Sunday, September 24, 2006

The Mogambo Guru speaks

The Mogambo Guru speaks

Several weeks ago on a whim I thought I would ask the Mogambo Guru a question and thought I would share my correspondence with you.

Mr Daughty

Any chance you could talk about how the coming crash will affect your largest trading partner, Canada. If you guys crash and burn I assume you’re taking us with you. What would be our best defense? Is it still gold, silver, oil?
What would be your CMPOFAD ? (Canadian Mogambo Plan of Fear and Desperation) After all you did come to Vancouver and not all of us PMW (Poor Mogambo Wanabees) could afford to fly in and see you.
Thanks for your informative and entertaining articles, (Your wife and family must be very good sports)

ACMF (a Canadian Mogambo fan)

Thanks for asking, but I never thought about it, but now that I am, I find I suddenly have a headache from continuously scratching my head in puzzlement. But, pressed for an answer, with Canada's massive resources, I assume that you will be fine, as you will have exports out the wazoo, while all we Americans seem to export is weapons, dollars, stupidity and hatred.

And whither gold and oil? Always a good idea! And silver? Always a better idea! File that under "CMPOFAD" with the subhead "Emergency Last Ditch Clutching-At-Straws Plan From A Real Moron, To Be Used In Case Advice From Competent Professionals Proves Somehow Inadequate."

And I am sorry that you did not get to see my speech in Vancouver, but, if it makes you feel any better, the consensus of opinion about my stupid speech was "What an idiot!", and I, of course, agreed with them, not telling them, of course, that I was secretly laughing at them for expecting anything different! Jerks!

And besides, they had enough people angrily demanding their money back and wanting to beat some sense into me without YOU adding to the hubbub!


Mr Daughty,

Thanks for the answer, I didn't think I'd actually get one.

What complicates the situation is the U.S. takes up 80% of our exports,
with a possible devaluation(collapse) of the U.S. Dollar, you won't be
spending much on things you can't produce. What foreign currency you can get will be used just for Oil, leaving many of our industries floundering.

In 5 years will we have Americans sneaking across our border to work
illegally and send cash home to Alabama?

Who says we won't be spending money? Hahaha! Hell, that is the whole point of the Federal Reserve!


So while not a long and detailed analysis by either of us, it would seem that the Guru is both bullish on Oil, Gold and especially Silver(as all right thinking people should be) even from the Canadians perspective. I was however a bit surprised at his bullishness for Canada in general. Should the U.S. dollar suffer a devaluation crisis I doubt the U.S. will be able to afford to import as much as it does presently. Yes they will be able to print as much paper as they want, but will our industry accept it in payment. Other considerations would be, what kind currency restrictions the U.S. invokes to buffer the dollar?, will they refuse to sell us fixed assets as happened with the port sales to Dubai? Will we be able to pass off U.S. paper into the world market to purchase our imports?

Assuming the dollar devaluate across all currencies equally we would not loose any competitive edge against other currencies except the dollar. However, since the U.S. is our biggest trading partner it would be an important consideration should they loose 50-80% of their buying power in weeks or months. I believe in such a situation the U.S. would have to import at what ever cost for a time, but eventually that will change. The U.S. will outlaw unions, close the EPA, repudiate most other environmental laws, and remove any other impediments to development. The President might even use Executive order 11000 to send people off to work camps in order to allocate needed labour at controlled prices, also expect the congress to enact stiff tarrifs and break many trade agreements.

The rational for these changes will be to return jobs and production to America. The delay in the issuing of mining permits, long environmental studies, zoning fights and labour cost all encourage the import of raw material and the exportation of jobs abroad to the detriment of the country. Eventually when the dollar no longer maintains enough of its purchasing power, previously exported jobs and primary industries will be repatriated decreasing Canadian exports to the U.S. A monetary crash is also likely to result in a prolonged depression in the U.S. which will also cut demand for our goods. It’s simple, we are far too reliant on this one market absorbing our economic output. The world will quake if the U.S. dollar implodes, and far from being immune, we could be more shaken due to our dependancy on the U.S. market.

Not that I have credentials to match Mr. Daughty but this was my take on it.

Be wary, be informed , invest safely, shed debt, buy silver or gold and be prepared for a world of pain. If I might quote the Guru, "We're freaking doomed!"