Yes, the Brazilians are still the centerpiece of South American economic growth, yet there are competitors arising. While Venezuala faces a period of uncertainty with the potential replacement of Hugo Chavez, Argentina offers a renewed challenge to the Falklands under Cristina Fernández de Kirchner.
Europe reminds many historians of conditions during the 1930s. Economically depressed countries are embracing extremist political parties with racial divide, riots, and anger as the symptoms. Currently, most of the population is aware of the European debt crisis. Although a serious as the economic crisis is, the side effects of lower economic output can be more serious.
To stray from the Predictions of 2013 series, I did an infographic of the gun control debate raging in the US, along with some statistics. The objectives of Obama gun control rules come plainly from the White House publication on the topic. As one can see, the proposed regulations are quite practical.
Egypt has often been the focus of news in Africa as of late. The removal of Mubarak and election of Mohammed Morsi has proven to be an interesting turn of events, but the excitement is far from over. Morsi symbolically removed ties from the Muslim Brotherhood, but that move hardly removes the influence the party has on the President.
Often, articles will be conclusions with a few supporting facts that will often sway the reader. I find this problematic for two reasons. First, the reader does not have the chance to fully understand the topic because no background is given. Secondly, the reader doesn't really have an opportunity to disagree with the writer's conclusion if the reader has little to no knowledge of the topic.
Monday, 28 November 2011
Enough of that, I decided to post a letter from Kim Il Sung (he's dead - probably had a ghost writer - pun intended) , written for the Economist in the World in 2012 edition. If you have a chance, pick up the magazine, it's a great read. This letter describes the insanity that this nation is governed by, and truly shows how scary it would be should this nation acquire a nuclear bomb.
One hundred years after my birth, I, Kim Il Sung, founding deity of North Korea, will descend from heaven.
That is only one prediction that can be made with cast - iron certainty about what I proudly proclaim is the world's most unpredictable country. On the 100th anniversary of my birth, April 15th 2012, the whole world will hear nothing but lies about the peace-loving people of North Korea.
Your organs of capitalist propaganda will mock the goosesteps, the Nazi - like choreography, and the sickly flowers., Kimilsungia, named in my honour. They will never mention what a pure-hearted people my beloved children are. As their hollow bellies attest, they have fasted in mourning almost incessantly since my passing away in 1994 - with hardly a whisper of complaint. They bend their broken backs out of love for my dear son, Kim Jon Il, so that he no longer needs to wear platform shoes to see over their heads. They rejoice as he erects monument after monument to my memory, instead of wasting it on the fripperies of food. On my 70th birthday they built an Arch of Triumph, bigger than the French one, with a brick for everyday day of my life. In 2012 they will finish the 100 foot Ryugyong Hotel in Pyongyang in honour of me. Who cares if none of them can afford to stay there: empty, it will make a lovely missile sole to impress the neighbours.
Next year will be , as my dear son has promised, the year when North Korea becomes a strong and prosperous nation. Strong, of course, we already are. We have outlived Soviet Russia, Mao Zedong in China, and deadly departed comrades such as Nicolae Ceausecu of Romania. Superpowers continue to bow to our whims, promising aid and investment even when we threaten to nuke our beloved South Korean brethren to hell and back. Prosperity may take a little longer, it is not for nothing that people, looking at our tragically torn peninsula, talk about "One country, two planets". But if our army is strong enough to have a million guns, who needs butter?
The only thing that troubles me, as I gaze down from my mushroom cloud on Mount Paektu, is ensuring my legacy lives on. Not everyone can come up with an ideology based on self - delusion, Chisten it with Juche, and tell people that it's about self-reliance - self-reliance, that is, on all those capitalist dogs we hoodwink for aid. Not everyone would could fashion a brand of ethno fascist, neo -Stalinist, theocratic, murderous totalitarianism and yet portry himself as a father molly - coddling his devoted children.
My son, sadly, has not managed to step into my shoes. He prefers spending time with ostriches, his fashion sense is other-worldly, and with his taste for lobster and red wine it is no wonder gout is killing him. So, in good theocratic tradition, 2012 calls for some divine intervention. I will therefore descend from heaven, and be reborn in the shape of my pudgy grandson - Kim Jong Un.
You don't believe me? It is not for nothing that your newspaper has already christened him the Chosun Un.
Satire at it`s finest.
Wednesday, 19 October 2011
Tuesday, 20 September 2011
Ontario politics is a mess. With a large structural deficit, an ailing economy, all the Leader's seem to have hot-boxed their campaign buses and come up with their platforms during one long session.
Tim Hudak's PC party wants to give more money to welfare people, spend 6 billion on Healthcare, spend 35 billion on infrastructure to "cure the economy" (didn't Obama try this and fail?), spend 2 bill on education, cut taxes, take out smart meters and then balance the budget with magic economy beans. McGuinty's Liberals want to somehow create a personalized ontario cancer risk profile (here's your profile: everything causes cancer), and creates a childhood obesity council while curing the economy with magic start-up biz beans, and spend billions on education. The NDP openly has no ideas except to become protectionist and cure transportation by making it law that cars must stay a regulated distance from bikes - because more people will then use bikes right?
All the parties want to spend money we don't have, increase the deficit, but at the same time balance the budget.
Meanwhile, the Green Party's solution for Health care is to "focus on preventing illness through healthier communities and lifestyles", freeze and cap tuition payments, lower taxes, create a plan to balance the budget by 2015, and create a better farming/food strategy. Although their green energy policy is far off, and their platform the most vague, they seem to be the lesser of the evils.
When the Green party has the best platform, you know Ontario politics has gone haywire.
Tuesday, 13 September 2011
Monday, 1 August 2011
The US is 14.5 trillion in debt in terms of national debt. The increases in spending because of bills passed like No Child Left Behind, Obamacare, and rising Social Security along with an expensive military to maintain are the drivers behind the increasing deficit. Basically, if the US doesn't cut any spending, the deficit will increase annually therefore the national debt continues to go skyward. That's the background.
There is a constitutional law that limits the amount of borrowing the US can do. Reagan increased it all the time, Clinton, Bush etc...Usually it passes like clockwork and no one really notices it. However, this time the Republicans wanted cuts. Which is fair, as they cannot afford the expensive programs they've been instituting. However, at the same time the Democrats wanted to increase taxes, which again is fair as the US has one of the lowest tax rates in the Western world.
John Boehner is the speaker for the Republicans and has been negotiating a deal with Obama. Obama has been fighting for tax increases and compromising with spending cuts. Boehner, due to the idiocy of populist politics and the rantings of the tea party, has declined to agree to any tax increases. The tea party is the main reason for this, a group of uneducated people who still think America's main threat is Obama being a closet Muslim. The risks of not getting a deal done is Moody's will downgrade the American debt from their precious AAA Rating causing turbulence in the markets, rising interest rates, and just general panic. The biggest fear though is of default, which would render America's currency less valuable in comparison to many of the other top currencies. Default is the worst fear, but it most likely will not happen.
Currently, Boehner has negotiated a deal that reveals Obama to be pretty spineless, as the deal that is expected to be announced is 2.1 trillion in spending cuts (good but not enough), a nonpartisan Budget committee to find more ways to slice the deficit down (good idea - should of happened years ago) and a two step plan for increasing the debt again when it has to be done which will involve more negotiated cuts. There will be no tax increases, which is very unfortunate as the US simply needs more tax revenue to pay their bills.
I realize I am biased against Obama but I am frustrated at him not standing up and getting some tax increases, 2.1 trillion in spending cuts isn't even enough (over 10 years). With straight line, that's 210 billion per year, which in terms of America's budget isn't good enough. Right now, if the deficit spending continues, interest payments will become America's largest annual expenditure (above military and Social Security).
Nobody doubts the tea party's effectiveness, they have succeeded n pushing the entire American spectrum to the right. Were they right? Hell no.
American tax revenue right now is around 14% of GDP. Right now, the rich contribute about 18% of total tax revenue, down from 30% around a (decade?) ago - I forget the timeline. This is the lowest percentage of tax revenue from GDP since the 1950s. Contrary to what most people think, Americans spend a ton of money on healthcare - I think it's above 15% of GDP and more than any of the wealthy nations. They have the largest military, which isn't cheap. In the last decade, they've engaged in 2 large wars. Obamacare adds to the cost, and really the legislation does nothing except give big pharmaceuticals more money. No Child Left Behind was shown as one of the most idiotic pieces of legislation by around 70 teachers (?) or something like that being caught in lifting average test scores so they would get higher salaries. And that bill cost a ton of money. Social Security costs far too much, and a lot of this is actually universal in the Western world. Part of the reason is the retirement age must be lifted. The 65 years old thing was based on old living expectancy (I think 67 at the time) - now I think most Western countries are around 75 - 80.
American government is too big, sure and they're spending like there's no tomorrow. But, taxation is actually at its lowest in a long time. And that ladies and gentleman is why were are in this mess. Republicans appease voters by lowering taxes while the Dems grab votes by offering social services. How can one continue to spend more money when you're not bringing in more? The answer is you cannot.
The Tea Party has a good central idea of government needs to be lessened - I agree. I agree that stimulus is never the answer and Keynesian economics don't work when you only practice in bad times. However, the riots and the idea of DON'T RAISE TAXES is something the Tea party is most known for and has Republicans catering them by refusing to raise taxes. Taxes NEED to be raised. They are just too low right now in the US. And taxes will be raised, it's only a matter of time before the government is forced too.
This is all of the top of my head, so look up the stats if needed - I'm pretty sure they're all close. If you want to know how to make money from this, short the American dollar and short any US Bank. Historically, when there have been low taxes on the rich there has been a quick boom followed by recovery. And we will enter the recovery stage sooner or later.
Monday, 6 June 2011
Well, we may have another Enron, except these guys don't trade energy. They trade forests.
TRE or Sino Forest Corp has fallen from $22 a share to recently closing just above $6 a share in a matter of days. This is due to the work of Muddy Waters, a Honk Kong firm devoted to exposing Chinese fraudulent companies, but shorting them before doing so. May as well profit from it. The report from Muddy Water's is 39 pages, the appendices are much longer. I think the most interesting part is the role of Ernst and Young, Sino's auditor. Currently, five former EY members sit on the SINO board of directors.
Basically, the report states that Sino uses financing it receives to buy forests and sell them to subsidiary companies that are closely related to them, not quite arm's length - but close. Documents and financial statements show part of the paper trail. An example of this is that Zhangzhou Lu Sheng Forestry Development Company Limited was incorporated nine months before Sino entered into a billion dollar contract with it. The startup capital for Zhangzhou Lu Sheng Forestry Development Company Limited was $78,000. With that type of capital, it is unlikely that a company that size could deal with a billion dollar contract. Speaking of the contract, it was only seven pages long. One would think that a contract dictating how one billion dollars would be allocated would be filled with pages of legal jargon.
Adding to this, Jiangxi Zhonggan Industrial Development Company Lt was incorporated five months before Sino entered into a 700 million dollar address. Zhangzhou Lu Sheng at least had a small office, the registered address for Jiangxi Zhonggan was an empty field. At least shows the picture from the Muddy report. Quite a few transactions occurred between Sino and Jiangxi Zhonggan, but none of them were forestry related.
These are just two of the subsidiaries. Another interesting part of the report states the laws in China for foreign capital. It must be processed by the Commerce Ministry before use and this is recorded. Since 1994, Sino has brought in $1.214 billion to be used in the company (and much lower than the $3 billion it has actually raised). The operating cash flow since this time is much lower. However, this measurement could be construed as Sino's main business is buying and selling forests. This is stated by the Poyry report:
Unlike most forest owners and managers, Sino-Forest actively trades in forests. Each year the company both sells and buys forests, and accordingly the composition of the forest estate changes much more than for a business that is simply managing and harvesting a more static resource.
Jakko Poyr has been writing valuation reports on Sino, which Muddy Water's reports that these reports are based on falsified data.
The link to the report is right here:
Looking at the financials, this company has grown disproportionately to any other public company. Meaning, the economic storm never affected them whatsoever. Growth just kept on rolling on. Operating profit increased from 204m in 2006, to 1.4 billion in 2010. This increase was from 204m in 2006, to 241m in 2007, to 788m in 2008 (the year the crash occurred), to 1 billion in 2009 and finally 1.4b in 2010. Looking at this alone, something seems suspicious. But growth is not criminal.
It is interesting to see there has been no cash flow from sale of property/plant/equipment in the cash flow section, yet extreme purchases in long term investments. The report from Muddy's clearly states the short term period that land remains in TRE's hands, so shouldn't this be in short term?
This is just my first thoughts from glancing at the financials. I would have to go through the SEDAR, calculate ratios for a real analysis, something that I would have done had I put money into this stock. However, I am just writing about this as this could be one of the largest scandals in a long time.
However, their is a defense. Mr. Quinn, an RBC analyst says:
“Over the last five years, I have visited Sino's Chinese forest operations on four separate occasions for about a week per visit,” Mr. Quinn noted. “I have seen Sino purchased trees and planted trees, manufacturing operations, other operations that purchase Sino's logs, Sino's nursery operations and tree-improvement project. I have been in numerous meetings with government forestry bureau representatives and Sino's operational staff.”
This was in reaction to BMO Nesbitt Burns' nothing that the company did not provide proof of tree ownership at its last meeting.
Sino has countered by providing an open database of ownership documents and bank documents proving the validity of the company. English translations should appear tomorrow (June 7) morning. The key information in the database is the package containing purchase agreements to buy land in the Yunnan province of China, specifically questioned by the Muddy report.
So is this a buy? Or sell?
Depends whom you ask. Personally, I'll watch - let the situation unfold. I may day-trade it a bit - but that's it. Morning gap downs are not fun to wake up to.
EDIT: Rosen Law Firm has launched an investigation on behalf of investors (http://www.financialpost.com/markets/news/Rosen+Firm+Announces+Investigation+Securities+Claims+Against+Sino/4894504/story.html)
Any information contact:
If you purchased Sino-Forest stock between March 31, 2009 and January 31, 2011, please visit the website at http://rosenlegal.com for more information. You may also contact Phillip Kim, Esq. or Jonathan Horne, Esq. of The Rosen Law Firm toll free at 866-767-3653 or via e-mail at firstname.lastname@example.org or email@example.com.
Friday, 3 June 2011
Most commonly, this study can be exemplified in the bar/club scene. One will notice through simple observation the different characteristics shown. Males will often be split 60/30/5/5. 60% of the male population will feel too socially awkward to approach a female, and thus will hang around the perimeters of the establishment. Sometimes, one of them will get "lucky" if a female drags them onto the floor, but this is usually rare occurrence. 30% of the males will arrive with a female escort(s) and will most likely hang out with their group. However, some of these males have the propensity to explore the existences beyond their circle, but often nothing will occur. The last 10% of the male population are the clever, and the handsome. The 5% are clever, charmers who can engage anyone (either gender) in conversation and usually come across as whatever characteristic they are emphasizing. Often they will approach a target with a set strategy and conversation topic in mind. It's not that it is planned, rather it happens naturally to them. On the opposite side of the spectrum is the 5% that are commonly known as "jocks". They are too unintelligent to realize the social consequences of their actions, and therefore have liberated themselves from imprisoning barriers. Sure, this segment will strike out a lot as they will often come across terribly, but will most likely succeed in a bar scene simply because of probability of numbers. It truly is a numbers game.
On the female side, there are two main types without divulging in further study. Mainly, girls herd together in groups and engage in protective stances to ensure that none of their members are left alone available for pouncing. Sure, this is a harsh way of putting things, but homo sapiens are members of the animal kingdom and do possess certain relational characteristics. There are certain more adventurous girls who possess certain male characteristics and can occasionally be mistaken in their more aggressive intentions.
This has been a short analysis of human decisions in a typical bar environment. More scientific research could add value to this field, as I think it is a worthy field of study that should be given academic consideration. Understanding the difference of behavior between intimate and social situations could provide valuable insight into human cognitive function.
Yup, pretty much all the arguments have been made to attack the whole sector. With that, we have seen the fall of all Uranium stocks, which has resulted in anyone with half a clue of the field to quickly buy up shares. Already, all of the Fukishima cooling systems have been restored. Although it took sometime, it was hardly the Chernobyl that the harshest critics were declaring. Most critics decided the fact that the reactors were 40 years old and due for closure was an irrelevant fact, or the fact that most reactors today are 10 times safer than the ones in Fukushima. I don't need to add a link for this, this information has been out there since the beginning - find it yourself.
What we do know is countries are playing politics over this. Angela Merkel has hurt Germany's reputation on the international circuit through foreign policy blunders, and has now decided to continue her mid life crisis by screwing around with Germany's energy policy. Don't get me wrong, Merkel has been a tactical political genius as Chancellor, but hey - we all mess up eventually. Merkel decided to shut down 50% or so of the nations nuclear reactors in a knee jerk reaction to the Japan quake for maintenance. This was not done for social responsibility, more so a move to increase her national popularity which has been sinking fast. Best part of the story was Germany had to import energy from France because of the shortage they created. How does France create energy? From nuclear reactors. Yeah, Merkel was being socially conscious in the same way a hypocrite is.....um...hypocritical? Ok, I haven't slept all night the wit isn't there.
The best part was China and Russia, both staunch advocates for anti corruption and human rights, decided to embrace the nuclear issue. China issued a statement that they would halt nuclear reactor production, only to quietly reverse this a month later. Why? Well turns out China is facing an energy crisis, and nuclear energy is the best option. Why (you ask like a five year old child)? Nuclear energy is cheap, it's clean, and it's had three major accidents in the last century. Three Mile, Chernobyl and Japan. And if anyone suggest that other power sources never had accidents - ahahahahahha. Exxon Valdez spill, the Gulf spill and countless others. What about wind or solar? Sorry, sun doesn't shine all day and the wind doesn't blow all the time. Plus, the maintenance and construction costs of these energy producers are far too great for these products to be an ideal solution. Don't get me wrong, I would love for every house to have solar shingles to fully power themselves, the fact is the technology just isn't there yet.
So why did Uranium stocks bust after Japan? (BTW - uranium is the fuel that powers nuclear reactors, if you want to know how nuclear reactors work drop me a comment and I'll post a cool youtube video) Well, some shrewd philosophers decided that one incident will deal a significant blow to a trillion dollar industry. In short, they're completely wrong. First, right now we're 30% short in yearly uranium production compared to the demand. What's been covering the difference is the conversion of Russian nuclear warheads to nuclear fuel rods, and right now those stockpiles are getting low - and the program ends in 2013 (I totally plagiarized that from a website).
The demand is there for nuclear power. Saudi Arabia (French Press) just said they plan on building 16 nuclear reactors in the next 20 years. Paladin, a nuclear producer, already said that uranium demand is likely to exceed supply (yes biased source, shoot me). China will build nuclear reactors, and I'm pretty sure India has a few planned as well as quite a few other countries - I think about 60 reactors are currently being built globally. Back to China, in 2007 China allocated 50 billion to build 32 nuclear plants - those projects aren't just going to stop. On March 11, China planned on building 6 more nuclear plants over the next 10 years. Basically, they're not stopping. Besides, let's look at what the head guy in China said about halting nuke plant projects:
"We will temporarily suspend approval for nuclear power projects, including those that have already begun preliminary work, before nuclear safety regulations are approved," read a statement from the State Council.
Temporarily, meaning their going to keep building them, and actually safer. And they'll need uranium fuel to power them.
Right now, UUU, CCO, HAT, PDN, URE and a few others are decent stocks to look at. Disclosure, I'm in on UUU.
I do believe that we will have safer, cleaner energy eventually. However, it will come when it is economical, and practical.
Thursday, 2 June 2011
This will be my informal outlet to the world - where I will establish my opinions about politics, economics, and other issues. Yes, sometimes my opinion will be a bit divisive, but I sincerely think debate always results in a better understanding of the issue from both parties. If this blog accomplishes that, then I have done my job.