And on the up side...

St. John's East Liberal candidate Walter Noel's political experience shone through at the start of an all-candidates forum on the local CBC Morning Show this morning.

When asked to identify the most important issue for his riding, Noel said it was the economy.

Noel hit that one and then nailed the corollary, given that the Conservative candidate isn't a contender:  the NDP ain't the ones to trust with managing the nation's economic problems.

Given the shifting strategic landscape and given that Jack Layton has abandoned his campaign goal to form a government, it reminds people they should be thinking twice about a stampede toward the Orange in the East.

It might be too little way too late, but you gotta give credit where it's due.

New Democrat Jack Harris  - the front runner - said the big issue for him was affordable housing.  Good choice but hardly likely to be the top-of-mind issue for voters in the riding, including Jack's own supporters.

-srbp-

Iceland banks have $250 million in NL fishery

Icelandic banks have invested at least $250 million in the Newfoundland and Labrador fishery.

Telegram editor Russell Wangersky pointed to that fact in his latest column:

That's the $250 million or so Williams was talking about last year, a number that has almost certainly grown considerably since then. Icelandic banks have traded on the fact that, coming from a fishing nation, they understand the needs of the fishery. And truth be told, they've been one of the few sources of available capital for fishing companies in this province, even before the credit crunch hit.

And now, those same banks are promising to get out of their overseas investments. That's a message that must be more than a little frightening for the industry in this province, with capital scarcer than ever.

If the Icelandic banks call those loans - as a ready source of foreign currency - some entity, public or private, will likely be called on to step in an assist the fishing companies.

-srbp-

Portent?

British Petroleum is halting work on a Delaware liquid natural gas plant:

“We've been looking at the global market conditions surrounding LNG, and the timing for a terminal just isn't right, so we've put it on hold for at least two years,” BP spokesman Tom Mueller said Wednesday.

“We will hold on to the property and look at conditions down the road,” Mr. Mueller added, noting that the company “believes New Jersey will need LNG infrastructure in the future, and we will position ourselves to do that.”

BP's plans, initially announced in December, 2003, called for a 2,200-foot pier to be built off Logan Township. It was designed to handle enough liquefied natural gas, or LNG, to serve 5 million homes and meet rising demand. [Globe and Mail]

-srbp-

The imaginary bubble

From RBC Economics' latest provincial forecast for Newfoundland and Labrador:

While domestic conditions are generally strong, growth in the economy is nonetheless expected to slow significantly relative to last year amid a leveling off in oil production. In 2007, the return to full operation of the Terra Nova offshore project and the completion of White Rose’s expansion have boosted crude oil
output by more than 20%. With no such increase this year, the contribution of the energy sector to provincial growth is likely to be flat or slightly negative.

Through the first six months of this year, crude oil production was down almost 9% year-over-year. All things considered, real growth in Newfoundland & Labrador’s real GDP is forecast to be negligible this year at 0.2% before picking up in 2009 to around 1.3% on the continued strength of the domestic economy.

Get that?

-  Oil production down by 9%  for the first half of 2008 compared to the same period in 2007.

-  Growth in real GDP at 0.2% in 2008 and only 1.2% in 2009.

Look at the whole report to get the full picture.

-srbp-

Pattern Behaviour 2: Spot the Pitcher Plants

Provincial Conservatives love to astroturf. In fact they've had this latest astroturf run planned for some time.

They love to call radio programs and make comments in support of their leader, usually following talking points that are astonishingly similar.  It's supposed to appear like a giant groundswell of support for their leader's cause du jour;  some of it - like the insistence they aren't coached - gets kinda funny.

Within the past 24 to 48 hours, the number of Pitcher Plants has jumped dramatically. The ABC Astroturf is in full bloom.

You can tell them a mile away:

1. They make repeated reference to "Premier Williams", pledge their support for him and praise him in the stereotypical pitcher plant fashion.  Most people don't have a need to do that;  Provincial Conservatives evidently do.
2. They make repeated references to the need to "stand up for your province".  A recurring theme among Provincial Conservatives is that the province consists of one mass whose interests are identical and who must act in a corporate fashion under the leadership of a single individual in order to achieve victory over external forces.  That's the foundation of Provincial Conservative politics since at least 2003.
3. They've been making repeated attacks on Fabian Manning.  Again, that hasn't been a common feature of the call-in shows to date.  Tonight it's all Fabe, all the time.  Despite the efforts to claim otherwise - nothing could be further from the truth - there's been a great deal of Family Feud energy directed to defeating Manning.
• Dead give-away:  they all make reference to the same episode, namely Manning sitting next to Harper in the House.  They describe this episode suing similar terms and typically misrepresent what happened in the same way their Leader did originally. People who aren't Provincial Conservatives don't need elaborate rationales to vote against Conservatives.
• Second dead give-away:  they praise any politician who has sided with their beloved "Premier Williams", usually referring to the individual as having acted in the best interests of his or her constituents.  To provincial Conservatives, their leader's decisions and the interest of the entire province are synonymous. (See Indicator 2 above)
4. They take great care to distinguish between Conservatives and the Provincial Conservatives, which they insist on calling Progressive.  Only Provincial Conservatives need to make that distinction for some reason.  Liberals and New Democrats don't care.
5. They turn up online making comments from behind a pseudonym.  In classic Provincial Conservative fashion, everything is about their leader. Note that the two comments here are from individuals who have a well-established pattern of behaviour presenting exactly the same kinds of comments offered here.  They didn't comment on the original post at all, suggesting that they weren't yet mobilized to start astroturfing.

-srbp-

Iceland sinks deeper into financial mess

1.  "Iceland teeters on brink of bankruptcy". (Forbes.com)

LONDON - Iceland is getting closer to becoming the first nation to go bankrupt as a result of the subprime mortgage crisis and resulting squeeze on lending. Late Wednesday afternoon in Europe, Fitch Ratings said it had cut Iceland's long-term sovereign currency issuer default ratings to "BBB-," from "A," putting them firmly in "junk" territory. Moody's also cut Iceland's sovereign rating to "A1," from "Aa1," and said its ratings were on review, according to TradeTheNews.com.

2.  "Iceland sinks further into crisis". (ABC7 Chicago)

Today, the government said it was abandoning a plan to nationalize the country's third-largest bank (Glitnir) and is instead putting it into receivership.

Further details at Marketwatch.

3.  The Icelandic meltdown jeopardises British citizens who have cash in a British subsidiary of Landesbanki.

More than 300,000 British customers had around £4 billion deposited in Icesave accounts, which until yesterday offered higher rates of interest than British banks.

The UK government last week issued a general guarantee that British account holders will be able to reclaim their money if their financial institution goes bankrupt - but only up to a maximum of £50,000 each.

4.  The Icelandic bank collapse will affect the fishery in Atlantic Canada. 

"The big impact that people probably are not aware of is that these Icelandic banks, Glitnir and Landesbanki, both those banks (finance) a lot of Atlantic Canadian seafood companies," said the chief executive officer of Black's Harbour-based Cooke Aquaculture Inc. on Tuesday.

"Glitnir has a very small piece of Cooke," he said. "These Icelandic banks they're banking a lot of firms - Clearwater Fine Foods, they're part of the syndication in Connors Brothers, they back the Barrett Group [sic.  Perhaps he meant the Barry Group] out of Newfoundland."

So much for the claims Newfoundland and Labrador is protected by a magic bubble.

5.  CBC Radio Noon (St. John's, ram audio).  Rob Greenwood of the Harris Centre at Memorial University discusses the Icelandic crisis in the context of local proponents of the Iceland model for Newfoundland and Labrador.

Rob gives it a nice try but it must be getting really hard to push the Icelandic model and fanciful notion of "subsidiarity" with any degree of seriousness.

-srbp-

Pattern behaviour

Faced with the prospect he can't deliver his consistently stated goal of ensuring no Conservatives are elected in Newfoundland and Labrador, Danny Williams shifted the goals of his Family Feud and completely reinvented what it was all about.

He did it a few weeks ago.

He repeated the completely rejigged goal of his ABC campaign and CBC is reporting the shift.

No one should be surprised.

It's part of the pattern.

-srbp-

The Can-Opener's surplus prediction

Memorial University economist Wade Locke:

"The price of oil has already averaged in excess of $110, $115 per barrel for the year so far, so even if the prices were to fall down to $10 per barrel, they would still meet their budget projections of $87 a barrel," Locke told CBC News on Monday.

"So the forecasts in the budget should still be fine. They should have a budget surplus even bigger than they what they had forecast."

Okay.

Let's see if that works out.

Given:

• The 2008 budget estimates predict oil royalties of $1.789 billion based on an assumed average price for oil of $87 per barrel.
• The 2008 budget estimates forecast a deficit on capital and current account of $414 million.
• The 2008 budget estimates forecast an additional borrowing requirement of $380 million for a combined cash requirement (borrowing) of $794 million.
• For the first six months of the fiscal year, Locke gives the average price for crude oil as $115 per barrel.
• The finance minister forecast a $544 million surplus in public statements and the budget speech, even though that figure does not appear anywhere in the budget estimates voted on by the House of Assembly.
• All other revenues and expenditures remain as projected in the estimates.
• Annual oil production is 111 million barrels.

Therefore:

• In order to attain a surplus of $544 million, provincial oil royalties would have to exceed the forecast by approximately $1.338 billion ($794 million + $544 million);  in total that would be oil royalties at $3.127 billion.
• If oil averages $115 per barrel for the entire fiscal year, the projected royalty would be $2.361525 billion.
• If oil averages $115 for half the fiscal year and $87 for the remaining six months, the total provincial royalty would be $2.05535 billion.
• Budget surplus (deficit) @ $115 for 12 months = ($766 million)
• Budget surplus (deficit) @ $115 or $87 over 12 = ($1.072 billion)

No matter how you slice it, that doesn't look like a surplus.

No matter how you slice it, that doesn't look like a larger surplus than the one supposedly forecast in the budget.

Anyone who wants to explain Locke's figuring or where the Bondable version is off is welcome to do so.  Either add your comment to his post or send it by e-mail and we'll do it for you.

-srbp-

Taylor's self-made hard spot

Provincial acting fisheries minister Trevor Taylor is in a hard spot.

You can tell he's in a hard spot because in order to criticize a recent fish quota trade deal, Taylor wound up resorting to an argument favoured by people Taylor usually criticizes harshly,  people like Gus Etchegary and Sue The Vanished Hydroqueen:

Taylor said the deal hearkens back to prior trade agreements, in which Canada traded its fisheries stocks for economic advantages.

Yes, it's a sign of complete bankruptcy when your argument is merely to repeat the same discredited fables as Gus, Sue and others.

Taylor called the deal tragic.

It's hard to see how it is tragic.

In exchange for allowing Americans to fish a portion of the Canadian quota for yellowtail flounder outside 200 miles, a portion not usually caught anyway, Canada gains.  It gains because:

-  the deal secures American support particularly for other conservation measures;

-  the deal includes Canadian access to over 600 tons of deep water shrimp which will be fished by a Newfoundland and Labrador company (and processed in already under-utilized plants);  and,

-  the deal includes an increased by-catch for American plaice which will allow the Newfoundland and Labrador harvesters to fish the yellow-tail flounder quota more efficiently and to a greater extent.

Sadly, the fishery is as misunderstood as the offshore oil and gas industry.  The result is that completely bogus arguments like the ones offered by Etchegary and Taylor are accepted as fact.

What is tragic is that Taylor is considering increasing plant capacity in a province in which there is way more capacity than existing quotas. Fish plant workers are making as little as $8,000 in some cases from their labour and must scramble to find other work in order to qualify for a pittance in employment insurance on top of that. The existing plants are in many respects  nothing more than stamp factories and Taylor is seriously considering making a bad situation demonstrably worse.

Taylor and the cabinet to which he belongs know what needs to be done.  They are - in effect - abrogating their responsibility to reorganize the fishery in a way that corrects the human tragedy and the economic tragedy in the province's fishery. Taylor and his colleagues are doing nothing more than following the less than sterling example of some recent fisheries ministers, like John Efford, who during his tenure increased the number of plant licenses and contributed to creating the current mess.

Such is the scope of the tragedy in the fishery.

Such is the scope of the tragedy that Taylor, who started his political career showing some promise, has become just another politician mucking about in the fishing industry for political purposes. 

A shuffling of the province's cabinet will evidently produce no positive change in the province's fishing industry.

That's another sign of the tragedy.

-srbp-

Marg, Princess Warrior tackles Harper again

From nlpress.ca.

CTV caves in face of ABC campaign

From Danny Williams comments on a voice of the cabinet minister call-in show on Sunday evening:

A couple of weeks ago when they were out in Harbour Grace, or Grace Harbour, as the Prime Minister referred the community to, you know, there was something came out of that whereby spokespeople for the Conservatives and for Mr. Manning came out and said that businesses were being threatened, that contracts were being threatened, that if people didn't vote ABC that our government was going to do something to them. CTV reported that and CTV actually had to retract that publicly on their network when it was found that those claims were unsubstantiated.

The original story is linked from this Bond Papers post: "Family Feud?  Try blood feud."

Let's see if CTV and Bob Fife want to comment on this.

-srbp-

The return of The Can-Opener

Memorial University economist Wade Locke is back in the news and, not surprisingly he is saying things the provincial government will love.

Like his view of oil prices and the chances for a budget surplus bigger than the one forecast:

"The price of oil has already averaged in excess of $110, $115 per barrel for the year so far, so even if the prices were to fall down to $10 per barrel, they would still meet their budget projections of $87 a barrel," Locke told CBC News on Monday.

"So the forecasts in the budget should still be fine. They should have a budget surplus even bigger than they what they had forecast."

Perhaps Wade would like to actually, you know, read the budget estimates and see what the budget says about oil averaging 87 bucks a barrel and surpluses.

Wade also believes that the world has changed fundamentally - high demand and no new supply - such that oil will sell above US$90 a barrel way out into the future.  In the short-term, - up to two years, according to Locke - they might dip but the long-term price will be high, higher and highest. Asked if he thought oil prices would go to  ten bucks a barrel, Locke gave an emphatic "no". 

Like we haven't heard that one being forecast before, based on the change in market fundamentals yada yada yada. There's likely tape somewhere of an economist telling us that there was absolutely no way oil would fall to $10 a barrel again;  that would be right before it went to 12 and then eight bucks.

Uh huh.

Even the Lower Churchill will go ahead, completely unscathed by the tightening of world capital markets. No problems there at all.  The future is bright, as Locke says.

Maybe someone should fire off a proposal to Trevor for some government cash to build a shades factory.  Not Raybans or anything pedestrian but some unique NewfoundlandLabrador brand of sunglasses to keep the unique sun out of our unique as we go around under this amazing bubble of economic protection that evidently surrounds us. 

Other places are falling victim to the global crisis but not here.

Economics is truly a dismal science. Aside from stating the obvious - that things will be unsettled in the next year or two - the rest of what Locke said was ultimately about as useful as something we'd get from Aline Chretien's confidant and her psychic alliance. No shame in that:  none of us can predict the future with any accuracy.  When we do get close it is often due more to blind luck than any insight or foresight.

Maybe to give a sense of Locke's analysis in the past though, perhaps we'll go back to his view of the Atlantic Accord when Danny was in full fight and Wade's view after the deal was inked.

Wee bit different.

But hey, at least we now know who Danny Williams turns to for economic advice and has been probably turning to for advice for some time.

Turns out it wasn't Sarah Palin after all.

-srbp-

Slim Whitman's Greatest Hits

Danny Williams, from a call to voice of the cabinet minister's Sunday night call-in show:

And, you know, there are issues that are very, very important to Newfoundlanders and Labradorians and we look at the economy and we look at where the American economy is going and Minister Flaherty was on last week and the Prime Minister is out saying oh no, we don't have to worry in Canada, everything is fabulous, everything is wonderful. But, you know, we have to realize that, you know, we do have a direct link to that American economy and if that tanks at some point in time, then, you know, we are vulnerable.

Followed immediately by:

Now that's not to say that, you know, there's going to be gloom and doom in Canada because Canada's fundamental are sound and I firmly believe that.

Well, there's a relief.

You know.

But it gets better.

You know.

Apparently, the province is somehow shielded from the goings-on in the world economy, even if, you know, we do have that direct link he mentioned and if that link "tanks" we would, you know,  be vulnerable:

And on the other side of it, you know, from our own perspective, you know, our economy is strong, we're in a better position than we've ever been, we're also in a very good position now with the, you know, the international financial crisis that's underway. We now, for the first time in our lives, are in a bit of a financial bubble and that's a wonderful thing. We have that protection and the people of this province got the support of the provincial government.

The bubble seems to be some kind of magical Star Trek kinda thing:

But I do think that Newfoundland and Labrador is in a very, very good position. Hopefully our surpluses will continue, hopefully they'll get even larger, it will enable us to do the things that we've been doing. I mean this, for us this hasn't happened overnight. We've been preparing for this.

Ahhh.

We got surpluses and ones that Williams hopes will get bigger.

You know.

Unless that link thing "tanks".

That would be the completely imaginary surpluses, though.

You know.

Which would make the protective bubble surrounding the provincial economy more like The Bubble in St. John's harbour.

Well, not exactly, because apparently some things have been going on behind the doors of Confederation Building people would not be aware of.

Like, you know, building a war chest whatever that means:

You know, we've built a war chest and, as well, we've tried to move our debt down to get us in a good position so that if ever there was a very, very, very serious situation we'd have to take that debt back up again, but we'd have the ability to do it. But, you know, we've been really, very fiscally prudent and fiscally responsible.

Ahhh, again.

You know.

So there's great comfort for all of us because even though we are vulnerable, there is a bubble of some kind, consisting of imaginary surpluses and then there's the debt which has been moving down due to the really very fiscally prudent responsibleness so that - only if there was a very, very, very serious situation  - we could drive the debt up again.

No word on what would happen if things only got very, very serious.

Or if that link thing tanking would be merely very serious, or if it would get enough veries to qualify for the debt growth bubble protection thing and then something else besides.

But anyway, we are vulnerable and then again, we aren't.

You know.

The debt has been going down.

Just like the chart at right shows.

If you hold it upside down, that is.

And it's not like we'd be planning on borrowing any more money in the meantime.

Like say for a major oil project.

Or a major hydroelectric project which the Premier said at the start of his call he had been busy working on.

A nine billion dollar project, which, if you notice, is actually more than the entire public debt load is currently.

Loyal Bond Papers readers will recall the idea of doubling the public debt being raised in January 2006.  That would be, if you recall, long before there was any talk of a major economic downturn. When the downturn came a little closer to reality, the Premier was  willing to acknowledge it would affect the Lower Churchill.

But then the Premier finished on a high note:

So, you know, Newfoundland and Labrador is very much on the move and so, you know, I'm pleased with the position we're in and I do think we're in a favoured position, to be quite honest with you.

To be quite honest, it is completely confusing to know that the province is vulnerable - as the Premier started out saying - and then to have him conclude by saying that this is a favoured position.

Up is down.  Vulnerable is favourable. Deficits are surpluses.

It would be funny, if it wasn't all so very serious.

You know.

-srbp-

Trevor's duck and cover explained

Trevor Taylor, part-time substitute fisheries minister in the Provincial Conservative government has been busily ducking a looming issue in the fisheries world.  In a system already grossly overstocked with processing capacity, Taylor's department has a recommendation under consideration to add a few more licenses.

The local CBC fisheries broadcast has been trying desperately to get Taylor on the air.

He's been unavailable.

Apparently, Trevor's been too busy campaigning against Fabian Manning, not in his free time or anything mind you but during the day time  - normal government working hours - when one might expect he could have found a few hours to devote to his custodial responsibilities in the fish department.

Seems Trevor has been joined on the hustings by attorney general Jerome Kennedy and intergovernmental affairs genius Tom Hedderson. 

You will recall Hedderson as the guy writing letters to Ottawa last June lobbying on a decision that was made...18 months earlier.

Trevor sees no problem with this carrying on partisan family fights during daylight hours.

Trevor also decided on Monday to issue a news release criticizing the federal government for a deal giving 1500 tonnes of yellowtail flounder from Canada's NAFO allocation to the Americans.

But sure Trevor and the boys are supporting the ABC campaign, you say.

Yes, sez your humble e-scribbler, but don't forget the real motivation for all these cabinet ministers to join in the Family Feud.

There's a big cabinet shuffle coming very shortly.  Being seen out there hammering away at The Boss' favourite cause is much better for the old career path than spending time doing other things, like say the job you get paid to do.

Oh.  That's right. 

Trevor did find time in his hectic hectoring schedule to call the Fisheries Broadcast and do an interview.

But that was after one of his predecessors outed him on the Family Feud thing.

-srbp-

Cats, frogs and something really lost in translation

Cute piece about Stephen Harper in Yarmouth Nova Scotia, a tickle in his throat and the side story about the different idiomatic expressions in English and French for the condition.  Frog in the throat in English;  cat in the throat in French.  A cough, a chuckle and a gaggle of confuddled Francophone reporters who missed the almost gaffe

All that from an English language Canadian Press story carried by the Star online.

Mais, the readers of copy from La Presse Canadienne got an autre histoire.

Seems Harper was coughing.

He was also pretty clear that while he thought Acadians were lovely people he had no intention of introducing a motion in the Commons recognizing the Acadians as comprising a nation within Canada:

"Je n'ai pas l'intention de faire une motion à la Chambre des communes", a déclaré, hier, le chef Stephen Harper, lors d'un point de presse à Yarmouth, en Nouvelle-Écosse.

Harper couldn't have had a cat in his throat.  The feline was too busy being set among the pigeons.

-srbp-

The way ahead

As a rule, Canadian political campaigns don't make use of the available technology to reach voters.

They don't.

The national party websites are light years ahead of what goes on at the riding level, but even nationally, they aren't anywhere close to the Obama campaign and its new iPhone application.

Yes. 

Barack Obama'[s people have introduced an application designed specifically for the iPhone.  The app allows the user to build contact lists, keep track of campaign news, and send information out to their personal contacts.

The basic idea behind the app is simple. It's a way of letting individual voters help mobilize their friends.  I love Obama.  I go and get a few friends to vote Obama.  Those friends are more likely to vote Obama because I am pushing it rather than because some dorky student from state u at butthole is sitting on their doorstep. 

Social media used to send a message through social networks.  Holy crap.  That's exactly what this stuff is for! 

And the psychology of it is as simple as it is brilliant as well. 

In one app you get an answer to declining voter turn-out,  voter tune-out, the shortage of volunteers all campaigns are experiencing and all the other woes of modern campaigning.  Get the activists going and let them spread the word on your behalf.

The Obama app shows the way, but in order to grasp it, politicos will have to break out of their mental confinements.

And that, dear reader, is something for another post.

-srbp-

Iceland economic troubles

Odds are you won't hear Newfoundland nationalists speaking too loudly about Iceland these days.

Not so very long ago it was a source of inspiration.

Iceland's prime minister and central bank officials held emergency talks on Sunday to deal with the country's growing economic problems.

That's just the latest effort.

But last week the Icelandic government nationalised Glitnir, one of its largest banks, and a large investment house collapsed. Now Kaupthing, Iceland's largest bank, is the focus of nervous investors, and the Icelandic krona plunged more than 20 per cent against the dollar last week as traders fretted about the implications of the bail-outs.

-srbp-

Whistling past the economic graveyard

The business world in a free market runs so extensively on psychology it's amazing that business schools around the world spend so much time on balance sheets, marketing and business plans.

Psychology is pretty much the reason why western government's responded to the American financial crisis with assurances that "the fundamentals" of the economy are sound.

However, in some instances, the efforts to describe the Canadian economy as somehow able to avoid any consequences of the move toward a recession south of the border became somewhat bizarre.

Take, for example, comments by Premier Danny Williams in an interview with the National Post:

"The fortunate thing about Newfoundland and Labrador and Saskatchewan in today's fragile economy is that our provinces are very, very well-positioned. We have strong economies, a lot of it based on natural resources, but we're going to weather this storm and weather it very well."

Finance minister Tom Marshall told reporters on several occasions that he doesn't see a problem find cash to build the Lower Churchill project. In other news stories, Marshall said he was concerned that lower oil prices would lower government revenues.

The Premier told VOCM listeners on Sunday night that the provincial "economy is growing very well."  That isn't accurate.  All economic forecasts - including the provincial government's own forecasts  - show the province having incredibly modest growth.  Some project the growth this year and next year will be scarcely above 1% and some have forecast growth at one half of one percent.  That is as perilously close to a decline as it can get.

At the same time, European countries are taking action to bail out where necessary and take other actions to avoid repercussions from the American downturn.  Odd is that, given that European countries are not as dependent as Canada generally or Newfoundland and Labrador specifically on the healthy American economy.

Iceland, once touted by some nationalists as a model for Newfoundland and Labrador to emulate, is in serious economic difficulty:

But in the financial world Iceland is now a hot topic of discussion for a different reason: many people suggest that it could become the “first national casualty” of the ongoing credit crunch. Until last year, Iceland’s economic track record in this decade had been phenomenal—its annual growth rate averaged close to four per cent over the past decade, and its per-capita gross national income is now higher than that of the U.S. This year, though, the country’s currency, the króna, has fallen twenty-two per cent against the euro; the economy has stagnated; and a global rating agency has put the nation’s three major banks on a credit watch. Now analysts are wondering whether the new Nordic Tiger will end up, instead, as “the Bear Stearns of the North Atlantic.”

Take, as but one example, an article from the weekend Globe and Mail.  It included this comment one one manufacturer from Newfoundland and Labrador:

Mr. [Lorne] Janes, president of Newfoundland-based Continental Marble of Canada, is already getting the cold shoulder from his customers in Florida, Maryland and California. “The reply I'm getting now is, ‘Lorne, save the phone call, don't call any more until this sorts out,'” said Mr. Janes, whose 12-employee company manufactures equipment to produce moulded stone countertops.

Janes wouldn't be alone.  A Bond Papers post from last July highlighted the extent to which the provincial economy is dependent on exports - especially energy exports - the majority of which heads to the United States. In 2005, the last year for which information is posted online at the provincial government website, 52% of international exports from Newfoundland and Labrador headed to the United States.

As the United States economy slows, the effects on Newfoundland and Labrador will be felt directly and in some instances very strongly:

1. As demand for energy products declines, exports to the United States will also likely decline.  That will reduce provincial government revenue.
2. As the price of oil declines, provincial government revenue will decline accordingly.  If crude oil averages US$87 in 2008, the provincial budget will run into deficit to the tune of about $800 million.
3. Declining commodity prices and lessened demand for minerals, forest products and fish would affect the three traditional major economic drivers in Newfoundland and Labrador.
4. The American credit crunch - and the resulting tightening of capital available for major projects - will affect virtually all the major projects projected for Newfoundland and Labrador:

• The NLRC refinery project is already in serious trouble and may well be dead for all practical purposes.
•  Hebron is not yet sanctioned.  While many believe the project is underway, it is not.  Oil prices, increased costs and tight capital may delay project sanction.
• The Lower Churchill needs $9.0 billion in capital investment, capital which is growing increasingly scarce. The project currently does not have a single power purchase agreement.  PPAs are crucial for securing long-term financing. A decline in revenues from oil and gas developments and mineral production would adversely affect the provincial government's ability to cover the costs of doubling the provincial debt in order to build the project.

The Newfoundland and Labrador economy is not immune from the effects of a serious downturn in the American economy.  As much as politicians are tempted to say something different from that for political reasons, it would be far better to provide people with an accurate picture of the provincial economy and the interrelationship between international events and local economic well being.

The shock of finding out the truth if serious consequences follow will be far greater than if politicians didn't try to whistle a happy tune as they walk towards what - for some economic projects - might well be a graveyard of ambition. That shock will have far greater consequences than what would occur from telling it like it is right now.

-srbp-

Campaign zoo diaries

1. Palin:  One too many pucks to the head.  The Republicans were desperate enough when they nominated Sarah Palin for the veep spot on the Republican ticket.  [Hint:  Despite what it seems, HNGs are not really a big enough demographic to win an election on.]  Now Palin is showing how completely wasted the GOP is, accusing Obama of "palling around with terrorists".

Palin's a self-described hockey mom.  Maybe she's taken one too many pucks to the head.

2.  Dippers lose a dipstick.  Well, another dipstick, as in a candidate they should never have nominated in the first place.  Yeppers. How many is that now?

3.  Not really plagiarism this time.  Stephen Harper says that he cribbed a couple of bits of a Mike Harris speech, but says what he used were "fairly standard" bits of political rhetoric.

Translation:  "If we keep killing staff whenever I screw up there'll be no one left to follow my orders."

-srbp-

Mission Impossible

Before someone gagged Ivan Morgan, he used to write the odd column - at the Herald and the now dead Independent - on local politics.  He offered sometimes pithy observations, sometimes no so worthwhile thoughts.

Then someone laid a hand on his shoulder and told him to stop.

So he started writing about jam jams.

Back in the days when Ivan actually felt free to offer his opinion, he wrote an open letter to Ross Reid. 

This was back in the days before October 2003 when all changed and Ivan it should be allowed was prepared to crown Danny the greatest ever long before the guy had a chance to warm the chairs on the 8th floor.  Ross was doing good work overseas and Ivan felt the need to appeal to Ross' civic sense and ask the guy to come back and help keep an eye on Danny.

So your job...will be to keep a lid on Danny and his merry band. Take the edge off - so to speak.

There's a bit earlier on than that quote where Ivan talks about Tory insiders muttering darkly about Danny's "management style."

Odd how these things slip your mind until they magically appear in your inbox.

Click on the picture, right, and the thing will pop up large enough for you to read.

-srbp-