Wednesday, October 28, 2009
Upcoming subjects
Just to give a heads-up, following my comments about the financial aspects of living and doing business in Montreal (and Quebec in general), triggered by the city hall leaders' debate, I will write a short piece on the financing of international trade, a subject that is very dear to politicians, but who don't have a clue on what it really takes. I will contend that two things are really important: the financing of international trade and the ability of SMEs (especially in the food sector, where we have an abundance of such companies outside Montreal) to export somewhere other than the US through trade intermediaries.
Leaders' debate on Montreal's economic future - follow up
I had some very interesting comments from people reading the blog and I wanted to quickly address them. These comments were mostly regarding the urban sprawl and the migration of families towards the suburbs, taking with them obs, investment funds and creating a whole lot of traffic. None of the candidates except Mr. Bergeron had a realistic view of the problem and Mr. Bergeron had a plan that involved the increase of the transport budget by 6.3% per year for 4 years to achieve in the fifth year a mere 10% reduction in traffic. Other measures he would take would result in the loss of "only" 100,000 people in the next ten years to the suburbs. The realistic view I think is the very long term one, and we cannot approach this from the political "I need a second mandate so I will make all the unrealistic promises necessary for that to happen" point. However, it seems ingrained in our political fabric to do so... I personally left the downtown for the same reasons as everybody else: it's crowded, it's loud, it's expensive, and if I want to get some culture (e.g. theater, movies, shows, etc.), I am 30 minutes away. Moreover, if I want to have a family, I want my kids to be able to play outside safely. The only way to reverse this trend is to take the example of Outremont and create villages within the city, encourage the creation of small "downtowns". Another trend that the candidates are not taking into consideration is the virtual office, where people can work from their homes, which means that a physical location does not become such an important issue.
In conclusion, I am not even sure that the migratory trend and the traffic can even be resolved, but there would certainly be improvements if the "village within the city" concept would be considered, if the fiscal and financial aspects of living in Montreal (and Quebec in general) would be scrutinized and if the telecommute trend would also be taken into consideration.
In conclusion, I am not even sure that the migratory trend and the traffic can even be resolved, but there would certainly be improvements if the "village within the city" concept would be considered, if the fiscal and financial aspects of living in Montreal (and Quebec in general) would be scrutinized and if the telecommute trend would also be taken into consideration.
Tuesday, October 27, 2009
Leaders' debate on the economic future of Montreal before the Board of Trade of Metropolitan Montreal
The three "community leaders" running for the mayor of Montreal position in the 1st of November 2009 municipal elections in Montreal crossed their wits today, October 27, 2009 in a debate that was causing embarrassment due to the lack of discipline, charisma and substance.
The incumbent mayor, Mr. Tremblay, has obviously the most charismatic presence, and he is the one that can sell even the most benign ideas with success. Unfortunately, his ideas are benign, and even though not ridiculous or antiquated as those of Mrs. Harel, they are not looking toward the future but rather towards the next mandate. He is right to want to solidify the administrative base acquired by the city after long and tedious struggle with decentralization, but what will truly bring Montreal into the 21st century and make it a real contestant in the fight against Toronto (any Montrealer will tell you that Toronto is our benchmark)?
Mrs. Harel seemed completely out of place, not only due to her excessive mannerisms and her lack of respect for the process but mostly because of her antiquated ideas of wanting to grow the administrative apparatus in order to shorten the lead time on projects and her insistence that Montreal be in the race for the next World Expo because they bring prestige, like the Olympics... quick reality check: the World Expo and the Olympics are not the same. The World Expo is for an emerging metropolis, hungry for the attention (any kind, really), not for a world renowned city like Montreal.
Mr. Bergeron, despite the fact that he was as dry as a stone, had more common sense than the others, with a real vision for a cleaner, more environmentally friendly Montreal, attracting families back to the city from the suburbs. However, his realism was damaging the quality of the presentation, and the fact that it would take a 6.3% increase per year in the transport budget over four years in order to reduce Montreal traffic by a mere 10% in the fifth year, or that in ten years his program would be able to decrease the Montreal population by only 100,000 rather than one million had difficulty contending with the political discourse of mayor Tremblay.
Despite the fact that keeping families in Montreal, increasing the work opportunities for local talent and improving transport and governance were the main themes, the solutions proposed (some that even went beyond the mayoral responsibilities and into provincial and federal domain) never took into consideration the real issues that make Montreal Eastern Canada's "ugly little duckling": fiscal and political. How can a family pay the premium for city real estate, cramped up and children-unfriendly, take the increase in energy costs and transport costs on top of general inflation with all the Federal, Provincial and ultimately Municipal taxes imposed on them? If I want to put some money aside for my retirement, I need some to be left over and, moreover, the average salary in Montreal for a specific job is on the lower side when compared to other international-level cities. As for companies, how can they establish their headquarters in Montreal when they cannot offer competitive wages because themselves are taxed at high levels (even though not ridiculous) and access to financing is difficult and tedious? This issue is linked to the political issue as well, which is not only the over-taxation of the middle-class and of property for sub-par services but also regarding the notorious political instability of Quebec as a Province. I understand that this is not of the mayor's resort, but to ignore these issues would be irresponsible.
All this to say that on Sunday, as the people are going to the urns to vote, it will be, like always, a difficult choice to pick "the least worst candidate" from the pile.
The incumbent mayor, Mr. Tremblay, has obviously the most charismatic presence, and he is the one that can sell even the most benign ideas with success. Unfortunately, his ideas are benign, and even though not ridiculous or antiquated as those of Mrs. Harel, they are not looking toward the future but rather towards the next mandate. He is right to want to solidify the administrative base acquired by the city after long and tedious struggle with decentralization, but what will truly bring Montreal into the 21st century and make it a real contestant in the fight against Toronto (any Montrealer will tell you that Toronto is our benchmark)?
Mrs. Harel seemed completely out of place, not only due to her excessive mannerisms and her lack of respect for the process but mostly because of her antiquated ideas of wanting to grow the administrative apparatus in order to shorten the lead time on projects and her insistence that Montreal be in the race for the next World Expo because they bring prestige, like the Olympics... quick reality check: the World Expo and the Olympics are not the same. The World Expo is for an emerging metropolis, hungry for the attention (any kind, really), not for a world renowned city like Montreal.
Mr. Bergeron, despite the fact that he was as dry as a stone, had more common sense than the others, with a real vision for a cleaner, more environmentally friendly Montreal, attracting families back to the city from the suburbs. However, his realism was damaging the quality of the presentation, and the fact that it would take a 6.3% increase per year in the transport budget over four years in order to reduce Montreal traffic by a mere 10% in the fifth year, or that in ten years his program would be able to decrease the Montreal population by only 100,000 rather than one million had difficulty contending with the political discourse of mayor Tremblay.
Despite the fact that keeping families in Montreal, increasing the work opportunities for local talent and improving transport and governance were the main themes, the solutions proposed (some that even went beyond the mayoral responsibilities and into provincial and federal domain) never took into consideration the real issues that make Montreal Eastern Canada's "ugly little duckling": fiscal and political. How can a family pay the premium for city real estate, cramped up and children-unfriendly, take the increase in energy costs and transport costs on top of general inflation with all the Federal, Provincial and ultimately Municipal taxes imposed on them? If I want to put some money aside for my retirement, I need some to be left over and, moreover, the average salary in Montreal for a specific job is on the lower side when compared to other international-level cities. As for companies, how can they establish their headquarters in Montreal when they cannot offer competitive wages because themselves are taxed at high levels (even though not ridiculous) and access to financing is difficult and tedious? This issue is linked to the political issue as well, which is not only the over-taxation of the middle-class and of property for sub-par services but also regarding the notorious political instability of Quebec as a Province. I understand that this is not of the mayor's resort, but to ignore these issues would be irresponsible.
All this to say that on Sunday, as the people are going to the urns to vote, it will be, like always, a difficult choice to pick "the least worst candidate" from the pile.
Wednesday, October 21, 2009
Why can't commodity traders bridge the gap between old school and tech?
Since I've been working in the dairy commodity trade, I can understand why these "road warriors" can't actually bridge the evolutionary gap: because if you were the missing link in the evolutionary process, you would probably get along with your ancestors as well as your progeny.
The trader is like the last existing cowboy, using the six-shooter because it's more reliable than those semi-automatics, kicking-up a dust storm whenever he has a chance and then making up with those involved, paranoid beyond measure concerning the small amount of assets and goodwill he has because that's what's going to save him in the wilderness. Yes, he also uses emails, but he'd rather use the fax, if given the choice. Anyway, a lot of his clients don't even like this whole IT revolution anyway. There is a lack of "humanity" in the screen, that's why they cling to the phone receiver.
These are the SME traders. Of course, there are large companies, like Fontera, in New Zealand, that are making advances in the tech side, but they seem to only stir resentment in the old school of trade, and allegations of conspiracy theories to "control the international markets". Fontera has put in place the first virtual market place for dairy commodities called globalDairyTrade. This is a place where pre-approved buyers can bid on certain quantities over a period of maximum 3 months. Once the tender is closed, the results are made public. Some people in the trade say that these results influence the direction prices are going to take on the world market (Fontera is already controlling 50% of the international dairy trade and has always tried to push the prices in the direction that would be most beneficial for them in the next season). Truth or fiction, no wonder our good ole' boys are afraid of the system...
But if you believe in the laws of the market, what's there to be afraid of? The system cannot really influence the laws of offer and demand, at least not in the long run and not by much. But arbitrage is the trader's bread and butter. They live from the market's imperfections, and any attempt to bring the market closer to it's ideal state of balance would be an attempt on their bread-winning abilities. No wonder the traders dream of the past as "the good old days".
In the same time, technology has allowed the trader to gather more information about the market, faster and in a more reliable way. Everything from emails from their clients and suppliers to the market information and currency forecasts found on the Internet, which has become a precious tool in their business.
So how come the trader is not able to reconcile his need for secrecy and arbitrage with the increased market efficiency brought upon by the advent of more and more advanced information technology? I believe that in fact the gap that they have failed to bridge is the "business intelligence" gap. They are not able to use technology in order to leverage the information generated in the course of their business, combine it with the market information and create profitable trading strategies. Most of the attempts made by trading companies to create software that could capture and treat this information and knowledge have had mitigated success or right out failure, due to the lack of or misuse of the software by the users, the old cowboys, who remain stubbornly opposed to changing their good old ways.
What would be the solution?
The trader is like the last existing cowboy, using the six-shooter because it's more reliable than those semi-automatics, kicking-up a dust storm whenever he has a chance and then making up with those involved, paranoid beyond measure concerning the small amount of assets and goodwill he has because that's what's going to save him in the wilderness. Yes, he also uses emails, but he'd rather use the fax, if given the choice. Anyway, a lot of his clients don't even like this whole IT revolution anyway. There is a lack of "humanity" in the screen, that's why they cling to the phone receiver.
These are the SME traders. Of course, there are large companies, like Fontera, in New Zealand, that are making advances in the tech side, but they seem to only stir resentment in the old school of trade, and allegations of conspiracy theories to "control the international markets". Fontera has put in place the first virtual market place for dairy commodities called globalDairyTrade. This is a place where pre-approved buyers can bid on certain quantities over a period of maximum 3 months. Once the tender is closed, the results are made public. Some people in the trade say that these results influence the direction prices are going to take on the world market (Fontera is already controlling 50% of the international dairy trade and has always tried to push the prices in the direction that would be most beneficial for them in the next season). Truth or fiction, no wonder our good ole' boys are afraid of the system...
But if you believe in the laws of the market, what's there to be afraid of? The system cannot really influence the laws of offer and demand, at least not in the long run and not by much. But arbitrage is the trader's bread and butter. They live from the market's imperfections, and any attempt to bring the market closer to it's ideal state of balance would be an attempt on their bread-winning abilities. No wonder the traders dream of the past as "the good old days".
In the same time, technology has allowed the trader to gather more information about the market, faster and in a more reliable way. Everything from emails from their clients and suppliers to the market information and currency forecasts found on the Internet, which has become a precious tool in their business.
So how come the trader is not able to reconcile his need for secrecy and arbitrage with the increased market efficiency brought upon by the advent of more and more advanced information technology? I believe that in fact the gap that they have failed to bridge is the "business intelligence" gap. They are not able to use technology in order to leverage the information generated in the course of their business, combine it with the market information and create profitable trading strategies. Most of the attempts made by trading companies to create software that could capture and treat this information and knowledge have had mitigated success or right out failure, due to the lack of or misuse of the software by the users, the old cowboys, who remain stubbornly opposed to changing their good old ways.
What would be the solution?
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