Juggling Dynamite

Now that the old conservative government is no longer gagging our scientists, we get a new non-shocking report from Environment Canada.  The finding: Alberta’s oilsands industry is one of the biggest sources in North America of harmful air pollutants called secondary organic aerosols (SOAs) that are then carried by winds across the country to pollute soil and water. See Alberta’s oilsands huge source of harmful air pollution, study finds: 

“Such production should be considered when assessing the environmental impacts of current and planned bitumen and heavy oil extraction projects globally,” the researchers wrote…

The World Health organization says particles of that size are small enough to be inhaled deep into the lungs, where they cause chronic inflammation. Long-term exposure significantly boosts the risk of dying of cardiopulmonary illnesses, and there is no evidence of a safe level of exposure.

Gee, it looks so environmentally friendly in pictures…

Excellent piece from John Hussman this week.  Read  The coming Fed-induced pension bust: “We strongly encourage investors to continue to save in a disciplined way, but nothing forces investors to allocate these funds to speculative asset classes.”  Unbiased, informed, commonsense, risk-management insights–so very rare and so valuable.  Here’s some highlights:

“All of this is tied together: zero interest rate policy, speculative yield-seeking, pension underfunding, financial bubbles, malinvestment, crisis, and economic stagnation. The intentional distortions created by wholly experimental monetary policy carry a great deal of responsibility for these outcomes. The global financial economy has been pushed to such reckless speculative extremes that the ability of this house of cards to survive even a quarter point increase in short-term interest rates is a subject of serious and uninterrupted debate.

The Fed has done enormous violence to the public, and to the underlying stability of the financial markets, not only by encouraging a reckless yield-seeking financial bubble as the response to a global financial crisis that resulted from the previous Fed-induced yield-seeking bubble; not only by driving the financial markets to the point where poor long-term returns and wicked interim losses are inevitable (the same dangers investors faced at the 2000 and 2007 peaks); but also by creating an environment where scarce savings have been increasingly diverted to speculative activities, and where pensions have been encouraged to underfund their liabilities in the belief that past realized returns are indicative of future outcomes.

Despite the dismal 10-12 year prospects for conventional portfolios, we strongly encourage investors to continue to save in a disciplined way, but nothing forces investors to allocate these funds to speculative asset classes.

…The tide will turn, as it always has in complete market cycles across history, and as investors discovered during the market collapses of 2000-2002 and 2007-2009. The erasure of realized past returns will restore reasonable prospects for future investment, as other retreats have done. Meanwhile, keep saving, reach for umbrellas, fasten your seat belt, and brace for the consequences and eventual opportunities that the current recklessness will bring.”

“Freedom 55” was a marketing slogan from the financial sales industry that arose during the late, great secular bull that ran from 1982-1999 and encouraged people to spend too much and save too little while banking on risky financial bets to make up capital deficits.  The real estate/mortgage business has also done a great job of convincing people that borrowing and buying expensive real estate is ‘investing’.  Scotiabank’s “You’re richer than you think” slogan to encourage borrowing and high risk/high fee securities is just one repulsive example.  It may have seemed like magic, but none of this was ever a realistic sustainable financial plan. Unfortunately, the masses have been very slow to see the truth. As Mark Twain once said: “It’s easier to fool people than to convince them that they have been fooled.”

A third of Canadians who don’t have an employer pension are reaching their mid-sixties without enough in retirement savings, forcing them to keep working. Here is a direct audio link.

The best plans are grounded in realism. People have to want to be defensive and proactive in their own financial health. For my summary of some tangible steps, see: Commonsense financial management.