Farmer Diaries

I suspect that the problem is that the world is looking at a new set of conditions, in a way that we have never had to confront them in the past; The USA which until recently was the dominant economic entity is being overshadowed by the emerging economies; yes the US economy is still three times as large as that of China ($15 trillion vs. $5 trillion), but what is important is the rate of change, zero growth Vs. 10%, and the dynamic of resources which for the first time are considered a store of wealth (Chinese pig farmers and their copper plates). For America the story is asset deflation, you cannot have internally generated inflation when credit is contracting at an annual rate of 5% per annum, by definition asset prices have to fall, as the required leverage has to fall to meet the bankers' maximum asset exposure. Banks have been asked to reduce leverage, and as a whole have done so (it helps that they've not had to realize their portfolio losses, but I digress). ...

I must admit that I am a closet conservative, not that this is going to be a huge surprise to Ms. FitN, she knows what I am made of! I was never terribly impressed with the Conservative party, but hey, couldn't be worse than the Liberal Party headed by Stephane Dion (Now replaced by Micheal Ignatieff). The Conservatives were elected on a platform of small government and non-interference (although they do have a "bible belt preacher" attitude). Canada is somewhat peculiar, in that historically it has been the Liberals (left leaning party) that have reduced expenses and balance the books. Between 1995 and 2006 that is mostly what they did, they were very clever, the Federal government cut its portion of funding in joint provincial/federal projects -- the province taking on the burden of these obligations with the commensurate increase in provincial indebtedness. Imaging the Prime Minister Harper's (Conservative Party) dilemma when the Canadian economy, like the rest ...

so, what have we learned in 2,063 years ? "The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance." - Cicero - 55 BC evidently nothing... Thanks little sister for this enlightened thought

My dad just came back from China, board meetings and a bit of sightseeing in the Yellow mountains. It my dad's 10th trip to China over the past decade, me I've only been twice. Anyway, again he was amazed by the vitality of the city, its energy, its growth, its continual building process. apparently the Bund is currently undergoing massive upgrading in preparation for the 2010 World Expo in Shanghai. Various commentators have been commenting on the growth of China, which this year exceeded 8%, and my dad concurs from the ground, but many more are worried about the Chinese credit expansion, among them mis Michael Petttis a Shanghai based professor and blogger . Over the past few months he has been discussing the credit expansion in China that has found its way, in greater and greater propertion in the the real estate sector. This morning an FT article discusses the Shanghai property market as having some level of over capacity; in fact it compares New York which is percei...

This afternoon while waiting for one of my clients to show up, I was "perusing" the internet, specifically the site for David Frum , a Canadian expatriate, famous for being a speach writer during the W. administration, and a Republican commentator. David linked to the web site of one Laura Ingram , a Talk Radio personality (according to her Wiki profile) on the role of Sarah Palin in the Republican party. One comment in particular was rather interesting, David alluded that Palin missed the boat in her book, it is a "tell all" revenge tom of the usual DC kind instead of being her opening salvo of a policy discussion. As an example he reproaches her the popularization of the "Death Panels", her well know comment on her Facebook page, when no such panels exists (End of life counselling). Now most Republicans know full well that the death panels were a falsehood, in fact, end of life counselling is an important part of the health care system, making sure th...

Yesterday afternoon I left a meeting in the western part of Montreal, and decided that it was the right time to get the H1N1 vaccine. On monday I had checked what was the most convenient local to get the shot, it was at Place Alexi Nihon, a 1960's shopping center near Montreal's old hockey forum (now a cinema). I arrived at the vaccination center at 16:00, at 16:33 I was all done! Let me just say that I am part of a "at risk" group because of asthma, two years ago I got a very bad flu during a trip to the Middle East. eventually on my return to Montreal I had to spend the better part of a day in one of Montreal's premier respiratory clinics, it scared the crap out of me, I still remember the technician's look on his face when he reviewed my blood oxigenation level... So I arrived at the vaccination clinic at 16:00, there were a number of cordonned off segments, the first triage was to determine if I was eligible for the vaccine, I showed my health insurance ...

Well Ms. FitN proved me wrong, she baked more than 150 pretzels to celebrate the 20th anniversary of the fall of the Berlin wall. Don't get me wrong she's an extraordinary women (after she can stand being with me), she is also tenacious and has once again proven her mettle! So if you have 10 minutes today, pay her a visit at her gallery !

Please! Like every guy in the business I follow the business news, and most of the time they get it wrong, still there is rarely any mea culpa. The latest is the "beat" estimates on earnings: Where 58% of the S&P 500 companies beat their Q3/09 earnings estimates. Don't kid yourself that's a load of manure! A parable may be a useful tool here: Let say that you have a daughter, and as a new years resolution she tells you that last year she got an average of B-. This year she will aim to get a B average (just work with me here). Come June your daughter tells you that the year is difficult that she's didn't do all her homework and that the teachers are more demanding, so she will not get an B, but she will get C- or even a D. She works real hard, and at the end of the September she tells you that she now things she is going to get a D+. At the end of the year her grades arrive and she's got a C-. Granted C- is better than a D+, but its not a B-, ...

Another rant... I think that a fable would be the best way of attacking this problem, it concerns three analysts, each looking at very different segment of the financial market, let us say that the first, we will call him the Bear, is an old school macro economist, nice guy, not too much respect at the farm from the other animals. However, those who listen to him have done reasonably well; his view is similar to many market observers, the U.S. economy is still in trouble and that recovery will only occur once deleveraging has occured -- and it has not started yet. The second is the Bull, nice micro economist, nice guy not much introspection -- let just say that his prognostication was that by the end of September 2008 the worse was over, and today everything is fine, growth is hear for good, and the stock market is not overvalued. In fact, we are about this is just the beginning. You see labor productivity in the U.S. is growing through the roof, yes sir, its simple the single large...

I love journalists, always looking for the easy answer the glib comment. As everybody knows we are in the mist of a flu epidemic (pandemic maybe?) of global proportion. Canada, with its socialized medicine determined that it would need 8 million vaccine doses for the entire population (basically because 2/3 of Canadian think they don't need vaccination). Needless to say with the recent death of a 13 year old boy in Ontario every parent is freeking out. Yet the authorities are not making the vaccine available to children, the government in order to maximize the effectiveness of the vaccine has targeted specific segments of the population, which do not yet include children. Journalists at the CBC know that the vaccine can only be administered to a certain number of individuals at anyone time (you cannot vaccinate 8 million Canadian in one day!) so there is a queuing system to optimize the delivery process: First, medical workers as the first line of defense it is only reasonabl...

About 10 years ago I was living in Singapore, and working in the aerospace sector. At that time getting good deals were difficult, these were the days when Thai Airways finance a bunch of Boeing B747 with loans priced at 12.5 bps (e.g. 0.12%) over LIBOR (the best rate banks lend to each other), it marked a low point in loan prices, it made my life a misery trying to find interesting deals. One evening while in Tokyo with friends I met the head of one of Japan's premier aerospace banks, these guys were one of the biggest players in the business, they were drowning their sorrows because they could no longer bid on new business, they had effectively been shut down to new business until the new financial year (1998). They bemoaned their poor luck (no new business meant very small bonus), as their bosses even asked them (desperately) to reduce balance sheet usage -- get rid of loans at least until the turn of the year! Intrigued I called them up the next day (Japanese despite mind nu...

Thursday night Mrs Frozen in the North and I were driving back home from the office, the congestion was rather bad and so we deviated from our normal route to take an alternative route which took us up Peel Street in Montreal. For those not familiar with this street there are a few "Chi chi" restaurants and a surprisingly large number of toy cars (Ferrari, Mercedes AMG, etc), in front of us a little Korean import was having a hard time "waking up" to the fact that the light had turned green, so I flashed the guy, he was not offended, clearly his mind was elsewhere. He we driving distracted I presumed that he was talking on the phone or something, anyway because of his distraction we missed the green light at the next intersection. Once that light had turned green he was again driving distracted, and at one point started weaving a bit until he hit a parked car, and you guessed it he hit a beautiful black Ferrari... we didn't stick around to see how that turn...

Last night Mrs Frozen in the North and I drove up to the cottage. Now that we are here my guess is that Mrs FitN would have rather stayed in Montreal, you see, despite heavy rain last night there's still lots of snow on the ground here. Yep snow, the white stuff, thermostat is suppose to rise to 15c in Montreal, it is still Zero here (you see the white stuff behind the sail boat!!!) Anyway, a quiet weekend at the cottage since it is still raining. Our cat (Hoover) is also disappointed, not a fan of the snow (he grew up in Singapore) he was push-out the door twice today to "take care of business" I am confident that he's now fast asleep on our bed. Despite the weather, the motorway was jam packed last night, we left Montreal at 20:30 and despite this late departure there was much traffic. Still its nice to see winter at our doorstep, it makes a change from the rainy summer we have had. In fact, the weather has been so bad that we've had a bear invasion near ...

Ms. Frozen in the North and I enjoy two reality shows: The Amazing Race and Survivor, the first where contestant race around the world the other where they are left stranded on an Island, a-la-Robinson-Crusoe mold. Last Sunday while watching the Amazing race the ignorance of the average American amazed both my wife and I, the contestants were given a picture of a women waving from an official car, and they had to figure out where this picture was taken. Immediately, my wife and I recognized Jackie Kennedy -- wife of JFK, but none of the contestants recognized her! Not one, not even the "old guy" on the show. The contestants were in Burma (there virtually every cab driver could identify Jackie and could also tell the hapless Americans that the picture was taken in front of a famous hotel in the capital). Later on the contestants were told the head to the tallest building in the Persian Gulf, one contestant actually asked for a flight to a country called the "Persian ...

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Its not for a lack of desire, its just been a little busy over the past few days. This is a short post, yesterday I had a bit of a China Syndrome episode. It seems that last week I spilled a soft drink onto my keyboard, nothing really, but yesterday four keys were operating with some difficulties. I called the help desk and they told me to fill a requisition and that something would show up in a few days/week -- hardly satisfying! On a whim, I asked the computer tech on the trading floor (where I exist on the edge) if he had any idea where I could get a keyboard fast! He bent under his desk and pulled out a brand new keyboard. Working in a dealing room where each trader has between 5 and 10 screens (we look like NASA) we order about 10-20 new computer per month. In the past we would only order the computer (no keyboard or monitor), but about two years ago, we noticed that if we ordered the a keyboard it was cheaper... than if we just bought the machine. The impact, we have lo...