Our World on this Day, July 23, 2015

Jul 23, 2015

Now that Greece’s ‘little detour’ has ended, at least temporarily, and is no longer sucking all the air out of the economics-and-politics chat room, and since many summer vacationers are immersed in other reading anyway, the present seems a good time to slip in some sly comments on the state of the world, as we step only slightly beyond the midway point of 2015.

2015 07 23 Our World on this Day Graphic

(1) August 6 has been scheduled as the date for the first debate among Republican Party leadership hopefuls, leading up to the next Presidential election a year and a quarter away in November 2016. There are 16 candidates, but only 10 will be invited to appear.

In current polling, Donald Trump is the frontrunner. As for his credentials, he has clearly been successful (financially); knows how to get things done; and revels in being outspoken. Many people are intrigued by his celebrity status and the fact he doesn’t sound like other office-seekers.

Flaws he has as well, though. He’s apparently vindictive. Just ask Rosie O’Donnell, John McCain or Lindsey Graham. Many politicians know how to hold a grudge. Few have ever before turned such a proclivity into a reality-television art form to serve as entertainment for a Nielsen audience.  

(2) On August 6, there will also be a televised debate in Canada for the party leaders vying to be Prime Minister after October 19’s federal vote. Current P.M., Stephen Harper is entering the contest with a support team that has lost, due to resignations, several of its former key cabinet ministers.

Nor is the Canadian economy, which is struggling to realize output growth, as strong as I’m sure Mr. Harper would wish. And this year’s heretofore highly-touted balanced budget may turn out to be a mirage, given the decline in royalty revenues as oil prices sink again.

In attack ads, the Conservatives are characterizing Liberal Party leader Justin Trudeau as “just not ready” for the highest office. The NDP’s Thomas Mulcair will be depicted as soft on Quebec independence and inexperienced in business matters. The election is sure to feature a good spat.

(3) An agreement between leading developed nations and Iran to curtail that country’s nuclear weapons aspirations is facing stiff opposition from Congress in Washington. Should the agreement be ratified, Iranian oil will become available for sale again in a world marketplace that is already awash with crude.

Analysts are saying all of the potential supply increase won’t come on-stream overnight. That investments by giant foreign oil firms will be required to bring Iranian fields back to full production. The consequent timing of the new oil supply will coincide with greater demand from an improving world economy.

In other words, there will be an orderly transition. So relax, what could possibly go wrong with that assumption?

Meanwhile, religious leaders in Iran continue to attend rallies that feature chants of “Death to America” and Israel’s Prime Minister, Benjamin Netanyahu is beside himself with annoyance over what has been negotiated by others for his neck of a very dangerous woods.

(4) The richest and possibly most vicious drug dealer in the world, Joaquin ‘El Chapo’ Guzman (where ‘chapo’ is a Spanish-language slang term for Shorty), recently escaped from a maximum-security prison in Mexico.

From under his jail cell to a small outside residence, he rode a motorized bike-like contraption through a mile-long tunnel complete with lighting and a ventilation system.

I remember the movie “The Great Escape”. The allied prisoners-of-war stuffed their pants with dirt from tunnel-digging operations. Then they managed, by various ingenious means, to spread it inconspicuously over the grounds of their camp.

El Chapo’s tunnel was a mile long. From media coverage so far, I have yet to learn the disposal method for the extracted earth. If there were dump trucks carting away mountains of cargo from an existing suburban site, did no-one pause to wonder what might be transpiring?

(5) For the longest time, global agricultural-product prices didn’t suffer the same floor-dropping fate as commodities in the energy and mining sectors. That respite has ended. Sugar and coffee prices have recently plummeted the most of any commodities.

Brazil is a world leader in sugar and coffee production. The value of Brazil’s currency, the ‘real’, has sunk by almost a third versus the U.S. dollar. This leads to a chicken and egg question. Have prices for sugar and coffee plummeted because the ‘real’ is in distress? Or has the ‘real’ tanked because world prices for coffee and sugar are on life support?

(6) Will she or won’t she? That’s another big question. Is September the best time for Janet Yellen, Chairman of the U.S. Federal Reserve, to raise interest rates? The crux of the problem is that there may never be a supposed ‘best time’ to take such a course of action. Perhaps it might appear someday in hindsight, but not likely ever in the thick of things.  

With commodity prices so weak and investment in resource projects – as well as in many other construction categories − already so timid, a rate hike fairly screams ‘questionable strategy’.

(7) Much of western North America is being plagued by wildfires. Many such conflagrations have been initiated by lightning strikes on terrain made tinder dry by drought. The long dry spell is being blamed on global warming. Firefighting costs are taking an enormous toll on government budgets.

Tornadoes are forming and touching down seemingly everywhere as well. The number of weather-induced calamities is on the rise. This leads me to wonder if, at some point, insurance companies won’t throw away their risk assessment tables and abandon the rest of us to our own devices. Better top up my rainy-day savings account some more.

(8) On a sweeter science note, worries about a decline in the honeybee population seem to have been overblown. According to Statistics Canada, the beehive population in Canada has risen to its highest level ever.  There are currently 8,700 beekeepers in Canada with management responsibility for 700,000 hives.

Thank goodness, because a write-up at the ‘CropLife’ home page on the Web asserts that one in three bites of the food we eat is thanks to the pollination efforts of bees.

(9) Lots of things go on behind the scenes that are critically important to our daily lives, but about which we may be unaware.

For example, maybe the world really is run by a secret cabal of villains and knaves. I guess we’ll find out on November 6 in America (Oct 26 in the U.K.), when the next James Bond film, SPECTRE, is due to be released in theaters.

It’s expected to earn at least a billion dollars. Can’t wait! 

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