Juggling Dynamite

For anyone who may have been unconscious or in outer space for the last 20 years, here are the Coles Notes:

If finance had not been able to ‘securitize’ debts (turn them into assets) and sell them to speculators/investors over the past two decades, then debt creation could not have gone to such extremes and consumers would not have been able to borrow and spend themselves so far into financial ruin.  If western consumers had not been able to borrow themselves so far into ruin, they would also not have been able to buy so many goods from Asia and other developing nations for a time.  Asia and developing nations would not then have been able to mint so many new millionaires and billionaires in their governments and businesses who then funneled capital into western property markets, and western property markets would not have appreciated so far beyond domestic income gains.  If property prices had not increased so far beyond income gains, then households would not have had to borrow so much just to get a roof over their heads or a post-secondary education.  If they had not been able to borrow so much, property prices, education and related services would never have been able to rise so much for so long, and become so unaffordable for the masses.  But they did.

Now, as William Butler Yeats (1854-1939) warned in his poem The Second Coming, the world is upside down and “the center cannot hold“:

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity…

The old need the young to drive productivity and innovation, pay taxes and support the social safety net.  They also need the young to buy their assets (real estate, securities, businesses) when they wish to downsize and raise liquidity.  If the young are broke:  under-employed, over-indebted and under-saved, they cannot get a footing and the social contract is undone.

Twenty years of central bank and government-enabled debt-driven asset bubbles, have broken long-standing laws of financial and social equilibrium.  A secular global repricing cycle is necessary to break the impasse and reboot the system.  The status quo is unraveling, as it must.

For important insight on these trends in global property markets, see Young buyers are being priced out of global city property:

For centuries, great cities have lured the young and ambitious in search of streets paved with gold. Now those city streets seem more likely to appeal to the silver-haired as young people either flee or shun the increasingly unaffordable property prices.

These charts are also on point.

We must resist short-term focus and pressure to borrow more debt and waste more cash developing antiquated energy sources, and instead double down on developing longer-term prosperity and health with our vast sustainable resources.  See Forget Trans Mountain, here’s the sustainable way forward for Canada’s energy sector:

As of 2015, two-thirds of Canada’s power generation was from renewable sources, mainly hydro power. The share of renewables in Canada’s power generation is already among the highest in the world, exceeded only by Norway, New Zealand, Brazil, and Austria, and roughly the same as Denmark. Yet far more is possible.

Canada has so much untapped zero-carbon energy that it can be a major exporter to the United States. And, as a bonus, Canada can provide energy storage services to the United States by deploying the hydroelectric reservoirs as giant storage “batteries” for an interconnected Canada-U.S. power grid…

Herein lies the real future for both Canada and the United States in energy competitiveness. Rather than building pipelines that will soon be shut, Canadians and Americans should be building a smart grid to carry renewable energy between the two countries. Canada’s renewable energy is vast right across the country. Alberta, fortunately, has vast wind and hydroelectric power potential to enable the province to continue to be a major exporter of energy, only this time with zero-carbon energy that is sustainable for the long haul.

With Donald Trump trying to break the Paris climate agreement and championing fossil-fuel development, it may seem convenient to Canada’s politicians to go along with the U.S. President’s fossil-fuel recklessness. Yet Mr. Trump will be gone and human-induced climate change will remain. Canada is clever enough to look beyond Mr. Trump to its true long-term interests and those of the world.

Even those who do not worry about climate change should care about our degrading air quality from burning fossil fuels, a leading cause of illness and death across the world.
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Fresh, healthy produce grown 365-days a year in the heart of dense population areas. This is an area where technological innovation can be employed to great collective betterment. A smart use for some of that superfluous and increasingly empty retail space all over North America.

“At Bowery we grow hydroponically and that means that roots of our crops are actually dangling down into water, and so they’re not only immersed in that water and are able to take up that water when they need it, but the nutrients that those plants need is also in the water itself,” he said.

Here is a direct video link.