Author Archives: Osumashi

The Race to October 2019

The popular press will do anything rather than admit that Justin and his friends are in trouble:

Twelve months from now, Canadians will pass judgment on the Trudeau government and decide whether its first mandate should be its last or if it deserves another four years.

As the one-year countdown to the next federal election on Oct. 21, 2019 starts ticking, Justin Trudeau’s Liberals appear reasonably well positioned to win a second term.

But a year is a lifetime in politics and the coming one promises to be particularly challenging for the Liberals, beset by a growing phalanx of hostile conservative premiers determined to put a spoke in Trudeau’s pre-election wheel.

In particular, they’re aiming to upend the introduction of a carbon tax — one of Trudeau’s signature policies, the central pillar of the Liberal plan for combating climate change.

It’s the next big thing on the government’s agenda and it’s the pivotal issue upon which Liberal strategists privately believe the next election will turn. It’s a fight they think they can win.

 

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China-Japan Summit Hopes to Produce a United Front Against US

With all the fanfare generated by Prime Minister Shinzo Abe’s visit to Beijing later this week, perhaps the most significant aspect is that it is happening at all.

Despite both taking office around the same time in 2012, Abe and his Chinese President Xi Jinping have never visited each other’s countries for a formal bilateral summit, with all of their previous encounters taking place on the sidelines of international conferences.

But after six years, Abe will finally make the trek, paving the way for a reciprocal visit by Xi to Japan at some point in the future.

“We want to use this opportunity to create momentum for us to map out and promote mutual cooperation and communication in various areas and to elevate Japan-China relations to a new level,” Chief Cabinet Secretary Yoshihide Suga said while announcing Abe’s visit to Beijing, which is scheduled to begin Thursday.

The meeting will likely be a cordial affair, with both sides eager to showcase the image of a rekindled friendship to commemorate the 40th anniversary of the Treaty of Peace and Friendship’s signing.

But among the parties, China appears to be the more desperate of the two.

China views Japan as an increasingly important partner in countering a protectionist United States led by President Donald Trump — while also realizing it could use the opportunity to alienate Tokyo from its top ally, Washington.

The Chinese government, analysts say, also seeks at least a semblance of an endorsement by Japan of Xi’s trademark — and increasingly criticized — “Belt and Road” initiative. It is looking to hammer out details on joint infrastructure projects in hopes of trumpeting Japan’s participation in the development strategy.

 

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A Stock Crash in China Could Be Much Worse

Perhaps the biggest financial market story in 2018 so far is the colossal fall from grace of the Chinese stock market, which has witnessed losses in excess of 30% since the start of the year.

The fall, which has seen the benchmark Shanghai Composite index drop to its lowest level in almost four years this week, is generally explained through the prism of investors realising that the blockbuster growth China has enjoyed over the last decade is on the wane, and that things are likely to slow down to a strong, but not stellar, rate.

Such a view has been exacerbated by the rise of the trade conflict between the US and China, which has seen the world’s two largest economies exchange tit-for-tat tariffs, which now apply to goods totalling close to a cumulative $300 billion.

Many economists see the trade war having a major negative impact on Chinese growth, with JPMorgan earlier in October saying a full-blown trade war could have a 1% shrinking effect on the economy.

While these two factors are evidently at play, there’s reason to believe that another factor could soon come into play, and force Chinese stocks even deeper into bear market territory — forced selling.

In China, hundreds of companies use their shares as collateral for loans, but when share prices fall they are forced to sell in order to maintain a certain level of balance in brokerage accounts, used to lend the companies money.

According to Bloomberg, about 4.18 trillion yuan ($603 billion,) worth of shares have been put up by company founders and other major investors as collateral for loans, accounting for about 11% of the country’s stock market capitalization, based on calculations using China Securities Depository and Clearing Corporation data.

The South China Morning Post, citing a report by Tianfeng Securities, said earlier in the week that more than 600 company stocks have fallen to levels where forced sales may kick in.

“It’s a vicious cycle: share drops lead to liquidation and liquidation leads to further share drops,” Wang Zheng, chief investment officer at Jingxi Investment Management told the South China Morning Post earlier in the week.

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North Korea Claims to Have Found Bones of Mythical King

And rainbows appeared when Kim Jong-Il was born:

Scholars say the chances that Dangun actually existed are close to zero.

According to Korean legend, Dangun was the son of a god who wanted to be a man, and a bear who wanted to be a woman.

“Dangun is a myth,” said Yeungnam University archaeologist Lee Chung Kyu.

North Korea’s founders originally disdained the story of Dangun as superstition incompatible with their ostensibly socialist ideology.

However, officials have since gone to great lengths to capitalize on the mythology and cement the ruling Kim family’s claim to Dangun’s legacy.

Official North Korean narratives have claimed Mount Paektu as the “sacred mountain of revolution” and assert that Kim Jong Un’s father, Kim Jong Il, was born on its slopes. Many historians place his actual birthplace in the former Soviet Union.

In the mid-1990s, North Korean authorities announced they had discovered the tomb of Dangun and his wife just outside Pyongyang, going so far as to “reconstruct” a white stone pyramid flanked by rough-hewn obelisks and statues of ancient princes and snarling beasts.

At the time, North Korean leader Kim Il Sung said constructing the mausoleum was designed to demonstrate “that Korea has a history spanning 5,000 years, that the Koreans are a homogeneous nation of the same blood since their emergence,” according to a state media article from 2015.

For 100 euros each, or about $115, tourists can peek inside a glass box containing what the North Koreans say are the bones of Dangun and his wife.

The high price and a reputation as an underwhelming experience mean few visitors pay to see the bones, Western tour guides say.

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Train Crash in Taiwan Kills 18 People

Terrible:

Eighteen people died and 168 were injured when a train derailed in northeastern Taiwan on Sunday, authorities said, in the island’s worst rail disaster in more than three decades.

Four carriages were overturned in the crash, which occurred in Yilan County near the coast on a line popular among tourists when all eight cars ran off the tracks, officials said.

It was unclear what caused the crash. As of 9:35 p.m. (1335 GMT), all 366 passengers onboard – including the dead and injured – had been evacuated or removed from the wreckage, the Taiwan Railways Administration said.

Hundreds of rescuers and military personnel worked through the wreckage with spotlights on Sunday night in search of survivors, with ambulances stationed nearby.

Rescue workers, some attending to injured people at the scene, used cranes to lift the battered cars, some of which were lined in a zigzag pattern near the tracks.

The official Central News Agency said the incident was the island’s deadliest rail tragedy since 30 were killed in a 1981 collision in northern Taiwan.

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Freeland Denies Being Pressured Into Making Last-Minute USMCA Deal

Sure, Chrystia. Sure:

Foreign Affairs Minister Chrystia Freeland says that anyone who thinks the new trilateral North American trade agreement limits Canada’s trade sovereignty is misguided.

Freeland told Chris Hall, host of CBC Radio’s The House, that the section of the United States-Mexico-Canada Agreement that lays out the rules for making pacts with “non-market” countries won’t limit Canada’s attempts to diversify its markets.

“It’s the one element of the modernized NAFTA that has not been fully understood by Canadians,” she said Thursday.

“There is nothing new in this clause and in the new agreement that restricts Canadian sovereignty in any way.”

Section 32.10 of the deal’s text states that a USMCA country must give three months’ notice to the other two parties before negotiating a free trade agreement with any country considered to be “non-market” — and therefore ineligible — by one of the USMCA partners.

Many have taken this to be a direct reference to China, as the U.S. has been engaged in a tariff battle with Beijing for months. Hundreds of billions of dollars worth of products have been affected, drawing retaliation from China.

U.S. President Donald Trump has taken aim at the dumping of foreign steel and aluminum by China. He also imposed steel and aluminum tariffs on Canada, Mexico and the European Union back in May, using a little-known U.S. law to declare those metals imports a threat to “national security.”

China has been critical of the new trilateral deal, saying the U.S. is trying to undermine its trade with Canada and Mexico.

 

In other news:

Canada’s embrace of American-style protectionist measures to prop up domestic steelmakers is set to increase costs for consumers and secondary manufacturers — assuming they can even find steel to buy amid current shortages.

It’s also offending key trading partners.

As of next Thursday, a 25 per cent surtax will be applied to all foreign imports of seven specific kinds of steel once they exceed historical average volumes. It’s an emergency tool the federal government’s never used before. Many manufacturers would love to stop it from being used now.

“It is going to kill businesses,” said trade lawyer Cyndee Todgham Cherniak. Her firm, LexSage, represents clients trying to persuade the Canadian International Trade Tribunal to reverse Finance Minister Bill Morneau’s decision at hearings scheduled for January.

“Exactly what we said shouldn’t be done to us, we’ve done to other countries. And, quite frankly, to our own businesses.”

Canada already has 78 different trade remedies (duties) in place for countries like China who’ve been caught dumping steel. This new surtax is part of a push to curb global overproduction and keep cheap steel from sneaking into North American supply chains.

But in the process, Canada’s surtax also hits fairly-traded steel from countries Canada normally counts as allies, including Japan and the European Union.

Companies already finding it hard to source quality, affordable steel are about to see more of their best options taxed.

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Column: “Electoral reform is finally coming to Canada and not a moment too soon”

Monday may in time come to be seen as the day electoral reform came to Canada. A year from now the country that, alone among those still using “first past the post” system of casting and counting votes, does so at every level of government, could have very different systems in place in several jurisdictions, municipal and provincial.

Starting Monday, and continuing until Nov. 30, British Columbians will be asked to vote by mail in a double-barreled referendum on electoral reform. The first question asks whether they wish to replace first past the post with a system of proportional system; the second, which of three “pro rep” systems they prefer.

Unlike the province’s two previous referendums on the subject, the threshold for reform is just 50 per cent: there will be no repeat of the 2005 debacle, when reform was supported by 58 per cent of the voters, including a majority in all but two of the province’s 79 ridings, and yet still somehow failed to pass the convoluted double-super-majority bar the province’s Liberal government had devised.

But B.C. is only part of the story. Monday is also the day voters go to the polls in 444 municipal elections across Ontario, the first since provincial legislation allowing municipalities to change from first past the post, where voters mark an x beside the candidate of their choice, to ranked ballots, familiar from party leadership races, where voters mark their ballots 1, 2, 3…

Of course the differences do not end there: where under first past the post the winner is the candidate with the most votes, no matter how few, under ranked ballots the second (and lower) choices of the last-place candidates after each round of counting are added to the tallies of the remaining contenders until one candidate has more than 50 per cent.

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It’s Just Money

The Economist this week warns policy makers to “start preparing for the next recession” while they still can. The release of the government of Canada’s annual financial report for the 2017-18 fiscal year, however suggests the Trudeau Liberals have no notion of foregoing that most enjoyable of all entitlements: spending other people’s money.

The annual budget is an aspirational document, revealing what the government would like to do. But the annual report is a look in the rearview mirror at what it did in the year ending March 31, 2018.

This year is complicated by a restatement of the public finances going back years to factor in an accounting change. (The Auditor General ordered the restatement, related to discounted and unfunded pension obligations, and it adds an additional $20 billion to the federal debt, which now stands at $671 billion.) But the story is relatively simple — 2017-18 was a bumper year for government revenues, which rose by $20 billion, or 6.9 per cent, from the previous year.

Personal income tax increases accounted for half of that flood of new money coming into the coffers, around half of which was related to economic growth and the other half to the unwinding of tax planning that had suppressed revenues in 2016-17 (when the Liberals announced they were going to raise the top rate of income tax to 33 per cent in late 2015, there was a rush of filing by high-income earners to declare income at the lower rate).

Yet, rather than reduce the deficit and pay down debt in preparation for the next recession, creeping toward them as inevitably as mortality, the Liberals spent the lot. In 2017-18 expenses amounted to $332.6 billion — breaching the $300-billion mark for the second time — up $20.1 billion, or 6.4 per cent from 2016-17.

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Moon’s Censorial Party Hopes to Gain a Propaganda Boon With Potential Papal Visit

It would be hilarious if Pope Francis surprises them with a Pope John Paul II surprise:

The ruling Democratic Party (DP) on Friday expressed hope that Pope Francis’ potential visit to North Korea will help speed up denuclearization of the Korean Peninsula.

The pope effectively accepted an invitation to visit North Korea on Thursday when President Moon Jae-in relayed North Korean leader Kim Jong-un’s verbal invitation. Pope Francis said if the North sends an official invitation, he will “certainly” respond to it.

“The pope’s possible visit to North Korea indicates the international community’s support for peace on the Korean Peninsula,” Hong Young-pyo, the DP’s floor leader, said at a meeting with senior party members.

“If realized, his trip will be momentum to induce the North toward the path to denuclearization,” he said. “We need a flexible approach to elicit (Pyongyang’s) denuclearization.”

The North’s leader expressed his willingness to invite the pope to his country during his third and latest summit with Moon in Pyongyang last month, according to Moon’s office.

No pope has ever visited North Korea.

 

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Whiner Complains About Law That Seizes Iranian Assets

Poor babies:

The real reason the Liberal government hasn’t been able to re-establish relations with Iran is due to its adherence to a “stupid” Canadian law allowing the seizure of Iranian assets, says Canada’s recently expelled ambassador to Saudi Arabia.

Dennis Horak, who was expelled from Saudi Arabia in August after its rulers were incensed by a tweet from Foreign Affairs Minister Chrystia Freeland, offered that blunt assessment as he shed new light on another controversial moment in Canada’s Middle East relations.

Six years ago, the previous Conservative government abruptly severed its diplomatic relations with Iran, shuttering its embassy in Tehran and expelling Iranian diplomats from Canada.

The current Liberal government campaigned in 2015 on re-establishing diplomatic relations with Iran but it has been unable to deliver on that foreign policy promise because Iran appears unwilling to re-engage.

Horak, who retired recently, said one obstacle is standing in the way: the passage in 2012 of Canada’s Justice for Victims of Terrorism Act, which allows victims of terrorism to sue countries that are listed as supporters of terrorism.

Among other things, the law paved the way for last year’s Ontario Court of Appeal ruling that upheld the seizure of US$1.7 billion in private Iranian assets by a group of American plaintiffs whose loved ones were killed in terrorist attacks sponsored by the Iranian regime.

“It was a stupid law. And it’s still a stupid law,” Horak told a meeting of the Canadian International Council in Ottawa this week.

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The New “Tobacco” Monopoly

We knew this was coming:

Under the federal government’s Bill C-45, provinces and territories were responsible for determining how cannabis is distributed and sold. But where indigenous communities – which fall under the federal Indian Act – fit into this picture is still unclear, given questions about jurisdiction and self-governance.

Canada’s Minister of Indigenous Services Jane Philpott told the Senate Committee on Aboriginal Peoples earlier this month that the government is working on addressing concerns regarding jurisdictional issues.

“I know that indigenous communities, organizations and businesses have spoken up about jurisdictional concerns but specifically the exercise of First Nation bylaw-making powers in relation to the legalization and regulation of cannabis,” Philpott told the committee.

“Our government recognizes and respects the jurisdiction of indigenous governments. We will continue to work with First Nations, Inuit and Metis communities to address and accommodate jurisdictional issues in an appropriate way moving forward.”

In Ontario, the only legal option to purchase cannabis until April will be through the province-run online store. Under the province’s proposed legislation, the Alcohol and Gaming Commission of Ontario (AGCO) will grant licenses to private retailers ahead of an April 1 launch.

Under the same proposed legislation, First Nations can opt out of that private retail model through a band council resolution. Brian Gray, a spokesperson for the Ministry of the Attorney General, said in an emailed statement that any store located within a First Nations reserve would require approval by the communities’ Chief and Council via band resolution before the AGCO issues a license.

 

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Article: “Feds dead set against ‘ridiculous’ quotas to replace steel, aluminum tariffs”

Good luck with that, Justin:

Canada is not about to agree to quotas or other limits on its exports in order to get the United States to lift punishing tariffs on steel and aluminum, says a source close to the ongoing talks to resolve the lingering tit-for-tat trade standoff.

Where the two sides ultimately end up remains to be seen, but the Canadian source — speaking on condition of anonymity in order to discuss sensitive negotiations — described the idea of a quota system as a non-starter and a concession that Canada is not prepared to make.

“They’re trying to get us to agree to a quota system, which we’re not going to do, because it’s ridiculous,” said the source.

 

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Just In: An Explosion in Pennsylvania Kills Three People

The Latest on a car explosion in Pennsylvania that killed at least 3 people (all times local):

4:20 p.m.

A coroner says three males are dead after a car explosion in downtown Allentown, Pennsylvania.

Lehigh County Coroner Scott Grim said at a news conference Sunday that authorities are working to identify the victims.

Authorities say the federal Bureau of Alcohol, Tobacco, Firearms and Explosives is taking the lead on the investigation. The FBI and local authorities are assisting.

Officials say they are seeking tips from the public to solve the crime.

Authorities say the blast happened on a city street around 9:30 p.m. Saturday. They had earlier confirmed at least one fatality.

More to come.

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