Thursday, 9 February 2012

If Iran Closes Strait of Hormuz, Will It Mean War? & will Oil Skyrocket to 200$/barrel

 

Are we heading for a War in the Middle East? Well read some the articles that I have put together and you can decide, and will oil skyrocket sending our fragiles economies to a global double dip Recession?

Strait of Hormuz powder keg: US-Israel to meet Great Prophet?



A Nour missile is test fired off Iran's first domestically made destroyer, Jamaran, on the southern shores of Iran in the Persian Gulf March 9, 2010 (Reuters / Ebrahim Noroozi / IIPA)
With tensions around the Strait of Hormuz sky-high, Iranian plans to conduct the country's "greatest naval war games” could coincide with joint US-Israeli exercises in the Persian Gulf. With both sides taking positions, could a real battle be looming?

­Hopefully the massive exercises will remain just that. But with three armies on the playing board, one spark could be enough to ignite an all-out war.
Iran, which recently held a 10-day naval exercise near the Strait of Hormuz to demonstrate its military prowess, is now planning new, ‘massive’ naval drills codenamed The Great Prophet.


The drills will be carried out by the country’s elite Revolutionary Guard, which has its own air, naval and ground forces separate from those of the regular military.



On Thursday, the semiofficial Fars news agency quoted the Iranian Revolutionary Guard's naval commander, Admiral Ali Fadavi, as saying the next round of war games would be "different" from previous ones, AP reports.
However, on the same day, an Israeli military spokesman speaking under condition of anonymity said his country was gearing up for the largest joint missile defense exercise ever held with the United States.


The drill, called "Austere Challenge 12," is scheduled to take place in the upcoming weeks. Its primary purpose is to test multiple Israeli and US air defense systems, especially the “Arrow” system, which the country specifically developed with help from the US to intercept Iranian missiles.
Perhaps more alarmingly to the Iranian leadership, thousands of US troops will be deployed to Israel in support of the drill.
While the Israeli military claims the latest exercises are unconnected with recent events, Martin Van Creveld, a military historian at the Hebrew University of Jerusalem, said the drill would be used to gain leverage over Iran.
"Defending against an attack is not something that you improvise from today to tomorrow. It's something you have to prepare, you have to rehearse… This, among other things, is an exercise to show Iran, the people in Tehran, that Israel and the United States are ready to counterattack," AP cites him as saying.
But Jamal Abdi of the National Iranian American Council in Washington told RT the actions of America and Israel are not merely preventative.

“We’re getting closer and closer to war with Iran. Anybody who argues that this extraordinary confluence of events – the planned exercises by the US and Israel, the exercises that Iran was doing in the Persian Gulf, we have sanctions in place with no diplomacy – the only way that that ends is through confrontation,” he said.  Tensions in the region have soared since the Islamic Republic threatened to block the Strait of Hormuz – through which one sixth of the world’s oil passes – in response to Western plans to ban oil imports from Iran.
And following Washington's decision Saturday to approve sanctions targeting the country’s oil Industry over Tehran’s alleged secret nuclear weapons program, the game of brinkmanship being played by all sides could push the entire region over the edge.

 



Iran says it will close Strait of Hormuz if crude exports blocked

Published: 08 January, 2012, 15:49
Edited: 10 January, 2012, 11:55

http://rt.com/news/iran-ready-block-strait-hormuz-361/
An Iranian war-boat fires a missile during the "Velayat-90" navy exercises in the Strait of Hormuz in southern Iran (AFP Photo / ALI MOHAMMADI)


Tehran’s leadership has decided to order a blockade of the strategic Strait of Hormuz if the country’s oil exports are blocked, a senior Revolutionary Guard Commander said as reported by Iranian press.
­The strategic decision was made by Iran's top authorities, Ali Ashraf Nouri said, as cited by the Iranian Khorasan daily.

"The supreme authorities … have insisted that if enemies block the export of our oil, we won't allow a drop of oil to pass through the Strait of Hormuz. This is the strategy of the Islamic Republic in countering such threats," Nouri said.

Until now, there had been no official confirmation of Iran’s military having direct orders to block the Strait. However, Tehran has been threatening to block the strategic waterway – one of the world's most important oil routes – if the West slapped more sanctions on its oil exports or risked hostile military act of any kind.
Meanwhile, Iran is planning a new round of “massive” naval drills codenamed The Great Prophet, which will be carried out by the country’s elite Revolutionary Guard with its own air, naval and ground forces, separate from those of the regular military.

On Thursday, the Iranian Revolutionary Guard's naval commander, Admiral Ali Fadavi, said the next round of war games would be "different” from previous ones.
Iran recently held a 10-day naval exercise near the Strait of Hormuz, demonstrating its military prowess and ability to take full control of the waters if necessary.

Tensions spiraled after the US introduced the latest round of sanctions against Iran targeting its financial and banking sector, effectively hampering Iran’s ability to settle transactions with the international consumers of its oil. The legislation already caused the Iranian currency to plunge to a historic low.
Iran is under UN sanctions for refusing to stop its uranium enrichment program, which is – as Iranian officials claim – aimed at developing a complex civilian nuclear industry. The international community believes, though, that Iran’s nuclear program is merely a front for its ambitions to create a nuclear weapon.

Meanwhile the EU may delay its embargo on Iranian crude oil imports, a measure aimed at complementing the US sanctions. EU members most dependent on oil imports are seeking to push back the embargo and have called for “grace periods” on existing contracts. But diplomats from different countries differed on the exact length of these grace periods. Diplomats from Greece, which is most dependent on Iranian oil imports, have called for a delay of 12 months, while the UK, France and the Netherlands want a maximum of 3 months.
EU foreign ministers are set to meet in Brussels on January 30 to decide on how the embargo will be imposed.

Iran is the second-largest oil producer after Saudi Arabia, among the 12 countries in OPEC, making around 3.5 million barrels a day. EU countries buy around 500,000 barrels per day, the largest share of Iran’s total 2.6 million barrel a day oil export.
During an interview on CBS’s Face the Nation on Sunday, US Defense Secretary Leon Panetta said the United States would not tolerate the blocking of the Strait of Hormuz. Martin Dempsey, chairman of the Joint Chiefs of Staff, added that the US would take action to reopen the Strait in the event Iran does block it.

They've invested in capabilities that could, in fact, for a period of time block the Strait of Hormuz. We've invested in capabilities to ensure that if that happens, we can defeat that,” Dempsey said.

Panetta also said he did not believe Iran was developing a nuclear weapon but indicated that Iran’s nuclear capabilities are what concern the US and its allies. 
Panetta and Dempsey stressed the need to continue putting diplomatic and economic pressure on Iran but also said that the US did not intend to “take any option off the table.
Asked about what the United States would do if Israel were to take out Iran’s nuclear capability on its own, Leon Panetta said the main goal would be to protect US forces in the region.

Iran drives Europe into a corner

http://english.pravda.ru/world/asia/25-01-2012/120326-iran_europe-0/
25.01.2012
Iran drives Europe into a corner. 46451.jpegThe European Union has decided to impose new sanctions on Iran designed to force the country to curtail its nuclear program. The most painful point is the rejection of the supply of Iranian oil, which will result in irreparable damage to oil exports, as it accounts for half of the budget revenues of Tehran. How would Ayatollah respond to the West?
The list of sanctions consists of twenty items, the most painful of which will be the rejection of the supply of Iranian oil. According to the authors of the sanctions, it will force the regime of Ayatollah to either accept the West's nuclear program, or make suggestions that would suit the Western leaders. However, it is doubtful that would happen.
First, it appears that in spite of their desire to punish Ayatollah, the European officials punished the Greeks, Spaniards and Italians - nearly all of the unfortunate quartet PIGS, whose stupidity and greed initiated the current economic crisis in Europe. These countries consume the lion's share of Iranian oil flowing to the EU. No wonder Greece, third of whose energy demand is covered by Iranian oil, until recently, sought to delay the embargo at least by a year.


For Tehran this decision, though unpleasant, is not fatal. One does not have to be a great military strategist to predict the actions of the Western politicians in the event of deterioration of the situation. The oil embargo had already happened in the history of this conflict, and this time the Iranians had time to prepare for it. Despite the fact that the country is really dependent on oil, energy exports are diversified among customers, who sometimes have very different interests.
The EU uses approximately 600,000 barrels of oil (20 percent of the Iranian exports), but China alone imports nearly as much (550 thousand barrels per day). Other large consumers of Iranian oil are Japan, India, South Korea, and they are not going to abandon the supply. Who should Iran bet on at a time when the West has virtually no industry left and the raging economic crisis, while Asia, if not increasing, then, at least, is keeping its growth at a steady pace?

The Ministry of Petroleum Industry of Iran has already declared that the embargo did not come as a shock and that they have developed alternative solutions in preparation for this outcome. A spokesman for the Foreign Ministry Ramin Mehmanparast advised the European countries and those under American pressure to think about their own interests. The importers that remove themselves from Iran's energy market will soon see that their place was taken by others. The EU gave Tehran six months (the embargo fully takes effect only on July 1, and until then the EU will be choosing the energy supplier from previous contracts), so the Iranian oil industry has time to find a replacement for the unruly customers.

Would Tehran be willing to use these six months? The Iranian elite already heard some suggestions to give an immediate answer to the embargo by shutting off oil and petroleum products to Europe, which will not make the Greeks and Italians happy. Even considering the "soft" option of imposing sanctions it will be difficult to recover the economies of these countries that would have to contend with an increase in oil prices, while searching for alternative suppliers. The latter, in turn, are unlikely to not take advantage of the situation. However, EU officials, apparently, decided to sacrifice the future bankrupts, placing an additional burden on them.
Meanwhile, the rise in price of oil has become a reality as early as Monday: a barrel of Brent crude jumped to $100, and some experts believe it will reach $200 if the confrontation escalates. There is another sad scenario in which Iran fulfills its threat to obstruct the Strait of Hormuz used to transport up to forty percent of world exports of petroleum and petroleum products. This is the second consequence of the EU's decision that would affect not only the Europeans.

Third, the sanctions are the response to their ideological inspiration in the USA. Under a threat of blocking transactions of its Central Bank, Tehran is transferring to transactions in Rial and the national currencies of the counterparties. Such agreements have been already reached with India and Turkey, with Russia to follow. The process of replacing the US dollar as a reserve currency for transactions has been ongoing for a while and was not started by Iran. However, the Americans are unlikely to be thankful to their allies for the acceleration of the issue.

Brussels sanctions did achieve certain results. In spite of all assurances of the Western politicians of love to the Iranian people, ordinary people have already felt its effects. Rial has been crushed by speculators, and on Tuesday prices for basic necessities increased, and even at higher prices they are difficult to get. This means that the situation is worsening for the ordinary people both in Iran and Greece, which is likely to be the only serious consequence of the embargo. No matter how good the rhetoric of Brussels, the results do not lead to anything other than further deterioration, including, first and foremost - for Brussels itself.
Ilya Nikonov
Bigness.Ru

Iran Decides to Close Hormuz if Oil Exports Blocked



Kurt Nimmo
Infowars.com
January 8, 2012
Ali Ashraf Nouri, a senior commander in Iran’s Revolutionary Guard, told Khorasan daily on Sunday that the Iranian government has decided to close the strategic Strait of Hormuz at the mouth of the Persian Gulf if the country’s oil exports are blocked.



Also on Sunday, Iranian Army Commander Brigadier General Habibollah Sayyari said Iran can block the Strait of Hormuz “easily.”
The threat comes as the European Union prepares to embargo Iranian oil at the end of the month in response to Iran’s alleged nuclear weapons program.
It was reported last week EU foreign ministers will likely to agree to block Iranian oil imports at a meeting in Brussels on January 30. Working groups are negotiating the details of how the embargo will be imposed, said an official.
Following Nouri’s comments, Defense Secretary Leon Panetta told CBS News that if Iran blocks the Strait of Hormuz the U.S. military will respond.
“We made very clear that the United States will not tolerate the blocking of the Straits of Hormuz,” Panetta told CBS television. “That’s another red line for us and that we will respond to them.”
General Martin Dempsey, the chairman of the Joint Chiefs of Staff, said Iran has the ability to close the waterway. “But we would take action and reopen the Straits,” he warned.
Panetta also said that Iran is laying the groundwork for making nuclear weapons. “We have common cause here” with Israel, he said. “And the better approach is for us to work together.”

Split thrust: Iran beefs up nuclear projects and bolsters alliances;



Iran has vowed to increase the capacity of its first nuclear power plant to maximum within a month, and launch a new nuclear facility, as President Ahmadinejad arrives in Latin America to gain support amid intense pressure from the West.
­The nuclear pledge came amid a storm of harsh rhetoric between Tehran and the West, with Iran saying it is not pursuing a nuclear weapons program and refuting Western allegations that it is in breach of the nuclear non-proliferation treaty.

­Tehran to launch subterranean nuclear site soon

­“The Fordo facility will be launched soon and will be able to produce 20 per cent, 3.5 per cent, and 4 per cent enriched uranium,” the head of the Atomic Energy Organization of Iran (AEOI) was quoted by Iranian media as saying on Sunday.
Fereidoun Abbasi was speaking at the opening of an exhibition displaying the country’s nuclear achievements in the port city of Bandar Abbas, in the southern province of Hormozgan.
In August 2011, the AEOI announced plans to transfer the production of uranium enriched to a purity level of 20 per cent from the Natanz nuclear site to the subterranean Fordo enrichment facility under the supervision of the International Atomic Energy Agency (IAEA). It also claimed it would triple the production of 20 per cent enriched uranium and eventually move the entire program to the new, secretly-built facility.
­The Fordo enrichment facility is carved into a mountainside south of Tehran to protect it against possible attacks. It was top secret until 2009 and was only disclosed to the IAEA nuclear watchdog in September of that year after its existence was allegedly detected by Western intelligence.
­Mr Abbasi says some centrifuges have already been moved, but they are taking their time in order to observe what he calls “technical standards”.
The first batch of 20 per cent enriched nuclear fuel will be loaded into the core of the Tehran research reactor within a month, reports The Tehran Times. Iran has reiterated that it needs 20 per cent enriched uranium to produce nuclear fuel plates for the Tehran research reactor, which produces radioisotopes for cancer treatment.
However, another Iranian daily, the Kayhan, which is rumored to be close to the ruling clerics, said Tehran has already begun injecting uranium gas into the centrifuges at the Fordo facility. It remains unclear which of the reports is actually correct.

­Bushehr plant to work to full capacity within month

­Iran's top nuclear official also said the Bushehr plant, located along the Persian Gulf coast, will reach its full capacity of 1,000 megawatts by February 1. The plant was connected to the country's national grid in September with a capacity of 60 megawatts. Once it reaches 1,000 megawatts, Bushehr will account for 2.5% of Iran's total electricity consumption.  

­‘Tehran ready to export nuclear services to friendly countries’

­Abbasi confirmed Tehran's readiness to export nuclear services to friendly countries, especially the African nations.
"At present we are capable of exporting nuclear services to the friendly countries in Africa which own considerable uranium resources," he was quoted as saying by the country’s media.
Noting that Iran is already registered as an exporter of nuclear hardware to other countries, he also underlined Tehran's readiness to export heavy water byproducts.
Fereidoun Abbasi announced a few months ago that Iran was ready to export enriched uranium, as well as build uranium enrichment plants abroad and advise countries importing nuclear power plants on how to write contracts protecting their rights.

 

­Ahmadinejad off to Latin America for support against the West



­Meanwhile, Iranian President Mahmoud Ahmadinejad has left for a five-day Latin America trip. It will take in Venezuela, Cuba, Ecuador and Nicaragua, countries which, “resist the oppression” of the United States and share “an anti-colonialist view,” he said just before flying out on Sunday, according to the country’s Fars news agency.

Commenting on Ahmadinejad’s trip, the US State Department said that “as the regime feels increasing pressure, it is desperate for friends – and is flailing around in interesting places to find,” them.
Tensions continue to run high in the Strait of Hormuz, where Iran has announced it is planning to hold yet another round of naval drills following 10-days of manoeuvres.
The fresh round of drills – codenamed The Great Prophet – could coincide with joint US-Israeli exercises in the Persian Gulf, codenamed Austere Challenge 12.
Hopefully the show of strength will remain just that. But with three armies on the playing board, one spark could be enough to ignite an all-out war


Political theatre: Currents behind Iranian-Western standoff
Published: 05 January, 2012, 23:49
Edited: 06 January, 2012, 03:46

If the EU puts its plan to sanction Iranian oil exports into practice, there will be hard consequences on the European economy. But experts say the West's sanction policy is motivated purely by politics.
The sanctions could come into effect by the end of January, unless Iran backs down on its alleged nuclear weapons program.
Tehran has responded to the sanctions with its own threats to block oil trade through the crucial Strait of Hormuz, leading to a continued deadlock in the Persian Gulf.
American warships are also present in the region, with a mission to prevent any hindrances of passage.
RT talked to professor of political science Pierre Guerlain, from Paris West University Nanterre La Defense, who is certain that the standoff between the West and Iran is driven by politics, not economics.
From the economic point of view, it [sanctions] is not wise” he says, but measures are “coming from leaders who are facing elections; Obama in the US. And Obama has to be very tough on Iran, because he is accused by the Republicans of being soft on Iran.
Iranian leaders, Guerlain believes, also have strong political reasons to continue the standoff, making the current conflict a “game where everything is trying to benefit from the opposition of the other.”
Being tough on Iran is good for Obama, being oppositional to the US is good for Iranian leaders, who are themselves quite discredited in their own country," Guerlain explains, adding that “everyone benefits politically though economically everyone could be hurt.

­US contributed into Iran’s geopolitical might

­Washington’s intercourse with Iran is nothing but “a strategic foreign policy problem” acquired since their failure in Iraq, says John Rees, a political activist and national officer at the Stop the War Coalition.
The war in Iraq was meant to give them a stable pro-Western, pro-business base for operations in the Middle East,” Rees told RT. “What they ended up doing is making Iran a greater regional power than it was before. This is what the sanctions are about.
The conflict is not just about nuclear weapons in the Middle East, or the US would be bound to pick on Israel, which is the region's only nuclear power, continues Rees.


The reason for this continued conflict is that the American administration simply cannot live with an Iran which has as much regional power as it has at the moment. They see its links with Syria, they see its links with Hamas, they see its links with Hezbollah. This is a challenge to the American power in an absolutely critical – economically and geopolitically – area of the globe."



                                     http://www.tewealth.com/experts/samuel-ezerzer-b-sc/
                                                                  samuel ezerzer

Samuel Ezerzer Bsc, Producer & Host of the Money & Business Show , Consultant at T.E.WEALTH

Tuesday, 7 February 2012

Eight Great Lies and Misconceptions about China

Tom Galey
Radio Shalom CJRS1650AM ,
Money and Business Show /Samuel Ezerzer
Wednesday the February the 8th live at 4pm-5pm
http://www.radio-shalom.ca/EN/showemission.php?ID=1042

 listen to the show
http://www.radio-shalom.ca/EN/player.php?URI=/../mp3/Programs/1042/1431.mp3





 My mother still thinks that people in China still ride around on bicycles wearing those green army suits and green hats with the red star in the middle. While there are still a lot of bicycles, especially in Beijing and Shanghai – now they wear there silk suites to work and not many people are wearing those green outfits anymore.
China’s growth curve has gone through the roof in recent years and for the past 15-20 years China has typically averaged 10% GDP growth, and it has maintained that growth even as a multi-trillion dollar economy . The 10% growth in an economy already worth trillions is an astounding achievement, but it can also lead to severe economic troubles, such as an inflated house prices and soaring food prices. Well from the looks of it , China has incurred both of these troubles , a real estate buble and food prices that are out of control . As a growing middle class emerges, demand for beef has far outstripped supply growth, and beef is typically making record highs every month. Additionally, the usage of real estate as collateral for local government loans, amongst other factors, has led to soaring housing prices.
Does China have a significant housing bubble on its handsbecause growth in the real estate sector is important in all modern economies. Construction of homes and commercial office space is a huge driver for demand in the steel, cement, and construction sectors, and is an important part of demand in the commodities market. Construction requires the use of iron (in steel), copper, and fuel. The local chinese government depends solely on rising land and real estate prices, since almost all of their collateral is in their properties. The famously investment driven Chinese also depend heavily on rising home prices to attain better rates of return than are possible in other markets.A slowdown in the real estate market has appeared recently; prices in nine major Chinese cities fell 4.9% in April from a year earlier. Real estate prices in major cities had been on an absolute tear for the past several years, as a growing Chinese middle class desires to migrate from the countryside into major cities.


And in the United States and Europe, the manufacturing industry was created due to technology innovation. For example, railways came into existence because of the invention of the steam engine and automobiles were created because of technology breakthroughs in automobile engines. In China, the manufacturing industry is being created in response to global demand. Chinese manufacturers take orders from Western companies that have designed products for their home markets.

They have no involvement with product development, innovation, market research, and even packaging. Chinese manufacturers have no experience in bringing their own products to overseas markets.While the rest of the world fears China’s manufacturing power, China is trying to move away from its "sweatshop" manufacturing and become a service-oriented economy. However, China may find itself locked into place, at least for now, due to the hundreds of millions of rural migrants that need jobs. Perhaps the most important thing to note is that the Chinese governemnt is desperate to keep GDP growing at a pace above at least 7% for the next several years.

Today live from colorado is Tom Galey professor of business and economics an expert in china and founder of the firm three china to talk about the Eight Great Lies and Misconceptions about China,

My name is Samuel Ezerzer, your host to the Money & Business show on Radio Shalom, CJRS 1650 AM. Thank you for tuning in live on the Money & Business show, with our studio and headquarters in Montreal, the financial capital and the home to the greatest hockey team, the Montreal Canadians. We have another great show for you today and as always, you can call if you have any questions, comments, or criticisms on today's topic. Please call us direct at 514 738 4100 ext 200 or email me at moneyandbusinessshow@gmail.com if you have any inquiries. You can also visit our website at www.radio-shalom.ca – all our shows are archived there.I work as Financial Consultant for T.E MIRADOR or TE WEALTH. TE MIRADOR has been providing Corporate Executives , CEO 'S , families ,employers and employee with independent wealth management and Financial education services since 1972. You can visit our website for my contact information at www.temirador.com, 

 
 
 
Bio Tom Galey
Tom Galey has been working with Asia in product development for over 25 years. He has made between 200 and 300 new products in Greater China, and has exported and sourced thousands more. Known as The Import Pro ™ Tom teaches and consults on a wide range of topics in international trade with Asia and the West. He started his career early in the Telescope industry developing scientific equipment for a Ball Aerospace engineer. In the 80's he moved to Taipei to study Mandarin Chinese and develop new products. He ran the buying office for a large Canadian chain store, producing hundreds of goods manufactured throughout Asia.
In the 1990's, Mr. Galey worked in the US territory of Guam with Esso Eastern Singapore, Exxon as a marketing executive. He later joined Budweiser Micronesia and managed the overseas production of Budweiser branded promotional products. As director of Marketing in the Pacific Rim, he pioneered factory-direct Asian purchasing for overseas divisions. Anheuser-Busch used these newly developed policies and changed corporate purchasing procedures.
The consulting firm of "Three Chinas" was established in 2005 to assist in the development of new and complex products in Asia. Further development included guided trips to China and Asia to learn hands-on skills in product development in Asia. He instructs seminars on doing business with China and the Pacific Rim.
Now a professor of business and economics in Colorado, Tom continues to consult on market entry into Greater China as well as advisor to trade ventures with Asia.
Tom graduated from the University of Colorado with a degree in Economics and has an MBA with an emphasis in Global Management from the University of Phoenix. He remains fluent in Mandarin Chinese and speaks enough Taiwanese go get into trouble! 

"Eight Great Lies and Misconceptions about China."

 
1. Q: Some of the presidential candidates have said that the US has suffered losses from economic and trade cooperation with China, and others claim that high unemployment in the US is caused by an undervalued yuan?Why is everyone down on China these days ?what are they doing that is so wrong ...? blaming China will not help the US solve its problemsA: First reason is politics, both Dems and Repubs will gain votes by criticizing China... (there are many topics which can be referenced... which is the basis of the rest of the misconceptions)(A Morgan Stanley report showed that 4 to 8 million jobs in the US are closely tied to Sino-US trade, and in the past 10 years US consumers have saved at least $600 billion by buying commodities made in China. According to a report released in November by the US-China Business Council, 88 percent of US companies have made more or equal profits in China compared with those made in other countries. )
http://english.people.com.cn/90883/7711407.html
 

2. Q; Capital and technology from the US have played a positive role in China's reform and opening up , are the The two economies so closely interconnected that neither one can leave the other?The US is the biggest source of China's foreign investment. Statistics show that by the end of November, the US had more than 60,000 investment projects in China with an input totaling $67.4 billion.

3. Republican candidate Mitt Romney has pledged to designate China as a currency manipulator and pursue litigation against its "unfair trade practices" will Such practices will "only push the two countries to a 'trade war', which harms China but brings no profit to the US either"? 
 
2. Q: From what I understand The Chinese market is actually two distinct markets for every product, there is a ‘foreign/local’ market, characterized by higher technology and higher price, and a second purely ‘local’ market, which is characterized by lower technology and lower price. All I hear is how bad the products are manufactured from china. Can I make an assumption that China manufacturing has made huge progress in that last few years?(Many luxury cars are made here. And I see some successful Chinese brands getting distributed in high-end department stores and boutiques, at the price point of most imported products.)A: You get what you pay for... China can produce high, medium, or low quality. What is in demand? ... low price. Americans demand low price, nothing else... if the quality suffers, the price is still low... that's ok.
 
 
 
4. Q: China accounts for the third largest number where child labour is concerned , child labour in China has been there for centuries. This is so despite that there have been strict official regulations that ban employment of minors. And according to the laws of China, a minor is an individual below the age of sixteen-years do they still have children working 18 hour days under horrible conditions? and As China's Economy Grows, So does China's Child Labour Problem?A: There are more than enough people (adults) to fill the production jobs, in fact the migrant worker population (of 300 million = to the entire US population!) has improved the overall quality of life by many times. I was there in the '80s and 90s, life was rough... farmers made $50 US per month. So the 300 million farmers moved to the factory and more than doubled their salary. Would you like a 2X in your salary? Does anyone want to double their salary? Sounds ok to me.
 
There are juvenile labourers employed in the workshops and factories. According to a recent People's Daily Report the use of children is maximum in the following industries:
Toy manufacturing
Production
Textiles
Construction
Food production
Light mechanical work
Child labour in China is hardly a new phenomenon. For years, despite official regulations banning the employment of minors (defined by Chinese law as those under sixteen years of age), teenagers and even pre-adolescents from poorer regions of China have been drawn to the rapidly developing southern and coastal areas looking for work. For this army of juvenile labourers, employment is readily available in the workshops and factories (and to a lesser extent related industries, such as food service) that are at the heart of China's economic boom. A recent People's Daily Report cites an investigation undertaken by the government agency in charge of monitoring labour conditions in Shandong province's Jinan City. According to the report, the use of juvenile labour is most prevalent in the following industries: Toy production, textiles, construction, food production, and light mechanical work. Concerning the latter, the report concludes that child labour is particularly in demand because children have smaller hands and eyesight undamaged by years of labour, making them more desirable than adults for certain kinds of work.
More often than not, parents of juvenile workers have little choice but to send their children off to work; as school fees increase beyond the means of most rural families, educational opportunities for rural children grow increasingly dim. Further, the earnings of children, however meager, represent a substantial portion of much-needed income to poor families. Parents of juvenile labourers rarely have a clear idea of the adverse working conditions and physical risks inherent in industrial work. Moreover, the juvenile workers learn themselves are often reluctant to complain, knowing well the critical nature of their financial contributions to the family.
 
 
5. Q: Little by little China is forming military links in Africa and in the Indian Ocean in order, experts say, to protect Beijing's economic interests in the region ,China has beefed up their military presence, they have a new aircraft carrier, they are venturing into space... are they going to take over over thee world or protecting there economic interests in the region? A: What is the motivation to "take over"? You have to ask an obvious question: WHY? Why would they want to piss off the USA? and ... Can they take over? ... most definitely NOT... they are about a trillion bucks short of that for one.

 
In the past three weeks Beijing has committed to supporting Ugandan forces operating in Somalia and to helping the Seychelles fight piracy. "It is very clear that the Chinese leaders recognize that military force will play a bigger role to safeguard China's overseas interests," Jonathan Holslag, of the Brussels Institute of Chinese Contemporary Studies told AFP. "There is a willingness, and even a consensus, in China, that this process will take place." The Indian Ocean is strategic, Holslag said, noting that 85 percent of China's oil imports and 60 percent of its exports are routed via the Gulf of Aden. Beijing does not so far have any military base in the region: its military presence consists of three vessels in the Gulf of Aden to fight Somali pirates. But the deployment of those ships in 2009, the first of its kind for the Chinese navy, was already highly symbolic. For the moment, cooperation between China and the islands of the Indian Ocean is still limited to "low profile military-to-military exchanges, but it is getting broader and more structured," Holslag told AFP. "The mere fact that China has a multi-year naval presence in the Gulf of Aden has great symbolic and diplomatic significance," said Frans-Paul van der Putten, senior research fellow at the Netherlands Institute of International Relations Clingendael.  

6. Q: China is able to produce goods that Americans want at a low cost. Despite the loss in jobs, this is unlikely to change. That's because most people would rather pay as little as possible for computers, electronics and clothing -- even if it means other Americans lose their jobs. the U.S.trade deficit with china was $272 billion . Why Is There a U.S. Trade Deficit with China? Do The Americans have to sell more products to balance its trade deficit?A: Not really, first we have already made HUGE increases in how much product China buys from the US now... to shut that down, it could ruin the US economy. If we limit China imports, they limit US imports (everyone does, the US taught everyone how to do that one).
 
The U.S. has a trade deficit with China despite the fact that its exports to that country were the highest in history. In 2011, the U.S. exported $94 billion in goods, an all-time record. (Exports in 2010 were only $92 billion.) However, imports from China also set a record -- $367 billion, more than the $364 billion imported in 2010. The U.S. imports consumer electronics, clothing and machinery from China. A lot of the imports are from U.S. based companies that send raw materials to China for cheap assembly. When they are shipped back to the U.S., they are called imports even though they are profiting American-owned companies. (Source: U.S. Census,
U.S. Trade in Good With China) 
OK how about we increase the tariff's, increase import taxes?A: That's not going to help, it will make product more expensive. If the desire is to hurt the average consumer, then slap higher tariffs on China goods. What will happen with certainty, is the retailer or seller will add that price onto the price the consumer pays. Oh yeah, anyone selling to China will have a tax added to their US product... that will limit sales and profitability for the N. American firm.
 
7. Q;Most economists agree that China's competitive pricing is a result of two factors so How does China keep prices so low?







8.Q: It’s one of those things we’re continually told, isn’t it, that all the good, well paid, manufacturing jobs have been packed up and shipped off to China?A: True but our corporations made fantastic profits in doing so. Laws of capitalism suggests that the US benefited from this, and they did. Was it China's fault? No, it was WalMart's fault, it was their conscious and deliberate decision to make the move, "... in order to strengthen US industry" That is the Capitalist argument.
 
9: Q American manufacturing output continues to rise. Yes, really, even as manufacturing employment falls, manufacturing output is still going upin the united states (ISM Manufacturing Composite Index) , I have data showing China lost 16 million manufacturing jobs, a decline of 15 percent, between 1995 and 2002, according to a study of manufacturing jobs in the 20 largest economies by Joe Carson, director of economic research at Alliance Capital Management. In that same time, U.S. factory employment shrank by 2 million, or 11 percent.Yes, that really is correct, China is losing manufacturing jobs. And at a rate faster than the US is. a.So where are they all going? Brazil maybe? Indonesia?
b.While jobs in manufacturing are certainly declining, is America producing more than it ever has. In other words, your producing more goods , using fewer people?
 
a.So where are they all going? Brazil maybe? Indonesia?
b.While jobs in manufacturing are certainly declining, is America producing more than it ever has. In other words, your producing more goods , using fewer people?
American manufacturing output continues to rise. Yes, really, even as manufacturing employment falls, manufacturing output is still going upin the united states (ISM Manufacturing Composite Index) , I have data showing China lost 16 million manufacturing jobs, a decline of 15 percent, between 1995 and 2002, according to a study of manufacturing jobs in the 20 largest economies by Joe Carson, director of economic research at Alliance Capital Management. In that same time, U.S. factory employment shrank by 2 million, or 11 percent.Yes, that really is correct, China is losing manufacturing jobs. And at a rate faster than U.S. theis.http://www.forbes.com/sites/timworstall/2012/02/03/that-giant-sucking-sound-of-manufacturing-jobs-going-to-china/
No, what’s actually happening is that the jobs are disappearing altogether, entirely going up in smoke: It seems that China’s advantage as a low-cost producer hasn’t halted the insatiable drive worldwide to replace even dirt- cheap labor with productivity-enhancing equipment.This really is happening all over the world:Some 22 million manufacturing jobs were lost globally between 1995 and 2002 as industrial output soared 30 percent, Carson says. It seems that devilish productivity is wreaking havoc with jobs both at home and abroad.




 10
A: We need China as much as China needs North America. We fire them (mr Trump) and they fire us! Do we want that? You can argue all day long about who is more important to whom... irrelevant argument I say because we both need each other.
 
11. Q; With increased pressure from the West and the World Trade Organization, China has instituted a number of reforms to its patent system. Much like the United States Patent and Trademark Office, but The Chinese continue to knock off our branded product, why does this keep going? Is it possible to protect your Intellectual Property Rights (IPR) when doing business in China?


; Q: So we just fire them as Donald Trump would say right?
A: Because we demand it... American's buy it all, and don't seem to try to stop it on the streets of New York... Fake Rolex watches are for sale right now in Montreal, you can go buy one in five minutes of arrival. What's wrong with this picture? It's as if it is legal... I wonder, is it? ... if you can buy a fake Gucci bag ... well, everywhere, is it legal? The people buying support the industry, not the makers... if there were no buyers, who would be so stupid to make it... if it's hardly illegal, wouldn't everyone want in!?!
 
 
12. China is more dependent on international commerce than almost any other nation, so trade friction -- or even declining global demand -- will hurt it more than others. Will China will not be able to export its way to prosperity like it did during the Asian financial crisis in the late 1990s. The country real estate, for instance, could it be the biggest victim of the eurozone crisis.? Real estate
Just like the US, speculation on real estate in China is facing a bursting bubble... prices are sky high and people may be losing money. What further complicates things is that the government initially, in the Maoist days of communism, owned all the land... so they dole it out as required. It's not a perfectly competitive market because of this government involvement. My advice to Americans interested in this area is to ... be Chinese...
 
13.why do the chines love buying gold ?Gold,
Historically, the Chinese have valued gold quite highly. It means more than money in Chinese culture, it is a symbol of wealth of course but of power and authority... Gold is owned by kings in the past, and now individual citizens can feel like royalty by owning gold. Also, Chinese save differently from North American and European cultures. We in the West trust banks to hold our savings... Chinese and developing Asian cultures have experienced bank failure and have lost money... That being said, maybe the West can learn from some prudent savings.
China has a great deal of gold, if we change currency standards this could play in... The Chinese Yuan is moving towards an internationally traded currency, look for changes in Gold.
(Note: we can talk about human rights, but that's like an entire hour of discussion, and quite controversial. It's a bit beyond business at this point, and i venture into politics enough... hopefully political business issues.)
The answer, the solution might be to accept the situation we have allowed the economy to go... to accept the fact that China is a good partner ... and they are here to stay. They are not the evil void we are seeking. Some think we need an enemy, that's a stupid argument coming from fear and a lack of knowledge.




 
notes
Posted: Thursday, March 30, 2006

by Tom Galey
3 Chinas
Is it possible to protect your Intellectual Property Rights (IPR) when doing business in China? A lot of people ask me this, and it is a great question and a very interesting topic. Things have changed dramatically in just the past few years in this area, most especially in China.
What launched this change has to do with China’s entry into the World Trade Organization. Just a few years ago the US and WTO watchmen applied enough pressure on the Chinese government to get serious about cleaning up copyright violations. In order for China to join the WTO club they had to show a serious commitment to curbing violations in intellectual property rights.

The result was new laws and a new legal perspective in China. US Customs and Border Protection (CBP) recently released statistics indicating that seizures are down 33% from last year. Apparel topped the list of infringing products followed by handbags. The list continues cigarettes, footwear and consumer electronics. Computer hardware was down to only a 5% share of IPR-related seizures.

Counterfeiting is big business and most brands do not suffer significant damage. Copycats are knocking off branded items, these brands are big names. Big brands have the attorneys on the ground in Asia keeping an eye out for their brands. Companies that take a proactive role usually don’t have a problem.

Violators can expect to do jail time for breaking the law. Criminals who profit from copying are now realizing that the laws are for real. Fines for violators are over $60,000 USD.

So if you have a product that is really unique and you don’t want it copied, apply for a patent. The right kind of patent will protect you on a global scale. Under the Madrid System, a US application for patent has protection globally. If your item is so unique you should file a patent in China for further protection. The thrust of China’s new laws is that they work both ways, the laws are written in harmony for protection on both sides.

Today overseas factories are not taking any chances. Besides, there is plenty of business to go around. They are busy making money.
Political as well as commerce opportunities have brought the two nations together in a partnership like nowhere other time in history. Success comes down to working with trusted partners with years of experience in dealing with these issues.



Tom Galey,

China Sourcing Consultant

Boulder, Colorado



http://www.3Chinas.com
 
People often compare China’s urbanization to Western industrialization in the 19th century. In both cases, a large population moved from the country to the city. Society advanced from agricultural to industrial via manufacturing on a massive scale.
 
 
------------------------------------------------------------
Myth of China’s Manufacturing Prowess
 

However, there is a key misconception about China’s manufacturing prowess.
In the United States and Europe, the manufacturing industry was created due to technology innovation. For example, railways came into existence because of the invention of the steam engine and automobiles were created because of technology breakthroughs in automobile engines.
In China, the manufacturing industry is being created in response to global demand. Chinese manufacturers take orders from Western companies that have designed products for their home markets. They have no involvement with product development, innovation, market research, and even packaging. Chinese manufacturers have no experience in bringing their own products to overseas markets.
Unlike the manufacturing industry in the West that gave birth to a middle class of both white-collar and blue-collar workers, manufacturers in China mostly absorb surplus labor from rural areas with few skills. Those rural migrant workers live in dormitories, earn about $100 to $200 a month, and hardly fit into the category of the middle class. (To be clear, there is a burgeoning middle class in China. Most of them are in urban private businesses, state-owned enterprises, and multinationals).
James Fallows, national correspondent for the Atlantic, visited many factories in China. He saw people working on the assembly lines and was convinced those tasks would only be performed by machines in the United States.
Yes, China is making efforts to drive its economy up the value chain. The 11th Five-year Plan (2006 – 2010) called for "scientific development." A key initiative is an increase in the R&D-to-GDP ratio from about 1.3 percent in 2005 to 2.5 percent by 2020. However, how much of the funding is actually used for research and development and how well the research is being transferred into manufacturing are both highly questionable.
Given the unpredictability of the regulatory environment, many Chinese manufacturers tend to focus on short term gain. They compete on volume and price, and only enjoy wafer-thin profit margins. This has kept Chinese manufacturers from investing in research and development or training employees.
Recently, some Chinese manufacturers experienced a shortage of low-waged workers. On the other hand,
While the rest of the world fears China’s manufacturing power, China is trying to move away from its "sweatshop" manufacturing and become a service-oriented economy. However, China may find itself locked into place, at least for now, due to the hundreds of millions of rural migrants that need jobs.
Contrary to the conventional view, manufacturing in the U. S. has been growing in the past two decades despite the decline in manufacturing jobs. The latest
In addition, most jobs the United States lost to China are low-skilled jobs. By outsourcing those low-skilled jobs to China, Americans have actually become more competitive in high-skilled jobs such as management, innovation, and marketing. The low-skilled jobs also serve China well as Chinese rural migrants have opportunities to move up in life and gain some skills.








                                          http://www.tewealth.com/experts/samuel-ezerzer-b-sc/
                                                                  samuel ezerzer


 
 

Friday, 3 February 2012

INVESTING IN LOW INTEREST RATES




via Financial Post | July 23, 2011



INVESTING IN LOW INTEREST RATES
via Financial Post | July 23, 2011


For older investors holding mostly fixed income, this protracted era of ultra-low interest rates has been a frustrating low-yielding experience. Based on what economists said this week, they may not be getting relief for a few years yet.
When bonds or GICs mature, investors must choose between accepting much less yield than the bond that’s just come due, or pushing out maturities longer than may seem prudent for those expecting an imminent jump in rates. This also makes it a frustrating time to annuitize.
For some years, financial advisors have suggested staying “short” – keeping bond maturities under five years – but what once seemed just a temporary stop-gap measure now appears to be a chronic source of under performance.
But attempts to stay short in anticipation of rising rates can just end up costing investors money, as ScotiaMcLeod advisor Robert Cable argues on the facing page.
On Wednesday, the Bank of Canada suggested rates may start rising in the second half, but only “gradually.” BMO Capital Markets chief economist Douglas Porter said the bank’s stance “certainly does not rule out rate hikes, but it does affirm that rates are highly unlikely to approach so-called neutral (3% to 4%) perhaps until well into 2013, and potentially even later.”

He says the bank’s “neutral” overnight rate averaged 4.15% in the 15 years leading up to 2007, but based on demographics and slower economic growth, suggested the “new neutral” is closer to 3.5%. “The BoC sees no need to get there soon.”
“We’ve been saying for a while get used to 4% bonds,” says Warren Baldwin, regional vice-president for Toronto-based T. E. Wealth. “We don’t see rates being earthshakingly higher than that for the foreseeable future.”

His firm uses pooled bond funds or bond ETFs using a mix of government and corporate issues of various maturities. Those managers tend to be going shorter on maturities but investors shouldn’t be shooting for yield on the bond part of their portfolios: What risks they take should be on the equity side, Baldwin says.
There is no easy answer beyond maintaining a properly diversified portfolio, says Clay Gillespie, managing director of Vancouver-based Rogers Group Financial. He has used preferred shares lately to boost yields on the conservative side of client portfolios, while shortening durations on the bond portion.

The canary in the coal mine is inflation, which is starting to heat up. According to Statistics Canada, the headline inflation rate hit an eightyear high of 3.7% in May, driven by almost a 30% spike in gas prices and 4.2% jump in food prices, but then slowed to 3.1% in June as energy prices slipped back down.
However, governments prefer to understate inflation by using the less ominous “core” rate (famous for applying to those rare people who “don’t eat or heat”), which was 1.7% in April and May but dipped to 1.3% in June. The Bank of Canada expects core inflation to subside and total CPI inflation to return to the normal 2% target by mid-2012.

If the inflation genie escapes the bottle, the rise in economic growth and commodity prices will force the hand of the U.S. Federal Reserve and other central banks. They will hike interest rates, perhaps sooner and faster than investors anticipate.
Most consumers feel true day-byday inflation is much higher. The record price of gold, which passed US$1,600 this week, suggests a more serious rate of inflation is around the corner. No mystery why: On the one hand, the world’s central banks try to understate the true extent of inflation but on the other it’s they that create more inflation by running the printing presses. Call it quantitative easing or any other euphemism you choose but it’s clear inflation is coming to a theatre near you.
According to Wainwright Economics, gold and other precious metals can hedge against inflation in both stock and bond portfolios. Other inflation hedges include inflation-linked real-return bonds, commodities, real estate or REITs, and arguably stocks.

Michael Nairne, president of Toronto-based Tacita Capital, says gold is correlated to high and rising inflation but has an even bigger correlation to negative interest rates and an inverse correlation with the U.S. dollar. Tacita has published a white paper on precious metals ETFs but Nairne sees no need for more than a 3% to 5% position in gold, ideally in the mining stocks. “My belief is we will start to see the market worrying seriously about inflation by the middle of next year.” http://tacitacapital.com/


But that doesn’t mean rates won’t rise for another three or four more years. “I think they’ll move up in advance of that,” Nairne says. Canada would have raised rates already had it not been for the dire situation elsewhere, he says. Once they start rising, “higher interest rates here could be very painful.”
The contrary view is the tug of war between inflation and deflation will tilt in favour of deflation, which is where longer-term bonds will thrive, Nairne says. In the current environment, some wealthy clients are using private or public mortgage investment corporations (MICs) that provide high yields (albeit with more credit risk) in one-or two-year maturities. Some are also using short-term split preferred shares.
If you’re a debtor, I’d be locking in mortgage rates for at least five-year terms right now. The 2% you save by staying short in variable mortgages could soon seem like a false economy once rates start rising, and repeatedly.

If you’re a creditor/investor with a reasonable time horizon and risk tolerance, risk/reward tradeoffs appear to favour quality large-cap, dividend-paying stocks over bonds, as reviewed in my column earlier this week. Lisa Myers, manager of Templeton Growth Fund, told unitholders Thursday that in Europe and the United States, dividend yields are greater than bond yields in defensive sectors like health care, consumer staples, telecommunications and utilities.

A similar strategy can be used here in Canada. Leslie Lundquist, co-lead manager of Bissett Canadian High Dividend Fund said the fund – formerly focused on high-yielding income trusts – now yields 6.5%, or more than double the 3% bonds are paying. Combined with a bond fund, investors can “get income in a conservative way,” she said.
While that 6.5% yield might be affected if rates rise, “historically we find companies can skate through modest increases,” she said.

PLANNING FOR YOUR NEXT MOVE

The problem with investing is predictions, especially about the future, are very difficult. For those who DO think they can predict, for example, where interest rates are headed, here are some logical investment ideas. Just remember though: Your view on interest rates is really just a guess.


THINK RATE WILL RISE

Keep bond maturities short (under five years) or “park” in cash or cash equivalents, hoping to reinvest if and when rates do rise. Debtors would lock mortgages at fixed rates for terms of five years or more. Take more risks on the equity side but conservatively, substituting some of your longer-term bonds or those now coming due with high-yielding utility, telecom or pharmaceutical stocks or funds or ETFs with similar exposure. For taxable portfolios, consider preferred shares. If you think inflation will rise in concert with rising rates, or vice versa, consider realreturn bonds and some exposure to commodities or commodity stocks, precious metals and real estate or REITs. Aggressive investors could even buy inverse bond funds that rise in value as interest rates spike up.

OR HOLD OR FALL

Maintain bond or GIC ladders over five years; use bond mutual funds or ETFs broadly diversified to include corporate and government issues of various maturities. Global bond funds may find more yield outside Canada but the tradeoff will be currency risk. The more you believe rates will fall, the longer you would extend bond maturities. Homeowners would stay “short” in variable-rate mortgages. Even if inflation doesn’t arrive, top-quality, dividend-paying stocks that consistently grow their dividends over time will protect purchasing power, especially if dividends are reinvested. J.C.

For full article at original source here


http://www.radio-shalom.ca/EN/showemission.php?ID=1042

past shows
http://www.radio-shalom.ca/EN/player.php?URI=/../mp3/Programs/1042/1404.mp3
2012-01-18 : What Will Trigger The S&P500 to Drop in 2012-2013? ; Charles Nenner

Flow Through Shares and their tax advantage , and how can you as an investor profit !!

Roman Jaskolski
RADIO SHALOM CJRS1650 AM/
 October 13th live
MONEY AND BUSINESS SHOW AT 4PM LIVE
www.radio-shalom.ca
MONEY MONEY & BUSINESS /
 http://www.radio-shalom.ca/EN/showemissionsall.php?ID=1042



http://www.radio-shalom.ca/EN/player.php?URI=/../mp3/Programs/1042/1124.mp3
listen to show

There aren't many legitimate tax shelters for for investors and
high-income entrepreneurs , let alone many that offer the potential
for lucrative returns ,Most investors know only how to take advantageof RRSP contribution and Tax savings accounts to reduce their taxes.
But that's the promise of flow-through shares. Issued by Canadiancompanies in the energy or mining sectors to raise funds forexploration, flow-throughs give investors juicy tax breaks and the opportunity for capital appreciation based on new discoveries and rising commodity prices. Resource companies typically have huge upfront exploration costs and little or no revenue. That means they don't need the tax deductions they would incur as income-generating companies. So to finance that exploration, they'll issue shares and allow the tax deductions to "flow through" to investors. Essentially,exploration or mining companies who issue flow-through shares renounce the deductions that would normally be available to the company and provide the deduction to the investor. So in order for the investor to benefit from the flow-through sharesthe company must spend the flow-through dollars on exploration in Canada. This includes most non-development stages of mining including ground sampling,geophysics, drilling, etc. At present, Quebec offers the largest potential tax savings for flow-through share investments followed by British Columbia, Manitoba, Saskatchewan and Ontario According to the PDCA ( Prospectors and Developers Association of Canada) the Canadian mineral exploration sector has averaged over one discovery per month since the enhanced flow-through program was introduced in October, 2000.
The resource sector is cyclical by nature, and exploration is risky ,
is there a guarantee that there will be a discovery or discoveries ?
And are Flow-through the right investment for you ? And can also
withstand a little volatility in portfolio for tax purposes ?

Live today on money and business , in our studios to talk about Flow Through shares and their tax advantage , we have Mr Roman Jaskolski an investment advisor from Richardson GMP Limited in Montreal;
http://www.richardsongmp.com/

My name is Samuel Ezerzer thank you for tuning in to Money and Business on radio shalom CJRS 1650 AM in Montreal, the financial Capital of Canada...I am a Financial Consultant for T E Wealth , Financial Consultants specializing in financial planning , Investment Management , and retirement planning ,and if you have any questions on money and business show or please give me a call directly at 514 738 4100 ext 272 or you can visit our website at www.radio-shalom.ca and listen on live stream and check our archives. You may also email me with your questions or suggestions on today’s show at moneyandbusinesshow@gmail.com  and I will reply to your questions, and if you need to have your financial analysis and planning please email me at sezerzer@temirador.com




Our live topic of discussion today; Flow Through Shares and their tax advantage , and how can you as an investor profit !!
I know it’s early to be talking about Canadian tax saving strategies ,
but I thought I would talk about flow through shares on today's showsince it doesn’t seem like there’s much information out there on this topic. Besides, it’s never too early to be talking about taxes!




BIOGRAPHY
Mr Roman Jaskoslki from Richardson GMP Limited in Montreal,
He is an Investment advisor and focuses specifically on the tax
advantage of Flow Through Shares and an innovator on pension options including Individual Pension Plans; Having spent his entire career in the financial industry , Roman also writes and sends out 2 or 3 times a week a nationally syndicated Business commentary to help investor on why and how the economy are constantly evolving ...


Questions

SAM -
Welcome to the money & business show Roman ,
Roman ------ thank you for inviting me on the money and business show
on radio shalom
sam -

Roman when i was writing up your bio I came across that you where
involved in rodeo many years back ? Horses or bulls you where riding..
Roman ..........

SAM-
Roman we are going to talk about your weekly business commentaries
that i have been receiving in the past week or so in the last segment
of the show , last week The U.S. economy unexpectedly shed 95,000 jobs
in September for a fourth straight month, as government payrolls fell
and private hiring was less than expected, hardening expectations of
further Federal Reserve action to spur the economy ,,,In Canada, the
unemployment rate went to 8% from 8.1% as fewer people looked for work
;
lets hear a clip from Bank of Canada Governor Mark Carney on the
Canadian economy that will grow at a "modest pace" in the coming
months .
http://stage.bnn.ca/News/2010/9/30/Mark-Carney-warns-of-modest-growth.aspx

We heard the bank governor of canada Mark Carney talk about modest
growth in the coming month ....Roman Given the soft job reports on
both sides of the border , do you think the bank of Canada will raise
interest rates in the future ?

Disclaimer ;Please because of the subject matter on flow through
shares that deals with tax issues and has medium risk for the
investors , please talk to your investment advisor or tax account
before buying flow through shares and do your due diligence , or you
can contact Mr roman jaskoslky for more information ...


Questions re. Flow-Through Shares
1. Roman – So roman not many financial advisor advise their clients
about flow through shares and their tax advantage , what attracted you
or motivated you to talk about these flow through shares , and can you
also tell us a short profile on Richardson GMP Limited ...

2. Today’s topic is flow-through shares – Roman could you give a us a
brief description of what flow-through shares are? And can you give us
a simple example ?
Flow-through shares have been around since 1954. They are now more
accessible than ever, with a minimum investment as low as $2,500.
The governments of Canada and Quebec give tax credits to resource
mining companies that do exploration and development and the companies
can then transfer these tax credits to individual investors as tax
deductions.
These tax deductions are admissible against all kinds of income.

3.Can the average investor invest in the these flow throughs or What
or who is the market for flow-through shares?
Of course, high net worth individuals or anyone wanting to maximize
their after tax net worth.
They can also be used for .............

4. Income tax benefits to individual investors will vary, depending on
the taxpayer's jurisdiction of residence for income tax purposes and
marginal tax rate. Are there advantages for Quebec vs. Canadian
residents when purchasing flow-through shares?

A. Yes there are. Two very important ones: first Quebec gives you a
150% tax deduction vs. Canada a 100% deduction and when the flow
through shares “roll-over” Quebec gives you a capital gains
exoneration which Canada does not for your income tax deductions.
Let’s pretend you bought $10K worth of flow through shares. Let’s
pretend you make the big bucks, and your Marginal Tax Bracket is 43.7%
When you get your tax refund- if you work as an employee, you will get
$4370 back, meaning you will have tax savings of $4370. This
works by multiplying $10,000 x 43.7%= $4370.(It’s just like an RRSP-
whatever you contribute, you get a tax savings of your marginal tax
bracket) However, there’s a catch. When you sell your flow through
shares- let’s assume for simplicity’s sake that you neither make nor
lose money on the $10,000 you invested, the adjusted cost base is $0-
so the capital gain is considered $10,000. So that tax you would have
to pay when you sell is: $10,000/2=$5000x 43.7%=$2185.

5 What are some of the uses for flow-through shares?

a. Reduce your capital gains; give example of selling a duplex or cottage.
b. Receiving a double tax deduction when combining them with your RRSP
contribution.
c. Eliminating or reducing your O.A.S. benefit claw back.
Sam
to recap what are Flow Through Shares for those who are tuning in :
Basically an investment that has intense tax advantages (which means
you get a big refund income tax refund time).
Primarily involves investments in the Oil and Gas Industry, the Mining
Industry, and the Wind Power Industry;
The investment is 100% tax deductible against your income;
After a certain period (usually 1-2 years) your shares will roll over
into a mutual fund which you can sell at any time;
It turns fully taxable income into future tax advantaged capital gains;
You have to look at the Marginal Tax Bracket you’re in to see how much
money you will get back come refund time;
The higher your pay (the more taxes you pay), the more you’ll get out of this

6. With the market volatility that we’ve seen recently in the past few
years , is this a good time to purchase flow-through shares?

It is one of the best times ever to purchase quality flow-through
shares. The recent financial crisis had pushed down all metal and
resource prices. Now, as we go through the recovery, metal prices are
rising and many exploration companies are enjoying record profits.

7. Is the accountant or tax specialist involved?

A. Absolutely. While we can show you the approximate after tax
savings, it is your accountant that intimately knows your financial
status and I always enjoy working alongside with them.

8. So when Can you buy / sell this investment and how does it work?

This investment does not trade like a stock. Once you buy it, you must
hold it until it rolls over or matures
disclaimer ; Please because of the subject matter on flow through
shares that deals with tax issues and has medium risk for the
investors , please talk to your investment advisor or tax account
before buying flow through shares and do your due diligence , or you
can contact Mr roman jaskoslky for more information ...

9. Well then, how long do you need to hold this investment?

The holding period is anywhere from 5 months to a max of 2 years. The
issuing company decides when it is most advantageous to rollover the
investment into a mutual fund.
Once the funds “rollover” they are paid back to the investor.

10. Roman Past performance cannot guarantee future returns and most
flow-through investments are considered high to medium risk due to the
nature of resource exploration and sensitivity to resource prices.
This almost sounds too good to be true. What is the track record of
this type of investment and can you lose your money?

Looking back over the last 10 years, I have the track record of all
the flow-through offerings that have been made by the leading company
in Quebec. It would be a pleasure to send them to anyone who is
interest, if you would contact me.
Over the last 10 years this company’ flow-through shares only lost
money in 2007 when we had the financial crisis and stock markets
tumbled in the 2007 – 2008 period almost 55%. Clearly, 2007 was an
anomaly, a once in a lifetime event.
If we include 2007, the net average return on investment in
flow-through shares is 55.5%. If we exclude 2007, then the average net
return on investment in flow-through shares after a holding period of
1 ½ years is 84%.

11. Very interesting. By the way Roman, I receive regularly your
Business Commentary. Can you tell me a little bit about your
publication?

Summary of flow troughs shares
FLOW THROUGH SHARES PROS:
It’s a nice tax shelter from the government (as we know, there are few
tax shelters!);
If you’re in a high tax bracket, it’s one way to not have to be gauged
in paying taxes;
You help stimulate the Canadian economy ;

FLOW THROUGH SHARES
When you sell, the adjusted cost base is $0, so whatever you have is
considered a capital gain;
They can be risky;
They are often sold at a premium;
It would be supportive of the oil and gas industry, mining.. I guess
that’s what Canada is all about, but if you have issues with it in
terms of the environmental consequences of supporting exploration
companies, then it might not be for you;
Doing the taxes for flow through shares is complicated. You’ll
probably need to get an accountant involved (which might incur extra
costs)

Thursday, 2 February 2012

What does Alternative Investments mean? And how can you benefit from these investments ?

Mr David Kaufman
Money & business show 
Radio Shalom
CJRS 1650AM
SAMUEL EZERZER
What does Alternative Investments mean? And how can you benefit from these investments ?

LISTEN TO THE SHOW

OCTOBER 6TH 2010


INTRODUCTION
MONEY MONEY & BUSINESS
An alternative investment is an investment product other than traditional investments such as stocks, bonds cash or property. The term is most commonly used to describe investments in tangible assets such as Art, Wine, Antiques, Coins or Stamps
but may include some financial assets such as precious metals , managed futures , private equities , Real estate Reits and hedge funds are also sometimes called alternative investments!!!
Alternative investments are favored mainly because their returns have a low correlation with those of standard asset classes. Because of this, many large institutional funds such as pensions and private endowments have begun to allocate a small portion (typically less than 10%) of their portfolios to alternative investments such as hedge funds. While the small investors may be shut out of some alternative investment opportunities, real estate and commodities such as precious metals are widely available. A Consultant company in California are telling the state investment council in new jersey pension funds that they should be putting more money in alternative investments such as private equity and real estate to boost returns and protect against stock losses, The panel voted to draft regulations that would allow the new jersey pension fund as much as 38 percent of the $68.3 billion fund to be invested in alternatives investment , compared with a maximum of 28 percent currently.The reason you might want to consider alternative investments as part of a investment strategy is because alternative investments tend to react to market conditions differently than our traditional investment stocks and bonds. Many alternative investments have a high expectation of return, like you would have with a stock. If you can have two investments with high expected returns, but they are going to earn those returns over different periods of time, it provides diversification to the portfolio and that's how you can manage your investments risk..To find out more about alternative investments , we have with us today, directly from Toronto , is Mr David Kaufman president of Westcourt Capital Corporation..  Biography David Kaufman, is the president of Westcourt Capital Corporation (www.westcourtcapital.com), an Exempt Market Dealer operating in Toronto. Westcourt specializes in the distribution of conservative, income-producing alternative investments including private mortgage funds, REITs and asset-backed lending syndicates.
A non-practicing lawyer and former Executive Director of Magna Golf Club in Aurora, Ontario, David has more than 10 years experience in the real estate industry, having specialized in the creation and execution of residential development strategies for major Canadian developers.
David appears regularly on CBC's Lang & O'Leary exchange to discuss alternative investing and published a series on alternative investments with the Financial Post in 2010.
David you will be launching a new weekly show on BNN Business News Network this Friday on October 8th on alternative investing, congratulations !!!! can you tell us more about your weekly show on BNN?

 http://www.westcourtcapital.com/
Questions
 

1.David can you tell us how you started in the business of Alternative investment ?, and what prompted you to start westcourt capital corporation?
 
2.David most investors invest in Gics in Canada , cds (certified deposits rate in the US) , stocks , bonds & mutual funds , Can you explain to our listnership on Money and business ccWhy should we consider alternative investments?


DAVID ;An alternative investment is an investment other than traditional investment products such as stocks, bonds or cash.
This broad definition makes it impossible to list all alternative strategies, but the most common alternative investments are in real estate, private equity, venture capital, commodities, and hedged or absolute return strategies. Exotic investments in wine, art and antiques are also alternative investments.
A common theme to alternative investments is that they generally have modest correlation with traditional investments and provide diversification to investors’ portfolios.
Clearly, some alternative investments are riskier than others. While the entire field of alternative investing is sometimes incorrectly painted as “very risky” by professionals in more traditional investment circles, it is in fact the nature of specific alternative investments that make them risky, not the fact that they are alternative investments.
At Westcourt Capital Corporation, as our credo indicates, it is our mandate to focus only on conservative alternative investments, leaving the more exotic forms of alternative investing to others. Without exception, when we recommend alternative investments, our clients will understand the nature of the investments, how they create distributable cash, and how they can increase in value over time. When investors understand their investments, they have more confidence in the process and are always more satisfied over the long term

3.
What services do you provide at westcourt capital corporation? and can you tell us the
typical type of clientele that would invest in alternative investments..?
Westcourt's function is to research and identify investment opportunities with the characteristics sought by our clients, rather than to invest their money on their behalf. When we make an investment recommendation and our clients choose to invest, they invest directly with the entity managing the investment.

In addition to investing in Westcourt-recommended funds on equal or better terms than would be available directly (see question above), Westcourt's clients benefit from our end-to-end due diligence on the investment funds we recommend. This research is ongoing: once a fund is approved, we conduct quarterly updates to ensure that the material aspects of the approved fund remain strong. We make these updates available to all of our clients upon request. The alternative investment universe is large: Westcourt's role is to help you navigate your way through it and support you while you make important investment decisions.
 
4.Can you explain Private vs. Public securities: measuring the relative value of liquidity versus low volatility and returns?


5.One day after the federal reserve got investors thinking about uncomfortably low inflation last week , Starbucks announced it was raising prices on some of its coffee drinks. Anheuser-Busch is planning price hikes on some of its Budweiser beers later this year. Americas high rate of unemployment and the low rates of capacity utilization imply that there is little upward pressure on wages and prices in the US and Canada . The CRB index which tracks commodity prices, hit an 8-month high last week. Gold prices hit a record level and other commodities, including soybeans and cotton, notched multi-year peaks.
It is less clear what these rising commodity prices will mean for the U.S. & Canadian economic recovery and the Fed's next policy move. High unemployment and sluggish consumer spending mean many companies cannot follow Starbucks' lead and pass higher raw material costs along to consumers.
So David is inflation dangerously low or is it creeping higher? and what kind of strategies have you been implementing for your client?

6
Alternative investments are sometimes used as a tool to reduce overall investment risk through diversification ,,so david can you expand on  


6.whats the difference between staying rich and getting rich? David how do you conduct due diligence on a private investment fund?
Whether investing for growth or income, all investors should seek multiple layers of diversification in their investment portfolio. The first level of diversification is asset class allocation, where investors diversify their investments among separate asset classes such as stocks, bonds, alternative investments and cash. This is inter-asset class diversification.
The next level of diversification is among the assets within a specific asset class. For example, most investors’ stock portfolios hold stock in numerous companies and sectors, such as owning multiple stocks in the banking sector, the technology sector and the resources sector. This is intra-asset class diversification.
The final (and most often overlooked) level of diversification allows investors to purchase specific investments that diversify internally among numerous holdings. For example, an investor who purchases units in a Real Estate Investment Trust (REIT) that spreads its risk over several apartment buildings, shopping plazas or other income-producing properties receives diversification that is unavailable when only a single property is purchased. This is asset-specific diversification, and this is the focus of all investments recommended by Westcourt.


8.Can Alternative investments be relatively illiquid?

DAVID ; One of the features of private investments is that they are generally less “liquid” than publicly traded securities. While most allow for you to redeem your investment either monthly or quarterly, they also generally apply “redemption fees” penalizing investors who invest for less than 1 or 2 years. This is a very important consideration when considering an investment, and you should ensure to be fully informed about the redemption rules for any investment.
Low or high correlation with traditional financial investments such as stocks and shares?
9.
Just like buying a mutual funds or a stock or a structure product there is a degree of investment analysis that may be required before buying these financial investments;

DAVID ;At Westcourt, we ensure that our review of the investments we recommend is thorough and personal. This entails a combination of both quantitative and qualitative analysis designed to provide a complete picture of a prospective investment.
Our methodology begins with a “macro” analysis of categories of investments, studying their benefits and drawbacks from the point of view of our investment strategy. For those investment models that pass the macro test of general suitability for our clients, we then apply an even more rigorous “micro” analysis of the investments in Canada that fit within this model. This level of analaysis is more detailed and more personal. Among a long list of questions that are dealt with at this stage are the following:

11.On you web site one of your philosophy is to Stay Rich vs. Get Rich
Our clients dont come to us to get rich. As qualified investors, most of them are already very comfortable. Their primary investment goal is to preserve their hard-earned capital in any market. In fact, their greatest fear is not under performance of their investments, but putting their capital base at risk. At Westcourt, capital preservation is the primary factor in determining which investments to recommend.

NOTES



7.Is there a Low or high correlation with traditional financial investments such as stocks and shares?
  1. How much of the management team’s own money is invested alongside your investors?
  2. What are the firm’s long-term objectives?
  3. How much experience does your team have in these and related investments?
  4. What are your management fees and exactly how are they calculated?
  5. What protections and controls have you designed in your investments to protect investors from illegal and unethical conduct?
  6. What are your redemption rules and how have they been applied in the past?
  7. Are your firm’s financial results audited and who are the auditors?

10.Can you explain what the specific alternative investment strategies are ;
a. Hedge Funds
b. Private Equity Funds
c. Mortgage Funds
d. Private REITs
e. Asset-backed lending funds.


low Volatility: As a dealer in conservative, alternative investments, it is important to us that the investments we recommend have very low volatility. Our clients are generally happy to forego the promise of huge gains in exchange for the promise of reasonable gains with low volatility.
High risk-adjusted returns:The concept of “high” returns is relative to the risk assumed by investors to achieve those returns. At Westcourt, we seek out conservative investments with attractive returns that are achievable without the assumption of undue risk.
High degree of diversification: Diversification within investors’ portfolios takes two forms. Both are designed to ensure that under-performance within an asset class has a lesser effect on the invested assets as a whole. The first is diversification among asset classes, meaning that investors split their investments between stocks, bonds, cash and alternative investments. The second is diversification within asset classes.

At Westcourt, we focus exclusively on the asset class of alternative investments. Still, our clients enjoy two distinct types of diversification. First, we recommend that clients diversify among the investments we recommend. Second, we generally recommend investments that are themselves diversified among a group of specific investments, adding to the layers of diversification that bring our clients confidence.
Low correlation to public equity markets: As a dealer of conservative, alternative investments, Westcourt does not deal in public equities (stocks of publicly traded companies). Since most clients already have exposure to the public markets, Westcourt provides diversification through the recommendation of alternative investments uncorrelated to those markets. In other words, we endorse investments that we believe will perform predictably regardless of stock market volatility.

Expected Consistent Distributions: With the exception of bonds, few investments guarantee distributions in specific amounts or on a specific schedule. However, many alternative investments are designed to return predictable periodic distributions that, while not guaranteed, are expected and paid out. At Westcourt we endorse a suite of investment products designed to provide steady, predictable returns to our clients.
Potential for Capital Appreciation: In addition to distributions, some conservative alternative investments provide investors with capital appreciation (the increase in value of their investments). Capital appreciation is welcome both because it increases the investors’ net worth and because it defers any taxes payable on the gains until the investments are sold in the future.

Reasonable Liquidity: Most publicly-traded securities, such as stocks and bonds, are fully liquid, meaning that investors are able to buy and sell them at will. Full liquidity has the advantage of being able to “cash out” on a moment’s notice, and the disadvantage of having the “value” of a security determined by whatever the last purchaser was willing to pay for it. As we have seen in recent times, during volatile market cycles, the minute-by-minute re-pricing of securities is not necessarily beneficial to anyone. That being said, illiquid securities are generally difficult purchases for all but the most trained and sophisticated investors. There is little or no way to cash out if an investor requires his money back at a time other than the one designed by the security’s issuer. At Westcourt, our clients are long-term investors who require flexibility, but not “real-time” liquidity. We seek investments for our clients with periodic liquidity, to provide some comfort that their investments are not tied up indefinitely.

Tax Efficiency: It is often said that investors, when evaluating the purchase or sale of an asset from a tax perspective, should not allow the “tail to wag the dog”. In other words, investors should not purchase a security simply because it is tax efficient. After all, if the investment doesn’t provide a distribution or increase in value, the fact that it was tax-efficient is totally irrelevant! Still, tax efficiency is a very important consideration to make when comparing offerings that are otherwise very similar in risks and returns. At Westcourt, we seek investments that fit squarely within our investment profile that may also provide tax-efficient distributions or growth.

No Startups/turnarounds: One of Westcourt’s fundamental principles is that we do not deal in investments or managers who do not have a significant track record. It is in this spirit that we do not promise outsized returns or magical capital appreciation. We have no interest in introducing our clients to startups, turnarounds, or other models and schemes that puts some or all of their hard-earned capital at risk. That is not to say that there is no room in an investor’s portfolio for “growth” plays – just not within an investor’s Westcourt allocation. http://www.westcourtcapital.com/investment-characteristics