Frank Giustra on the Economy

• Shopping | Obituaries | Horoscopes | Lotteries

• Search

• Search vancouversun.com...

• Search

• YellowPages

• Find a business or person

Weather Centre

0

Overcast

Vancouver

• More

• Subscriber Services

• Start Home Delivery

• Digital Edition

• Mobile Products

• canada.com network

Newspapers

◦ National Post

◦ Victoria Times Colonist

◦ The Province (Vancouver)

◦ Vancouver Sun

◦ Edmonton Journal

◦ Calgary Herald

◦ Regina Leader-Post

◦ Saskatoon StarPhoenix

Page 1 of 20

12/5/2011http://www.vancouversun.com/news/been+down+this+path+before/5798026/story.html

◦ Windsor Star

◦ Ottawa Citizen

◦ The Gazette (Montreal)

◦ DOSE

◦ Postmedia Community Publishing

◦ Nanaimo Daily News

• Log in

• Register

In Monday’s newspaper

Whistler Film Festival wraps

Read Monday’s Vancouver Sun to find out what happened during the weekend at the Whistler Film Festival.

• more »

The Vancouver Sun

Top Picks

Timeless beauties: Hottest actresses...

These stunning actresses prove that beauty can get better with age. Take a look at some of Hollywood’s hottest starlets who

are over 40 -- but you’d never know it.

• more »

Page 2 of 20


Weather Centre

0°C

Overcast

Vancouver

• Detailed Forecast

•

• News

• Opinion

• Business

• Sports

Page 3 of 20


• Entertainment

• Life

• Technology

• Travel

• Topics

Page 4 of 20


•

• Jobs

• Cars

• Homes

• Classifieds

Don't miss:

• Holiday guide 2011

• Sun Run

• Adopt-a-school

• Student videos

• Vancouver 125

• NFL pool

• eStore

• Today's Paper

• Video

» RSS

Page 5 of 20


We’ve been down this path before

As civilizations mature, they tend to make the same mistakes. We are in the

middle of one of those mistakes right now

By Frank Giustra, Special to The Vancouver SunDecember 1, 2011

49

2

Comment

8

• Story

• Photos ( 1 )

Recommend

Page 6 of 20


The type of economic restructuring both America and

Europe need is so difficult and painful that, even if the

current political systems were functioning, it would still

take many years and the kind of courage and sacrifice

that does not seem to exist.

Photograph by: Nease, MCT

“What has been will be again, what has been done will be done again; there is nothing new under the sun.” Ecclesiastes

1:9

If, as an investor, you are looking at the U.S. and Europe, and are confused by the barrage of sombre news relating to

economic issues — such as stubbornly high unemployment, collapsing housing prices, soaring government-debt levels,

waning consumer confidence and a precarious banking system — I don’t blame you. As far as I can tell, so are the legions

of experts, media and politicians, those we have traditionally trusted to explain such complex economic and financial

matters to us. And why have all the herculean efforts to save us from these maladies failed so miserably, despite the fact

that we seem to be drowning in remedies?

It seems as though America and Europe are going down for the count. As Canadians, we have a solid financial system and

a stable government that functions as it was designed to do. And yes, we Canadians can take comfort that we are somewhat

shielded from the profligate and irresponsible policies of our American and European friends, but given their sheer size and

our inter-connectedness, we can’t completely escape the collateral damage when the stuff eventually hits the fan.

As the above Ecclesiastes quote (generally attributed to King Solomon) suggests, history is replete with examples of

repetitive behaviour. Observing the behaviour of today’s policy-makers, I suspect this quote is as valid today as it was more

than two millennia ago.

We are in an unholy mess and however loudly the sane few may plead, the chances it will get turned around without

disaster striking are slim indeed. The type of restructuring both America and Europe need is so difficult and painful that,

even if the current political systems were functioning, it would still take many years and the kind of courage and sacrifice

that does not seem to exist. One of these days, some unforeseen event, akin to the child in Hans Christian Andersen’s The

Emperor’s New Clothes declaring “But he isn’t wearing anything at all!” may serve as the tipping point that brings the

entire financial system to its knees.

To get a proper understanding of the current situation, we should start by ignoring all the noise propagated by the experts,

media and elected officials.

Our global financial system is based on the very simple and fragile concept of confidence. So you can’t really blame the

policy-makers and politicians for not telling the public the “entire” truth; feeding us constant reassurances, peppered with a

little mendacity. And to make things worse, it’s just human nature for us, the recipients of this information, to reject the

idea that the worst can happen, hence our willingness to find reassurance in the misinformation we are fed. But folks, the

worst CAN happen.

I doubt the citizens of Imperial Rome ever considered that their empire, which stretched from the Atlantic Ocean to the

Caspian Sea, would eventually collapse on itself from the sheer weight of effort and resources needed to maintain it, or that

16th-century Spaniards ever thought their high standard of living, sustained by the plundered riches of the New World,

would disintegrate once the supply of gold dwindled.

Or that the upper-class 19th-century Brits leading up to 1918 ever fathomed that the sun could cease to set on lands ruled

by the British Empire. History has shown that when great nations mature and over-extend themselves, they revert to the

paths of least resistance: borrow and/or print money. They all did it and they all failed; this time will be no different.

Page 7 of 20


If Einstein’s definition of insanity — doing the same thing over and over again and expecting different results — holds

true, we should move to have all of America’s and European policy-makers locked up in padded cells.

This hubris — holding on to time-worn ideas about what made a nation great in the first place, but ignoring the hard

sacrifice that went with it — has prevailed throughout history and is as relevant today as it was for every great nation that

came before America and the European Union.

Still, the “experts” continue to reassure us that America was built on a foundation of entrepreneurial spirit; we can get

ourselves out of any mess. (At least the Europeans know better than to preach such fantasy.) I sense that some of those

ideas don’t hold up as well as they once did, especially as the world outside of America has become highly competitive.

At some point in the evolution of a great nation must come a time when the simple math of mounting debt, lack of

productivity and printed money plays havoc with ingrained beliefs. This is one of those times in history.

Therefore, as much as I would love to provide solutions to this mess-in-waiting, I would rather give some thoughts as to

how to protect yourself.

Consider the following precaution as a condom for your portfolio or savings: protection against STDs (savings’ total

destruction).

The bottom line is that the money needed to bail out Europe and to fund America’s spiralling debt and future unfunded

obligations is in the tens of trillions. IT DOES NOT EXIST. It has to be created by printing money in massive quantities,

and despite all the rhetoric you will hear against such policies, in the end it’s the path of least resistance. Printing money is

an invisible tax on savings, much easier to initiate, than, say, raising taxes or cutting back on services and entitlements.

However, there is a lag on its negative effects, a perfect policy tool for elected officials who inevitably kick the can down

the road to future governments. Policy-makers in most democracies live in a 24/7 campaign mode, which prevents them

from making difficult, long-term and most certainly unpopular decisions. Simply said, we operate in a system not

conducive to decisive action.

Witness last week’s dismal failure by the U.S. Congressional Super Committee to reach agreement after months of bitter

negotiating on what was essentially a ridiculously minuscule reduction of the deficit over the next decade and you get the

picture.

There will be a quantitative easing three (QE3) in the U.S. and the European Central Bank (ECB) will eventually follow

suit in printing money in American-style amounts, despite Germany’s resistance to date.

If the world continues to print money, currencies will be debased against “tangible things” such as gold, farmland,

exclusive real estate, rare art and collectibles, select equities to list a few. Therefore, having your savings invested in cash,

bonds, money and markets, could mean a complete destruction of those savings by runaway monetary inflation.

Having said that, timing is an issue you must weigh carefully. There is a chance that another financial crisis such as we

experienced in 2008 would cause the value of real assets to go down and, by definition, make cash holdings more valuable

for a short period of time, until further “printing” reverses the trend once more.

I would recommend owning plenty of gold and, depending on your available resources, select real estate and collectible art,

which works well for wealth preservation, and having an adequate pool of cash, which would only be used to acquire

additional “real assets” in the event of another crisis.

It’s your wealth, your life savings; you are the only person who can protect it.

No one else really cares.

Wake up and smell your future.

Frank Giustra is a Vancouver business executive with interests in the mining and filmmaking industries, and a noted

philanthropist.

© Copyright (c) The Vancouver Sun

Page 8 of 20


• E-mail this Article

• Print this Article

• Share this Article

Location refreshed

More on This Story

• Submit a letter to the Vancouver Sun

• Full Vancouver Sun op-ed coverage

Story Tools

• E-mail this Article

• Print this Article

Font:

• *

• *

• *

• *

• *

Image:

• *

• *

• *

• *

Sponsored By:

Page 9 of 20


The type of economic restructuring both America and

Europe need is so difficult and painful that, even if the

current political systems were functioning, it would still

take many years and the kind of courage and sacrifice

that does not seem to exist.

Photograph by: Nease, MCT

• E-mail this Gallery

• Print this Gallery

• Share this Gallery

Photo Galleries »

More Photo Galleries

Page 10 of 20


Photos: Flames drop in on Canucks...

Calgary Flames and Vancouver Canucks renew rivalry...

• more »

Photos: Rogers Santa Claus Parade...

Rogers Santa Claus Parade 2011

• more »

Timeless beauties: Hottest actresses...

These stunning actresses prove that beauty can get...

• more »

More Photo Galleries »

New to the site?To leave a comment, you need to Register.

Already a member?To comment, please Login.

What Do You Think?

8 comments Sort by: Newest to Oldest

Score: 0Diamond Lou

11:26 PM on 12/3/2011

Demographic trends will reinforce Giustra's forecast. You'd be wise to heed his

predictions IMO.

Report Abuse

Login or Register

Questions? - Visit our FAQ

Page 11 of 20


Score: 0anon958032305

12:38 PM on 12/3/2011

collectible and rare art??????? There is such an over abundance of"art" on the market

today that when the crunch comes 80% of it will become worthless.

human values project?? which of course, you will be their leader and demand a 6 figure

salary telling us haw to live. Not!! What is needed is a high interest rate on all loans, a

tax on speculation, and a major reduction in special interest group influence .

Report Abuse

Score: 0Brian Strader

7:56 PM on 12/2/2011

Apologies. The last line of my last post was cut off.

The global Occupy movement is the visible sign and herald of this necessary

organization.

The Human Values Project will offer alternative strategies to the current global financial

system, one which could transcend money as a medium of exchange and potentially

even The Market itself, like an internationally coordinated barter/credits system. The

Project will have a social function as well, analyzing the beliefs and attitudes that create

and reinforce dysfunction like homophobia, sexism, xenophobia, racism. Its agenda will

be to create a strategy of better human living. Its members will be comprised of

international human rights activists and professionals in psychology, history,

criminology, etc. whose credentials will guarantee the moral suasion necessary to shame

governments into vital change. Shame is the only way to get change from governments

now.

Report Abuse


7:43 PM on 12/2/2011

Frank Giustra: "The type of restructuring both America and Europe need is so difficult

and painful that, even if the current political systems were functioning, it would still take

many years and the kind of courage and sacrifice that does not seem to exist....Simply

said, we operate in a system not conducive to decisive action."

Agreed. All true.

Frank Giustra: "Therefore, as much as I would love to provide solutions to this messin

waiting, I would rather...."

Since Mr. Giustra has none, I would love to provide a solution. It is called The Human

Values Project. It is an organization that needs to be created. I seriously doubt any

individual government will create it, since its scope would be international. The United

Nations would have to create it or a private foundation. The Human Values Project

would examine the beliefs of the human species, including those which create The

Market. The global Occupy movement is the visible sign and herald of this necessary

organiz

Report Abuse


7:26 PM on 12/2/2011

Frank Giustra: "I would recommend owning plenty of gold and, depending on your

available resources, select real estate and collectible art, which works well for wealth

preservation, and having an adequate pool of cash, which would only be used to acquire

additional "real assets" in the event of another crisis."

This is worse than a conservative strategy. This is the financial equivalent of a hippy

"drop out and get back to the land" strategy. The Market is cyclical: boom and bust.

We're in a bust time now, but what is required is The Next Big Thing, like a personal

computer in every home. That will get us out of this recession. That, and spending.

Spending, not hoarding your money, will get us out of the current recession.

Report Abuse


7:18 PM on 12/2/2011

Frank Giustra: "One of these days, some unforeseen event, akin to the child in Hans

Christian Andersen's The Emperor's New Clothes declaring 'But he isn't wearing anything

at all!' may serve as the tipping point that brings the entire financial system to its knees."

Agreed. An excellent point. It will be the unexpected that will destroy us, and it may be

as simple as a Eurozone government refusing to bow to imposed financial "solutions" of

France, Germany, and the IMF.

Report Abuse

Page 12 of 20


Related Topics

• Europe

• United States

• Opinion

Frank Giustra: "Our global financial system is based on the very simple and fragile

concept of confidence."

That's why it is failing now. The financial system needs to be rebuilt on a far stronger and

saner foundation.

Frank Giustra: "But folks, the worst CAN happen."

It can and it will if fundamental changes are not made, and not just to the global

financial system.


7:05 PM on 12/2/2011

Frank Giustra: "And yes, we Canadians can take comfort that we are somewhat shielded

from the profligate and irresponsible policies of our American and European friends...."

I challenge Mr. Giustra to define "profligate and irresponsible". No examples were given.

Therefore, the statement is rhetorical and irrelevant. Canada is by no means holierthan

thou. Our government does the exact same thing as all the others.

Frank Giustra: "We are in an unholy mess...."

No, we are not. We are in a global accounting crisis of national debt financing. Nothing

more. This idea of a Eurozone Crisis (note capitals) is entirely mediagenerated, and the

critical thinker has to question whose agenda is at work and who profits from the

hysteria.

Report Abuse

Score: 0TommyH

11:50 AM on 12/2/2011

Does Mr. Giustra think that Vancouver and Lower Mainland residential property, with

the market where it is now (high compared to other cities), qualifies as "select real

estate"?

Report Abuse

Page 13 of 20


Hot photos and videos

• News

• Sports

• Entertainment

• Business

Hockey

Photos: Flames drop in on Canucks

Calgary Flames...

• more »

Rogers Santa Claus Parade 2011

Photos: Rogers Santa Claus Parade 2011

Rogers Santa...

• more »

Top Picks

Timeless beauties: Hottest actresses over 40

Page 14 of 20


These stunning...

• more »

Football

Junior football takes over BC Place

Football fever...

• more »

Christmas

Cute kids and pets with Santa

Send us your...

• more »

Entertainment

Wild, weird celebrity Twitter pics

Sexy, scary ...

• more »

Page 15 of 20


More photos >>

Most Popular News

• Most Read

• E-mailed

• Commented

• Uproar in Gitxsan First Nation after support for Enbridge's Northern Gateway pipeline announced

• Bands, dancers accompany Santa during his annual parade through Vancouver

• UFC Ultimate Fighter finale results: Bisping dominates Miller

• Canucks Gameday: Luongo to make first start in three weeks against Flames

• Rams achieve epic victory against Hawks

• Vancouver to Toronto WestJet flight diverted after alleged bomb threat

more » RSS

• "The Amazing Race Australia" has landed at YVR


• Vancouver to Toronto WestJet flight diverted after alleged bomb threat

• Small plane flips over at Kelowna International Airport

• Rogers Santa Claus Parade 2011 draws large crowds to downtown Vancouver

• Sex sells in any income bracket

more » RSS

• Canada's anti-Kyoto stance sours climate-change discussions in Durban

• 55 days of teacher bargaining but still nothing

• B.C. woman arrested for 18-year-old Ontario child abduction case

• Gitxsan First Nation take ownership stake in Northern Gateway pipeline project

• Untitled Article

• Labour board sides with teachers over report cards, pay

Sponsored By

Breaking News Alerts

Sign up to receive e-mail alerts on breaking news from The Vancouver Sun.

[email protected]

Submit

• Our Privacy Statement

More News Headlines »

Page 16 of 20


Latest updates

Julian Assange can pursue extradition fight in Britain:

court

WikiLeaks founder Julian Assange is granted permission to apply to England's highest court in a final attempt to block his

extradition to Sweden over ...

• more »

20 minutes ago

Comments (0)

• Photos: Timeline of the Julian Assange saga

• The whistleblower: Assange’s life overshadows his work

• Internet has become 'surveillance machine': Julian Assange

• WikiLeaks "spy files" show global surveillance industry

Local updates

Italy pushes deep austerity to avoid Greek-style 'collapse'

4 minutes ago

Former negotiator says Canada blocking Durban talks

Two Mounties injured in Alberta standoff

Ads by Google

Page 17 of 20


Aftershock is Eye-Opening

Susan R. from Montgomery, Ala. is

raving about her free copy. Get it.

www.newsmax.com

o katrina

discover what's next in music by

watching the band black lips.

vitaminwater.com/music

How bad is the U.S. Debt?

Five Simple Ways to End America’s

Spiraling National Debt. Free RPT

MoneyMorning.com/US_Debt_Report

Inside The Vancouver Sun

• Home

• News

• Opinion

• Business

• Sports

• Entertainment

• Life

• Health

• Technology

• Travel

• Jobs

• Cars

• Homes

• Classifieds

Photos: Heating Advent: Photos: Weekend

Page 18 of 20


• Don't Miss

• Holiday guide 2011

• Sun Run

• Adopt-a-school

• Student videos

• Vancouver 125

• NFL pool

• eStore

• Today's Paper

• Video

» RSS

• Most Popular


• Bands, dancers accompany Santa during his annual parade through Vancouver

• UFC Ultimate Fighter finale results: Bisping dominates Miller

» RSS

• Formats

• Sitemap / RSS

• Contests

• Blogs

• Columnists

• Photo Galleries

• Videos

• Mobile

• iPad App

• Vancouver Sun

• About Us

• Contact Us

• Work for Us

• Advertise with Us

• Subscribe to the Print Edition

• Rate Our Delivery Service and WIN

• Newspaper in Education

• Tools

• Search vancouversun.com...

Search

• Search for a Job

• Buy/Sell a Car

• Real Estate Listings

• SwarmJam Sweet Deals

• Place a Classified Ad

Page 19 of 20


• E-mail Alerts

• canada.com Logo

• About canada.com

• Privacy Statement

• Terms

• Copyright & Permissions

• © 2008 - 2011 Postmedia Network Inc. All rights reserved.

Unauthorized distribution, transmission or republication strictly prohibited.

Page 20 of 20


Date post:	08-Feb-2016
Category:	Documents
Upload:	jne6379
View:	10 times
Download:	0 times

Frank Giustra on the Economy

Documents