Saturday, October 01, 2005

City State APPENDIX

City State Appendix Edmonton

Time Line - A Brief History of the Fur Trade


1670
The
Hudson Bay Co. was chartered. They claimed all the lands that drained into Hudson Bay as their trading area. Their post were located on Hudson Bay and the Indians brought their furs there.

1763

Britain tried several different arrangements to control the fur trade - imperial control, limiting trade to only five posts, and exclusive licensing. In spite of this, unlicensed traders continued to operate.

1766

Johnathon Carver traveled west in search of the North West passage.

1767

Trade regulations were returned to the colonies, exclusive licenses were abolished. The start of unregulated trade increased the use of liquor in the fur trade. British traders were allowed to establish wintering posts amongst the Indians. Construction began on permanent structures at Grand Portage.

1774

The Quebec Act became law. The western Great Lakes and all land north of the Ohio River became part of Quebec and subject to its laws and regulations. Green Bay and Prairie du Chein became interior trading centers. Traders started to exploit the region northwest of Grand Portage, but cut-throat competition reduced the profits. Small partnerships were formed to avoid or oppose the competition. The American Revolution caused some traders to avoid areas south and west of the Great Lakes and encouraged them to go north and west. Hudson Bay Company built a post on the Saskatchewan River.

1778-79
First agreements were made between partners that would become the
North West Company, the first joint stock company in Canada and possibly North America. Peter Pond traveled to the Athabaska where he gathered so many furs he was forced to leave some behind. Generally throughout the 1770's fur trade was centered around the large posts. The Dakota and Ojibwe were fighting for control of the St. Croix Valley so traders avoided those areas.

1786
The North West Company increased its shares to 20.

1787
The
Beaver Club was formed. It was a very selective social organization of men who had wintered in Indian country. There were 19 original members. The Hudson Bay Company built more posts in the interior because furs were being taken at the Indian camps by the North West Company.

1821

The North West Co. and the Hudson Bay Co. merged under the name Hudson Bay Co. A major factor in the decision to merge was the high transportation costs shipping through the Great Lakes. In addition, the Hudson Bay Co. charter had stronger legal backing to right of land by discovery than the partnership claims of the North West Co. After this time, most trade goods were shipped through Hudson Bay for the interior posts. The border war still continued between the Hudson Bay Co. and the American Fur Co. It did not end until 1833 when the American Fur Co. abandoned its posts along the border in exchange for an annual cash payment from Hudson Bay.

INDIAN TERRITORIES (ALBERTA) 1800 - 1829

NORTH WEST TERRITORIES and ALBERTA

Little is known about the earliest settlers of Alberta
most were of Indian and Metis origin


1801

Fort Augustus (NWC) and Fort Edmonton (HBC) are relocated from Fort Saskatchewan (Alberta) to the Rossdale Flats (Edmonton, Alberta) this year.

At the junction of the Miette and Athabasca Rivers is Fitzhugh Place that was in 1813 renamed Jaspers, Place (Alberta) after a North West Company supply post. This post was for the mountain trade across Athabasca pass (where there are reeds), that is established about this time. It is noteworthy that after more than ten years of use, David Thompson, in 1811, would claim discovery of the Athabasca pass.

The Gros Ventres invited a passing brigade of 75 Iroquois traders into their camp. They engaged in a heated form of gambling, a quarrel broke out. When the dust cleared, 25 Iroquois of the N.W.C. lay dead. The survivors reached Fort Augustus (Alberta).

William Tomison of the H.B.C. claimed the North West Company and XY Company had over 300 Iroquois on the Saskatchewan River this summer alone. This is not counting the hundreds who are still in the region from the 1790's.

Rocky Mountain House, aka Poste de la Montagne de Roches, birth (II)-Fanny Thompson Metis daughter (I)-David Thompson (1770-1857) and Charlotte Small b-1785 Metis.

(I)-David Thompson (1770-1857) and James Hughes search for a pass to the west of Rocky Mountain House, aka Poste de la Montagne de Roches, but failed.

Grouard (Slave Lake) is established and by 1898 would replace Dunvegan as the center of trade for the Peace River District.

1802

Patrick (Pichina) Finlay (1802-1879) born Rocky Mountain House, aka Poste de la Montagne de Roches, son Jacques Raphael (Jacko) Finlay, Metis (1768-1828) and Indian woman. This is likely one of the 4 adopted Lussier children.

The Rocky Mountain House Echo newspaper in 1911 attributes the establishment of Rocky Mountain House at the mouth of the Clearwater River into the Saskatchewan River to John MacDonald of Garth Scotland for the North West Fur Company of Montreal. They claim Alexander Henry succeed him and David Thompson succeed Henry. This is obviously in error as Rocky Mountain House has been used as a trading post since 1751.

Old Man Monroe (Hugh Monroe), born 1784 Montreal, died 1892, arrived Fort Edmonton in 1802 in the employ of The Hudson Bay Company. He married a Piegan woman and their son, William Monroe (b-1851), would serve with the Pallisar Expedition (1872). It is possible that the legends of old man Monroe represent two or more different people. Some place his birth date at 1898 or 1899. He is said to have been indentured for three years in 1815 to the Hudson Bay Company and posted to Edmonton House. It is alleged he departed a Hudson Bay Company warehouse in Montreal in 1815, traveling to Edmonton House via York Factory. It is highly likely he didn't depart until after 1821, when the North West Company merged with the Hudson Bay Company. This assumption is based on the fact that his first child was born in 1825, Rocky Mountain House aka Poste de la Montagne de Roches; suggesting a departure after 1821.

The North West Company established Bow River Fort, fifty miles west of Fort La Jonquiere (Calgary). Bow River is named as the place for making bows.

Patrick Pichina Finlay, Metis, b-1802 Fort Edmonton area, died January 1879 Montana son Jacques Raphael (Jacko) Finlay, Metis (1768-1828); married Margaret.

Some suggest the Battle River Settlement was first noted about this time and was located south of Camrose. The Cree called this location No-tin-to-si-pi whereas the Blackfoot called it Ke-chi-sab-wap-ta and was noted as a good crossing place and was the location of a number of clashes between the Cree and Blackfoot.

Simon Fraser (1776-1862) built Fort Laird at Fort Vermilion, Alberta

Saskadjiwan a.k.a. Saskatchewan, means the running of the thaw or swift current. Both Fort Saskatchewan, the North West Company and Fort Augustus, Hudson Bay Company, moved to Edmonton on the Rosedale Flats, where the Edmonton power plant now stands. The 'XY' Company also built in this location. Chesterfield house, at this time, lies abandoned.

The N.W.C. built Pierre au Calumet on the east bank of the Athabasca River, 55 miles from Fort McMurray.

March 3: The North West Company sent a 12 man party to Fort Chesterfield, near present day Empress, Alberta, and the Gros Ventre killed the two Canadians (Metis) and ten Iroquois traders. Others suggest it was 14 Iroquois and 2 Canadians of the N.W.C., and that they were killed on the Bow River, southern Alberta.

1803

Thomeson Audinson, Metis, b-1803 Red River married to Leathine Metis b-1802 Red River living Lakeland eastern Alberta, 1891.

William Connolly (1787-1849) who joined the N.W.C. in 1801 and became a partner by 1818. He married 1803 Rat River Suzanne Cree, d-1862 and had 6 children.

Marie Louise Jerome dit St. Mathe, Metis, b-1803, Rocky Mountain House (Alberta) daughter Martin Jerome dit St, Mathe and Francoise a native; married June 15, 1829, Red River, Maximilien dit Dauphinais Genthon (1790-1871) son Jean Baptiste Genthon and Marie Louise Lafontaine.

Peter Fidler reported 110 Iroquois fur traders on the Peace River near the Rocky Mountains.

1804

John Clarke, b-1781, joined the N.W.C. in 1804 and served the Pacific Fur Company 1810-1814 and joined the Athabasca Expedition of 1815.

La Gasse and LeBlanc return with the Kutenai to trade at Rocky Mountain House and are believed to be the first known to cross the Rocky Mountains.

William Sturgis a merchant from Boston arrived west coast of Vancouver Island with 5,000 ermine skins from Leipzip. He sold these to the Kimgarnee Indians who prized them for ceremonial purposes. He valued his ermine at 30¢ and traded them at 5 for one sea-otter skin. These he sold at Canton, China for $50.00 each skin.

Raphael Tremblay b-1802 Quebec married to Catherine Metis b-1804 B.C. living Egg Lake (Alberta) 1901.

John Rowand born 1787 Montreal died Fort Pitt (Saskatchewan), May 30, 1854, served as a clerk at Fort Des Prairies a.k.a. Fort Augustus (Fort Edmonton), (Alberta) for the North West Company, until 1806 when he served at Red River des Metis, then went back to Fort Edmonton 1808. He spent most of his life at Fort Edmonton and was known as Iron Shirt or Big Mountain Man by the Indians.

(I)-David Thompson (1770-1857) visited the future site of Fort Dunvegan in 1805.

1805

Big Lake (St. Albert, Alberta), birth, Angele Bourassa, daughter, Michel Francois Bourassa and Marguerite Beaulieu; married, 1835, Fort Pitt, (Saskatchewan), Pierre (Pierriche) Delorme, b-1813, White Mud (Alberta), son Pierre Delorme and Marguerite Cardinal.

North West Company's, Archibald MacLeod, built Fort Duvaegan on the Peace River and Simon Fraser (1776-1862) of Cornwall, previously of New York, and established several Forts in British Columbia. Fort Dunvegan is considered the center of the fur trade for the Peace Region (Alberta) until 1898 when it was replaced by Grouard (Slave Lake)..

Francois (Benetsee) Finlay b-1805, Fort Edmonton area d-before 1873 son Jacques Raphael (Jacko) Finlay, Metis (1768-1828) and Indian woman; married Susanna. This is more likely the child of Xavier Finley (1779-1859) Jacko's brother.

Some suggest Fort Edmonton (Alberta) was known as Fort des Prairies the Upper not to be confused with Lower Fort des Prairies on the Saskatchewan River and others say it was called Hughe's Fort (Fort Augustus). It is noteworthy that forts/trading posts change names from season to season and some change locations as frequently.

Battleford a trading post is established this year.

A fire virtually destroyed much of Detroit.

June 13: Meriwether Lewis departed Belt Creek in search of the Grand Falls of the Missouri, which was previously reported by others.


HISTORY OF CANADA
North West and Hudson's Bay companies: AD 1783-1821
This gives the North West Company's members (known as the Nor'Westers) a virtual monopoly of the rich fur trade in the western half of British America. The problem is that their line of communication with the Atlantic ports is now overstretched, as well as seeming to be threatened by a new initiative of their Hudson's Bay rivals in 1811.

In this year the Hudson's Bay Company brings in Scottish immigrants to establish an agricultural colony on the Red River in the region of modern Winnipeg. The site is close to Fort Gibraltar, built in 1804 by the North West Company to protect their trade route east to Montreal.

Employees of the North West Company attack the Red River Settlement in 1816, killing its governor and nineteen of his men. The Hudson's Bay Company retaliates by seizing and destroying Fort Gibraltar (which they subsequently rebuild as Fort Garry). This unseemly war between two British companies leads eventually to a merger, imposed by the government in 1821.

Hudson's Bay Company - Our History

Its first century of operation found Hbc firmly ensconced in a few forts and posts around the shores of James and Hudson Bays. Natives brought furs annually to these locations to barter for manufactured goods such as knives, kettles, beads, needles, and blankets. By the late 18th c. competition forced Hbc to expand into the interior. A string of posts grew up along the great river networks of the west foreshadowing the modern cities that would succeed them: Winnipeg, Calgary, Edmonton.

The Rise of Retail

The Rise of Retail

By the end of the 19th c. changing fashion tastes contributed to the fur trade losing importance. Western settlement and the Gold Rush quickly introduced a new type of client to Hbc – one that shopped with cash and not with skins. With the Deed of Surrender in 1869 between Hbc and Canada, the Company yielded sovereignty over its traditional territories to the new country. The retail era had begun. The Company’s focus shifted as it concentrated on transforming trading posts into saleshops, stocked with a wider variety of goods than ever before.

In 1912, following advice from one of its directors who was with Harrods department store in London, Hbc began an aggressive modernization program. The resulting ‘original six’ Hudson’s Bay Company department stores, in Victoria, Vancouver, Edmonton, Calgary, Saskatoon and Winnipeg, are the living legacy of this period.

A Brief History of Edmonton


Modern Edmonton can be said to have begun in 1871, when the Reverend George McDougall, a Methodist missionary, arrived and built a mission on the present site of McDougall Church (11025 - 101 Street). Also in this year, Edmonton was incorporated as a village.

Edmonton’s first newspaper, the Edmonton Bulletin, was started in 1880. At this time, Edmonton consisted of five European families, with the majority of the population being Aboriginal and Metis. Edmonton grew very fast and by 1891 the Canadian Pacific Railway arrived in Edmonton, reaching up to the south bank of the North Saskatchewan River.

In 1892 Edmonton was incorporated as a town and Matthew McCauley was elected as its first Mayor. Five years later Edmonton experienced a population boom as thousands of gold-seekers were bound for the Klondike.



Edmonton History


Edmonton's development began in 1795 when the Hudson's Bay Company Trading Post was established. John Rowand, a fur trader for the North West Company, arrived in Edmonton in 1804, and grew to be respected by the Plains Indians and accepted as a leader, managing Edmonton's the fur trade with the Cree and Blackfoot in Edmonton for about 30 years. Fort Edmonton became a local economic centre, becoming the major stopping point before pioneers headed up north or farther west. In the 1870s more people began to settle around Fort Edmonton, after the government offered the land to settlers at a good price. Edmonton had 700 residents in 1892, when it officially became a town. The city boomed during the Klondike Gold Rush of 1897, as thousands of eager prospectors heading north, via the "All Canadian Route," stopped in Edmonton for supplies. Many people settled in Edmonton permanently and by 1904 Edmonton had 9,000 residents. It became incorporated as a city and a year later was declared the provincial capital

Canadian Pacific Railways

In 1890, work started on the Calgary and Edmonton (C&E) Railroad. This was built under contract for the CPR and was completed in the summer of 1891. It terminated in Strathcona and there was no thought of it going any further. However in 1902, a short affiliate of the Canadian Northern Railway, the Edmonton Yukon and Pacific (EY&P), joined Edmonton north of the North Saskatchewan River with Strathcona on the south, crossing on the Low Level Bridge. This put the C&E at a disadvantage and it immediately began planning its own bridge into Edmonton. In 1903, CP signed a 99 year lease on the C&E and continued on with the plans for the bridge. Work started in 1910 on the High Level Bridge, and the first train crossed it in 1913. CPR's Edmonton station was located at the end of the line on the northwest corner of Japser and 109th Street. There were some rail yards in the area between 109-111th Streets and Jasper and 104 Avenues


Edmonton's First Public School Teacher

Early Edmonton Bulletin reports give us a few more details on Edmonton's first teacher. According to the Bulletin, James Harris was a member of the Edmonton vigilante committee, and he took an active role in community life. The Bulletin also quotes School Inspector David McQueen as saying that, "Harris was once a businessman in Illinois." The Rev. McQueen also learned that Harris had amassed a small fortune in America and then lost it. Another startling revelation by McQueen was that Harris was a member of the Ku Klux Klan, the secret organization that spread terror throughout the United States after the Civil War. It may have been Harris' connection with the Ku Klux Klan, or his business failure, that prompted his return to Canada. Or it may have been, as Edmonton historian John Day speculates, an attempt to escape marital problems and alimony payments. Day's opinion stems from his research into early Edmonton land holdings that refer to a claim on an Edmonton-area acreage by Harris' estranged wife.

According to Bulletin news reports, Harris was selected as the Edmonton (1881) School teacher by an education committee consisting of Presbyterian Pastor Andrew Baird, Hudson's Bay Company Factor Richard Hardisty, and Trustees Groat, Rowland and McCauley. His monthly salary for a three-month term contract was to be $50. One-half of the generous stipend would be subsidized by the North-West Territorial government if Harris could maintain an average enrolment of fifteen pupils per day, and keep the big boys in check. According to news reports, Harris was a strict disciplinarian and succeeded in the latter requirement.

The First Legislature In Alberta


This photograph was taken on May 9, 1906 – the last day of the first session of the first Legislature of Alberta. Pictured here are the 25 members of that first Alberta Legislature; they are seated in the third floor Assembly Hall of McKay Avenue School, a space the government rented from the Edmonton Protestant Public School Board.

Although the capital debate was the highlight of the first session, the only motion that was put forward was that the capital be permanently located in Calgary. This motion was lost by a vote of sixteen to eight. Subsequent motions for Red Deer and Banff were withdrawn. Edmonton (previously named the provisional capital) prevailed, but the decision was not entirely popular.

The 1907 session was also held in McKay Avenue School. The building was designated a Provincial Historical Resource in 1976 and now serves as the Archives and Museum of Edmonton Public Schools. A featured display is the restored legislative Chamber of 1906, which was re-constructed based on the image to the left – the only known image of this important event in Alberta’s history
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Friday, September 30, 2005

Deficit Hysteria Redux


As I predicted in my article on the $152 billion in tax cuts, the nasty Deficit hystria is back. It is the political equivalent of Chicken Little's 'The Sky is Falling'.

Nobody in the the capitalist ruling classes and their political parties, the Liberals and Tory's, worried about deficits until last spring when the NDP talked about increasing social spending by a pitiful $4 billion.

The red herring of a deficit was raised by Monte Solberg, Tory Finance critic, in an attempt to whip up a bit of good old right wing hysteria over social spending. Never does he mention deficits when his corporate masters get their tax cuts. And his corporate masters were at it again yesterday also bemoaning the possible deficit that could be created by public spending, but never with increased tax cuts to them

Business leaders issue spending warning
Top business leaders warned yesterday that the approaching federal budget must rein in "runaway growth" in spending and cut corporate taxes, or risk undermining Canada's fiscal and economic health. The Canadian Council of Chief Executives told a parliamentary committee's prebudget hearings that any repeat of last year's massive program spending hikes may jeopardize competitiveness. The council represents CEOs from 150 leading corporations with combined annual revenue of more than $600-billion "Program spending last year grew by more than 15 per cent. That was roughly eight times the rate of inflation, and more than three times faster than nominal economic growth," David Stewart-Patterson, executive vice-president of the Canadian Council of Chief Executives, told MPs. "Such a pace simply cannot be sustained unless the government plans either to hit Canadians with higher taxes or to break its promise to stay out of deficit," he said. "No sensible economic strategy can be based solely on ramping up public spending."

No then gee what strategy would they suggest....wait for it......

The council said the time is ripe for corporate tax cuts to recharge Canada's competitiveness, which is hurting from weak growth in productivity and foreign direct investment. "Over the past two fiscal years, federal revenue from corporate income tax has grown $7.7-billion or 35 per cent," Mr. Stewart-Patterson said. "Corporate income tax now brings in more cash than the [goods and services tax]."

Ah too bad, they should be paying more in taxes, after all their surplus value is produced by workers not tax cuts or investments. And the Gouge and Screw Tax is a regressive tax on the poor. Are they suggesting that the poor pay more in taxes than wealthy corporations and their bosses? Of course they are. Even if its a myth that tax cuts improve manufacutring and production output. They don't see chart below.

Now in order to avoid more deficit hysteria the Liberals are planning to introduce No-deficit budget legislation. Another dumb idea whose time has passed. Don't believe little old left winger me, take it from those in the know:

"However, Don Drummond, chief economist at TD Bank Financial Group, said a guarantee against deficits was "horrifically bad policy. This is entirely political. We have created an 11th principle 'thou shalt never go into deficit' but the impact of a $1- or $2-billion deficit in an economy our size would be irrelevant. The whole thing seems bizarre."

Yep whats a few billion in deficit, its NOT debt after all and as Alberta showed in 1995 one year after having a deficit it was abounding again in surpluses and has done so ever since. Now of course back then, a decade ago everyone was suffering deficit hysteria including economists at the TD Bank, my what a difference a decade makes.So how come Don Drummond is not on the same page as his bosses, in the Canadian Council of Chief Executives? Hmm can you say special interest group. And almost word for word Monte repeated what this special interest group of the well heeled said;

The dramatic rise in government spending in the last fiscal year has led to accusations by Conservatives that the budget surplus is being squandered and that the economy could slide back into deficit if growth slows. "We support measures to make sure we don't go into deficit, but the government is missing the point. We want to ensure that surpluses are put to some end -- services that make a difference in people's lives, or a reduction in taxes that hurt productivity, or debt repayment," said Monte Solberg, the Conservative finance critic. "Much of the spending does not produce results."

Well the NDP better balanced budget did apply "spending on services that make a difference in peoples lives", but Monte and his Tory pals opposed it. You see their real agenda, is no spending is good spending, everything should be corporate tax cuts. Except that tax cuts to corporations does NOT put money back into production and manufacturing, it goes into general revenues to offset profit losses. Don't beleive little old left winger me? Well the Economist says so:

The chart below shows that in 1995, countries with big budget deficits did generally pay a penalty in higher real long-term interest rates. Today, however, as the right-hand chart shows, there is no correlation at all between borrowing and real interest rates. Similarly, a study by the OECD in 1995 found that countries with big current-account deficits over the previous decade tended to have higher real bond yields. An update of that analysis by The Economist shows that this relationship has broken down, too. Financial markets seem to be doing a poor job as economic watchdogs: in particular, America's profligacy is being subsidised rather than punished.



Some convergence in real bond yields is a natural consequence of a global capital market. In a closed economy, if a government increases its budget deficit it must pay higher interest rates to persuade domestic investors to hold more bonds. But if it can tap global savings, it can borrow more cheaply because a smaller rise in rates is needed to attract the required funds. Even so, a more efficient international capital market is supposed to ensure that capital is allocated to the most productive use. Yet much of the recent inflow of foreign money into America is not financing productive investment, but a housing bubble and a consumer binge.One explanation is that, with interest rates low pretty much everywhere, investors are hungry for any sort of yield. This has made them more willing to buy high-yield bonds, and has pushed down the spread that riskier borrowers must pay compared with safer borrowers. This not only encourages investors to price risk too low; it may also produce bigger economic imbalances.

See my How do you spell economic basket case? USA
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Thursday, September 29, 2005

How do you spell economic basket case? USA

In one of those serendipitous moments that occur, far too infrequently, the Left and the Right come to the same conclusions about the prolitical economy.

In this case the latest issue of the New Left Review (NLR) contains an article
about the Savings crisis in the Global Economy and so does this weeks Economist magazine. They are both subscriber only content. however you can buy them online with paypal for each article or buy them at the local newstand. Both are well worth the price.


New Left Review 34, July-August 2005
Andrew Glyn: Imbalances in the Global Economy
Wide-ranging account of the growing disequilibria within an increasingly integrated global capitalism. Andrew Glyn takes the measure of China’s still gigantic catch-up potential, in comparison to previous Asian NIEs, and assesses the impact of its rise across different sectors of the world economy

The world economy
Sep 22nd 2005
From The Economist print edition

IS THE world economy in good or bad shape? Judged by the pace of growth, it is in rude health. Despite soaring oil prices, the IMF's latest World Economic Outlook reckons that global output will grow by 4.3% both this year and next, well above its trend rate.…




Suffice it to day they deal wit the curent American fiscal imbalance between savings, investment and deficit. The conclusions the both draw is that advanced industrial countries live with deficits, lower savings, and lower investments. That is deficits as currently experienced by the US economy have NO effect on investment or savings. Instead, investments and savings reverse roles in the new economy of longwave bubble in this case the current real estate boom over the last decade, has promoted personal deficits while corproate captial accumulates and is not invested. This anamolous situation is reversed in China and the newly industrialzed nations of the Pacific, where savings grow as does investment.

This is the new crisis of capitalism, America is now an economic basket case and only getting worse under George II's 'Vodoo Economic's" of tax cuts and deficit budgeting,. Says the Econonmist:

"The problem is that big-government conservatism is already stumbling under the weight of its own contradictions. The grandiose experiment in the Gulf could be enough to flatten it entirely. The first contradiction is Mr Bush's insistence on governing like a big-government conservative while taxing like a small-government one. Even before the hurricane hit, federal spending had been growing by 7% this year (on the heels of a 30% hike during Mr Bush's first term). Mr Bush has now promised to spend an additional $200 billion of federal money on rebuilding the Gulf, while ruling out tax increases to pay for it. The money can supposedly come from cuts in other government programmes. Fat chance." "Big-government conservatism faces its biggest test so far; it could prove fatal

This then has lead to the crisis of of the American Empire, it is not reaping profits from its colonies but instead in order to maintain its power is a net importer of investment from the hinterlands.

"America's current-account deficit, at 6% of GDP, is its highest on record; its net foreign liabilities, at 22% of GDP, are also close to an all-time high. Foreign central banks seem to have reduced their purchases of American Treasuries: official holdings of these rose by only $2 billion in the first seven months of 2005, against $295 billion in (the whole of) 2004 and $175 billion in 2003. If this trend continues, other currencies could one day challenge the dollar's dominance."How the dollar might lose its status as the world's main reserve currency

America is now a debtor nation relying soley on credit.

Thus the United States, which in the 1950s and 1960s had been the major source of world liquidity and of direct investment, in the 1980s became the world’s main debtor nation and by far the largest recipient of foreign capital. The extent of the reversal can be gauged from the change in the current account of the US balance of payments. In the five-year period 1965–69 that account still recorded a surplus of $12 billion, which constituted almost half (46 per cent) of the total surplus of G7 countries. In 1970–74, the surplus contracted to $4.1 billion and to 21 per cent of the total of G7 countries. In 1975–79, the surplus turned into a deficit of $7.4 billion. After that the deficit escalated to previously unimaginable levels: $146.5 billion in 1980–84; $660.6 billion in 1985–89; $324.4 billion in 1990–94; and $912.4 billion in 1995–99. As a result of these escalating US deficits, the $46.8 billion outflow of capital from G7 countries of the 1970s (as measured by their consolidated current account surpluses for the period 1970–79) turned into an inflow of $347.4 billion in 1980–1989, and of $318.3 billion in 1990–1999.

This was a reversal of historic proportions, that reflected an extraordinary, absolute and relative, capacity of the US political economy to attract capital from all over the world. It is likely that this was the single most important determinant of the contemporaneous reversal in the economic fortunes of North America and of the bifurcation in the economic fortunes of Third World regions. For the redirection of capital flows to the United States reflated both effective demand and investment in North America, while deflating it in the rest of the world. At the same time, this redirection enabled the United States to run large deficits in its balance of trade that created an expanding demand for imports of those goods that North American businesses no longer found profitable to produce. Since competitive pressures had become particularly intense in manufacturing industries, these imported goods tended to be industrial rather than agricultural products.
GIOVANNI ARRIGHI New Left Review 15, May-June 2002


Americans have maxed out their savings, rung up their credit cards all on the basis of a real estate bubble around housing prices. America as a nation has maxed out its savings, rung up its international credit, all on the basis of a real estate bubble that keeps the economy booming based on consumer spending rather than investment and production.

The Economist warns that Inflation that terror of the 1970's is raising its head again thanks to the artifical growth bubble in the United States funded entirely on the speculative market in Housing. Not only are houses being bought and sold for a profit but Credit is being overextended to Americans based on their mortgages, in otherwords America is a nation in debt.

INFLATION was supposed to be dead. Yet back-of-the-envelope estimates by The Economist suggest that in September America's 12-month rate of consumer-price inflation will jump above 4%—the highest since 1991.

With inflation edging up almost everywhere, is there a risk of a repeat of the 1970s? A burst of double-digit inflation seems unlikely. Prices took off in the 1970s largely because of serious policy errors. Policymakers now understand that rising inflation harms growth, and independent central banks are more likely to stamp on inflation swiftly.

The real worry with rising inflation expectations is less that they herald a surge in inflation than that they will limit the ability of the Fed or other central banks to cut interest rates if growth stumbles. It is commonly argued in America that if the housing bubble were to burst, and falling house prices threatened to choke consumer spending, the Fed would slash interest rates to prop up the economy, as it did after the stockmarket bubble popped in 2001-02. But then inflation was falling. Today, with inflation rising, the Fed would no longer have that option. If the economy hits trouble, investors and homebuyers should not expect to be bailed out again.


Which is a scary place to be at when the bubble bursts.

housing affordability is deteriorating quickly. In hot markets
on the coasts, such as Los Angeles, the income share required for
mortgage payments on a newly purchased home already matches the
previous two peaks seen in the early 1980s and the late 1980s.
More recently, even affordability in the country as a whole has
started to deteriorate quickly. For example, the National
Association of Realtors -- not an organization known for
excessive bearishness on the housing market -- reports that their
US affordability index now stands at the lowest level since 1991.
Thus, housing valuations are stretched, and are becoming more
stretched the longer the current boom continues.
Goldman Sachs Economist on the Bubble


Finance capital in America, and indeed all G8 countries, are now flthy rich with profits from the investment boom, but are not investing! Warren Buffet: U S Capitalism in Crisis

Corporate capitalism and it's vampyric master; Finance capital, insist on more tax cuts though, so as to make even more profits, for the sake of profits. American investment in production is the lowest it has been in over twenty years back when the market crashed. Which is why there is a global movement to loot pension funds which are seen as another source of captial for profit without having to use it to invest in production.

THE DECLINE OF CORPORATE INCOME TAX REVENUES
By Joel Friedman

A weak economy, new tax breaks, and aggressive tax sheltering have pushed corporate income tax receipts down to historically low levels, both relative to the size of the economy and as a share of total federal revenues. According to the most recent budget projections of the Congressional Budget Office, corporate revenues will remain at historically low levels even after the economy recovers, and even if the large new corporate tax breaks enacted in 2002 and 2003 are allowed to expire on schedule. Deficits over the next decade are now projected to be enormous in size. A joint analysis by the Center on Budget and Policy Priorities, the Concord Coalition, and the Committee for Economic Development projects deficits totaling $5 trillion through 2013. An analysis by Brookings economists reaches a very similar conclusion, while Goldman Sachs projects deficits totaling $5.5 trillion. Despite the deteriorating fiscal outlook and the historically low corporate revenue collections we already face, Congress nonetheless seems poised to shower more tax breaks on corporations that would cause deficits to grow substantially larger over time

Corporate Traitors
The Decline of Corporate Taxes & the Subsequent
Rise of CEO Pay
By Scott Klinger, CFA, United for a Fair Economy

In 2003, ten large US corporations listed at the end of this report each earned more than $1 billion in pre-tax profits, yet paid no federal income taxes:
• Collectively these ten Benedict Arnold companies earned $30 billion in profits
and paid their CEOs $126 million. The $12.6 million average pay of the CEOs
of these firms was 51% higher than the $9.6 million received by the average
large-company CEO as reported by Business Week.2
• If these ten firms paid taxes at the 35% statutory tax rate, they would have
contributed more than $11.7 billion to the federal treasury instead of extracting
$3.3 billion in refunds, a $14 billion budget swing from just ten companies!

The Myths Underlying Corporate Tax Breaks
Myth # 1: Corporate Tax Breaks Increase Investment and
Stimulate Job Growth
This widely popular myth has led a public increasingly starved for good jobs to
enthusiastically embrace corporate tax breaks. If only the myth were true! To the
contrary, not only did US private non-residential investment fall 7% between 2001 and
2003, according to the Commerce Department, but those companies receiving the
greatest accelerated depreciation tax savings saw their investment decline the most.
According to CTJ, the 25 largest beneficiaries of accelerated depreciation deductions tied
to new investment cut their total property, plant and equipment spending by 27% between
2001 and 2003. The other 250 companies in the study saw their investment spending fall
just 8%.15 Similarly, corporate tax cuts are no panacea for job growth. The ten corporate Benedict Arnold companies (those paying no taxes in 2003) collectively employed 765,500 peopleat the end of 2003, and added an anemic 1,518 jobs, a 0.2% increase, in 2004.16 Job
growth in the corporate Benedict Arnold companies was even worse than the anemic
1.1% job growth delivered by the economy as a whole.

If America is Empire then the Emperor, has no clothes! Tis a reflection in a mirror darkly, of the truimph of Keynesianism for corporations.

The neo-liberalism that began in the 1970's, and truimphed in the Reagan/Thatcher/Mulroney era of the eighties that crowed about the end of Keynesianism, which had rescued capitalism from the ravages of depression and continued to be the golden goose of post WWII growth, merely turned Keynes on his head. They had not abandoned his General Theory, they simply reversed the capital flows, now consumers and their savings were used to prime the pump instead of finance capital.

So Americans and their government and corporations are now in the same debt boat. Finance capital in America on the other hand is flush with cash, but being deficit shy, would rather see the State go into debt, than invest their profits in production and manufaturing, except abroad.

And when they do invest its with borrowed money from foriegn investors, which is why in the globalized economy more American corporations are being bought off by their European, Japanese, Russian and Chinese competitiors. Dahlmer Chrysler is only one example of this take over of American corprotations because of their debt crisis. Imagine if China and Japan the USA's largest creditors, call in their chips, whats for sale then?!

In the wings awaits America's major competitor, the one they did not wage Cold War with, China. See my article China: The Truimph of State Capitalism

Giovanni Arrighi asserts in his book The Long Twentieth Century, that the growth of capitalism as a World System,has coincided with expansion and migration Westward.

If America was the Western Migration of capitalism from England and Europe in the 19th Century, and the 2oth was America's century with capitalism moving from the bastions of the Eastern Sea Board to all points west ending in the Silcon valley boom of California.

Then the 21st Century is the age of Capital in the Pacific. Japan, Korea, the Phillipines, Malaysia/Indonesia, Hong Kong, are now little tigers of new industrial capitalism in the Pacfic. The farthest Western shore, China, now arises on the horizon of glorious global capitalism. Ironic that.

"Globalization, State Sovereignty, and the 'Endless' Accumulation of Capital"

by Giovanni Arrighi

For what we know, the present rise of East Asia to most dynamic center of processes of capital accumulation on a world scale may well be the preamble to a recentering of the regional and world economies on China as they were in pre-modern times. But whether or not that will actually happen, the main features of the on-going East Asian economic renaissance are sufficiently clear to provide us with some insights into its likely future trajectory and implications for the global economy at large.

First, the renaissance is as much the product of the contradictions of US world hegemony as of East Asia's geo- historical heritage. The contradictions of US world hegemony concern primarily the dependence of US power and wealth on a path of development characterized by high protection and reproduction costs--that is, on the formation of a world-encompassing, capital- intensive military apparatus on the one side, and on the diffusion of wasteful and unsustainable patterns of mass consumption on the other. Nowhere have these contradictions been more evident than in East Asia. Not only did the Korean and Vietnam wars reveal the limits of the actual power wielded by the US warfare-welfare state. Equally important, as those limits tightened and expansion along the path of high protection and reproduction costs began to yield decreasing returns and to destablize US world power, East Asia's geo-historical heritage of comparatively low reproduction and protection costs gave the region's governmental and business agencies a decisive competitive advantage in a global economy more closely integrated than ever before. Whether this heritage will be preserved remains unclear. But for the time being the East Asian expansion has been the tracklaying vehicle of a developmental path far more economical and sustainable than the US path.

Second, the renaissance has been associated with a structural differentiation of power in the region that has left the United States in control of most of the guns, Japan and the Overseas Chinese in control of most of the money, and the PRC in control of most of the labor. This structural differentiation--which has no precedent in previous hegemonic transitions--makes it extremely unlikely that any single state operating in the region, the United States included, will acquire the capabilities needed to become hegemonic regionally and globally. Only a plurality of states acting in concert with one another has any chance of bringing into existence an East Asian-based new world order. This plurality may well include the United States and, in any event, US policies towards the region will remain as important a factor as any other in determining whether, when and how such a regionally-based new world order would actually emerge.

Third, the process of economic expansion and integration of the East Asian region is a process structurally open to the rest of the global economy. In part, this openess is a heritage of the interstitial nature of the process vis-a-vis the networks of power of the United States. In part, it is due to the important role played by informal business networks with ramifications throughout the global economy in promoting the integration of the region. And in part, it is due to the continuing dependence of East Asia on other regions of the global economy for raw materials, high technology, and cultural products. The strong forward and backward linkages that connect the East Asian regional economy to the rest of the world augur well for the future of the global economy, assuming that the economic expansion of East Asia is not brought to a premature end by internal conflicts, mismanagement, or US resistance to the loss of power and prestige, though not necessarily of wealth and welfare, that the recentering of the global economy on East Asia entails.


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Tuesday, September 27, 2005

Ralph Economics- A Bounty of Stupid

"It's the Economy Stupid"

The King is in his counting house, someone get him a calculator........


2.8 billion....6 billion....8 billion.....
do I hear 10 billion, or maybe 12 billion

In his last days as our lame duck Premier, Ralph is acting like he is President of a High School Students Union. And we suffer with his Ralphenomics. The link in the header takes you to my other Blog....Red Between The Lines....and stories on the Alberta Surplus

Alberta news roundup: Sept. 23

BN

September 23, 2005


Premier says dividend cheques should keep coming

Premier Ralph Klein says dividend cheques could keep coming, so long as energy prices remain high.

Klein says Alberta's budget surplus could reach a record $8.8 billion dollars this year -- about three times what the government estimated in the spring budget.

Alberta's Liberals say the province is blowing the windfall energy wealth on gimmicky giveaways.

The NDP says Albertans deserve something better than the promise of more cheques in the mail.


Feds haven't ruled out taxing cheques

Federal and provincial officials say Ottawa has not ruled out taxing Alberta prosperity cheques bound for the province's children.

Transportation Minister Lyle Oberg says tax rebates paid to adults wouldn't be subject to Ottawa's attention.

But the minister says in theory, cheques earmarked for the youngest, unemployed Albertans theoretically would be.

Deputy Prime Minister and Edmonton MP Anne McLellan says she can't ensure that the 400-dollar payments will be exempt from taxation.


Fed says Alberta's wealth good for entire country

A federal politician who has said Alberta's energy wealth may have to flow to other provinces now says

Alberta's prosperity is good for the entire country.

Federal Transport Minister Jean Lapierre says more money in the pockets of Albertans means increased revenue for Canadian businesses.

In August, Lapierre said that a struggling manufacturing sector in Quebec may force Ottawa to intervene with a financial lifeline.

He then said that the dollars may have to come from Alberta.


Widowers' benefit program shut down

Alberta's widows and widowers benefits program is being shut down and replaced with another form of funding.

Premier Ralph Klein says the details of the new program are vague, but insists people will not simply be cut off.

A new program under Alberta Human Resources is to be in place before the existing support ends.

In 2003, the province moved to create one massive social-assistance initiative which would combine three programs into a single income-support and employment-training program.

Yep we have the lowest Welfare/AISH and other support payments in Canada, and one of the lowest minimum wages as well. But hey lets give everyone a one time bonus cheque.....

Rebate cheques not much of a legacy
Government is making things up as it goes along, unlike what occurred in Alaska
Graham Thomson
The Edmonton Journal
September 24, 2005

Sort of like Klein's surplus forecasts.

In the province's first-quarter fiscal update three weeks ago it was $2.8 billion.

Last week Klein pegged the budget surplus at $3.8 billion.

On Monday it was $6.8 billion.

By Thursday, Klein had it as high as $8.8 billion -- almost triple the forecast three weeks ago and much higher than anything that could be attributed to the recent surge in energy prices. At this rate, wait 15 minutes and it'll be worth another $7 million.

Alberta New Democrats say the situation is so screwy they might ask the province's auditor general to investigate how the government comes up with its surplus forecasts.

NDP writes auditor general to investigate revenue assumptions
The NDP Opposition wants an investigation of Alberta's revenue assumptions by the Auditor General. "You don't just forget to count six billion dollars," says Mason. "In Tory hands, our money is counted using whatever new math Ralph Klein dreams up in order to suit his political whims," he said.

The NDP suspects the government is up to no good, of course, wondering if Klein is playing a Machiavellian game with the numbers for his own devious ends. As usual, they give the government more credit for diabolical planning than it deserves.

The government is making things up as it goes along. It has no long-term, well-thought out plan for the surplus. It's as if a fiscal hurricane Katrina had breached the government's levees and flooded it with surplus cash. Klein is turning on the pumps and trying to get rid of it as fast as possible.

Last month there was no plan at all for rebate cheques, according to sources close to Klein. Back then Finance Minister Shirley McClellan was forecasting a $2.8 billion surplus. She didn't want to raise expectations and have people demanding money back.

Instead, she was leaning toward a tax cut for lower income Albertans but first she wanted to see what an in-housemreview of Alberta's tax system came up with later this year.

Then Klein got involved -- and, faster than you could sketch it on the back of a napkin, came up with the idea for rebate cheques. He's playing what he calls "retail politics," buying back the love of Albertans who deserted him in last year's election.

He keeps saying the $400 cheque is a one-time "prosperity bonus." But because he has no long-term plan for surplus money, reporters had no problem getting him to bet on the chances of a rebate cheque next year.

"If the price of oil stays where it is, yes, much better than 50 per cent," said Klein.

In perpetuity? -- asked one reporter. "If the price of oil stays where it is," responded Klein.

Undoubtedly, many Albertans will welcome the cheques, especially those left behind by boom times -- just as some outside the province will start to wonder if they should be entitled to a share of Alberta's wealth.

Klein's badly thought-out, and rushed, plan could end up making us a target for Canadians who don't live atop a sea of oil and gas, especially when they see the province's second-quarter fiscal update in November.

So, to try to head off the easterners at the pass, Klein will go on a cross-Canada tour near the end of November to explain that a prosperous Alberta means a prosperous Canada. "Keep your hands off," he'll say in the nicest way possible. It might work. Then again, his trip might be the equivalent of painting a bulls-eye on his front and hanging a "kick me" sign on his rear.

Before he explains his position to southern Ontario, he'll be explaining it to South Africa. Klein is headed there this weekend to speak to the World Petroleum Congress. His trip will also take him to Germany and Ireland -- at a cost of $70,000. Put another way, that's the equivalent of 175 rebate cheques.

For all of you who think annual rebate cheques are a great idea and who point to Alaska's annual dividend payments as a shining beacon, allow me to point out that Alaska has built up a $26-billion Permanent Fund to pay for those yearly cheques to 650,000 residents. The dividend cheques are paid out of interest earned on the fund. Alaska does not dip into the principal, nor does it turn energy revenues directly into dividend cheques as Klein has done in Alberta this year, and might continue to do for years to come.

Klein's plan is like frittering away your lottery winnings in a few years instead of living off the interest forever.

Mason to Klein: forget trip-Premier would look 'like a rodeo clown in a bullring'



Sending Premier Ralph Klein east to try and talk other provinces out of coveting Alberta's oil-driven budget surplus is like "putting a rodeo clown into a bullring," says Alberta New Democrat Leader Brian Mason. "He's just going to get everyone stirred up," he said. Klein's planned junket tour of Ontario and points east - intended to convince the rest of Canada that Alberta already contributes more than its fair share to the federation - is doomed to backfire, said Mason. "He's the one who single-handedly turned this into a national issue by his bellicose and belligerent statement: 'Hands off our money,'" he said. "I think he's the last person to go down east and tell the rest of Canada they shouldn't force Alberta to share its wealth." Rather, the premier should stay at home and develop a real plan for the province's resource revenue by consulting with Albertans, Mason said.

And this cartoon is from the Calgary Herald....in 2004, when the surplus was oh a couple of billion, reminding us that ever since King Klein was Mayor of Calgary he has always had a soft spot for 'Eastern Bastards', which should make his trip east even a bigger suckcess.



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