Western Standard - Don't worry Greta, the Coronavirus Pandemic will get us first - The Pipeline, Episode 12

00:00:00.000 You're listening to The Pipeline, the Western Standards National Affairs Program,

00:00:15.120 recording this Wednesday, March 11th, 2020. Each week we break down the issues,

00:00:21.800 discuss them in depth, and examine some of the broader implications for Western Canada

00:00:26.400 and beyond. Featuring from Calgary, the Western Standards publisher, Derek Fildebrandt.

00:00:32.320 Derek, how are you today?

00:00:34.740 Hey, hello.

00:00:36.480 And featuring Dave Naylor from Calgary, our news editor back in Calgary. I see you, Dave.

00:00:43.760 Yep, back from Dreary, Abbotsford, all the way to Dreary, Calgary now. I'll tell you what,

00:00:48.440 Abbotsford never went below zero and we're threatening to get to minus 28 here, so

00:00:53.020 hold on, hold, give me Dreary, Abbotsford over this weather.

00:00:57.340 And hosted by myself, digital editor Paul Holmes from always beautiful and balmy Victoria,

00:01:06.100 British Columbia. Topics this week include COVID-19 and or the novel coronavirus and some of the

00:01:16.940 issues around that, some breaking news as well. We're going to discuss the price of oil and we're

00:01:24.320 going to get in a little bit into the Alberta budget because those two things kind of go together.

00:01:30.040 But before we get into the topics, just want to remind everybody, if you're not a member,

00:01:35.160 please head over to the membership page at westernstandardonline.com and sign up today.

00:01:41.340 Those of you who have become a member, you're helping us reach our goals for membership,

00:01:46.420 keep us live and on the air. So thank you very much for that. So let's dive in. Some breaking news.

00:01:56.100 Dave, why don't you break down the breaking news that we're breaking right here?

00:02:00.780 Breaking right here. Well, just mere minutes ago, the World Health Organization officially declared

00:02:06.420 this coronavirus outbreak a pandemic. I'm not sure what that means in Latin, but I think it means we're all

00:02:12.680 screwed and need to buy toilet paper. So it's the next step. Basically says this is going around the

00:02:18.800 world. Sort of really no way to stop it now. At the same time in Ottawa, Prime Minister Trudeau was

00:02:26.600 announcing he was coming out with more than a billion dollars to help fight the outbreaks or the, I guess,

00:02:34.240 the aftermath of coronavirus. That's money going to the provinces, health care and things like that.

00:02:40.500 So looks like there's no stopping it now, Paul. Well, the last pandemic that was declared was 2009 with

00:02:50.580 the H1N1. And before that, we're looking at 1968. Of course, 1957, there was the H2N2. And otherwise,

00:03:04.420 we're heading all the way back 102 years ago to believe that was the Spanish flu. So this is, this is a big

00:03:12.740 declaration today. You know, we're not, this is getting pretty serious.

00:03:16.900 Well, it's scary, Paul. It's scary. You look at the Spanish flu, 1919, in terms of history, not that long ago,

00:03:23.780 that's reported to have killed up to 100 million people.

00:03:26.900 I've seen fatality reports of coronavirus that, you know, 3.4%, 3% to 3.4%. Then you multiply that by the amount of people in the world. It's a very, very scary figure.

00:03:41.380 Well, I'm, and I'm definitely not a biology expert or a doctor. None of us are. But one thing I'm pretty good at is math. And they're telling us that the

00:03:55.380 number of cases is doubling every four days. And I don't know if you guys remember this one, but you know, I can give you a million dollars today,

00:04:03.380 or I can give you a penny and double it every day for the next 30 days. Uh, you're far better off to take the penny.

00:04:10.900 And, uh, when we're dealing with doubling situations like that, we're looking at exponential growth and

00:04:16.420 potentially, uh, you know, uh, exactly what, um, you know, we, we all fear, which is a massive global pandemic.

00:04:24.740 Uh, and it certainly, that's the way, um, well, I should say, and, um, Derek, you, you probably have some thoughts on this as well.

00:04:33.460 They, depending on who, which media you're listening to, we're either all going to die. And this is the

00:04:39.060 worst thing ever and has been for the last several weeks. Um, or they're downplaying what seems to be

00:04:46.340 something a lot more significant and sort of depends outlet to outlet, person to person. I think there's

00:04:51.780 a lot of healthy skepticism and I think there's also a lot of, um, fear mongering going on as well.

00:04:57.460 So I don't know. What's your take there?

00:04:58.740 Well, this is something we've, we've struggled with since this, uh, first, uh, since we first

00:05:05.460 started hearing of this funny sounding virus. Um, you know, I'm, I'm naturally skeptical of when

00:05:12.980 governments proclaim emergencies on things like this and the media start going on about it.

00:05:17.860 Governments love opportunity to flex their muscle. Uh, they love opportunity to blame outside

00:05:22.900 factors on, uh, domestic, uh, domestic problems on outside factors. Uh, so when,

00:05:29.380 you know, anyone with a soft economy can, can point to this and the politicians can say,

00:05:33.460 none of this is our fault. Um, and then the media, uh, you know, we, we've struggled with this more

00:05:39.700 directly is, uh, our, our, do we need to report on this frequently and feverishly as an important story

00:05:49.460 or are we fear mongering to try and drive clicks to dry and draw, uh, advertising, uh, in the media

00:05:55.860 business, uh, today it's no longer the old subscription newspaper where, uh, people are kind of in it for

00:06:03.540 the long haul and you need a big story every month or two to keep people engaged. Uh, competition in

00:06:11.140 the media business is fierce and it's, there's a, there's a, a very, uh, there's very tough competition

00:06:18.980 to be the first out with something and to have it as loudly and, uh, a headline as alarmist as possible

00:06:24.580 to drive that traffic. And so media love disasters, you know, the old saying, if it bleeds, it leads

00:06:31.780 media, uh, they might personally not like it, but they love disasters. They love wars. They love

00:06:38.180 pandemics. They like anything that's going to get people scared and driving things. And so we, we've

00:06:43.540 really struggled with trying to find that balance, the Western standard, trying not to be fear mongers,

00:06:49.060 but trying to keep people informed about, uh, you know, developments on the story. Part of the problem

00:06:56.500 is, uh, none of us really know what we're talking about. We're not doctors. Uh, I, I've started to

00:07:03.940 reach out in the last few days to actual doctors and experts, public health officials to try and

00:07:09.700 actually get a better sense of how serious this might be because the media is in a feedback loop.

00:07:15.140 Uh, CNN says it, then Fox says it, Fox says it, the Globe and Mail says it, the Globe and Mail says it,

00:07:20.500 we say it, we say it, the Calvary Sun says it, and it's all in a bit of a feedback loop.

00:07:25.220 So our, our sense of how important this is, is often, uh, related by the coverage of other media.

00:07:31.140 And we can really end up in a feedback loop very quickly. Uh, that being said, I mean,

00:07:37.460 there are some credible people out there saying that this is a very big deal. This is not fear

00:07:43.060 mongering. This is very serious. Um, uh, I've not gone out and stocked up on toilet paper.

00:07:50.100 Uh, maybe wash my hands a little more carefully, but you know, we, my generation or you older guys

00:07:59.460 have never dealt with anything on this scale. Uh, I, I remember very vividly, uh, in Coots, Alberta,

00:08:06.180 it's a little tiny, tiny border town, uh, between Alberta and Montana. And I've got, uh,

00:08:12.340 uh, my in-laws side, some, uh, some relatives there and you go to the Coots, Alberta graveyard

00:08:17.860 and look around and you can see, uh, the, the dates in which people died. And the number of people

00:08:25.140 from 1919 is terrifying. It is just a tiny, tiny little town with some farms around it. And, uh,

00:08:34.420 the old graveyard there, there's two notable things about it. One is that there's a, I think

00:08:39.620 the coolest gravestone in Alberta, it says Fletcher stranger in town. And that's all it says. Uh,

00:08:45.780 I kind of feel like he may have gotten in an old West shootout. Um, but the other notable thing is

00:08:50.260 the number of people from 1919, more people died from the Spanish flu than from the first world war

00:08:56.420 less than a year earlier. Uh, and much of it was driven by war and in a, in a, in our globalized

00:09:01.540 world today where people travel so frequently and with, with relatively little restriction,

00:09:07.060 uh, it is so easy for this stuff to get out. Well, and this was the point of, uh, with the

00:09:12.820 Spanish flu was as people were returning from war, they were traveling and they were bringing 1.00

00:09:19.380 the virus home with them. And, uh, you know, that's, I, I, you know, I don't know that epidemiology

00:09:25.620 sort of has nailed that down precisely, but certainly that's the theory that, uh, I've heard a number

00:09:30.820 of times when it comes to the Spanish flu. Um, again, I'm not, none of us are experts, but that

00:09:35.860 was, uh, that was my understanding. There's nothing more terrible in the world than surviving four years

00:09:40.500 in the Western front trenches to come home and die of a flu. Yeah. Well, and, and ultimately when you look

00:09:46.900 at global travel in 1919 and you compare that with global travel in 2020, uh, everything is moving 12 times

00:09:56.180 faster and, uh, you know, a hundred times as, as often. Right. And, uh, uh, uh, yeah, you know, this,

00:10:02.980 this thing can move quickly and, and really the sense I've gotten from, you know, again, the coverage

00:10:08.420 I've been watching, you know, as a, as a non-expert observer, um, is that, uh, really what they want to

00:10:14.980 try to do is slow this down, uh, to buy time, basically buy time to treat everybody effectively,

00:10:21.620 uh, and to buy time, uh, to hopefully, uh, develop a vaccine. But, you know, vaccines take a long time

00:10:29.220 and, uh, you know, I, I don't think we're going to get ahead of this one at looking at the rate that

00:10:34.740 it's, that it's increasing. Again, um, the math behind it is, is a bit terrifying. Um, I have stocked

00:10:41.780 up on toilet paper, but you know, I'm a bit of a regular dude. You're the guy who bought out Costco.

00:10:46.420 Oh, I bought out Costco like months ago. You know, don't worry, man. I've got, uh, I'm, I'm doomsday

00:10:54.020 prepped to the hilt over here. Um, does anybody know where this toilet paper thing came from?

00:11:00.420 I mean, the coronavirus is a respiratory disease. It's not gastrointestinal.

00:11:06.820 Walking around with like 200 rolls of toilet paper, thinking, okay, we're going to eat this

00:11:11.380 when the pandemic gets worse. I just don't understand. I haven't been able to figure out

00:11:16.340 where this came from. Well, the best I can, I mean, you're, it's completely irrational and based

00:11:21.780 on panic. Right. And, and these things build on themselves, but you know, there's a good argument

00:11:26.580 to say that if you are going to be quarantined at home for four, four weeks or five weeks, you better

00:11:32.020 damn well have enough toilet paper on toilet paper. Like there are so many necessities bottled, like, you

00:11:38.420 know, like I, I lived right at the center of the, I would live in bonus Calgary when the flood came

00:11:43.220 through. Like there are certain necessities that go, uh, water canned foods, like non-perishables.

00:11:49.460 There's batteries. There's a lot of this stuff that goes, I've never heard of a panic where everybody

00:11:55.220 just buys TP. Well, I mean, and if TP is really what's going to save us, Venezuela is screwed.

00:12:02.660 They've been out of toilet paper for a decade. I, it's, it, I think, I think it actually,

00:12:07.540 I think there is actually a logical explanation. You know, when people, people are stocking up on food,

00:12:13.700 but they're not all stocking up on the exact same food. And Costco is more than happy to continue to

00:12:18.900 ship, you know, crates full of food. Right. And, uh, and a toilet paper is one thing. And it's one

00:12:25.060 thing that if you are in fact stuck at your house for, you know, four to six weeks, uh, you really

00:12:30.260 don't want to run out of it. Ideally. Um, it would be kind of a terrible thing. And so I'm already

00:12:35.780 stepping the birch bark off the trees in my yard. I think there's a logical component, but then the

00:12:40.580 other part that does happen is people see other people doing it. And I know people on my Facebook that

00:12:47.540 went to buy a toilet paper because they were suddenly worried that there wouldn't be any.

00:12:52.980 And, uh, they were down, they were just that I could see it's a, that I could see it's a,

00:12:57.540 it's the kind of feedback loop is you see a couple of people have gone out and bought a truckload of

00:13:02.100 toilet paper and you might just reasonably need toilet paper and you're worried that everybody

00:13:06.980 else is going to buy it. So now it's, it's almost like a run on the bank. You know, if a couple of

00:13:11.540 people withdraw all their money, everyone's afraid there'll be nothing left. And then everybody runs on the

00:13:15.220 bank. So we've got to run on toilet paper. The other thing is this particular, um, emergency

00:13:21.140 isn't going to involve, um, not having access to water or electricity probably. Right. And so the

00:13:27.860 things that you would ordinarily stock up for in situations where you're expecting power outage

00:13:32.900 or water stoppage, uh, are not the things you're, you're a panic buying right now. Dave, go ahead.

00:13:38.340 Well, uh, bringing up, uh, uh, you know, a serious turn of events. Uh, there's a small community in

00:13:44.260 New York state that has a cluster of, uh, coronavirus outbreak and they have 172 cases that I believe

00:13:51.060 it is. Uh, New York governor yesterday called in the national guard. So you're going to have military

00:13:57.060 troops on the street enforcing a ring around this, uh, this neighborhood with a cluster in it,

00:14:03.460 making sure nobody goes in or out. Now that's scary when you're seeing troops on the ground

00:14:08.660 in, in, in your city basically saying you can't leave your neighborhood and that's, that's taking

00:14:16.260 it up a notch for sure. Well, and, and you know, the other piece of this that, you know, we're not,

00:14:21.380 we haven't, because we haven't really taken this seriously in North America, uh, we don't know what

00:14:28.580 we don't know. And when you look at the countries that have the high counts, Hong Kong and Iran in

00:14:35.300 particular, those countries started mass testing people. We haven't mass tested people. I was sick

00:14:41.860 last week. Nobody gave me a test, right? Maybe I had the coronavirus. I have no idea. Right. And I,

00:14:48.180 and may never know. Um, but I bet you if we went and tested a million random people in North America,

00:14:54.980 we would probably find a bunch of this out there. Um, if they're without symptoms.

00:14:59.300 It is the time of year for coughs and runny noses. Exactly. You cough at the neighborhood pub,

00:15:05.300 you're going to be shunned. Right. The Calgary, the Calgary board of education yesterday put out

00:15:09.940 a statement to parents and said, your kid is sick. Don't send them. We don't want them. That's right. 0.91

00:15:14.660 Well, this is, um, at home happy. Yeah. And this is, um, really going to have economic, big economic impacts

00:15:24.020 beyond just trade. Um, you know, my wife is in the hotel conference business and runs the conference

00:15:31.220 center here in Calgary. And the number of cancellations there have been for big events

00:15:37.060 is, is quite startling. Um, you know, I, I won't get into specifics, but I know of several conferences

00:15:43.700 that, uh, I had some attention of, uh, perhaps attending. Um, uh, I, I won't name those conferences

00:15:52.100 because I don't want to get them in trouble, but, uh, conferences, uh, at hotels and conference

00:15:56.820 centers are being canceled across the country. Uh, because people are just, are pulling up and

00:16:01.940 leaving, uh, companies and associations are walking away from very big deposits right now,

00:16:08.580 uh, because they're just not going to hold an event where everyone's expected to be together because,

00:16:12.260 uh, I mean, we are just getting started. Uh, I've been extremely skeptical about the seriousness of this.

00:16:18.660 Um, uh, and I'm only now starting to maybe believe what we're being told. Uh, that's my tinfoil hat

00:16:28.580 maybe coming off a little bit. And, uh, but, but this is gonna, this is gonna have huge economic

00:16:33.540 impacts. This isn't just, uh, international travel and trade, uh, even just domestically in every city

00:16:39.460 across the country. Uh, this is gonna, the hotel business is gonna be one of the first casualties of

00:16:46.340 this after the airline business and the cruise business. And they, this is the, this is the,

00:16:51.060 the part that where it kind of does, you know, it matters in terms of lives and in terms of,

00:16:57.300 you know, all the heartache that, that this can cause when, you know, grandparents and parents

00:17:02.420 start dying, uh, as we've seen in other countries. Um, but the, even if that were not to happen here for

00:17:10.020 some reason, you know, they somehow managed to rush out a vaccine and, you know, get it in everybody's

00:17:16.100 bodies in the next three weeks, which is not going to happen, but you know, some miracle happens like

00:17:20.900 that. Um, the economic damage is already done, right? I mean, we're already starting to see this.

00:17:27.780 Um, and, uh, and, uh, you know, how do you re, how do you recover from that, from that? And, uh, this is

00:17:35.220 going to be a long time and the way we work and the way we communicate, this is going to change forever.

00:17:40.420 Uh, I don't shake people's hands anymore. I did a month ago. I don't do it anymore. Uh,

00:17:46.580 you know, we do the, we do that because that's the Trekkie thing to do.

00:17:50.740 Your, your nerd, your nerd is showing.

00:17:52.580 Yeah. And, uh, and definite, but other things, you know, like just, um, uh, at church on Sunday,

00:18:00.500 uh, we did not know, you know, nobody shook hands, everybody, uh, bumped elbows or just said hello

00:18:06.180 or, you know, whatever. And, you know, uh, there's lots of churches where they just not going

00:18:11.860 because, uh, you know, there, there's that you look at South Korea, for example, was one church that,

00:18:18.580 uh, spread, um, the initial, um, the initial community spread happened in one church and

00:18:25.620 that's been a disaster there as well. Um, so talking about economics, we could probably move along to

00:18:33.220 the next big story, which is definitely tied in, but, uh, but separate. And that is of course,

00:18:41.540 it's fair to say the crash in the price of oil. You consider a 45% drop in one day, a crash. I think

00:18:51.060 that's pretty safe to say, um, that was the number I saw the night before on Sunday night with, um, uh,

00:18:58.260 with, uh, Canadian crude. Uh, I don't remember the exact numbers. Um, what it all sort of panned out to

00:19:04.900 the next morning when the markets opened, but Dave, maybe you can fill us in a bit on the details.

00:19:09.220 Yeah. When I checked a few minutes ago, it was trading at a 33 59, which is down another two and a quarter

00:19:17.140 percent. Uh, the other breaking news today is the United Arab Emirates has decided that they're going

00:19:24.420 to boost oil production. Uh, they're actually the third, uh, third largest producer, uh, within OPEC.

00:19:32.260 Uh, as you know, there's currently a battle raging between Russia, uh, who's sort of an honorary member 0.76

00:19:38.420 and, uh, Saudi Arabia that's, uh, that's pushing the price down. So it all seems to be connected.

00:19:44.740 Coronavirus to stock markets are tanking. The, uh, uh, the oil prices are going down. So,

00:19:51.300 uh, a lot of collateral damage there, including, you know, as we'll talk about later, the Alberta budget,

00:19:56.500 uh, again, not, uh, not good out there. Derek, your thoughts?

00:20:02.180 Well, when it rains and pours, I mean, uh, if, uh, if coronavirus, uh, I mean, it's just more bad news

00:20:14.020 after another. Um, you know, we had a really thoughtful piece from Tesla, Little John, uh,

00:20:19.940 on the Western standard yesterday on this, uh, getting into why they're really in this fight.

00:20:25.540 Uh, and, and it's, there's a lot of, uh, rabbit holes to go down with it. Um, you know, Saudi Arabia 1.00

00:20:33.140 wanted to, uh, wanted to set a price, uh, a higher price with Russia. Russia would not play ball because

00:20:40.980 Russia is keeping its production up because it's at war with U.S. shale producers. U.S. shale, uh, has

00:20:47.140 completely revolutionized, uh, over the last decade, the oil and gas market and, uh, you know, Russia,

00:20:54.500 Russia really targets them. They see them as not, uh, not a player they really want on the world stage.

00:21:01.460 Uh, it's, uh, not as high a cost that produces Canada's, uh, or, or our oil sands as an unconventional,

00:21:09.700 but it's higher cost and, uh, shale like the oil sands requires a higher, a higher price per barrel to be

00:21:16.420 profitable. And so, uh, Russia wants to flood the market to try and drive out U.S. shale.

00:21:21.780 Uh, and so this pisses off Saudi Arabia, uh, who massively increases production to dropping the

00:21:29.620 price to then hurt Russia to try and get Russia back to the table. Um, and now, uh, UAE, uh, or, uh, 0.68

00:21:38.500 United Arab, UAE, uh, uh, sees itself getting cut out of this. So now they're driving prices down

00:21:45.540 further with more production. Um, and so while OPEC is a cartel, it, um, it doesn't always exactly

00:21:54.580 operate as a cartel, uh, appropriately. They don't exactly have the dairy, uh, the dairy supply

00:21:59.460 management board overlooking things to enforce. It's, it's members, its member states, uh, do what

00:22:05.060 they want if, uh, if they don't really like the way OPEC is going. So all, all of this has just been

00:22:11.140 to a total collapse in prices. Um, I remember, uh, I, I was at downtown Calgary, uh, yesterday

00:22:19.220 and, uh, there were some, uh, I was at a pub for, uh, for a pint after an event and there were, uh,

00:22:26.420 at just 6 30 in the afternoon, uh, there were some, uh, oil field service workers who just happened to be

00:22:31.460 in the downtown who were there, uh, who did not seem like it was a 6 30 drinking event. Um,

00:22:39.700 they, uh, they had bet that if, uh, oil hit a certain price, they were going to go drinking and,

00:22:44.180 uh, pretty safe to say that, that, uh, that, that, that had made it. And so this is really just going

00:22:49.620 to compound, uh, bad news on top of bad right now. Well, and, and, and the knock on effect becomes

00:22:56.180 further knock on effect, right? You talked about the hotel industry and cancellation of big events

00:23:01.380 and stuff, you know, um, I, I mean, for our family, we were planning a big vacation in, in summertime.

00:23:08.740 Um, you know, the Corona virus could stop that. Um, but even if this is passed by then we might still

00:23:16.660 not go because, you know, I don't know what the economic situation is going to look like come July.

00:23:21.380 Right. And, uh, so people are going to start making, um, personal and business decisions that are also

00:23:27.700 going to be reductive and that's going to have a further knock on effect. Right. And, uh, it's

00:23:32.980 going to be a damn big hole by the time we're finished to dig out of. And, uh, I've never taken

00:23:37.620 a cruise before, but I'm considering it now because I'll probably never get it so cheap.

00:23:42.980 Yeah, there, uh, we love cruising. I've been on 11 cruises and, uh, yeah, I'm not, uh, not so sure.

00:23:50.100 You green, you green Victoria people, uh, with your cruises.

00:23:57.300 Floating cities of death.

00:23:59.540 My parents are about to go in September. So they're, uh, they're keeping their fingers crossed.

00:24:04.180 And we haven't even talked about professional sports and San Jose sharks playing in front of

00:24:08.660 empty, uh, an empty crowd now. Seattle has banned anything above, uh, any gatherings above 250 people.

00:24:15.700 Uh, you know, the States is probably a couple of weeks ahead of us, but it looks like that sort of

00:24:20.580 stuff's coming to, uh, to Canada just in time for the Stanley cup playoffs. So think of Calgary

00:24:26.260 versus Edmonton battle of Alberta with no fans. Hey, I'll be able to finally afford tickets.

00:24:32.660 Joe Rogan had a medical expert on, uh, on his show yesterday, and he was talking about in particular,

00:24:38.980 um, comparing China to North America. And one of the things that he raised was the obesity rate,

00:24:46.660 uh, along with obesity, um, uh, which is considered epidemic in North America comes breathing issues.

00:24:54.900 And so it's, it's a possible that things like that and diabetes and some other complications

00:25:01.380 along with, you know, an aging population, et cetera, et cetera, uh, we could potentially

00:25:06.180 be hit harder, uh, than China just based on the demographic differences. So on that happy note, 1.00

00:25:13.060 um, what we should, uh, probably, uh, talk about the Alberta budget in particular because, um, obviously,

00:25:21.140 uh, Canada is affected by this oil, um, price, uh, madness. And, uh, in particular, the great

00:25:29.860 province of Alberta, um, is going to have a massive hole in its, uh, budget, I presume.

00:25:36.340 Uh, Dave, what does that look like?

00:25:38.980 Pretty massive. Uh, you know, there's been some people smarter than myself, like, uh, like Derek,

00:25:44.980 who say might as well rip up the budget you've got now and start again. You know, they've based their,

00:25:50.740 uh, their budget figures on oil in the mid fifties and it's already down into the low thirties.

00:25:56.180 Uh, so unless it springs up quickly and stays, uh, stays at a greater height for,

00:26:02.740 for a long time, uh, there's no hope of, uh, Alberta coming anywhere close to its, uh,

00:26:08.020 uh, its budget predictions. Derek, your thoughts? Well, I, uh, I appreciate your, uh, your deference

00:26:15.700 to my wisdom, Dave. Um, no, it's, uh, I mean, look, it's, I, I, I've been studying Alberta budgets for,

00:26:23.780 uh, for a decade. It's, it's always a crapshoot to try and, uh, predict these things. Um, so I,

00:26:31.140 but I did a little rid of, I want to do some research for a bit of a more of a historical

00:26:34.740 take on this, uh, at least from the beginning of the last NDP, the one and only NDP government,

00:26:40.420 I should say, to, uh, to where we have the current budget in terms of projecting out for oil prices.

00:26:45.860 Uh, on average, nobody gets it right. Governments normally overshoot oil prices. Um,

00:26:51.700 and then they can blame it on things later, but it allows them to project a sunnier time into the

00:26:56.260 future without having much to base it on. Um, the NDP on average got, uh, in every budget they had,

00:27:02.820 they got the price of oil about $5, $5 and change off. Um, but, uh, the Tories now they're still new,

00:27:11.940 so they don't really have much of a track record with this. Um, but if they pass the budget as is,

00:27:17.140 which they say they will, uh, they're going to overshoot oil prices, uh, by about, what do I got

00:27:28.100 here? Um, uh, like $34. Like it'll be the most wild over projection in the history of the province.

00:27:40.260 And this is happening right now. So I I've been in budget debates before I've, uh, I've led to

00:27:44.260 budget debates in the house and you know, you want to, the opposition's always going to find

00:27:48.980 holes to poke. Well, this isn't the hole to poke this, this is, you could drive a truck through this.

00:27:54.100 The Tories are now expected to stand there in the legislature and defend a budget with oil at $58

00:28:00.420 this year, uh, $62 and then getting to $63 in their projections. When we look at the spot price right

00:28:07.540 now, it's sitting around 33 bucks and change. Uh, that could, this could be maybe a blip and maybe

00:28:14.340 Saudi Arabia pulls back, uh, if they could do a deal with Russia, but it does not look like that's

00:28:18.660 the case right now. And this is going to punch a massive hole in the budget. The revenue sensitivities

00:28:23.940 in the government's own budget says that for every one us dollar change in the price of, uh, West Texas

00:28:29.460 intermediate, um, it has a, has a revenue impact on Alberta of $355 million for every $1

00:28:37.220 shift in that price. Well, according to this, that means this year alone, that's $8 billion

00:28:43.860 in lost government revenue, but that's impossible because the government was only projected to bring

00:28:49.620 in about $5.1 billion in all resource revenues combined, including natural gas, royalties, other

00:28:55.860 taxes, et cetera, from this. So those revenue sensitivities actually only make sense within a certain

00:29:01.540 scope after which they kind of become bunk numbers, but within the scope of sanity, it's about 355.

00:29:07.780 This means though that, um, the government's, uh, the budget's totally shot. Uh, the NDP have

00:29:13.540 graciously offered to help rewrite the budget at an all party committee. Uh, when I was Wildrose

00:29:18.820 finance critic, I don't recall the NDP ever, uh, offering me a chance to help write their budgets

00:29:23.620 at an all party committee. Uh, so I'm not sure the Tories will exactly take them up on their, uh,

00:29:27.940 other, uh, very kind of them to, to, to take over the budgeting process for the government. Uh,

00:29:35.380 assuming that the government doesn't though, uh, they have said that they're just going to pass it

00:29:38.820 as is. And very interestingly, uh, Jason Kenney has said that, um, if this holds up, uh, his commitment

00:29:47.300 to balance the budget by the end of this term of the government, uh, will not be kept. And that was a

00:29:53.620 marquee promise. That was, uh, other than the carbon tax, which they promised to get rid of,

00:29:58.820 not just produced by 33%. Uh, the balancing the budget was the issue. And it was the issue that

00:30:04.660 we hammered the NDP on mercilessly for four years. We gave them no quarter on the budget.

00:30:10.820 And now the government is asking the NDP to be nice to them, uh, on this. Uh, I mean,

00:30:16.900 they only cut $1 billion out of four years of spent over four years out of their budget. And they're

00:30:21.620 saying that, uh, there's not much more to cut and that they're going to have to, uh,

00:30:25.220 run more deficits. So this is going to potentially, uh, create some real political upheaval in the

00:30:30.980 province as, uh, we haven't balanced the budget in Alberta since roughly 2009. It's been a very

00:30:37.620 long time since Alberta's had a balanced budget. And now it looks like there's no prospect of

00:30:41.940 balancing it anywhere in the foreseeable future under either of the two parties in the legislature.

00:30:46.740 Well, and, and, you know, not, I don't think anybody could be surprised by that. You know,

00:30:52.100 we're, we're, we're in the midst of this global, uh, crisis. And I think one of the unique features

00:30:59.460 of this, uh, global crisis, financial crisis, if you will, is, um, you know, not a lot of people

00:31:06.900 clearly saw it coming. Maybe there's some epidemiologists who, you know, I mean, they've

00:31:11.060 been talking for a long time, stuff like this could happen. Uh, but you know, nobody knew it

00:31:15.780 was going to happen now. And, but in terms of budgeting though, they can change it like this,

00:31:20.420 this is sure they, like, I, I don't expect them to put this to an all party committee with the NDP

00:31:26.820 and let Rachel not leave with her great record of budgeting, uh, have her hands into this. I,

00:31:31.060 I, maybe they should, maybe they should, maybe that's how they, that's how they duck and cover from

00:31:35.780 this. Right. Because ultimately it's going to be a stimulus situation anyway. So you may as well

00:31:42.180 let them, that's what he's talking about now. He's talking about, uh, Obama style and Rachel

00:31:47.780 Notley or Don Getty style stimulus spending. Uh, we haven't seen details around it yet,

00:31:52.820 but they're talking about big corporate welfare stimulus spending. And, uh, that is pretty damn 0.92

00:32:00.420 far from the mandate the government got elected on. They were got elected on a mandate of cut spending,

00:32:05.140 balance the budget, cut taxes and, and anything involving the NDP. This is, uh, this is quite

00:32:11.540 a departure in language and could present real challenges to the government, uh, politically

00:32:17.540 in the future if, if they leave such a wide, uh, opening on their right with their fiscal policy.

00:32:24.340 Well, and, and, you know, this is the problem with governments being, uh, so, you know,

00:32:32.100 governments just overspending and overspending and overspending when times are good,

00:32:39.540 because the whole concept of, you know, uh, stimulus and in economics depends on governments being

00:32:49.380 prudent when times are good so that when crises like this happen, you've got some money in the

00:32:55.940 coffer that you can then spend, um, on dealing with the crisis. And governments around the world

00:33:04.820 have been awful at this. And in particular, the federal government, you know, Trudeau gets elected

00:33:11.140 on a mandate to run a deficit in a country that doesn't have one.

00:33:15.460 That kind of a Keynesian cyclical, uh, economic theory would have a better chance of actually

00:33:21.380 working in dictatorships. But when governments are on a four-year election cycle, the economic

00:33:26.580 cycle matters a lot less. And so there's always an incentive to spend even at good times. And then

00:33:31.300 we, then we come to a crisis like this and the cupboard's bare and, uh, government's got no one

00:33:35.780 left to blame but themselves. Well, and you know, I, I'm old enough and Dave, certainly you're old enough

00:33:41.060 to remember, you know, in the, in the early nineties when Canada was going to become the next third world

00:33:46.420 country, according to the front cover of the New York times, because we overspent ourselves into

00:33:52.100 oblivion and along came the reform party and a few other wise folks. I think we are almost out of

00:33:59.540 time to recount the history of the nineties. Anyway, thank you, Derek, for bringing me back in. But, uh,

00:34:05.620 but yes, uh, hopefully the, hopefully the world will learn a lesson from this and we can be

00:34:10.900 more prepared for the next time this happens. Uh, final thoughts, Dave. It's going to be an

00:34:17.060 interesting week ahead. Uh, is it going to be, you know, nothing but bad news for another few weeks,

00:34:22.740 I think. I think you're right. Derek, anything chipper to close on? No, one's flying. No,

00:34:29.700 one's buying anything. The economy's in the shedder. Greta Thunberg should be very happy. 0.73

00:34:33.620 All right. Thanks very much everybody for tuning in. If you are not yet financially ruined,

00:34:40.740 please consider, uh, membership with the Western Standard. Visit us at westernstandardonline.com

00:34:47.220 and, uh, for a very small amount, you can help us, uh, continue doing the amazing work, uh, like,

00:34:54.340 folks like Deirdre Mitchell-McLean and Dave Naylor and all of the great people at Western Standard

00:34:59.700 are doing, uh, to bring you the news and opinions for Western Canada. Uh, have a great week. We'll see

00:35:07.860 everybody next week. Cheers.

Western Standard - March 11, 2020

Don't worry Greta, the Coronavirus Pandemic will get us first - The Pipeline, Episode 12

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