Wednesday, March 31, 2010

Survivalism in the Suburbs

Despite humanity surviving and thriving for thousands of years using commodity currencies the fiat currency proponents have effectively marshaled the press and academia to equate those in favor of a commodity currency with those counting down to Armageddon. When looking back through the corridors of history one lesson is clear from humanity’s experience: at all times and in all circumstances gold and silver remained money. After fiat currency debacles that resulted in self-inflicted financial and economic wounds it was the individuals with the foresight to store tangible assets that were able to provide the capital for humanity to do what they have always done: rebuild.

Therefore, those in favor of a commodity currency who store tangible assets are the optimists. Commodity currency advocates are neither ‘doom and gloomers’ nor vampiric fatalistic fiat currency disciples who will be vaporized by a rising golden sun. Those in favor of a commodity currency who store tangible assets realize that the earth rotates, the sun rises and the ages turn. As the night shifts to day life will go on with breakfast being cooked and eaten. The issue is who will do the cooking and who will do the eating.

Strategic Relocation

Shortly before Memorial Day I received an interesting, if not unanswerable, question from a reader: “Would you recommend a place to live in the Montana to Colorado area that will have minimal economical damage?”

The principle of human action holds that every individual derives utility according to their own preferences resulting in a subjective perception for determining value and price. I hate cold weather. Being trained in the law I am often accused of being cold-blooded but the reality is that I am just a desert rat.

While preparation expert Joel Skousen, author of Strategic Relocation, may consider Montana or Nebraska attractive locals I have about the same desire to live in Montana or Nebraska as I have for eating sauteed rats in South Korea. Nevertheless, I know people who love living in Montana and others who find sauteed rat a delicacy. Everyone has their own individual preferences based on their human action.


A motto I have tried to implement is: Be prepared. Often the first step is to assess the environment and circumstances. There is an infinity of scenarios that can play out. The key is being able to assess what is possible and its probability of occurring.

Sure, a metorite could come hurling out of left field and destroy your car, or the earth for that matter, but the probability is extremely low. Even if I did purchase meteorite insurance I would still bear the counter-party risk. Therefore, I have chosen to forgo meteorite insurance. Nevertheless, I would not be surprised if a few of my extremely conservative readers did purchase meteorite insurance and maybe even additional reinsurance. Everyone has their subjective preferences.

Mental Calculations of Value

The use of fiat currency has greatly retarded the ability of the general populace to performance mental calculations of value. These fiat currency illusions are like using the term ‘foot’ or ‘feet’ to perform mental calculations of distance when constructing a building but having either no definition of inches or conflicting definitions of inches.

Let us assume plans were drawn up for a building with a 7 foot door within a 10 foot wall. However, the definition of feet when used for the door was 24 inches per foot and when used for the wall it was 6 inches per foot. Can you imagine the resulting chaotic structure?

But that is precisely the problem most individuals and financial professionals have found themselves in. As a result most people can neither accurately appraise the economic environment nor make accurate assessments of the possible events and their probability of occurrence.

Suburban Survivalists

Yahoo Finance! reported that a new trend is coming out of chaotic California: ‘Crisis spurs spike in ‘suburban survivalists’. “Six months ago, Jim Wiseman didn’t even have a spare nutrition bar in his kitchen cabinet. Now, the 54-year-old businessman and father of five has a backup generator, a water filter, a grain mill and a 4-foot-tall pile of emergency food tucked in his home in the expensive San Diego suburb of La Jolla.”

I find Mr. Wiseman’s tale of ‘spending roughly $20,000 since September on survival gear’ rather ironic on multiple levels. First is his name. Second is that he is a ‘fire protection contractor’ so it appears that he is in the risk management business. Third is how he has approached the performance of these mental calculations of value.

Surprisingly Professor Markman does hit on a key issue when he says, “We have no real causal understanding of the way our world works at all”.

Complex Systems
A few years ago I was touring a Wal-Mart store with its general manager. He showed me all around, how the trucks were packed and explained the Just-In-Time computer system that automatically managed the inventory to make sure that just the right amount of goods arrived at the stores at just the right time. After all, this helped reduce inventory which freed up cash and made the company more profitable.

Also a few years ago at a lunch I had a discussion with Kevin Rollins, former President and CEO of Dell Computers, about inventory management. His statement still sticks in my mind about measuring inventory turnover not in days but hours.

Tremendous innovations in supply chain management have taken place over the last decade. Companies and their inventory are leaner than ever which conserves their cash and supposedly increases profitability. But sometimes a black swan flies in, disrupts the system and chaos in sues. Other times it is a gaggle of black swans.

Simple Preparation

If Mr. Wiseman really needs his various preparations then what would the probability be that the area he is in is experiencing massive civil unrest, supply chain disruptions, gang warfare and a host of other undesirable effects?

Often when thinking of disaster preparation people get a little extreme, do not accurately assess the probability of events, focus on fairly immaterial questions like how to buy gold or silver and neglect the more important issues.

When considering physical preparation I think the best insurance is a three month supply of food and a 72 hour kit.

The kit should be extremely portable such as a backpack which may be quickly taken in the automobile should there be a need to evacuate. The food storage is a great hedge against inflation, insurance that you can eat which is not subject to counter-party risk, protection against potential supply chain disruptions such as the recent swine flu advertising campaign, and relatively cheap. Food storage is a form of savings and procuring a three month supply of food may cost only a few hundred FRN$s.

Many of the economic establishment has an insane belief that savings can be too high and often berate China for their high savings rate. The savings rate can never be too high.

For example, an individual can never have too much food. But many negative effects, such as death, result from having too little food. Therefore I would rather bear the risks from having too much food such as spoilage, etc. than any of the effects from having too little food. After all, the body measures food and water inventory in hours not days. To reduce the cost of having excess food therefore I follow the principle of storing what I eat and eating what I store.

Many, such as billionaires Eric Sprott and Richard Rainwater, find the Peak Oil theory persuasive and foresee a long emergency. Sure, there are additional preparations you can make such as opening a free GoldMoney account where you can begin using gold or silver in ordinary daily transactions, procuring a shotgun or Glock 9mm, storing a year or two of food, spending hundreds of thousands or millions of FRN$s on a ranch in a remote location, etc. For those interested, I address the principles for a comprehensive strategy in chapter 6 of The Great Credit Contraction for dealing with the current environment to protect, preserve and grow one’s wealth.


Using gold to perform mental calculations of value is extremely important in determining how to profitably allocate capital. The current worldwide monetary system is based on a rapidly evaporating illusion. The FRN$ system is facing intense pressure which is resulting in many undesirable consequences. Being able to assess possible events and discern their probability is becoming increasingly important.

Our current society functions because of complex systems and they can easily be disrupted. Preparation to hedge against these uncertainties can cost anywhere from a few hundred FRN$s or become a black hole for capital and time. Having a three month supply of food and a 72 hour kit will provide protection against the vast majority of probable scenarios. The Great Credit Contraction has only begun and the landscape is changing at a rapid pace.

Are you prepared? You may even consider taking a survivalism course. To benefit other readers please leave you questions or suggestions in the comments.

Trace Mayer

Trace Mayer, J.D., author of The Great Credit Contraction, holds a degree in Accounting, a law degree from California Western School of Law and studies the Austrian school of economics. He works as an entrepreneur, investor, journalist and monetary scientist. He is a strong advocate of the freedom of speech, a member of the Society of Professional Journalists and the San Diego County Bar Association. He has appeared on ABC, NBC, BNN, radio shows and presented at many investment conferences throughout the world. He operates and

Monday, March 29, 2010

Biblical plagues really happened say scientists

Researchers believe they have found evidence of real natural disasters on which the ten plagues of Egypt, which led to Moses freeing the Israelites from slavery in the Book of Exodus in the Bible, were based.

But rather than explaining them as the wrathful act of a vengeful God, the scientists claim the plagues can be attributed to a chain of natural phenomena triggered by changes in the climate and environmental disasters that happened hundreds of miles away.

They have compiled compelling evidence that offers new explanations for the Biblical plagues, which will be outlined in a new series to be broadcast on the National Geographical Channel on Easter Sunday.

Archaeologists now widely believe the plagues occurred at an ancient city of Pi-Rameses on the Nile Delta, which was the capital of Egypt during the reign of Pharaoh Rameses the Second, who ruled between 1279BC and 1213BC.

The city appears to have been abandoned around 3,000 years ago and scientists claim the plagues could offer an explanation.

Climatologists studying the ancient climate at the time have discovered a dramatic shift in the climate in the area occurred towards the end of Rameses the Second's reign.

By studying stalagmites in Egyptian caves they have been able to rebuild a record of the weather patterns using traces of radioactive elements contained within the rock.

They found that Rameses reign coincided with a warm, wet climate, but then the climate switched to a dry period.

Professor Augusto Magini, a paleoclimatologist at Heidelberg University's institute for environmental physics, said: "Pharaoh Rameses II reigned during a very favourable climatic period.

"There was plenty of rain and his country flourished. However, this wet period only lasted a few decades. After Rameses' reign, the climate curve goes sharply downwards.

"There is a dry period which would certainly have had serious consequences."

The scientists believe this switch in the climate was the trigger for the first of the plagues.

The rising temperatures could have caused the river Nile to dry up, turning the fast flowing river that was Egypt's lifeline into a slow moving and muddy watercourse.

These conditions would have been perfect for the arrival of the first plague, which in the Bible is described as the Nile turning to blood.

Dr Stephan Pflugmacher, a biologist at the Leibniz Institute for Water Ecology and Inland Fisheries in Berlin, believes this description could have been the result of a toxic fresh water algae.

He said the bacterium, known as Burgundy Blood algae or Oscillatoria rubescens, is known to have existed 3,000 years ago and still causes similar effects today.

He said: "It multiplies massively in slow-moving warm waters with high levels of nutrition. And as it dies, it stains the water red."

The scientists also claim the arrival of this algae set in motion the events that led to the second, third and forth plagues – frogs, lice and flies.

Frogs development from tadpoles into fully formed adults is governed by hormones that can speed up their development in times of stress.

The arrival of the toxic algae would have triggered such a transformation and forced the frogs to leave the water where they lived.

But as the frogs died, it would have meant that mosquitoes, flies and other insects would have flourished without the predators to keep their numbers under control.

This, according to the scientists, could have led in turn to the fifth and sixth plagues – diseased livestock and boils

Professor Werner Kloas, a biologist at the Leibniz Institute, said: "We know insects often carry diseases like malaria, so the next step in the chain reaction is the outbreak of epidemics, causing the human population to fall ill."

Another major natural disaster more than 400 miles away is now also thought to be responsible for triggering the seventh, eighth and ninth plagues that bring hail, locusts and darkness to Egypt.

One of the biggest volcanic eruptions in human history occurred when Thera, a volcano that was part of the Mediterranean islands of Santorini, just north of Crete, exploded around 3,500 year ago, spewing billions of tons of volcanic ash into the atmosphere.

Nadine von Blohm, from the Institute for Atmospheric Physics in Germany, has been conducting experiments on how hailstorms form and believes that the volcanic ash could have clashed with thunderstorms above Egypt to produce dramatic hail storms.

Dr Siro Trevisanato, a Canadian biologist who has written a book about the plagues, said the locusts could also be explained by the volcanic fall out from the ash.

He said: "The ash fall out caused weather anomalies, which translates into higher precipitations, higher humidity. And that's exactly what fosters the presence of the locusts."

The volcanic ash could also have blocked out the sunlight causing the stories of a plague of darkness.

Scientists have found pumice, stone made from cooled volcanic lava, during excavations of Egyptian ruins despite there not being any volcanoes in Egypt.

Analysis of the rock shows that it came from the Santorini volcano, providing physical evidence that the ash fallout from the eruption at Santorini reached Egyptian shores.

The cause of the final plague, the death of the first borns of Egypt, has been suggested as being caused by a fungus that may have poisoned the grain supplies, of which male first born would have had first pickings and so been first to fall victim.

But Dr Robert Miller, associate professor of the Old Testament, from the Catholic University of America, said: "I'm reluctant to come up with natural causes for all of the plagues.

The problem with the naturalistic explanations, is that they lose the whole point.

"And the whole point was that you didn't come out of Egypt by natural causes, you came out by the hand of God."

Catholic priests are not the only child abusers

You have to hand it to the BBC: it tries, in its way, to be impartial. To that end, Radio 4's Broadcasting House yesterday interviewed a man called Trevor who was sexually assaulted when he was a child by an Anglican vicar – rather than a Catholic priest.

Trevor, who is still justifiably enraged about it, says that it put him off religion for life. But where does that leave us? With the notion that the Churches are merely clerical outfitters for pederasts? Certainly, given the latest allegations about child abuse in a school for the blind in Italy, most Catholics will, once again, be pulling the duvet over their heads. Notwithstanding Trevor, the CofE isn't in the same league.

Yep, I too turned my face to the wall. But there's a problem with the way we're looking at this: as a present scandal, not as belated acknowledgement of crimes that were, by and large, committed two or three decades ago and grotesquely mishandled back then by bishops.

Offenders who were once humiliatingly unfrocked were, in the Seventies, sent off for therapy, which is more than their victims ever got. Clerical scandals are still happening, not least in Italy, but in an interview published in The Tablet, the man in charge of these cases in Rome, Mgr Charles Scicluna, says that in the past couple of years, he's dealt with 250 cases a year worldwide. That's almost certainly an underestimate and 250 too many, but it's not, God help us, as bad as before.

In Britain there are now exemplary guidelines for clergy in dealing with these allegations; cases are now referred to the police. For that change in culture, most credit must go to people who spoke out about what happened in the past, but some should go to the Pope, who took charge of the issue in 2001.

Right now, most of my priest friends go out of their way not to be left alone with a child, which is dispiriting in itself. But even in the past, about four per cent of clergy in Ireland and less than half of one per cent in England and Wales attracted allegations of abuse. That's bad, God knows, but it's comparable with the problem elsewhere. And there's the rub. It's handy to displace our paranoia about children on to an institution. But the reality remains that children are most at risk in their own homes. Yet we don't demonise fathers. We don't sound off about the danger to children of living with a stepfather – men who are, judging by American research, four times more likely to abuse a child than a blood parent.

I'm all for prosecuting clerical molesters, but if we think the problem of child sex is out there in the Vatican, or even in the CofE, we're kidding ourselves.

* Come British Summer Time, come the annual debate about putting the clocks forward. One headline yesterday said: "Parties back clock change to give extra hour of light." Really? If they can do that, they're a force of nature. Look, we get so much daylight; we can start the day when we like to make the most of it. What politicians can't do is give us more light.

* Wasn't it just brilliant, the Radio 4 interview with Ian Paisley, 83, on Saturday? The great man cheerfully declared that he had prayed with Martin McGuinness, the republican leader; unlike any other politician, he wasn't remotely embarrassed about it. Genial from first to last, he upheld his new reputation as half of the "Chuckle Brothers". Given where he's coming from, it shows anything's possible in the way of personal transformation. Did you ever think you'd see the day when the old villain would become a national treasure?

Saturday, March 20, 2010

Backyard Bunnies Are the New Urban Chickens

Why rabbit is the most sustainable meat for the city farmer. (Plus: How to cook it, and how to raise your own.)

By now we all know that eating a lot of meat—especially factory-farmed meat—isn’t very good for the planet. Fortunately for meat eaters, some meats are more sustainable than others. And as it turns out, rabbit is one of the healthiest, leanest, and most environmentally friendly meats you can eat.

There are many reasons for this. Mark Pasternak of the famed Devil’s Gulch Ranch explains, “The biggest reason that rabbits are a sustainable meat choice is that they eat forage, which is not useful for humans. This means that rabbits don’t compete with us for food calories." Rabbits are also, as Meatpaper editor and co-founder Sasha Wizansky points out, an ideal choice for urban farmers. Rabbits are small and can easily be raised and butchered by the DIY homesteader. They are easy to fit in a small backyard, and are happy to help you compost your leftover food. “You can feed a rabbit on your kitchen scraps,” says Wizansky, and then use their waste as fertilizer. (Pasternak advises against feeding them too much fruit, however.)

Rabbits have a much smaller carbon footprint than other animals because they convert calories into pounds more efficiently. According to Slow Food USA, “Rabbit can produce six pounds of meat on the same amount of feed and water it takes a cow to produce just one pound.”

So, are rabbits poised to become the next American diet staple? “I don’t see rabbits taking over beef markets in the U.S.," says Wizansky, "but it wouldn’t be a bad thing if they did.” Unlike Europeans, she notes, Americans have displayed a resistance to the idea of rabbits as food, but that seems to be changing.

pollanMichael Pollan is on the bandwagon. When I ran into him at a recent rabbit butchery class, he had this to say: “Rabbit makes more sense than chickens in a lot of ways, and if people ate more rabbit, I think they would see that instantly. Rabbits are easier to slaughter, quieter, and not as stinky as chickens. I think it’s a really good solution. We have rabbits and chickens in our neighbor’s backyard, and we aren’t aware of the rabbits. It’s a cultural thing, we aren’t as accustomed to eating rabbits, but rabbit is becoming a fashionable meat.”

Biologically, their fast reproductive cycles encourage rapid generational assimilation. Rabbits, unlike chickens, quickly replenish their own stock, a stock that—with each iteration—is better suited for its particular environment. Being able to reproduce quickly and quietly are clear advantages that rabbits have over chickens—especially in densely populated areas. Unlike roosters, which are famously enthusiastic for crowing about their fecundity, rabbit bucks are known for being doers, not talkers. This noiseless intimacy means you can have both male and females together without annoying your neighbors.

Wizansky sees raising rabbit as a natural extension of the “eat local” movement. “If you are talking about being a locavore then even if you live in a city, you need to grow your own food.” If you choose to eat meat, this is a way to do that in a responsible manner. If every time you wanted to enjoy some flesh you first had to slaughter and butcher an animal, it is likely that you would simultaneously eat less meat and appreciate it more when you did.

But are rabbits just too adorable to devour? Not for Wizansky, “I don’t have a prohibition against eating cute animals. I feel like if I’m eating animals I should eat all of them; If not, I should rethink my omnivorism."

So backyard bunnies sound nice, but how hard is it to actually slaughter and butcher one? “Rabbits are the easiest animals to slaughter," says Pasternak. "Mother Nature designed them to die: They are at the bottom of the food chain; you don’t have to pluck feathers; it’s easy to twist their necks; and skinning them is really fast and easy.”

Wizansky agrees. “Rabbit slaughters are quieter. Devil’s Gulch had a slaughter with the butcher and chef Ryan Farr. They broke their necks, using one arm as a vice to hold the rear legs, and the other arm to pop the neck. They call this cervical dislocation. I’ve also seen Novella Carpenter do it by putting the rabbit’s neck under a broom handle.”

But once butchered and cooked, does rabbit even taste good? According to a growing legion of acclaimed American chefs, the answer is "absolutely." Devil’s Gulch rabbits are featured at some of the country’s best restaurants, such as Chez Panisse and French Laundry. And chef Chris Kronner of San Francisco’s Bar Tartine explains that he likes to cook with rabbit because it evinces exoticism but comes with a familiar flavor profile. Rabbit tastes like chicken, he says, but “the meat is mild and generally sweet without any traces of gaminess.”Still, there is a complexity there. "Just like a pig, each portion of a rabbit has different muscle structures and flavor characteristics when cooked. The hind leg has a more developed flavor because the muscle is used more than the loin, which is leaner and composed of all white meat."

Chef Samin Nosrat, the teacher of the rabbit butchery class, adds that the novelty of rabbit meat seems to inspire chefs and diners alike: “People have been less creative with chicken. With rabbit, they are being much more mindful with how they cook it.”

The meat is also good for you. According to Pasternak, “rabbits are a healthier meat. The quality of their protein is very good, they are high in good fats, and because they are a pseudo-ruminant they have higher levels of CLAs [Conjugated Linoleic Acid] which are high in the Omega-3 fats that you find in grass fed-beef and lamb.”

How big will this rabbit renaissance get? The last time the nation was this invested in growing its own food was during the Victory Gardens of WWII. Then, like now, the White House had a vegetable garden. “Rabbit [may have] fallen out of favor, but you can still find a lot of rabbit dishes in your grandparent’s recipes," says Wizansky. She also notes that Keeping Poultry and Rabbits on Scraps, a book originally printed in the 1940s, has been recently reissued.

It’s still too soon to tell, but rabbits look like they may soon be ubiquitous. And, maybe that’s the best part about going down the rabbit hole: whenever you do, everything old becomes new again, and everything changes places.

DSC_8434Chef Chris Kronner’s Easy Home Rabbit Recipe: Braised Rabbit with White Wine and Herbs.

If you haven’t got your own rabbits, bring home a fryer from your local farmer’s market or butcher and then cut the entire rabbit in half with a cleaver. Next, season both pieces with salt and pepper and allow to rest for several hours.

Give the meat a light sear in the pan. You can use oil or butter, or, if you are feeling more ambitious, first render the fat encasing the kidneys and use that as your cooking oil.

Next, remove the rabbit and add the onion, garlic, parsnip, and carrots. Sauté the veggies and then add the fennel, two sprigs of thyme, two bay leaves, and peppercorn and parsley. Wrap herbs in cheesecloth. Put the seared rabbit back in on top of the vegetables and then add enough chicken stock and 1 cup of white wine to covers the rabbit.

Cover and put in oven at 350° for 90 minutes. Serve over wide egg noodles, toasted bread, or roasted potatoes. Braised kale or chard are optional side dishes.

1 rabbit
1 onion
1 small head of fennel
3-4 garlic cloves
1-2 parsnips
1-2 carrots
1 cup white wine
2 sprigs thyme
2 bay leaves
peppercorn and parsley to taste.

Rabbitry 101: Mark Pasternak on Raising Backyard Bunnies

“If you are already raising chickens—raising rabbits on a small-scale would be really easy,” he says. Pasternak suggests that the average DIY farmer should start out with one male (buck) and three does (female). He advises against having more than one male at a time because adult male rabbits are aggressive and territorial. A rabbit’s gestation period is extremely short, only 30 days from conception to birth. Consequently, if you mated one buck and three does, you could have up to six litters a year, but four litters is much more likely. Each doe should deliver anywhere from six to 10 bunnies. With three does, Pasternak reckons you could supply yourself with a substantial supply of meat over a year.

Pasternak has three basic rules for the urban homesteader:

  1. Be careful not to have too many female rabbits breeding at the same time.

  2. Dispatch the offspring before they are old enough to reproduce (three months).

  3. Make sure you have a lot of rabbit recipes. (See Chris Kronner)

Monday, March 15, 2010

Half-price homes? Canadians pounce on the Sunbelt

Last November Stacey Lynn found herself in Florida pondering whether to buy a condominium in Naples or one in nearby Sarasota. The Toronto woman ended up buying both.

"The prices were truly amazing, especially when you factor in the exchange rate," said Lynn, explaining her splurge.

Except this wasn't for a pair of jeans. Cross-border shopping has never been this good for Canadians.

No snow. No nasty bidding wars. And condominiums for the price of a parking space in downtown Toronto.

Canadians jaded by high prices at home are increasingly looking beyond our borders as a much more muscular loonie – and a sense that prices are bottoming out south of the border – has us flexing new-found financial brawn.

Not since the Japanese started snapping up real estate in Manhattan have a group of foreign buyers been as prevalent in U.S. markets.

"There is certainly a greater confidence out there with Canadians. It's not just economic. There is a sense that we are players on the world stage, whether it's our banking institutions or more recently at the Olympics," said Philip McKernan, author of South of 49: The Canadian Guide to Buying Residential Real Estate in the United States.

Developers will be hard at work courting Canadian dollars this week as families descend on Florida, Arizona and other sun destinations for the March break.

According to a U.S.-based National Association of Realtors study of international home buying activity, Canadians were the No. 1 foreign purchasers of property in the United States in 2009. And we have also been looking farther afield in Central America and the Caribbean.

"Canadians are absolutely dumbfounded when they see the prices here," said Arnold Porter, the Canadian owner of Phoenix-based realty firm Arizona For Canadians. "You have this rare perfect storm in the United States where you have low interest rates, still falling prices and a Canadian dollar that keeps going up."

Analysts have been predicting prices may never be this cheap again. And they may be right.

U.S. foreclosure filings dropped in February for the second straight month, according to figures released this week, as the backlog of distressed homes is being snapped up by foreign buyers.

Porter and his wife Maureen have sold about 60 homes to Canadians in the last 12 months. Most of those sales were recent, he says.

A favourite neighbourhood with Canadians is in the new suburb of Laveen, about a 20-minute drive from downtown Phoenix.

For instance, a newish 1,702 sq. ft. home, built in 2004, is listed there for $103,000 U.S. A similar property in Toronto would likely fetch more than four times that price.

"That's just the asking price," says Porter.

Remarkably, the property, which comes with a pool, will likely sell for less, as opposed to Toronto, where many properties sell for above the asking price.

Analysts say Canada's stable banking system and real estate market means buyers are feeling a lot more confident. They are also tapping the value of their existing homes to purchase homes south of the border.

In the United States, a combination of lax lending policies and widespread speculation helped sink the market. In Toronto, prices have risen every year for 13 years – even during the recession.

But the biggest reason for going cross-border shopping is the rise of the loonie. It hit 98.2 cents U.S. on Friday, its highest level since July 2008.

Economists are forecasting the Canadian dollar will be worth more than the greenback by this summer. Compare that with the all-time low in 2002 of 61.79 cents U.S.

"The last few months have been like an explosion. People are coming out of the woodwork because of the exchange rate," said Brian Ellis, vice-president of Brampton-based Florida Home Finders.

"I think the people sitting on the fence are finally realizing that this is crunch time."

Last year Canadians represented 30 per cent of all foreign purchases in that state, according to Florida Home Finders, overtaking the British for the first time.

And the bargain hunters seem to be back. Existing home sales in Florida increased by 24 per cent in January on a year-over-year basis. Yet with so many distressed sales crowding the market, prices keep falling – median house prices are down by 6 per cent.

Analysts say prices may still fall in 2010, but the bottom is in sight because inventories are down from peak levels.

The distressed sales are having an impact all the way up the food chain, where luxury properties have become white elephants.

The asking price on disgraced financier Bernie Madoff's Palm Beach home was recently cut to $7.25 million, down from an already reduced price of $7.9 million – a 15 per cent drop in total from the $8.49 million asking price last year.

"Being in Toronto you become jaded at the high prices. There really is a bit of a disconnect to what is happening here and what is happening in the U.S.," said Toronto buyer Lynn, who works at an agency representing photographers.

Lynn's first buy was a relatively new one-bedroom condominium in upscale Naples near the beach for $54,900. That's about what parking would cost at a new luxury condominium in downtown Toronto. (An extra parking spot at the still-to-be-completed Ritz Carlton on Wellington St., for example, costs $55,000 Canadian.)

And for just another $5,000, Lynn could have her condo fully furnished.

While it might be a little unfair to compare a major North American financial centre such as Toronto to smaller cities down south, it's hard to resist seeing what a dollar will buy in the U.S. versus Canada, especially since prices have fallen so dramatically.

In some places prices are down more than 50 per cent from the peak of the market. During the same time, the Canadian dollar has steadily increased by more than 50 per cent from its lows.

Lynn's 500-square-foot condominium would have sold for about $169,000 three years ago, according to Florida Home Finders.

Her second property was purchased in nearby Sarasota, a five-minute drive from Siesta Beach, considered one of the best beaches in America. Lynn purchased a 900 sq. ft. condo for $86,000. She estimates it would have cost her more than $200,000 at the peak.

Both her properties were acquired for under $100 U.S. per square foot. That's an astounding price, considering resale condos in the Toronto area are in the range of $350 per square foot.

The bonus was that there were already tenants in both units. The smaller property gets $700 a month in rent, while the two-bedroom gets $1,000. After taxes and condo fees, Lynn says she now nets $1,000 per month gross before any income taxes on the properties. Plus, she hopes the properties will go up in value over the next five years.

"The worst-case scenario is that I have something to look forward to when I retire," says Lynn.

Renters are not in short supply either, says Porter, because there have been so many foreclosures. Florida's unemployment rate hit 11.9 per cent in January, matching the record set in 1975.

"People are out there renting because they either can't afford a home or they're forced out of their homes," he said.

Despite the low prices and the upbeat sales pitches from realtors, author McKernan, the keynote speaker at an international real estate conference in Toronto this weekend, warns buyers not to be "blinded" by the low prices.

"You're on March break in the sun with your family. Emotions are running high. This is when you should take a step back and consider all the factors," he said. "You can buy foreclosed homes in Detroit for $20,000, for example, but the unemployment rate in that neighbourhood could be at 50 per cent and you'll never get your money back."

Like any other major purchase, potential buyers still have to be careful, says realtor Ellis.

Some projects have extremely high vacancies and their reserve funds might be severely underfunded. If that's the case, buyers could be hit with a huge bill once they move in if an unexpected repair is needed.

Out-of-state residents, whether from Canada or other U.S. states, also pay higher municipal taxes than those who reside in Florida, under the Homestead Act. Purchasers should check with their tax accountant before placing a deposit.

And of course, property prices can still go down. Both Phoenix and Florida have some of the highest foreclosure rates in the United States, which means distressed properties are still weighing heavily on the market.

"This is not a market where I would advise anyone to buy if they're going to flip in the next year or two. This is a long-term buy," said Porter.

"But I think it's very possible that many years from now we'll look back and see that conditions were never as good for Canadians looking to buy that place in the sun."

Toronto Star

Wednesday, March 10, 2010

Immigrants want less immigration

It is widely believed that most immigrants support high immigration levels. Political parties in particular buy into this assumption, assuming that bringing in large numbers of newcomers will increase their support among ethnic voters. Research in the United States, however, suggests that this is a mistaken premise and that immigrants think immigration levels should be lowered.

A recent poll commissioned by the Center for Immigration Studies in Washington, D.C., found that 56% of Asian-American voters surveyed thought immigration levels in the United States were too high, 7% thought they were too low and 14% just right. Among Hispanic voters, the results were not that different, i.e. 57%, 5% and 18% respectively.

It is true that some newcomers do not want immigration levels reduced -particularly those who hope to bring in large numbers of extended family members. For many immigrants already in the country, however, the arrival of a great many more in our larger cities means increased competition for the jobs they themselves are seeking.

There is no shortage of data, moreover, showing that immigrants who arrived in recent decades have been much less successful economically than those who came before 1980. Their earnings have been much lower and their poverty rates significantly higher, with estimates that the benefits they receive over what they pay in taxes is in the order of tens of billions of dollars every year.

While research suggests that a number of factors have contributed to their weak economic performance, one of them is almost certainly that we are bringing in far more people than we need and can successfully integrate into the economy. This is particularly the case during a recession -- as was demonstrated during the economic downturn in the early 1990s, when new immigrants fared particularly badly on the job market and never really recovered after the skills they brought with them became dated before they could find suitable employment.

Why then do political parties persist in maintaining such high immigration levels if they are so costly to Canadians in general and not even popular among most immigrants?

Because those who claim to represent newcomers often have agendas of their own that differ significantly from the interests of those whom they are supposedly serving. Most notable are organizations that purport to represent ethnic communities but that don't reflect the concerns of the latter.

Chief among these are groups that receive government funding to assist in the settlement of newcomers and provide such services as English language training. Were immigration intake to decline, their level of public funding would decline accordingly. Such organizations also have a vested interest in the continuous growth of the ethnic communities they claim to represent since this will give them greater political clout.

An example of such divergent interests could be seen in the late 1990s when a report commissioned by the federal government recommended that newcomers have a working knowledge of English or French when they arrive in Canada since research showed clearly that such an ability was key to their successful integration. The proposal was successfully attacked by organizations that could stand to lose significant government funding if newcomers arrived already proficient in English and French and did not require language classes after their arrival.

Interestingly, a poll was carried out in the Vancouver area at the time showed that not only 75% of Canadian born but 73% of immigrants themselves supported the report's recommendation that newcomers be competent in English or French when they arrived.

Surveys show far more Canadians want immigration levels lowered rather than increased. This is particularly the case in large cities such as Toronto where inhabitants are concerned about large-scale immigration for such reasons as stress on educational and health-care systems, cost to taxpayers, impact on the environment, effect on the employment market, difficulties with integration into the social fabric of Canada, etc.

Such concerns are largely ignored at election time in the expectation that most people born here do not care enough about the problems of immigration to make it a voting issue -- while immigrants do care about immigration policy and will vote for whatever party supports increased intake.

If the American survey results are any guide to the situation in Canada, the assumption that most newcomers support high intake is wrong and suggests that our political parties have been listening too closely to those who claim to represent immigrants rather than to the immigrants themselves.

- Martin Collacott is a former Canadian ambassador in Asia and the Middle East and lives in Vancouver.

Fraser Institute
Reassessing immigration policy
On June 4-5, 2008, the Fraser Institute hosted a conference in
Montreal which focused on reassessing the economic, demographic,
and social impact of immigration on Canada. Marking
the Institute’s new initiative in Quebec, all proceedings were
available through simultaneous translation in both French and
Over 100 people attended the conference and heard the Hon.
Diane Finley, Canada’s Minister of Citizenship and Immigration,
present a keynote address on the government’s legislative
initiatives aimed at dealing with the backlog of 900,000 applications
for immigration visas.
The conference had a distinctly international flavour. Experts
from France, Britain, and the United States gave papers that discussed
the state of immigration policies in those countries.
Similar to Canada, those countries face economic and social
problems that increasingly are coming to the attention of
politicians and the public. A fundamental point made by most
speakers at the conference was that these problems are not the
result of immigration per se, but of mass immigration, which
in recent years has reached levels that are unusually high by
historical and international standards.
Many of the speakers also agreed that the overriding objective
of immigration policies should be to serve the interests of
the people born in Canada or already residing here by increasing
their present and future average incomes. (The humanitarian
reception of refugees was treated as a separate issue.) The objective
of these policies should not be to serve “Canada’s interest,”
which is a vague and non-operational term that is used widely.
The papers presented at the conference showed that by these
standards, recent immigration policies in Britain, the United
States, and Canada have failed. This failure is mainly the result
of the existence of the welfare state and the low average earnings
of immigrants.
In welfare states, personal income taxes are highly progressive
and most social programs equally benefit all residents, including
immigrants. For this reason, recent immigrants receive
large net transfers paid for by the rest of the population. In
addition, immigrants benefit from many costly programs that
were designed specifically for their benefit.
The speakers also discussed the supposed benefits of mass
immigration, some of which are gained at costs that are not
widely appreciated. For example, they noted that immigrants fill
vacant jobs and this benefits employers. However, the speakers
suggested that this may actually depress the wages of Canadian
workers who are competing with the immigrants. As immigrants
compete with Canadians with low skills and wages, the poverty
rate among these Canadians would increase correspondingly
and the immigrants themselves may join the ranks of the “poor.”
In addition, the speakers argued that mass immigration leads
to the greater use of infrastructure facilities, like schools, hospitals,
roads, and municipal services, which often leads to overcrowding
and congestion. The construction of new facilities designed
to end overcrowding and congestion tends to use much
labour. As a result, the speakers argued, it is possible that mass
immigration increases rather than eliminates job vacancies.
Several speakers noted that, contrary to popular belief, immigration
cannot solve the problems caused by low fertility
rates and the pending increase in the dependency ratio, which
is defined as the number of recipients of pensions and health
care over the number of taxpayers. (At present, this ratio is 0.2
or 20 percent.)
A study presented at the conference showed that if Canada
were to keep this ratio at its present level by increasing the number
of tax-paying immigrants to pay for the fiscal transfers to
the growing number of recipients of pensions and health care, in
2050 Canada would have a population of 160 million and would
have to accept seven million immigrants in that year alone. This
result is due to the fact that immigrants also age and like aging
Canadians are entitled to public pensions and health care.
The Honourable Diane Finley, Minister of Citizenship and Immigration,
speaks at the conference.
In Closing
The Institute holds second annual conference in Montreal
Reassessing immigration policy
36Fraser 36 Forum 07/08 36
A number of conference papers addressed non-economic
effects of mass immigration on the well-being of Canadians.
Mass immigration to Montreal, Toronto, and Vancouver has
resulted in the creation of enclaves in which immigrants can
live without having to learn French or English or adapt to Canadian
society. Yet immigrants with poor language skills have
poor employment and earnings prospects.
Some speakers discussed how the maintenance of native
cultures, institutions, and traditions has led to demands for the
modification of Canadian culture, institutions, and traditions.
These demands, they noted, do not sit well with many Canadians
who are proud of their heritage.
The ongoing debate regarding immigration policies that are
designed to raise the incomes and speed up the integration
of recent immigrants to Canada was not discussed at length.
However, there was broad agreement among the speakers that
such policies should be enacted in the name of fairness and in
order to reduce the negative impact on other Canadians.
At the final luncheon of the conference, politicians from the
three main parties of the Quebec legislature—Catherine Morissette,
Martin Lemay, and Minister Yolande James—spoke about
problems that have arisen in Quebec due to the public debate
over the “reasonable accommodation” of immigrants, which
was made prominent by the Bouchard-Taylor Commission.
The ensuing discussion was lively and revealed the deep divisions
that exist in Quebec over this issue.
The policy recommendations that emerged from the conference
concerned improvements in the immigrant selection process.
The principle of any reform should be to distance the selection
process from political influences as much as possible. One
proposal was to create an independent agency that carries out the
will of Parliament but, much like the country’s courts and judges,
without interference from politicians in its daily operations.
Another proposal put forth by the conference speakers was to
replace the present selection system with one that would require
applicants to have an employment contract for work in Canada
in order to enter the country, and continuous employment for a
number of years to qualify for permanent resident status.
Under this proposal, politicians would determine eligibility
by setting minimum wages for employment contracts and setting
maximum annual rates of immigration based on the country’s
absorptive capacity. These criteria would be adjusted periodically
after proper consultation with experts and the public
through hearings. While this proposed system still leaves much
room for the introduction of political motives into the selection
of immigrants and the determination of their numbers, it
would be superior to the one used presently, which makes virtually
no use of signals sent by the private sector.
The adoption of the proposed changes in immigration policies
faces strong resistance from politicians and interest groups
that have a vested interest in current policies. For this reason,
the conference participants were quite pessimistic about the
likelihood that the proposed changes would be adopted.
However, the experience in Britain, as related by one participant,
suggested that there is room for some optimism. After
being provided with information concerning immigration issues,
the people there have begun to demand changes and have
attracted the attention of politicians. Given their demands, it
appears that the British public considers mass immigration one
of the most significant causes of Britain’s recent and growing
economic, social, and environmental problems.
The conference (and the planned publication of the proceedings)
was designed to make Canadians more aware of the effects
of mass immigration on their economic and social well-being.
Only time will tell whether this increased awareness will result in
political pressure for reform and change to government policies.
— Herbert Grubel