The Debt Storms Comes to Parliament Hill: Review of Presentations
The Debt Storm Canada is finding itself in and an indebted world
Luncheon with MP’s
- Debt and derivatives – How debt continues to escalate globally each year. In the 7 previous years (2008-2015) have added 57 trillion USD to debt instruments globally.
- Unfunded liabilities – Governments around the world have made massive social/welfare promises where there is no money set aside to fulfill these promises.
- Aging demographics – We have factored into our numbers constant economic growth and large periods of retirement. But when the worker to retiree ratio goes from 14:1 to 2:1, then funding for social welfare programs and pension programs become a challenge.
- Unjust weights and measures – The price for money (interest rates) and the value of money is under severe manipulation as the central banks lower rates and print more money, buying government bonds. This puts pressure on interest rates to go down and bond prices to go up, resulting in much instability.
Why are we in this predicament?
- The secularization of the West and the gutting of our faith commitments as a society and culture
- Postmodernism: loss of truth, loss of moral authority in our culture, lack of long-term discipline resulting in increased consumerism (buy now, pay later)
- Breakdown of the family: the marriage divide of committed families raising children, and families that are under pressure and breakdown. Moral breakdown of families produce high cost for society and culture, yet we continue to undermine the family unit.
Summary: The debt crises is severe and needs to be addressed because at our current rate what is going on now is not sustainable.
Luncheon with Ambassadors
We broached similar topics of discussion from a slightly different perspective. How will the debt in first world impact second and third world countries as power shifts from West to East? If the first world nations are not as wealthy as we think and are spending their futures, what does that mean? There is a concern in this power shift, because if “rich” countries have a debt crisis, it will in turn impact trade with the developing world.
Initiative called the “Asian Infrastructure Investment Bank,” which is a bank set up by China with the support of a number of countries. This bank is a competitor to the World Bank and the IMF which have been dominated by the West. It will allow new emerging economies which currently feel left out of the current system to help fuel their economies. This will shift new money of our current day to go into infrastructure in the East.
What does this mean from an investment perspective?
- Buy quality companies with strong balance sheets.
- Watch the leverage and be careful about over indebtedness. Don’t buy companies that have large debt or with investments that could vapourize in a monetary crisis.
- Buy scarce, irreplaceable assets; assets backed by tangibility (agriculture, real estate, water, infrastructure, health care, etc.).
- Get global purchasing power. Buy businesses that make money everywhere around the world, helping create and fuel international commerce.
- Buy assets that will do well in a de-dollarized world (gold, silver, etc.). With the continued pressure on the USD, more pressure is going to go against the USD (de-dollarization), resulting in the reduced trading in USD and the increased trade directly between countries.
Jonathan Mark Wellum, B.Comm., B.Sc., MA, MBA, CFA
Jonathan is the founder and CEO of ROCKLINC Investment Partners Inc., an independent research-driven investment management firm focusing solely on creating portfolios of high quality assets customized to their clients’ objectives and needs.
Prior to founding ROCKLINC in 2009, Jonathan served as Chief Executive Officer with Portland Investment Counsel (formerly AIC Investment Services). Under his management, AIC’s assets grew from $10 million to a peak of $15 billion, making the firm the largest privately owned mutual fund organization in Canada.
- Chartered Financial Analyst
- Named 1995 Fund Manager of the Year by the Investment Executive Magazine
- Awarded 1997 Fund Manager of the Year at the Canadian Mutual Fund Awards Gala
- Recipient of Canada’s Top 40 under 40
- Member of the McMaster University Investment Pool Committee
- Board member of the Canadian National Christian Foundation