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The fears of an ignoramus Chicken Little

If you look at the comparison chart of stock market indices for Canada and the U.S. over last five years, they match reasonably except for last six months. Dow Jones has jumped almost twenty percent and Toronto index is treading water. One would think that the economy down south is booming while we have double digit unemployment and major housing crisis.

While the drop in commodity prices is blamed by many, it does not explain the whole difference. There is something else underlying this jump in the stocks south of the border. Rather than superficial projections we have seen in business media lately, this rise needs detailed investigation to learn what it mean for the stocks in near future. What would keep me awake at night if I had American stocks is the strong possibility that evaluations are getting way ahead of the economy and a minor collapse in next few months is possible. If this were to occur, it has an implication not only for global economy but the U.S. presidential elections as well.

A Broken Tooth

Ravi has a very short memory. He may have an excuse though. When you hit seventies, memory is the first thing to go. But he has had this problem ever since he was a child. What makes it strange is that he can remember most things perfectly. He can repeat verbatim the whole conversation if you accused him of not paying attention. He never forgets where he put his wallet, or the keys or the phone numbers. But ask him what he had for breakfast, he has no clue. It can be a problem once in a while but it also has its benefits. He had the same sandwich - cream cheese and sliced tomato on whole wheat bread - every working day for forty years. He has had the same breakfast since the day Monica moved with him fifty one years ago. She lovingly makes for him in a large tub of granola with identical ingredients once every three months. Every morning Ravi puts a cup of it in a bowl, pours skimmed milk on top and lets it sit for an hour when he reads the newspapers; national newspaper to find out what is going on in this world of ours and the local broadsheet to note the date of memorial service if one of his acquaintances has passed away.

It was Monday two weeks ago. It was a normal Canadian winter morning, blowing snow and the temperature of minus twenty centigrade, still dark at eight o’clock. He noted happily that every one that mattered to him was still alive and picked up the breakfast bowl. He put a spoonful in his mouth and chewed. “How did the rock get in here,” he wondered aloud as the teeth met resistance. He spit it out on a paper towel and here it was. A tooth, not just a piece, a whole tooth! Where did it come from? He looked in the mirror. Horror of horrors. There was a gap right in the middle of the top row. It did not hurt. He felt the space with the index finger of his right hand. The base below the gum line was there, the rest had broken off and it was lying along with bits of granola on the towel.

In a situation like this there is not much one can do except call the dentist. Ravi has a really good person looking after his teeth who is available to him for long distance consultation twenty four hours a day. He called Freda, his daughter, who practices dentistry in a small town one thousand kilometers away and asked her what kind of glue he needed to glue it back. “No, it can not be glued back, space age glues don’t work with teeth in the mouth,” he heard her say. She also confirmed what he had suspected all along - she couldn’t do much on skype because her drill does not travel through wires. He had to go to her clinic and she would get her receptionist to put him in the next available spot.

A combination of taxi, shaky small plane, another taxi took Ravi to Freda’s clinic on Wednesday afternoon. She looked at the tooth and shook her head vigorously, “Not a good sign. Rest of the tooth has to be removed and then a new tooth has to be implanted. Just as well you called me. Ten thousand dollars will stay in the family rather than go to a stranger who is already loaded.” This was done on Thursday after hours because she had the whole day booked. She drilled through the bone and inserted what would be the root of the new tooth. It had to settle before the tooth could be put in. So, for three months Ravi would have to go around with his lips firmly in contact with each other as if attached by a space age glue. His accent is already difficult for most people, the mumble would be impossible to decipher. He can only hope that there would be a few friends left when he opens his mouth with a gleaming enamel tooth replacement. Hindu scriptures and the tradition in his family permitted him the society of his friends for a couple more years before he was to take on the solitary life of a monk at the age of seventy five.

He returned home on Friday and started the regimen of two pills – one pain killer and one antibiotic – three times a day. Killer was a bit of an exaggeration but the pain did become tolerable. Something, could it be the antibiotic, made his stomach ache and turn everything he ate into gas which made him bloat and found every outlet it could at most inconvenient times. Thankfully, no inconvenience lasts for ever and the pain in the mouth and the gas were gone after two weeks without causing lasting damage and hopefully never to show their ugly faces again. Life returned to as normal as it can be when the mouth can not be opened in public.

On Being Old

My wife Evelyn and I are not young any more. She was sixty eight a short while back and I will be seventy four in a few weeks. We are in good health and manage to physically and mentally cope with daily chores of our lives. Speaking for myself, I have one big advantage in being old; there are no career ambitions. I have reconciled to what I had wished for but did not achieve in my long career. As for financial success, my wife was a great Financial Officer of the household and we have saved enough for a comfortable, though by no means luxurious, living for the rest of our lives without ever having been the top dogs in our professions. Evelyn still works three mornings a week. Not for the money but due to the passion she has for the work. I write several hours a day, again not for the money; my work rarely gets in print. We have time and energy for our widely scattered family and friends. Still, I feel as if I live with a sword of Damocles hanging over my head. Any moment, without any notice, I could have a stroke, a heart attack, a fatal accident on the highway because of slow reactions or with some luck peacefully pass away into next life in my sleep. I have no idea how much time – days, months, years – I have left, not of life as much as of good health when I can do what I wish. Realizing the unpredictability of my situation, I have prioritised what to do with my time every day and not make any long term plans, particularly those with impact on others.

There are three reasons for undertaking activities. There is something of importance to achieve, it is expected of me, and it is enjoyable. The achievement does not have be important to any one else, just to me. The years when I worked for general adulation are over; remaining years are for what I wished to work on but did not have time or energy to do. There are so many options. It can be travelling to some place of niggling memory from the childhood, some historical place of great personal interest or some irresistible challenge like climbing Everest. It can be living for an extended period in a place I have always dreamed of. It can be reading War and Peace in Russian, studying Hindu epics in Sanskrit, playing Chopin preludes or something as simple as writing an autobiography. The achievement would be in being able to do it – not in becoming a recognised authority on it – autobiography would be for grandchildren to enjoy sometime in the future not necessarily for publication and to win accolades.

The work on hoped for achievement is always tempered by what is expected by the family, friends and community. Family may not share or sympathise with my ambitions and my pursuit could interfere with their own. Moreover, I must help them in their efforts as much as I wish them to help in mine. Friends have demands on my time too. They might need my help when they are ill, my company when they are depressed. Community has stood by me when my kids were growing up and when I needed volunteers to help me and the family. It is time for payback and I must volunteer some of my time and energy for community work.

What about enjoyment. All work and no play makes the senior go senile before his time. There are many books one reads for enjoyment, not for enlightenment. One may watch TV, movies, theatre and opera and listens to music merely for relaxation, not to broaden the knowledge base. Yet, if one could enjoy learning Russian as a first step to burying himself in the world Tolstoy created, daily workouts to get fit to run that marathon or climb that mountain, the need to relax would be that much less and there would be more time in the day for the family, community and himself. Therefore, one key to contented remaining years is the match between the goal and what provides real joy. After all, if one hates practicing whenever there is free time, s/he is not likely to learn ‘Twinkle twinkle little star’ leave alone the simplest Chopin prelude. The other, and no less important, key in making the best of the rest of one’s life is to contain the ambitions within limits of her/his inherent capacity. If one suffers from advanced stages of Asthma the chances of making it to the top of a mountain are remote. It is good to dream of catching a star but in real life a little practicality reduces a great deal of disappointment and goes a long way towards making it all enjoyable.

After considering these factors I have chosen to devote whatever free time I have to writing. I will write essays on social and political issues and short and long fiction, wherever the fancy takes me. With this choice I know that whenever the sword falls, not much of importance will be left in limbo. I would hope to publish my work and add to the fund of literature assembled over the ages. But if it is not deemed worthy by editors so be it. I will be disappointed but world will not lose a Shakespeare.

Retaining Canadian Ownership

In an otherwise excellent article lamenting the sale of Viterra, Eric Reguly of Globe and Mail does not point out that the companies he quoted were already largely owned by foreign, mostly American, hedge funds and run by American CEOs. These investors are driven by their short term interests and can not be expected to have Canada's interest at heart. Only way to retain Canadian companies in Canadian hands is to have ownership restrictions. We are constantly being told that we need foreign investment and can not afford such restrictions. We also need foreign workers and foreign managers for economic growth. What it amounts to is that if we want the economic growth, foreigners have to do it from the ground up. Then why lament if they own it too?

Whether we should have economic growth on these terms is an issue which needs some research: By Canadians.

Slow Economic Recovery:

The recovery observed in the first quarter every year since the 2008 collapse is due to lucky few spending their bonuses and once that is done the sales retreat again. There is an obvious reason behind slow recovery in manufacturing and service sectors and I do not know why the economists disregard it. All machinery lasts much longer than it did twenty years ago and needs to be serviced less often. My seven year old Altima runs as well as it did in the first year, something inconceivable even ten years ago. Our fifteen year old appliances do their job as well as they ever did and have not broken down once. There are very few people who replace these items just to acquire the latest models, most use them till they die. The age of an average car is eleven years because recent models last that long without many repairs and it is only going to get longer. Consumers will continue to demand cars and machines which last even longer and need servicing less frequently and manufacturers will have to supply them. With population stable, this will eventually translate into declining sales unless we stop practicing birth control. The implication of continuous quality improvement is that the economy will have to find a different avenue for growth than manufacturing to keep every one gainfully employed.

Problems at Air Canada and Aveos:

Air Canada is in the news again. Thankfully it is not for an accident or anything involving loss of life. In some ways it is an old story. The longstanding battle between the unions and the management on wages and pensions has come to the boil and the federal government has intervened once more to prevent the shut down by strike or the lockout.

Air Canada has had financial problems and poor employee morale for decades. It was nine years ago, on April 1, 2003, when the airline declared bankruptcy. The company's financial house was restructured over next eighteen months mostly at the expense of shareholders who lost all of their investment. The workers agreed to wage concessions but insisted on preserving the pensions and other benefits. Even with the wage reductions, cost structure at Air Canada stayed higher than at WestJet. More serious was the issue of deficiency in pension fund. Air Canada was allowed to postpone making this up but the liability was not diminished. The company has not
been able to adequately top up pension fund shortfalls since then and pension liability has continued to grow. This is perhaps the most serious of the problems haunting the company now. Air Canada has other so-called legacy handicaps too. They carry the baggage of pension and other agreements made when they were a federal government agency, not to mention the burden of general expectation of quality service from a 'national' airline.

In current economic environment no company, leave alone one barely staying afloat like Air Canada, can guarantee pensions related to incomes at the time of retirement several years from now. The times of economic growth and steady rise in stock market which made it possible are long gone. The companies can contribute to a plan along with the employees but they can not predict the performance of investments in the plan. Workers must recognize this reality. They can negotiate the level of contribution and the age of retirement. But the assured monthly payment for rest of the life after retirement is not a realistic hope any longer and no management can agree to it.

Air Canada employees must also remember that the wage and benefits structure is significantly lower at competing companies, partly because their employees are not unionized; they do not negotiate the working conditions and do not go on strike. The argument of older workers that they made 'sacrifices' in 2003 and it is time they recouped some of those losses does not hold water because the employees did the minimum that was necessary for the company to operate and carry on providing them jobs. Unfortunately, the business environment for airlines has not improved since then even though the traffic has grown. The lower cost structure of the competition in Canada and cut-throat competition from other international airlines fighting for
their own survival has made it difficult to retain the market share. In this environment, and with fuel costs remaining high, the pressure to cut cost has been relentless. Fuel and wages are the biggest cost items and it is only the later that the airlines have any control over. With the best wish in the world, the management at Air Canada can not offer their employees better terms while the competitors are holding their wage costs steady. Their options come down to dying slowly and painfully or quickly after a prolonged strike or lockout and the management can not be blamed for opting for the later. The union negotiators understand this argument, but they have not been able to convince their members. Surely, fat pensions and huge
bonuses in the contracts of the executives and their reluctance to volunteer reductions they are asking of their workers may have a role in the opposition of frontline workers. No one has forgotten the huge bonuses awarded to then CEO Robert Milton and his associates after the company was restructured. This memory may be why the employees twice voted down the negotiated deals. Notwithstanding the grievances the second coming of receivership of Air Canada is very likely and this time new Air Canada, or whatever it is called, will begin afresh with new name, new wage and pension structure, no unions and new workers under new management. Till then, when Air Canada workers are sorry for themselves, they can feel better by pausing for a moment to look at the plight of investors who bought shares in the restructured company at $20 and can not sell them now for a dollar. It may be some consolation to the unions negotiating better pension deals for future employees to realize that the retirement funds who invested in Air Canada are the laughing stock of the industry and their investors can not afford to retire whatever their age.

While the employees have larger share of the blame in problems at Air Canada, the situation is different at Aveos, the company that did the maintenance work for Air Canada and that filed for bankruptcy this week. When I moved in my community thirty years ago, there were three garages repairing cars and selling gas. Now there is only one. Cars being made today are sturdier and do not need frequent repairs as they used to do. I suspect the same is true for aircrafts; they still need maintenance but much less often. To survive in a shrinking market, a company has to acquire new business by diversifying into new services or by attracting new clients. Aveos failed to do either. Even though Air Canada sent almost all of their work to Aveos, it wasn’t enough to keep four plants operating. The company failed to attract other clients and did not reorganize the operations for the reduced amount of work that was available. It carried on with excess capacity and too many employees for far too long. Rather than blame Air Canada for not creating for them work they did not need, Aveos management should focus on how they can adjust the size of operations to the available market. Perhaps the owners have concluded that it is not possible to be profitable under current circumstances and they should cut their losses and leave. If this is indeed the case, it is only fair to the workers and their main customer that they let someone else take over the operations and adjust its size to what will be profitable.

Our Healthcare Dilemma

The growing share of healthcare in federal and provincial budgets is a source of alarm and given the political nature of the issue it is not going to go away. The costs continue to balloon because the population is growing older and new life prolonging drugs and surgical procedures are very expensive. Health care now consumes nearly half of the total expenditures in all provinces and annual increase far exceeds the rate of inflation. Consequently, investments in other necessary items, education and infrastructure for instance, are declining every year. This is unsustainable and measures to contain the costs must be devised and implemented. To make the situation worse, the demand for services exceeds the capacity in the system from primary care physicians to emergency hospital care and patients have a long wait before receiving essential care. Simply put, there are not enough medical professionals to go around. Although more are being trained, the shortage of staff remains acute.

There are two possible solutions to rectify the imbalance in capacity and demand. First, and the preferable one, is to improve the operating efficiency of the system. Instructions on how to achieve higher efficiency levels often come from the top and some serious mistakes have been made. Major studies to determine system wide solutions are necessary and must continue. But we also need small committees of professionals working locally to improve efficiency in their organization which are appropriate for skill levels available to them. The means of implementation and dissemination of the proven techniques, including the financial assistance for new and improved equipment, should be generally accessible without complicated procedures.

Higher efficiency will mitigate but not solve the problem. The other approach, unpleasant at first glance, is reducing the demand. In the long term this can be achieved by improving the dietary habits and encouraging physical fitness. The studies in the United States and New Zealand have shown that the children brought in dysfunctional families are six times more likely to suffer from chronic diseases all their lives starting from childhood. Therefore, effective policies that alleviate poverty, drug addiction, unwanted pregnancies and unemployment and provide job training to men and women living in deprivation can reduce medical care costs by improving the health of children in such families.

Other steps are required till effects of social engineering are felt. The demand can always be reduced by making it unaffordable to some. However, Canadians will rightly find such system abhorrent. A better way may be to provide incentives to reduce or eliminate unnecessary care as well as putting in place some value measures in provision of the care. Are the tests requested by a patient really advisable? What is a stay in extensive care worth in terms of the prolonged life; by a month, a year or ten years? What quality of life would it be after the medical intervention? Rather than making ad hoc decisions we need to have in place a generally applicable protocol. The system should set limits to the extent of care it would provide for specific cases in terms of tests and treatment; giving patients the option to buy the care beyond this limit. Thus, if a test is unnecessary in the doctor’s opinion or a certain treatment, be it drugs or surgery, will extend the life but the quality of life would be poor, patients can receive that care but only by paying for it. Such a system would be labeled a two-tier system and many Canadians would instinctively oppose it. But they might be persuaded if it were explained that the second tier allows all Canadians to receive first class care they need when they need it and a higher tier has always been available to the rich in hospitals and clinics south of the border.

To meet the ever escalating cost, all but the poorest citizens should pay a supplementary tax on income or consumption which is entirely devoted to health care. This tax should cover the healthcare costs above a threshold in the government budget; say 40 percent of general revenue. The rate of this tax can fluctuate based on the anticipated healthcare budget. In order to maintain transparency it is critical that this tax be levied by the healthcare administration and not by the politicians. This system is preferable to a user fee because it will spread the payment over a wide base and will not be disastrous to the family in case of a serious illness.

None of the suggestions proposed here – higher efficiency, elimination of unjustifiable treatments and a supplementary health tax - would be enough by itself and a combination of all three is needed to make the system sustainable. One can only hope that the political will to impose strong measures to solve problems of this magnitude exists.

Iran's Nuclear Development:

There is a general belief in the West that Iran is developing a nuclear bomb while the Mullahs insist that the facilities are being built for peaceful purposes. It has made Israel and all the Western governments very nervous. To dissuade the rulers, various sanctions have been imposed on Iran but they have had no effect. According to some media reports Israel is now set to attack the nuclear facilities of Iran with or without the support of the U.S.

I suggest that the only reason Iran is developing a nuclear capacity, if indeed it is, is because Israel already has it. Islamic countries in the Middle East have good reasons to worry about expansionist aims of Israel. Their view of the situation, rightly or wrongly, is that the Jews expelled Arabs in 1948 and have annexed the territories of their neighbours twice since then; have showed no interest in negotiating a piece deal with Palestinians and have been building the military capacity, including nuclear weapons, far greater than they would need for defensive purposes. No coercion will change this impression and one way or the other populist governments of Islamic countries will continue working towards military parity with Israel. This does not mean that continuous wars in the area are inevitable till one of the two sides is annihilated. It does mean that huge imbalance in the strength of two sides does not auger well for peace.

Israel does not have to weaken itself to begin the process that could reduce tensions in the region. Rather than threaten strikes which may or may not work and could easily backfire, Mr. Netanyahu can suggest that Israel will abandon its nuclear arsenal and start negotiations with Palestinians if three conditions were met:
1. Iran unconditionally gave up any intention to develop nuclear weapons.
2. Iran allowed international observers to monitor its nuclear development to ensure that it is exclusively for peaceful purposes.
3. Other countries in the region signed and promised to abide by non-proliferation treaty.

Iran can not turn down this offer without confirming the worst fears of its enemies and alienating her remaining friends. In that case there will be much greater support for the attack to destroy the facilities. On the other hand, if good sense were to prevail, Iran would accept the offer and the possibility of a war in the region will be averted, not only now but for some time in the future.

If there were a win/win situation here is one. Will Netanyahu be able to convince his motley group to do it? Let us hope so.

Set of Rules for Governance of Canada:

1. Government of Canada has been replaced by Harper government.
2. Absolute majority in parliament, though far from it in votes, gives a Prime Minister the right to push his narrow agenda, no matter what harm it does to the country.
3. The ministers don’t lie or play tricks; it is some junior official in a back office.
4. If caught with a hand in the cookie jar, throw the jar at the person making sure s/he learns a lesson and never snoops on you again.
5. Cut the services to those most in need and where it will do the most long term damage because these are the people who voted against you.
6. Protect the jobs and benefits of your cronies irrespective of costs. After all it doesn’t come out of your pocket.
7. Make sure every pronouncement promotes your party and puts down the opposition parties whatever the truth.
8. Use government funds to promote your party and its candidates in the next election.
9. Encourage your supporters to sabotage fair elections at home while extolling democracy abroad.
10. Avoid the high road; why risk of falling down. No one can bring you down from the low road.

Ontario and Quebec Unite:

The verbal jousting between new Alberta premier Alison Redford and Dalton McGuinty, third term Premier of Ontario, goes deeper than the ink on paper. For thirty eight years that I have lived in Canada, economies of the West and Ontario have consistently gone in opposite directions. When oil price is high, Alberta prospers but the manufacturing in Ontario suffers a double whammy of higher energy cost and rising Canadian dollar. The situation is more extreme these days because the up cycle in oil prices has lasted longer than usual. It shows no sign of turning and the misery in Ontario’s industrial heartland is acute.

Federal governments in the past represented Central Canada more than the West and they tended to follow policies which alleviated Ontario’s plight, often at Alberta’s expense. Current government in Ottawa has a strong Western bias and under the guise of supporting free enterprise it is being singularly unhelpful to the suffering workers in Central Canada.

Not only are the leaders of current Federal government short-sighted, they are guided by crazy extreme ideology borrowed from the Tea Party types south of the border. It would be foolish to expect them to work in concert with Ontario to improve the situation. Only option for Ontarians, other than mass migration to Alberta and Saskatchewan, is to join Quebec and start a campaign for Central Canada separation from the Federation. Separation movement in Quebec has been regaining strength lately and it would have a better chance of success if the two largest provinces with similar economic interests skip over the language barrier and work together to form a strong industrial union whose prosperity would not be constrained by Petro-currency of the blue-eyed sheikhs.

Return to Gold Standard:

Kelefa Sanneh (New Yorker, February 27) mentions in passing Republican hopeful Ron Paul’s wish to return the U.S. dollar to gold standard. There can be no doubt that since the abandonment of gold standard, the Central Banks have flooded the system with new money to create a false sense of prosperity. Unfortunately, mountains of cash have led to the situation where manipulating money is far more rewarding than using it productively and the traders at Goldman Sachs make billions even when the economy is in disarray and unemployment is in double digits. Sustained development over long term needs a financial system where money is made by inventing and making useful products, not by shuffling it around. In this system the banks use the money deposited with them for loaning to profitable enterprises and they don’t have much left for trading on risky ventures. Ignoramus on economic and political matters though I am, I do believe that if all the money that has been pumped over last thirty years to keep the economy ballooning were soaked up somehow and future oversupply constrained by instituting some standard for printing new money, the cycle of bubble and collapse will be eliminated.

Stocks ‘R Us:

The financial media is full of reports on what pension and hedge funds and their managers are doing with their money implying that the readers should do the same. I am afraid that in this field just as in most others, what works for giants does not necessarily work for dwarfs. There are things one can do with a billion dollars, like buy enough shares in a company to push the management around, which most investors can’t do. On the other hand, a small investor places small bets in a larger field and has more flexibility.

Investment philosophy and goals depend on the size of investment. Big hedge funds and pension funds can not consistently grow by 10 percent but a small fund can. That is because a patient investor with a few thousand dollars can buy shares of growing companies that trade infrequently for a couple of dollars which would never be on the radar of a billion dollar fund. For example, investors who bought a few thousand shares of Boyd Collision or Intertape Polymer a year or two ago have quadrupled their money. Such gains easily offset losses in investments that do not work out.

Big funds relate their performance to the market indices while an ordinary Joe saving for his retirement merely wants his investments to stay ahead of inflation after taxes year after year. It is no consolation to an average investor that the TSX lost more in a bad year. There is no rationality when the spectre of deprivation in old age looms. When general markets are falling, a small investor wishing to minimize the losses in the portfolio should stay away from darlings of large traders. Preference for ‘income’ over ‘growth’ stocks reduces the volatility in the portfolio because steady income stabilizes the price to some extent and makes up for small drops in price when they occur.

An investor must be aware of the political and economic winds that are blowing. While local calamities like earthquake or floods do not have a significant lasting impact, a major war or a long recession can be disastrous. However, before you sell all your stocks and stack your dollar bills under the mattress, remember that most disasters, including economic ones, eventually bring inflation and the best way to stay ahead of inflation is to own carefully selected relatively indestructible assets.

Danielle for Premier; Newt for President

I have believed all my overly long life that there are some things the governments do well and there are others best left to private enterprise subject to the proviso that the industry is not dominated by a few mega giants. However, many people, perhaps wiser than me, believe otherwise. Their mantra is that the governments mess up whatever they undertake and smallest possible government is the best government.

I have been fortunate over the years that I did not have much dealing with the government agencies. I pay my taxes, fill the forms as well as I can and get approximately the refund I expect, sometimes a little less other times a little more. I leave other things like building permits to contractors and they resolve the issues if there are any. But the situation changed recently. Fortunately, it was nothing personal and it does not affect me at all. If this were critical to my well-being, I would be joining the Wild Rose party and be sending money to Gingerich campaign. As it is, I am only thinking about it.

Although it is in common use most people are not familiar with the origin of the term ‘broken record’ because records from where the term originated have gone the way of the dodo. Before the digital revolution and imusic, there were compact discs which are still in use by older generation. The discs replaced tapes which were on the scene for no more than a few years. Before tapes they had a contraption called record which rotated on a plate and a needle floating on it picked up the vibrations pressed on its surface. The records reproduced sound accurately and were in use for several decades. However, they did have a problem. If the surface had a scratch, sometimes even a dust particle, needle got stuck and played the same notes again and again. This constant repetition was called a ‘broken record’ and soon the term was applied to any one who repeated the same argument over and over disregarding counter arguments of others. Politicians and ad agencies realized that repeating a statement ad nauseam persuaded a large number of people that this was true and soon became adapt at it.

Enough of diversion and back to the story. I noticed a while ago when buying a carton of milk that on top of $3.29 for a two litre carton there was a deposit of 25 cents. On returning the carton a few weeks later, I got a refund of 18 cents. Thus, I paid seven cents extra for the milk not counting the cost of time and transportation to the bottle depot and back. It occurred to me that this was an imposition on the citizens who pay a substantial fee to the city for the curbside pick up of the recyclable material. Moreover, there are families whose means are limited and the deposit may force them to reduce their consumption of milk, thus harming the health of our future generation.

These considerations prompted me to write letters to my alderman and he was kind enough to reply within a few days. He informed me that the deposit was a provincial matter and had nothing to do with him. I now sent the letter to the MLA. It is my misfortune that the MLA is now the Premier of the province and has no time for the concerns of her constituents. She did forward the letter to the Environment Minister who got a staff to draft a response. It said, in effect, that the deposit was reducing the amount of garbage in the dumps and achieving the goal of recycling 85% of such material. There was no mention of the economics of recycling or the deposit.

I am a retired grumpy old soul with not much to do unlike our civil(?) servants. I fired back a note stating that the reply did not answer the issues I raised. Lo and behold, a few days later there was the reply – an almost verbatim repeat of the previous note. Having grown up in India with records of poor quality and being aware of the futility of playing the broken record, I did the only thing one can do in this situation, gave up.

The private companies are no better in this regard. In case a reader is having difficulty remembering the last experience of this phenomenon, I will relate my recent experience. A few months ago I wrote to my discount broker suggesting a very minor change in their monthly statement which will make it much more convenient to the customers and save many trees too. I received the automated response telling me how much my correspondence was appreciated but they had no plan to make any changes. Last week, I sent a similar letter adding to it my frustration with the company not paying attention to a customer’s problem. Guess what? I received the same letter as before, only under a different name. What should I do?

In old days when the record was broken we went and bought another one. To transpose that solution to the existing problems, I am investigating the possibility of moving to a different broker. As for the government and its response, it may be time to switch my political ideology from ‘middle of the road pragmatic government is good’ to ‘less is better’. I need new slogans – ‘Danielle Smith for Premier’ and ‘Newt Gingerich for President’ will do for now.

Grampa’s Gift

Even-tempered individuals who go through life unperturbed by daily hassles are few and far between. Men and women who tend to be placid are good company when there is a story to tell or a special meal to share. But most interesting people are those you could call excitable. It doesn’t take much to excite them; the prospect of a good espresso with a plate of three kinds of baklava is enough to send them overboard. Tomas is one such person. He was even more high-spirited that day than he usually is but if walking on cloud nine could ever be justified, this was the occasion. Tomas comes from a family where women are tall if they touch five feet in high heels and then they tower about their men whose sole occupation is making money. Folks he married into are taller but not by much – may be a centimetre or an inch. Yet, there he was in Sydney celebrating his daughter Roma’s inclusion in Hungary’s basketball team. Roma was by far the tallest person in the clan – no other Kovari reached her shoulders. If she weren’t so fit and energetic, the parents would have worried about some genetic defect. As it was, they found her long reach useful, no need to fetch a ladder to reach the top shelf or change the bulb in ceiling light fixtures.

Tomas was waving his arms about shouting Hungaria – Hungaria when he heard the sound not much louder than that of a pin drop, then the crunch as his left foot stepped on something solid. He stopped to look and picked up the jumble of metal and leather which looked like it was once a watch. “How stupid, leaving a watch on the sidewalk,” he said to no one in particular. He was surprised when he examined it a little more. It was an expensive model, a Tudor Oysterdate; just like his own with identical crocodile skin strap. An unhappy thought crossed his mind and his eyes turned to his left wrist now limp against his body. There was an empty space next to the cuff of his shirt. Indeed, the watch in his palm was the one that had been on his wrist a few moments ago. It must have come off when he was shouting slogans and waving his arms. To think of it, the clasp holding the band was a bit shaky when he put it on while dressing to go out that morning. Now it was dolefully staring at Tomas with its cover cracked, face muddy from his shoe and hands stuck close to the numbers two, ten and eleven. It was the gift his grandfather had given him at a party to celebrate his squeaking through the final school examination. While transferring the watch from his wrist to Tom’s Grampa had said, “It is a family heirloom. You must love and cherish it.” “And obey too because punctuality runs deep in the Kovari blood,” he remembered thinking at that time.

The accident and the memory of the day he graduated from being a boy to a man drained all excitement out of poor Tomas. His spirits hit the bottom as if an old friend had left him for good. He let the crowd shove him around till he found himself jammed with his nose against a window displaying – you guessed it – men’s watches. There were at least fifty seven varieties; their prices scribbled on the tags hanging from the bands. It was difficult to read the numbers but there seemed to be a large range. He located the door and stepped inside. There were thousands of people on the street but only one in the store. A lady barely in her thirties, her wavy well groomed red hair parted on the left, came forward and wished him Good Day. She was wearing a short plaid skirt, a white blouse that gave prominence to her figure and hardly any make up. He showed her the skeleton of the watch and asked if something could be done to fix it. She disappeared with it behind a swivel door at the back. It would be normal to watch the boistrous crowd on the street while waiting for her return but Tomas was in no mood for enjoyment and glumly looked at the watches in showcases instead. There was a wide range, some gold, some steel, some with second hands others without, some with faces cluttered with all the information fit to present on a watch, others with just two barely visible hands on a bright white face. They ranged from expensive Omega, Rolex, Tissots and Longines from Switzerland to cheap Asian products named one letter different from those of the well-known brands.

Just when Tomas was starting to wonder whether they were already working to put the fallen Humpty Dumpty together again, the lady came through the door with an open box on a small tray in her right hand. “I am sorry, sir. Our staff looked at the watch carefully. They do not think it is worth repairing. It will take them several days and the replacement parts may not be available any way. The working model would be highly prized as an antique but in its current state, I am sorry to convey their opinion sir, it is worthless.”

Tomas was heart-broken. Leave alone the fear of having to explain the accident to his grampa when he meets him in the next world - he had a tendency to be grumpy and had no doubt carried it with him, the thought of meeting all the social engagements without a time keeper was depressing. However, the lady came to rescue, “Will you like a replacement, sir? We do have a large selection and one of them is sure to appeal to you. We accept all credit cards and foreign tourists get the sales tax refunded.”

She helped Tomas find an Omega, a little beyond his means but within the credit limit of the card. It was nowhere near as elegant as the watch now resting in a box in his pocket used to be, but it ticked, had an alarm, glowed in the dark and worked on a long lasting battery. She helped with the long form to claim tax refund, got the band adjusted for his wrist, thanked him for the custom and he was on his way resisting the temptation to ask her to join him for lunch and whatever that might lead to.

Whether it was the loss of good vibes from the family heirloom or the mismatch of his stars with that of the new watch, next few years were tough on Tomas. He lost his job and the only employment he could find was on the drilling rigs in far away Canada. The work was hard and the winters cold but the money was good and he was able to save enough in five years to start his own business; shoveling snow in driveways in winter and mowing lawns in the summer. The older population of the city needed a reliable person to do these jobs and soon Tomas, now Tom, had several crews working all over Edmonton. He settled in a nice bungalow in a good area and invited neighbours on summer weekends to drink Hungarian wines and snack on crackers with goat cheese. It was at one such get together when Roberto – who had emigrated from Sicily twenty five years ago and lived a few doors away – showed him a watch he had just got fixed for a small fortune. It was a Rolex, not as fancy as the grampa’s gift but still elegant. He felt a sharp pang in his heart for his long lost love. He told his guests about the incident in Sydney and how much he missed that watch. Roberto had a brilliant idea, “Tom, it won’t do any harm to get an estimate here if you still have that box. Those watches are now collector’s item and people pay a fortune for them on e-bay.”

After the guests left, he rummaged through the cardboard boxes he had brought from Hungary over the years and stored neatly on shelves in the basement. It took a few hours, but he located the crushed Oysterdate. He dropped it at the Rolex store the next day. Two weeks later he got the call he had been waiting for, “The watch can be fixed but it will take some work. We estimate the cost at $1197.50, plus tax of course.”

Tom was happy that the watch could be fixed and the estimate did not surprise him. It was high but the business was doing better than ever and if he did meet his grumpy grampa in next life he did not want to have any explaining to do. He gave the go ahead and in four weeks the fixed watch was on his wrist. It did not glow in the dark, it did not have alarm, it ran on vibrations from the wrist and it gained a couple of minutes every day but it cost five thousand dollars new and it would sell for a lot more as an antique in an internet auction if his daughter did not want to keep it. Fortune favours the pack rats, thought Tom as he put the Omega in the old box and at the bottom of the heap where he had found his old and now the latest pride and joy.

A Break in Florida

Evelyn and I got up at the ungodly hour of five in the morning to prepare for our departure. The cab picked us at six and took us to the airport for the flight at eight. Due to ice on the runway the plane sat fully loaded on the tarmac for an hour and was late arriving at Minneapolis. We had to run to board the connection for Orlando. After getting off the plane there, we walked a kilometer to collect the luggage and another kilometer to the rental car counter. It took about half an hour to get the car. It was dark by then and I have difficulty in navigating at night in a strange city. The car representative set the GPS system to guide us to the hotel. However, it did not give any meaningful directions once we were out of the parking lot. After a fair bit of confusion, we decided to follow the map and were soon on the State Road 535. Now we had to find the Holiday Inn, number 11345 on this road. However, there were not many buildings with numbers posted on them and we coasted past a Holiday Inn located just before a restaurant that displayed 8110 in bright lights which we assumed was the address of that location. We were hungry by then and Evelyn was very tense as well – it was getting late and she had to prepare for a three hour seminar the next morning. The manager of the restaurant confirmed that the hotel we just passed was indeed the one we were looking for. He ascertained it by calling the receptionist. He then guided us to a table and we had a calming dinner. The room in the hotel was satisfactory, the bed comfortable and the sleep sound.

When Evelyn was at the seminar I set our GPS for Orlando and it guided me to the rental car company where I returned their GPS and then back to the hotel by a roundabout route as it often does. The next morning it took us to the Epcot Centre but went into a blind stupor on the way back, never to wake up again. By now I knew my way around the map and we found our destinations by the most direct route. I booked Sea World visit for myself the following day when Evelyn was busy and swimming with the dolphins for her the following day when I planned to visit Cape Canaveral Space Station. Evelyn had a great time snorkeling and playing with dolphins but the cold water got to her. On my return from the Cape soon after six, I found her in bed with all her warm clothes on and wrapped in blankets. She had been trying to warm up for an hour and it took a cup of hot tea and another thirty minutes of rest for her to get ready for dinner. A hot soup and a steak helped her return to normal. Back in the room, we packed for our return flights on the following morning. The temperature in Orlando was plus 24 degrees when we boarded the plane. Journey was uneventful and we were happy to be home although the temperature was minus 24 degrees when the flight landed in Calgary.

I felt that the Sea World and Epcot Centre were more hype than substance. The ‘theme parks’ had several frightening rides which appeal to the daring teens but do not do much for the older clientele. Saturday was a fine day when I drove to Cape Canaveral on the other coast of Florida. Fortunately, the state is a long thin peninsula and the distance from one coast to the other is about 50 miles (yes, they still live with miles and Fahrenheit down there) and on good roads it took just about an hour. The entry fee was less than half of that in so-called theme parks. To avoid driving in the dark I allowed myself six hours in the Space Centre visitor complex and it turned out to be enough time.

Rather than discuss the exhibits, it will perhaps be more interesting to describe the overall impression of the place and the emotions it created in me. The space facility is located in a Wildlife Refuge covering around two hundred square miles. The installations are spread out and a bus takes the ‘guests’ to the sites of interest. Lucky visitors get to see alligators, bald eagles and their nests and several unique birds. One nest on a tree next to the highway is fifty years old. It is as big as a double bed and it is still in use.

The exhibits in Cape Canaveral bring home to an observer the immense effort expanded during the sixties for the moon landing in 1969. It was accomplished by eight years of intense effort by two hundred thousand individuals. Each space craft is an assembly of two million ‘systems’ and each of these has to be perfect. The most talented people, whether from the U.S. or abroad, were hired to research, develop, design and test each step in the progression from theoretical musings in 1920 to the landing on the moon. The team that designed successful German space vehicles during the Second World War was moved to the U.S. after the war to help in space exploration there and its contribution turned out to be critical in the development of U.S. space technology. The willingness and ability to attract talent from all over the world and utilize it to the full extent has been a crucial factor in the huge lead U.S. has maintained in all aspects of Technology. Compare this to Hitler who expelled much of the German talent pool and lost the war.

Another impression the exhibits leave is the mind-boggling scale of resources in the U.S. The nation spent more on space exploration every year over last five decades than the total GDP of many countries. Also consider that there are more airplanes sitting on the Chicago airport than owned by the airlines and air force combined of many reasonably prosperous countries. The scientists and economists of the country win most of the international awards and some of the best social studies research is done and published there. Yet, the American cities have more homeless people, illicit drug use is rampant and there are more homicides every day than in any other developed country. The unemployment is on the rise and people need two or more jobs to make ends meet. Middle class, the traditional backbone of the economy, is shrinking as the wealth concentrates in ever fewer hands. Unbridled capitalism and free enterprise is not working for those who can’t help themselves. To make the situation worse, the people and the government are polarized at two extremes and no one can agree on the steps required to solve the social and economic problems. The prospects of social chaos increase by the day when the governments are unable to deal with the problems faced by a large and growing portion of the population. It does not need saying that a political upheaval in the U.S. will bring the economy of the whole world to a grinding halt. Unfortunately, the friends of the great country can do no more than hope that it will muster the will to use its vast economic and intellectual resources to find the solutions before the problems become unmanageable.


Veto at the U.N.

Last week Russia and China vetoed the resolution proposed by the Western powers at the U.N. The resolution was relatively innocuous asking President Assad to step down to avoid further bloodshed in his country. Obviously, these countries have learnt their lesson.

A similar resolution was put forward in the Security Council by Arab countries whose hereditary rulers are beholden to the West when the opposition to Muammar Gaddafi was gathering momentum in Libya. Assuming that the resolution meant no more than what the words said, these powers supported it. However, it was later used by NATO countries to directly intervene in Libya and cause the overthrow of the dictator inconvenient to the West which may not have occurred if Libyans were left alone to sort out their problems.

Every power bloc looks after its interests and it is foolish to expect China and Russia to be different. They are not likely to be hoodwinked twice by pious resolutions which are later distorted to suit their opponent’s purpose. If we need strong threatening resolutions to achieve our goals, let us put these forward and not try to be sneaky, whether it is Syria now or Iran in a few weeks.

Honour Killings, Arranged Marriages and Gender Equality

I left India fifty years ago and married an English girl five years later. My two brothers stayed behind to look after my aging parents who arranged their sons' marriages. By and large the family lives of my brothers were happy and produced my three nephews and two nieces. Two nephews overcame strong opposition and chose their wives and the marriages of the others were arranged. The nieces were married into prosperous families. One of them had two daughters. These girls were educated in elite schools, graduated with honours in commerce and now have important positions in Indian outposts of global enterprises. One of them did something Indian girls of her class rarely do – she fell in love with a colleague. But the lovers couldn’t just go and get married; the relationship had to be blessed by both sets of parents. In her case the family of the prospective groom did not approve, the young man lost heart and the bride-to-be was left to bake in the hot midday sun.

The family of my niece was very disappointed and they initiated a search for the replacement groom. Another prospect came forward but backed out during the negotiations. When Evelyn, my feminist wife, heard this sorry tale she was livid, “It is the same disrespect for women that is behind honour killings. Can you imagine the shame a beautiful and highly educated young woman in a respectable job feels in being marketed like a commodity, families bargaining the terms of what dowry she will bring without regard for what qualities she has? We should invite her to come to Canada. There will be a line up of men from here to eternity dying to marry her.”

Evelyn has a very good aim when it comes to hitting a nail on the head. The problem with arranged marriages is that the bride’s family has to chase the groom who plays hard to catch. Being put on display and being the one to be accepted or rejected by the prospective groom without reciprocal option is demeaning for the girl and sets the tone of the couple’s life together. Other customs which devalue women range in impact from murder at one extreme to constant put downs at the other. Honour killings, setting brides on fire when dowry is inadequate, female infanticide and abortion of female fetuses, old and fortunately now dead practice of Sati, sexual mutilation, use of niqab to cover the face and hijab to cover the head, physical and emotional punishment when her work is below expectation are expressions of the same basic belief - women are not as human as men. The sense of inferiority of women is so entrenched that women themselves believe it and participate in perpetuating it. This is why girls are treated like a burden to be borne by the family. They are an onerous responsibility to be grudgingly shouldered till they are old enough to be passed on, with appropriate compensation, to another family. It does not matter what women themselves feel or what they are capable of.

If customs that subjugate women are to be eliminated, men and women will have to be treated as equal, not only in law but in every day affairs as well. Social workers and educators dealing with immigrants from the developing world face a critical issue: Are the gender based customs edicts issued in religious scriptures or they are cultural conventions. Although the line between culture and religion is sometimes blurred, the scholars of most Hindu sects, Judaism and Christianity are agreed that this is not a religious issue. Although Islamic scholars are not unanimous in their opinion, the vast majority of them have stated that there is no gender prejudice in Quran and women have the same rights as men. This view is supported by the argument that if these customs were based purely on religion they would be observed universally while most of the practices mentioned above are regional and even there these are practiced among certain classes only. Moreover, evidence points to gender biases being of relatively recent origin. It has often been argued that the humiliation of women in a society began when it was in decline.

The murder of three girls in Rideau Canal by their parents and the sibling along with the step mother is shocking indeed and is rightly being condemned. But to consider it in isolation will be a mistake. To bring any meaningful change we need to see beyond the worship of goddesses, be they Lakshmi or Mary or Fatima and facile statements like ‘she is the queen of the house’. We have to create the belief that all human beings are equal irrespective of their race, religion or sex. All individuals have the same rights and responsibilities and traditional and cultural practices must demonstrate that. We can not hide behind the cover provided by multiculturism. We must work towards eradicating customs which treat half of the society unfairly, in Canada and all over the world.


Financing Pensions

Canadian Government is raising the issue once again of the increasing burden of supporting retiring people. In my opinion, the senior's problem is easily defined and the solution is straight forward. The root of the problem is that the life expectancy in Canada has increased steadily over the years. My elementary research suggests that it increases by one year every two years. Coincidentally or by design, when Old Age Security age was set at 65, life expectancy was close to 65 too.

If this is indeed the case, there is a simple solution to the problem. Let us make the age of seniority float with life expectancy. Whatever the life expectancy of an average Canadian, seniors' benefits (including retirement?) begin at an age directly related to it. This will stop the ballooning of the costs of older people without causing much hardship. As it is, a large number of people work beyond 65 (myself and wife included) anyway.

The change will cause a hue and cry but that will happen anyway, only the people screaming would be different.

Three Odd Comments

Vancouver House Prices:

It was reported on Monday that Vancouver residential real estate is among the least affordable among the major cities of the world. The reason is obvious to any one who has the least familiarity with the city. While the number of properties, particularly in higher price range, being purchased by absentee citizens of Asian origin is not insignificant and helps to raise the prices, the main reason is the size of drug trade. The unreported income from local and international drug traffic impacts on calculated affordability in two ways: it is not included in the income in statistics making the affordability factor lower than it really is and much of drug trade income is invested in housing pushing its price up. It is a similar situation to many Italians owning luxury cars and residences while reporting paltry incomes to avoid the taxes. It makes the life of honest Vancouverites harder but one may consider it a just punishment for tolerating, even supporting, the drug trade.

Banks and Risky Ventures:

Mark Carney, Governor of Bank of Canada, has expressed reservation on several occasions about the proposed law south of the border restricting the banks from indulging in risky trades. It is this kind of activity that caused the banking to freeze in 2008 globally and cost hundreds of billions of dollars to activate it again. Mr. Carney argues that banks are needed to trade government bonds because there is no other agency to ‘make the market’ in government bonds particularly when the risks are high and without it the cost of borrowing by the governments will rise. The argument is simplistic and its three components have easy answers. First, the main reason for restricting banks from such activity is that their actions have impact on all aspects of our lives and no one can afford for them to fail by indulging in risky ventures which sometimes turn sour. Second, if the banks are forbidden to do it, the slack will be picked up by large investment funds who would not freeze all business activity if they failed and would not need to be bailed out. Third and most important, if the governments have to pay a premium to prevent the repeat of 2008 crisis, it is not a great burden considering the value of the insurance. Surely, the Governor of the Bank of Canada realizes that the problems in Europe have been exacerbated by the large holdings of risky bonds acquired by the European banks, no doubt, because of their higher yields, without thoroughly evaluating the ability of the governments to repay them. If banks were restricted by law to stay away from risky ventures, governments of Greece and other troubled countries would have been forced to mend their finances when it could have been done instead of borrowing money to bribe the electorate and delaying the outcome till it may be too late.

Why Second Marriages Succeed?

The second marriage of two people who had messy divorces is often happier than most lasting marriages at their later stage. I am not a psychologist and I am known for not having any Emotional Intelligence. Therefore, I should not be expressing an opinion on the issue but I can’t resist being an undisciplined person that I am. After years of demanding jobs and daily chore of bringing up the kids, each partner has a memory bank of events during their time together. Human nature being what it is, pleasant memories are pushed to the back; at least the contribution of the partner to make them pleasant does. On the other hand, the role of the partner in unhappy recollections is at the front of the stage and each time there is a disagreement the movie of them all is replayed in the mind multiplying the grief caused by the event itself and drowning all other pleasantness in life. For a new couple with not much history behind them an unpleasant episode is just one bother. There is no load of accumulated misery of past years to bring forth and it is forgotten as soon as something good happens as it most often does.

Keystone Rejection: A Blessing in Disguise

President Obama announced the rejection of the application of TransCanada Corporation to build a pipeline to carry bitumen from Alberta to Texas. This was expected by many observers and the reasons, whether political or environmental considerations, are immaterial. The rejection has upset our political leaders and has caused a big brouhaha in our media. The push is on to find alternate markets for the oil, regardless of legal or environmental considerations.

In spite of such kneejerk reaction some cool thinking might show that this decision may actually be a blessing in disguise. By exporting the bitumen to the U.S. in its crudest form we are also exporting the jobs and profits in the processes of refining it into more usable products. The only reason for exporting the crude is that it suits the infrastructure of oil companies who extract the bitumen from oil sands. It is understandable that major international companies want to use the excess capacity on the Gulf coast for refining the crude rather than build new facilities in Canada for this purpose. But why should our governments be so willing to go along with them is an issue that needs to be explained to Canadians, particularly those looking for employment in well-paying jobs.

Refineries in Central and Eastern Canada import approximately 800,000 barrels of oil from overseas while we export around 2.000,000 barrels from the West to our southern neighbour. Whether it is history or the economics of several decades ago, the governments of the day were complicit in the implementation of short-sighted policies that caused us to import so much oil rather than use some of our own production. The rejection of the pipeline with coincidentally the same capacity as the volume of imports offers an opportunity to remedy the situation. While we need to explore ways to broaden the scope of market for excess production, our governments in Edmonton and Ottawa should implement policies which encourage the use of Canadian production for our refined petroleum needs and the phasing out of imports. If this were accomplished, not only would our security of supply be enhanced, we would be beholden to a lesser extent to the politics in Washington now or in Beijing or Delhi at sometime in the future. If this point is driven home and we adjust the trading pattern of crude oil accordingly, all Canadians will be better off in the not so long run.

Yet another issue to consider is the possibility of at least some of crude oil consumption being replaced by natural gas. Vast resources of natural gas have been discovered over the last decade in North America and elsewhere and prices have dropped to astounding three dollars or even less per thousand cubic feet while crude oil has stayed in the range of $100 per barrel. In addition, the clean coal technology is making rapid advances and emission free coal powered electricity generation in near future is a distinct possibility. It is only a matter of time when electricity will be more affordable because most of it would be generated by cheap coal and natural gas. This will promote the use of cars and trucks powered by electricity or natural gas and the demand for oil will decline. Add to this the reserves of recoverable shale oil being discovered in the U.S., South America and the Middle East, the future price of crude oil starts to look less rosy. It can be argued that the falling demand in the West will be offset by increasing consumption in Asia. However, Asian countries have simmering political and social problems and projections of recent growths into the future are likely to prove dangerous.

In this scenario of declining demand and falling prices, do we want to continue building new oil sand plants at huge environmental and economic costs? Should we not be planning for the changes we see on the horizon? It is time we took off our rosy glasses and looked at all possibilities rather than wait till it is too late.

An Arrogant Post

For some reason I can only guess at, Canadians are more interested in Republican primaries in the U.S. than they are in the leadership races of two Federal opposition parties. Surely, the actions of government in Ottawa have more impact on average Canadians than the President of the neighbouring country, let alone who opposes him in the next election. Could it be because most Canadians watch American TV channels and read American magazines rather than the local offering? Around the cooler or in the coffee shop we share the stories on American media and are generally ignorant of happenings around us.

I have lived in Canada for 38 years and I love this country. Disregarding some instances of colour preference, Canada has been good to my family and we have been made quite comfortable. In return, we have done what we could to help the country’s economy and artistic endeavours. Canadians are reputed as a tolerant people and they forgive misdemeanours of foreigners readily. They are proud of their country and for very good reasons. Yet, I have a suspicion that we have a little of the mentality of the populations ruled by foreigners for long periods - Others know more than us and it behooves us to follow what they do without much thought. This subconscious feeling leads us to foreign products, stores, TV stations and magazines in preference to our own and in celebrating foreign royalty. That in turn perpetuates our sense of inferiority we inherited from our great grandparents who were forced out of their homelands by somewhat desperate circumstances there and the promise of a better future in a far-off frozen Tundra. They survived somehow, worked hard in difficult environment and prepared the ground for the prosperity of future generations. We owe them much gratitude and it would be preposterous to blame them for the psychological complexes of current generation. But we can face the truth without assigning any blame to ancestors long gone to heaven. Along with the wealth they generated, we also inherited from our forbears the attitude that the people in mother countries were our betters and we can do worse than imitate their social, political and economic order.

It is quite possible that I am transposing my Indian inferiority complex on the kind people who have been more than fair to me. If this is indeed true I apologize for hurt feelings. On the other hand, if it provokes some discussion, something useful may come out of this arrogant post.

Investing Philosophy for the New Year:

While the New Year will bring prosperity, health and happiness to some, almost as many will suffer from impoverishment, ailments and grief of loss of the dear ones. There will be moments of joy and periods of sorrow in every life. It is impossible to predict what the climate change, terrorism or political upheaval will dump on us and where. These are uncertain times but that is how every year has been and 2012 will be no different.

The issue in the minds of all investors is simple to state: How to handle our investments in the stock market under different scenarios we are likely to face? Extreme downside is not a consideration because if the world comes to an end what happens to our money doesn’t matter. We invest in a system which is moving forward whether stumbling or running at full tilt. Investment in commodities and real estate has undue risks because there trading tends to be quite irrational and prone to hype. Yes, the stock market too is not rational but only on a day to day basis. Over the term of a few months one can see the patterns and relate them to reality. This has worked in the past and should work in the New Year too.

The indices for the U.S. and Canadian exchanges rose sharply in the first quarter of 2011 to give up these gains and some more in the third quarter. In the fourth quarter they fluctuated in a 1000 point range, centered at 12,000 for TSX. Many acute hedge fund managers made money by shorting when the index was 12,500 and covering the shorts at 11,500. This trading by large funds may have played a part in the volatility. The U.S. economy, shaky banks, the problems of Euro and heavily indebted European economies were perhaps the reasons for drop from the peaks of the second quarter but their ups and downs did not correspond to the volatility in the last few months and may have had little to do with it. I suggest that the market will trade in the same vein for next few months. This pattern will change downwards if there is a catastrophe like a repeat of 911 in the West, political upheaval in China or India, major confrontation in the Middle East or unforeseen significant weakening in a major Western economy. Conversely, there will be an upward move if Europe resolves its problems convincingly (not likely in the short term) or the U.S. economy shows signs of life (possible if President Obama stands up to Tea Party Republicans and taxes are raised to reduce the budget deficit) or India and China reverse recent declines and commodity markets begin to rise again. Isolated natural havocs like Tsunami in Japan don’t seem to have a lasting impact on the economy except on the communities of the region. What a series of such disasters in quick succession will do is too awesome to contemplate and plan for. That said, an investor who watches for and reacts to the signs around him will reap profits whichever way the economy moves.

Rather than balance the portfolio for different sectors of economy or for geography, it is better to balance it on the basis of yield, risk and the prospects of individual companies. Even a seven figure account can own only one or two companies in any sector. For example, which bank or insurance company to hold to represent the financials is a key issue and needs the attention of the investor. Generally, it is better to invest in second tier companies than the largest in their industries for two reasons. First, second tier companies are often bought at a premium by their peers or by the leaders in the industry. Second, these companies are usually not on the radar of hedge funds and are not as volatile as the top tier companies. It is often profitable to put a small percentage of the portfolio in companies which have either hit the rough spot and have a good prospect of recovering or the start ups which have an unusual and proven (as much as anything can be proven in this business) potential. In my experience, many of the big losers of last year are likely to be big winners this year. It helps to sleep better if an investor remembers that over the short term, performance of the portfolio is critical, not that of each individual component, because these may fluctuate in a large range for no good reason and trading based on daily price alone causes grief more often than joy.

There are many tomes, media columns and blogs advising investors but there is no proven technique. Generally, buy and hold is better than day trading even when trading expenses are negligible. On the other hand, there is a time to buy a stock and there is a time to sell. Long term investors develop an instinct which guides them on when to trade which works for them more often than against them. Not every investment in 2012 will work even for the sage of Omaha. However, more of them should succeed than fail for a good investor and the portfolio should be ahead at the end of the year after counting for inflation and taxes. Any gain on top of that is gravy.


Throwing stones while living in a glass house:

Picking junk may have made Smiling Barracuda rich, as Mr. Delaney claims (Smiling Barracuda, Globe and Mail, Dec. 17), it has not done much for his his investors. Stock of Sherritt was $8 in 1996; This week, fifteen years later, it trade around $6.00.

Another company loved by the media is Westjet. In five years its stock is down from over fifteen dollars to around eleven. Yet, watching the CEO being interviewed you would think that it has made its investors fabulously rich. Running down your competitors sounds better when you have something worth shouting about.