Working Hard to Safeguard Paddling Assets for All Canadians

All about Whitewater

All about Whitewater
A Blog about River Preservation and the need to protect our free flowing whitewater resources

Monday, December 13, 2010

The discount rate and environmentalism

Lately I've been following the work of Nicole Foss (Stoneleigh). She profoundly states that low interest rates give people the luxury of looking 'long term' while high interest rates cause people to act with short term focus.

This is similar to the Brazilian farmer cutting down and burning amazon rain forest because they need to eat - today, the longer term health of the environment is irrelevant to them.

Stoneleigh has come up with a prescription for survival over the next few years:

1) Hold no debt (for most people this means renting)

2) Hold cash and cash equivalents (short term treasuries) under your own control

3) Don't trust the banking system, deposit insurance or no deposit insurance

4) Sell equities, real estate, most bonds, commodities, collectibles (or short if you can afford to gamble)

5) Gain some control over the necessities of your own existence if you can afford it

6) Be prepared to work with others as that will give you far greater scope for resilience and security

7) If you have done all that and still have spare resources, consider precious metals as an insurance policy

8) Be worth more to your employer than he is paying you

9) Look after your health!

Stoneleigh gives the following explanatory notes:

1) The reason that getting rid of debt is priority #1 is that during deflation, real interest rates will be punishingly high even if nominal rates are low. That is because the real rate (adjusted for changes in the money supply) is the nominal rate minus inflation, which can be positive or negative. During inflationary times, this means that the real rate of interest is lower than the nominal rate, and can even be negative as it was during parts of then 1970s and again in the middle of our own decade. People have taken on huge amounts of debt because they were effectively being paid to borrow, but periods of negative real interest rates are a trap. They lure people into too much debt that they may not be able to service if real rates rise even a little. Most people are thoroughly enmeshed in that trap now as real rates are set to rise substantially.

When inflation is negative (i.e. deflation), the real rate of interest is the nominal rate minus negative inflation. In other words, the real rate is higher than the nominal rate, possibly significantly higher. Even if the nominal rate is zero, the real rate can be high enough to stifle economic activity, as Japan discover during their long sojourn in the liquidity trap. Standard money supply measures don't necessarily capture the scope of the problem as they don't adequately account for on-going credit destruction, when credit has come to represent such a large percentage of the effective money supply.

The difficulty from the point of view of debtors can be compounded by the risk that nominal interest rates will not stay low for years, as they did in Japan, but may shoot up as the international debt financing model comes under stress. For instance, on-going bailouts may cause international lenders to balk at purchasing long term treasuries for fear of their effect on the value of the dollar, even though those bailouts are not increasing liquidity thanks to hoarding behaviour by banks. We are not there yet, but the probability of this scenario rises as we move forward with current policies. The effect would be to send nominal interest rates into the double digits, and real interest rates would be even higher. The chances of being able to service existing debts under those circumstances are not good, especially as unemployment will be rising very quickly.

There is no safe level of debt to hold, including mortgages. For those who are not able to own a home outright, most would be much better off selling and renting, as real estate becomes illiquid faster than almost anything else in a depression. By the time you realize that you need to sell because you can no longer pay the mortgage, it may be too late. Renting is essentially paying someone else a fee to take the property price risk for you, which is a very good bet during a real estate crash. It would also allow you address point #2 - having access to liquidity.

2) Holding cash and cash equivalents (i.e. short term treasuries) is vital as purchasing power will be in short supply. Cash is king in a deflation. Access to credit is already decreasing and will eventually disappear for ordinary people. Mass access to credit has been a product of an historic credit expansion that expanded the supply of pockets to pick to an unprecedented extent, feeding off widespread debt slavery in the process. As you can't count on the availability of credit for much longer, you will need savings in liquid form that you can always access.

When interest rates spike, not only will debt become a millstone round your neck, but a debt-junkie government forced to pay very high rates will be in the same position. As a result government spending will have to be cut drastically, withdrawing the social safety net just as it is most needed. In practical terms, this means being on your own in a pay-as-you-go world. You do NOT want to face this eventuality with no money.

3) Keeping the savings you need in the banking system is problematic. The banking system is deeply mired in the crisis in the derivatives market. Huge percentages of their assets are not marked-to-market, but marked-to-make-believe using their own unverifiable models. The market price would be pennies on the dollar for many of these 'assets' at this point, and poised to get worse rapidly as the forced assets sales that are coming will lower prices further. The losses will eventually dwarf anything we have seen so far, pushing more institutions into mergers or bankruptcy, and mergers are becoming more difficult as the pool of potential partners shrinks.

If we do see a rash of bank failures, each of which weakens the position of others as the sale of their assets and unwinding of their derivative positions can re-price similar 'assets' held by other parties, then deposit insurance will not be worth the paper it's written on. When everything is guaranteed, nothing is, as the government cannot guarantee value. Savings held in these institutions are at much higher risk than commonly thought due to the systemic threats posed by a derivatives meltdown and spreading crisis of confidence. Fractional reserve banking depends on depositors not wanting their money back all at once, in fact with reserve requirements so whittled away in recent years, it depends on no more than a fraction of 1% of depositors wanting their money back at once. This is a huge vulnerability and the government deposit guarantee is a bluff waiting to be called.

4) The general rule of thumb in a deflation is to sell everything that isn't nailed down and then sell whatever everything else is nailed to, for the reasons that assets prices will fall further than most people imagine to be possible, and the liquidity gained by selling (hopefully) solves the debt and accessible savings problems (provided you don't lose the proceeds in a bank run). Assets prices will fall because everywhere people will be trying to cash out, by selling not what they'd like to, but what they can. This means that all manner of assets will be offered for sale at once, and at a time when there are few buyers, this will push prices down to pennies on the dollar for many assets.

For those few who still have liquidity, it will be a time when there are many choices available very cheaply. In other words, if you manage to look after the proceeds from the sale of your former assets, you should be able to buy them back later from much less money. Of course flashing your wealth around at that point could be highly inadvisable from a personal safety perspective, and you may find that you'd rather hang on to your money anyway, since it will be getting harder and harder to earn any more of it. During the Great Depression, some of the best farms in the country were foreclosed up on and received no bids at auction, not because they had no value, but because those few with money were hanging on to it for dear life.

Being entirely liquid has its own risks, which is why I wouldn't sell assets that insulate you from economic disruption if you didn't buy them on margin (ie with borrowed money that you may not be able to pay back) and if you have enough liquidity already that you can afford to keep them. For instance, a well equipped homestead owned free and clear is a valuable thing indeed, whatever its nominal price. It is totally different from investment real estate owned on margin, where the point of the exercise is property price speculation at a time when doing so is disastrous.

One important point to note with regard to commodities is that commodities have already fallen along way since I first published the above list of suggestions. At that time, selling commodities was a very good idea, but now, since commodities are already down a very long way, it may depend on the commodity in question. If you only own commodities in paper form then selling is still a good idea in my opinion, as there are generally more paper claims than there are commodities, and excess claims will be extinguished. At some point soon I will write an intro on my view of energy specifically, since energy is the master resource. In short, we are seeing a demand collapse now, but eventually we will see a supply collapse, and it is difficult to predict which will be falling fastest at which times.

5) If you already have no debt and have liquidity on hand, I would strongly suggest that you try to gain some control over the essentials of your own existence. We live in a just-in-time economy with little inventory on hand. Economic disruption, as we are already seeing thanks to the problems with letters of credit for shipments, could therefore result in empty shelves more quickly than you might imagine. Unfortunately, rumours of shortages can cause shortages whether or not the rumour is entirely true, as people tend to panic buy all at once. If you want to stock up, then I suggest you beat the rush and do it while it's still relatively easy. You need to try to ensure supplies of food and water and the means to keep yourselves warm (or cool as the case may be). Storage of all kinds of basic supplies is a good idea if you can manage it - medicines, first aid supplies, batteries, hand tools, wind-up radios, solar cookers, a Coleman stove and liquid fuel for it, soap etc.

At the moment, there are many things you can obtain with the internet and a credit card, but that will not be the case in the future. Water filters are a good example, as the quality of water available to you is likely to deteriorate. You can buy the kind of filters that aid agencies use oversees for all of about $250, with extra filter elements for a few tens of dollars at sites such as Lehmans Non-Electric Catalogue or the Country Living Grain Mill site.

6) Most people will not be able to get very far down this list on their own, which is why we suggest working with others as much as possible and pooling resources if you can bring yourself to do so. Together you can achieve far greater preparedness than you could hope to do alone, plus you will be building social capital that will stand you in good stead later on.

7) If you have already taken care of the basics, then you may want to put at least some of whatever excess you still have into precious metals (in physical form). Although the price of metals should still have further to fall, since distressed sales have not yet had an effect on price, obtaining them could get more difficult. Buying them now would amount to paying a premium price for an insurance policy, which may make sense for some and not for others. Metals will hold their value over the long term as they have for thousands of years, but you may have to sit on them for a very long time, so don't by them with money you might need access to over the next few years.

Metal ownership may well be made illegal, as it was during the Great Depression, when gold was confiscated from safety deposit boxes without compensation. That doesn't stop you owning it, but it does make ownership far more complicated, and makes trading it for anything you might need even more so. You could easily attract the wrong kind of attention and that could have unpleasant consequences. In short, gold is no panacea. Other options may be far more practical and useful, although there is an argument for having a certain amount of portable wealth in concentrated form if you should have to move suddenly.

8) Being worth more to your employer than he is paying you is a good idea at a time when unemployment is set to rise dramatically. This is not the time to push for a raise that would make you an expensive option for a cash-strapped boss, and in fact you may have to accept pay cuts in order to keep your job. During inflationary times, people can suffer cuts to their purchasing power year after year, but they don't complain because they don't notice that their wage increases are not keeping up with inflation. However, deflation brings the whole issue into the harsh light of day.

People would have to take pay and benefit cuts for their purchasing power to stay the same, thanks to the increasing value of cash, but keeping people's purchasing power the same will not be an option for most employers, who will be struggling themselves. In other words, expect large cuts to pay and benefits. As unions will never accept this, for obvious reasons, since their membership has its own fixed costs, there will be war in the labour markets, at great cost to all. You need to reduce your structural dependence on earning anything like the amount of money you earn now, and don't expect benefits such as pensions to be paid as promised.

9) Your health is the most important thing you can have, and most citizens of developed societies are nowhere near fit and healthy enough. Already medical bills are the most common reason for bankruptcy in the US, and while you can't protect yourself against every form of medical eventuality, you can at least improve your fitness. You will be be living in a world where hard physical work will be much more prevalent than it is now, and most people are ill-equipped to cope. The solution Ilargi and I have chosen, as we have mentioned before, is the P90X home fitness programme. While it wouldn't be the right choice for everyone, if I can do it, as I have for 11 months already, then most people can. For others, there are gentler options available, but everyone should consider doing something to make themselves as healthy and robust as possible.

Stoneleigh has put her forecasts on here blog: the The dire nature of her prognostications are renumerated here:

1.Deflation is inevitable due to Ponzi dynamics (see From the Top of the Great Pyramid)

2.The collapse of credit will crash the money supply as credit is the vast majority of the effective money supply

3.Cash will be king for a long time

4.Printing one's way out of deflation is impossible as printing cannot keep pace with credit destruction (the net effect is contraction)

5.Debt will become a millstone around people's necks and bankruptcy will no longer be possible at some point

6.In the future the consequences of unpayable debt could include indentured servitude, debtor's prison or being drummed into the military

7.Early withdrawls from pension plans will be prevented and almost all pension plans will eventually default

8.We will see a systemic banking crisis that will result in bank runs and the loss of savings

9.Prices will fall across the board as purchasing power collapses

10.Real estate prices are likely to fall by at least 90% on average (with local variation)

11.The essentials will see relative price support as a much larger percentage of a much smaller money supply chases them

12.We are headed eventually for a bond market dislocation where nominal interest rates will shoot up into the double digits

13.Real interest rates will be even higher (the nominal rate minus negative inflation)

14.This will cause a tsunami of debt default which is highly deflationary

15.Government spending (all levels) will be slashed, with loss of entitlements and inability to maintain infrastructure

16.Finance rules will be changed at will and changes applied retroactively (eg short selling will be banned, loans will be called in at some point)

17.Centralized services (water, electricity, gas, education, garbage pick-up, snow-removal etc) will become unreliable and of much lower quality, or may be eliminated entirely

18.Suburbia is a trap due to its dependence on these services and cheap energy for transport

19.People with essentially no purchasing power will be living in a pay-as-you-go world

20.Modern healthcare will be largely unavailable and informal care will generally be very basic

21.Universities will go out of business as no one will be able to afford to attend

22.Cash hoarding will continue to reduce the velocity of money, amplifying the effect of deflation

23.The US dollar will continue to rise for quite a while on a flight to safety and as dollar-denominated debt deflates

24.Eventually the dollar will collapse, but that time is not now (and a falling dollar does not mean an expanding money supply, ie inflation)

25.Deflation and depression are mutually reinforcing in a positive feedback spiral, so both are likely to be protracted

26.There should be no lasting market bottom until at least the middle of the next decade, and even then the depression won't be over

27.Much capital will be revealed as having been converted to waste during the cheap energy/cheap credit years

28.Export markets will collapse with global trade and exporting countries will be hit very hard

29.Herding behaviour is the foundation of markets

30.The flip side of the manic optimism we saw in the bubble years will be persistent pessimism, risk aversion, anger, scapegoating, recrimination, violence and the election of dangerous populist extremists

31.A sense of common humanity will be lost as foreigners and those who are different are demonized

32.There will be war in the labour markets as unempoyment skyrockets and wages and benefits are slashed

33.We are headed for resource wars, which will result in much resource and infrastructure destruction

34.Energy prices are first affected by demand collapse, then supply collapse, so that prices first fall and then rise enormously

35.Ordinary people are unlikely to be able to afford oil products AT ALL within 5 years

36.Hard limits to capital and energy will greatly reduce socioeconomic complexity (see Tainter)

37.Political structures exist to concentrate wealth at the centre at the expense of the periphery, and this happens at all scales simultaneously

38.Taxation will rise substantially as the domestic population is squeezed in order for the elite to partially make up for the loss of the ability to pick the pockets of the whole world through globalization

39.Repressive political structures will arise, with much greater use of police state methods and a drastic reduction of freedom

40.The rule of law will replaced by the politics of the personal and an economy of favours (ie endemic corruption)


Canadian Rivers

Canadian Rivers
I speak for river users too!

The Queen is not amused!

The Queen is not amused!

The Damned Dam - 2005 -

The Damned Dam - 2005 -
22nd Annual Kipaw Rally has modest turnout. - 23rd does better

The Ashlu river: it could happen to you

The Ashlu river: it could happen to you

Whitewater Ontario

Whitewater Ontario
Working Hard to Protect Canada's Paddling Resources

Whitewater Ontario - Mission Statement

It is Whitewater Ontario’s mission to support the whitewater paddling community through the promotion, development and growth of the sport in its various disciplines. We accomplish this through the development of events, resources, clubs, and programs for personal and athletic development, regardless of skill level or focus, to ensure a high standard of safety and competency; We advocate safe and environmentally responsible access and use of Ontario’s rivers. Whitewater Ontario is the sport governing body in the province, and represents provincial interests within the national body Whitewater Canada and the Canadian Canoe Association

Kipawa, Tabaret, and Opemican

Kipawa, Tabaret, and Opemican
If Hydro Quebec is not actively pursuing Tabaret what is that bite out of Opemican for?

Kipawa Dam: After

Kipawa Dam: After
Laniel Dam at 2006 Rally

Where is the Kipawa

Where is the Kipawa
Kipawa flows into lake Temiskamingue, running from Kipawa Lake, under hwy 101 in Quebec

Kipawa Dam

Kipawa Dam
laniel dam at 2004 River Rally

Tabaret is a Bad Idea

About the Kipawa

The best thing paddlers can do to help the cause of the Kipawa:

1. attend the rally and bring others including non paddlers to attend and buy beer and have fun

2. write your MP /MNA and raise the issue and post your objections -1 letter = 200 who didn't write

3. Write Thierry Vandal the CEO of Hydro Quebec strongly opposing the 132 MW standard decrying the use of "diversion" as the most environmentally inappropriate method of power production

4. Write Jean Charest, Premier of Quebec protesting that either the algonquin or the tabaret project will eliminate all other values on the Kipawa River by turning it into a dry gulch.

5. See if you can get other allied groups interested by showing your own interest, ie the Sierra Defense Fund, Earthwild, MEC, and so on.

6. Demand further consultation

7. Currently we are at the point where we need to sway public opinion and raise awareness.

However, if all else fails, don't get mad, simply disrupt, foment, and protest . The Monkey Wrench Gang.

Have you read Edward Abbey?

Important Addresses
CEO,Hydro Québec, 75 boul René Levesque, Montreal, P.Q., H2Z

Tabaret is a Bad Idea (Part Two)

Les Amis de la Riviere Kipawa is poised to use an application to the Federal Court to issue a Writ of Mandamus to ensure the Minster does what he is supposed to do, protect the public's right to navigate the water control structure at Laniel, Quebec using the Navigable Waters Protection Act. (see

In the now gutted Navigable Waters Protection Act lay the means by which the Minister of Transport could keep the public right of passage down our great Canadian Heritage, our rivers and streams which are threatened especially by resource corporations and power brokers such as Hydro Quebec.

These powerful entities continue to petition that 'this' river or 'that' stream is not navigable and therefore not protectable.
I don't say that dams and bridges should not be built, only that if they are, historical navigation rights should be considered and preserved by making reasonable accommodations for recreational boaters.

It is the Minister of Transport, in exercising the right to allow or disallow work on or over a navigable waterway is what keeps boats and recreational boaters plying our waterways.

To many recent cases launched in the Federal Court concerning the Navigable Waters Protection Act, most recently the case of the Humber Environment Group of Cornerbrook Newfoundland versus the Cornerbrook Pulp and Paper Company indicates that the important oversight is not being faithfully performed. Have we really come to the point now where we must say "such and such a stream is one foot deep, possessing so many cubic feet per second flow and so on?" The answer to this is... YES!

The honourable Mr. Justice John A. O'Keefe, ruled that it had not been shown that the river was navigable. How convenient was that to the Minister? But either the Minister of Transport acts to protect our rivers and streams as a public right or he does not and that means rivers and streams currently enjoyed by kayakers and canoists.

Enough of the cheating, and double-talk. Canadians! our rivers and streams are our own, lets urge the Minister of Transport and the our government to protect them.

Peter Karwacki

Tabaret is a Bad Idea (Part Three)

10 Reasons WhyTabaret is a Bad Idea1) Tabaret is too big. The station is designed to useevery drop of water available in the Kipawawatershed, but will run at only 44 percent capacity.We believe the Tabaret station is designed to usewater diverted from the Dumoine River into theKipawa watershed in the future. 2) The Tabaret project will eliminate the aquaticecosystem of the Kipawa River.The Tabaret project plan involves the diversion of a16-km section of the Kipawa River from its naturalstreambed into a new man-made outflow from LakeKipawa. 3) Tabaret will leave a large industrial footprint on thelandscape that will impact existing tourismoperations and eliminate future tourism potential. 4) The Tabaret project is an aggressive single-purposedevelopment, designed to maximize powergeneration at the expense of all other uses. 5) River-diversion, such as the Tabaret project, takinglarge amounts of water out of a river’s naturalstreambed and moving it to another place, is verydestructive to the natural environment. 6) The Kipawa River has been designated a protectedgreenspace in the region with severe limitations ondevelopment. This designation recognizes theecological, historical and natural heritage value ofthe river and the importance of protecting it.Tabaret will eliminate that value. 7) If necessary, there are other, smarter and morereasonable options for producing hydro power onthe Kipawa watershed. It is possible to build a lowimpactgenerating station on the Kipawa river, andmanage it as a “run-of-the-river” station, makinguse of natural flows while maintaining other values,with minimal impact on the environment. 8) The Kipawa watershed is a rich natural resource forthe Temiscaming Region, resonably close to largeurban areas, with huge untapped potential fortourism and recreation development in the future.Tabaret will severely reduce this potential. 9) Tabaret provides zero long-term economic benefitfor the region through employment. The plan is forthe station to be completely automated andremotely operated. 10) The Kipawa River is 12,000 years old. The riverwas here thousands of years before any peoplecame to the region. The Tabaret project will change all that.

Problems on a local River?

  • There is more to do as well but you have to do your research and above all, don't give up.
  • IN the meantime prepared a document itemizing the history of navigation of this spot and its recreational value. Use the Kipawa river history of navigation as a guide: see
  • Under the Ministry of Environment guidelines you have a set period of time to petition the change under the environmental bill of rights, you may have limited time to take this action. But it involves going to court for a judicial review of the decision.
  • 4. contact the ministry of natural resources officials and do the same thing.
  • 3. contact the ministry of the environment and determine if they approved the project
  • 2. determine if the dam was a legal dam, approved under the navigable waters protection act.
  • 1. research the decision and timing of it to determine if an environmental assessment was done.

Minden Ontario

Minden Ontario
Gull River Water control at Horseshoe lake

A History of Navigation on the Kipawa River

Prior to the environmental assessment there was no signage at the Laniel Dam

T-Shirts Area: These are available now!

T-Shirts Area: These are available now!
Send $25 and a stamped self addressed envelop for the Tshirt, and for the bumper sticker, a stamped and self addressed envelope with $5.00 for the bumper sticker to Les Amis de la rivière Kipawa, 80 Ontario St., Ottawa, Ontario, K1K 1K9 or click the link To purchase a Les Amis "T" contact Doug with the following information: Number of shirts:Sizes: Ship to Address: Method of Payment: cash, cheque and paypal, Shipto address:

Bumper Stickers Now Available

Bumper Stickers Now Available
Get your bumper sticker and show your support for the Kipawa Legal Fund ! - send $5.00 in a Stamped, self addressed envelope to: Peter Karwacki Box 39111, Ottawa, Ontario, Canada, K1H 7X0