Alternative View
By Lance Crossley

Last month, I took a mid-year review of how I was faring with my 2010 prediction that states would face serious insolvency issues. We found evidence that this is indeed happening in the form of the Greek debt crisis as well as a number of other Euro nations that are dancing with precarious balance sheets. I said the theme of insolvency would also play out on the institutional level (with banks) and the individual level. Since I didn’t have space to address the latter two items last time, I’ll give it a go for this column.
The thing with debt is that you can’t separate government debt from bank debt or from individual debt; it’s all part of the same story. For example, last issue I mentioned one of the reasons for the bailout of Greece was to keep German and French banks, who were heavily invested in Greek bonds, solvent. French and German leaders feared a Greek default would render those banks’ assets worthless, and thus engender a run on their countries’ banks.
How much of a threat is the sovereign debt crisis for banks? A June 11 Bloomberg article reported that in a worst-case scenario – where Greece, Ireland, Italy, Portugal and Spain would all restructure their debt because of their inability to pay – banks globally would lose $900 billion dollars. In the past I have mentioned how the banking system is extremely over-leveraged. That means it would never have to reach a worst-case scenario to create another banking crisis. It would probably only take one or two countries to default to start the domino effect.
The debt crisis is also unfolding on the individual level. At the end of May, the Organization for Economic Co-operation (OECD) said in its semi-annual economic outlook that the debt levels among Canadian families threatens our economy. The report was overall quite positive on the Canadian economic recovery, but was quick to point out that “the high rate of household indebtedness is a source of risk to the outlook.”
The OECD report follows a similar warning from the Certified General Accountants Association of Canada, which said household debt in Canada is 2.5 times what it was in 1989 – that’s $41,740 per person! People just don’t have any rainy day funds anymore. When something goes wrong, they are really in the mud. The main asset Canadians hold is their homes. If housing prices begin to decline – as I believe they will – a lot of people will be without a financial lifeline.
The whole debt problem will eventually cause deflation. There’s no other way around it. What goes up, must come down. In that sense, my 2010 prediction wasn’t really a prediction at all. I was only observing a story that was already written during the many years of easy credit and loose monetary policy. What we are witnessing now is the story unfolding.

Alternative View
By Lance Crossley

As we are nearly halfway through 2010 – scary, I know – I thought it would be a good time to see how my New Year’s predictions are panning out. In my December 2009 column, I wrote the following:
“My 2010 predictions can be summed up in one word: “insolvency”. To be insolvent is to be unable to pay one’s debt obligations. In my view, this trend will only get stronger on the individual, institutional, and state level.”
For this column, I’ll keep my remarks to the state level. Last year, how many times did you see Greece on the news? These days, you can’t turn on the television without hearing the latest on the Greek debt crisis. What is happening across the Atlantic is extremely important. For those of you who don’t know, Greece has been under tremendous international pressure to get its fiscal house in order. The world markets are refusing to buy Greek debt except at insanely high interest levels. Why? They don’t believe it will ever get paid back. Markets believe it has gone past the point of no return. Even when Greece announced severe cutbacks to its public service, an action that provoked riots and deaths, currency markets have continued to turn its back on the country.
Euro zone leaders and the IMF eventually had to step in and agree to a $146-billion bailout to restore confidence in the international markets. Only one problem: even with the bailout, the market still didn’t believe it would be enough to make Greece solvent. So European leaders went back to the drawing board and came up with a $1-trillion bailout scheme, the largest bailout in history. Incredibly, the effect of this massive liquidity injection lasted less than 24 hours. The Euro almost immediately began to plummet. This was the market’s way of saying, “It doesn’t matter what you do at this point – this thing is broken.” This all in bet by European leaders has been going horribly wrong. What’s their next move? A ten trillion dollar bailout? The market just doesn’t buy this whole charade.
Why is the market crucifying Greece? Because they know who is bailing them out. It’s other bankrupt nations. They know credit rating agencies have been downgrading the debt of Spain and Portugal. They know Ireland and Italy are also facing similar problems. They know this is the broke bailing out the broke.
One of the reasons for the hasty bailout is that France and Germany’s banking sectors are hugely exposed to Portuguese, Spanish, and Greek debt. Leaders feared a contagion effect, and didn’t want a run on their banks. They prevented a run on the banks (for now) but they have not prevented a run on the Euro currency and various national debts.
Greece is the canary in the coal mine. Once this European story plays out with the other nations I mentioned, currency speculators will turn across the Atlantic to the U.S. dollar. The balance sheet of the U.S. is no better than Europe. The dollar is currently benefiting from the European crisis as some investors are fleeing to it as a “safe haven”. This will only last so long. Eventually, investors will also abandon the dollar and run to the only immortal currency – gold. At that point, gold will soar well over $2000 an ounce. The monetary system as we know it will have to push reset and reinvent itself. Things will start again but it’s going to be a turbulent ride to get there.

Alternative View
By Lance Crossley

Your faithful editor, Mr. Casey Lessard, recently gave me 100 trillion dollars. Seriously. Following a dinner we had a few weeks ago in Toronto’s Bloor West neighbourhood, in which I proposed that the United States is firmly on the road to hyperinflation, Casey kindly sent me a rather fitting gift: an authentic 100 trillion dollar bill from Zimbabwe’s bout of hyperinflation in the 2000s. (Ed.: This was the second largest bill ever printed until the Z$ was suspended in April 2009; government transactions are now performed in US$.)
Zimbabwe is one of the worst examples of hyperinflation in history. It is also the first example of hyperinflation in the 21st century (though, dare I say, it won’t be the last. More on that later).
The road to hyperinflation for Zimbabwe started with a sputtering economy, enormous government deficits, and the inability to borrow due to poor credit ratings. The Robert Mugabe government, which desperately wanted to avoid creating the civil strife that results from harsh austerity measures, resorted to what most governments do in this situation: printing money. Since Mugabe couldn’t find buyers for Zimbabwe bonds, he rolled the printing presses.
At its peak in 2008, inflation in Zimbabwe was increasing at an exponential rate. Put in a more tangible way, the cost of grocery shopping would double every 24 hours.
Hyperinflation brings cruel consequences for the average citizen. If you’re on a fixed income and your pension is $3000 a month, and the price of everything around you increases 50 to 100 times that amount, you can imagine the hopelessness of the situation. Basically, hyperinflation is an instantaneous way to wipe out all your savings and wealth.
During my conversation with Casey a few weeks ago, I suggested that the United States is highly vulnerable to hyperinflation. Like Zimbabwe, they have a struggling economy and gigantic government deficits. The only difference is that other countries are still willing to buy U.S. treasuries (i.e. U.S. debt). However, that may be changing.
In 2009, the U.S. had to auction a record $1.49 trillion in treasury bills to pay its deficit. And that was only freshly minted debt. If you count the debt the U.S. had to “roll over” from previous auctions, it totalled over $8 trillion. That is a massive amount of debt to sell. Remember, somebody at the other end has to assume this debt.
To me, it is astounding that anyone would buy a U.S. treasury security in light of all the money printing talking place south of the border. John Williams, an American economist who calculates statistics based on how the government used to calculate these things (before various administrations started cooking the stats), says the real inflation rate in the United States is at least twice as much than is reported by the government. In other words, people are buying U.S. treasuries to lose money at this point. This can only go on for so long.
Recently, some well-informed analysts have also noticed some “funny business” in the way the U.S. reports the results of its treasury auctions. Without getting too technical, it appears that part of the treasury auctions are being bought by the Federal Reserve itself. This would indicate that there is already not enough demand for the massive supply of U.S. debt that must be met. If you wrote yourself a cheque and cashed it in to meet your monthly obligations, you would be put in jail for fraud. The U.S. government, on the other hand, can get away with it. But not forever.
Will we ever see a million, billion or trillion dollar American bill? As incredible as it may sound, this is not a ludicrous proposition anymore.

Alternative View
By Lance Crossley

In George Orwell’s 1984, the ruling party’s three slogans were “War is Peace; Freedom is Slavery; Ignorance is Strength.” If you need any evidence that an Orwellian world is already upon us, you need to look no further that the awarding of the Nobel Peace Prize to US President Barack Obama – a bizarre and scandalous episode that drips with irony.
In the 108-year history of the Nobel awards, it has never gone to a leader so early in his tenure. So why Obama? One Nobel committee chairman defended the selection by saying, “Alfred Nobel wrote that the prize should go to the person who has contributed most to the development of peace in the previous year. Who has done more for that than Barack Obama?”
Let us run through all the remarkable contributions President Obama has made to the cause of peace. He has expanded the war in Afghanistan, poetically adding 30,000 troops to the area just a few days before his acceptance speech. He authorized the war to expand into Pakistan, where the killing of innocent Pakistani civilians has become a regular occurrence. He’s pointing the gun at Iran and Yemen. He continues to occupy Iraq by building permanent military bases in the country. He has tried to block court cases that challenge torture and domestic spying. And he has still not closed Guantanamo Bay, as promised so often during his election campaign.
In light of all this, his December 10 Nobel acceptance speech was all the more difficult to stomach. On what planet can a man accepting a peace prize get away with this: “I … reserve the right to act unilaterally if necessary to defend my nation.” Or how about this: “So yes, the instruments of war do have a role to play in preserving the peace.” Or this: “War is sometimes necessary.”
One observer astutely called it “an infomercial for war”. International security analyst Kaan Kutlu Atac said the president used the word “war” 44 times, the word “kill” five times and “peace” 31 times. It seems peace is losing ground.
Obama’s Nobel Peace Prize is perhaps the most striking symbolic event of 2009. An event that only makes sense in a world where people truly believe war is peace.

Alternative View
By Lance Crossley

My wife always makes fun of me after reading my columns because, as she says, “they are always such downers”. I can’t really argue with her on that one. But in my defence, I really am trying to call it as I see it. Anyway, she’s going to love this one. So without further ado, allow me to make my predictions for 2010.
My 2010 predictions can be summed up in one word: “insolvency”. To be insolvent is to be unable to pay one’s debt obligations. In my view, this trend will only get stronger on the individual, institutional, and state level.
Many countries are in serious financial trouble. Ireland’s public services have been drastically slashed with emergency budgets in an effort to pay its bills. Credit-rating agencies recently downgraded the credit-worthiness of Greece and Dubai. The U.S. and the U.K. have been warned of possible future downgrades.
The individual level is no better. In the U.S., bankruptcies are up by over 30 per cent so far in 2009. A similar story is emerging in Canada, albeit not as drastic.
My main concern, however, is with the banks. Western banks are so highly leveraged you can almost hear their top-heavy structures beginning to creak and crack. In the United States, over 130 banks have gone bankrupt in 2009. The top five Canadian banks are even more highly leveraged than the big banks in the states. According to a Sprott Asset Management report, these Canadian banks are leveraged at an average of 31:1, meaning a mere drop in their tangible assets of three per cent would effectively wipe out their worth.
The Sprott report suggests the only reason Canadians banks sidestepped the 2008 crash was because of a stealth government bail-out of $114 billion. It wasn’t called a bailout, of course; it was merely a “liquidity injection” courtesy of the Canada Mortgage and Housing Corporation ($65 billion), the Bank of Canada ($45 billion), and the Canada Pension Plan ($4 billion). Apparently all it takes to sedate the Canadian population is to change the terminology, or in the case of CPP, bury it on page 32 of your investment board’s 2009 annual report.
So the situation is risky even if you take their financial statements at face value. The problem is their financial statements, at least in the U.S. and Europe, are effectively “cooked”. The bank failures happening in the United States are quite revealing in this respect. Take the recent failure of AmTrust Bank, for example. It reported assets of $12 billion against deposits of $8 billion – not highly leveraged at all. Yet the government had to cough up $2 billion (25 percent) to cover people’s bank deposits. In other words, a large portion of their so-called “assets” were phony. This story is playing out again and again south of the border.
Whether the insolvency story is kicked further down the road or explodes in 2010 is anyone’s guess. But it is certainly something to watch out for. Happy New Year!

Alternative View
By Lance Crossley

Here in Canada, we seem to think we are immune to a housing bubble, so it was interesting to see the Globe and Mail – usually a real estate cheerleader – at least question the logic of why we continue to experience a booming housing sector amid the greatest economic crisis since the Great Depression.
In an Oct. 30 article, the Globe wrote, “Canadians are in the midst of a mortgage binge, taking out home loans at a pace that’s nearly eight per cent faster than a year ago…housing prices don’t usually survive recessions.” While the article correctly points to the Bank of Canada’s record low interest rates as a primary culprit for the buying spree, nowhere in the article does it mention the other major culprit: the Canada Mortgage and Housing Corporation.

Too big to fail?
The CMHC provides insurance to the banks for the entire amount of any mortgage when the purchaser has less than a 20 per cent down payment. This is another way of saying that they insure virtually all mortgages, since the average down payment of Canadians who buy a home is only about six percent. With this CMHC guarantee, the banks have no risk when they issue mortgages. If the homeowner defaults, it is the taxpayer who is on the hook. We don’t have a name for “sub-prime” here in Canada because we don’t need one – the CMHC makes almost everyone a worthy borrower.
Some are starting to call the CMHC the northern version of Fannie Mae and Freddie Mac. By the end of 2009, the CMHC says it plans to insure a staggering $813 billion worth of mortgages and mortgage-backed securities. That is well over half of Canada’s entire GDP. If there is a northern version of “too big to fail”, the CMHC is it.

An untold story
The National Post’s Diane Francis, the only mainstream journalist I know to call out the CMHC, warns that “Ottawa’s smugness about its superior regulatory regime and Canadian banking conservatism” is an accident waiting to happen.
“It’s a mortgage slush fund which distorts the market,” Francis writes. “It allows banks to lend recklessly without consequences and pushes up the price of housing for everyone.”

Worse than America
One of the most astute observers of this quiet Canadian housing bubble is blogger Jonathan Tonge (www.americacanada.blogspot.com). Here s what he has to say:
“Even at the zenith of the US housing bubble, prices peaked around $230,000 US while incomes were around $47,000 US. In Canada, incomes are $44,000 and prices are now at $326,613. If I have evidenced to you at this point how risky our lending has been, how are we so different than America? One might even say that we are much worse.”
The voices that recognize we are indeed in a housing bubble are few and far between. It won’t be long before the rest of the public catches on.

Alternative View
By Lance Crossley

I have said this before, but future generations will write about our time as a turning point in history. One major event that is attracting too little attention is the decline of the American dollar. To understand the importance of this we must first understand the dollar’s privileged status as the world reserve currency.
Gold used to be the anchor that gave paper money value; paper currency was freely convertible into a fixed quantity of gold. But since President Richard Nixon abandoned the gold standard in the early 1970s, the international money system is entirely based on fiat currency.
To fill the void gold left behind, the American dollar – due to its economic and military might – stepped into the role of world reserve currency. That meant other countries would stock up American dollars as “proof of value” for their own currencies. It also meant international transactions for commodities such as oil were all settled in American dollars.
This is starting to change, and quite rapidly.

The Independent, a British newspaper, reported on October 6 that Gulf Arabs were secretly meeting with China, Russia, Japan, and France to end dollar dealings for oil and replace it with a “basket of currencies” which would include the euro, gold, and the Chinese yuan. To give you an idea of the significance of this, one of the reasons America invaded Iraq so swiftly was because Iraq started to sell oil in euros instead of dollars – something America saw as a clear threat to the dollar’s status.
But this time, we aren’t talking about a rogue country. The ones staging a mutiny against the dollar are some of the most powerful countries in the world. (These countries have since denied the secret meeting, but at least one other reporter has confirmed with senior sources that this meeting did in fact happen. It is also worth noting that these countries have openly, and on the record, questioned the dollar’s reserve status numerous times over the last several months).
Another bad omen for the dollar is that it is now becoming the currency choice for the carry trade. The currency carry trade is a strategy of very wealth investors who borrow one currency and cash it in at a profit in another currency.
When the Asian crisis hit in the 90s, Japan set interest rates at zero percent. Carry traders borrowed Japanese Yen for free, converted it to dollars, and then bought U.S. government bonds that had interest rates of 4-5 percent. There’s your profit.
Now America is becoming the weak currency by which carry traders prey upon to cash in at a profit elsewhere.
Meanwhile, the U.S. will continue to recklessly print money in order to keep its economy on life support. The more money it prints, the more it devalues its currency. When the currency is devalued enough, countries like China will stop buying American debt. That will result in more money printing and, very possibly, hyperinflation.

Alternative View
By Lance Crossley

In his weekly radio and Internet address this past weekend, U.S. President Barack Obama lashed out against critics making “phony claims” about his health care reform bill. He urged “an honest debate, not one dominated by willful misrepresentations and outright distortions”.
To be sure, the debate on health reform south of the border has been hotly debated. Angry crowds have jammed into town hall meetings across the country. At some of these meetings, the confrontations have even turned physical. Some people call the reform bill socialist, others call it fascist. The problem is that there has been a lot of emotion but not a lot of context.
One of the central features of the bill is the idea of saving dollars through the targeted cost-cutting of Medicare, a government health insurance plan available for Americans 65 and over. These cost-cutting proposals were inspired by some controversial studies at the Dartmouth Institute for Health Policy and Clinical Practice. The studies wowed people in the Obama circle by showing how government could cut Medicare spending by hundreds of billions without affecting quality of healthcare delivery.
How did they arrive at these conclusions? The studies found that when it came to end-of-life care, some regions spent more than others on Medicare. The “great discovery” was that the ones that spent more had no major difference in patient outcome than the lesser spending regions. To make a long story short, the Dartmouth Institute championed these lower spending regions as models that should be emulated by the rest of the country. The higher-spending regions, according the studies, have no justification for spending more because other regions get the same results with less. Therefore, there should be essentially the same budget ceiling applied to all care across the country.
Sounds reasonable, right? But hold on a second. One glaring omission in this study is that it fails to take into account data such as the economic status of the patients. For example, the least expensive medicare facility in America is the Mayo Clinic in Rochester, Minnesota. The most expensive facility is found at the New York University Medical Center. Huge socio-economic differences between these two areas were simply ignored in the Dartmouth studies, even though it is well known that economic conditions have a huge impact on health. For example, lower-income people are more vulnerable to chronic diseases, which are extremely costly to treat. The study also didn’t take into account the amount of family support a patient has, which is important because those with more help at home can have more home-care rather than rely on expensive overnight stays at the hospital.
If this cost-cutting proposal is passed in the reform bill, the poorest are the most likely to suffer. While President Obama laments his critics, one wonders whether he has been critical enough of the ones advising him.

Alternative View
By Lance Crossley

On July 23, Bank of Canada governor Mark Carney announced that the recession was coming to an end. On July 29, President Obama said things have gotten better: the United States had prevented a depression and this was the beginning of the end of the recession. On August 3, a Bank of Montreal economist said the U.S. recession will end in the third quarter. And on August 5, the front page of The Toronto Star declared “Economy on the Rebound”. Leaders, experts, and media have announced in unison that all is well with our economy.
What a steaming pile of horse doo-doo.
The facts tell a very different story. Everything hinges on the United States’ ability to generate growth but there just isn’t any credible evidence that will happen. Now that the housing bubble has burst, the next shoe to drop is the commercial real estate market. Banks have postponed this day of reckoning by extending commercial loans instead of foreclosing, but how long this can go on is anybody’s guess.
Unemployment is officially at almost 10 percent now. Unofficially, some reputable analysts have it at almost twice that figure because of the skewed methods the government uses in its calculations. Either way, unemployment benefits are running out for many Americans, with the New York Times reporting as many as 1.5 million jobless will see their benefits end by Christmas.
State tax revenues have experienced their biggest fall since records began 45 years ago. Virtually every state is insolvent, most notably California, which has had to make draconian cuts to avoid bankruptcy.
Railroad carloads, which carry goods and are an accepted reflection of economic vitality, are down 22.5 percent since 2006. Retail sales are slumping. Consumer spending is tightening despite government efforts to stimulate credit. Even the Bank for International Settlements, which acts as a global central bank, has warned that the fiscal stimulus packages are only a band-aid and will be followed by an “extended period of economic stagnation.”
Most ominously, countries like China and Russia are starting to show signs they will no longer support America’s debt by buying its government bonds and treasury bills. If this happens, the dollar will plummet and American standard of living will drastically fall, as everything they import will becoming significantly more expensive.
So why all the optimism about emerging “green shoots” in the economy? Their hope is largely based on the rise of stock markets, which have rebounded greatly since bottoming out in March. But this climb can be attributed to Federal Reserve Chairman Ben Bernanke, who has expanded the monetary base by $1 trillion with fresh money. This new money has not been directed into productive purposes; rather it has been channelled straight into tradable assets. As a July 16 Wall Street Journal article pointed out: “In other words, Ben Bernanke has been the market.”
Where is it all headed? I wouldn’t be at all surprised to see another stock market crash as early as this fall, following the end of the American fiscal year when the final numbers come through and investors can see the bigger picture. Even if that day is postponed, the economy’s cheerleaders won’t be able to hide the reality forever.

Alternative View
By Lance Crossley

(The last in a four-part monetary system series)

It is astonishing to see how little the idea of monetary reform is up for political debate. Nevertheless, there is a small but growing chorus of voices offering an alternative vision to our money system. Here are a few of the more realistic proposals I have encountered. While none is a panacea, each is capable of improving the current system.

Return Bank of Canada to its former glory
Canada’s central bank was created in 1935 and nationalized three years later. It is supposed to be owned by the public in the interest of the common good. In effect, however, it has become a vehicle of Bay Street bankers. It wasn’t always that way. From WW2 until the early 1970s, money creation was shared by the private banking system and the government (through the Bank of Canada). The central bank would lend government money with what amounted to an interest-free loan. This paid for massive undertakings like the war and costly infrastructure projects like airports and the Trans-Canada Highway. This “government created money” would eventually find its way into the private banks, which would then use the cash as its reserve base to lend to businesses and individuals. In the words of Paul Hellyer, a former Trudeau cabinet minister: “It was the system that gave Canada the best 25 years of the 20th century.”

The 100 per cent reserve system
The modern banking system is based upon the “fractional reserve” scheme created by the goldsmiths in the 17th century. For a small fee, goldsmiths held people’s gold in safes and provided the depositor with a receipt that was good as gold in the marketplace. The goldsmiths soon noticed that only 10-20 percent of their clients would redeem their gold at any one time. This meant they could “safely” lend gold at interest many more times over the amount they actually had in the vault – as long as they held at least 10 percent reserves. This deception worked as long as people trusted there was actual gold backing their paper receipt. Mandating a 100 percent reserve requirement on banks would take away their money creating privileges and prevent runs on banks like the one we witnessed last fall in the United States.

Local currencies
Bernard Lietaer, a former Belgian central banker, argues that people and corporations are actually competing for money, not markets and resources. That is why he and a growing number of activists are promoting the idea of local currencies, which can circumvent the need for legal tender. The idea is that as long as there is an agreement between two people, paper money doesn’t matter. For example, in Ithaca, New York, community members can use time credits to shop at the farmer’s market or even pay rent. Farmers and landlords can use the pledged “hours” to get help with the harvest or building maintenance.

While all of these ideas differ in their application, they share the common belief that the money system has gotten away from us and has become detrimental to the common good. Perhaps Lietaer says it best: “We’ve forgotten that we designed it, and it’s now leading us around.”

Alternative View
By Lance Crossley

(Part three of a four-part series examining the monetary system.)

Another danger of having a money system controlled by private banking interests is something relatively new in our history: the financialization of the economy.
Before the 1970s, capital was mostly used for economically fruitful purposes, such as production. Banks still had undue influence on society because of their license to create money and charge you interest for that right, but at least the money was loaned for more or less productive purposes.
Since then, things have reversed. Most money today is directed to what economists call the “derivatives market”. Whereas traditional investing has revolved around advancing money for economically productive endeavours, the derivatives market is about betting on whether an economic endeavour will go up or down. Speculators can bet on anything from stocks, bonds, even currencies. Derivatives can also be bought and sold as a form of insurance to “hedge” one’s risky bets.
In other words, most money is flowing toward a global casino that doesn’t care if the economy succeeds or fails. In fact, a privileged few can profit greatly when it fails.
Whereas finance used to support industry and the real economy; it is now there to cannibalize it. As Ellen Brown, author of Web of Debt, explains: “Derivatives are basically just bets, which vacuum up value without producing anything.”
According to Sprott Asset Management, a respected Toronto-based brokerage firm, the total nominal value of the global derivatives market is a mind-boggling $743 trillion. As Eric Sprott, the company’s CEO points out, that is equivalent “to more than 11 years of everything the world produces. It is far and away the largest asset market the world has ever known.”
To make matters worse, the derivatives market places bets with a high proportion of borrowed money from banks (i.e. bank created money).
Borrowing money for derivatives can be hugely profitable when riding a market bubble, but devastating when the legalized pyramid scheme comes tumbling down. It is worth noting that the massive Wall Street bailouts were largely devised to cover irresponsible bets made in the derivatives market.
Noam Chomsky, the great American intellectual, recently said to me in an email: “The financializaton of the economy in the 1970s was a major event, in my judgment…more important in world affairs than the collapse of the USSR.”
If this is true, then we are truly in the midst of historic times. As of now, the Obama administration has gone to great lengths to preserve the financial economy. His economic “reforms” announced in June were basically written by the banking industry and only served to illustrate that big banks have no interest in changing their financial games. Why would they? As it stands now, they profit greatly in “good times” and have the taxpayer to cover their losses in bad times.
There is zero risk if you are a big bank these days. The same is unfortunately not true for the majority of people who reside in the real economy.

Alternative View
By Lance Crossley

(Part two of a four-part series examining the monetary system.)

One of the unspoken absurdities of our money system is government debt. Under our system, the only way a government can pay for its programs and services is through taxes or borrowing. Since taxes are never enough to meet its budget requirements, government is forced to borrow money. It does this through selling government securities such as treasury bills and bonds. These are basically IOUs with the promise to pay interest on whatever they borrow. The cumulative effect of government borrowing is well known. In Canada, the single largest federal spending item is interest payments on the public debt. In 2006, it amounted to just over 15 cents of every tax dollar. That figure is going up as the Harper government projects $64 billion in deficits by 2011. In the United States, the deficit has ballooned to an astounding $1.7 trillion.
Government debt eventually reaches a point where it cripples a country. You see it in the conditions of the roads, in higher taxes, overcrowded hospitals, and child poverty – everything must be eroded in the name of servicing debt payments. Yet there is no lack of resources, labour, or knowledge to solve these problems; there is, however, a lack of money.
This raises the question: Why is the issuance of credit controlled by private banks and not the government?
In 1921, the great inventor Thomas Edison put it more succinctly:
“If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good … both are promises to pay; but one promise fattens the usurer, and the other helps the people.”
Abraham Lincoln realized this during the civil war, when bankers would only fund the war at interest rates of 24 to 36 percent. Since this would obviously bankrupt the North, he bypassed the private banking system altogether and authorized the printing of fully legal treasury notes (which is where the expression “Greenbacks” comes from). This money was not backed by reserves or gold, but by “the full faith and credit of the United States”. This interest-free money helped win the war and turn America into an economic power – the steel industry, the railroad system, and even free higher education was established under this innovative money system. Unfortunately, it was short-lived. After Lincoln was assassinated, the bankers resumed their place as the dominant money power.
These days, the distracted public unleashes their anger over their deteriorating quality of life against political parties. They blame the left for raising taxes. They blame the right for cutting back social programs. A divided public suits the bankers fine because it means nobody is questioning why they have a monopoly on the money supply. The fact is, under the weight of enormous public debts, politicians don’t have a choice but to raise taxes or slash programs.
Until we reorder the money system so that it benefits the entire public, and not just a private banking cartel, we’ll be hearing more of these tedious partisan debates for years to come.

Alternative View
By Lance Crossley

(Part one of a four-part series examining the monetary system.)

“Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.”
- William Lyon Mackenzie King, 1935

Running for his fourth term as Prime Minister, Mackenzie King said this amid the rubble of the depression because he saw that money creation was the bitter root of a fundamentally unjust economic system. Today, you cannot find one politician in Canada connecting the economic crisis to our money system.
Most people don’t realize that private banks create virtually all of today’s money supply. For example, when you take out a mortgage of $250,000, the bank is not lending you cash sitting in its vault – it creates it on the spot by typing digits into a computer. (Editor’s note: while the United States requires reserves of 10 per cent for any loan, Canada has no such rule.) The money didn’t exist before you were approved for the loan. When you pay back the principal it becomes what they call “dead money”. It cancels out the loan and it no longer exists in the system. The bank makes its money by charging you interest. Only you have to toil in the real world by producing goods or services in order to pay the interest. Earning tangible wealth takes time. Meanwhile, the accumulating interest can easily double the cost of your initial purchase. It is a sweet deal if you’re a banker: produce nothing of tangible value but get real wealth in return.
But banks only create the principal, not the interest. This creates a chronic shortage in the money supply because businesses and workers are competing to extract interest payments from a money supply that never created it in the first place – the proverbial “rat race”. The money supply is continually being diverted into the coffers of the bankers. Bankruptcies are actually inevitable in such a system; it’s something bankers know full well. That’s why they arrange to seize your property should you default on your payments.
Usury – charging interest on money for profit – is nothing new. Throughout the ages it has been condemned by many of the world’s major religions. The only record of Jesus acting violently was when he threw the moneychangers out of the temple. Jesus was enraged and accused them of turning a house of prayer into a “den of thieves”. The backstory is that people who came to worship had to pay a temple tax, and although there were many different kinds of currency used in everyday commerce, temples would only accept a certain kind of coin called the shekel. The moneychangers soon vacuumed up most of the shekels in circulation and proceeded to lend it at interest to the faithful. Jesus saw that the moneychangers were fixing the fight, and that the system was manufacturing losers.
The moneychangers were the bankers of their time. The question today is: Who is going to challenge the moneychangers of our time?

Alternative View
By Lance Crossley

Let me share my financial predicament.
My family currently rents an apartment and within the next year or two we would like to put a down payment on a house by using the government’s First Time Home Buyers Plan (HBP). The plan allows you to withdraw from your RRSP, without penalty, to use as a down payment on a home with the promise you will pay back the “loan” over a period of time.
Like many Canadians this past fall, I watched in dismay as the value of my investments nosedived. My middle-of-the-road mutual fund portfolio took a 25-30 percent hit. Fortunately for me, I am nowhere near retirement age, but it did complicate my plan to buy a home, as I would have to cash in my investments at a loss to use the HBP.
Recent stock market gains have “increased” the value of my mutual funds into the negative 15-20 percent territory – a tempting sign to keep my money parked there until the funds fully recover.
But the stock market rally of late is a tease, which is why I have decided to cut my losses before the market takes another tumble. Instead I’ll deposit whatever is left into a safe money market fund.
Why? Because I believe the loss I’ll take will be less now than later. Nine months after the stock market crash of 1929, there was a similar stock market rally that led many – including U.S. President Herbert Hoover – to believe the depression was over. The stock market subsequently crashed even further and didn’t hit the bottom until the summer of 1932.
Things aren’t as bad as the Great Depression, but there is too much evidence that the worst is yet to come. The economy won’t recover unless two things increase: consumer spending and exports.
Consumer spending is the most important, accounting for more than half of the economy. But consumers are tapped out. Household debt in Canada is at an all-time high. Jobs are hemorrhaging at a rate faster than they were during the recessions of the ‘80s and ‘90s. Yes, there was a recent job surge in April, which the media hailed as a sign of recovery, but most of the new jobs were through self-employment. This is the predictable result of the Harper government’s refusal to fix the Employment Insurance system, which less than 45 percent of the unemployed quality for – compared to the more than 80 percent who qualified during the last recession. In the absence of an effective social safety net, workers scramble to put food on the table through what are often lower-income, no-future self-employment activities.
Exports account for a third of the economy, but they won’t generate a recovery until our biggest buyer to the south gets its house in order. Other countries are in a similar situation and will also be curtailing purchases, which again is bad news for our exports.
That is why I am going to save the old-fashioned way for a down payment.

Alternative View
By Lance Crossley

Shakespeare once wisely wrote: “Neither a borrower not a lender be”.
But in 2009, it’s clear that it is better to be a lender. If there is one thing the global economic crisis has shown, it is that the world is run by creditors. The reality is so obscene that it is a wonder why incidents that happened at the G20 summit in London, where protesters stormed the banks, are not happening more often. Instead of paying for their crimes – promoting predatory loans and exotic securities that fueled the housing bubble and subsequent economic collapse – banks are cashing in on the current crisis on the backs of taxpayers.
In the United States, the government recently announced a so-called “public-private” partnership to rid the banks of the toxic assets they created. Under this plan, the government will lend investors 92 per cent of the money to buy these worthless pieces of paper. Investors only have to put up eight per cent of the costs. If the assets end up losing money (which they probably will), the 92 per cent “loan” is guaranteed by the taxpayer. If they miraculously gain money, the public gets only 50 per cent of the gains. The financial elite have everything to gain and nothing to lose: banks rid themselves of toxic assets and way above market price, investors risk nothing, and the tab is picked up by your average hard-working citizen.
In Canada, the Harper government bailed-out our banks to the tune of $75 billion in the fall, supposedly to get the banks lending again. That much money could have fixed healthcare, poverty, and raised the standard of living for First Nations in one fell swoop. The government framed it as a “market transaction”, not a bailout, so it was barely covered by the press. If our banks are the healthiest in the world, as Harper is so fond of saying, why do our banks require a cash injection that, on a per capita basis, is equal to the $700 billion dollar bailout in the U.S. that caused so much controversy? Another steal for the banks.
The same power dynamics are taking place on the world stage. Take Iceland, for example, which is on the verge of becoming a third-world country thanks to the current crisis. International creditors knowingly loaded Iceland with debts they knew could never be repaid. The idea is to keep collecting on the interest until the country is tapped and then forced – by institutions like the IMF and World Bank – to start stripping its public assets. Sell off the country bit by bit to the private sector and create a whole new slew of borrowers for the banks. The problem is that this is leaving the country in ruin. This is familiar story to the developing world, but a new one for a country like Iceland.
Today, we live in a world where the only wealth being generated is through the extraction of debt.
It’s a world where only a privileged few are benefiting and an awful lot are suffering.

Alternative View
By Lance Crossley

Prime Minister Stephen Harper drew heavy criticism earlier this month when he told CNN that international forces in Afghanistan were never going to defeat the insurgency. His comments provoked a tongue-lashing by everybody from opposing political parties to the renowned Washington-based magazine Foreign Affairs.
What’s really shocking about Harper’s comments is not their legitimacy; many reputable sources close to the issue have said the same thing for a long time now. The real scandal is what his comments and the ensuing reaction to it reveal about the pathetic scope of debate on the Afghanistan issue.
Those who criticize Harper do so because they believe the war can be won, or that it is an insult to soldiers to say otherwise.
What links Harper and his critics is that they all justify the war based on whether it is winnable or not. If we can win, we should stay. If we are going to lose, we should go. (A few years ago Harper was happy to boast to the world that Canadians “don’t cut and run”.)
There’s been an appalling lack of critical thought in this country about this war ever since the former Liberal government signed up for George Bush’s “war on terror”. Iraq has had plenty of critics, but Afghanistan has been strangely immune to criticism. Nowhere can I find a convincing answer to a very simple question: Why are we there?
Are we there because of September 11? The Taliban were not involved in the planning of 9/11. Before the invasion, the United States propped up the Taliban regime with millions of dollars until American oil interests were unable to build a lucrative pipeline through the country. That is why government documents show the U.S. was planning to overthrow the Taliban well before the terrorist attacks. Sound like Iraq? This is a more rational explanation than the idea of squandering billions of dollars just to hunt down one man.
Are we there to instil freedom and democracy? In October 2001, the U.S. and its allies ignored the pleas of 1,000 non-Taliban Afghan leaders to stop the bombing of their country. The leaders begged the West to overthrow the Taliban regime through other means – a goal they believed was possible without killing. Why were these proposed alternatives never considered?
Are we there to counter Islamic fundamentalism? We now have a country run by drug warlords with no viable economy, horrendous rates of illiteracy, and widespread starvation. Nothing has improved. Things are worse. Worse yet, the Taliban has been given a new lease on life thanks to the hatred the war has incited among Afghans.
To date, more than 100 Canadian soldiers have died. With each death, this country turns into hero-worship mode, turning our soldiers into martyrs for dying for such a ‘noble cause’. But their deaths do not make them heroes; rather, they become tragic figures. Their deaths are tragic because we cannot give a good reason why they had to die.

Loss of manufacturing sector more than just numbers

Alternative View
By Lance Crossley

The latest job figures are not good. According to Statistics Canada, the country lost 129,000 jobs in January, which is worse than any monthly decline in the previous two recessions. Almost all the positions were full-time. Ontario was hit especially hard due to losses in the manufacturing sector, where 36,000 manufacturing positions evaporated into thin air. Unemployment rates are shooting up, with blue collar towns like Windsor already showing double digit unemployment figures.
Behind the numbers are a lot of devastated families. Some will be further distressed when they find out they don’t qualify for the Employment Insurance they have paid into all these years. But there is a broader and even more worrying trend, and that is the decline of our economic might.
Historically, Canada had to work hard to become more than just a natural resource based economy. It took sound public policy planning to create a diversified economy that wasn’t solely dependent on unprocessed resources. That is why by the mid-1990s Canada had become a heavyweight in the global manufacturing market. This helped make the country self-sufficient.
In the words of Jim Stanford, economist for the Canadian Auto Workers union, “For the first time in our history, we exported as much as we imported, and then some. For a country which traditionally relied on the export of natural resources to pay for imports of value-added merchandise, this was a tremendous achievement.”
But that economic high point was short lived. Since then our production exports have gone way down, and our reliance on resource exports – like Alberta oil – has risen dramatically. The problem with resource exports is that they are finite. A diversified, “value-added” economy with a strong manufacturing sector is more sustainable and better for our long-term economic security. For those who coldly suggest that laid-off manufacturing workers in Ontario can simply pack up and go work in the Alberta oils sand, think again. Forget about the complications of uprooting ones entire family to move out west, or the fact that oil sands projects are also being hit by the global recession. According to Stanford, there has only been one new job created in the mining and energy sector for every 4.5 jobs lost in the manufacturing sector between 2002-2008. And that was when the oil sands were booming.
I hate to say it, but the manufacturing sector in this province is done. It’s been dying for years. We need to build a new economy to replace the one we are losing. Even if we succeed in reinventing ourselves, it is going to take a long, long time to reap the benefits. In the meantime, better hold on tight.

Alternative View
By Lance Crossley

It can get confusing listening to the various media pundits and experts talk about what’s wrong with the economy. You hear a lot of talk about “subprime loans”, the “credit crunch”, and “market confidence”. All this is true, but for me, there is no clearer illustration of what ails the economy than this startling fact: On the morning of January 2, at precisely 9:04 a.m., the country’s highest paid 100 CEOs had already earned what the average Canadian earns in an entire year.
That means that before these CEOs had barely recovered from their New Year’s hangover, they had “earned” $40,237. This shocking fact was recently published by the Canadian Centre for Policy Alternatives, which analyzed the earnings of Canada’s best-paid CEOs for 2007. The study’s author, Hugh MacKenzie, puts it like this:
“If you made what most would consider a substantial salary – say, the $100,000 a year that gets you on the so-called ‘sunshine list’ in some provinces – the highest paid 100 CEOs would have pocketed your annual earning by the end of lunch hour on January 5.”
This perverse gap between the rich and poor is one reason it is going to be very difficult to get out of this deepening recession. In the last five years, hundreds of thousands of well-paying manufacturing jobs have evaporated into thin air. Workers are left to scrounge for low-paying jobs, which doesn’t help in a country where not a single province has a minimum wage even close to the poverty line. In fact, Canada has the second highest percentage of low-paid workers in the developed world. (Only the United States is worse).
Meanwhile, household debt in Canada is at a record high; as the recession worsens, a lot of Canadians simply won’t be able to keep up. Those relying on their home equity to bail them out of debt are in trouble too, as the Bank of Canada says that “a severe economic downturn could result in a substantial increase in default rates on household debt.” In other words, brace yourself for a housing crisis of our own.
In the last 30 years corporate profits have soared while workers’ wages in real dollars have either stagnated or declined. According to Canadian Business magazine, the country’s 46 billionaires are worth more than the total assets of the bottom 14 million Canadians. This ever-widening gap is finally catching up to the greedy few at the top. Why? Because no one has any money to buy the things they’re selling.
In 1914, Henry Ford announced he would pay his employees five dollars a day for their work. This was unheard of at the time, as most industrial workers were only making 11 dollars a week. He did so because he wanted his workers to be able to buy his cars. He realized that if citizens don’t get a fair share of the pie, then the economy cannot grow because capitalism relies on people buying things.
Ford’s philosophy helped build North America into an economic giant. Now the giant has grown top-heavy. Unfortunately, it’s the ones on the bottom who are going to suffer when it falls.

Alternative View
By Lance Crossley

One of the most intriguing aspects of the recent struggle for power on Parliament Hill was the propaganda war. Nowadays we call it public relations, but it still amounts to the same thing: the conscious and intelligent manipulation of public opinion.
In the dramatic lead up to the Governor-General approving Stephen Harper’s request to prorogue Parliament – thereby saving his political career – the country witnessed an ugly battle for the hearts and minds of Canadians.
The anti-coalition propaganda was particularly disgraceful.
The source of this propaganda came primarily from two very well oiled machines: the Harper government and big business.
Let’s start with the Harper government. It is to be expected that politicians with power will try every means to keep it, but the Conservatives resorted to outright lies to prevent the fall of their government.
They relentlessly repeated that this was a separatist coalition (it’s actually an NDP-Liberal coalition that has the Bloc’s blessing) and shamelessly implied this was a coup d’etat (when in fact it is perfectly democratic – Canadians elect a Parliament, not a government). The problem with the Conservative propaganda is that it is manufacturing a national unity crisis and spreading ignorance as to the kind of democratic system we have.
Big business was also against the coalition, although for a different reason: the fear of a government friendly to progressive labour policies. This view was reflected in the corporate-friendly editorial boards at most of the major newspapers. The Globe and Mail said it was “dangerous” to have members of a “left-wing, labour-beholden party” in cabinet. It even demanded Harper resign just to avoid this scenario, even though it endorsed him for leader during the recent election campaign.
The Canadian Chamber of Commerce (CCC), a huge business advocacy group, originally criticized Finance Minister Jim Flaherty’s pathetic economic statement, saying it lacked a real economic stimulus plan. But the powerful lobby group was clearly more worried about the prospect of a coalition. The reason was plainly stated by its president, Perrin Beatty, during an interview with CBC Newsworld where he brought up Bill C-257: a private member’s bill put forth earlier this year by the Bloc Quebecois that would have strengthened Canada’s labour rights. The bill failed but the fact that Beatty used it to explain his opposition to a coalition accurately revealed his motives. Conversely, it also explains why the coalition was so heavily endorsed by the Canadian Labour Congress and so many unions.
Even the Liberals were aware of big business’s opposition, as they went out of their way to tell corporate Canada the NDP would have no significant financial role in a coalition government.
The first casualty in public relations is truth. All the fear mongering by powerful interests prevents Canadians from acting in their own interest. It’s not that everyone has to agree on the idea of a coalition, but the winning idea should not belong to those with the biggest propaganda machine.

Lance Crossley is an award-winning journalist who has worked for The Ottawa Citizen, The Haliburton Echo, and The Prague Post.

What the U.S. and Canadian elections reveal about “democracy”

Alternative View
By Lance Crossley

On the surface, the recent Canadian and U.S. elections seem like a study in contrast. The Canadian election recorded the nation’s lowest voter turnout in history – a paltry 59 per cent – which is a shameful outcome for a country whose average turnout for the last half century exceeded 70 per cent.
Meanwhile in the U.S., voters turned out in historic numbers. Early estimates report that two-thirds of eligible voters made their voices heard – no small feat for a country where only about half of eligible voters marked their ballots during the last 50 years.  
But upon closer examination, both of the North American elections point to two countries that are alarmingly removed from real democracy; that is, an informed public making rational decisions based on how proposed policies will affect them.
Both campaigns, albeit in very different ways, illustrate how elections have moved away from real democracy and have been taken over by advertising firms. Elections are now about selling a product – the candidate’s personality – and not ideas.
Canadians had four national parties that offered a number of distinct policy visions. We had the most neoliberal party in the country’s history (Conservatives), an idea to fundamentally change our tax system (Liberals), an offer to implement a national pharmacare program (NDP), and some of the most environmentally progressive policies this country has ever seen (Green).
These various political visions were met by a collective yawn from the Canadian public. Voting was reduced to whether Dion was a “real leader” and what kind of sweater Harper was wearing.
The Canadian election’s failure was one of branding, not policy.
In contrast, the U.S. offered two candidates whose political differences were grossly exaggerated. Neither candidate represented any real change to American imperial policy. There was virtually no difference in their stance toward so-called Russian and Iranian “aggression”, except for John McCain’s more macho rhetoric. There were real differences to their ideas on Iraq. But the sum of American foreign military involvement will be about the same, as President-elect Barack Obama wants to transfer many of the troops in Iraq to Afghanistan.
Domestically, both McCain and Obama hurriedly offered a no-strings-attached endorsement of Wall Street’s $700-billion bailout, confirming the fact that both parties are firmly in the pockets of the financial elite.
But Americans were galvanized by a despised president and an ailing economy. They were desperate for a hero. Obama, an articulate and poetic speaker, was the perfect personality for the times. He managed to inspire not only Americans but the entire world. But his success was largely based on enthusiasm for his charismatic personality and motivational speeches, not his political ideas.
It’s not that inspiration is not important. But if our elections continue to be determined by either the presence or absence of a cult of personality, then “change” will remain more of a feeling than a reality for both countries.

Alternative View
By Gloria Martin

In the Sept. 10 Strip, Casey Lessard made comment that he feared a majority government in the federal election, and that, although he couldn’t quite put your finger on it, he “just doesn’t trust him (Prime Minister Stephen Harper).” I have to admit that I resonate with that fear, but I think with good reason.
First off is the fact that we are facing an early election despite Harper’s own pronouncements to the contrary; he says one thing and does another. Second, we have a prime minister who does not respect the will of Parliament by disregarding a majority vote in the house: the vote taken on allowing Iraq war resisters to stay in Canada. Having refused to participate in an illegal war not sanctioned by the United Nations, a war which has committed serious human rights violations, left countless untold dead, with lives and communities utterly destroyed, Harper continues to deport these courageous resisters back to the United States to face prison sentences. This is in spite of the fact that a majority vote was taken in the House of Commons to let them stay. Make no mistake: Canada would be fighting in this Iraq war if the Conservatives had their way.
Perhaps this is why Harper is so insistent on supporting another very unpopular war in Afghanistan. Canadians have heard the pleadings of voices like Afghan’s former MP Malalai Joya urging us to stop supporting her government, one of the most corrupt and criminal governments in the world – a gang of druglords and warlords, many of them wanted for human rights violations. She has told us that 60% of the Afghan people consider this government to be the worst in two decades. She reminds us that it’s a proven fact that no nation can liberate another. Liberation must be achieved by the people themselves – others can only provide support. The majority of Canadians want to support the troops by bringing them home, but Harper is determined to keep them there and watch as many of them return home in body bags. I was proud to call myself Canadian because we were a peacekeeping country concerned for human rights and people in crisis. Now we are involved in a war and supporting a criminal government. Would Harper follow the US in a war against Iran? His actions thus far suggest he well might. He seems more intent on impressing the Republican government than the Canadian people. We need to read the writing on the wall before it happens.
Last but not least is Harper’s reneging of the Kyoto Accord. Faced with the biggest crisis of all time he would rather point a finger at China than take full responsibility for our significant part in the global environmental crisis. Our very life on this planet depends on us taking urgent measures now. Now is the time for strong leadership on this matter because we don’t have until 2050! So am I nervous about the outcome of this election? Very! And with good reason.
For more information please go to www.youtube.com and watch Malalai Joya on Democracy Now! 19June07; Malalai Joya on ABC program on Afghanistan; War Resisters Supporter Catches Up With Stephen Harper; Canada’s Parliament votes to let U.S. War Resisters stay.
Gloria Martin is a Parkhill resident.

Alternative View
By Anjhela Michielsen

Somewhere between 1500 and 3000 miles (or 2400 to 4800 km) is the average distance your food has travelled to land on your plate (Leopold Center for Sustainable Agriculture, Iowa State University). And the numbers are climbing. In our modern era, these may not seem astonishing because we have come to accept and reap the benefits of a globalized market. It is not shocking to see produce stamped with the words Product of Mexico, Israel, Peru or, most frequently, U.S.A.. With most shoppers concerned about the price of their food, few care where the produce is coming from.
This is slowly changing. Our food security is diminishing, and our concerns about the environmental impact of imported products are growing. These concerns include: pesticide and herbicide use; genetically altered crops; fuel consumption due to transportation; and human and animal rights concerns. As a result, some people are looking for alternatives to the supermarket shelves.
In 2005, B.C. couple, Alisa Smith and James MacKinnon decided to try something that is now coined ‘The 100 Mile Diet’. They committed to eating within a 100 mile radius (160 km) of where they live for one year. They have since written a book recording their journey and findings called The 100 Mile Diet – A Year of Local Eating. They found many environmental, social and health benefits from their experiment, and have since continued with their commitment and challenging others to follow their example.
The environmental benefits to eating locally are the most obvious: as confirmed by Iowa State University researchers, regional diets decrease fuel consumption by up to 20% as opposed to typical North American diets. There are many other reasons that eating locally benefits the consumer individually: an increase in taste because of freshness; direct connection to the farmer and their farming practices; support to local economies and consumption of less processed and packaged food, leading to weight loss and better overall health.
We are privileged to live in one of the most prosperous farming areas in the world. When you really think about it, there is a lot you can get within 160 km of where we live. There are many resources right under our noses, like the Grand Bend and Pinery farmers markets, the Sunnivue organic farm – featured in this issue – and all of the various local farms that are too numerous to count. You don’t have to drive far to start seeing farm after farm. We even have wineries for wine lovers out there.
It may take some creativity and a little more thought, but eating a local diet is highly beneficial for the environment, the local community and personal health.
If you decide to take up The 100 Mile challenge or have already, the Grand Bend Strip wants to hear about it!

Editor’s Note: The book is available at The Currant Organic General Store on Parkhill’s Main Street.

Alternative View
By Anjhela Michielsen

“Peak oil” is the point when the world will have used half of the oil resources on the planet and the global output of oil will no longer meet demand. Peaking is usually followed by a serious decline, a prospect that worries many researching “peak oil.” Few dispute that oil will hit a peak; the arguments centre on when it will occur. Some say oil’s peak is decades away, but many believe it will happen between 2010 and 2020 (monbiot.com). Today we consume around four times as much oil as we discover.
Peak oil is one of the world’s most serious questions because the consequences are so great. Experts predict that lack of oil will cause a steady rise in prices and frequent oil shocks, leading to increased global instability, and an unstable economy held permanent hostage to terrorists, unstable dictatorships, resource wars and natural disasters. This will start a domino effect of human rights violations in desperate bids by western countries to gain control over remaining oil supplies that fuel their economies.
Isn’t this already happening? Take, for example, the illegal invasion of Iraq in 2003 by the US government with the ultimate agenda of controlling oil reserves in Iraq. The violence has caused devastation to several countries – Afghanistan, Iraq and the US – which will take decades to recover from, and some countries may never recover.
This is only the beginning. Oil corporations already commit massive human rights violations in southern countries through unsafe working conditions, pollution to environment and underpaid labour (and more), and when western countries become desperate for more fossil fuel to maintain their economies and lifestyles, the violence will only increase and the “have-not” countries – as throughout history – will pay the price. The best solution is for us to use our creativity to find solutions and for governments to support initiatives.

Note: just before press-time, the government reaffirmed it would not allow electric vehicles on the roads of most provinces, even though we make them in Canada for an American market. What’s wrong with this picture?

Alternative View
By Anjhela Michielsen

Male/female. Caucasian/non-Caucasian. Straight/gay. Able/disabled. Civilized/savage. Rich/poor. Rational/emotional. Mind/body. Normal/abnormal.
All of these pairs appear to be polar opposites. But in every set, in Western thinking, one part is privileged over the other. One is seen as “having” while the other is seen as “lacking.” This is called a binary. This ideology perpetuates Western power structures, which privilege white, straight, “civilized” men.
Let’s examine the ability/disability binary. “Able” is privileged over “disabled,” but who decides what is ability and what is disability? If you break it down, it’s actually “invented” by us: people in a culture or society who behave according to the ideas of the binary and follow certain rules. Therefore, our society is economically and physically built to privilege the “able” bodied individual creating the limitations that hinder all people from accessing and independently enjoying all aspects of public life, including working, shopping, recreating, traveling and worshipping.
As an “able” bodied individual, I take many things for granted. I am able to move freely in the physical construction of society without struggle, not often stopping to consider what it would be like if – because of my physical state – I weren’t able to step up one step to get the medical prescription I need without calling someone to get it for me, or being limited to certain clothing stores because most in our area are not accessible. This realization has made me look deeper into how I’ve been privileged as an able-bodied person in our society, and how I perpetuate oppression, and this is the first step to being part of the solution.
So, is there such as thing as “disability?” Or is it something that we, as a society, have created because of binary thinking, placing the rights of able-bodied people over those with other physical situations?
How can we, as a community, break the binary?

Alternative View
By Anjhela Michielsen

Consumers have power. Using buying power in a capitalist economy as an active way of creating social change and is one of the most underused forms of expression, and yet en masse it is so powerful.
Our economy is built on supply and demand. Wal-mart started carrying organic produce in Canada in 2006 after the company realized the market demand. The fact that the giant retailer is carrying organic produce – food favoured by people who care about the earth, good environmental stewardship, and fair trade – is a laughable concept; their sale of the food is an attempt to portray Wal-mart as having good environmental and ethical standards, a form of green-washing for the benefit of those who demand such products. Considering the environmental damage caused by Wal-mart (as an example, “new stores built [in 2007] alone consume enough electricity to add about 1 million metric tons of CO2 to the atmosphere” – Stacy Mitchell, grist.org) and human rights violations committed in its name (Norway’s federal pension fund dropped its investment in Wal-Mart, citing “serious” and “systematic” human rights violations in Wal-Mart’s supply chain – New York Times, May 4, 2007). Yet Wal-mart has added organic products to its shelves because of consumer demand for the products. Our free market economy leaves business to govern themselves, creating a conscience-less money-making machine. This puts consumers in the position of making the crucial decisions about the products they buy, a power which many people do not exercise.
More than 70 per cent of Wal-mart’s goods come from China; in fact, if Wal-mart were a company, it would be China’s sixth largest trading partner, ahead of Germany, the United Kingdom and Canada (wakeupwalmart.com). The Boycott Products Made in China campaign has listed some crimes that are being committed in China and how buying products made in China supports this corruption. Buying a product made in China supports the “suppression of democracy and freedom, wholesale and indiscriminate use of the death penalty, commercial harvesting of transplant organs of executed prisoners, denial of basic rights to Chinese workers and farmers, nationwide forced abortions and sterilizations, sweeping and brutal repression of all religions, criminal psychiatric abuse of political prisoners, routine torture of prisoners, military occupation and genocide in Tibet, draconian repression in East Turkestan, military expansion and aggression, world’s tightest Internet censorship (and) the largest dealer of “Weapons of Mass Destruction” to rogue states” – to name a few (www.boycottmadeinchina.org).
People suffer when we financially support China’s economy and its present government.
People are suffering here, too, as a result of our actions. Too often we hear of lay-offs in industry jobs and plant shut-downs in Ontario, because domestic companies can’t compete with lower-priced off-shore competitors.
Boycotting Chinese products, as well as most foreign made products, can be very discouraging for consumers but, with some research and sacrifice, it is possible. If everyone stopped buying products made in China there would be no market for products made under the supervision of this oppressive regime.
Support our local communities. It’s better for our neighbours and the environment, too.
Useful websites:
http://www.boycottmadeinchina.org/
http://www.made-in-china.com/
http://www.walmartwatch.com/
http://www.canadianmade.com/

Alternative View
By Anjhela Michielsen

Tempers are flaring in Haiti, Egypt and elsewhere around the world as grain prices rise out of reach. Haiti’s prime minister was fired Saturday and the government introduced a rice subsidy aimed at defusing the hungry rage that has triggered violence and looting.
A scarcity of supply is one of the main reasons for the price increase, and the move to replace fossil fuels – which contribute to global warming – with “cleaner” biofuels is one of the key factors in making food scarcer. The move to biofuels has increased the demand and price for biofuel sources, including corn, wheat and soybeans, and monopolizes on land used to grow other food products.
The dramatic increase in demand for biofuels is, as The Guardian’s John Vidal contends, “turning the corn belt of America from the bread basket of the world into an enormous fuel tank.” U.S. President George Bush wants to see the production of biofuels quintuple by 2017 to supply “24 per cent of the nation’s transport fuel,” according to British environmentalist George Monbiot, also writing in The Guardian, who is calling for a five-year moratorium on biofuel production targets and subsidies. The emphasis on fuel security is coming at the cost of food security “on a scale never seen before,” according to environmental analyst Lester R. Brown of the Earth Policy Institute, who notes the world has consumed more grain than it has produced for “seven of the last eight years.” Brown says the low availability of grains for human food consumption is the direct result of “misguided” U.S. policies intended to decrease reliance on fossil fuels by increasing the production of biofuels.
Growing demand for meat-centred North American diets, especially among the rising middle class in the world’s two largest nations, China and India, is exacerbating the problems of using food for fuel. Cornell University ecologist David Pimentel suggests it takes on average “nearly 6 kg” of grain to create 1 kg of high-quality animal protein, noting the amount of grain fed to livestock in the United States alone could feed 800 million people.
The rise in demand for grain for fuel and livestock feed caused a record price increase in 2007; the price of corn doubled and wheat increased by about 50 per cent (Vidal). While meat production is an important part of the increase, The Economist says “ethanol is the dominant reason” grain prices have increased. Elisabeth Rosenthal of the International Herald Tribune says food costs increased 25 per cent in the neediest countries, while the UN Food and Agriculture Organization saw its food price index increase by 40 per cent in 2007, four times the increase of the year before. Considering the impact the diversion of grains for fuel has on food security, its efficiency as a fuel is questionable; ethanol was “20 per cent of the whole maize crop” in the United States in 2006, but produced only enough fuel to offset “2 per cent of US automobile use” (Vidal).
The move to biofuels demonstrates a skewed set of priorities, valuing lifestyle over human life. The World Bank says ethanol is highly inefficient as a fuel, noting “the grain needed to fill up an SUV would feed a person for a year” (The Economist). The curse of the “have” nations is that they – meaning we – will not sacrifice the maintenance and enrichment of material lifestyle, and the people in “have-not” nations pay the price.

Article adapted from a longer essay. For more information, email anj at grandbendstrip.com.