Different Approaches to US/Canada Relations

I, like many, watched Mark Carney's speech in Davos. I am not going to address the specifics of his speech but I am going to attempt to put it into a broader context.

Many believe that it was just a rebuke of Donald Trump, which it certainly was, but it was much more than that. It was a very articulate and rather extreme expression of one of the two approaches that have dominated Canada's relations with the United States for decades.

The first approach is the one PM Carney expressed rather forcefully. That is, the United States is our neighbour and our friend but they are so large there is an ever present threat that they will swallow Canada just by its very existence. Therefore, there needs to be a constant effort to push back on that to maintain our sovereignty and our distinctiveness.

The second approach is to be somewhat more subordinate to the United States. They are the dominant country on the planet, financially, militarily and culturally, so trying to fight that is futile and besides making us more like them can only be beneficial to Canada and its people.

Of course, that is a simplification of the complex interplay between the two approaches. No government has ever chosen to follow one approach over the other but all governments have chosen to give one more weight in their dealings with the US.

The Liberals tend to choose the first approach. Think of PM Pierre Trudeau and his much more conciliatory approach to relations with the Soviet Union and Communist China of the 1970s and 80s. Think of Jean Chretien telling George W. Bush that Canada would not participate in the second invasion of Iraq in 2003. 

The Conservatives tend to favour the second approach. Think of the Diefenbaker government giving into pressure from the Kennedy Administration to scrap the Avro Arrow and buy the Bomarc Missiles, missiles that were obsolete before we bought them. Think of the Canada/US Free Trade Agreement or think of the trial balloons, from both Brian Mulroney and Stephen Harper, of adopting a common currency with the US. Only to see both never to mention that idea again when those balloons were shot down by Canadians with extreme prejudice.

Again, that is not to say they exclusively follow these approaches. The Chretien government negotiated the NAFTA and sent troops to Afghanistan after 9/11. The Mulroney government took the lead in negotiating the treaty that banned CFCs and they took the lead in the efforts to bring down Apartheid in South Africa, breaking with the Reagan Administration in both cases.

So Mark Carney's speech was just another example of the first approach and it was consistent with the Liberal's preferred approach to Canada/US relations. What was remarkable about it was how extreme of an example it was of that approach. As someone who has followed Canadian foreign policy for over four decades I was shocked by that speech, not because what he said was wrong but because I never believed a Canadian PM would articulate such a position in public.

Then again, Donald Trump, and his actions towards Canada, has created the conditions where the Canadian government would have to go to extremes to defend our sovereignty. The corollary to that is if we were being governed by the Conservatives they would probably have to go to extremes in their preferred approach.

That prospect scares the hell out of me as I have always preferred the first approach. This is not a partisan dig at the Conservatives by the way. I have always appreciated that governments of every stripe have balanced the two approaches in such a way that we have had decades of peace and prosperity with our southern neighbours. I have often disagreed with specific policies and decisions but overall I have been satisfied with how governments have handled the Canada/US relations.

Unfortunately, Donald Trump has eliminated the balanced approach as an option. He demands complete subordination from Canada, either as the 51st or a vassal state so we are left with having to choose a single approach. Therefore we either have to push back on that hard, as PM Carney is doing, or we have to give in to his demands. I am glad that PM Carney has chosen the approach he has chosen.

Well the Canadian Auto Industry Is Not Up to the Task

In a previous post I asked if the Canadian business class was up to the task of taking advantage of all of the new opportunities being presented by Mark Carney's efforts to expand and diversify markets for Canadian goods and services. I expressed doubt they would be and it would appear I am correct with regard to the Canadian auto industry.

My reasoning is they are beginning to make noise about having the government eliminate or at least delay the requirement to eliminate the sales of gas powered cars by 2035. That requirement has been in the books for over a decade and the Trudeau government gave the industry a couple of decades to meet it.

Those calls have become a little more louder with the Americans eliminating a large number of green house gas emissions requirements in the US, including measures that impact the US auto industry.

The reasoning I have heard is that with the US eliminating the requirement Canada no longer needs them and that pretty much sums up my distain for the Canadian business class.

As usual, they are falling on the old habit of depending on the US market for their business even though the actions of the Trump Administration is disintegrating the North American auto industry. They just cannot help themselves. The evidence is mounting, almost daily, that the US market is no longer a reliable one and will become increasingly unreliable as time goes on. As well, even if Donald Trump were to drop dead today it would not change much because his ideas about tariffs have been embraced by MAGA and will not go away quietly even after he is gone.

Therefore, if the Canadian auto industry wants to continue to be a viable industry they are going to have to expand their access to markets in Europe and Asia. The problem is those countries are toughening environmental requirements, not loosening them. So if the Canadian auto industry fails to meet those requirements they will not be able to sell their cars in those markets. They will be frozen out on environmental grounds. To be clear these will not be tariffs they will be bans on Canadian made automobiles on environmental grounds, i.e. no sales at all.

So the Canadian auto sector should be looking to accelerate their efforts to replace the sale of gas powered cars, not asking the government to loosen requirements. 

It is almost a state of nature that governments trail behind private businesses. There are many examples of that. However, we are seeing an exception. The Canadian government has embarked on a quest to completely change who Canadians can sell their goods and services to and our industry appears to be oblivious to this, falling back onto old but increasingly nonviable habits. 

It is both sad and infuriating.

Polls and Election Speculation

Liberals are celebrating great polling recently and some are speculating that we will be having a spring election.

Some will remember that when the CPC were 20 points up on the Liberals that I expressed profound doubt in the veracity of the polls because there was no election speculation to go along with the lead. After all, when a minority government, with less seats than the current minority government, goes 18 months without an election despite being down by that much then the polls were obviously untrue. It's true that Pierre Poilievre has no political acumen but even he would have finally figured out how to take advantage of great polling, given the amount of time he had to do so, if the polls were right. They were not and the fact the polling gap was closing before the election of Donald Trump, the resignation of PM Trudeau and the election of Mark Carney as Liberal leader pretty much proves that.

Which brings us to the great polling the Liberals are enjoying. The interesting thing is they are being accompanied by the media speculating about the Carney Liberals calling a snap election to take advantage of them. Does this mean we can assume the polls are correct this time? 

No.

Polls in between election campaigns are hopelessly unreliable. Hell they are only slightly more reliable during election campaigns but that is only because the polling companies use their polls as marketing tools so they have to be as close to the final election results as possible to maximize their effectiveness. So no campaign means the polls are garbage that can be safely ignored.

So why is the media speculating about an early election? 

First, because it sells. The media care about nothing more than clicks. It has been like that for quite some time. It is also why news media outlets are always skating near the edge of doom. No one wants to actually pay for that shit and they are increasingly acting on that lack of desire.

Second, the main stream media gave up actually informing consumers of their products on substantive issues a long time ago. And I mean before the internet became all pervasive. So if the media has to choose between election speculation and actually providing us real information about government programs and policies they will take speculation 100% of the time.

Third, the media does not have the best interests of the Liberal Party of Canada in mind. It has been like that since Jean Chretien was PM. They have been actively working to undermine the party since then and the election speculation is all about that. Right now Canadians are concerned about the orange blob who occupies the White House. They are also impressed with how Mark Carney is handling that situation. That is leading to his personal polling numbers being quite impressive and they are the only ones I actually believe, although they are probably overblown. The reason is I actually have conservative members of my family indicating they like him and what he is doing. These are the same relatives who never said a good thing about the Liberals for decades.

So something needs to be done to try to bring those numbers down. Telling Canadians that Mark Carney is planning on calling a snap election is one way to do that. No one wants an election and if the Liberals were to actually call one they would see their polling advantage evaporate very quickly. So a way to take advantage of that is to say the Liberals are planning to call a snap election, although not in so many words, which is why it is all speculation right now.

So my advice to you is to ignore it. It is all noise.

Is Canada's Business Class Up To The Task?

I have written in this space before that Canada is a first rate country with a fourth rate business class. Their way of making money is to establish branch plants for the big US multinationals and to pull stuff from the ground to sell as raw material. They rarely process that raw material into a value added product, being content to sell the raw material to another establishment, usually in the US, and buy back the finished product at a markup.

The actions of the US administration and the actions of the Carney government are putting big monkey wrenches into that approach to making money. The US is no longer reliable and even if Donald Trump were to drop dead tomorrow, it will not be reliable ever again. At the same time, Mark Carney is traveling around the world making trade and investment deals with anybody who is interested and judging by the number of deals he has announced it would appear that many are interested in what Canada has to offer.

So now our business class is going to have to step up. The government is creating the conditions for them to make money a different way than in the past. They just need to have the business acumen and courage to take advantage of them.

I am not holding my breath that they will. The old approach is too ingrained in our business class for them to change. However, they could surprise me.

We will have to wait and see.

The F-35 or the Gripen?

Personally I would prefer Canada buy the Super Hornet but that is not an option.

In all of the arguments around which aircraft to buy the key issue is always, "which aircraft has the greater capabilities?" Proponents of the F-35 indicate that it is the more capable aircraft of the two and they are correct.

Unfortunately, that is the wrong question. The question is which aircraft can best meet all of the operational needs the Canadian Air Force? 

The F-35 cannot meet all of the requirements. This particular airframe was developed for a specific mission, namely the deep penetration of hostile airspace, to take out high value targets, and return alive. For this it is very well suited but for other tasks not so much. Which is the reason that most users of the F-35 have other 4th generation fighter and strike aircraft to back them up. Hell, even the US has not even suggested retiring any of the F-Teens aircraft and the cost of the F-35 is not the only reason why.

So can the Gripen meet the requirement? Not completely. It is a capable aircraft but it is still lacking, although if Canada is only going to buy one type the Gripen comes closest to being able to meet all of the operational needs of the Air Force.

Then you have to look at the politics. The simple fact is the US is no longer a reliable ally so buying aircraft from them is a huge risk, particularly when said aircraft requires the frequency and intensity of maintenance the F-35 requires. It is true that part of the deal to purchase the F-35 is the maintenance of them and that the supply chains for the manufacture and maintenance of them include Canadian companies. However, watching the current administration trample all over agreements when it suits them does anybody really believe the maintenance deals and supply chains are safe? If they are not then the Canadian Air Force would be left with a large number of useless pieces of junk very quickly.

On the other hand the Swedes have made all sorts of promises regarding the manufacturing of the Gripen here in Canada. It all sounds great but one of the reasons why they have made these promises is because they want to build the Gripens for the Ukraine war away from the combatants. The problem is, if the deal goes through, the first Gripens would not roll of the assembly line until the late 2020s, maybe early 2030s. By then the war in Ukraine will probably be concluded one way or another and that could change plans really quick.

So what is the answer? As I stated above most F-35 users have other aircraft to complement them and that is the approach the Canadian Air Force should take. We have already agreed to buy 16 F-35s from the US and that agreement should be honoured. However, Canada should not agree to buy any more, instead filling out the balance of their requirement with the Gripen. 

This approach would best meet all of the operational requirements of the Air Force while mitigating the risks associated with buying both airframes. It would provide the Canadian Air Force with its own deep penetration capability, which is very important in the changing geopolitical landscape, while better meeting all of the other requirements as well.

Some would argue that maintaining two aircraft would lead to logistical issues but I am old enough to remember when the CAF had the Voodoo, Starfighter and CF-5 and they had no problems with logistics. They can do it again and with the big influx of money going to the CAF maintaining two logistical chains would be a good way to spend that money.

I do not know how this will all finally shake out but I am hoping that someone in authority will start thinking outside of the self-imposed box they seem to have put themselves in and consider the idea of buying both types.

A short note on why I prefer the Super Hornet. We already use an earlier version of the Hornet so the transition would go alot smoother. As well, I remember when Canada purchased the Hornets. It was a competition between the F-16 and the F-18 in the early 80's. Canada eventually settled on the F-18 and one of the reasons was it has two engines. When we have to send a couple of fighters up to the Arctic to play with some Russian Bears they have to cross some of the most forbidding terrain in the world. If an aircraft loses its engine there you not only lose the aircraft but the pilot also has a very low chance of survival even if they successfully and safely eject from the plane. Having two engines mitigates that risk. If one fails the other will allow you to limp home. Of course, the instances of engine failures in modern aircraft is very low so it is not a huge issue but it is not negligible and it would only take the loss of one Gripen or F-35 to engine failure to create all sorts of questions of why we did not buy aircraft with two engines.

Will Pierre Poilievre Quit?

No, he will have to be pushed out, in January, by gaining less than 50% of the vote at the Conservative Party leadership review. If he wins more than 50% he will claim victory and hang on.

In all of the talk about the troubles in the CPC one thing is missing. The Liberals only had a 50/50 chance of winning the last election going into it. If it were not for the actions and words of the current US president, before and during the election campaign, the Liberals could very well have lost.

They did not and Mark Carney is enjoying a rather extended honeymoon, although the Liberal Party is not. That honeymoon will end. It is as inevitable as the sun setting tonight and when it does the Liberals will likely lose any subsequent election to the CPC. You see, the Liberals have been governing on borrowed time for a couple of years and historical voting patterns will make their loss virtually inevitable next time.

Pierre Poilievre knows this. I have questioned his political acumen and instincts in the past but even he has to see that the leader of the CPC will likely be PM after the next election. So if he is that leader he will be that PM. So he is going to hang on as hard as he can, despite the short term negative impacts that will have on the CPC. As an aside, others in the CPC, who have Prime Ministerial ambitions should know the same thing which is why I am surprised that campaigns to oust him have not been more prevalent.

Of course, his hanging on could shake loose more CPC MPs who decide to cross to the Liberals, giving them a majority government. While this would hurt Mr. Poilievre in the short term it would actually allow for more time for the positive aura around PM Carney to become tarnished. Or to put it another way, if we have an election within the next 12 to 18 months the Liberals still have a 50/50 chance of winning it. If the election takes place 4 years from now they have virtually no chance. So the short-term pain would actually be to his advantage in the long run.

I am not saying that Mr. Poilievre is play 4D chess and letting all of this happen as part of some master plan. He just wants to hang on because he likes the perks and he believes, rightly, that if he does he has a very good chance of becoming PM someday. 

There is the wildcard of CPC members not deserting to the Liberals but quitting the caucus and attempting to form a conservative alternative to the CPC. Perhaps an attempt to resurrect a progressive conservative party within Canada. I do not believe this is likely to happen or whether they would be successful if they attempted it but it cannot be discounted and if they do succeed then the next election could be very interesting.

So if he receives even a small majority of the vote in January he will claim victory and stay on as leader of the CPC. He will then try to rehabilitate his image. Incidentally, assuming he is able to do so or he just decides to wait until PM Carney's popularity starts to slide it will take time so I would not expect the CPC to bring down the government anytime soon. He will find a way to allow this government to continue until he believes he can win.

The Federal and Alberta Governments Make a Deal

Or more accurately the two governments have settled on a framework that could potentially lead to a new pipeline being built to the BC coast.

When I first read about it I asked the question: WTF is Mark Carney doing? 

Then I read the agreement, or Memorandum of Understanding (MOU) and I have concluded that no pipeline will ever be built. The reason for that conclusion is the MOU specifically states that the funding for such a pipeline has to come from the private sector and that those very same companies will have to come to an agreement with all of the potentially impacted indigenous peoples to build it.

At this time I can confidently state that this is not going to happen. The biggest reason is there is no business case for a new pipeline. There has not been one for over a decade, whether you are talking about one to the Pacific, Churchill or points east. Most oil and gas industry analysts, who do not work for the industry, are indicating that oil and gas demand, and therefore prices, will permanently decrease by the end of this decade. So considering it will take at least that long to have a pipeline approved, even with the new approval process in the Build Canada Act, and built, that the pipeline will never show a profit. No profit, no business case, no pipeline.

The MOU also holds out the possibility of revoking the tanker ban, although the language around the conditions to do so is quite convoluted, but again private interests will make that meaningless. The waters that the tankers would have to go through to pick up the oil are very treacherous and no insurance company would insure a tanker going through them. Without insurance the tanker company would be on the hook for the entirety of the liability for any accident and they will not accept that risk.

So in the end the MOU is virtually meaningless.

Of course, there has been alot of talk about how the MOU has put the ball into Danielle Smith's court, taking away a bone of contention that she could use to fire up her base and hang on to power. I am not going to repeat all of that here, although I will disagree on two points.

The first point is the peace between Ottawa and Alberta will be short lived. The next battle will be Alberta demanding that Ottawa put up a substantial amount of money to build the pipeline. Danielle Smith promised her voters a pipeline, the private sector is not going to step up to build it, which will leave governments to foot the bill. Alberta does not have the financial wherewithal to do it alone so they will eventually get around to demanding Ottawa to kick in, which means most of the cost. 

The second point is this MOU will not help the Liberals in any way with Alberta voters during an election. During the next election the Liberals will most likely lose seats in Alberta instead of gain any. That was true before the MOU was signed and it is still true.

So in the end it is status quo. There will be relative peace between the two governments for a short period but the Alberta government will go back to blaming Ottawa for all of the ills in the province because that is what provincial governments do when they shit the bed. No pipeline will be built, without governments paying for it. The Liberals will lose seats in the next federal election. 

Who Cares?

With that question PM Carney voiced the frustration that most Canadians are feeling with regard to Donald Trump and his administration. 

Then he followed it up by stating that it was a poor choice of words.

I do wonder if it was as much an off-the-cuff question or whether the whole thing was calculated. 

That sentiment would resonate with most Canadians. The Conservatives, ever predictable, decided to try to make political hay from it and then he walked it back making them look kind of silly and reminding Canadians that when it comes to Donald Trump there is some doubt the CPC can be trusted to fight for Canadian interests.

Or the put it another way the Conservatives failed to read the room yet again. That should come as no surprise. After all there was a poll that came out a few weeks ago that indicated that a large majority of Canadians are very unhappy about what Donald Trump is doing. It indicated that over 80% of non-Conservatives were unhappy but only around 50% of Conservative were unhappy. That is, around 50% of Conservatives are quite happy with what Donald Trump is doing. The Conservatives appealing to their base at the cost of appealing to the broader electorate has become the MO in the last few years. Maybe they believe it will eventually win them an election, and they could be right, but I do know that appealing to a broader audience would almost guarantee them a victory. However, as a Liberal supporter I hope they keep doing what they are doing. It decreases their chances of winning.

The old "elbows up" never meant that the government would fight the Trump administration on everything. It was always going to be about picking their spots. The PM did just that in South Africa this week.

Nicely done. 

Surprising No One Budget 2025 Was Passed

Why does the political class actually believe Canadians really care about the minutiae of what happens in Parliament?

I am one of those who follows politics pretty closely. So here is a brief summary of how the budget was passed:

The Liberals did not give a damn whether it passed or not. They were the only party that was poised to benefit from an election and they also knew that two of their opponents wanted desperately to avoid one.

The Bloc did not want an election either but they were not as desperate so they decided to vote against, knowing it would not come back to bite them on the ass.

Elizabeth May managed to win vague assurances from the PM, providing her with the political cover to vote for the budget.

The Conservatives and the NDP desperately wanted to avoid an election but they did not want to be seen supporting the budget either. So they took the half-assed approach of making certain that not enough of their members voted to ensure their votes did not exceed that of the Liberals and Greens. Hell, the Conservatives literally had two of their senior members hide behind curtains in the House so that they could quickly move into their seats to vote once the outcome was known.

All of this is very interesting and both amateur and professional political commentators have been in a tizzy since it happened.

Monday night, after the vote, I went to my non-political wife to tell her the results. She had seen in the news the week before that there was a confidence vote that could trigger another election. She asked me if we were going to have an election and I said no.

So, when I went to tell her I began giving her the above summary. She stopped me very early and asked "Is there going to be an election?" 

I said "No."

"Good"

"Don't you want to hear the details?"

"No."

And we have not spoken about it since.

For years my wife has reminded me that most Canadians do not care about politics to the point where some do not ever bother to vote. And those that do care tend to have already chosen a side and nothing that happens will probably change that.

So the Conservatives and the NDP twisting themselves into knots Monday night was all for naught. It was a complete waste of time.

The 2025 Canadian Federal Budget

Having read the budget I can say that it did not surprise me. It does not contain any of the poison pills that the opposition was talking about a couple of weeks ago and it is not the progressive budget it would have been if PMJT was still the head of the Canadian government. I stated in this space a few months ago that PMMC would have fit in quite well in the Progressive Conservative cabinet of Joe Clark and this budget proves it. Make no mistake that this is a progressive conservative budget.

As with all progressive conservatives, and all conservatives for that matter, they talk a good game with regard to reducing deficits but when push comes to shove they fail as much as non-conservative governments. This budget did not buck that trend. The actual number given for the deficit this year is an eye catcher but as some have noted if you account for inflation it is no bigger than the average deficit from the last 50 years. At any rate, the usual deficit hawks are loudly condemning the Federal deficit, from a Liberal government, but as usual they are dead silent about the deficits, and some rather egregious mishandling of taxpayers money, from Conservative provincial governments. I am certain that must be a coincidence.

What makes the current deficit a progressive conservative one instead of a conservative one is it is being created by investing in stuff Canada needs. They are borrowing money for big projects and the military instead of just borrowing money to transfer it to the wealthy in the form of tax breaks, which is what the last federal Conservative government did several times in their nine years in power. A progressive budget would have borrowed money to give to ordinary Canadians, who we are told are going through an "affordability crisis".

The amount of money involved is quite impressive and it cannot have anything but a positive impact on overall economic activity. That is not to say that its impact will always be positive but overall it probably will.

My biggest beef with the budget is its measures to shrink the public service. It does not make sense to plan to invest billions but also get rid of the people who will be required to make certain the money is being spent as intended. After all, when this kind of money is being talked about it is inevitable that some will wind up where is should not be. You need people to keep that to a minimum but that is harder to do if you are giving the people charged with doing that pink slips.

As well, these periodic reductions in the size of the public service have always been shell games. Certainly they reduce the size of the public service, for about a month, maybe six. Then the government departments go back to hiring more staff because they realize that they need them. Oftentimes the staff they hire back are those that left during the workforce reduction. When you add that most staff reductions take place as a result of people taking incentive packages to volunteer to leave what really happens is the government gives many employees months long paid vacations.

Really these workforce reductions are just a publicity stunt and it is disappointing that the current government is doing this. I would have thought that a former Bank Governor would be able to figure this out and approach workforce reduction if a different and sustainable way.

I cannot speak about the budget without talking about how it has discombobulated the Conservative Party. It is probably not the reason for their current troubles but it seems to have been a catalyst for the unrest in the party that was inevitable after their election loss in April and Pierre Poilievre' s refusal to step down as leader of the CPC. These things do not go way quickly so it will be interesting to see how this all finally shakes out.

For a first budget I cannot say I am surprised by it. It is certainly ambitious and if they achieve even half of what it sets out to do then it could very well be the transformative budget the Liberals are selling it as. However, there is alot of time and politics to go before we will begin to see this transformation so I would not get too excited about it yet.

I would be very surprised if this budget caused the government to fall and trigger an election. If I am the opposition parties I do not want to piss off the electorate by triggering an early election and fight said election against this budget. Stranger thing have happened so we will have to wait and see but I believe you do not need to worry about campaigning in the snow.

Will There Be An Election in the Fall of 2025?

Short answer: No.

Not so short answer: Anything is possible when it comes to politics but no.

I resolved to stop commenting on the day-to-day silliness of politics in this country awhile ago but the current speculation about a Fall election is just too ridiculous for me to ignore.

The budget will be released on November 4 and the idea it will be defeated and a snap election will occur as a result is getting some media play. This is not surprising of course. Such speculation is worth more than a few eyeballs staring at screens and newsprint and a few clicks on the internet. Or to put it another way it is good for the news business.

The crux of the speculation is the media stating the government is indicating they do not have the votes to pass the budget and the opposition has not stated whether they will support it. Very serious stuff until you apply just a little critical thinking. We have a minority government so, by definition, it does not have the votes to pass the budget on its own. As well, since the budget has not yet been released the opposition parties are not going to decide how they will vote just yet. They will posture and try to maneuver for short-term political advantage but that is to be expected and nothing extraordinary.

So when the budget is released does it mean they will decide to vote against budget and trigger an election?

Well let's look at it from the perspective of all of the parties.

The honeymoon for the Liberals is over, but only by a few weeks, but the honeymoon for Mark Carney continues. He is still the most popular and trusted politicians at the federal level. In our increasingly Americanized politics, where party leaders are the main focus over party and policy, that gives the Liberals a huge advantage. To put it another way, the Liberals do not want an election but they are not afraid of having one. None of the other parties can say the same.

The Conservative Party is lead by a leader who has been severely damaged by the events of the last 6 months. That is something that Conservatives and the media just do not seem to want to admit. Pierre Poilievre lost an election everybody believed he was going to win less than a year ago, losing his own seat in the process. Yes, his party picked up seats but they were unable to prevent the Liberals from gaining seats too, almost to the point of achieving majority government status. Mr. Poilievre is going to need time to rehabilitate his image, if he can and assuming he comes through the leadership review in January, before he challenges for the PM's chair again. He will only get one more chance to do just that so he will want much more favourable conditions before taking that chance.

The NDP is in an existential crisis. They are leaderless, beyond broke and have no party identity to speak of. An election now would result in two outcomes. They would lose what remaining seats they have and be wiped out as a political force at the federal level. Or they would pick up a few more seats, maybe getting back to official party status, but they would be so deep in debt that they would need to declare bankruptcy leading to their elimination as a political force at the federal level in a year or two. Either way, an election now would lead to their destruction. They need time to choose a leader, renew their party and make some money. An election now would prevent all three.

The Bloc cannot gain anymore seats in Quebec. They are at their high water mark. However, the Spring election showed them that they can lose seats in Quebec. So they find themselves in a position where an election will not benefit them with a larger seat count and where an election right now runs the risk of them losing seats. For the Bloc the status quo is in their best interest, at least for now.

So none of the opposition parties are really in a position to fight an election. Their risk of losing more is higher than their chances of making gains. As well, if you add the displeasure voters would have with having to go to the polls less than a year after doing so in the Spring it increases the risk. The election would be fought on who triggered the election and if they vote against the budget it would be a hard sell to say anybody else besides the opposition parties would be responsible. That would provide the Liberals the opportunity to secure the majority they just missed in April.

So in the end the government will table their budget, the opposition parties will shit on it, because that is what opposition parties do, but they will find a way not to defeat the budget in the end. The budget will probably not have any poison pills. It will be different from budgets the Trudeau Liberals used to table but not egregiously so. In the end one of the other parties will say they can support it and that will be that. My guess is it will be the Bloc.

Of course, this assumes that the opposition parties have remotely competent political strategists working for them. If not, then all bets are off.

   

Book Review: The Next Age of Uncertainty

This is a book by Stephen Poloz, the former Governor of the Bank of Canada, that was first published in 2022.

As the title indicates the author argues that the interaction of the five "tectonic forces" of an aging population, technological innovation, increasing personal debt, income inequality and climate change are going to lead to greater economic volatility and uncertainty in the coming decades. He argues that average economic growth with decrease from the current average, that interest rates will be low and that inflation will be more volatile, increasing and retreating much more regularly than it has in the last 30 years.

In the book he describes each of the tectonic forces and he describes how they will impact inflation, jobs, housing and government fiscal policies. He then goes on to suggest ways to reduce risk and mitigate the impacts of the interaction of the five forces.

Some of his suggestions are rather intriguing. Arguing that the current model for buying and mortgaging houses has its roots in the Great Depression he suggests that a new model could be implemented. Instead of the borrower paying off a mortgage alone over the usual 30 years he suggests that mortgages could be structured so that the mortgage is not paid off, the bank will be a partner in the mortgage, accruing some of the equity for the bank while the mortgage holder would receive the bulk of the equity for themselves. In essence the bank would be a co-owner of the house, where the mortgage owner essentially pays rent to the bank, but accrues equity for the future. When the borrower decides to sell the house they will take their share of the equity and the bank will take their share. The author argues that such an arrangement would lead to lower monthly payments, less foreclosures and the ability for more people to be able to afford to buy a home, since they would not be paying off a set amount of money during a set mortgage duration but would be paying the bank for as long as they own the house, whether that would be 5 years or 50 years. It is an intriguing idea and it could very well mitigate the current situation where young people are more and more finding it difficult of afford to buy a home.

One of his other ideas is also intriguing, namely that companies will play a role in assisting their workers in mitigating the risks of the interaction of the five forces. Arguing that the aging population will make it more difficult for companies to hire and retain staff they will have to invest more in keeping them. He further states that companies are more and more adopting the environmental, social and governance (ESG) model as they move to meet the demands of an increasing number of investors who make investment decisions with it in mind. It is interesting that he seems to agree with Mark Carney who essentially argued the same thing in his book Value(s). I am not convinced that this will happen but his argument to support his assertion is a good one. We will have to see.

The most disappointing part of the book is he argues that companies will have to take on the role of helping their employees handle the risk of future volatility and uncertainty because central banks and governments will not have the capacity to do so. He argues that interest rates will be well below the current historical average average so room to maneuver of central banks in cushioning the impacts of that uncertainty will be limited. Since the main lever central banks have is changing interest rates that is consistent with his argument. However, while highlighting the impacts of income and wealth inequality he completely dismisses the idea that governments should raise taxes on the wealthiest. He argues the economic dogma that doing so discourages innovation and is actually counter-productive in raising revenue. Interestingly that assertion has never been tested so it is disappointing that he argues it without providing any real evidence or data to back it up. It is just a matter of faith.

He argues that one way to reduce inequality is a universal basic income (UBI). However, he again doubts its feasibility because of the limited fiscal capacity of governments. Again, higher taxes on the wealthy could be the solution to that.

One thing this book did was help me resolve an issue that I have had with free trade for some time. Anybody who has read this blog before knows that I am not a fan of free trade agreements because their negative impacts on the losers from those agreements. However, I have to acknowledge that free trade does have some positive benefits. I had issues trying to square that circle and this book helps with that. In essence, free trade does lead to great economic benefits but it takes decades for them to be felt throughout the economy. However, it also has great negative impacts on those who work in industries that cannot compete with the same industries in lower cost jurisdictions. That often leads to job losses and economic upheaval for many almost immediately or at least a very short time after free trade takes effect. Further because programs to assist those losers are often token jokes that do not actually help those who lose their jobs it can lead to generational poverty for them. If a parent loses his job, cannot find another with the same wages and benefits of the one he lost, he will have a hard time helping his children in getting out of the poverty trap he finds himself in. In other words, if you are having a hard time making ends meet, for an extended period of time, you are not going to be able to send your kids off to college or trade school to give the opportunity to get out of poverty.

That is my issue with free trade and its proponents. They can truthfully claim that it eventually helps the economy but not before disrupting lives in the short-term, often leading to generational poverty. Their indifference to the losers of free trade is one of the reasons why the backlash towards it, in the last few years, has taken hold. The losers of free trade have found champions and they are systematically dismantling the free trade system that took decades to build.

The Next Age of Uncertainty is a fascinating book. Its central argument is sound and some of its proposed solutions are fascinating and deserve more study. However, it is disappointing that the author does not seem willing to consider all of the potential solutions, including more government intervention in reducing income and wealth inequality.

Extremism Breeds Extremism

Charlie Kirk was an asshole but he did not deserve to die. On the other hand, I am not going to lament his death and I will admit a part of me believes the world is a better place now that he is gone. By the way I thought the same way when Rush Limbaugh finally decided to leave our presence.

What Mr. Kirk, and many like him, did not understand is that his extremism and the rhetoric that grows out of it always leads to increased extremism where political violence becomes much more commonplace.

I have said it before in this space that the political extremism we are currently seeing from the right will produce a similar movement on the left. It is only a matter of time.

Yes it would appear that Mr. Kirk's murderer is not a "lefty" but is instead another right wing nut job, which is something else these right wing extremists seem not to understand. Extremism does not just breed extremism on the other side of the political spectrum it also breeds it on their side. You see, the rhetoric being spouted by the like of Mr. Kirk creates those who begin to believe that the likes of Mr. Kirk are too moderate and therefore have to be removed so that their views can take over as the "mainstream" of their movement. Because you see, extremism does not tolerate "debate". There is no middle ground to be agreed upon so the only solution is to eliminate your opponent, whether they have views diametrically opposed or whether their views are similar to the extremist but they just do not meet a given purity test.

So buckle up, Mr. Kirk was probably only the first one to fall unless the US can somehow step back, which they will not be able to do. Others, on both sides of the spectrum, will suffer the same fate as Mr. Kirk soon enough.

Some might say that I am describing the beginning of a civil war but that is not really the case. Yes, extremists on both sides of the political spectrum will probably target each other and those who they consider not to be true believers but I doubt it will degenerate into general violence. 

My "optimism" on the civil war front stems from two factors. The number of extremists at the edges of the spectrum are not that many. Yes, they are loud, motivated and have social media available to give the impression that they have more power and influence than they have but the vast majority of Americans do not believe what they do and when the violence hits a critical mass the wave of revulsion from those non-believers will destroy the extremists' causes. We are not there yet but that time is coming. The second factor is the geographical location of the two extremes. Right-wing extremists are in rural America while the left-wing extremists are going to come from deeply urban America. If the rural folk try to "invade" the urban strongholds of the urban folk they will be crushed and vice versa. 

So in the end, we can probably expect more events like the murder of Charlie Kirk, with increasing frequency, but a general war between the two extremes in the US is highly unlikely. As well, we can also expect that the violence between the extremes will not abate for quite some time. We are probably just seeing the beginning. Maybe, just maybe, by the end of this decade, we will begin to see the extremism fade into history.

The US's Decent to 2nd World Status is Almost Complete

Let's go through the check list for the US:

• The US is a rich country but its wealth is concentrated in the hands of a very small elite while the rest of its citizens are poor, often desperately poor - CHECK
• The government almost exclusively makes policies for its own benefits and those of the very small elite - CHECK
• The judiciary has lost its independence - CHECK, although lower courts in the US still seem to have some independence all of their decisions eventually make it to SCOTUS, which is firmly in the pocket of the President
• The leader of the government is concentrating power in his own hands while those who are supposed to prevent that either ignore it or are being coopted in that effort - CHECK
• The media has been capture by the government and is no longer completely free - CHECK, this is not completely true for all media but all main stream media has been. There are other media which are free but they are just voices in the wilderness.
• The government has an in-house propaganda organization - CHECK, Fox would probably push back on that characterization of their relationship with the government but let's be real.
• The leader of the government is becoming more authoritarian - CHECK
• The leader of the government is using his office to enrich himself, his family and selected supporters - CHECK
• The leader of the government calls in the military to quell dissent - CHECK
• The country has little influence on international relations and is dependent on much bigger players for what influence it does have - HALF CHECK, the US is still the richest country in the world with the most powerful military but there is no doubt the trend is for countries to insulate themselves from what power it has left
• Elections, if they take place, are not free and fair - NOT YET CHECKED, we will have to wait until 2026 to see whether we can check this one off.

Memo to Mark Carney

You can support every oil and gas initiative proposed by the Alberta government until the cows come home and you will realize absolutely no political reward for it. That is guaranteed. Criminy, your predecessor bought a freaking pipeline and the Liberals were shut out of Alberta during the subsequent election.

However, supporting these initiatives will cost you votes in places that you cannot afford to lose support, namely Ontario and Quebec. You would be giving a moribund NDP a great gift, leading to a split in the progressive vote in Ontario and a Conservative victory.

By all means, support the removal of internal trade barriers. Support the development of energy corridors that will allow Canadian electricity to flow east and west, instead of south. Hell, support railway corridors and high speed rail in such places as the Windsor-Quebec corridor and between Edmonton and Calgary if you want to initiate grand Canadian infrastructure projects. However, do not support pipelines, they will not help you politically and there is no business case for them. They may provide some jobs for a short time but they will be huge white elephants that will suck funds that can go towards projects and programs that will actually help Canadians in the long-term.

Oy Vey! Iran is Showing More Strategic Acumen Than Israel

Surprising no one the United States attacked Iran a few nights ago. They dropped a few bunker buster bombs on three nuclear sites and went home.

I was wondering how Iran would react and I suggested they would be smart not to, instead focusing on Israel. That would have been the best strategic move.

In the end they attacked some US assets in the Region but not before announcing the time, place and nature of the strikes to the Americans and the host countries. In other words, they launched a token retaliation and then went back to pounding their true enemy in this conflict.

It should be obvious that the US cannot really hurt Iran unless they commit much more than what they are willing to commit, including ground troops. That could get lost in the heat of the moment and then the Iranians would play into the hands of their primary enemy by shifting their focus to attacking a country they have no hope of defeating.

They did not do that. We in the West are made to believe that Iran and Israel's Arab neighbours are backwards boobs, completely out of their league with regard to taking on Israel and the US. Iran just proved that they can think strategically.

Too bad Israel has lost that ability.

The only saving grace for the Israelis is Iran does not have any ability to destroy the state of Israel. But then again Israel does not have the ability to destroy Iran. So instead they will continue to pound each other until they exhaust their ammunition. 

They will eventually stop and start to rearm for the next round. The key difference is between then and now the Iranians will acquire nuclear weapons, which the Israelis will be unable to prevent because they wasted their efforts in a pointless conflict this time. 

Iran has had the ability to manufacture nuclear weapons for a couple of decades. They have not done so up to now and took steps beyond being part of the Non-proliferation treaty to prove that they were not making them and allowing outsiders to keep making certain it stayed that way. By just sticking to the status quo Israel could look forward to having a nuclear monopoly in that region for the foreseeable future. They blew that. 

I stated in my previous post that Iran cannot lose strategically in this conflict. The only way they might have lost that advantage was to allow themselves to become embroiled in a war with the US. They have avoided that so now it is just a matter of ending the current conflict and preparing for the next one.

PM Netanyahu and his Government Really are that Blind

We are less than a week into the war between Israel and Iran and something about it has jelled, even when how the rest of it will play out is still unclear. It would appear that the Israeli government completely underestimated the ability of Iran to hit back at their country.

Which is really astounding.

Iran is a country with more than 10 times the population of Israel. It has about 100 times the geographical area, with all sorts of access to natural resources within the country and from other parts of the world (sanctions be damned). It has been preparing for war with Israel for over 30 years, basically since the Israelis bombed one of their nuclear facilities in the 1980s. Further, their good friend George W. Bush eliminated their only threat of land invasion in 2003 when he destroyed Iraq as a functioning country. So, Iran has had the luxury of exclusively preparing for war with Israel since then. It should surprise no one that they did so with a sense of urgency and are now more than capable of hitting back at Israel with enough force to hurt them.

Now Israel finds itself in a situation they have not been in since 1973. An enemy that can hurt them as badly as they can hurt that enemy. As well, since they cannot use their ground forces to bring this conflict to a conclusion they will have to continue to endure the pounding they have been receiving.

The fog of war prevents us from knowing the full extent of that damage. However, there is no denying that there are videos coming out of Israel showing Iranian missiles raining down on them with increasing frequency. The war has become a battle of missile attrition. The Iranians have a limited number of missiles they can fire but the Israelis have a limited number of missiles with which to intercept them. As well, it appears that the Israelis have to use three interceptor missiles to take down one Iranian missile, on average. If that is the case it would seem that the Israelis are burning through their defensive missiles at a faster rate than the Iranians are using theirs.

Now the Americans are involved but they are irrelevant. They cannot stop the Iranian onslaught any more than the Israelis can. Sure they can use some special munitions to try to take out Iranian nuclear facilities but that does not help prevent the continued destruction of Tel Aviv.

If the Iranians are smart they will ignore the Americans and focus on Israel. All the Iranians can do to the US is threaten some US servicemen in bases around the Persian Gulf. They can do real damage to Israel however. This would have the added benefit of showing the US just how powerless and irrelevant they have become in the Middle East.

So how does this impact things in the medium to long-term.

First, the Iranians are going to acquire nuclear weapons, either by making them themselves or by buying them from the Chinese or Russians. They currently do not have them because if they did they would have announced that to the world, mostly to inform the Israelis that they now live under a Mutual Assured Destruction situation. Incidentally, that is why the Israelis want to prevent the Iranians from acquiring them. They have a monopoly on nuclear weapons in the region and want to keep it that way. They have just guaranteed that they will lose it, probably before the end of this decade.

Second, the Iranians and much of the rest of the Global South are going to move towards aligning themselves with the Chinese. Their influence on the global order will increase at the expense of the United States and the West.

In the short-term it is a race to see who will run out of missiles first. If it is the Israelis they will have no choice but to ask for the cease-fire and the old aura of invincibility of the Israeli military, security and intelligence services will take yet one more hit. If it is the Iranians then they will suffer some short-term pain but that will not impact their relations with their allies.

Really, the Iranians can suffer a tactical defeat during this war but not a strategic one. Regardless of how the fighting finally stops the Iranians are going to come out on top strategically. How the Israelis did not figure this out before they started the war is astounding.

Perfection is the Enemy of the Good

Since Parliament resumed I have been watching some progressive commentators lamenting that Mark Carney is "governing from the right". That is not true of course. He is governing from the centre but after 10 years of Justin Trudeau it just seems that Mark Carney is right wing.

I have said it many times before that Justin Trudeau was the most progressive PM, who lead the most progressive government, since his father and he will be the last progressive PM for at least the next two decades, probably longer. 

However, that did not stop many progressive commentators and voters from turning on him as much as the Conservatives did. Scratch that, the Conservatives never liked him but progressives did not take long to join them. 

"But he bought a pipeline" progressives cried. 

He also brought in the CERB and other supports for citizens during Covid. If anybody besides Mr. Trudeau would have been PM they would have followed the old government playbook of shoveling 10s of billions of dollars at big business to encourage them not to lay people off. Of course, those same businesses would have given big dividends to their shareholders and bonuses to the company senior management and then they would have laid off 10s of thousands of workers. The reason why Canada came out of the pandemic so well, economically, is because the progressive government of Justin Trudeau put people over corporations.

"He broke his promise on electoral reform" progressives lamented. He also brought in national childcare, national dental care and other programs that directly assist Canadians in raising their children and taking care of themselves.

His reward in 2019 and 2021 was for progressive voters to desert the Liberals for the NDP in large enough numbers to deny them a majority government. And in 2024, if you believe the polls, it looked like enough would abandon him to allow the Conservatives to form a majority government. Talk about looking a gift horse in the mouth.

It is ironic, after the Liberals got rid of their progressive leader and elected a more traditional, centrist leader, progressives deserted the NDP and the Greens in droves for the Liberals. You guys were one election too late and now you have to live with the consequences.

Progressives had it great with Justin Trudeau. He brought in so many of the policies and programs that progressives had been calling for since Brian Mulroney began dismantling PET's progressive programs. There was no one else besides Justin Trudeau who would have done so. None of those who were pegged as his likely successor, before Mark Carney came on the scene, were as progressive as he was. So his replacement was always going to go back to the right.

That did not seem to matter to many progressive because he was not the perfect progressive. He pursued just too many policies and programs that they did not like so many decided he had to go.

Now, after contributing to forcing him out, they complain about the new government not being progressive enough. *Slowly butts head against a wall*.

Too freaking bad! The Conservatives can be forgiven for not liking Justin Trudeau and his government. It was a matter of profound ideological differences for them. For progressives they were just too stupid and short sighted to realize how good they had it and that is on you if you were one of them. I have no sympathy for you.

Moderate Conservatives Lost an Opportunity

The CPC needed to be humiliated in the last election. That was the only way for moderate conservatives to regain their voice in Canadian politics. They lost it to populist conservatives, who took over the Conservative Party of Canada, when Stephen Harper was elected leader of the CPC.

As a result the CPC has been drifting further and further to the right until they can now be truthfully called Maple MAGA. 

The last election was a golden opportunity to change that. All moderate conservatives had to do what to hold their nose, for this one election, and vote Liberal. If the CPC would have been reduced to less than 100 seats then the grip of Maple MAGA could have been broken. The irony is by doing so moderate conservatives would have been voting for one of their own. Make no mistake, Mark Carney would not have been out of place in Brian Mulroney's cabinet and he would have blended into a Joe Clark cabinet very well.

However, moderate conservatives just could not bring themselves to do that, at least not in large enough numbers to make a difference. The end result is the CPC lost but not badly enough for them to believe that they actually need to change and renew their party. Pierre Poilievre will win his by-election and he will continue to rule his party much like he did before the election.

Or, he could still lose his grip on the party but his replacement will not be any different from him. Maple MAGA has been emboldened by the increase in the CPC seat count so no matter who winds up leading them into the next election their differences from Mr. Poilievre will be nothing more than differences in packaging and style. They will still be Maple MAGA.

Moderate conservatives forfeited their voice in Canadians Federal politics for at least a decade and probably longer.

Election Assessment: NDP

The NDP find themselves in an existential crisis because their latest election campaign was the culmination of more than a decade of bad political decisions. The way they were going it was just a matter of time before they suffered the fate they suffered on April 28.

I cannot really say anything specific about their campaign except that it was apparent early on that they realized they had no chance and just phoned it in. 

All of this started with Jack Layton. I know that he has been deified by NDP partisans because he managed to take the perennial third party and make it the Official Opposition against a majority government. The problem is he did so by making the NDP just another political party and one that has never learned how to win at the federal level.

Before Jack Layton, the NDP had the reputation of being the conscience of Parliament. They always pursued principled positions and they used that to keep the other parties honest, even when those parties lead majority governments. Jack Layton, decided to move away from that and help the Conservatives in their attempt to eliminate the Liberal Party of Canada. His two successors continued that pursuit. The only problem with that is they were unsuccessful and the result of April 28 was inevitable. It was only a matter of time.

That result is a repeat of the 1993 election. After that election they no longer had official party status because they won around 7 seats. At the time everybody who followed politics was upset by this. We all thought they deserved better. They were just caught up in the wave of revulsion Canadians had towards the Mulroney Tories, who were reduced to two seats in that election and would eventually be swallowed by the Reform Party. This time, I do not know anybody who cares about what happened to the NDP, except for the most partisan of NDP partisans. I know I do not care and as far as I am concerned they can be completely eliminated and I would not shed a tear.

So what happens now?

In the short term they will support the Liberals in everything because they will not want an election any time soon. So as long as all of the recounts currently taking place do not reduce the Liberals to under 165 seats the Liberals will be able to govern as if they have a majority for the foreseeable future.

As for the NDP that will be up to them. What they need to do is rebuild their party from the ground up. That is what they did after 1993. It took them almost a decade, and two leaders, to come back to respectability but they did it. However, what I expect will happen is they will try to go for the quick fix. They will try to get back into the game by the next election. If they succeed then that would be good on them but there is a very real risk that they will fail and failure will mean the destruction of the NDP as a political force at the Federal level. 

We will have to see how their leadership election progresses to see what approach they will decide to follow.