Westcoast Voice Takes Sabattical

Taking a break.  Hope you enjoyed the 150 blogs posted over the last 10 months.

Putin Pays Big Price For Winning East Ukraine

Elections in separatist East Ukraine last Sunday appear to have elected 2 new leaders to the European scene.  One, Alexander Zakharchenko an electrician, continues as President of the "Donetsk People's Republic", while Igor Plotnitsky a Soviet army veteran, won in the "Luhansk Peoples's Republic".  Ukraine's "official"  government calls them "pseudo-elections"  and sputters about their illegality.  But the results are in and nothing short of a continued armed conflict will change them.

For Vladimir Putin it's a victory - but the cost may be too high even for the Russian dictator to survive.  On Friday Oct. 31st, the Bank of Russia raised interest rates from 8% to 9.5% to stop a sell-off of their currency (ruble).  But this week, the ruble continues to fall against the American dollar;  since January 2014, it's down 35% .  Russia is sinking into recession.  The weaker currency means more inflation on the home front, particularly for food.  With the coming Russian winter, the people will feel the pinch in their pocket book;  civil unrest will grow and financial sanctions imposed by Europe and the United States will continue making it more difficult for Russian companies to borrow overseas.  And behind all of these problems lurks the spectre of falling oil prices world-wide which, if they continue, will wreak havoc on Russia's biggest export.

So here we are Mr. Putin.  Time for a reality check.  You created this mess.  Was it worth it?  Why don't you ask the Russian people?

McDonald's Has Fallen Arches

From 2001 to 2011, the burger giant's income almost doubled and profit almost tripled.  Ah, but how the mighty have fallen.  The business quarter ending Sept. 30, 2014 saw a 30% decline in net income- a drop that shook McDonald's to the very core of its corporate culture.  The first casualty was the President of its American operation, but the root of the Big M's problems goes far deeper than management.  Younger customers have defected to other fast-food chains that offer fresh ingredients, more popular selections and customized food.  Competitors like Chipotle Mexican Grill,  Five Guys and Panera Bread Co.  present a young, fresh image that makes McDonald's look like an old fshioned grandfather.

But the Big M is fighting back.  Under the new slogan "McDonald's Experience of the Future"  Chief Executive Don Thompson thundered:  "Customers want to personalize their meals with locally relevant ingredients.  They want to enjoy eating in a contemporary, inviting atmosphere.  And they want choices in how they order, choices in what they order and how they're served".  He then rolled out a new business model.  First, 4 zones will be created - Northeast, South, Central and West.  The key to this strategy will centre around local consumer tastes and preferences.  Second, simplify the menu by removing low-selling products.  Third, new technology to make it easier for customers to order, pay digitally and customize their orders.

Some analysts want McDonald's to add healthier food to help America in its war against obesity.  But Edward Jones analyst Jack Russo pointed out:  "There's a huge portion of the population that could care less about health and wellness.  McDonald's already tried adding salads, fruit smoothies and oatmeal to its menu - it didn't work.  They need to get lower middle-income consumers back to their stores".

Roughly 40% of McDonald's 35,000 global restaurants are in the American market.  But the over-seas operations are not off-setting American losses.  They have their own problems.  In China, for example, a national scandal at one of McDonald's meat suppliers caused deep losses in sales.  A weak economy in Europe has hit the bottom line hard.  And in Russia, restaurant inspectors are harassing the Big M's restaurants and shutting down many on the pretext of "unsanitary kitchens".  Why?  Probably in retaliation for American sanctions against Russia because of Putin's invasion of Ukraine.

Can McDonald's overcome these challenges?  Will the new business plan turn red ink into black?  Perhaps, but in my view, sometimes a Brand has simply outlived its sell-by date.

Russian Saber-Rattling In The Sky

Like a red flag taunting a bull, Russian jet fighters, bombers and tankers flew over the Atlantic Ocean, North Sea, Baltic Sea and Black Sea this week - very close to European airspace but never entering those zones.  NATO (North Atlantic Treaty Organization)  immediately scrambled F-16 fighters to intercept the unidentified aircraft.  So far this year, NATO has ordered 100 intercepts of Russian planes - 3 times more than in 2013.  General Ray Odierno, the American Army's Chief of Staff called the flights "Russian aggression".  "I think they are trying to reassert themselves, we have to watch them very carefully."  Russia claims the aircraft were just engaged in "manoeuvers".

But if we track just one intercept, we can understand why NATO countries are nervous.  On Wednesday, for example, 8 Russian aircraft flew over the North Sea heading west.  Norway scrambled F-16 fighters to identify them.  Six Russian planes turned back but 2 bombers headed southwest towards the U.K.  British fighter command scrambled 2 Typhoons.  The bombers continued south into the Atlantic Ocean, where Portugal scrambled their F-16's.  The bombers continued southward and were still airborne, 13 hours after they were first detected.

Of course these harassment flights don't pose any "clear and present danger"  in a military sense, but they do threaten civilian aircraft.  The Russians often don't file flight plans or use on board transponders, which means civilian air-traffic control can't detect them.  Considering the dozens of commercial jets that fly the same international airspace, the Russian actions are reckless and extremely dangerous.

If confrontations like these ones - in the air, on national borders, land grabs under the Arctic Ocean don't stop, there will be a serious incident one day leading to ?  Remember, World War I  started when one man was shot in a small village called Sarajevo in a small country called Serbia.  That was the spark that killed 16 million people.

Lawyers Trump Human Rights

The Ontario and British Columbia Law Societies here in Canada have banned graduates from Trinity Western University's Law School from becoming lawyers in those provinces.  The reason has nothing to do with academic credentials.  The reason lies in the university's requirement that students sign a pledge not to engage in sex outside heterosexual marriage.  Period.  Full stop.  Why the pledge?  Trinity Western is a Christian School, based on their view of Christian morality.

The lawyers, in self-righteous rage, accuse the school of discrimination against homosexuals - the school violates their human rights!  Bull feathers!  Homosexuals can attend Trinity Western without any fear of discrimination as long as they honour the school's moral code.  The ban on sex applies equally to single heterosexual males/females as it does to homosexual males/females.

What the lawyers are fundamentally missing is the definition of "human rights"  as it applies to Canada.  In many other countries the fight for "human rights"  has a very different meaning, based more on life-threatening issues or fundamental freedoms that we already have.  Here are some examples.  The right to criticize the government without being jailed or shot (China, North Korea etc);  the right to convert from one religion to another (Iran etc)  the right for a female to drive a car  (Saudi Arabia etc).  The list goes on and on.

In Canada, the definition of human rights has a much more limited meaning because we've had fundamental rights and freedoms for centuries - they are entrenched in our Culture and in our Constitution.  Human rights in Canada means the right NOT to be discriminated against because of a "group characteristic" you have, over which you have no control.  Examples include your race, gender, disability, sexual orientation etc.  Human Rights has nothing to do with your behaviour, only your group characteristic.

The introduction of Human Rights laws in Canada paralleled the struggle for Civil Rights in America in the 1960's.  The massive discrimination against African-Americans had similar issues here.  When I was working for the Human Rights Commission in British Columbia, I was struck by the hard attitudes employers had against hiring women, aboriginals or whatever group they were prejudiced against.  Often, they could not or would not look beyond the group characteristic to see the individual beneath.  Even today, I am still amazed at some of the idiotic prejudices held by intelligent people.

But I digress.  The point is that human rights has nothing to do with behaviour - it has everything to do with discrimination against someone simply because of who they are.  If Trinity Western banned homosexuals from attending their law school, I would be the first one on the barricades.  But their moral code relates to behaviour, not group characteristics.

P.S.  To all you clever ducks out there who read this and say "Eureka I've found the Achilles heal in this argument".  Wrong!  I know what you're going to say - but you lose - a married homosexual couple can attend Trinity Western, provided they sign the pledge like every other student.

Ukraine's Dilemma: Unity? Or Let The East Go

Last Sunday (Oct. 26th)  Ukrainians voted in a Parliamentary election.  It was a landslide in favour of closer political and economic ties to Europe and the West.  No single political party was able to form a majority government but Prime Minister Poroshenko said:  "More than three-fourths of voters have powerfully and irreversibly supported a European course for Ukraine.........  So I expect the quick formation of a new coalition  government".

But Poroshenko faces a dilemma - separatists in eastern Ukraine boycotted the election.  In fact, they plan to hold their own election, fully supported by Russia, this coming Sunday (Nov. 2nd).  Porochenko and his top Ukrainian officials call this election "rogue"  and "illegal";  Ukraine must remain one united country.  Fine patriotic words but reality tells a different story.  The people in the east appear to support closer ties with Russia and seem quite comfortable with either annexation or independence.  Poroshenko's promise to give more autonomy to the eastern region holds no appeal;  it's too little too late.

Even Ukraine's actions point towards the acceptance of an inevitable split.  The little town of Selydove, 15 miles west of the separatist capital Donetsk, looks like a fortified border checkpoint.  Trenches, concrete blocks and portable buildings dot the landscape.  Road barriers have been set up and border guards check the passports of all vehicles passing westward from the separatist region.  One guard pointed eastward and said "both sides are Ukraine, but on that side, they don't want so much to be part of Ukraine".  The official government position is that this checkpoint and others like it do not form a border.  Spokesman Oleh Slobodyan declared:  "this is a provisional security line, not a border.  Its purpose is to establish a temporary neutral zone".

Sooner or later, Ukraine will have to accept some compromise to ensure a long lasting peace and sense of stability.  If it doesn't, it will never qualify for membership in the European Union.  In my view, the so-called provisional security line will become a permanent border between an independent Ukraine and the Donetsk People's Republic.

P.S.  Today, an agreement was reached by Russia and Ukraine to deliver Russian gas and oil over the coming winter.  I wonder if this guarantee contains a secret deal - did the Ukrainian government promise to give up all claim to the separatist region in return for this essential gas and oil?

Vladimir Putin's New "Cold War" In The Arctic

Sitting on top of the world, the Arctic has become an enormous strategic and economic prize for all 5 countries that circle this vast ocean.  Modern technology and the melting ice cap makes the dream of a northern sea route more of a reality.  One third of the world's natural gas deposits and 15% of its oil lie under the sea-bed.  And no one recognizes this potential more than Vladimir Putin.

Last year, a base in the Novosibirsk islands, shut down at the end of the Cold War was reopened.  Now it harbours 10 military ships and 4 icebreakers.  Just last week, the Russian military announced it had opened a new base on Wrangel Island near Alaska and that 6 more bases and 7 airfields were "on the drawing board".

Putin's chief architect to head this ambitious plan is Deputy Prime Minister Dmitry Rogozin:  "It is crucially important for us to set goals for our national interests in the Arctic region.  If we don't do that, we will lose the battle for resources, which means we will also lose in a big battle for the right to have sovereignty and independence".  What?  I hope the meaning of this sentence was lost in translation because to me it sounds like "if we don't militarize and exploit the resources now, our future land claims in the Arctic will be threatened".  By whom?  Your Arctic neighbours Denmark, Canada, Norway and America?

Whatever it means, clearly this kind of "hawkish"  talk signifies the strategic importance of the Arctic for President Putin and his new Russian Order.  It may also explain the recent Russian military exercises in its Far East.  This war game involved 155,000 men and thousands of tanks, jets and ships.  Many of these forces were sent to Wrangel Island and the nearby Chukotka beaches to "repel"  an invasion.  The name of the enemy was "Missouria" - an unmistakeable reference to America.

Despite the huge cost of this military build-up, Arctic dominance is a top priority for President Putin.  Next year's national defense budget, for example, is up a whopping 25% over 2014's budget.  This despite a slowdown in the Russian economy caused by the drop in oil prices (half of the government's revenue),  economic sanctions imposed by the West over the invasion of Ukraine and the currency (ruble)  hitting new lows against the American dollar and the Euro.

Russia's Arctic neighbours are well aware of Russia's intentions.  They are taking steps to protect their own territorial claims and ambitions.  Will the Arctic become the new world hot spot?  Stay tuned for Part 2.

Islamic State Uses Chemical Weapons To Ramp Up Reign Of Terror

Chlorine gas was first unleashed in World War I and quickly spread fear and terror among unsuspecting allied soldiers.  Three years into the war, both sides of the conflict informally agreed not to use such agents of death - partly because of its volatility (wind change could reverse the flow of the gas)  and partly because it was just too destructive, even for modern warfare.  Since World War I, biological, chemical and nuclear weapons have been universally banned by the world community, except as a deterrent to war.

This month Islamic State (ISIS)  escalated their advance across Iraq and Syria by using crude chemical weapons in 2 toxic gas attacks.  The first was a chlorine gas attack against Iraqi police officers in the town of Dhuluiyah, 50 miles north of Baghdad.  They reported seeing "yellow smoke"  rolling towards them from the ISIS front line.  The officers' symptoms included vomiting and breathing difficulties;  fortunately, they all survived.  Over in the besieged Syrian town of Kobane, ISIS exploded a bomb that again unleashed chemical weapons against Kurdish fighters and civilians.  This time, the victims suffered red blisters on their skin.  Dr. Mohamed Arif Ali who treated them said:  "We do not know exactly what kind of weapons they are using but they did use poisonous materials".

The source of these weapons was the al-Muthanna chemical weapons storage facility near Baghdad captured by ISIS in June.  Both America and the United Nations denied that useable weapons could be made from these aging stockpiles.  But Michael Luhan, a representative from the Organization for the Prohibition of Chemical Weapons had a different take:  "Basically they are like chemical weapons junkyards.  If you go to a junkyard you're not going to find a car that you can drive away, but you can go and find useable parts".

And that is exactly the point.  ISIS has the money and the human talent to make weapons of mass destruction if they can find the component parts.  And since they have often demonstrated their "will to kill",  they won't hesitate to use them.

"I am Woman. Hear Me Roar!"

Islamic State fighters in Kobani  on the Turkish border,  face a new breed of women - female warriors in the Kurdish Defence Force.  These brave soldiers, deprived of sleep and food, armed with only a Kalashnikov, have fought alongside their men for more than a year.  One commander, 28 year old Avshin Kobani,  (Kobani is not her real name - she chose this "nom de guerre"  when she enlisted)  said:  "Isis are monsters, but we are not afraid.  I know I will be beheaded if caught but as a girl, I have to defend my home town.  It should not be left just to the men."

Listening to their stories is like watching an Arnold Schwarzenegger "Terminator" movie.  The human race battles armies of robots determined to wipe out the last trace of human existence.  Fearsome, relentless, without mercy - but still the humans fight on in the rubble of their cities, towns and villages - for freedom ....... and survival.

Morale among the Kurds is high, especially after an intensive campaign of airstrikes by the coalition helped them push ISIS militants back.  For the moment, Kurdish Defence Force controls 90% of Kobani and if they succeed in liberating the town, it will be a huge propaganda blow against Islamic State.  Some observers believe that the jihadists fear the Kurdish women more than the men.  Why?  Because they believe their place in paradise will be in jeopardy if they are killed by a woman.

Avshin Kobani noted:  "We see them through telescopes when we are on the front line .....  they have no tactics or strategies.  They fight like monsters, just attacking and attacking".  Before the invasion, Kobani had planned to go to university, get married and have children.  Now, her dreams are on pause.  But her unconquerable spirit and dedicated sense of duty drive her forward:  "All that I want to do now is to save my people".

Fortress America?

Canadians working in the U.S. are  looking for Canadian airlines' direct flights to return home for visits, rather than taking an American carrier.   Canadians don't trust American authorities "to get it right"  in their war against Ebola.  Travelers are paying $50. extra to fly Air Canada from California direct to Vancouver.  Remember the American jet that flew the Ebola stricken nurse from Texas to Cleveland was not taken out of service and decontaminated.  Instead, it flew more domestic flights before being quarantined.

Why take a chance?  The authorities said 'protocols'  would offer adequate protection.  Now two nurses have Ebola - and they supposedly followed the protocols.  Canadians are losing confidence in the system.

Then there is the health-care worker quarantined on a Carnival cruise ship in the Caribbean.   She may have had contact with clinical specimens from Thomas Duncan, the Liberian who died in a Dallas hospital.  She has been found to be Ebola free, but look at the effect.  Both Mexico and Belize refused to let the ship dock.

Passengers on board the ship were horrified and frightened when first confronted with the news,  even though Carnival's official response was "The ship's passenger isn't considered a risk to other passengers or crew".  What?  How do you know?   If I were a passenger on that ship, I'd be afraid to touch the door handles, hand-rails etc.

The point is people are afraid and are asking questions that can't be answered.  We only know 3 things for sure:  this is the largest Ebola epidemic in history. it can mutate and there is no magic vaccine yet.  Period.  Everything else we hear from the experts and the politicians is sheer speculation.

My immediate instinct is to put a travel ban on West Africa and anyone with a West African passport or visa traveling from other parts of the world.  Will it work?  Who knows?  Most of the experts disagree with me but 80% of the American people support a ban.  It just seems like a common-sense thing to do.  And I predict President Obama will order a travel ban sooner than later.

Global Economic Slowdowon Strangles Recovery

                              
Headlines scream "Markets Tumble",  "Recession Looms",  "Recovery Falters".  Pundits around the world look for causes and spin out all kinds of reasons, explanations, theories.  It's like a vast universe of information overload.  Overwhelming!

Let's try to narrow down the villains behind this debacle.  In my view, too many countries are relying on the theories of 1940's economist John Maynard Keynes.  He postulated that more government spending would stimulate higher economic growth.  So let's look at 3 sample countries - France, Italy and America.  In 2013, France spent 57% of its GDP  (total economic output)  versus 56% in 2009, the peak of the economic recession.  The result?  The French economy has not grown in more than 6 months. Italy spent 50.6% of its GDP in 2013 but its  economy is actually shrinking.  The best of the 3 is the United States which only spent 36.5% of its GDP in 2013 but its recovery is the slowest since World War 2.  America's National debt is skyrocketing and its "easy money"  program, quantitative easing (QE), designed to boost economic growth has failed dismally.

The simple fact is that every economy can be divided into 2 parts:  public and private sectors.  The larger piece of the economic pie spent by government leads to a smaller slice for the private sector which leads to fewer jobs and a lower standard of living.  But if this is true, why do governments spend so much?  The answer may sound cynical but in my view, governments are run by politicians who will promise nearly anything to get elected.  And promises cost money.  But to them, that's no big deal.  Just borrow long term and pass on the debt to the next "unborn"  generation. (whatever you do, don't raise taxes on the "living"  - you won't get re-elected!)

However, to end on a positive note, there are examples of countries that have made difficult decisions in the best long term interests of the people.  Germany, 2003, Chancellor Gerhard Schroeder passed labour-market reforms that stimulated an effective economic recovery.  Poland, 1991, pro-market reforms of Leszek Balcerowicz.  America, 1980's, Ronald Reagan's tax-rate reductions and regulatory reforms.  And of course, my own country Canada, 1995, Liberal Finance Minister Paul Martin's public spending reductions, continued by current Conservative leader, Stephen Harper.

But the difference between the current crop of politicians who just spend, spend, spend and these true patriots of the past is that they had the guts to make tough decisions and stay the course - in the interests of the people, not re-election.

Police Beating Shocks Hong Kong Students

How far can you be pushed before you fight back?  In Hong Kong, pro-democracy student protesters have been pushed to the limit by a police beating of a student widely shown on television and social media.  So far, the Hong Kong Federation of Students and the Occupy Central with Love and Peace groups have shown remarkable restraint.  Their mantra, until now, was peaceful "civil disobedience"  as practiced by Mahatma Gandhi and Martin Luther King.  But the arrest and beating of one of their own broke some students' non-violent resolve.  They stormed a tunnel outside the offices of the city's chief executive.  The result?  Riot police handcuffed and dragged dozens of students away in the worst violence since demonstrations began more than 2 weeks ago.

Clearly, Beijing has become frustrated with the protesters.  The Communist Party's newspaper, PEOPLE'S DAILY, condemned the students and said:  "They are doomed to fail..... illegal acts only result in more severe illegal activities, creating disorder and turmoil..... stability is bliss and turmoil only brings havoc".  In other words, shut up, go home or face arrest and prison.  Leung Chun-ying, Beijing's puppet leader in Hong Kong, said the pro-democracy movement "has spun out of control and has hurt the city's economic activities".

The violence and lengthy stand-off has divided the students.  Leader of the Hong Kong Federation of Students, Alex Chow, said his group had no role in the storming of the tunnel.  Another demonstrator denounced this action because "It gives the government an excuse to use force....... A group of protester's thinking is becoming increasingly radical and warlike.  They aren't thinking of this as a peaceful movement anymore".

From my perch on the west coast of British Columbia, Canada, it looks like the government in Beijing is playing a waiting game.  Promises to meet with students to negotiate demands?  Broken.  Guarantees to Hong Kong in 1997 of "one country, two systems"?  Broken.  Clearly, the Communist dictators in Beijing won't tolerate any challenge to their authority.  They proved that in Tiananmen Square, 1989 with violence and and death.  At least in Hong Kong 2014, government forces haven't yet reached that level of brutality - so far, they plan to drive the students beyond the limits of human endurance and surrender.  But if that strategy doesn't work?  Stay tuned for more.

"Double Irish" Tax Loophole Shut Down

I've often written about the incentives that governments use to attract multinational corporations to "domicile"  in their home countries.  Chief among these incentives is the tax rate on company profits -  the lower the rate, the more chance a multinational will call your country "home".  Competition is fierce and tax accountants are always looking for unique ways to twist the law and beat the taxman.

Some genius in Ireland has developed the most creative tax solution I've seen.  It's called the "Double Irish"  and has the full support of the government.  To understand this concept, we have to separate corporate profit into 2 categories.  First is profit from "normal" business practices.   The second category is profit from the sale or rental of patents, commonly called intellectual property.  Until 20 years ago, most companies didn't have patents to sell or rent.  But the explosion in the technology sector -Microsoft,  Facebook, Apple etc.  changed that landscape forever.  Back to our Irish genius.  He/she found a loophole in the tax code that allowed companies to send royalty payments for patents (intellectual property)  from the Irish "mother company"  to a subsidiary in another country with no corporate income tax - without paying Irish tax!  So, for example, Google used this loophole in 2012 to send $11 billion in royalties to a subsidiary in Bermuda, a tax-free haven; and paid no Irish tax!

Now the question is what's in it for Ireland?  The answer is the "mother company"  registered in Ireland will pay tax on its income from other business practices.  What a great deal for the tech companies.  In fact, Facebook, Linkedin, Microsoft, VMware and others have all used the "Double Irish"  to avoid tax.

But now the bubble is about to burst.  For years, many governments, particularly the United States, and the European Union have pressured Ireland to plug the loophole.  So three days ago, Finance Minister Michael Noonan announced that he would shut it down:  "Aggressive tax planning by the multinational companies has been criticized by governments across the globe, and has damaged the reputation of many countries".  But while Noonan said the new rules would take effect on January 1st, he quickly added that existing "Double Irish" programs could be gradually fazed out over 6 years.  And the Minister said he would introduce incentives to persuade the multinationals to stay in Ireland, where tech companies have turned Dublin into a mini Silicon Valley.  He even hinted that he might create a new "home-grown Irish"  tax rate for income generated by intellectual property.

So the "Double Irish" is dead - for now.  But keep your eyes peeled for the next genius who will unlock a new corporate loophole in some other country's tax law - it's just a matter of time.

ISIS And BOKO HARAM Pervert Islam To Justify Slavery

Most of us are familiar with the slaughter of "infidels"  by the jihadists of the Islamic State of Iraq and Al-Sham (ISIS).  Beheadings and mass executions are plastered all over the internet.  The latest atrocity is against the Yazidi - a peaceful community living in northern Iraq.  Western media focused our attention on tens of thousands of Yazidi refugees fleeing their homes and crowding into the barren hills of nearby Mount Sinjar.

But what wasn't shown on television news and social media was a new twist in the perverted ideology of these ISIS  barbarians - slavery.  Young girls and women were systematically rounded up to be divided up among the fighters as sex slaves.  Reliable estimates put the total around 7,000.  Some have managed to escape and report horrific stories of their captivity - "married"  to older jihadi leaders, raped by groups of young militants, made to watch beheadings and mass executions.  To sanctify their acts, ISIS published a lengthy theological justification based on the Koran in their English-language online magazine called Dabiq.  The article about the Yazidis, entitled "The Revival of Slavery before the Hour", said:  "After capture, the Yazidi women and children were then divided according to the Sharia amongst the fighters of the Islamic State".  It does not say the girls and women are sex slaves but rather, "maids" or "concubines" who "help men avoid the sin of adultery, or of being alone with an unrelated woman".  The article then cites the practices of the Prophet Mohammed and his followers as justification for this "distribution".

Islamic scholars all over the world have denounced these acts as "un-Islamic".  One group of scholars published an open letter insisting that:  "the re-introduction of slavery is forbidden in Islam.  It was abolished by universal consensus".

Meanwhile over in West Africa, 4 Nigerian school girls have escaped from the extremist army, Boko Haram.  They were part of a group of 200 girls kidnapped from their school and moved to a camp in neighbouring Cameroon.  Somehow, they gave their guards the slip and trekked through the jungle for 3 weeks - "following the setting sun".  These lucky four reported that they were raped every day during their captivity and were told their families would be killed if they criticized Boko Haram or spoke English.

Like ISIS, Boko Haram bases its terrorist war on a perverted interpretation of Islam and like ISIS it intends to create an Islamic caliphate in northern Nigeria.  Already, Boko Haram controls an area the size of Ireland and new recruits flock to their banners daily.  So far, the Nigerian military has been powerless to stop their advance.  I wonder how many more groups like ISIS  and Boko Haram are germinating in other parts of the world until suddenly their black flags of death and destruction pop up in the name of Islam?  Stay tuned for more.

Quantitative Easing: Fairy Tale Or Prudent Policy?

If anybody out there understands how quantitative easing (Q.E.)  benefits a country, please let me know.  Call me old-fashioned but I was taught that government programs should be financed by taxes paid by a healthy expansion of the private sector economy. The more growth, the more taxes collected by the state.  If the government wants more money, it has 2 choices:  raise taxes or go into debt (deficit financing)  by borrowing on the open bond market.

But the Obama administration doesn't do this.  Through Q.E., the Central Bank prints new money, releases it through the bond market and "stimulates"  the economy.  If this is such a great program, is there a limit on how much new money can be printed?  Is it 50 trillion dollars?  500 trillion dollars?  1000 trillion dollars?  This sounds like a Ponzi scheme to me - robbing Peter to pay Paul.  If I were a foreign investor, I don't think I would trust the American dollar - after all, where is the financial backing for the currency?

When Q.E. ends, the American government will still need money and if the Democrats are re-elected, they will need tons of money to fund their "entitlement"  giveaway programs.  And with Q.E. gone, the only place to get that money would be on the international bond market.  If I were a big international player, I wouldn't want an interest guarantee on my loan - I would want equity - ownership of America's industries, resources and technology and other assets.

That scenario boggles the mind.  But I could be wrong.  Come on readers - please enlighten me.

Islamic State Versus Air Power

No war was ever won by air power alone.  With no professional ground forces to root out ISIS street by street, the U.S. led coalition is finding it more difficult to target effective air strikes.  One defense analyst put it this way:  "ISIS is not really structured in such a way as to be vulnerable to airstrikes.  They don't have a lot of static targets.  We can bomb a building here, a building there, a tank here, a truck there.  But ISIS fighters are very good at intermingling with the civilian population".  Since strikes began in Syria 2 weeks ago, the terrorists are using cellphones and radios far less to avoid detection.  They camouflage humvees, trucks and tanks;  they relocate training camps;  they move at night in small groups and use many other evasive tactics.

Choosing and training Coalition "boots on the ground"  forces will be very complex.  They must arm and advise the Iraqi military as well as Kurdish soldiers, who view each other with suspicion.  In Syria, they will have to organize thousands of anti-regime rebels who are more interested in toppling Bashar Assad than fighting ISIS.  The Coalition will also have to aid tribal militias in both Syria and Iraq, some of whom have known links to terrorist groups.

Then there is Turkey.  Ah, Turkey - NATO member, candidate to join the European Union - sitting on a hill on the Turkish/Syrian border in their tanks and armoured personnel carriers - watching the action a few kilometres away in Kobani, a key Kurdish town.  ISIS black flags fly from Kobani buildings while Kurd warriors fight these  barbarians street by street, house by house - outgunned, outnumbered.  On social media, jihadists post photos of severed heads - Kurdish women - trophies of their victory over the infidels.  The Turkish army watches - and watches.  There is no lovelost between Turks and Kurds.  Kurds want their freedom, their own country - Turkey doesn't.  Why?  The answer lies in hundreds of years of history.

And again, history repeats itself. Flash back to Warsaw, 1944.  World War 2 is coming to an end.  Russian forces stand on the Vistula River facing Warsaw.  The Poles, sensing victory, rise up against the German occupiers, expecting Russian tanks to cross the river and join the fight.  But nothing happens.  Like the Turks today, Russian soldiers wait and watch the slaughter.  Communist leader - Josef Stalin has other plans for the Poles.  Adolf Hitler orders Warsaw destroyed - every building, every house.  Then the Russians advance through the rubble and march on to Berlin.

Flash forward to Oct. 7, 2014.  Very complex, very confusing and very draining on the public purse and public will-power to stay the course.  A few days ago, Vice President Joe Biden noted:  "This is going to require a lot of time and patience.... strife across the region will take a generation or more to work itself out".

Amen brother.  Tighten your seat belts, boys and girls.  It's going to be a long, bumpy flight.

Hong Kong's "Umbrella Revolution" Slowly Folds. Part 2

After almost 2 weeks of protests, Hong Kong students and democracy supporters are weary and doubtful of any compromise from Beijing.  Clearly, supreme leader Xi Jinping and the ruling elite fear that freedom in Hong Kong will only encourage mainlanders to demand their own rights.  So far, the Communist masters have successfully suppressed all reform attempts in China - supporters of democratic freedoms are branded "political agitators"  and jailed;  journalists, television and radio are tightly muzzled;  hundreds of thousands of government censors block Twitter, Facebook, You Tube and other social media;  Instagram was closed down after mainlanders shared photos of Hong Kong protesters using umbrellas against tear gas and pepper spray, and on and on it goes.

Some hardline protesters in the island city are determined to carry on but new, underhanded tactics used by Beijing are making their civil disobedience very difficult.  For example, thugs and goons, probably brought in by the government, beat up and sexually assaulted students - many in plain view of police who stood idly by.   Some businesses have been terrorized by these criminal gangs.  Yesterday, one student said:  "We are not afraid of the government and we are not afraid of the police.  We just don't want any more violent acts against residents".  Many students have apologized to nearby shop owners for disrupting business.

In my opinion, the students should continue their peaceful protests even if it is on a smaller scale.  Two major factors give them legal and moral support.  First, the Chinese government is in clear breech of international law.  It signed an agreement for "one country, two systems"  17 years ago.  If they break that deal, how many other trade and political agreements with foreign companies and countries might they break in future?  The eyes of the world are on Xi Jinping.  Second, Hong Kong is still the country's leading financial centre and the gateway for trade and foreign capital investment.  The city still has a free press and an independent legal system.  If China harms or destroys the prosperity of Hong Kong, it really only achieves a black eye on its international reputation and further exposes the ugly face of Communist rule. 

Civil disobedience can work.  Witness Mahatma Gandhi in India, Martin Luther King in America and many other social reformers.  It just takes time, patience, control and commitment.

Richard Branson Targets The Banks

This week, Virgin Money, a tiny British bank announced plans to sell shares on the London Stock Exchange.  Entrepreneur, Richard Branson used social media to sweet-talk investors into buying his dream of beating the Big Five banks at their own game.  He promised to operate Virgin Money at lower costs than bigger rivals.  And he vowed never to get involved in the scandalous behaviour that caused the financial crisis of 2008 -9.

One of Branson's strongest supporters is the British government.  It hopes that Virgin Money and smaller banks can  break the dominance of the Big Five, which control most of Britain's retail-banking markets.  The government also expects Virgin Money and others to push cheaper credit into the economy.

Today, Virgin Money operates 75 branches and only has a market share of 1.6%  for mortgages and 1.4%  for savings.  But Branson thrives on competition.  He loves to challenge the "Big Boys".  And his successes have so far outnumbered his failures.  Who knows what Britain's financial landscape will look like in 5-10 years.  Don't be surprised if Virgin Money is one of the "top dogs"  in the pack.

Obama Sacrifices Growth For Equality

One of the best measures of economic growth is Median Household Income.  This is simply a snapshot of the real wages or salaries earned by households in the middle of the wage distribution scale from the poorest to the wealthiest families.  When the dot-com bubble burst in 1999 and the stock market crumbled, America's economy went into a deep recession.  Median Household Income dropped significantly until 2003 when President George Bush cut taxes on capital income from investments and on marginal income-tax rates.  The result?  Median Household Income rose until the 2008 -2009 recession.

Enter a new president, Barack Obama.  Rather than take a page out of Bush's playbook and reduce taxes, Obama chose income redistribution, more food stamps, "free"  health care, more government spending and more taxes on the "fat cat"  rich.  The result?  Incomes did not rebound with the 2010 - 2014 recovery as they had in every other recovery since the Great depression.  Today, the Median Household Income is 8%  less than it was in 2007, under the Bush reforms.  ($51,900 compared to $56,500)

Another curious irony under President Obama's monetary policy was that Quantitative Easing (QE) - pumping billions of new dollars into the economy - only raised stock market and real estate prices, most often owned by wealthier Americans.  The poor, people on fixed income and much of the middle class who relied on interest income on their savings - got no benefit.

The real road to equality is economic growth not social engineering.  As John F. Kennedy said:  "A rising tide will lift all boats".

Baltic States Defy Czar Putin

Deep in a forest near Estonia's capital city Tallinn, a dozen young recruits crawl through the mud, dragging kits and rifles beside them.  A few meters away, a Sergeant Major barks: " Faster Delta company and keep those rifles dry - they belong to the state, not you".  These are the newest volunteers of Kaitseliit (Estonian Defense League)  preparing to fight if the Russian bear growls on their border.  In civilian life, they work, raise families and enjoy a peaceful lifestyle since Estonia regained independence from Russia in 1991. But today, they prepare for the worst.  During a break in training, 18 year old student Kevin Ungro said:  "I want to defend my homeland, my family.... the more people know how to handle a gun, the better our chances of defending ourselves".  Realistically of course, the 14,500 members of Kaitseliit and the 4,000 strong professional military could not stop a Russian blitzkrieg, but they could at least slow them down until NATO allies came to the rescue.

For one new recruit, fear was the motivating factor for enlistment.  "Russia's attack against Ukraine influenced all of us a lot.  If Russia can act like this in Ukraine, they are surely able to do the same thing here".  Apart from bordering Russia, another concern for Estonians is the fact that 25%  of the population are ethnic Russian.  No one questions their loyalty, but they do worry that Vladimir Putin will use it as a pretext to invade.  He regularly talks about the need to defend ethnic Russian minorities from "hostile"  governments.  (Putin used this as "justification" to attack Eastern Ukraine, Adolf Hitler used it as a "legitimate"  reason to invade Poland in 1939)

The other Baltic states, Lithuania and Latvia, are raising similar "citizens' armies".  Even Poland is witnessing a surge of new recruits for the Home Guard.  Unlike Ukraine, all of these nations belong to the North Atlantic Treaty Organization.  Article 5 of the NATO Charter commits alliance members, including America, to defend each other if any one is attacked.

Tensions are high but morale is strong.  All eyes are on Czar Putin.  Will he or won't he?  Only the Russian bear knows for sure.

Honk Kong Students "Tweak The Nose Of The Devil"

Over the last 17 years, China has slowly tightened its grip on Hong Kong through media control and political restrictions.  These moves were small and subtle but for the 7.2 million people in Hong Kong, the breaking point came on August 31st when China decreed that only candidates "approved" by the Communist Party could run in the 2017 local election.  This violated the 1997 guarantee for free, democratic elections and immediately students protested with a civil disobedience campaign - they boycotted school and college classes and held "sit-ins"  in the downtown area.

The television images of the student protests touched many viewers both in Hong Kong and mainland China.  It was reminiscent of the idealistic student protests in 1989 in Tiananmen Square, Beijing.  The outbreak of dissent in Hong Kong shook the Communist Party leadership.  They ordered in the police.  Chaotic scenes of police using tear gas, pepper spray, threatening protesters with clubs and riot shields and dragging away students to paddy wagons were aired repeatedly on Hong Kong's television channels and news websites.  Millions of Chinese on the Mainland also saw these images.

Today, tens of thousands of Hong Kong residents turned out in support of the students.  One group, Occupy Central, is calling for a massive rally in the business district on Oct. 1st.  This is a dangerous move - Oct 1st marks the anniversary of the foundation of communist China in 1949.  Talk about tweaking the nose of the devil.  What will be the government's response?  Stay tuned for part 2.

                                                               BACKGROUND
Before the British government handed their colony of Hong Kong back to China in 1997, they negotiated an agreement to grant Hong Kong a high degree of autonomy.  The guarantees included freedom of speech, freedom of assembly and a democratically elected local government.  This deal was called "one country, two systems"  and applied only to Hong Kong - the rest of China was ruled by the Communist Party in Beijing.

Emerging Markets: The Doorway To Successful Investing

Many investors in the Western world are reluctant to put their savings or retirement money into emerging markets for a variety of reasons - lack of transparency, corruption, lax regulations, fear of the unknown etc.  But there is one way to benefit from these exploding markets - go in through the back door.  What I mean is, invest in well-known multi-national corporations that have their base in the developed world but a sizeable share of their sales in emerging markets.

General Motors - an iconic American brand name - is a great example of this strategy.  Today, GM sells more cars in China than in the United States.  Market analyst Dennis DesRosiers explained the impact this way:  "There would not be GM vehicles sold anywhere in the world if they weren't dominant in China, because they would be bankrupt.  Sales in China, where they are No. 1 in trucks and No.  2 in cars, are what allows GM to pay its bills".

Other "blue chip" companies that derive the majority of their sales in foreign markets include Coca Cola, Apple, Google, Exxon Mobil, IBM and Johnson and Johnson. In 2013, Starbucks opened 206 company-owned stores in China - more than it opened in America.

For an indepth look at the importance of emerging markets in your portfolio, check out a report published by the Organization for Economic Co-operation and Development (OECD)  called THE EMERGING MIDDLE CLASS IN DEVELOPING COUNTRIES.  One of its conclusions noted:  "China's middle class today is already large in absolute terms at 157 million people  This is why so many retailers and businesses are eager to penetrate the Chinese market.  In certain key industries reflective of middle-class consumption, China is already rising to overtake the United States as the most important market".

Then there is India with its booming middle class and economic growth policies launched by newly elected Prime Minister Narendra Modi.  In fact, when emerging markets are taken together, the OECD report predicts:  "By 2030, the Asia-Pacific countries alone will represent 66% of the world's middle class population and comprise 59% of global spending.

Investment opportunities do exist.  You just have to know which door to open.

Coke Scores With The "ME" Factor

Twenty years ago, McDonald's was looking for an advertisement that would appeal world-wide.  An agency came up with the familiar "dah dah dah dah dah.  You're Loving It".  McDonald's executives loved it until a young marketing genius said:  "Hey, why am I telling other people to love McDonald's?  Don't we want  'Me'  to love it? "  Right away, the slogan was changed to "I'm Lovin' it"  and that iconic phrase has been used around the world ever since.

Early this summer, Coca Cola confronted dropping sales with their own "personalized"  marketing campaign.  They began labeling Diet Coke, Coke and Coke Zero with 250 common names from Adam to Zoe.  Under the slogan "Share a Coke",  the company launched a product blitz in June right across America.  It became an instant hit, particularly with younger consumers.  The result - a 2% rise in sales.

One market analyst said:  "A Coke can or bottle is the most iconic design in the world and the fact you can impact that with your name has a huge curiosity and wow factor".  One couple in Ohio named Alyssa and Shane spent the summer searching for bottles with their names on them.  Three months later, they had both and 24 year old Alyssa said:  "I'm thinking of keeping them on a living-room shelf next to our wedding pictures.  I'll keep them forever".

Coke's website also let customers type any name to make "virtual"  Coke bottles they could share on social media.  More than 6 million of these imaginary bottles have been created.  On the social-media site Instagram, 500,000 photos of customers or their pets (imagine your dog Barney clutching his personalized bottle)  have been posted with the hashtag #shareacoke.  Now that the summer campaign is over, real, personalized bottles and cans are selling on eBay for $3.00 - $5.24.

"Share A Coke"  was first introduced into Australia in 2011 and immediately sales rose 7%.  Now the summer campaign runs in 80 countries.  What a great marketing gimmick - the perfect union of an iconic Brand Name and "ME".

Obama Nails Coalition Against Islamic State

Barack Obama made it clear that he would only authorize airstrikes against Islamic State (IS)  in Syria if other allies in the region joined the mission.  The key among the Arab states was Saudi Arabia - without their involvement, the rest would hold back.  Getting the support of Saudi's King Abdullah is an interesting lesson in Diplomacy 101.  The Americans knew that Saudi Arabia opposed both Islamic State and the Syrian regime of Bashar al-Assad, but they also knew that King Abdullah was angry with Obama's decision not to bomb Assad's forces.

Secretary of State John Kerry negotiated a deal where American forces would strike against IS militants in Syria (not Assad's forces)  which satisfied half of Saudi's demands.  He also agreed to oust Iraqi leader Nouri al-Maliki, a Shiite with close ties to Iran, a traditional enemy of Saudi Arabia.  But what finally got King Abdullah's approval was American agreement to train Syrian rebels opposed to the Assad regime, in Saudi Arabia.  Up to this point, the ground war in Syria had dragged on for years but now with a guarantee of U.S. special forces training the rebels, Saudi Arabia believed Assad's troops could be forced to surrender.  Saudi leaders also hope they can eventually persuade the U.S. to bomb Assad's forces.

The deal also met President Obama's demands. He has resolutely opposed American "boots on the ground"  but he knows Air Power alone won't defeat Islamic State.  With King Abdullah's agreement to allow training camps in Saudi Arabia, Obama is betting on Syrian rebels becoming the ground troops he desperately needs to defeat IS.

With Saudi Arabia on board, 4 more Arab states - Qatar, United Arab Emirates, Jordan and Bahrain - joined the coalition.  All but Qatar provided jet fighters to join the American airstrikes against Islamic State militants in Syria  A notable feature of this Arab coalition is the fact that all of these states are Sunni taking part in a campaign against a Sunni militant group - Islamic State.

Now the coalition is picking up more support:  France and Netherlands agreed to participate in airstrikes over Iraq (not Syria)  and the British Parliament is voting today whether or not to authorize airstrikes in both Syria and Iraq (currently they provide reconnaissance flights over Iraq).  Other Western countries, Australia, Germany and Italy, have agreed to offer weapons and training.

This war in the Middle East is just beginning.  It's complicated.  But it's a start.  As I reported in previous blogs, the war against Islamic  extremism will last for generations.  The entire world is involved.  There's no escape.  Stay tuned for more.

Richard Branson Voted Top Entrepreneur In 50 Years

The man behind the VIRGIN brand was chosen top entrepreneur by Britain's most important business leaders.  Branson, with his usual panache, "hammy"  performance and self-deprecating shrug said "I am honoured to be chosen by my peers.  I never set to be a  businessman.  I just wanted to create things that I could be proud of and that made a difference.  But thanks to the wonderful teams of people following their passions and curiosity over the past 50 years, we've created our special brand and group of companies".

Branson started his entrepreneurial drive when he was 16, with a small magazine called Student.  Then he set up a mail-order record business and a chain of record stores called Virgin Records.  From there, he signed rock and roll bands like the Sex Pistols and Culture Club.  Then came his Opus Maximus - Virgin Atlantic.  This fledgling airline took on the big boys - British Airways and American carriers - and won a sizeable share of the Trans-Atlantic market.

Over those 50 years, Branson made himself synonymous with the Virgin Brand.  The Media loved his stunts like skydiving and mountain climbing and they reported every detail of his jetset lifestyle.  Today, the Virgin Brand encompasses mobile phones, gyms, trains and financial services.  And now the peak of his ambition - Virgin Galactic, which promises to take tourists into space.

Of course, like most entrepreneurs, there were failures along the way.  Virgin Brides (wedding dresses), Virgin Vie (cosmetics), Virgin Cola and Virgin Vodka have all vanished into the graveyard of good ideas gone sour.  But today, at age 64, Richard Branson is at the top of his game.  One admirer described Branson this way:  "He invented the concept of using a lifestyle brand (Virgin)  across dozens of sectors and industries.  We want individuals like these, not big company executives who specialize in financial engineering".

Next stop, the moon?  Or maybe someday, even the stars.

Abenomics: Japan's Road To Economic Growth

For the last 15 years, Japan's economy has remained dormant.  But in December, 2012, the country elected Shinzo Abe to lead them into a better world.  Abe said "My highest priority as Japan's Prime Minister remains the economy",  and his reforms so far seem to match his words.  Abe launched his ambitious economic overhaul with changes to the monetary and fiscal policy designed to make Japan more competitive in international markets.  His policies were nicknamed "Abenomics".

His third strategy, what Abe calls the "third arrow", is structural reform.  For example, having recognized private sector companies as the "engine driving economic growth", Abe reduced Japan's corporate tax rate by 2.4% this year and promises more cuts next year.  He also strengthened "corporate governance", meaning he gave incentives to companies to increase the number of outside directors to their Boards of Directors.  This, Abe argued, would reduce insider trading and corporate corruption and make companies more accountable to their shareholders.

Abe then set up National Strategic Special Zones:  which focus on more deregulation of companies by government agencies.  This, Abe argued, would allow companies more freedom to operate and make them more profitable.  A second exciting feature of the N.S.S.  Zones is the admission of foreign companies, foreign entrepreneurs and their employees to set up shop on the home islands.  Up to now, Japan has been a relatively insular country.  In conjunction with this policy, Abe also relaxed visa requirements for tourists.  This measure alone resulted in over 10 million tourists visiting Japan last year - more than any other year in its history.

Abe then targeted Japan's dwindling population.  For centuries, Japanese society suffered from systemic discrimination against women in employment.  Knowing Japan's need for more workers, Abe created more child-care facilities.  This led to an increase of 820,000 women in the Japanese workforce since he took office.  Today, the female labour force participation rate for the 25-44 year olds, stands at 74.2% - the highest in Japanese history.  To set an example for others, Abe increased the number of women in his Cabinet from 2 to 5 ministers.

Another problem facing Abe was Japan's aging population.  In order to look after the elderly, Abe introduced pension reform.  Then, he took a very unusual step - he raised Japan's consumption tax (sales tax, value added tax) from 5% to 8%.  BUT, every Yen was allocated to social security funds for the poor and elderly - most governments simply put these taxes into general revenue.

There are many other reforms like Trans-Pacific trade agreements and so on, but what is the result of these growth strategies?  Significantly, unemployment is now below 4%;  companies, both large and small, have raised wages;  many part-time employees now have full-time jobs;  capital investment in company expansion has exploded;  a lower Yen has made exporters more competitive on the world stage;  and the Japanese stock market has reached its highest level since 2007.

Shinzo Abe is a leader of few words but lots of action.  Other world leaders would be wise to study his play-book!

Alibaba Says "Open Sesame" To Wall Street

In my blog "Alibaba Storms Wall St."  Sept 8th, I described how entrepreneur Jack Ma built China's  largest e-commerce company from an idea he had in his apartment a few years ago.  The beauty of Alibaba's business plan is its unique structure - it doesn't hold inventory, it doesn't sell products directly;  it connects buyers and sellers of all shapes and sizes and provides a conduit for delivery and payment.  With the decision to "go public",  the company issued an IPO (Initial Placement Offer)  selling shares to insiders, friends and a few institutional buyers at $68 a share.  That IPO was the largest technology IPO in history.

Last Friday, September 19th, Alibaba debuted as a publicly traded company in New York.   It's first trade sold at $92.70 and by the closing bell, finished at $93.89 a share, $26 over the IPO price.  Jack Ma was ecstatic.  He remarked:  "We want to be bigger than Wal-Mart.  We hope in 15 years, people say this is a company like Microsoft, IBM, Wal-Mart.  They changed, shaped the world".  One market analyst described Alibaba this way:  "The business model is really interesting.  It's not just an eBay.  It's not an Amazon.  It's not a Pay Pal.  It's all of that and much more".

Now that Alibaba has conquered the Chinese market, it plans to expand into emerging markets and then into Europe and America.  In terms of size among U.S. - traded technology companies, Alibaba is fourth, behind Apple, Microsoft and Google.  Not bad for a light-bulb moment in one man's apartment.

Scotland Lets The "Nationalism" Genie Out Of The Bottle

The question was simple:  "Should Scotland be an independent country?"  The voter turnout was phenomenal:  84%.  The answer was "No"  (55% - 45%)  but the "Yes"  campaign was so emotionally persuasive that all 3 British political parties scrambled to promise the Scots more control over their affairs.  The "Yes"  campaign also unleashed the nationalism genie in Wales, Northern Ireland and even parts of England where there is growing resentment over London's control of their regions.  It will take years to untangle this mess, so the new look of the so-called "United Kingdom"  is anybody's guess.

But one thing is for sure.  The 2 year Scottish campaign for independence has fueled "nationalism"  all over the world.  Take Catalonia, for example, a wealthy industrial region in North East Spain.  For decades, the Catalonian population of 7.5 million has pushed for independence from a Spanish government that many separatists consider to be "foreign occupiers".  Last week, nearly 2 million Catalonians demonstrated in the streets of Barcelona in advance of a referendum on independence in November.  The Spanish government in Madrid is taking the organizers to court in order to block the referendum.  They say it's unconstitutional but how do you bottle up the drive for self-government once national pride and honour have been unleashed?  Many Catalonians traveled to Scotland to witness and learn from the separatist campaign.  One young patriot, Rosario Borvas, said:  The Scots have helped inspire us in our fight, all along the way".

Catalonia is not alone.  The fires of independence have been stoked in regions from Xinjiang province in China to Kurdistan in Iraq to Novorossiya in Ukraine to the province of Quebec in my own country, Canada.  Critics of pro-independence movements argue that "nationalism"  is just a human emotion.  Well, that's true, but so what?  Since human beings lifted their knuckles off the ground and walked upright, emotion has been an integral part of our development.  Even Mr. Spock, a Vulcan ruled by logic and reason, had an emotional side.

Ukraine Makes Deals For Peace And Trade

The real dilemma for Ukrainian sovereignty is the simple fact that the population is not homogeneous.  Ninety per cent of the people see themselves as Ukrainian nationals and most of them want closer ties with the West.  But the other ten per cent, in Crimea and the East, are loyal to Russia.  The Crimea problem was solved in March when Russia simply annexed it to the homeland.  In the East, however, the ongoing conflict between separatist rebels (assisted by Russian troops)  and the Ukrainian army presents a more difficult problem.

So on September 5, 2014, President Poroshenko and the rebels signed a cease-fire agreement to end the bloodshed and to establish more autonomy in the East.  This plan was backed by Vladimir Putin.  Essentially, it's a blueprint for limited self-government in the Donetsk and Luhansk regions - very similar to state powers in America and provincial powers in Canada.  The law will go into effect for 3 years, at which time both the Ukrainian government and separatists will "re-evaluate"  their positions.  Will the East return to full membership in Ukraine?  Probably not.  Most likely it will either become independent or join Russia.

Another deal was ratified by the Ukrainian Parliament this week with the European Union.  It opens Ukraine up for more trade and more investment by Western entrepreneurs and companies, and possibly full membership in the EU at some later date.  But the terms of this deal are vague and limited, probably done deliberately so as not to upset Vladimir Putin (most of Ukraine's oil comes from Russia).  Still, it is a step forward.  And with the cease-fire agreement now in place, at least Ukraine has some breathing space to plan its future.

India Plays "Catch-Up" With China

India's newly elected Prime Minister Naendra Modi is taking a page from China's playbook to get India back on its feet after 3 years of weak growth and high inflation.  Mr. Modi is aiming to boost exports and raise India's share of world trade by 50%  over the next 5 years.  Mr. Modi's mantra is "Sell anywhere but manufacture here".  His Trade Minister Nirmala Sitharaman promised the government "will ensure that we do enough hand-holding with our manufacturers so that 'Made in India' becomes a brand which all of us can be proud of".

Of course, only time will tell if India can duplicate China's success.  Remember that China has a huge head-start.  The seeds for China's growth were sown back in the 1980's, when Deng Xiaoping started welcoming foreign investment and unleashed the Chinese entrepreneurial spirit through state-owned companies.  India's growth has been fueled more by services like software and business outsourcing.  Product manufacturing is already well established in many other parts of the emerging markets:  Bangladesh makes clothing, Thailand and Vietnam produce machines and computer parts, Philippine electronics have a reputation for quality and price.

But the attitude of India's leaders is both refreshing and promising.  Check back with me in 5 years to find out if their words translate into action.

Venezuela: Poster Child For A Socialist Nightmare

Ah socialism - the utopian dream for social justice and equality.  Take Venezuela for example.  When Hugo Chavez took power in 1999, he promised more jobs, more educational opportunities for the poor, a higher living standard - in fact he promised more goodies for all Venezuelans!  But he forgot one thing - only entrepreneurs and the private sector can create economic wealth.

PDVSA the state-owned oil and natural gas company was producing 3.5 million barrels of oil when Mr. Chavez and his cronies took the reins of government.  Three years later in 2002, he purged 20,000 employees because they were not his brand of "political correctness".  Chavez replaced them with loyal supporters but most of them were not trained for oil work.  Then he nationalized foreign -owned oil assets.  Investment fell, accidents went up and in 2012, the huge Amuay refinery blew up.  Today, under Chavez's hand-picked successor President Nicolas Maduro, Venezuela produces 2.3 million barrels of crude oil daily - down 35% from 1999.  And in the July issue of Veneconomy Monthly published in the capital Caracas, the editorial board, after analyzing PDVSA'S 2013 Annual Report, concluded:  "Sadly, what information is available confirms perceptions that PDVSA is headed for insolvency".

The oil crisis is just the tip of the iceberg.  As inflation and poverty worsen, President Maduro announced last week that his government may default on repayment of $80 billion of foreign debt.  If that happens, Venezuela will be branded a pariah by the investment community.  It gets worse.  Simple consumer goods like shampoo, diapers, meat, medicines etc. etc. are in short supply.  Even fresh water is becoming scarce, particularly in high-poverty areas.  Soviet-style labour laws and massive government regulations and restrictions are strangling the private sector - the very engine of growth needed for the country's economic survival!

But the socialist dream lingers on - an idealistic ideology untouched by reality.  I don't want to sound too cynical, but I wonder how President Maduro and his government cronies are faring in this swamp?  I'll bet there's no shortage of shampoo for his fresh-water showers.

Dollarama "Bucks" The Trend

Is a "dollar"  store no longer a dollar store when its price point goes over one dollar?  Not according to Dollarama Inc., Canada's premier haven for frugal shoppers looking for the best deals at low prices.  In the spring of 2012, Dollarama added merchandise at $1.25, $1.50 and $ 2.00 and later added stock at $2.50 and $3.00.  Today, the company reports that 2/3 of its sales are generated by products priced over $1.00.  Chief financial officer Michael Ross admitted that the company was nervous about the strategic switch in its business model, but over time Dollarama concluded that consumers were just looking for the best deal.  Ross said:  "I think we're a low-entry price-point value store.  As long as whatever we sell we sell it at a better value than anyone else, the business case holds".

Not everone agrees with Mr. Ross.  Keith Howlett, an analyst with Desjardins Securities in Toronto, claims Dollarama may destroy the sheer psychological pleasure a consumer gets at a true dollar store.  "As prices go up, now you go in and you might only get 4 items for $10.  Does the enthusiasm pale?  My own view is it probably does because there seems to be something intrinsic about buying a lot for a little.  There's some kick out of it."

Yesterday, Dollarama's chief executive Larry Rossy announced a 25% increase in net earnings last quarter.  His conclusion - "We'll stay with that mix of prices as long as we can".
So far, the future for Dollarama looks bright.  Currently, it operates 917 stores in Canada and is working towards a target of 1200 outlets.  Will their strategy hold?  Why not.  After all, a dollar ain't what it used to be.

Barack Obama: The War President

On Wednesday night, President Obama reluctantly but effectively declared war on the Islamic State.  Gruesome beheadings broadcast around the world and threats of attacks on the homeland finally convinced Obama to drop the gauntlet.  That and the Central Intelligence Agency estimate that the size of the terrorist army doubled over the summer to 20,000 - 31,000 fighters, primarily by foreign recruits eager to get into the war.  The President said:  "The United States will lead a broad coalition of partners to degrade and ultimately destroy ISIS".

Lined up against ISIS are Saudi Arabia, Jordan, the Kurds, Syria, Iraq and Iran.  Saudi Arabia, in particular, has a pivotal role because of its airpower and its commitment to provide training facilities for 10,000 new volunteers.  Saudi Foreign Minister Saud al-Faisal promised:  "There is no limit to what the kingdom can provide in this regard..... The kingdom is determined to face and overcome this scourge:".

America will step up its air strikes and for the first time, bomb ISIS facilities in Syria.  Targets include armored vehicles, artillery, trucks and machine gun/mortar positions.  The number of U.S.  advisors/trainers will be beefed up but Mr. Obama was very clear that "This is not our fight alone.  American power can make a difference, but we cannot do for Iraqis what they must do for themselves, nor can we take the place of Arab  partners in securing their region".  Two very important tactics in this strategy are to cut off ISIS funding and to equip local ground forces with military hardware.

An equally important pledge came from some Arabic countries to stop the propaganda promoting the Islamic State's radical, perverted ideology  through religious centres and social media sites.  This, in addition to military might, is the key to killing the hypnotic lure of ISIS.  It will be a long struggle.  The House of Islam is divided.  The world watches - hoping that sane, civilized men and women will destroy this inhuman, monstrous cancer and the perverted ideology behind it.

Europe Cuts Interest Rates To Stimulate Growth - But It Won't Work

Mario Draghi, President of the European Central bank, cut the key borrowing rate from .15% to .05% in an effort to spark economic growth.  For good measure, he tossed in some complicated monetary stimulus that only an Einstein could understand.  But these "solutions"  don't attack Europe's real problems - aging populations that don't produce but soak up scarce resources;  high taxes;  over-priced, union-controlled labour markets and over-regulated business.  The result is economic stagnation.

The Euro is at a 14 - month low against the American dollar.  Consumer demand for everything from washing machines to automobiles hasn't bounced  back from the economic crisis 2008-2009.  As a result, over-supply of many products is depressing prices and profit margins.  Take automobiles, for example, which are a glut on the European market.  Italian car sales have plummeted 50% since 2007 but the assembly lines keep churning out more cars.  Analysts say 18 automobile factories would have to be shut down in Europe to bring supply in line with demand.  But so far, only one factory has been closed - union opposition is so strong it trumps economic common sense.  Many other industries face the same dilemma.

Until Europe faces reality and allows pro-growth reforms, expect more stagnation and more Soviet-style bottlenecks, surpluses and status quo.

The Scottish Head Says No But The Heart Says Yes

Ah Lassies and Laddies   -You've got a lot of weight on your shoulders.  For the first time since the Act of Union created the United Kingdom in 1707, Scotland will vote to stay or go independent.  Until a month ago, the momentum was "No" - stay.  But today 3 key voting groups have switched to the "Yes" side - separate.  In only 4 weeks, working-class voters are up from 41% "yes"  to 56%;  young voters under 40 are up from 39% "yes"  to 60%;  women are up from 33%  'yes"  to 47%. Only conservative voters have resisted the lure of independence with a solid 93% planning to vote "No".

These patterns demonstrate the effectiveness of Alex Salmond, leader of the Yes Scotland movement.  First, he neutralized the fear factor - many Scots feared separation would devastate the economy - but Salmond's message of more North Sea oil revenue and corporate tax cuts to attract new companies hit home.  Second, he played the "Sassenach"   (English) card with great skill.  He appealed to Scottish national pride - how long will you let the Sassenach politicians in London control your destiny?

The business community is split on the vote.  Smaller firms located in Scotland seem caught up in the wave of nationalism and tend to vote "yes".  But larger companies with business ties in England, Wales and overseas trend to the "no"  side.  Most economists agree that independence would lead to recession, instability and more spending cuts in government programs.  Revenue from oil production in the North Sea, they argue, is already on the decline as extraction costs go up and oil reserves run dry.  By the 2020's, North Sea oil will bring in less than 2 billion pounds a year.  Scotland's financial services industry, including the Royal Bank of Scotland, would head south resulting in the loss of high-paying jobs and tax revenues.  There is a high probability that bank deposits would shift from Scotland to England within days.  Deutsche Bank, Germany's largest bank, issued this ominous warning:  :  "Be afraid, be very afraid".

But this referendum is a battle of emotions so anything can happen.  In the 1995 Quebec vote for separation from Canada, polls pointed to "yes",  but voters did not take the plunge - they voted no (It was close:  50.6% - 49.4%).  Scotland can easily go either way.  For many, the price of freedom from the government in London will be a price worth paying.  (Remember Mel Gibson in "Braveheart"  - FREEDOM! )  Even Sean Connery will vote "yes"  - and when did James Bond ever lose a mission?