Over five years ago now, March 11, 2013, I published this mayo615 blog post on the Alberta bitumen bubble, and the budgetary problems facing Alberta Premier Alison Redford, and the federal Finance Minister Jim Flaherty at that time, both of whom were surprisingly candid about the prospect for ongoing long-term budgetary problems for both the Alberta and Canadian national economies. Fast forward five years to today and the situation has essentially worsened dramatically. The current Alberta Premier Rachel Notley is facing another massive budget deficit, just as Alison Redford predicted years ago, and was forced to call a new election. My most glaring observation is that despite years of rhetoric and arm-waving, almost nothing has changed. Meanwhile, the Canadian economy is on the precipice of a predicted global economic downturn which could easily become a global financial contagion.
As Fareed Zakaria has pointed out this week in the Washington Post and on CNN GPS, we now have a Trump foreign policy doctrine, and it is not reassuring for the World. Obviously heavily influenced by Bannon, who many had thought had been relegated to backseat status by McMaster, we have been fooled again. As Trump demonstrates his RealPolitik admiration for authoritarians like Putin, Xi Jinping, Erdogan, and Duterte, more sinister scenarios begin to crystallize. Trump’s speech justifying the withdrawal of the United States from the COP21 Paris Climate Change Agreement is a frightening exposition of this new Trump Doctrine. It is Trump thumbing his nose at the World. It is the United States against the World, led by a coterie of plutocrats and their money. The reality is that the evidence points to an ongoing seizure of executive power by Trump that destroys our Constitution in the name of our national security. The question is what we can do about it.
We are now seeing the first indications of the consequences of a Trump withdrawal from the international community. China has seen an opportunity to displace the United States and to advance China’s own aspirations to take a more aggressive and visible leadership role in the COP21 agreement. The simultaneous announcement of the de facto death of the TransPacific Partnership (TPP) has also opened a new opportunity for Chinese hegemony in the Asian economic and geopolitical world. Regardless of the Trumpist views on climate change and foreign trade, we are proverbially cutting off our noses to spite our faces.
Leonardo DiCaprio’s extraordinary two-hour National Geographic documentary is now available for viewing free everywhere, including on this page, YouTube, The National Geographic website, and the National Geographic Channel. Everyone should watch it. Equally worthwhile is the series The Years of Living Dangerously on National Geographic. The 2-minute trailer and the full documentary film are below here.
Following my recent blog posts on Reid Hoffman, COP21, and an apparent resurgence of Big Ideas in technology, a growing group of venture capitalists are resurrecting their original mission in industry and the economy. Paul Krugman of the New York Times has also noticed and offers his hope that this trend continues. Max Marmer, who wrote his now legendary 2012 Harvard Business Review article, “Reversing the Decline in Big Ideas,” has stimulated a broad rethinking on what we should be focusing. The successful landing of Space X’s Falcon 9 is a hopeful early indication that Elon Musk is one of those on the right track.
Le Bourget airport just north of Paris is the place where Charles Lindbergh landed the Spirit of St. Louis. That event 88 years ago could now be interpreted as foreshadowing the era of globalization. Tomorrow, the world’s nations will meet there under the banner of the UN Framework on Climate Change (UNFCCC). COP21, also known as the 2015 Paris Climate Conference, will, for the first time in over 20 years of UN negotiations, aim to achieve a legally binding and universal agreement on climate, with the aim of keeping global warming below 2°C.
Underscoring Goldman Sachs forecast last week of oil prices at or below $50 per bbl until at least 2020, Bloomberg News is today reporting that Iraq is preparing to unleash a flood of new oil within the next few months. This is very bad news for the price of Western Canadian Select bitumen, and Alberta oil sands producers. Saudi Arabia’s strategy, together with OPEC, to squeeze high-cost oil producers of oil sands and shale seems to be working. More pessimistic forecasts of WCS at $25 for an extended period now appear more plausible.