoover did in the 1930's.

If Obama is going to rebuild America, "brick by brick", as he said in his acceptance speech, he best make sure the foundation is firm enough to hold more than a ranch style bungalow. The foundation needs to be strong enough to support a skyscraper. This means immediate work at finding a base value for the US dollar, one not based on the greed of a nation, but one based on something tangible. Only then can the real asset value of banks and financial institutions be ascertained and measured against each other. And only then will the world's economies have a solid basis from which to trade with each other and measure their progress.

Limited use of Nuclear Weapons

Rogue states need to be policed somehow. One decries the use of limited strikes using nuclear weapons, but there is no disputing their effectiveness. Hiroshima and Nagasaki were regrettable in the loss of life to innocent people, but there is little doubting the effect they had in bringing a quick end to the war in the Pacific. Today, Japan is the second strongest economy in the world after the US. Their trading relationship with Japan is a strong bilateral tie that binds the two nations. The use of nuclear weapons there did not affect the future potential for economic and cultural ties.
North Korea is a country that is holding the rest of the world hostage with their on-again, off-again goal of producing nuclear weapons. Indeed, the state of war between North Korea and the Alliance that fought against them is still in effect. Should North Korea persist in developing a nuclear capability while their people starve, then their military and atomic infrastructure should be eliminated with a requisite number of low-yield nuclear strikes.
And can there be any doubt that nuclear weapons produced by Iran would not find themselves in the hands of fundamentalist Islamic factions that are in a state of war against Israel and the West? In the case of Iran the decision to use nuclear weapons is strategically easier. No doubt their case-hardened manufacturing and processing facilities are located in the desert, away from population centers. With a reported 3,000 centrifuges producing fissionable isotopes this should be a watershed moment for the argument of diplomacy over force as a way to solve disputes. I believe talks should be held and serious efforts to sway the Iranians from developing a nuclear capability. No effort should be spared: However, if talks should not bear fruit, then their capability to produce weapons should be stopped with nuclear strikes on production sites. The residual radiation alone would ensure they could never be used again. This would also serve to l'encourage les outres'.

The Dark Continent

If there is a Hell on earth it is Africa. Rwanda, Somalia, The Sudan, The Congo, Zimbabwe, and South Africa - to a lesser intent, are diseased, starving, and awash in tribal conflict. When the final story about the United Nations is published, its failure to bring peace and prosperity to a continent rich in culture and mineral wealth will be the context of the story.
Those without a soul might advocate cutting foreign aid completely and letting nature take its course. But the world cannot continue to turn a blind eye to a corner of the world where men and women are trying to keep their families safe. The recent case of a 13 year old girl in Somalia touched my heart. After being raped by three men she was proclaimed an adulterer and stoned to death in a sports stadium.
If there is a moral case for war anywhere in the world it is Africa.

Moral Hazard

As US trade and debt deficits mount the day will come when the only thing left to trade will be geo-political allies isolated in cash-rich parts of the world. China owns an increasingly large amount of American consumer debt. Can the day be far away when they forgive that debt for a free shot at getting back Taiwan? If it were to happen, then how much would it be worth middle America to stop aid and arms shipments to Israel in return for Middle East wealth? If oil is indeed the reason for war these days, it makes more sense for the US to carry the fight to Central and South America.
Abandoning the Middle Eastern oil markets will eliminate the need for ever sending troops there and surely a war in the Americas would be cheaper to run. The supply lines would be shorter and there are enough hispanic Americans to make communicating with people easier. Surely there would be a hue and cry from Jewish Americans, especially in Florida, but this is easily offset by engaging Cuba in battle and repatriating those lands for the massive Cubano population in the Sunshine State. With peak-oil past the threshhold, especially in the Arabian Penninsula where oil fields are fast approaching the used by date, the time to cut and run seems ripe.

Citigroup's collapse will signal the end of the crisis.

Perhaps no other institution still standing in the Global Crisis of 2008 deserves to fail more than Citigroup. Their reach extends to 100 countries with assets close to $3 Trillion. It was Citigroup that provided the resources to pass the Gramm-Leach-Bliley Act that repealed Glass-Steagall in 1999. It was after that act, that Citigroup emerged as the largest financial services institution in the world.

That they took an injunction to stop Wells Fargo from their acquisition of Wachovia is at the moral heart of the 2008 Crisis. I mean, how big is big enough? Can they possibly comprehend the magnitude of the monster they have created. Currently, Citigroup is the largest issuer of credit cards in the world, with 40% of the market. They are also the largest lender of consumer credit, where people pay huge interest for a refrigerator when they are broke and the icecream is melting. They are also hold most of the student loans in the US.

This crisis is largely a spectator sport for Joe Six-Pack and Hockey Mom, but very soon the spotlight will shift and the dust will settle on lower and middle America in the form of super-inflation and the kinds of interest rates experienced in the 80's. An avalanche of personal bankrupsies is inevitable.

When that happens there will be no money left anywhere to bail Citigroup out and nowhere for their board of directors to hide.

Trying to stop the bleeding.

Federal Reserve Chairman Ben Bernanke is not looking well these days. As someone described as being an authority on The Great Depression, he would have been wise to bail out himself after inheriting the mess Alan Greenspan left him. Or could it be he wants a ringside seat at the next one?

It's clear that the repeal of the Glass-Steagall Act let slip the dogs of commerce. Having spent some $200 million to lobby on its behalf, bankers had to have had some inkling as to what could happen. Any oversight after its passing was consistently blocked by Alan Greenspan. History will likely judge Mr. Greenspan in the same light as Neville Chamberlain or Goebbels.

Another thing clear is that until there is some kind of national forensic audit on all investment banks, insurers, and commercial banks, no amount of money will restore trust in institutions that have failed to maintain any kind of ethical or moral standard. Paulson's appointment of a former crony from Goldman Sachs to oversee the $700 billion handout is repulsive. And GOP candidate John McCain, a notorious champion of deregulation, is taking his advice from Phil Gramm, the architect of the legislation that repealed Glass-Steagall?

For the past 60 years people have been asking how the German people could have stood silent in the face of Nazism. Perhaps they will be saying the same thing about the American people in the future. In this age of open and free information they should be judged by a more rigorous standard than the German people. What exacerbates any logical thinker is how, come the second Tuesday this November, a Republican could have any chance of getting elected. It boggles the mind.

Black Market

The coming week will rank as the worst ever to hit the world when this week comes to a close. The DOW, already below 10,000 points for the first time in five years will probably bottom out around the 8,000 level by Friday. Banks will continue to shake, rattle and roll in an atmosphere of takeovers as the industry tries to sort out the good from the bad. Until banking finds its bottom credit will continue to be difficult to find. That's the good news.

It will surprise nobody when jobless numbers, reported on the first Friday of each new month in the US, hit double figures in November. Christmas is generally the engine that drives the domestic retail market in the US; this year will reflect the first in a series of measures that show the economy as stagnant. Defaults and bankrupts will set new records. Auto sales will be the lowest, and possibly lower than during the 1973 oil crisis.

The surprise in all this is the drop in commodity prices. Gold is still below $1,000 per ounce and the price of oil is still dropping. Common sense says these should be safe havens for capital - with a corresponding rise and yet they remain lower than I expected. Spokespersons say it is because of lower demand, but with winter coming on in North America, Europe, and Asia, the price of oil must rise.

The problem is value: Until the markets - housing, stocks, commodities, etc., bottom out and the debt tally is truly comprehended, it would be foolish to pour money into them and expect a miracle. That many banks will collapse is a certainty and it will take some time before those losses are written off and their assets absorbed into healthier financial institutions. Many countries are now guaranteeing all their deposits, but as the economy worsens it will not take much to see people withdrawing funds at the first sign of commodity increases. If there is a panic bank run the result will not be banks failing - countries will begin to crumble.

First the Bailout - Now the Hedge

With a bailout deal now all but done, get ready for the next collapse in the financial house of cards that is the US economy. On Tuesday, investors in hedge funds can take advantage of the first in a series of "cracks". Cracks provide investors with the opportunity to pull their capital out of hedge funds. There are four such cracks. The first is this Tuesday, followed by opportunities in December, March and June.

I predict a run of selling that will see the collapse of many highly marginalized hedge funds. This will be followed by an increase in the stock market as wealth seeks a safe haven in offshore stocks (Asian and European Markets will have a good week this week.) There will also be sharp increases in commodities like oil and gold.

By the end of next week we will be seeing increases in the price of gas at the pumps. Because oil and food increases are no longer are factored in the Consumer Price Index, the CPI will remain unchanged, but in real terms families will begin feeling the pinch.

The injection of $700b into the system waters down the currency, so investors will transfer their dollars to gold. I expect gold prices to hit new highs by the end of next week. The Fed will have no choice but to increase lending rates as the value of the dollar falls inverse to the rise of gold. Companies will revise their profit projections and behind the scenes, the first in a long series of layoffs will be announce.

That's what I think will happen in the coming week.

This Video should be seen.

Peter Schiff wrote about this stuff a while ago. His predictions have been right on the money. Nothing I write comes from any knowledge I might pretend to have. Call it a "gut feeling" or a revelation.

Who Do You Trust II ?

I'm more convinced that the market needs to sort out this mess on its own. The War on Terror enabled civil rights to be thrown out the window. Today, Americans can be eavesdropped on, arrested, and held without due cause. There exists a state of martial law in the US.

Now the executive branch of the government is holding Congress hostage over the Bailout Bill. This bill would eliminate any congressional oversight and not be subject to challenge in the courts. The President appoints the Treasury Secretary - whom serves at his pleasure.

I can't believe it, but it looks like Senators have resisted the pressure to just hold their nose and vote for the Bailout. If this Bill is not signed the Stock Market is going to experience the Great Mother of all Runs as investors move their assets offshore. The market will survive. It may be 10 or so years before it flushes the rot out of the system and recovers, but it will happen.

The real threat is - and has always been the 'shadow value' of the American Dollar. America needs to go back on the Gold Standard and throw Bretton Woods out the window. If I had money to invest I would buy gold and silver - and not certificates but stuff I could hold in my hands. Gold will go to $2,000 by Christmas - the dollar will be worth .50c; that's my prediction. I would also spread my liability around by buying commodities like oil (Canadian Oil Sands), copper, and food ( not dairy, because that has been artificially inflated in value by the Chicago Mercantile Exchange and will fall to its real value very soon ) . Buying Asian currency would also be a safer bet than buying T Bills at 0% interest.

I have a long-shot prediction that things will decline so rapidly that the 2008 elections will be suspended, even if it takes a war with Pakistan or Iran to cement the issue. I think George W. Bush will serve a third term. I know it sounds nuts, but there it is.

Who do you trust?

Wait for it.

Economies are governed by numbers; unlike doomsday theories about phantom planets entering our solar system or other 2012 predictions. A power shot of adrenaline to a damaged heart may keep it beating a season longer, but takes nothing away from the realization that an operation, transplant, or death is the only likely outcome.

A US election is just 6 weeks away. Congress is being asked to trust Treasury Secretary Henry Paulson to take $700b of taxpayer money to bail out financial institutions as 'the fix' needed to right the economy. Every twitch of the stock market is a call to act quickly. Paulson is asking for an unfettered hand. One aspect of the Bailout Bill before Congress states:
“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

Where is this money coming from? The Federal Reserve will create a bond issue to cover it - in other words, they will print the money. As early as 1974, the national US foreign debt had a $3b surplus. Today, with a national debt of $10 trillion dollars, soon to increase to $11 trillion when the bailout bill is factored in, means that each individual taxpayer is holding about $25,000 worth of public debt. US dollars have yet to find their real value. By 2009 the value of the US dollar will be half what it is today.

The Credit Default Swap will give way to a collapse of Hedge Funds. It has to. Hedge Funds bear good returns for investors because of the freedom they have to act quickly, short-selling to take advantage of a fluctuating stock market. But short trading has been stopped for 900 stocks, and how will they pay for stocks held when 30, 60, & 90 day margin calls come due. With similar debt-to-net capital profiles as Investment Banks, Hedge Funds can only collapse a month or so from now.

Inflation can only increase. The Federal Reserve has held off increasing interest rates to buy dollars since 2000. With Treasury Bills bearing .017 % interest, rates have nowhere to go but up. When - not if, the Fed begins to raise interest rates to protect the US dollar, the consumer economy will grind to a halt. Mortgage rates, credit card rates, student loans, etc. will all increase. Lowered demand for goods will result in a huge increase in unemployment, at the same time as prices begin to increase for necessities like food and energy.

And what about energy? OPEC is refusing to increase production (perhaps because they don't have the reserves they purport to have). Hurricanes have damaged 800 oil rigs in the Gulf of Mexico to say nothing of the damage to oil refining facilities on the US mainland. No new oil fields in the world have been found. America has yet to give the go-ahead for Alaskan exploration and even if new fields are discovered, they will be decades away from production. Wealth, seeking a safe haven, is flowing into commodities. Yesterday, oil futures experienced the biggest 1 day gain ever, going to $125 a barrel. Some people are predicting oil will reach $250 a barrel in 2009. The US auto industry will be the next demanding a bailout. The cost of credit and oil at the pump will combine to cripple it.

Doomsayer? Or Realist? I am not an economist, but the Housing/Investment crisis is only the first salvo. Yet to come will be a cascading series of crisis' that shifts from the investment community, to the stock market, to the banking industry, to the energy sector, to the auto industry. Unemployment, housing defaults, credit defaults and inflation will paint tomorrow's American landscape.

In my next post, I'll talk about the geo-political ramifications.

Building a House of Cards

Governments and institutions are telling everyone not to panic and stay the course. This to give the top 3% of society time to liquidate before the coming collapse. By the time the little guy at the back of the line gets wise, there will be nothing left.

Economists themselves cannot agree on what is happening. The instruments of the coming catastrophe were established during the climate of fear surrounding 9/11. The stock market could have collapsed then. The dot.com bust and Enron had exposed the weak underbelly, and delicate nature of the market economy. The Securities and Exchange Commission (SEC) needed to do something different to inject capital and confidence back into the marketplace.

So, the SEC relaxed the rules governing some investment banks. Five solid banks: Goldman Sachs, Merril Lynch, Lehman Bros., Bear Stearns and Morgan Stanley, restricted to operating on a 12:1 debt-to-capital ratio for lending, were sanctioned by The SEC to increase their debt to capital ratio to 30 and in some cases 40:1 . In a single stroke, these five institutions; were infused with tens of trillions of dollars. Overnight, it was as if the US mint had printed trillions of dollars and injected it into the economy. These banks don't lend to people, they lend to companies like Freddie Mac and Fannie Mae (Fannie-Mac). Fannie-Mac lend money for mortgages.

Lenders need security for loans. Those insurers are governed by Regulatory bodies to make sure there are sufficient assets for repayment in the event lenders forfeit. To get around these regulatory bodies a new term called "credit default swaps" entered the financial vocabulary. There is no regulatory body for credit default swaps. AIG became the holding company for the credit default swaps that would secure this new investment capital.

The set pieces were all in place.

Home mortgages could be had for a 0% downpayment. First-time home buyers flocked to take advantage with mortgage rates stabilized at 5 & 6%. It became a sellers market and the real estate boom started. New home construction took off, accounting for 15% of new jobs. Houses selling for $100,000 in 2001 were now being evaluated for $200,000 and then $300,000. Ordinary people by the thousands were channelled into seminars where they were told to leverage their mortgages into buying more houses and become millionaires overnight. The magic was many did become millionaires.

Flush with money, banks and lending institutions rode the wave into a new consumer-driven economy. Credit was extended to anyone. In America, a $50,000 income was guarantee enough for a million dollar loan. Illegal immigrants could borrow money. Consumer spending for home furnishings, cars, boats, second homes, education, stocks, and travel was paid for with credit cards and second mortgages. Sub-prime financiers for large-scale construction projects, guaranteeing incredibly high returns, attracted pension funds and the life's savings of retirees and baby boomers hoping to retire early.

Even the war in Iraq, costing $2 billion dollars per week, and a US national debt at $10 Trillion dollars and growing at $600 dollars a second couldn't slow it down. Inflation was steady, GDP was growing, and dollar remained strong. The first inkling people had that something was wrong was when oil crossed the $100 a barrel threshold. It was a gust of wind that teetered the house of cards.

Act Now

The United States economy is dissolving as I write this. I expect emergency measures like the one imposed during World War II, when presidential elections were postponed for the duration. Yes; I believe Congress will suspend the US election this November. This means some kind of bipartisan arrangement with President Bush. By the end of next week trading on the stock exchange will be suspended. Banks will fall, one after the other. There will be a run on cash and banks will close. This will take us through September and October.

The Great Depression will hit North America first. Europe will be next. Then Asia, including New Zealand. The great cities of the world will fall into chaos very quickly. Without cash or credit there will be food riots and looting. Emergency measures will suspend civil rights in a matter of weeks. Police in New Zealand will be armed and the Army and Territorials will be given policing powers. States of Emergency will be instituted in most of the developed world. Aid from the developed world to the third world will stop. Millions will die in those countries. International travel will slow to a trickle.

People will look for a strongman, a saviour, to bring order back into society. Just as the collapse began in the US, this strongman will emerge there and bring a semblance of relative normalcy to people desperate for a solution. Each country, in turn will select their strongmen. The internet will disappear as we know it today. The governments will scour the servers in every country and jail all labeled seditionist.

Nothing is going to stop this from happening. Anybody who reads this should borrow as much money as they can, do whatever they have to do to stock up on food and supplies. Electricity and fuel cannot be counted on. People should concentrate on gathering flour, grains, freeze-dried and canned foods. They should have a supply of seeds to grow food. They should have fishing gear, camping gear, first-aid kits, and the means to make fire. They should have basic tools for harvesting wood. They should have shortwave radios with built in generators to keep abreast of what's happening. People will need weapons to defend themselves. They should collect how-to books on preserving foods, medical treatment and holistic remedies. If family members have farms, then arrangements should be made to gather there and live communally.

I believe it will get very, very, ugly before too long. Those who prepare themselves should survive - those who don't will not.

Congressman Ron Paul - One year ago.

The same full moon that lights up the night outside my home, lit the night sky over the rest of our little world at some point within the last 24 hours. This day will be remembered as the beginning of the end of a lifestyle.
One year ago Ron Paul stood up Congress during the debate about the US budget. He predicted the collapse of the dollar. He talked about the cost of war and the deficit. He blamed an out of control Federal Reserve for printing money, because nobody will lend the US money anymore, so they just turn on the mint presses and churn out more. This is what he said.

ETS - Money Trees

Market driven solutions to climate control and pollution will never work. If someone had dreamed up carbon credit trading as the answer to global warming 30 years ago, it may have had some impact on the number of trees we cut down, but I think it would have only dictated 'where' those trees got axed.
The surest barometer of how effective New Zealand's Emission Trading Scheme, ETS, will work is how willing the New Zealand government has been to give the forests back to Maori. Far North's Iwi are currently negotiating a return of their forests in the Aupouri Peninsula.
The Crown Forestry Rental Trust, current-day Tane Mahuta's, see the writing on the wall and are working overtime to get a deal done before parliament dissolves on October 3rd. They have thrown a quarter of a million dollars at the Te Hiku o Te Ika forum to enable Iwi negotiators to earn while doing the deal, as well as a $36k+ honorarium to chairperson Mangu Awarau, to ensure a proper result. That honorarium was a Crown Forestry Rental Trust add-on, that nobody asked for.
The forests are indeed an asset, but their value will now be dictated by their value as carbon credits in an imaginary marketplace. Converting forestry lands to other use will cost future owners dearly. In reality, the land will be held hostage to tree-making so long as the land is held in trust. It can only be converted to other use when it is transferred back to Maori and that use will have to be profitable enough to offset the penalties of cutting down the trees for the last time. The 'x-factor' of the value of carbon credits is an unknown. Carbon-credit trading is a speculators playground like the dot.com companies that went bust a short while ago. Common sense says that if solid markets like mortgage and loan companies can fail in today's economy, what hope is there for carbon credits that have yet to have any established value.
So who benefits? Since anything that can be sold or traded is taxed, the government always wins. Since title to the forests could only be transferred to Maori anyway, at least in the first instance, the real question is: Why is everyone, including Maori, in such a rush to settle, when the implications of a deal are so unclear?
The biggest question is who is pushing the deal and why.

Millie

At 20, it is difficult to predict where life will take Millie Elder-Holmes. Arrested last week, along with the kick-boxing son of a patched Headhunters member, she was charged with possession with intent to distribute. Less than a year ago, Millie stood in front of me in a lineup for lunch, at an Auckland Rehab facility. At the time I thought, 'tall, pretty, young lady.' I never saw her again, but heard she had discounted that place as the right place for her. Given its reputation as a no-nonsense facility - it was not surprising. There was no place to hide inside its environs. You were there to get well and the clinical staff did not broker any crap.
A pity she didn't take the opportunity. The literature on addiction promises this: "Institutions, jails, and death" for those who continue on the path of addiction... the only alternative is abstention. Rehab for teens is a one-in-a-thousand roll of the dice; their bullet-proof mentality coupled with the denial that feeds their use is a tough combination to beat. Even when one has lost everything and capitulates to a solid recovery programme, the odds are closer to a hundred-to-one for any long term sobriety. It doesn't look good for this young woman.
Being associated with the Headhunters will keep her safe in jail, but the other side of the coin is she will need to keep that association to survive, a prospect that bodes ill for any recovery from drugs. I'd like to see her committed to a serious residential rehabilitation programme, and the best would be Higher Ground in Auckland. But like I say, they do not tolerate behavioural issues beyond the first 40 days and it would be difficult for someone used to the limelight, to submit to being 'just another addict'. The other option would be Odyssey House, an 18-month programme that focuses on behavioural stuff. That might work although her presence would turn a community of others trying to recover in turmoil, I expect. If money were no object, the best option would be to send her to a tough programme somewhere in the US. There, she could be truly anonymous - nobody would know who she is - or care. If she were my daughter and I could afford it, that's what I would do.
Hope springs eternal, but hearts are broken all the time for addicts and their families.

Avalanche - Self Will Run Riot

This clip says just about everything about today's culture.

Wait for it

A couple of weeks ago I was prepared to write a glowing blog about Hone Harawira, Maori Party MP for Tai Tokerau. I like Hone because he is in touch with the people and knows that the basis for creating a better future for Maori lies in education and social spending. But I get uneasy when he is silent about ethical issues. He hasn't said very much about Winni-tanga and recently worked behind the scenes to squash serious assault charges against a Maori man who beat up a housing corporation worker.
Increasingly, he is being seen getting cozy with the old guard of maoridom, quietly supporting their back room tactics in dealings with Northern Iwi. I always saw him as a man of unbridled ethics, but now I'm beginning to wonder if he hasn't become too enamored with having the inside goss and being part of the larger established politic. It's a slippery slope.

Crossroads

I envy those bloggers who carve out and explore a niche. I wish I had a fetish for political campaign buttons, or thimbles, or an in-depth knowledge of anything. Then I could share my knowledge and expertise with someone wanting the quintessential one-stop-shop on something or other. Instead, I jump from thing to thing, not knowing anything in any depth, and without the insider knowledge that makes it special. I went on a rant about Winston Peters for a while because it didn't seem possible that a man, no matter how personable, could escape the rules of society that govern the rest of us. Well, the chickens have come home to roost and he will atone, at least in some way. But that still leaves me with a lot of questions about my place in the blogosphere.

Why do I do it? A part of me wants to be famous, another part just wants to leave some evidence that I existed, still another believes that what I write has value. The key question is more about the person I want to be. Do I want to be the critic and pundit? Will this advance my goal: to find serenity and some kind of spiritual path?

The truth is I do not get any residual satisfaction from criticising other people. I used to... but what kind of value is that in a world already frought with war, poverty, hate, and natural calamity? How do I contribute to making this a better world? With that question in mind I am going to change tack and begin to focus on the possitive. There are little and big miracles all around us - should we choose to seek them out.

Black Watch

My friend Allen is excited by a new book soon to be released about the last days of the Black Watch in Canada. The world in 1951 was frightened enough about the Soviets to re muster the Regiment from five highland militia units. Although they only took the parade ground for less than 20 years it was the last gasp of military pageantry before the onset of unification and the army of 'little green managers' that formed Canada's military in the 70's and 80's.
Allen served in the Black Watch and I remember a story he told me about how it all ended. He was with the Regiment in Germany when word came down that the colours were to be struck and the unit made a part of the androgynous new Canadian Army. Describing the mood on that day as dark, the Black Watch were determined to go out with style, and organized a proper Change of Colours parade, complete with band and unit turned out. They waited and waited. Finally, a jeep rolled up and a little green man from Administration opened his briefcase and handed over the colours. It was the perfect metaphor for the attitude-of-the-day regarding all things military.

The Final Word on Winston

Winston Peters breezed into the Grey Power meeting in Kaitaia last week. The audience was as you would expect, old. His performance was too. He addressed all the issues that appeal to the geritol set; crime, superannuation, the conspiracy against him... all very predictable.
He was charming and wore a nice suit. Besides the donation made to him, I doubt that he walked away having gained or lost anything. I expect the same result from inquiries by the House Privileges Committee, or from the SFO. The former lack the subpoena powers to get facts and the latter, winding up their activities, will not want to go out on a controversial note. This leaves the media.
The media are waiting for someone else to do the investigative work. They lack the resources or expertise to do an investigative story that goes deeper than the clues provided by the whistle-blowers who sent the cancelled cheques to various members of the press some two years ago. In that time they have added nothing to the story. So, it will probably die a slow death. I expect New Zealand First will do badly in the next election. Winston is unlikely to win his seat in Tauranga, but will likely get enough second votes to get a seat on the list. A small part of me is frustrated at the injustice of it all. In the end, I expect regular kiwis don't care very much about the story. Like me, they figure that political life is a hell of a lot more interesting with him than without him.

Why Winston loves Grey Power

Letter to the Editor will see light.

Apologies to Northland Age Editor Peter Jackson. He assures me that the letter will indeed be published, the omission was due to a plethora of LOTE over the past two editions. Today I am attending the Grey Power meeting in Kaitaia where Winston Peters will address northland for 30 minutes. I considered laying a 'Citizen's Arrest' on him, but realized that I am not a citizen - per se.

Kaitaia Airport is the key.

Some time ago, Carrington Resort commissioned a study to find the most appropriate place to build an international airport in the Far North. The study identified Kaitaia as the only place where an international would be feasible. The Kaitaia Airport is held in Trust by the Crown and leased to Far North Holdings and the lease expired last year. Far North Holdings has been trying to get a 35 year lease on the airport but has been stalled because of Treaty Negotiations with the Iwi who lay claim to the land.

There are a group of people interested in a huge Far North development scheme for the pristine stretch of coastline called '90 Mile Beach. The Airport is the Key.

This is very deep indeed. And there is so much more to come....

Winston Peters visits Northland

New Zealand First Leader Winston Peters is coming to Kaitaia this Thursday and I plan to be there. I am going to ask him why he won't come clean on donations to New Zealand First and I plan to ask him how much money is in the Spencer Trust. It's a Grey Power meeting so I will probably get thrashed with canes and rammed by the motorized walkers of his core supporters but I plan to be there anyway. I'm going to try and get someone to hold a camera as well so maybe there will be some pictures.

Letter to the Editor that was rejected.

Letter to the Editor, The Northland Age:

Te Houtaewa should be looking over his shoulder as Iwi in the Far North wrap up treaty negotiations, because attention will now be fixed on the jewel in the Far North crown - Te Oneroa A Tohe and the forests.

No doubt there is a prospectus winding its way through China, as this is being read, urging investors to get in early. Incumbent on the plan is the consolidation of political and Maori interests. It is timely that Mayor Brown seeks to eliminate the Regional Council in favour of a District Council - with the power to fast-track development, but this alone will not provide the political infrastructure necessary to create another Maui, or Surfers' Paradise along 90 Mile Beach.

The real work, of course, is how to get the buy-in of the six northern Iwi. Someone will have to take a leadership role; someone with enough mana to organise and deliver Maori co-operation in the venture. That person (or group of persons) will also need the necessary business acumen, as well as a background in economics.

By my reckoning three things will have to happen: Te Runanga O Muriwhenua will become the 'next big thing' in Maoridom; this to negotiate the sale and disposition of tribal lands in the Aupouri Peninsula. I say "sale" because the Chinese are never interested in rents and leases - only ownership. Of course, Kaitaia Airport will have to become an international, because nobody will want to drive from Auckland International to get here. Lastly, something will have to be done to pacify the locals who are affected, both pakeha and Maori, given our record for tourist crime.

The benefits to the community will be significant. Thousands of jobs will be created in the hospitality and service sectors. Local developers will certainly benefit from the building boom. In the short term, all those consultants who have been working on treaty negotiations will be able to retain their travel allowances and per diems, helping to get things started.

That's what makes this upcoming election so important. Because:
E kore e mau i koe, he wae kai pakiaka
(A foot accustomed to running over roots makes the speediest runner)

Doug Graves,
Kaitaia

Big Game in the Far North

-Welcome Winston to the world of blogging. Never mind that this medium is foreign-owned too; I look forward to your blogs because it only adds to your hippocracy - and when the truth comes out, your legacy as a political buffoon will be legend.
-Michael Cullen gets full marks for getting involved in treaty negotiations with Maori. He has the clout to move efforts past the front line of government mandarins and pooh-bahs who keep the dialogue on an endless loop of discussion. With Agreements in Principle in place among many of the Iwi in the Far North, it is interesting to watch the squirmings of the many 'professional negotiators' making a five-star living from the process. All Iwi negotiators cannot be tarred with this brush, but there are a handfull sprinkled about who garnered big reputations by photocopying and plagiarising the work of others - under their guise as capacity-building consultants. And of course, just as Runanga budgets are depleted, they have resurrected muriwhenua to begin a new round of plane trips, hotel rooms and cabernet.
-And then you have Shane Jones returning to the Far North. His new best friend is Wayne Brown, Far North Mayor. These self-styled 'masters of the universe' are working together to build 'Las Vegas with a beach' along 90 Mile Beach. While Wayne pitches the idea to Chinese property developers and wrestles power from Northland Regional Council, Mr. Jones is taking care of the Maori side of things by resurrecting muriwhenua and assuring there is enough money to go around to fund the retirements of 'white wine Maori' everywhere. The only honest far north parliamentarian is Hone Harawira, a man who cannot be bought at any price.

PM defends Peters in Parliament

It just goes on and on and on.

The Unauthorized History of New Zealand

Corporate Cosmology

This is a prophetic glimpse into what we are today.

Rest in Peace Michael

My friend Michael S. passed away, last weekend, after a battle with cancer. I will always remember him for his wit, and his intelligence. Michael said things we were all thinking, usually better than we could have said it ourselves. That he loved his children, Sid and Ella, there is no doubt. I wished I could have had that afternoon at an outdoor cafe to talk and laugh, but it was not meant to be. A difficult guy to get close to, he was never a part of the 'in crowd'. The last communication I had with him was a joke he sent me - too ribald to post. His funeral is today and I may write more about him later on.

Master Bullshit Artist #2

Well, unless something particularly revealing happens I am going to give this topic a rest for a while. One of the reasons is I am starting to feel sorry for him, in much the same way I felt sorry for Saddam Hussein just before he was hung.

Follow the Money

Art used to imitate life, but in today's society, life imitates art. Journalists throughout New Zealand are stumbling all over each other to get to the bottom of the Winston Peters affair. It is easy to find out... just follow the money.

Questions: Why is it that The Spencer Trust comes up blank in a search through the Trusts and Societies database? Does it exist? Is it offshore?

This is part of the script from 'All the President's Men'. The scene begins with Bob Woodward in an underground parking garage with Deep Throat.

Bob Woodward: The story is dry. All we've got are pieces. We can't seem to figure out what the puzzle is supposed to look like. John Mitchell resigns as the head of CREEP, and says that he wants to spend more time with his family. I mean, it sounds like bullshit, we don't exactly believe that...
Deep Throat: No, heh, but it's touching. Forget the myths the media's created about the White House. The truth is, these are not very bright guys, and things got out of hand.
Bob Woodward: Hunt's come in from the cold. Supposedly he's got a lawyer with $25,000 in a brown paper bag.
Deep Throat: Follow the money.
Bob Woodward: What do you mean? Where?
Deep Throat: Oh, I can't tell you that.
Bob Woodward: But you could tell me that.
Deep Throat: No, I have to do this my way. You tell me what you know, and I'll confirm. I'll keep you in the right direction if I can, but that's all. Just... follow the money.

A Master Bullshit Artist at work

A Cornered Rat

That Winston Peters is a charming, handsome character, there is no doubt. He is famous for verbal rope-a-dope, which has opponents throwing jabs and haymakers at him while he bobs, weaves, and filibusters through round after round. Past opponents are left open-mouthed with hands hanging by their sides. (Click on title: A Cornered Rat for an example.) It harkens back to a time when the measure of a 'kiwi bloke' was a brawler with a wit. This, along with his identity as an apprentice of past master, Robert Muldoon, seems explanation enough for most New Zealanders, especially the 'Grey Power' block of voters who keep him in office. He is forgiven his zenophobic views about all immigrants - especially asians, despite representing New Zealand on the world stage as Foreign Minister. Ethically, and morally, the PM should have sacked him for that alone. In private, Mr. Peters will tell you that asian immigration is good for New Zealand, but afterall, he must cater to the fears of his core constituents to do the greater good. He is also the champion of anti-corruption in politics; necessary to have around to keep everyone else honest. But the duplicitous nature of his immigration private/public views seems to extend to all facets of the man's character given the current raruraru over his handling and declaration of party funds. Will he finally be outed? It remains to be seen, however a groundswell of fourth and fifth estaters appear to have finally had enough. That the PM lacks the moral fibre to clean house will only tarnish the Labour Party on the eave of the election. Someone should remind her that when you lay down with dogs, you will get fleas.

A Bad Storm

There is a howling storm outside my home this morning and the Volunteer Fire Service has been called out three times since 5am. Winds are gusting to 130kph and hail is pelting off the metal roof of my home. It is on days like this that I marvel at the commitment and bravery of the people working for the Fire and Ambulance Services. They do not get paid but a sign outside the firehall bears evidence they have been called out 250 or so times this year. It is on days like this, when the power is sure to go off, and serious flooding possible, that I worry about having enough firewood, water and food. What would I do if the roof blew off. It is Saturday, and my wife is supposed to be at a meeting and my grandson is supposed to stay with his mother. Being separated in a disaster would be the hardest of all things to bear. Oops. There go the lights.

A Watershed Moment

Although I am safe enough here in New Zealand, I feel a vertigo over happenings throughout the world. It is easy to criticize America for the war, neo-conservatism, and their refusal to combat climate change, but the truth is that all of our freedoms worldwide are dependent on a strong, secure, and just America.
America's refusal to heed global warming is not because they don't believe the scientists, it is simply because there is no political will or profit in it. And yet Congress and Senate voted a $300 billion Housing Bill to stop the erosion of the middle-class. A further $300, or so billion was recently allocated to subsidize farmers. The ripples of the current economic crisis will touch everyone. A fiscal meltdown seems all but inevitable; as living costs skyrocket and the value of US currency plummets.
Material wealth is important, but I'm more concerned about the erosion of a legal system that made individual rights and freedoms the cornerstone of what America represented. In the face of institutions like Abu Ghraib and legislation like the Patriot Act a great society seems to have lost its moral compass. Future historians may look back at the Supreme Court's decision to give the presidential election to George Bush, 8 years ago, as a defining moment in America's fall. In truth George Bush should never have gotten that close to begin with. Clinton had just quarterbacked an economic miracle where americans had a balanced budget and zero deficit within their grasp. That should have been the legacy that Al Gore campaigned on. But when Clinton chose to have relations with 'that woman', he took himself out as an effective campaigner in 2000 and put enough of a blemish on Al Gore's campaign to have made the difference. Indeed, his residue probably cost Hilary her shot at the presidency.
Obama may have the star power to pull America back from the abyss, but I don't think it matters anymore whether Barak Obama or John McCain are elected on the second Tuesday this November. It seems the only path left for a cornered America is to expand militarization to some kind of end-game. Hitler used war to get out from under the weight of the Versailles Treaty. Saddam Hussein chose to invade Kuwait, rather than pay them back for financing the Iran/Iraq conflict. I fear that today's America will pay any price to keep what they have. The United States of America stands at a watershed today, and I pray she finds the strength to weather the coming storm.

Maybe You Can Go Home Again

At 66 to 1 odds, who would have figured Greg Norman to lead the British Open after 3 rounds. He hasn't won a tournament for 10 years and the last time he was in the headlines was when Bill Clinton got pissed at Norman's house and broke his leg. No doubt, his marriage to tennis star Chris Evert has a lot to do with it. Given his classic collapses under pressure in majors I expect the odds on his winning haven't improved very much with one round to go; but you never know.
But before golfers everywhere start ditching their marriages for one last grab at the ring, perhaps they should wait for the finish. Knowing Norman's penchant for turning anything into money, I am going to wait for the inevitable testimonial for the 'little blue pill', ginseng, antler fur or bear bile. It is a much safer bet that it will be some extract from a Great White Shark.

Looking at Omar

Omar Khadr is exactly where he should be. Perhaps I'm becoming more conservative but when the kid chose to take up arms against forces that included serving Canadian soldiers then he got what he deserved. If he had not been wounded and taken prisoner he would have gone on the celebrity circuit back in Canada and become a jihadist poster-boy at the mosque in Mississauga. No doubt that while the men folk are off on their overseas adventure, the Canadian taxpayer is supporting mom and the girls back in Canada, knitting kafalas. He made the choice between snowboarding or waterboarding. And as for Robin Long... he didn't go to Canada to avoid the draft; he volunteered, for goodness sake. Desertion in the face of the enemy used to buy you a firing squad - which I am against. But he too will have to face up to his choice - 'to encourage the others'. During Vietnam, a significant number of Americans who hid out in Canada found comfortable livings as teachers in public schools. Their gift to Canada was a generation of white-wine-socialists, only too eager to tummyhug the barrel and lift their skirts, whining 'choose me'. I won't even mention how it affected the women. After all, look what Gary Bettman did to hockey in Canada.

You can never go home again.

Omar Khadr (image left) was born in Toronto, but left for Afghanistan and joined up with Al Queda. He killed a U.S. medic with a grenade before he was wounded, but was treated by the mates of the dead serviceman and taken prisoner. He sits in Guantanamo Bay, the last western-born person to be held there. Now he wants to come home - to Canada. American, Robin Long (image right) joined the U.S. military. Outraged over the treatment of prisoners at Gitmo, he deserted and came to Canada. He doesn't want to go home to the U.S. , however, immigration officials in Canada are sending him back to 'the land of the free and home of the brave'. As a Canadian in exile, I can relate to both fellas wanting to somehow turn the clock back, pop open a Molson and catch Hockey Night in Canada. Well, life just 'aint that way. We three made our decisions and now we have to live with them. Isn't life full of irony?

Language as Medium... Yes?

The Medium is the Message; especially in the context of public speaking. I first noticed it in the '80s, when women began taking their rightful place at the podium. The start of any comment began with, "umm". Umm's at the beginning of each comment or sentence created an illusion of deep contemplation - as if the speaker was sorting through millions of bits of information to find the right tidbit, irrespective of the carefully written script before them. I believe linguists call these 'interrupters'. In today's techno-speak we would describe it as 'insufficient ram'. It was a huge distraction as I often found myself counting the umm's, sometimes collaring the speaker afterwards to ask if they were aware they had said, "umm" 76 times in a two-minute talk. Usually these were pretty women with sensible haircuts, pinstripes and flat shoes.

The 'umm' was improved upon by the BBC, and replaced by the 'stutter". Each roundtable usually contained at least one person with a stutter. When asked to contribute, this type would begin with a crisp "yes, well" and launch into ten seconds of "ma, ma, ma, ma, ma, ma" before exploding in a set-piece run of genius - quick stop - ingest of breath - continue. This performance accompanied any and every bit. It was also a very clever way of cutting off or horning in on another panel member. Here, one pictured the befuddled genius in bow tie and mad haircut, twitching blinks, out-of-breath; at once blessed by God with a first rate intellect while on the other, limited by speech as the medium. No wonder aliens use ESP to communicate.

The latest verbal affectation is beginning to make me twitch in my seat. The newest thing is to say something, but instead of an umm or stutter at the beginning of each comment, you get the comment followed by a "Yes?" Gordon Ramsay uses this to great effect. As in, "This fucking soup is cold! - Yes?" Now lecturers and speakers everywhere are mesmerising audiences with a statement followed by a 'Yes?'. This new trend eliminates any thought that the speaker is unsure of their subject. It also creates the illusion that an opportunity is being presented for a response, when it is really meant as a twist of the knife after it has ripped into your bowels.

I'm going to take the opportunity to stand up and and say "No!" everytime I get the Yes tactic. After all, it works for my 3-year-old grandson.

Chicken Soup

If you really want to know what your neighbours think of you, just drop off a pot of fresh homemade chicken soup. I did, and their dog is slurping is up quite nicely. It's true that we have never really gotten along, but when I heard the missus was home with the flu I thought sharing some of my homemade soup would be just the ticket to improve relations. I don't quite blame her though. Because if she dropped off chicken soup to me I doubt that I would tuck into a bowl without at least trying it out on someone else first. But to just plunk the pot by the dog house, in plain view of where I am sitting?

The Serenity Prayer - Enya (May it Be)

May your days be full and warm.

Bobby Mcferrin improvisation with Richard Bona

Satchel Paige's Rules for Living

"Work like you don't need the money. Love like you've never been hurt. Dance like nobody's watching."

Satchel Paige got paid for throwing a baseball. He was past 40 before he made the Major Leagues, spending most of his career playing in the Negro Leagues. He was a character also known for his quotes. These 'Rules for Living' were taken from his autobiography, Maybe I'll Pitch Forever (as told to David Lipman, 1962):
"Avoid fried meats which angry up the blood."
"If your stomach disputes you, lie down and pacify it with cool thoughts."
"Keep the juices flowing by jangling around gently as you move."
"Go very light on the vices, such as carrying on in society — the social ramble ain't restful."
"Avoid running at all times."
"And don't look back — something might be gaining on you."

Towards Spirituality

I am grateful to Paulo Coelho for choosing to become the advance scout in my search to find spirituality. He is fearless and inclusive in his search. There are no fees and dues to join with him, short of getting a library card, or purchasing a book. Nobody is excluded from the spiritual experience. His books fire the imagination and possibility, often containing step-by-step instructions. I like that the instructions are there. One can try them without being limited by their definition. Or you can choose to treat them as most good rules should be, not abolutes, but guidelines. I believe anyone, anywhere can embark on their own pilgrimage, whether it be around the world or around the block. An inquisitive nature coupled with humility is required, together with the capacity to be in tune to nature and people. It is requisite that nothing be dismissed as insignificant or coincidental. We should allow time to ponder and reflect on what happened. To that end I am going to start testing my ideas with a daily walk. I will be alert to sound and eye-contact with the people I meet. I will pray before leaving, asking God to guide me towards my purpose for today. And in the spirit of Paolo, I'll let you know what happens.

Gratitude

To most of us 'gratitude' is a polite reflex after receiving something. We get and say, "Thanks." But in a deeper, more profound way gratitude is about saying thank you even when something is taken away from you. A mind disciplined to find the good in everything will ultimately result in a living state of grace.

Vista

How we all awaited Microsoft's new operating system - Vista. I know Bill is trying to leave the driving to others these days, but gosh, what a botchup. Microsoft did their usual; rush the product to the shelf, let the user find the bugs, then develop massive Service Packs to correct the glitches. But as media/data rich as Vista is, well, 'that dog just won't hunt'. I think people are fed up with being held hostage when purchasing a new computer, because unless you build it yourself, or get a Mac, preloaded Vista is what you get. This is the beginning of the end for Microsoft's dominance in the world market. They know it too and are scrambling to develop Windows 7 on the one hand, while on the other they have made a deal with OLPC (one laptop per child) to install XP on third world laptops.
http://blog.wired.com/monkeybites/2007/12/microsoft-strip.html
If the world truly cared about equality they would build on an open source platform, develop a free world ISP with enough bandwidth to stream audio visuals, and build server farms large enough to provide software and storage space for everyone.

Contact

After 16 years of absence I tracked down my ex-wife, Helen. My daughter, Audrey, answered the phone. I didn't say anything to her but it was her. Helen was cool, as she always was, and told me Audrey was fine... and what did I want? Good question.
Since everything is about me, I figured Audrey lay awake nights wondering who her father was. What crap. I'm sure it passed through her mind from time to time, but knowing my wife's family she was probably assured I wasn't worth the bother. And they were right to do so.
Looking back over my old blogs was painful. The typos, written when I was full of drink and self-pity; the senseless meanderings, presented as some sort of bohemian genius. I was tempted to obliterate the lot and start over, but I didn't. Because looking through that stuff reminded me what had happened and where I am now.
Thanks be to God I am sober today and have been for some 7 months. The past cannot be deleted as easily as text on a page. Better to trust in the human heart and the capacity within each of us to see the soul, not the wrapper. My phone call to Helen must have put her world in turmoil too. After all, she had the task of raising Audrey and given the results would be reluctant to place our treasure in any kind of jeopardy. I understand and approve. Just for today I am glad to have given her my contact information. In time, we may begin a dialogue. Just for today I am happy my daughter is loved and well.

Paolo the Warrior

Discovering the writing of Paolo Coelho is a good first step in discovering yourself. To some he is self absorbed and pretentious. But to me he is a hero, because he looks inside himself and asks the question; "Why?". I ask the same question of myself. He is the mentor of spiritual discovery, the basis for all serious questions about God and our relationship with him. He is a warrior of the light who could have chosen to keep the secret to himself. Instead he releases all, like the arrow in his bow. He is a guide to fellow travellers everywhere... and he is my friend.

To edit or not to edit

After years of trying to find my daughter, Thea, I feel like I'm getting closer. As she gets older and begins to do what normal teenagers do I believe technology will bridge our connection. But what does one say after 16 years? For many of those missing years I was someone who could not have offered much, but things are different today. I have a lot of amends to make. One quandary I have has to do with this blog... and indeed my life. My first instinct is to blot out all references to anything that does not contribute to a high opinion of me. However, I cannot succumb to that. To do so would be to erase not only the ugly facts, but many of the hard earned truths too.

Much Ado About Nothing

I would rather be dead than go through life not being able to find humour in the tragic. One of the endearing things about my grandson is that his 6 year old mind can trigger a laugh when a train goes off the bridge and crashes into the gorge. Pity those who go through life only seeing the fine print.

One friend of mine endured 18 weeks of intense displeasure at the hands of those much practiced in the art of disquieting the soul. Humour had no place in open discussion, but my friend persisted in trying to introduce parody into what was a surreal experience for many of us. True, he sometimes threw a barb my way but not so much to humiliate, but to humble. At one point, when faced with his removal from the programme, I spoke out and hoped against their judgement. My friend stayed the course and in keeping with tradition passed out thank you cards to our minders. On one card, to one woman, he wrote an invitation to create progeny. I believe Nelson Mandela had a similar relationship with his prison jailer and they got along afterwards. Not so here. The pitchforks came out and the torches were lit. That the woman in question had graduate degrees in psychology proved inadequate to her ability to read between the fine print and see that she was attractive, loved, and in the end truly thanked.

Gosh, I thought it was funny.

How to have a good time

The secret of health for both mind and body is not to mourn for the past, not to worry about the future, or not to anticipate troubles, but to live in the present moment wisely and earnestly.

Buddha (563 BC-483 BC) Founder of Buddhism.

I wasted yesterday by wondering what was going to happen tomorrow... which is today. Living in the moment is the difference between anxiety - over what cannot be anticipated, and just trusting that everything will unfold as it should. Just for today. So today I will let go and let God. I will exist in the moment.

Owning My Part

I did not think my post "Chickens Coming Home to Roast" cast anything disparaging towards my wife. The truth is none of my recovery would have been possible without her. She travelled upwards of 11 hours a day-sometimes twice a week - to support me in group, or just to visit. Ana also made sure the bills were paid and that there was enough left over to keep me in smokes.
In recovery, I know there will be bad days... and maybe even bad years. Today I don't have to turn my anger into a resentment and get hammered. My wife is human - subject to tiredness, dissapointment and anger just like the rest of us. We will survive this. I'm frustrated because of my inability to do anything today to fix the problem. My own part is that defect in my character that blames others. I love my wife and trust God she knows that.