News roundup, 25 Sept 2025

- A man opened fire on an ICE facility in Dallas, killing one person and wounding two others before turning the gun on himself. Authorities say that anti-ICE slogans were engraved on bullet casings found at the scene; ironically the deceased and at least one of the wounded were not ICE agents but detainees.

- Copenhagen's main airport was shut down on Monday after a mass incursion of drones; two other airports in the country were shut down on Wednesday for the same reason. The Danish government says that "professional actors" were behind the attacks; they say they have found no evidence of Russian involvement but the fact that they bothered to mention that suggests that they still have their suspicions.

- The Trump regime has retroactively cancelled grants made to municipalities as far back as a year ago for street safety and bike and pedestrian infrastructure, on the grounds that the projects are "hostile to cars".

- Bank of Canada governor Tiff Macklem says that the "safe haven" status of the US dollar is coming into question due to fears about the policies of the current regime, including fears about the continued independence of the Federal Reserve. Nonetheless, Macklem says that the greenback will likely continue to be the world's reserve currency due to a lack of alternatives. No explanation is given in the article about why the euro or the yuan couldn't replace the dollar in that role; perhaps it's as much a matter of nobody wanting to make the first move as anything.

- Wasagamack First Nation in northern Manitoba has ordered all of its employees to be tested for illegal drugs, including cocaine and meth. They say that this is intended to connect residents with addictions resources rather than to punish.

- A body was found just outside a schoolyard in St. Boniface. Police say that the death is not criminal in nature.

News roundup, 7 July 2025

- Torrential rains have caused flash flooding on the Guadalupe River in Texas. At least 69 people have been killed, many of them campers from a Christian summer camp; many others remain missing.

- Foreign investors are increasingly leery of the US. A survey of fund managers worldwide by the Bank of America has found that only 23% of them preferred American stocks over those of other countries, a sharp reversal from the last 20 years. And while the S&P 500 is up over 6% compared to last year, Hong Kong's Hang Seng Index and Germany's DAX are up more than 20%. Of course, abandoning the US dollar as a reserve currency isn't something that can be done on a whim, or without significant disruption in its own right, but the dollar's status is more uncertain than ever.

- The director of one of Gaza's largest hospitals was killed along with much of his family by an Israeli airstrike on his apartment. His surviving children believe that he was targeted; they say his unit was the only one hit in the airstrike. If true, this would of course be yet another war crime; I guess you can file that along with the countless other war crimes Israel has been accused of in the last few years. All hospital directors in northern Gaza are now either dead or detained. Meanwhile there are also allegations that some of the food aid being distributed in Gaza is laced with the opioid oxycodone.

- The Brokenhead Ojibway Nation has obtained land to build an urban reserve in the RM of East St. Paul, just outside of Winnipeg.

- Tataskweyak Cree Nation in northern Manitoba was hit by a wildfire that has destroyed at least 7 homes; meanwhile the town of Lynn Lake has been evacuated for the second time this summer and residents of Leaf Rapids have been warned to prepare for the same.

- Bob Vylan are facing a rash of cancellations of their booked events in response to on-stage remarks at the Glastonbury festival. The Radar Festival in Manchester has dropped them from their lineup. A representative of the festival says that they did not want to cancel them but were "forced", with suggestions that the venue being partially owned by AMG and Live Nation was a factor. In response, other artists, including GENN and The Scratch, are cancelling their appearances at the Manchester festival in solidarity.

News roundup, 4 July 2025

- The Trump regime is trying to shut down the Mauna Loa laboratory in Hawaii, which has been measuring atmospheric CO₂ concentration since the 1950s. Of course this is no doubt because he doesn't like the implications of what the laboratory is documenting. In a better world someone else (like, say, the UN) would step in and take over the lab's operations, but I suspect Trump would actively seek to dismantle it before that becomes a possibility.

- The US dollar has lost over 10% of its value when compared to those of its closest trading partners - the most dramatic loss of value since 1973. Trump's tariffs are one plausible reason. There are concerns about inflation, and even more so, concerns that foreign investors are avoiding the US. 

- California governor Gavin Newsom has signed into law two bills that make significant changes to the California Environmental Quality Act. While the existing law has drawn praise from some environmentalists, some provisions in it have been weaponized by NIMBYs, not only against affordable housing but even against clearly pro-environment measures like bike lanes. The amendments are intended to fix these issues; among other things they exempt infill housing from the Act's requirements for environmental review (since such housing is by its very nature not constructed on pristine land anyway).

- Russia bombarded Kyiv overnight with hundreds of drones and several larger missiles, injuring at least 23 people and causing widespread damage. This would seem to be a lot less indiscriminate than Ukraine's recent strikes on military factories; one could be forgiven for thinking that the real goal is to destroy Ukraine's viability as a country.

- Kilmar Abrego Garcia, who was wrongfully deported to El Salvador in March, says that he was brutally beaten and subjected to various psychological torments while incarcerated at the CECOT facility there.

- Flights in Canada were heavily disrupted on Thursday as bomb threats were called into airports in six major cities. 

- Winnipeg mayor Scott Gillingham plans to seek a second term in next year's municipal elections. 

Volcker fears for the future of America

Paul Volcker, who chaired the Fed through most of the 1980s, thinks the dollar is in trouble:

Former Federal Reserve Chairman Paul Volcker, who is chairman of President Barack Obama’s Economic Recovery Advisory Board, said the U.S. dollar is in danger of losing its role as a global benchmark currency.

“The growing question is whether the exceptional role of the dollar can be maintained,” Volcker told a gathering of New York civic leaders at the University Club of New York last night.

The decline of the U.S. economy, political gridlock at home, U.S. involvement in two wars and “festering” geopolitical issues in the Middle East and Asia have undermined the ability of the U.S. to influence global events, Volcker said.

From Bloomberg (h/t Eric Janszen in this iTulip thread). Not surprisingly, Volcker takes it for granted that this will be a bad thing. But perhaps most interesting is this:

Volcker offered no prescriptive solutions as he spoke in broad terms of the country’s loss of stature.

When a guy who's supposed to be in charge of America's economic recovery admits that he has no clue what to do about it, it certainly does look like that country is in trouble.

So are we out of the woods yet?

In the last couple of days there have been a few good news stories about the economy. The US lost 11,000 jobs in November, which sounds like bad news until you read on and see that the pundits were predicting more than ten times that. Paradoxically, their unemployment rate actually dropped. The paradox is resolved when you realize that the unemployment rate is based on the number of people actively seeking employment... but more on that in a moment. In Canada, we had a net gain of 79,000 jobs. And gold is down, which is usually seen as a sign of improved confidence in the economy (or at least the value of the US dollar).

However, we shouldn't assume that it's going to be clear sailing from here on in. For instance, looking at the American stats, there's still a net loss of jobs... which implies that the drop in the official unemployment rate may be because of people who have given up looking for work and have gone back to live with their long-suffering parents. And the job stats do not necessarily reflect quality; if an auto worker is laid off from a $50,000 a year job, but two fast food workers are hired at $18,000 a year, that is a net gain in employment, but it isn't really a favourable economic indicator. Note too that retail sales on Black Friday fell short of expectations (don't get me wrong, I'm no fan of the crazy consumer culture that surrounds that day, but it is an indicator of public confidence). And on the international front there may still be some shocks awaiting us. Canadian Silver Bug reminds us that the Dubai crisis may not be the last, and identifies Japan, the UK, and Russia as potential trouble spots. And of course, a default by any of those countries would have dramatic effects on the global economy, which might mean big trouble ahead... although I suspect creditors might be willing to renegotiate things before it gets to that point, because they could stand to lose a lot from the secondary effects of such a default.

Some more Roundup for those green shoots

The powers that be have been claiming recovery for some time, of course. Certainly things aren't as bad as some were predicting; the TSX is doing very well, and other North American and European exchanges have generally closed up as well, as of this moment. But many economists, such as Jim Stanford, are wary:

Now Statistics Canada’s GDP report for the third quarter adds to the consensus that the recession is over. Led by public sector stimulus, a surge in auto production (tied to the U.S. “cash-for-clunkers” program, now finished), and a steady expansion of the financial industry, real GDP eked out an increase of just under 0.1% (rounded up) for the quarter. “Annualized” (that is, raised to the 4th power), that means growth at an annual pace of 0.4% (again, rounded up).

Qualitatively, this is within the statistical error of margin of zero growth. So again, while it is more evidence that the free-fall in economic activity which occurred from last autumn through this spring has been (thankfully) arrested, this report does not remotely indicate that anything approximating a “recovery” is underway. So don’t pop the champagne just yet.

Here are a few cationary nuggets buried within the StatsCan report:

• Without public sector stimulus, GDP would still be contracting. Private sector GDP shrank marginally during the third quarter.
• Of course, the finance industry is the brightest light in the private sector — partying like the good old days since the markets turned around in March. GDP in the FIRE sector grew a full percentage point in the third quarter. By contrast, private non-financial GDP (what I call the private “real economy”) was shrinking at an annualized rate of 1.4 percent.
• A $1 billion boost in auto sector output (as Chrysler’s Canadian assembly plants came back on stream, and all auto exports were boosted by the U.S. incentives) accounts for 150% of the total expansion in Canada’s national GDP in the third quarter. So much for the Fraser Instutute’s claim that the rescue of GM and Chrysler was a gigantic waste of money. Never mind that it may not actually cost taxpayers a cent; without the auto turnaround, Canada’s GDP would have kept declining. I doubt that performance will be repeated in the months ahead.

Of course, whether the GDP is growing or not is hardly the ultimate arbiter of whether the economy is healthy, for all the reasons we know so well. But it is important. Yet even by this narrowest of criteria, we cannot say that the recovery has arrived. Without public sectior stimulus (both here and in America), and without the current rebound in financial exuberance (that is quite likely simply the onset of the next pointless boom-and-bust cycle), real GDP would still be falling.

The awkward thing is, if they don't keep up the stimulus, things could get dangerously out of control. On the other hand, if they keep it up for too long, they'll run into other problems -- inflation, deficits that can't be readily managed, and all that stuff. The thesis of the iTulip folks is something called "Ka-Poom theory" (I kid you not). What it is, basically, is that the current crisis will play itself out first with deflation or disinflation (the "ka") in which people sit on much of the stimulus money rather than spending it, followed by major inflation when the economy does recover and people start spending the cash they've been hoarding. I'm not so sure it will play itself out like that myself, though; most of the hoarding is being done by investors, so it will likely just go into long term investments rather than circulating freely through the economy. The situation has to be handled carefully, though.

It's worth noting that the current run the TSX is on is partly explicable by a flight from US dollars. The TSX is quite gold-heavy, and even setting that aside the Canadian dollar is seen by many investors as a potential safe haven, making Canadian-denominated stocks a good investment anyway. And the American dollar is making a lot of folks nervous:

During a recent visit to Tokyo, Timothy Geithner, the secretary of the US treasury, said that a strong dollar is "very important" to Washington, even as the American currency continued its noticeable depreciation.

This is a very curious statement as it seems to indicate that the US treasury is going to defend the dollar from any further slide in the near future. But this is highly unlikely as the US treasury does not have a history of intervening in foreign exchange markets.

It is true that the treasury's Exchange Stabilisation Fund (ESF) can be used to prop up the dollar, but it has never really been used for that purpose. The ESF, which right now has about $50bn, was originally created by the Roosevelt administration in the early 1930s to deal with currency upheavals as the Gold Standard was being dismantled.

The ESF was used only once in international financial markets and that was to defend the Mexican peso in 1994.

Therefore, the treasury's use of the ESF to defend the dollar can be ruled out.

In any case, it would take a lot more than $50bn to stabilise the greenback if there were to be a speculative attack on the dollar, like there was against the British pound in 1992.

Source. I wish the article went into more detail about why the Treasury won't use the ESF; the author implies that there's more factors at work than the fact that the fund isn't big enough to stave off the worst case scenario. Indeed, if it's no good for that, the sensible thing for the US to do would seem to be to use the fund now, to shore up the dollar before there's a big speculative attack.

The country that holds most of the cards, of course, is China. Thing is, they can't just dump their dollars all at once, or those dollars will depreciate before they can get rid of them all. So it's hard to say how this will play out.

If the US dollar does collapse in a big way, the effects on the world economy will be dramatic. Since they import so much energy, they'd be forced to buy that energy with depreciated dollars, which would limit their ability to buy cheap stuff made in China (or Canada, for that matter). But for that reason, a lot of people both in the US and elsewhere will pull out all the stops to avoid such an outcome. We'll have to see how things go...

Calls grow to supplant dollar as global currency

Interesting:

The call to find an alternative to the U.S dollar as the global reserve currency is gaining momentum as France joined calls by China, India and Russia for a review of the world's currency practices.

French Finance Minister Christine Lagarde challenged the dollar's supremacy “in a world that has changed because of the crisis and the growing role of emerging countries.”

The questioning of the U.S. dollar as the key currency for central banks by a leader of a major European economy gives renewed life to the issue at this week's Group of Eight summit meeting in L'Aquila, Italy. The U.S. dollar has long served as the dominant medium of exchange, and tends to dominate the official money reserves that countries hold through their governments and at their central banks.

In the first quarter of 2009, 65 per cent of the world's allocated foreign exchange holdings were held in U.S. dollars, according to the International Monetary Fund. That's the highest in seven quarters.

The push for an alternative is being driven in large part by concern over the weakened state of the U.S. economy.

The country is forecasting fiscal deficits for the next decade.

That's leading large holders of U.S. debt such as China to worry that the U.S. dollar may not be as safe as it once was. In addition, the dollar has been volatile on international currency markets, and the U.S. is running ongoing trade deficits.

Diversification would likely take years, because unwinding large reserve positions of U.S. dollars too quickly would devalue them. And despite concerns about the greenback, it has maintained its international appeal, in part because investors need the value of their U.S. dollar holdings to stay high.

From the Globe and Mail. Predictably, though, our Yankee-loving government is having none of it:

The U.S. dollar as the global reserve currency of choice has been a stabilizing force during the current financial crisis, Canada said on Friday, downplaying calls to debate the greenback's dominant status.

Canadian Finance Minister Jim Flaherty told reporters he did not know whether the U.S. dollar's role as the global reserve currency would be included in the final communique of a meeting between the Group of Eight leaders and a heads of emerging nations in Italy next week.

"It's an issue that we have not addressed other than to say that, in the midst of what is still a significant global recession, it's important that we aim for stability, and stability has been based on the U.S. dollar as the global currency," Mr. Flaherty said via teleconference from Chile.

From the National Post. To be fair to Flaherty (gasp! Did I just say that??) the transition away from the US dollar would be rather difficult for Canada, particularly if it happened quickly. I think we're going to have to consider this, though; the US can't get away with their irresponsibility forever.

US bank failures increasing exponentially

Canadian Silver Bug has pointed out something interesting:

I just noticed that the several banks when under last Friday and I decided to go to the FDIC home page and get a total count for the year. While I was there I decided to look at other years failures to point out the trend and this is what I found

2007 1 lone failure
2008 24 failures
2009 9 already and its only Feb 9th

If this trend continues at only the average of 4.5 every month we could be heading for over twice last years failures, however if we go with the higher number of 1.5 banks a week so far this year we are looking at 78 failed banks.

Of course, they have the FDIC, and they'll have no choice to bail it out, but how long can this go on? There's just too many things that they have to spend money on. The increasing indebtedness of the US should, by rights, have seriously weakened their currency by now, but so far it has not; the US dollar is holding its own against most currencies. Perhaps it's because the rest of the world depends on the US dollar retaining its value, though that can't be relied upon to continue. After all, all it takes is for some large economy to think that other large economies are about to unload their dollars, and the fan will be hit by a larger chunk of shit than has already hit. (Where's Jim Lahey when you need him anyway?)

If nothing else, this might put a stop to America's foreign military adventures for a little while. On the other hand, it could just as easily drive them to try harder...

Is China bailing out the US dollar?

It's looking that way:

China has resorted to stealth intervention in the currency markets to amass US dollars, using indirect means to hold down the yuan and ease the pain for its struggling exporters as the global slowdown engulfs the economy.

A study by HSBC's currency team in Asia has concluded that China's central bank is in effect forcing commercial banks to build up large dollar reserves, using them as arms-length proxies in a renewed campaign of exchange rate intervention.

Beijing has raised the reserve requirement for banks five times since March, quickening the pace with two half-point rises in late June.

This is having major spill-over effects into the currency markets because banks in China have been required over the last year to hold extra reserves in dollars rather than yuan. The latest moves have lifted the mandatory deposit from 15pc to 17.5pc of total lending since March.

From here, via this iTulip thread. I suppose China has to keep the greenback afloat so that the Yanks can still afford to buy their products, but how long can this go on?

The peg precipice

You know all those countries (especially oil producers) who have their currencies "pegged" to the US dollar? Well, this is starting to be a problem for them:

Pegged exchanged rates prevent those countries from raising interest rates to keep inflation under control. Instead, to maintain the exchange rate, they have to match U.S. monetary policy. Interest rates in the United States are highly stimulative, however, designed for an American economy struggling to avoid a recession - not a Gulf country whose coffers overflow with oil money.

So emerging market demand continues unabated, even encouraged, further exacerbating the inflation problem that governments around the world are scrambling to contain. Qatar's inflation is running at about 14 per cent. Egypt is at 19 per cent.

The average for the region just two years ago was a mere 2 per cent.

From here. Furthermore, Saudi Arabia is experiencing serious inflation; depending on who you believe it is anywhere from 3.4 to 10.5%. I'm more inclined to believe the latter, myself. The thing is, if this starts really hurting the citizens of these countries, they might unpeg their currencies, in which case things could get very exciting indeed:

"If several dollar-pegged currencies were revalued, we could expect to see some panic selling in the U.S. dollar, further destabilizing the global economy," she said.

Such speculation has prompted politicians in the United States and the Gulf to frequently deny this would occur.

So what happens then? Well, I suspect that America's ability to buy oil would be severely compromised. It's not hard to guess what that would mean. It would get pretty awkward for us as well, given our dependence on the US market. Just how it would play out is anyone's guess (plenty of speculation happening here if that's your thing.

A sinking feeling for the (US) dollar in China

SHANGHAI -- On a frigid winter afternoon, an old dumpling of a man with buzz-cut hair was holed up in his usual spot, the corner of a busy bank lobby here. He reached into his beige fisherman's vest, pulled out a wad of bills and turned to the people hovering over him waiting to trade currency.

There was the young woman with 40,000 Japanese yen to exchange. Another had a stack of euros. Then an elderly couple, each clutching a handbag, sidled up to the man and asked if he would change their U.S. dollars into Chinese yuan.

"No, I don't want dollars," he snapped, shooing them away with a wave of his pudgy hands.

Source. Via iTulip.com.