The Oil Drum: Canada

North American integration is making the news again on both sides of the border, and on the other side of the Atlantic. Meanwhile, another large Canadian company - Alcan - becomes the subject of a takeover some describe as a symptom of Canadian economic suicide. The natural gas drilling crash affects Baker Hughes, the Chinese feel unwelcome in the Alberta oil patch and concerns are raised over the safety of LNG terminals in Québec.

In the US the subprime credit market problems are beginning to snowball, while the folly of relying on sophisticated risk analysis models based on the 'data' from 'liar's loans' becomes apparent. Wall Street's ability to value assets is called into question, the lawyers begin to get in on the act and the US tries to sell mortgaged-backed securities to China.

How cosy do we want to be with the Americans?

Prime Minister Stephen Harper will be meeting in Montebello, Que., with U.S. President George W. Bush and Mexican President Felipe Calderón on Aug. 20 and 21.

These meetings seem to be kept deliberately low-profile. Do we, as Canadians, really want to continue down the road toward deep integration with the United States with regard to our resources?

In March 2005, Paul Martin, Vicente Fox and Bush met in Waco, Tex., to ratify the Security and Prosperity Partnership of North America (SPP). The SPP takes NAFTA's goal of continental economic integration much further by including security and foreign policy issues, and by speeding up the process of regulatory harmonization integral to the first Canada-U.S. Free Trade Agreement.

All this has been done quietly, resulting in a lack of public awareness or input. It should also be noted that all three North American governments seem to be moving quickly toward a continental resource pact, a North American security perimeter, and common agricultural and other polices related to our health and environment. To date, the public has been neither informed or consulted.

We should ask our members of parliament their position on these very important meetings, and when public input will be initiated.

This is our country. Let's keep it strong and free.

Elizabeth Eidt, Stratford

N.S. premier urges revolt against federal budget

The 2005 Atlantic Accord, a deal signed by the then-Liberal government between the governments of Nova Scotia and Newfoundland and Labrador, protects those two provinces from having their offshore oil and gas royalties clawed back under the federal equalization plan.

However, to accept an enriched equalization deal, they have to abandon the accord.

Gordon Laxer, Professor of political economy at the University of Alberta and Director of the Parklands Institute, created a political storm with his testimony before the International Trade Committee on Thursday. He was conducting a presentation on the energy and climate change implications of the Security and Prosperity Partnership (SPP), an agreement on greater integration between Canada, the US and Mexico. Professor Laxer pointed out that the deal, which refers to North American "energy security" as a priority, commits Canada to maintaining energy exports to the US, in the absence of a national plan or strategic reserve to protect its own security of supply.

Billions at risk from wheat super-blight

An infection is coming, and almost no one has heard about it. This infection isn't going to give you flu, or TB. In fact, it isn't interested in you at all. It is after the wheat plants that feed more people than any other single food source on the planet. And because of cutbacks in international research, we aren't prepared. The famines that were banished by the advent of disease-resistant crops in the Green Revolution of the 1960s could return, Borlaug told New Scientist.

The disease is Ug99, a virulent strain of black stem rust fungus (Puccinia graminis), discovered in Uganda in 1999. Since the Green Revolution, farmers everywhere have grown wheat varieties that resist stem rust, but Ug99 has evolved to take advantage of those varieties, and almost no wheat crops anywhere are resistant to it....

....What's more, Ug99 will find agriculture has changed to its liking in the decades stem rust has been away. "Forty years ago most wheat wasn't irrigated and heavily fertilised," says Borlaug. Now, thanks to the Green Revolution he helped bring about, it is. That means modern wheat fields are a damper, denser thicket of stems, where dew can linger till noon - just right for fungus.

Another worry is that travel has exploded in the past 40 years. There have now been several documented cases of travellers carrying rust spores on their clothing. Some fear Ug99 will hitchhike as much as it flies - and its spread need not be innocent. New Scientist has learned that the US Department of Homeland Security met in March to discuss the possibility that someone could transport Ug99 deliberately.

When reading this quote, remember what happened to the markets in 1987. Executives are voting with their feet.

Top executives sold $63.18 worth of stock in their companies for every $1 they bought in November -- the widest margin since 1987. Analysts said the numbers suggested that corporate chieftains -- including Microsoft's Bill Gates and Google's Eric Schmidt -- didn't share the investor confidence that has pushed markets to new heights. "They're pretty savvy market guys," said Wayne Wilbanks, chief investment officer of Wilbanks, Smith & Thomas Asset Management. "They see things are slowing down and they're like, 'Man, I'm taking some money off the table.'"

"Amid the recent rallies in equity and bond markets, the yield curve's inversion has received scant media attention," New York-based DBRS analysts David Roberts and Tobias Moerschen commented.

"Most observers seem to have moved on, as the potentially worrying yield curve signal seems at odds with the ongoing economic expansion."

However, the DBRS study warns that the yield curve is a forward-looking indicator, pointing a year or so into the future.

"Moreover, the persistence of the U.S. yield curve's inversion strengthens its predictive power."