Double Blind

Williams Lake airport was shut down for the majority of a day because apparently the explosive checking equipment flagged one passenger’s baggage as potentially carrying explosive devices. There was a second piece of baggage which had the same signature, so airport security called 911 and the police decided to shut down the airport. The passenger in question was from Seattle, and was detained.

It turns out that there was nothing suspicious in the baggage after inspection and the passenger was released.

I’m surprised that more false positives like this do not occur more often. One would also think that such false positives would happen at larger volume airports, such as YVR. But Williams Lake?

It sounds like that faulty equipment was the cause of this problem, but unfortunately, I doubt we’ll ever hear the conclusion of what was inside the baggage that caused the shutdown of the airport.

I have misgivings about the proceeds of crime legislation. By introducing such legislation, governments get into the slippery slope of justifying asset seizures. I am not at all involved in any criminal activity anywhere, but history would suggest that if busting marijuana grow-ups is the big target today, something might be selected tomorrow (e.g. seizing vehicles because you’re speeding on the highway) that would be against my interests.

Apparently some person’s $600,000 home was seized because he ran a marijuana grow-op. He made the mistake of having full equity in the house (i.e. no mortgage) compared to other convicted marijuana growers, who owned money on their houses and thus did not have to deal with the corresponding mortgage debts.

The root cause of this legislation is that the province is stepping in the jurisdiction of the Federal government – punishments to crimes are supposed to be deterrents, and the criminal code does not include an economic component – just simply time spent in jail (along with fines that are of minor consequence compared to the profits of marijuana growing). By introducing an economic deterrent to the crime, presumably the criminal activity would be lessened.

So the law is also a statement on the ineptitude of the criminal code, and perhaps a component of this is light sentencing given by judges after conviction.

The forfeiture laws will encourage illegal drug manufacturers to keep their assets in a much more liquid form – i.e. not in real estate. Typically the proceeds of such drug sales ends up in the real estate market, so this might cause a bit more supply to appear out there in the BC real estate market.

I’ve had $275 on the line to win $477 in the event the following people are not selected as the Democratic party’s VP nominee:

Evan Bayh
Joe Biden
Wesley Clark
Hillary Clinton
Al Gore
Bill Richardson
Sam Nunn
Jim Webb
Tom Daschle
Christopher Dodd
Mark Warner
Barack Obama
Ted Strickland
Bob Kerrey
Tom Vilsack
John Edwards

Unfortunately this bet has been going on a lot longer than I anticipated – about a month and a half. Since the Democratic National Convention will be held in less than two weeks, I’m expecting to capitalize on this bet very soon. I’m anticipating a female VP nominee.

I have been looking at certain types of investments for my RSP since I have some US cash that I would like to deploy.  Typically I perform some common stock screens and then do some valuations on companies that initially appear to be attractive, but I accidentially ran across some alternative asset types that trade on the main exchanges (Nasdaq, NYSE).

They were trading at valuations which were giving yields that seemed a bit excessively high (e.g. in the low double digit range), so I did some further digging and discovered these classes of assets were asset-backed securities.

These were the classes of securities that got a very bad reputation as being “junk” as they were backed with mortgage-based products.  However, there are classes of asset-backed securities that are backed with legitimate assets.

A lot of these securities have been trading at significant discounts to their underlying assets, which creates an arbitrage opportunity – the reason why this gap has not been closed is that trading on the asset-backed securities is very light and it is generally not worth it for high-volume institutions to take dollars when they’re going for millions.

Anyhow, I am watching these very closely since after doing all the research I’m fairly convinced that some relatively less risky double digit returns can be realized with some of these.  Unfortunately, I can’t be more specific since the liquidity of these products are horrible (e.g. $30,000/day traded with 3% bid/ask spreads is typical), but when I’ve executed some trades I’ll divulge some more information.

There are a few valuable lessons to be learned during this Olympics.

First, if anything you see has been designed to be on television, then chances are a significant part of it is likely to be spun or doctored. While I was away from civilization during the opening ceremonies of the Olympics, I was not entirely surprised to hear that parts of it weren’t real – including the computer-graphic aided fireworks of the footsteps walking the sky.

This is consistent with my theme that photos and (soon in the future) videos that are seen will have no authenticity as the possibility of seamlessly doctoring them continues to grow exponentially.

Secondly, if you are a ruler of a large country and you want to do something under the radar of America, do it during the opening ceremonies of the Olympics. In this case, when Russia invaded Georgia (which by all accounts was a blowout military victory by Russia), this was the true world event that happened over the past week.

While the immediate objectives of the invasion is to remove a pro-western government in Georgia, the take-home message here is that Russia is “back”, having shed most of the economic baggage associated with the Soviet era. Their strategic objectives are quite obvious – exert influence over the Middle East and control the oil supplies, and also exert influence over Europe, which is increasingly reliant on oil and gas flows coming in from pipelines controlled by Russia.

It’s imminently clear that the best chief executive officer on this planet this decade has not been Sergei Brin or Larry Page (founders of Google), but rather Vladimir Putin. Most of Putin’s decisions have been sharper than a Mach 3 razor and he has not taken his eyes off the main strategy of bringing Russia back to the world stage as a superpower.

It may eventually get to the point where we will look at the 10 years that we have wasted babbling about climate change, an issue which we have very little influence over, when we really should have been asking ourselves why we can’t defend ourselves against a country that is a little more than 1,100 miles away across the North Pole.

Since school, we were shown maps with borders that appeared to be immutable – the borders of the United States, and most of Europe and Asia haven’t changed over the past 30 years, with the exception of the collapse of the USSR. I suspect that over the next 30 years this will likely not be the case.

This area undoubtedly is one of the nicest places in the province, situated in the northwestern corner of Vancouver Island. The area is very remote.

It takes 17 kilometers of hiking in to get to the camping spot, but it was well worth it. Unfortunately, words cannot describe it very well, but pictures can do it somewhat – click on the link below and it will take you to a photo album of some selected pictures.

2008-CapeScottPark

The most difficult part of this trip was the logistics and the sheer distances involved – in order to get to the beach at a respectable hour, you have to arrive at the parking lot in the morning. Since the parking lot is about 70km west of Port Hardy on an bumpy gravel road that is otherwise used by Western Forest Products, that means you should leave Nanaimo at around midnight. In order to get to Nanaimo at midnight, you should take the 10:45pm ferry from Tsawwassen. In other words, either plan to spend an extra night on the island, or do the drive overnight. North of Nanaimo there’s hardly anybody on the roads past midnight and even less people north of Campbell River.

The other logistical constraint is being able to lift 40 pounds of stuff on a pack for the distance required, but that went well.

The water availability at the beach wasn’t bad – there was a trickle of water available that came from a creek. The colour of the water looked like apple juice, but boiling the water was adequate and the taste of the water was fine – just the appearance was a little disturbing.

After doing this trip, I felt physically and mentally exhausted and needed a day and a half to recover, but I’m getting back to normal again.

Will be back on or around August 12th. Been going around the southern part of BC and will be on Vancouver Island, safely away from the civilized world.