Great article Peter,

I say we go to a general strike! We did it in the 80's in BC, it was called "Solidarity", remember? This is our money they are messing with, and we have a right to say NO!!

Wake up Canada, stop this crap, stop it now!!

I will not pay another penny of income tax, until this charade stops. And trust me, I am in a position to not pay tax on my earnings!! She is all tax free from here on.

Canadian Citizens, get some backbone.

BIG BUSINESS, get on your knees, you are done. Time to get back to reality.

You all belong in the same prison as Conrad Black!!

taxinapothole, stop being so bitter. You still have the same dollar you earned in 1954, in your wallet. Take that stuff out and spend it, for goodness sakes.

And there's nothing wrong with "giving" money to banks or big business. They pay it back. They're a better risk for us taxpayers than some homeless people walking the streets. Whatever we give to them, its gone.

Problem solved, next story.

On the CBC new American Trillion dollar bankster bailout article I wrote this this morning....

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This is generational warfare committed by a band of criminals on future generations who do not as of yet have a say... if they ever will.

Its just another form of slavery without all the costs and troubles for the slave drivers benefiting from the devaluation of each dollar we earn on our paychecks through the printing of ever more money to bailout the so called 'to large to fail' bankers and their manipulation of our real economy through the bankers hedge fund leveraged debt bloated paper transactions that leach out all true value from our economy to support their never ending quest to monopolize all power through the merger and acquisition of our entire economic base with their ill gotten paper gains.

I say we ban all derivatives and all trading of paper on paper, because it is nothing more than a system with no real economic production that corrupts the whole economy. We should let the banks swim in their own investments and liquidate their assets in bankruptcy court like any other company according to the rule of law... and let the local credit unions pick up the job of liquidating the economy through access to their local banking services.

The time of the banksters needs to end now, or future generations will be like Germany after WW1 in their response dealing with this in future years... when it is seen how they were sold into a life of poverty to bail out the likes of todays investors, voters, banks and the people that run them.

IMO this is the Rubicon crossing for the babyboomer generation and their bankers minions... the dice have been rolled.

The ABCP has an impact that goes far beyond 2000 financiers. Canfor has ABCP with an origional pricipal value of $81.2M US$ (per 2007 annual report). Unlocking maybe 60% of this through the agreement you mention will help keep Canfor alive in hopes of the market turning around. That keeps ALOT of people working in general and in PG in particular.

The irony is that the principals of supply and demand (as they tell us) actually have no principles at all.

The anyone else get the feeling that there is to much wrong?? Can all this be fixed when all the tax payers surplus money is being shared among the wealthy in hopes of creating jobs? Does anyone else feel scared of the future? I can barely bring myself to watch the news anymore. All it is, is more bad news. I look at these people in all levels of government and cringe.

Sorry for any spelling errors :}~

Im scared too. Its always worked out in the past but I really worry that one of these times its not going to turn around. I dont think that this is that time but it could be. Our lifestyles have become unsustainable.

I really believe now is the time to ensure your kids are ready. Teach them how to survive. How to grow tomatoes or kill a deer. A combination of higher education and 'back to the basics' will help ensure they have the skills to survive.

If the economy is so bad how come there is always a line up for passports? Seems the is a lot of people still have money for travel.

Well said Peter!

Interesting article but in specific terms, who exactly are the "bankers" and the "financial elite"? If it's so obvious that these people are taking all of this money without any benefit to the general public, then surely it would be easy to identify them would it not? Are we talking about the teller at the local TD branch? The loan manager? Your financial planner? Who exactly? Why do all of these people seemed to be cloaked in so much secrecy?

My humble opinion is that the whole story reads like a mystery novel because it's impossible to prove a single thing that is being written. It's all theory and fables, except "banksters" and the "financial elite" have taken the place of rabbits and giraffes.

I think this whole mess comes down to a few relatively simple things:

1) Many big businesses (in sectors critical to most everyone) made ridiculous business decisions.
2) Many "average joes" (the victims in the article above) made ridiculous personal decisions in regards to their own consumption habits when compared to their income levels.
3) Governments are now making ridiculous decisions to bail out the above noted parties instead of allowing the natural cycle of accountability to occur.

Indeed, there is plenty of blame to go around and it's not just guys wearing fancy suits. Some of the problem can also be attributed to guys wearing blue jeans and politicians more worried about votes than doing what's needed, which is letting some companies die and letting some people lose what they have. Tragic but that's the only thing that will solve this problem. The equilibrium needs to be restored and nothing that is being done today will do that. In fact, it's only making it worse.

Oh and for the record, no I'm not scared. Tentative about certain decisions? Perhaps. A reduction in my risk tolerance for investments? Maybe. Scared? Nope.

An excellent article, Peter!

The bottom line.....what can be done to make the billions of dollars in the EI fund available to unemployed workers who paid the premiums throughout the time they worked? Don't put your faith in politicians! The 5-week extension in benefits is an obvious indication of their lack of concern or interest.

In 1982, during the worldwide economic downturn, I was laid off from an electrical apprenticeship and after 22 years of working full time. I was devastated and it changed the way I have lived the rest of my life. Stay out of debt...the banks are in bed with the politicians!

I am now retired but I know how so many workers, who are now out of work, feel. I have been there. I eventually attended CNC to obtain further education, at the age of 45, which led me to a well paying job and a pension I now appreciate in my retirement. It was an extremely tough time that cost me my marriage. Hopefully, those people who are going through tough times now are receiving support from the special person in their life.

There are many to blame for this meltdown.
Mortgage lending practices, debt rating entities, financial engineers who engineered crap securities, CEO's that had little idea of the risks they held, currency fluctuations, wars, $150 oil, Fraud , trade practices,etc...

I am amazed at how in the space of 6 months, the world goes from flying to crashing and very few saw it coming {Except
maybe eagleone}. Not presidents, not prime ministers, not sheiks, not many if any CEO's, not investment banks, not mutual fund managers, not investors ,etc. There were some exceptions, but there are as many that think the world is flat.

The numbers being used to "stimulate" the economy are surreal. This is a world altering event. There is some old saying about crises being an opportunity. With the current volatility, missed priced assets, and governments that are making it up as they go along, there has to be opportunities. I go to sleep trying to think what they are.

Those who say let them all fail....be careful what you wish for.

"Those who say let them all fail....be careful what you wish for"

There is a rather significant difference between wishing for them to fail and coming to the realization that this is what is required to ultimately address the issue. One can understand the latter without wanting to see the former.

I use to say I was glad I'm not a hot tub salesman working on commission only. It will be interesting when people realize what they can live without.

When I was growing up. it was one tree, one man, and one chain saw. It took a long while to take down an acre of trees. But, the Canfor's of the world, hooked up with modern technology, and brought in all this high tech equipment! With all this high tech equipment, they were able to rape our forests at alarming speed, with less people, and making more profits. Huge profits. For who??? For them, not for you and I. More money for them, less for you and I. Wake up Canada. The politicians and big business belong in JAIL! It is time we put them there!!

and one more thing,"beesknees" you are either a politician, or are sleeping with one, to make a comment like that. You have not a clue, or you have way too much money for your own good!!

Think about the "big picture", taxinapothole.

In 1900 it took half the population of North America working in agriculture just to feed themselves and the other half that were doing other things.

What percentage of the population does it take today to do the same thing? Last time I looked it was something like 3%!
You can look at any industry you choose and you'll see exactly the same thing. The "jobs" are disappearing. Trying to buck that trend is completely counter-productive. There is nothing to be said for taking ten hours to do something by hand that a machine could do in ten minutes, unless you believe the whole purpose of man's existance is to be a 'drudge'. That "work" is the desired "end", instead of merely a "means" to another "end".

The one guy with the chainsaw replaced two guys with an axe and a cross-cut saw.

The auto plant that used to employ thousands on an assembly line is down to a few dozen per shift, with robots doing most of the jobs that were previously done by "manual labour".

But were those people with that cross-cut saw, or even with the chainsaw, or labouring all day on an assembly line "happy in their work"? In a pig's eye they were! They were 'on strike' every chance they got for 'better working conditions' (less work, for more money).

But look at the 'profits' that so many on here are always so conviced are always the great evil. Where are they for Ford, and GM, and Chrysler today? Where were they for all the other car companiies that used to exist, but no longer do? Studebaker, Nash, AMC, Packard, Kaiser, etc., etc.

Where are they for Canfor, and Weyerhaeuser, and West Fraser? Who are all swimming in "red ink". Where were they for the outfits that preceded them? If there was so much 'money' in what they were all doing, why did they sell out?

The fact is there WASN'T that much money in what they were all doing. Ever. And the further FACT is that 'profits' as a percentage of "sales volume" have been in steady decline, on average, for over a hundred years.

Go back and look at the size of dividends that were paid prior to World War One, and compare that to the size of dividends any "blue-chip" companies, if there even be any such thing anymore, pay today.

The "big" have got bigger as a matter of survival. But even if (when) they were all consolidated into "one" big "forest company", say, and even if (when) that "one" big "forest company" was owned by the "government", there still wouldn't be any improvement. You want to know why?

Because of a "flaw", a corrctable "flaw", in the way 'accounting' works in its relationship to 'money'. It charges into prices figures for which no 'money' is being distributed. Because the only way 'money' can be distributed, at present, is through "employment". And we are eliminating "employment" as fast as we can. The correction is to change the 'accounting'. Not "make work" projects that'll only make the situation worse than it is already.

OK socredible, you have refered to the "flaw" now on about one hundred posts and I still don't understand what you are trying to say. Show us an example of how this accounting should work.

The taxinapothole post refers to the big business changes to the way things work and I agree there is a problem.
There is the way of which big business operates each of its many plants, but more importantly is the way all other systems work with these big companies.
The other systems include governing of them, financial structure and influences of marketing and prices.
It is obvious that governments have a difficult time in regulating these giant corporations and hence the public complaints of lack of benefits which flow to the people. That is a whole story by itself.
The financial system which large public companies operate with cannot by their structure do anything but exhaust the resources it uses and convert them to returns to shareholders. It wouldn't work otherwise. Its because the shareholders are not local that this causes the wealth to be transferred from where the resources are to where the shareholders live, in distant places.

The corporation therefore has to deliver the wealth to its shareholders (or its management will be fired)and have no regard for a specific plant, its workers,the community or even the province or country for that matter.

Case in point is the purchase of southern US forest companies with the softwood lumber refunds to Canfor and West Fraser. Canadian profits going to the US to add to our competition while shutting down the plants that made the profits, here in BC. Good for the corporations, but not good for us people in BC.

This leads to the third point about markets and market share and why this corporate conglomeration needs to stop. The race to increase market share by each large corporation by increased production and takeovers of as many competitors as possible has supressed prices while weakening the few remaining competitors. Nothing good can come of this for anyone but the last corporation(s) left standing.

Woodchipper, in the WHOLE economy, with ongoing "labour displacement" through increasing technology, automation, mechanisation, etc., (including, now, outsourcing Canadian manufacturing jobs to low wage countries), the "working capital" bank account balances held by Firms are increasing in respect to the bank account balances held by Consumers.

Firms lay people off, or otherwise cut the amount of 'money' they pay out as direct labour costs, which are the distributions of 'money' the majority of people receive as 'incomes'.

But because their operations become more sophisticated and "capital" intensive with automation, etc., they have to retain more money as 'working capital' to meet their ongoing overheads ~ equipment payments, insurance, fuel, etc., etc. And, though it is not a 'distributed', or 'cash' item, a larger part of the price of their products include allocations for depreciation charges. Which distribute incomes to no one.


This fall in direct "labour" incomes relative to "capital" charges results in overall Sales falling in respect to the overall 'costs of production' being "expensed" to the point of final retail.

(In double-entry business accounting, 'Profit' is NOT Receipts - Disbursements as in "cash" accounting, but rather is Sales - "Expense" , merely an accounting figure that will be closed to the Balance Sheet to determine the operational increase of Assets over Liabilities. "Expense" are the 'costs of production' pushed forward in time through accounting convention, so that they can properly relate Sales to Investment.)

Sales and production are thereby suppressed consequent to the fall in the rate of profit, preventing the attainment of actual productive potential and the satisfaction of real demand. And we have a 'financially' induced 'poverty' in the midst of a potentially physical plenty.

But instead of trying to correct the 'figures' to continue to produce and distribute the 'plenty', we go the other way, and try to create a physical poverty to match the figures!

The problem is not difficult to correct. It involves having a proper set of National Accounts set-up much in the manner of the accounts kept by every business. Where we show, for the country as a whole, regardless of "ownership", a National Balance Sheet. Where, just as in every business,Assets = Liabilities + Capital. "Capital" in this case being
every Canadian's equal
"equity" as a citizen in the country as a whole.

From this Capital Account, as it increases by the normal increase of national Assets over national Liabilities, (or, physically, the ongoing
excess of national production over national consumption in any given fiscal time period), there can be an ongoing periodic distribution to
all Canadians of 'money' that has not been 'costed' into production.

Both
directly as a National dividend, and through "compensating" prices to allow merchants to sell retail to Consumers below their "financial" cost, yet still remain profitable.

What this does is allow "real demand", for real goods and services, the delivery of which is the only sane purpose of any economy, to happen. Right up to our actual capacity to produce, or the satiation of "real" demand, whichever comes first.

We are, through augmenting presently inadequate Consumer incomes that are "earned", increasing "effective demand" (the ability of the public to pay the prices asked for the things they want that CAN be produced), and enabling our industries to fully satiate real demand for their products. Which puts people back to work, and allows for a genuine 'prosperity' instead of the 'inflation' we're going to get in its place when 'stimulus' money (which we'll have to repay in future taxation) enters the economy.

Very good post woodchipper!

"Corporate conglomeration" does indeed need to stop. But not because it "suppresses prices". For who amongst us, as Consumers, and we are ALL Consumers, is advantaged by 'higher' prices? No one that I know, and that's for sure.

Rather it needs to stop because it is inherently wasteful, and even if the prices we pay 'now' are lower, the prices we WILL pay 'later' are not only going to be higher, but fewer and fewer of us will have any incomes from which TO pay them.

So long as business profit is falling in ratio to the volume of Sales, AND, when business profit is rising it is comprised of dollars that are continually 'buying' less as EACH dollar loses its purchasing power, so long will "corporate concentration" continue to be a major feature of every economy.

Legislating that it stop simply will NOT work on its own. There has to be a way to restore the 'profitability' of the smaller producer by increasing the "effective demand" for his product. While at the same time, Consumers, as a whole, have to be fully credited through lower prices and incomes not connected to "employment" as actual improvements in productive efficiency continue apace.

(Woodchipper wrote:-) "The financial system which large public companies operate with cannot by their structure do anything but exhaust the resources it uses and convert them to returns to shareholders."

Socredible replies:- The first part of that is absolutely correct, they do exhaust the resources far faster than can ever be called 'sustainable'. But the latter is what "large public companies" are "trying" to do, though it's highly questionable whether they are actually achieving it.

The trend amongst many "large public companies" that own timberland in the US and Canada is away from trying to live off their 'income' from operating forest products mills, towards living off their 'capital', by progressively liquidating their land-holdings themselves.

Here, we see it with Timberwest, Brookfield, and Western Forest Products on the Coast.

In the USA, Potlatch has recently spun off its mills, and is now going to be a "real estate investment trust". Pope and Talbot placed its US timberland holdings into a separate "limited partnership" years ago. Other firms there have similarly moved to separate their timberland holdings from their milling operations.

And even where there are no private timberland holdings, we've seen many major fully integrated companies start to de-integrate ~ putting pulp mills into separate entities, contracting out as much of various phases of their operations as they can, etc. The reason is that these companies' 'profits', despite their position in trying to gain market dominance, continue to elude them. As a percentage of sales, they continue to fall.

This is not anything new. It was noted years ago by the late Gordon Gibson, Sr. at a shareholder's meeting of MacMillan Bloedel, where he took then MB Chairman J V Clyne to task for building a multi-national "empire" which was less and less profitable with every new acquisition.


(Woodchipper continues:-) "It wouldn't work otherwise. Its because the shareholders are not local that this causes the wealth to be transferred from where the resources are to where the shareholders live, in distant places."

Socredible replies:- It really doesn't matter whether the shareholders are 'local' or not. They may have a greater interest in what their company is actually doing to the land itself if they are living in the same area, but the fact remains that the 'profits' are still elusive.

(Woodchipper continues:-) "The corporation therefore has to deliver the wealth to its shareholders (or its management will be fired)and have no regard for a specific plant, its workers,the community or even the province or country for that matter."

Socredible:- NO. The corporation has to be profitable TO MAINTAIN ITS 'CREDIT' WITH THE BANKS, without which it cannot continue to operate. This is what dictates what will be done. Not the 'shareholders', who, for the most part these days don't see much in the way of 'dividends' from most forest products companies still in the manufacturing end of the business. The ones that DO still pay good 'dividends' are doing so by liquidating their 'capital'.

(Woodchipper continues:-) "Case in point is the purchase of southern US forest companies with the softwood lumber refunds to Canfor and West Fraser. Canadian profits going to the US to add to our competition while shutting down the plants that made the profits, here in BC. Good for the corporations, but not good for us people in BC."

Socredible:- There are many possible reasons why those companies invested in the US South rather than here. But lets just suppose they had invested here instead. What would they have done? If they re-built their mills would those mills have employed 'more' British Columbians afterwards, or 'less'? Would they have used 'less' of the forest resource through improved recovery, etc., or 'more' of it, through the need to try to recover the cost of their investment in a market that's then even more glutted with lumber than was previously the case?

The context in this debate as originally posted by taxinapothole is largely centered about the local consequances of distantly controlled public companies.
Fact is that this current industry structure does not actually serve local or provincial or even Canadian interests. A long book could be written about this by itself. Perhaps this is so complicated that it is accepted as the only way things can work and therefore the defense of this whole system prevents the movement towards change.
I understand the basis for your rebuttal as it is largely the same position which our BC government has used to get us here to this point.
Only now, at a point when our predicament is seen and the pain is felt that the questions of how and why this has arrived are being asked.

It is true that we will not change the systems (markets,financial) and have limited influence on governance which are inherint to the structure of the industry ownership we have, but we must look at ways to change the ownership structure itself, thus allowing for the transition to local/provincial focus and commitment and therefore local benefit.

I have no illusion that we can change everything quickly, but this is an opportune time to change what we can that can improve our overall situation over time.

We can either accept and continue to follow as the government has done towards the controls and design of our industry OR we can begin to set a course for different objectives which actually serve the people that own this resource.

The wisdom used towards this stratedgy used to date is what is being questioned. IMO;The defending of the way it works is totally useless towards finding a solution for our future.

I'm not trying to "defend the way it works", Woodchipper, because it's quite clear, or should be, that it increasingly doesn't work. Nor can it be made to work, the way the BC Liberals have been going, nor the way the NDP would likely go if it replaces them in May.

Changing "ownership", while it might give great solace to those who think they are recapturing something that has been lost, is really meaningless.

For it is the "credit value" of "ownership" ~ the ability of the concern to get a price for its product in excess of its costs~ that gives ANYONE'S "ownership" in it any meaning whatsoever.

And a simple change from foreign absentee ownership to domestic local ownership does nothing to alter that "credit value" of itself. That can only be done at the 'macro-economic' level, by making necessary changes to the financial system itself to enable "real demand" for products to be made "effective demand".

When that's done, both 'beneficial' and 'administrative' ownership will generally be found, IMO, to be much more practical at the local level than from afar.

It is precisely that the "accounting" is in fact only a narrow view which has led us so far from finding the truth that we require to set the new course.
You certainly will not find the answers to the future by embedding the accounting principles used in the past and currently into what has to be entirely changed.

Ownership is key in many more ways than are obvious. Local focus,comittment through thick and thin are two essential parts to attaining the best that can be done in a specific setting. The specific operation then recieves the management focuss it requires rather than only being viewed as one of many others which may be prefered or prioritised on a/for an accounting only basis.

Your position that the only thing which is important is the money is absolutely consistent with why corporate control of our resources could not have left us more stranded. Where we have arrived at this desperate time started long ago. Through record demands for our lumber products the prices did not increase but rather softened because of the corporate missions of a few dominant corporate players attempting to expand their market share/control to influence their future payback. We are now stranded because of their accounting, their overall business stratedgy which in itself was the counterproductive competition to flood the markets, push the prices down for the purpose of killing their competition.

Woodchipper, the per capita demand for sawn wood products peaked in about 1900, and has been in steady decline since. That was shown in a study referred to by Ed Williston, a long time Weyerhaeuser Co. researcher into such things, who later authored several books on sawmilling, saws, and lumber manufacturing, and also operated his own Consulting business for several years out based in Washington State.

But regardless, you need only look at all the things that used to be made out of wood which are no longer made out of wood to see that.

Even Timberwest doesn't have its own timber sawn for its private logging road bridges anymore, like its predecessors did. They're now made out of concrete and steel.

If dimension lumber products prices rose to the level they'd have to be to keep smaller lumber producers in the black, they'd run the risk of losing further market share to substitute products.

This has already happened with many specialty lumber products like wooden sidings, for instance, where vinyl and Hardy-plank have taken the market share formerly held by wood.

But lets look at it another way. Lets suppose that the government forced the large multi-mill corporate giants to divest themselves of all but one or two of the plants they now own.

Lets further suppose that the divested plants had local timber tenure attached to them, and that the government assisted the financing of their acquisition by the employees who work in them, and the local managers who run them, and the communities in which they are located.

Sort of like the ESOP idea that's been often utilized in the USA, where various private companies are acquired by their employees and senior managers when their founding owners get long in the tooth and want to sell out.

How long do you think it would be before these new, independent, community-owned and oriented concerns had to go right back into the same 'acquisition' and 'consolidation' and 'rationalization' mold that the whole de-centralizing effort was designed to get them away from?

My guess is it would not be very long at all. And the reason? Just what I've been trying to say, (obviously with little success), their COSTS will always rise faster than their Incomes that have to liquidate them will.

Not because their managers are inept and out of their league when they have to do all the things themselves that 'head ofice' used to do for them.

Nor that being locally owned and attuned to the overall needs of the community is a lousy way to run a business. It isn't. Not at all.

Nor that their employees have all got lazy now that they've become "owners". None of these things.

The reason is that the WHOLE financial system, as it operates in the WHOLE economy, is not fully 'self-liquidating' in each overall cycle of production. And this, more than any other factor, will ensure that even the best laid plans for successful, smaller scale local ownership, with responsible, sustainable use of resources, will go far astray from what's intended. It won't have any other choice than to be operated for a "financial object" it can never attain.

The financial system, as it's presently operated, is flawed. It does not distribute sufficient 'incomes' from jobs which are increasingly being displaced to fully liquidate all the 'costs of production' that have to be recovered through 'prices' in each succeeding cycle of production.

It is not particularly difficult to correct this, though it is exceedingly difficult to get people to realize that it is the thing that needs to be corrected.
First.

If it remains uncorrected, none of what SHOULD work, in regards to local enterprises using local resources responsibly, and for the benefit of all, has a hope in Hell of ever working.