Saturday, May 10, 2025

Canada’s Welfare Kingdom: Alberta

Canada’s Welfare Kingdom: Alberta

 

If governments removed explicit subsidies and imposed corrective taxes, fuel prices would increase. This would lead firms and households to consider environmental costs when making consumption and investment decisions. The result would be cutting global carbon-dioxide emissions significantly, cleaner air, less lung and heart disease, and more fiscal space for governments.

-             Fossil Fuel Subsidies Surged to Record $7 Trillion, International Monetary Fund

            

Gregg Wall (5-10-2025)

 

It’s been an interesting two weeks here in Alberta, Canada.  The ultra conservative central banker, Mark Carney, was voted in as prime minister, under the Liberal party (thanks in large part to Donald Trump).  W/in a matter of hours Alberta’s premier, Dani Smith, began rallying her rabidly populist base to support secession, going so far as to issue an ultimatum and a list of demands to Ottawa.  Alberta’s populist-right government has done tremendous damage to the Alberta economy, public healthcare, jobs and opportunity, and even ran off a renewables industry, billions in investments, and tens of thousands of jobs.  But for reasons unknown, premier Smith’s rural base of support is accepting of all this failure.  The United Conservative Party (UCP) faithful appear to be single issue voters, to wit: hating Trudeau, despising Libs, and forever foaming at the mouth over something called equalization payments.

 

Alberta’s claim to fame isn’t its beautiful Rockies, its majestic farmland and prairie, Alberta’s indigenous population and growing diversity… but rather, at least for the far-right UCP voter, Alberta’s fame and pride stems from Fort McMurray’s dark pit of tar sands hell.  In their minds, Alberta is oil country.  And as result of that oil, its revenue, and perceived wealth, Alberta transfers somewhere between $15 to $25 billion, per annum, more in various forms of tax revenue to the federal government than Alberta receives back.  All the other provinces & territories are net contributors on a much smaller scale, like BC and Ontario, or receive more from the Feds than they pay in.  This issue, that Alberta pays in more than they receive from the Feds is a never-ending source of angst for Alberta’s rural population, who are deeply worried about this relatively paltry sum and feel that the O&G industry has been constrained and put upon by the Feds (even though PM Trudeau did what PM Harper did not achieve, build a taxpayer funded pipeline for the industry to the Pacific).

 

I say ‘relatively paltry sum’ because when we examine the reality that the entire Fort McMurray O&G operation is one of the biggest taxpayer funded money pits known to humanity, as is the global O&G industry…  the deception & illusion that Alberta O&G is a godsend, a gift that is being abused by the Libs and all the other Canadian provinces, quickly evaporates.  The reality is the Liberal party leadership are in on the scam, maintaining the charade that this industry is viable, likely at the behest of the industry insiders, high net worth individuals, and politicians, who are the primary beneficiaries of endless federal and provincial welfare flowing into the industry.

 

The reality, thanks to the Fort McMurray operation, Alberta is the recipient of hundreds of billions of dollars in subsidies annually.  The O&G industry receives far more in funding … direct subsidies, indirect subsidies, and externalities (known costs & expense passed onto the general public) … than any other industry in Canada or the world for that matter.  Moreover, Alberta oil is some of the most toxic form of sludge on the planet, w/ some of the highest, if not the highest, production, processing, travel, and refining costs on the planet (much of it, presently, exported to the United States).  In short, this is some really nasty stuff, in an industry already noted for cancer alleys, killing one in five humans through air pollution, destroying clean air, polluting fresh water, turning land into Superfund sites (or FCSAP in Canada), and basically, cancelling the planet.  In short, Fort McMurray, Alberta is the epicenter of hell on earth

 

As for the hundreds of billions in subsidies?  Here, I refer to the International Monetary Fund (IMF) analysis that states global fossil fuels subsidies are $7 trillion per annum… the lion’s share of those subsidies are intangibles/indirect and externalities (that is, known costs and expense paid for by society at large or simply avoided at the moment, a deadly & toxic can endlessly being kicked down the road for future generations).  More recently, two Dartmouth professors released another study, designed to tie 111 fossil fuels companies to their emissions, and concluded that these companies have generated $28 trillion in climate damages to the planet, between 1991 and 2020.  The goal of this study is to tie fossil fuel companies directly to their liabilities to achieve better outcomes in civil litigation (so the industry can be held accountable, like Big Tobacco).  And the icing on the cake, the University of Chicago and Wharton School estimate that fossil fuels consumed by corporations will cause $87 trillion in social costs by 2050, in the United States alone.  That is, eighty-seven trillion U.S. dollars… as noted by Bloomberg multiples of U.S. GDP and the offending companies’ market caps.

 

Those are interesting numbers but how do they tie into Canada?  Indeed, these are global studies, but we know that Canada produces between five and six percent of global oil and gas production.  If we take 5% of the IMF number of $7 trillion, we can estimate that Canada’s oil patch receives $350 billion in subsidies per annum, again most of this figure is indirect subsidies and externalities (like the town of Jasper, AB burning down last summer, Canada’s pristine forests and parklands that catch fire every summer, greater cardio vascular and lung disease tied to the garbage Fort McMurray’s products emit into the air, higher food costs and property insurance premiums as a result of the climate catastrophe unfolding before our very eyes, etc.).  So, there’s that.  Now, if we take 5% of the $28 trillion in liabilities, outlined and published in Nature by the Dartmouth team, we get unfunded liabilities for Canadian O&G of 1.4 trillion dollars (these are American dollars by the way; if we apply the Canadian exchange rate these figures climb higher, 35% to 40% higher).  This, from an O&G industry that is reporting out record profits, that uses tax cuts and all manner of government welfare to engage in stock manipulation (aka stock buybacks) and pay themselves astronomical dividends, while employing fewer and fewer Canadians & Albertans as time passes by.  This, from an industry that has abandoned O&G wells throughout Alberta and for whom, Alberta’s premier has graciously sought to clean up at taxpayer expense (with estimates ranging from $33 to $70 billion to hundreds of billions of dollars).  Hundreds of billions for well cleanup, land remediation, a climate crisis, higher food costs, contaminated air, water increasingly poisoned along with fish and wildlife… $1.4 trillion doesn’t really seem like a lot.  Does it?  The figure appears low.

 

The point to all this is … with the Fort McMurray pit of hell & Canadian O&G industry consuming $350 billion in subsidies from Canada, the public, the taxpayer, and factoring in the ever increasing costs of living & dying… and with unfunded liabilities of $1.4 trillion (more than likely, much higher)… perhaps the rock ribbed, rugged individualists, aka the UCP party faithful, shouldn’t get their panties in a wad over the $15 or $25 billion Alberta sends to Ottawa annually.  Maybe?   (Note, the $16 to $25 billion paid to Alberta, per annum, in royalties, land use, rents, and taxes, and the  $53 billion, for the years 2007 through 2019, paid to the Feds in corporate income taxes, royalties, and fees…  by Alberta O&G…  doesn’t begin to cover the endless ocean of public and taxpayer subsidies that keeps this industry alive & in existence.  By the way, that $53 billion figure comes from the Canadian Energy Centre, a pro-industry lobbying group, founded & funded by the far-right, provincial government.  Nor have we delved into the forgone opportunity costs of plowing hundreds of billions into this lethal industry, so a tiny segment of the population can grow filthy rich, instead of placing that money into far more productive uses.)



Alberta Premier Danielle Smith is shown at a press conference in Calgary on Thursday, Dec. 19, 2024. PHOTO BY JIM WELLS /Postmedia (w/ editing from JM Hamilton Blog)


 

The bottom line, if Fort McMurray’s criminal and repugnant O&G industry was cut off from direct subsidies and forced to pay $1.4 trillion in past liabilities, the industry would go bankrupt and cease to exist, at least in its present form.  Which might explain why the Queen of the Damned, premier Dani Smith, shut down the Renewables industry in Alberta, so as to leave the province almost entirely dependent upon a dying, vile, and repugnant O&G industry.  Interestingly, before Dani Smith was premier, she was a lobbyist for the oil and gas industry.  Notice, Alberta’s conservative voters get really excited about $15 to $25 billion paid annually to Ottawa; but conveniently, these same individuals go silent when their pet industry, O&G, is the recipient of hundreds of billions in government, public, and taxpayer funded subsidies and welfare, annually.

 

Does it get anymore corrupt and rotten then that?  Well, I’m afraid it does, because if we examine Dani’s and UCP's track record, the conservative government’s reign of chaos & terror has been a complete abortion, including but not limited to:

 

Tanking Alberta; 

Affordability crisis

Food Bank Usage soars;

Betrays Alberta & Canada; 

High unemployment;

Low wages;

Got in bed w/ Trump;

Trashed healthcare; and

Endless Scandals, including CorruptCare and crony deal making with taxpayer money.

 

And now, UCP and their supporters want a referendum on independence (as a coverup & distraction from the aforementioned laundry list of failures and past sins)?  In fact, UCP plans on amending the rules that would lower the number of signatures required to make that referendum a reality.

 

UCP can’t manage Alberta or its affairs now, and the party has saddled Alberta with a trillion dollars – plus in fossil fuels liabilities and hundreds of billions in subsidies, per annum.  Make no mistake about it, the management and ownership of Alberta O&G, and the industry globally, have zero intentions of paying those liabilities.  UCP has, arguably, done this with their partners in crime, the Liberals in Ottawa.

 

Meanwhile, the crazies and freaks, the UCP cult, want to be a sovereign nation.  There’s a thought.  From a purely financial perspective, perhaps Canada and Canadian taxpayers would be well advised to cut Alberta, and its trillions in subsides and liabilities, loose?

 

Then again, perhaps a better solution is to bankrupt the industry, nationalize, with the proceeds funding a green transition, cleanup, remediation, and reparations to First Nations.


Copyright JM Hamilton Publishing 2025


Saturday, April 26, 2025

CAPITULATION & ENTROPY


CAPITULATION & ENTROPY 

 

On Monday, the stock market fell precipitously as Trump attacked Powell as a “major loser,” fueling speculation that the president would move to fire the Fed chief. But by Tuesday afternoon, Trump appeared to dial back his rhetoric, saying he had “no intention of firing” Powell and arguing that the “press runs away with things.”

 

-             Top Trump aides urged president to tone down attacks on Jerome Powell, WAPO

 

Gregg Wall (4-26-2025) 

 

April has been an eventful month and not exactly a winning month for U.S. dollar hegemony, superpower status, and the Trump administration.  As I wrote two weeks ago, Trump was forced to capitulate on reciprocal tariffs, as the dollar and Treasuries were dumped and interest on ten-year notes began to spike.  America’s spiraling national debt and debt service loads were obviously on Trump’s mind when he backed off on reciprocal tariffs for at least ninety days. 

 

This week, the Washington Post reported Commerce and Treasury secretaries met with Trump to talk him off the ledge on the president’s harassment and nascent moves against Federal Reserve chair, Jerome Powell.  Treasury Secretary, Bessent, also indicated the triple digit tariffs against China were not sustainable, which Trump confirmed along with the comment that America planned to be “very nice” to China.  Once again, the President’s favorite benchmarks, the nice index and the stock market, were cratering and ten-year yields were climbing as all of this was announced.  This, and the highly unpleasant reality that the U.S. is dependent upon China for so much that it critical … from antibiotics, medicine, rare earths, and weapons components, all the way to the purchase of Treasuries and debt, et al. ... likely, focused Trump’s attention & super hasty retreat.  Other factors entering into the administration’s collective mind: China says they are not meeting with the American gov on trade, despite Trump’s claims to the contrary; and China has used Trump’s global tariffs war to reach out to America’s traditional allies in the spirit of cooperation and goodwill.  Say, versus Trumpian bombast, contempt, rage, and purported “ass kissing” orgies.

 

This is what forty-five years of Reaganism, failed duopoly governance, globalization, laissez-faire – anything goes capitalism, $40 trillion in national debt, and the accompanying oligarchy formation have wrought.  America finally humbled on the world stage and looking more defeated and exhausted by the second, poorly led and poorly managed by America’s repugnant & ultra-violent gerontocracy.  Dems, GOP, the oligarchy, and Wall St. own this moment… as do America’s business leaders.

 

Of course, $40 trillion in national debt brings us back to Jerome Powell.  Trump was in the process of attempting to put the screws to Chair Powell and was even looking into whether he could fire the head of the FED.  And he still might.  Trump is fixated, of course, on bringing interest rates down because America is leveraged to the hilt and not just the government.  Private equity, Wall St M&A, the grossly inflated stock market, asset classes of the catastrophically wealthy, trillions in derivatives transactions, even smaller to mid-sized businesses that have front run future earnings and borrowed off their credit lines to pay themselves bonuses and cash are all dependent, to varying degrees, upon cheap debt & debt service loads.  Conveniently left out of the discussion on why interest rates are higher, than the extraordinarily low yields the FED and other central banks have often produced since the ’08 crash, is inflation.  Inflation has not come down, gas is still 30% higher than when Trump left office in January 2021, food and eggs are catastrophically elevated, and rents are high enough to put people on the streets.  And of course, bankruptcy (biz & personal) and homelessness are soaring.  All these factors are, likely, on Trump’s mind as well as the pending recession as the result of Trump’s tariffs. This, at a time Congress should be tying themselves in knots over whether or not extending and expanding the Trump tax cuts for the rich are really a smart move.  It’s not an intelligent move but that won’t stop the hideously corrupt GOP members of congress from passing tax cut legislation.

 

As we can see, there’s a lot of moving pieces here, but what it really comes down to is the Federal Reserve has bankrolled all manner of fatuous behavior going back to the Bush (W) administration, which includes but it not limited to:  empire, the Gulf Wars, the Iraq invasion (remember WMD), AIPAC and the State of Israel (seemingly, every war Bibi can dream up), 700 to 800 military bases around the globe, a hot war with Russia in the Ukraine, new Cold Wars with China & Russia, billions for America’s genocide in Gaza, our entirely worthless and useless Congress has been given a blank check by the FED for decades (which struggles to put together a formal budget), there are those financed tax cuts for the rich, the oligarchy tax code, endless corporate welfare, there’s the bailouts for Wall St (which seemingly never end), et al.  My…  America’s central bank and FED chairs have been very busy boys and girls, transferring all that wealth to absolute pigs and leaving the American people with the IOU.  And if we are completely honest the FED is essentially bankrolling & backstopping our failed dereg, neolib/neocon command economy, our laissez-faire/monopoly economy.  The entire BS economic paradigm of the U.S., from empire to financialization, mainlines endless monetary welfare.  In short, the FED chair basically is the sugar daddy of last resort and the most powerful individual on the planet, at least for the moment.  Which, one is to gather from Trump’s behavior, absolutely infuriates the president to no end.  Presumably, Trump would like Chair Powell to adopt a more Arthur Burns approach to his job… Burns, of course, was Nixon’s FED chair and was said to be responsible, in part, for a decade of American inflation & malaise.

 

The FED has been allowed, since America’s entrance into WW2 and Bretton Woods, to underwrite and provide endless monetary policy support for corruption, economic and governmental malpractice, economic and military violence around the globe (including within the United States itself), and again, the transfer of unimaginable sums of wealth to a privileged few and the disaster we call: American oligarchy.  Lower interest rates, presently, would buy the American economy and government more time to get its act together, negotiate on tariffs and trade.  Or lower interest rates would give American leadership more time to do what it generally does: screw up, delude itself, finance more fraud – like tax cuts for billionaires & multinationals, carry on with business as usual, do more colonialism, genocide, and wars, etc., etc.  All this, while leaving essential Americans with an ever-growing IOU of $40 trillion and counting.  You get the picture.  All roads to the billionaire welfare state, chaos, colonialism & empire, and fiscal, monetary, & regulatory malpractice run through one destination, the Federal Reserve. 

 

But after Trump basically started up a world war on trade with such a high-handed approach, even our allies and former allies have to be asking, why does the U.S. enjoy exorbitant privilege again?  Macron, obviously, believes the Euro should or could replace the U.S. dollar.  To the FED’s credit, Powell has, to date, resisted Trump’s calls for lower rates.  Not to put too fine a point on it, but endless bailouts, endless tax cuts for the rich, the blank check handed to congress, America’s money sucking Israeli friends & empire, the lack of regulatory controls and oversight over Wall St & other industries … and the FED constantly engaged accommodative monetary policy, expanding the national debt, interest rate suppression, QE, debt monetization, etc. …  are exactly why America finds itself in the mess it’s in today.  

 

That and the FED's inexplicable inability to simply say, “No.”  

 

Meanwhile, despite some disinflation, there’s zero signs of deflation, and prices – post pandemic – are stubbornly resistant to decreasing and falling (despite record profits reported out by essential industries).  Trump’s tariffs will undoubtedly make things worse. 

 

 

 

 

 

 

Trump wasn’t the only billionaire to shrink a couple of inches this week.  It came out that Tesla’s income took a 71% hit in the first quarter, as Musk salutes, bankrolls right-wing political parties globally, and DOGE’s malevolent efforts began to catch up with the prodigal billionaire.  The damage that Musk has done to his personal image, as well as the reputations of American oligarchs is incalculable.  DOGE’s reckless attack and destruction of the federal government, particularly programs that Americans need and count on, perhaps more than ever given the state of the economy, have caused the American people to reassess & reconsider Musk … to such an extent that even republican voters are now open to taxing oligarchs.  It took 45 years but Americans, in increasing numbers, are finally waking up to the fraud and scam that is globalization, neoliberalism, supply-side, trickle-down, and oligarchy.  DOGE’s apparent goal all along was to gut public programs, portray gov as a waste, privatize gov, and transfer greater wealth to a repugnant billionaire class.

 

Like so many of Trump’s & Musk’s promises, DOGE is a far cry from achieving the $2 trillion in savings it promised, even the $1 trillion in savings it promised; and, if we factor in the true costs to the public for DOGE taking a chainsaw to the federal government, even the recently claimed savings of $150 to $160 billion seems, increasingly, suspect.  The costs to Americans of Musk’s and Trump’s reckless behavior… poorly planned, poorly thought out, poorly executed… could and likely will be felt for decades.  It’s quite a comedown for Messrs. Musk and Trump.  With both camps at this point looking for a break and a timeout… Musk plans to return to Tesla next month but has no plans to let go of his chainsaw & sledgehammer, DOGE.  So much winning, Republican politicians are now afraid to meet with their constituents.  Coincidence?  The reality, Musk’s actions scream private equity model.  Where a handful of individuals loot corporate balance sheets, strip the company of assets, front run profits, borrow to pay extravagant dividends… lay off workers, cut customer service, diminish products & services to pay for it all.  Except the PE template is being applied to Social Security, Medicare, public schools, and Medicaid.

 

The question remains, how much destruction to America’s brand and reputation thanks to Trump’s and Musk’s egregious conduct?  Libertarian ideology, that Musk champions, has been revealed to be a complete fraud (may it forever rest upon the ash heap of history).  There is, however, some good news: at least for a generation, the American people and the world have finally seen through the veil of U.S. exceptionalism and the world will probably never look upon this nation the same again.  America, & its leadership, is a genocidal monster, a bully, angry, deeply racist and misogynistic, narcissistic, petulant, and not to be trusted.  Whatever you do… don’t turn your back.  And the exact same can be said of the lies, myths, and MSM spin surrounding the billionaire class.  We can thank billionaire arrogance, greed, hatred for all peoples, and hubris for that.  


The Oligarchy’s hypocrisy surrounding its own addiction to government & welfare from the state… while simultaneously, holding complete anger & hate for essential citizens and gov programs that help Americans (even programs workers paid into, like Social Security) … has never been more obvious.

 

Copyright JM Hamilton Publishing 2025