Another decent read picked up at the library. This book is by Canadian author John Lawrence Reynolds. It’s small, short (less than 150 pages), and nice format to read. He has laid the book out in a ‘question and answer’ format – along with simple definitions of various financial terms and instruments.
I picked the book up partially because I really liked the layout and wanted to take a longer look to assist my own work in finishing a book right now. I also have interest in good accessible information regarding the financial meltdown – and this book is that. Short and to the point (unlike some of my posts…).
As I read through the book I started to see an analogy with the current bubble bursting on salmon populations. OK, yes, when someone is a bit obsessed with the fish then one can see salmon in anything… However, as the old Clinton campaign saying goes: “it’s the economy, stupid”. And when it comes to salmon – economy is significant – as are the words of Alan Greenspan.
I have found a flaw.
– Alan Greenspan former Chair of the US Federal Reserve Board, commenting on his long-held support for total deregulation of the financial industry, October 23, 2008
Early in the book Reynolds states:
For the first three quarters of the decade we all believed we were part of an economic paradise, a world where everyone prospered with no end of the party in sight…
When it comes to the western coast of North America we could change decade to “century” and add “an economic paradise of salmon and forests.” This would accurately describe the industrial and management regime that has blitzed our rivers and hillsides through the 1900s.
From 2000 to 2007, members of the U.S. Congress banished laws that had prevented commercial banks, investment banks and insurance companies from forming private clubs. The new bills made it more difficult for consumers to get out from under the punishing debts by declaring bankruptcy, and ordered federal watchdogs to stop policing banks, insurance companies, mortgage lenders and investment firms.
Unconstrained by their elders and the general public, denizens of the financial and investment industry looked like a gang of sexual swingers at a Viagra convention, breeding and inbreeding up and down Wall Street and beyond. Their actions begat strange creatures no one had encountered before, identified by names such as credit default swaps, interest-rate derivatives, asset-backed commercial paper and other newly hatched offspring. Warren Buffett, who is both smarter and wealthier than ten people you and I can name, called these beasts “financial weapons of mass destruction.”
To put it in another context, the kids on Wall Street and their cronies all across the United States were given keys to the candy store. With nobody around to watch over them, they devoured toxic sweets such as sub-prime mortgages which represented too much money invested in too many houses bought by too many people who couldn’t afford to make the payments. The kids in the candy store got fat. Everyone else got arteriosclerosis.
The story around salmon fisheries may not be all that far off. We’re not necessarily talking trillions of dollars in losses and debt in less than a decade like the debacle in financial markets over the last couple of years – however we are easily into billions.
However, extend these losses over say my lifetime (less than 40 years) and we are easily into trillions.
The wild salmon fishery in British Columbia had a landed value of just over $40 million in 2007. Curiously, sockeye only represented 9% of the harvest yet almost 50% of the landed value. This harvest was 80% smaller than the 2006 harvest due to conservation concerns.
Total commercial catch for all species in B.C. (groundfish, salmon, herring, and shellfish) had a landed value of $321 million.
And yet a report by the OECD (Organization for Economic Co-operation and Development) looked at the cost of managing fisheries in a 2003 worldwide study: The Cost of Managing Fisheries. By Fisheries and Oceans’ own numbers the cost of fisheries management ($91 million), fisheries research ($71 million), and fisheries enforcement ($70 million) was over $200 million with a slight cost recovery of $40 million from licensing fees.
Last year’s budget at Fisheries and Oceans – about $1.8 billion. Total full time equivalent employees 10,500. It’s a behemoth (granted it has the Coast Guard worked in there too).
Fisheries management – and especially salmon management – as it’s currently structured in Canada is a money losing proposition. The losses in the nets are a significant net loss to citizens.
The salmon party is over and right now, not even Viagra isn’t going to get things up. The real party was when Keith Richards of the Rolling Stones was in his heyday – look at the poor boy now – he’s been to a few parties, and it shows.
Maybe a little different approach is required for salmon – and fisheries management. This is a chapter name from another randomly picked up library book: “It’s not the economy Stupid, it’s you!”
If your sales are down 40 percent or 50 percent and you’re continuing to lose money, you haven’t adapted to the changing market realities. If you’re at the point where you’re not able to realize modest profits and pay yourself, it’s probably because the recent years of unparalleled national prosperity put you into a coma. You have a choice: Wake up or pull the plug.
Granted that government ministries often operate at a loss – especially ones that deliver significant social benefit. However, last I checked Canada prided itself on paying for its great social programs through its rich natural resources.
The sad thing is that maybe Fisheries and Oceans, or someone somewhere has seen the 0 tonnes to 2 million tonnes growth of salmon farming in less than 20 years.
2,000,000% growth in 20 years is pretty darn good return… at least in terms of simple economic terms – not true costs. Don’t even try to start adding up all of the carbon released in the fish farming industry….
Plus it’s a little easier to secure the resource rents (i.e. revenue) off of farmed salmon than wild caught. This means a government ministry can move to cost recovery – instead of white elephant obscurity, in a county boasting the most coastline in the world, and thus one would think richest fisheries and self-supported fisheries ministries…