Saturday, September 25, 2021

Why Evergrande may be a very big deal indeed


Evergrande is the second largest real estate development company in China and is sinking under a mountain of debt. When the company reported last week that it wouldn’t be able to make its interest payments this month on its $85.3 billion bonds and loans, all hell broke loose in the stock market across the globe. Evergrande’s economic troubles may turn out to play a very significant role in our own economic downturn.


The stock market plummeted but then everything seemed to calm down. Why the plummet and then the immediate calming over one property development company in China that nobody, or practically nobody, has heard of in the western world? However, as it turns out, it seems that quite a lot of westerners, especially economic elites, have heavily invested in Evergrande. They could lose massive amounts of money if Evergrande goes bankrupt. 


The Chinese people who had prepaid Evergrande for promised to-be-build apartments were also massively upset that Evergrande has skipped this month’s interest payment on their $305 billion debt, with no notification of next steps. These people had begun sit-ins at banks, demanding their money back, and some threatening suicide. What is the government of China to do? Bail out the entire enterprise of Evergrande? But there are other housing developers that are more or less in the same boat. 


The western financial world is white knuckling it while waiting for news from China about the fate of Evergrande. They are fearful of their investments. But why have the Chinese people calmed down? A couple of days ago they were willing to breach protocols against protests and even publicly threaten suicide. Today are to work, minding their business and the country’s business. Why this about face?


Let me explain. The Chinese government works primarily with two major currencies, the yuan and the American dollar. In China people themselves work almost exclusively with the yuan. The Chinese people have little investment opportunities in China so most of their wealth building opportunities are in real estate and consist of buying their homes, apartments, and other properties and are, of course, transacted in the yuan. The debt that Chinese people carry is called in-shore debt. When the company that took their money for the promise of a home it now can’t meet, it took on in-shore debt.  


On the other hand, the investments that foreigners have made into Evergrande is in American dollars and is called off-shore debt. It is beginning to look like the Chinese government may choose limited repayment, only bailing out the in-shore debt but not off-shore debt to ensure the delivery of housing projects. Unlike the western world, this choice is being made to bail out the Chinese people instead of foreign conglomerates and sickening wealthy millionaires. How refreshingly different.


It appears that Chinese people will get their money back for the apartments they have already paid for. I believe they have been assured of this because the yuan-denominated interest on the bonds have been quietly paid. This means that the in-shore interest on the bonds has been paid.  But what about the out-shore interest that is denominated in American dollars? As for now, they don’t seem to be high on the Chinese Communist Party’s list of priorities, even as international investors face what has been described as an “eerie silence” by the company as it missed its $83.5m interest payment. 


Evergrande owes money not only to Chinese investors and banks – it also owes massive amounts to foreign investors and hedge funds. We can only hope that western funds supporting pension plans are not involved in this. We do know that either way, the next steps are going to be a very big deal indeed. More next time.

Wednesday, September 08, 2021

What can Canada learn from Haiti? An election question


In 1492, when Christopher Columbus first landed in what is now known as Haiti he wrote in his diary, “This is the most beautiful land that human eyes have seen”. Part of that beauty was the soaring mountain sides covered with valuable forests of mahogany. Many – if not most – of the Indigenous Taíno died, with no immunity to the diseases the Europeans brought with them. Before he left the island, Columbus named and claimed the island for Spain, calling it Espanola. However, France also had claims and for years there were skirmishes and outright wars over the matter until Spain gave up and went home. The French interested in being wage slaves or worse in the cane fields and temporarily fled deeper into the forests. The French settlers brought over African slaves. As time passed and the slaves began to speak French, they heard about the start of the French Revolution in France. They took note. When the Slave Revolution started in Haiti there were 10 slaves to 1 European settler. They figured their odds were good.


By this time the population in Tahiti had been intermixing for several generations and a few of the slaves had gained their freedom. Some of these became educated the art of warfare. I think they could be considered the first guerrilla fighters, engaging in ‘pop up’ attacks. Their revolution started in 1791 and ended in 1803, when they ran the French soldiers with all their modem warfare out of Tahiti. They ended slavery and declared their land a nation. But the price they paid for their nation was its ruin. 


The French demanded unconscionable war reparations. And the Haitians were under the gun. Literally. Because if the Haitians didn’t pay, the French promised to send their gunboats. The Haitians had not had time to have developed a capitalist economy. The only real financial asset the Haitians had was their mahogany trees. So they began cutting and sending massive logs of mahogany to France.


The last of the money promised to France was paid in 1947. That’s well within my lifetime. Imagine enduring all those long years of dismay watching Haiti's forests disappear as logs to be finished into fine furniture and housing products for rich outside their land. And what is Haiti like today? From all reports it is a failed state. Their last president was assassinated with no real replacement, and they haven’t recovered from the horrible earthquake of 2010, with another devastating one this year. The country is also staggering under environmental devastation, poor access to food, virtually non-existent health, rampant crime and, perhaps worst of all, a political class that acts only in their own personal and partisan interest.


Haiti has much the same topology as British Colombia. Yes, the mountains here were once covered as far as the eye could see with forests of Cedar, Douglas Fir, and Pine. And these forests have disappeared in much the same order as in Haiti, except even faster as Canada has the latest forestry technology. But we are already suffering the same results of the massive cutting, like wildfires, flooding, and landslides; the same results that make a gigantic mudhole out of much of Tahiti during the rainy season. 


It seems that deforestation of a mountainous country brings poverty and ruin. When the environmental integrity of a country is lost, so the people become lost. The Haitians didn’t deliberately do this to themselves. After the incredible bravery of the Slave Revolution they found they had no other choice. We do. Yet we are allowing much the same thing to be done to us by our own economic elites. Politicians will only do what they are forced to do by the body politic. We all know that. So if you run across one or two in this election season, ask them what they would do about the very last ruination of our forests, especially out at Fairy Creek. They are hoping you won’t ask this because all they know about the forests decline is “talk and log”. They have all been doing this for many years which is why we are being “talked and logged” into a ruined state ourselves. But go ahead and try. Serendipity does happen. Next time.


Friday, August 27, 2021

Fairy Creek, the Sierra Club and the 'No More War in the Woods' agreement


In this video I discuss the Sierra Club and the legacy of the 'No More War in the Woods' Agreement in relation to Fairy Creek. 

Monday, August 23, 2021

Chaos at Fairy Creek


In this video I discuss issues of RCMP brutality and arrests and the role of the Great Bear Rainforest Agreement affects the current situation. 


Links mentioned: 


Rainforest Flying Quad 


 Luke Wallace Instagram

Thursday, August 19, 2021

The Defense of Necessity


In this video I discuss the legal 'The Defense of Necessity', where one can claim that the law that was broken was done to prevent a greater harm.

Saturday, August 07, 2021

Cleaning up our own backyard: Forestry, mechanization, and the Gulf Stream

The forestry struggles continue in Fairy Creek as the forests burn in many places over the North American continent, facilitated by the residue left behind from corporate logging. When I first became aware of the massive corporate clear cutting that had gone on in Clayoquot Sound 25 or more years ago, I was shocked.

I was living in the Sound at the time. I had more or less just arrived, still dizzy with the natural beauty of the place. Slowly I began to realize that the massive greenery on the mountains behind my cabin weren’t new trees but new brush. When the winter rains began, I was even more shocked to learn the new brush wasn’t strong enough to halt the massive landslides on one side of the mountain. I’d never seen anything like it in my life. I began reading about clear cutting and talking to people.


I was told by members of Friends of Clayoquot Sound that it wasn’t just the removal of the trees that destroyed the integrity of a forest, but also the amount of machinery involved in the work. Since the late 1940s most of the logging companies in BC have become increasingly mechanized. Several loggers told me that they themselves had grown more than a little uneasy over the ever-increasing amount of mechanization in the corporate logging process. Their unease was somewhat different from, or perhaps in addition to, those simply trying to save such a rare, incredibly beautiful place for posterity. Every time a new machine or new addition to an old machine was implemented, this meant fewer loggers would be needed. Each new machine or addition would mean less jobs as the purpose of each machine was simply take the place of humans. I was told by older loggers that there had been push back from some of the men, and there had been struggles in the union over the issue. However, that particular struggle seemed to be over. The men who still had jobs just wanted to hold on to them.

The new innovative machines were far more the Harvester PONSSE Bear C6, also called “a forest clearing monster”, with champions proudly proclaiming that it allows “a forester to do a day’s work without ever breaking a sweat”.

This machine is incredible. Its efficiency takes one’s breath away. It uproots trees, scrapes off the limbs and cuts them into required lengths all in one fell swoop. Other clear-cutting machines include 'bunchers' that can grasp multiple trees together for cutting, grapple yarders, and massive skidders. All of these weigh tons, tearing up the forest floor, as they are moved, installed and as they drag tons of timber along with them. Then there are the stump grinding machines and the woodchippers. These are just some of the earth and job-destroying machines used in commercial logging.

Clear-cutting dries the land, invites landslides, and worst of all, facilitates devastating wildfires. But it’s not just about us here in B.C. Our forestry practices and resulting wildfires are made worse – and contribute to – the rapid climate changes and extreme weather we are all increasingly becoming concerned about and having to live with. The emphasis on mechanization and logging machines I’ve been talking about are therefore directly connected to the most recent news about the possible collapse of the Gulf Stream which will affect hundreds of millions of people due to desalination from the warmer temperatures melting vast amounts of freshwater.

We are living in the legacy of the machines we use to increase efficiency, so that we can consume more, and that the ravenous thing called ‘the economy’ can continue to be fed and grow, without seeming end. But we cannot ‘innovate’ our way out of this with more technology and mechanization. While you may think the Fairy Creek protestors can’t change the whole world, they are showing us that we can take on the responsibility to clean up our own practices in our own backyard.  

More next time.