Inflation: Bring back the 1980s
Interest rates will soon catch up with inflation. It is running at 7.5% in the United States. That’s the highest since 1982. A lot of people say it has peaked. A year ago a lot of people called inflation `transitory’ and those of the left denied its existence since talking about inflation meant questioning government Covid handouts.
But Interest rates are still in cloud cuckoo land. In 1982 a five-year mortgage in Canada was 19.25%; today it is 4.79%, and there are cheaper offers out there.
Here's the historical mortgage rate chart
The US Federal Reserve will probably raise rates half a percentage point soon. That will spread to mortgage rates, not just in the United States, but in Canada too. Stretched homeowners and amateur speculators could panic.
“Fifty years ago, the average home cost two years of the average American household’s income. Today it costs four.” says economist Scott Galloway.
Oil heading to $100?
Oil prices jumped 4.5% on Friday to $93.90. That’s the main North American price; Brent, the European price, hit $95. The prospect of Russia invading Ukraine was the biggest mover. A Bloomberg headline says oil could hit $120. That is inflation that hits the average commuter in Canada and the United States. Gasoline up 4 cents a litre in Toronto on Sunday to C$1.60 plus. That’s inflation. Much whining on radio and TV.
An unintended consequence is a rising world oil price makes Russia richer.
It also helps places such as Newfoundland and Labrador and Alberta that were hit by a big drop in oil prices. There is a proposal for a new offshore development off the coast of Newfoundland — Bay du Nord — but green-leaning members of Prime Minister Justin Trudeau’s cabinet are said to be against it. Newfoundland politicians, desperate for tax revenue, are incandescent with rage.
The Richest Companies in Different Markets
The chart below shows the market capitalization— the price of the stock times the number of shares outstanding— in different areas. It is number one in North America— it’s only listed in the United States— but that shrinks in other markets.
Europeans buy Apple phones, tablets and computers, but the luxury goods company LVMH (and acronym for Louis Vuitton, Moet, Hennessey) is the richest firm in Europe.
LVMH’s controlling shareholder, Bernard Arnault is the second richest man in the world after Elon Musk of Tesla, but ahead of Jeff Bezos of Amazon. Forbes Magazine now tracks billionaires net worth on a daily basis.
A Depressing Chart from The Economist
The British publication says Covid restrictions reduced democratic freedoms last year. It is an observation, not a judgement on Covid rules.
Amazing that so many European countries such as France, Italy and Spain are classed as `flawed democracies’, as is the United States. The US is tied with France and Chile. Not to be too sanctimonious, Canada is behind the Nordic countries and New Zealand, though listening to Jacinda Adearn’s voice would be be too much to bear. Canada might slip in next year’s ratings after the disgraceful `freedom convoy’ in Ottawa and the bridge to Detroit. The Ottawa police chief should be fired, and Justin Trudeau will be lucky to last the year.
Working on Thin Ice
Brome Lake, a short walk from where I live part of the time, is mostly frozen solid now, but there are parts where streams come in that are open even in mid-winter. The local fire department trains to rescue people who fall into open water, usually by driving snowmobiles too close to the thin ice. The secret, as you can see in the practice session, is to spread your weight over the ice so you are a rescuer and not another victim. Brave men and women.
English pronunciation of Foreign Words
We speak English, not Ukrainian, Hungarian, Arabic or even French. We do not say Paree, we say Paris. I worked with an announcer at the CBC who liked to show how clever she was by pronouncing the capital of Hungary as Budapeshhht. Wrong.
The capital of Ukraine is pronounced Kiev, the weird new way it is spoken on television: Keeve. Qatar is often pronounced Cutter. Affected and annoying. Perhaps most controversial is Junta. In English it is Jun-ta. We speak English, not Spanish.
Essay of the Week
This is a short essay written by Charlie Scott, who lives around the corner from me in Knowlton. He is a lot younger, and tried out a new type of ski, called a Hok.
This short article will appear in next month’s Tempo Lac Brome, where I am the volunteer editor. Lucky newsletter subscribers can read it here first.
The title is by Charlie as well.
What the hok?
Quebecers are clever at finding fun, active ways to enjoy snowy weather. Downhill skiing, cross-country, snowboarding, snowshoeing, and skating—we strap all sorts of winter gear to our feet. Now there’s some new kit in town. Hok skis. While it’s relatively new to this part of the world, Hok skiing (or ski-shoeing) has been popular in the Altai Mountains of central Eurasia (where Russia, China, Mongolia, and Kazakhstan meet) for thousands of years. Originally used by hunters to navigate the remote, snow-covered landscape, ‘hoks’ (the word for ‘skis’ in the local Tuva language) have evolved into a convenient hybrid of ski and snowshoe.
Hoks are about 50% wider than typical downhill skis and only two-thirds as long, making them relatively light and surprisingly maneuverable. The simple bindings attach to the skis only at the front, allowing the skier's foot to lift and pivot much like a snowshoe or cross-country binding. No special footwear is needed. Any winter boots will fit just fine. The real genius of the hok ski is found underneath, where the ski meets the snow. Traditionally covered in animal skins, the base of modern hoks is partly covered in synthetic ‘skin’ made from nylon fiber. This soft velvet-like material allows the skis to glide forward, but prevents the skis from sliding backward. Most hokkers use a regular pair of ski poles, while purists opt instead for a single long wood pole.
So what’s it like to ski on hoks? And what sort of landscape and conditions are ideal? From my experience, learning how to hok is considerably easier than picking up downhill or cross-country skiing and it’s immediately fun. It might even be easier (and certainly feels more natural) than snowshoeing. Basically, if you have any aptitude for walking, you’ll be a hok star in no time at all. Hoks are brilliant in any depth of snow and work beautifully on almost any terrain. Flat, hilly, wide open fields, trails, or deep in the woods. While some hoks do have metal edges, it’s generally best to avoid icy conditions. Steep uphills may require side-stepping and aggressive downhills definitely require a strong nerve.
If you’re tired of feeling uncoordinated and/or out of control on cross-country skis, frustrated that your snowshoes don’t slide, and looking for a simpler alternative to downhill skiing, then give hok skiing a whirl (and yes, you may spin out of control the first time you try turning). A pair of hoks with bindings will cost around $475-650. Owing to a surge in popularity they can be a little hard to find, but they’re out there. And they’re waiting for you to discover.