Post 258

A snapshot of what’s going on in the world’s economy.  Financial Ructions and book reviews can be a bit more technical so feel free to skip them.  See disclaimer at the end of this note.

Cynne and I are visiting our daughter in Calgary for the Stampede.


  • Another housing rant.
  • Cruise line operators are hitting records in terms of bookings and pricing.
  • Inflation robbing you as you improve your job skills.
  • Denny’s sales are falling.
    • And a quick history.
  • Inflation in Canada is rising again.


Willful Delusion

A Globe and Mail opinion piece by Paul Kershaw (policy professor at UBC).

  • The title of the piece: Our kids think we’re rigging the system against them.
    • He hosted a townhall with Trudeau and writes what amounts to an apology piece for the mess that our prime minister has contributed to.
  • Kershaw rightly points out that past governments (and this one) irresponsibly failed to deal with fully funding future retirement needs of Canadians, such as Old Age Security (OAS).
  • Towards the end of the article, Kershaw effectively says that Trudeau won’t do the right thing because it will hurt his re-election chances i.e. baby boomers and Gen Xers won’t stand for their house prices declining.
  • PM: A few comments.
    • I’ve been writing about this intergenerational redistribution of wealth for many years.
    • However, I do believe that it is less about “rigging” and more about willful delusion.
      • And policymakers (central banks and politicians) and academia are entirely to blame.
      • It was bad enough that our generation wasn’t funding our own retirement, but we doubled-down by creating a housing affordability crisis for the next generation:
        • A crisis from which we benefit.
      • The crisis is a result of fallacious wealth effect doctrine that was in particular espoused by former Fed Chairman Ben Bernanke and much of what ails western democracies today can be laid at his feet.
        • All other central banks followed his lead.
      • Driving interest rates to zero and exploding the population higher with completely irresponsible levels of immigration to drive housing prices higher does NOT create net wealth for society.
        • It simply redistributes it.
      • A wealth tax on principal residences is a really bad idea as it just puts more money in the hands of our spendthrift/wasteful politicians.
        • And encourages them to drive house prices even higher to collect more taxes.
      • A capital gains tax on principal residences is also a bad idea except for one unique circumstance which I discuss in my book.
      • The obvious answer is that house prices need to come down.  No one should be making money on their home.
        • And while no one should be making money on their home i.e. something for nothing, no should be losing money either.
        • There is a way to help first time buyers who may suffer a significant loss with prices going down, which I discuss in my book.
      • The way to get home prices back to “fair” prices is three-fold:
        • Normalised interest rates determined by market players with actual skin in the game.
    • It’s a joke that our central bankers can’t wait to reduce interest rates to abnormally low levels in order to keep the asset price inflation/intergenerational wealth distribution party going.
      • Note Tiff Macklum (Bank of Canada): after recently dropping interest rates he told reporters to “enjoy the moment.”
      • What a joke.  He’s clearly more interested in popularity than doing the right thing.
      • Enjoy the moment of worsening the housing affordability crisis.
    • The only thing that’s stopping central banks from lowering rates is still high consumer price inflation.
    • Rather, it should be an understanding/awareness that apart from redistributing wealth, abnormally low interest rates detract from the productive capacity of the economy i.e. they are really bad for longer-term economic prosperity and social cohesion.
    • Those interested in the damage that low interest rates cause should read The Price of Time by Edward Chancellor.
      • Some of you will remember my book review of this from last year.  If you want my notes let me know.
        • Second is to stop driving population growth far in excess of the country’s ability to increase the housing stock as well as build out the country’s infrastructure.
    • Anyone trying to drive anywhere in the greater Toronto area can attest to this.
      • Reduce the outrageous levels of fees and taxes on new home development, which in Toronto and Vancouver can amount to almost a third of the cost of a new home.
    • These fees and taxes are insidious as they are simply added to the home price and consumers don’t put the blame of high house prices where it rightly belongs i.e. government.
    • These three steps, combined with reducing barriers to new homes being built would quickly bring down home prices and end the housing affordability crisis.
    • However, politicians are increasingly having their “deer in the headlights” moment where they want to end the affordability crisis but want to “protect” the value of peoples’ homes.
    • They can’t do both.  And as the value of our homes was unfairly obtained at the expense of our children due to bad policy decisions, the path should be obvious.
    • But many of us will continue to claim we either worked harder than our kids, or saved more, or were more responsible.
    • None of this is true.  We just got lucky and it’s simply willful delusion that allows us to feel good about our lot in life and convince ourselves that it doesn’t come at someone else’s expense.


In a letter to the FT, Jonny King points out that wages rising in line with inflation is still theft.

  • If inflation is 3% but your wages also rise 3% then you are no worse off.
  • Yes, your standard of living may not be declining but it’s not rising either.
  • Over time you train, get better at your job etc. and the path should be one of an improving standard of living, not stagnant.
    • Your efforts to improve are taken from you by the government.
  • Not only that, but the official inflation numbers understate the true level of inflation.
  • And in a truly unhampered market system, even if your wages were flat your standard of living would rise as prices would slowly fall (good deflation) due to productivity improvements and competition.  Much more in my book.


Some stats from Cruise Lines International Associaton (CLIA)


  • 2019: 29.7 million
  • 2023: 31.5 million
  • 2024 Expected: 35.7 million.
    • Up 13% from last year
    • Up 3.7% per annum since 2019.
  • 10% of cruise travellers take three to five cruises per year.

Carnival Corporation (cruise lines) competes with Royal Caribbean and Norwegian Cruise Lines.  It owns the following brands:

  • Carnival
  • Princess
  • Cunard.
  • Holland America
  • Seabourn
  • Costa
  • P&O Cruises

2Q/2024 results

  • Customer deposits hit an all-time high of $8.3 billion.
  • Bookings for the rest of 2024 are at a record with “considerably higher” pricing.
    • And advanced bookings for 2025 are on course to hit a new record both in terms of occupancy and price.
    • Just checked their website.
      • You can book a 5-Day Caribbean cruise for just under $500.
  • Royal Caribbean is also hitting record bookings.
  • Norwegian Cruise Line holdings also had record bookings with sales up 20% in their last quarter.
    • Capacity was up 8% with the rest pricing.
    • Capacity was 104.6%.
      • I believe they consider full occupancy as two people per room.
        • So if some rooms have more than two people occupancy can be over 100%.


  • Denny’s has over 1,700 restaurants in a number of countries.
  • It is known for good portions at fair prices.
  • It’s also known for being open 24/7 including all holidays.

A little history:

  • 1953: Started as Danny’s Donuts in Lakewood (LA area), California.
  • 1956: Changed name to Danny’s Coffee Shops.
  • 1959: Changed the name to Denny’s Coffee Shops as people were confusing it with another restaurant called Coffee Dan’s.
    • PM: Seems to me Denny’s is still similar to Dan’s.  The owner’s name was Harry; why not go with Harry’s Coffee Shops.
  • 1961: Change the name to Denny’s
  • 1977: Introduced their Grand Slam breakfast.
    • It was introduced in Atlanta to honour baseball great Hank Aaron.
    • The meal consists of:
      • Two pancakes
      • Two eggs
      • Two strips of bacon
      • Two link sausages
    • They now also offer a Fit Slam:
      • Scrambled egg-whites with spinach and tomatoes
      • English muffin
      • Turkey bacon
      • Fruit.
        • PM: No thanks.
  • 1987: Was taken over by Trans World Corporation (owner of Trans World Airlines or TWA)
  • 1988: For the first time Denny’s decides to close its restaurants on Christmas day.
    • But because most of them had never been closed, many of the stores didn’t have locks or the keys were long lost.
  • The company is now publicly listed
    • Not exactly a success story from an investment perspective.
    • The share price is down 28% since 1997.
      • And down 68% since pre-COVID.

1Q/2024 Results:

  • Same store sales were down 3.0%

Canada Inflation

  • Jan: 2.9%
  • Feb: 2.8%
  • Mar: 2.9%
  • Apr: 2.7%
  • May: 2.9%:
    • Goods: 1.0%
      • Grocery prices vs. May 2020: +22.5%
    • Services: 4.6%
  • Big movers:
    • Up:
      • Rent: +8.9%
      • Travel tours: 6.9%
      • Shelter: +6.4%
      • Gas: 5.6%
      • Air transportation: +4.5%
      • Health and personal care: +3.6%
    • Down:
      • Clothing and footwear: -3.0%
      • Household operations/furnishings: -1.5%

Disclaimer: Note that Paulitical Economy™ should not be considered as investment advice, and I have not verified all of the sources of information.  It is meant for general interest purposes only.  Please consult an advisor if you plan on putting any of your hard-earned capital to work during these turbulent times.

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