Local Motors & MOTO

Saw two entrepreneurs on TV this morning. Both pretty true to the real meanings of the word.

Both with m-o-t-o in their names.

One runs a large restaurant and is moving into “food design” and internal farms.

moto-homaro_16-baking MOTO-plate

Quick review: https://www.youtube.com/watch?v=CRSwwSg52Kw#t=111

He is also working on production of food right within his own restaurant. Here’s the farm video summary: http://motorestaurant.com/farm/ and some text: http://news.medill.northwestern.edu/chicago/news.aspx?id=163075

Here is Moto’s wine list:

CHAMPAGNE

bin#

  • 412 – larmandier-bernier, TERRE DE VERTUS BLANC DE BLANCS 1er CRU, vertus, brut nature 2007 ($195)
  • 401 – pierre peters, GRAND CRU BLANC DE BLANCS, oger, brut 2006 ($175)
  • 413 – billecart-salmon, BLANC DE BLANCS, mareuil-sur-ay, france, brut 1999 ($275)
  • 404 – camille saves, CARTE BLANCE GRAND CRU, bouzy, champagne, brut, nv ($125)
  • 399 – alain thienot, reims, champagne, france, brut, nv ($100)

SPARKLING

  • 402 – gruet, SAUVAGE BLANC DE BLANCS, albaquerque, new mexico, usa, nv ($45)
  • 414 – l.  mawby, CREMANT CLASSIC, vignoles, leelanau peninsula, michigan, usa, nv ($60)
  • 410 – domaine du petit coteau, vouvray, loire valley, nv ($40)
  • 411 – juve y camps, CINTA PURPURA RESERVA, cava, spain, brut, nv ($40)
  • 408 – andre et michel quenard, jacquere, savoie, france, nv ($60)
  • 400 – inman family, ENDLESS CRUSH ROSE, pinot noir, russian river valley, california, usa, brut 2009 ($105)
  • 420 – alma negra, MISTERIO ROSE, malbec, mendoza, argentina, nv ($40)
  • 403 – emanuele scammacca del murgo, ROSE, nerello mascalese, sicaly, italy, brut 2009 ($70)

CHARDONNAY

  • 164 – domaine costal, LES TRUFFIERES, chablis, france 2009 ($60)
  • 100 – edi simcic, brda, slovenia 2007 ($80)
  • 146 – hirsch vineyards, sonoma coast, california, usa 2011 ($140)
  • 106 – ramey, HYDE VINEYARD, carneros, california, usa 2009 ($120)

SAUVIGNON BLANC

  • 197 – andre dezat et fils, sancerre, loire valley, france 2010 ($60)
  • 113 – walter hansell, GADDY LANE VINEYARD, lake county, california, usa 2011 ($45)
  • 107 – ata rangi, martinborough, new zealand 2011 ($40)
  • 205 – stony brook, GHOST GUM, franschhoek valley, south africa 2010 ($55)
  • 209 – rudd, mt veeder, napa valley, california, usa, 2011 ($145)
  • 165 – domaine didier dagueneau, BLANC FUME DE POUILLY, loire valley, france 2008 ($200)
  • 147 – domaine didier dagueneau,  SILEX , pouilly-fume, loire valley, france 2008 ($230)
  • 135 – domaine didier dagueneau, SILEX, pouilly-fume, loire valley, france 2009 ($275)

RIESLING

  • 185 – kunstler, DRY, rheingau, germany 2012 ($45)
  • 198 – kunstler, OLD VINES, rheingau, germany 2008 ($105)
  • 148 – fritz haag, mosel, germany 2010 ($45)
  • 196 – balthasar ress, HATTENHEIMER NUSSBRUNNEN AUSLESE, rheingau, germany 2002 (375ml) ($85)
  • GRÜNER VELTLINER
  • 220 – rudi pichler, FEDERSPIEL, wachau, austria 2011 ($60)

PINOT GRIS/PINOT GRIGIO

  • 203 – bolzano, ST. MAGDALENA, alto adige, italy 2012 ($35)
  • 112 – domaine zind humbrecht, CLOS JEBSAL, alsace, france 1996 ($195)

ITALIAN WHITE VARIETIES

  • 206 – sergio mottura, POGGIO DELLA COSTA, grechetto di civitella d’agliano, italy 2011 ($45)
  • 182 – ottin, petite arvine, vallee d’aosta, italy 2010 ($60)
  • 213 – matthiasson, sauvignon blanc/ ribolla gialla/ semillon/ friulano, napa valley, california, usa 2011 ($75)

WHITE RHÔNE VARIETIES

  • 191 – broc, VINE STARR, grenache blanc/picpoul/counoise, centgral coast, california, usa 2011 ($50)
  • 163 – mas jullien, vin de pays de ‘lherault, languedoc, france 2007 ($95)
  • 204 – turner pageot, LE BLANC, languedoc, france 2010 ($40)

SPANISH WHITE

  • 103 – izadi, rioja, spain 2011 ($50)

HUNGARIAN DRY WHITE

  • 105 – royal tokaji wine company, tokaj, hugary 2011 ($45)
  • GREEK WHITE
  • 125 – alexakis, malvasia, crete greece 2011 ($30)

ROSÉ

  • 201 – domaine tempier, bandol, provence, france 2012 ($90)
  • 208 – hedges, cabernet franc, red mountain, washington, usa 2012 ($55)

PINOT NOIR AND GAMAY

  • 1008 – albert morot, CENT-VIGNES 1ER CRU, beaune, burgundy, france 2009 ($130)
  • 1343 – domaine lucien boillo, LES ANGLES 1ER CRU, volnay, burgundy, france 2009 ($170)
  • 1034 – waits-mast, OPPENLANDER VINEYARD, mendocino county, california, usa 2009 ($95)

ITALIAN REDS

  • 1093 – gaja, SORI SAN LORENZO, barbaresco, piedmont  1988 ($975)
  • 900  – santome, raboso, piave, veneto 2002 (3L) ($160)
  • 814 – villa calcinaia, VIGNA BASTIGNANO, chianti classico, italy 2009 ($230)
  • 817 – sestadisopra, rosso di montalcino, italy 2007 ($130)

RED BORDEAUX VARIETIES

  • 1091 – chateau haut-brion, graves, france 1982 ($2,000)
  • 818 – rudd estate, oakville, napa valley, california, usa 2006 ($240)
  • 1002 – ridge, MONTE BELLO, santa cruz mountains, california, usa 1994 ($540)
  • 822 –  ridge, MONTE BELLO, santa cruz mountains, california, usa 1995 ($340)
  • 1092 –  ridge, MONTE BELLO, santa cruz mountains, california, usa 2008 ($320)
  • 1095 –  ridge, MONTE BELLO, santa cruz mountains, california, usa 2008 (3L) ($1500)
  • 967 – lieb cellars, RIGHT COAST RED, north fork, long island, new york, usa 2008 ($60)

CABERNET SAUVIGNON

  • 821 – corison KRONOS VINEYAR, napa valley, california, usa 2006 ($210)
  • 802 – dunn, howell mountain, napa valley, california, usa 1989 ($360)
  • 804 – dunn, howell mountain, napa valley, california, usa 1997 ($430)
  • 969 – vine hill ranch, VHR, napa valley, california, usa 2009 ($365)

RED RHONE VARIETIES

  • 832 – domaine du joncier, CLASSIQUE, lirac, france 2010 ($55)
  • 824 – domaine du vieux telegraphe, LA CRAU, chateauneuf-du-pape, france 2010 ($175)
  • 1035 – hatton estate, syrah, gimblett gravels, hawkes bay, new zealand 2004 ($115)
  • 816 – cayuse vineyards, CAILLOUX VINEYARD, syrah, walla walla valley, washington, usa 2010 ($210)

SOUTH AMERICAN REDS

  • 1349 – arboleda, carmenere, colchagua valley, chile 2009 ($50)
  • 812 – sena, cabernet sauvignon/carmenere/merlot/petit verdot/cabernet franc, aconcagua valley, chile 2010 ($375)

SPANISH AND PORTUGESE REDS:

  • 972 – hacienda monasterio, tinta del pais, ribera del duero, spain 2009 ($130)
  • 1357 –  artadi, VINA EL PISON, rioja, spain 2010 ($630)

What a cool idea. Open systems for transportation vehicles. All the design tools are in open source and available to the public.

Prototypes are working.

LOCAL MOTORS

LOCALMOTORS.COM

Excerpt video:

How It Works

Retail

You can buy innovative vehicle products directly from the Microfactory’s retail space. This includes exclusive Local Motors brand items such as t-shirts and duffle bags, but we also sell exciting products from local and international companies that will enhance your automotive lifestyle. Visit the Shop online to view some of our current options.

Learn More

Co-Creation

Co-creation is an essential element of vehicle innovation at Local Motors. Microfactories bring the internal Local Motors team, the virtual community, and the physical community together to make this concept a reality. Utilizing the Local Motors website, designers, engineers, fabricators and enthusiasts can submit their ideas, receive helpful feedback, and develop their designs.

Learn More

Community

Community is a core value at Local Motors.  Engaging the community to facilitate innovation and empower the maker community drives everything we do. At the Microfactory, you can collaborate with our LM Labs team to work on projects, attend one of our monthly open houses, schedule a Microfactory tour, or sign up for a Rally Fighter “Drive Experience” with a licensed driver.

<!– Learn More –>

Build Program

The Build Program at our Microfactories is the most immersive experience you can have at Local Motors. Using in-house tools, parts, and our interactive online build manual, anyone who buys a Rally Fighter constructs their own vehicle in the Microfactory with help from the Local Motors team.

<!– Learn More –>

The Chicago Nanny

GREAT shots from the fifties and sixties.  Thousands of negatives bought for $386.00. A smart buyer and knew a treasure when he found it.

an Buys 10.000 Undeveloped Negatives At a Local Auction and Discovers One of The Most Important Street Photographers of the Mid 20th Centuury.

 

an Buys 10.000 Undeveloped Negatives At a Local Auction and Discovers One of The Most Important Street Photographers of the Mid 20th Century

Oct 30, 2013

0 52605

Imagine this : perhaps the most important street photographer of the twentieth century was a nanny who kept everything to herself. Nobody had ever seen her work and she was a complete unknown until the time of her death. For decades Vivian’s work hid in the shadows until decades later (in 2007), historical hobbyist John Maloof bought a box full of never developed negatives at a local auction for $380.

street photography 001

John began to develop the negatives and it didn’t take long before he realised that these were no ordinary street snapshots from the 50′s and 60′s — these pictures were a lot more then that. Maier’s work is particularly evocative for those who grew up in the 50′s and 60′s because she seemed to stare deep into the soul of the time and preserve the everyday experience of the people. She ventured outside the comfortable homes and picturesque residential neighborhoods of her employers to document all segments of life in and around the big city.

street photography 002

street photography 003

street photography 004

street photography 006

street photography 007

vivian maier

He embarked on a journey to find the legend who took these beautiful pictures and he quickly discovered her name: Vivian Maier.

street photography 005

Here’s a self-portrait of Vivian

Before he could find her, John discovered  her obituary in the newspaper of 2009 . She slipped on ice, suffered a head injury and never fully recovered. She was 83 years old when she passed away.

Since then, the work of this mysterious and incredibly talented woman has turned the art world upside down. The pictures gained international media attention with exhibitions in London, New York , Los Angeles , Oslo and Hamburg.

John has also made ​​a documentary about Vivian and her work  – you can check out the trailer below. Wow! What an incredible story and what an inspiration.

Uncategorized
Oct 30, 2013
0 52605

Imagine this : perhaps the most important street photographer of the twentieth century was a nanny who kept everything to herself. Nobody had ever seen her work and she was a complete unknown until the time of her death. For decades Vivian’s work hid in the shadows until decades later (in 2007), historical hobbyist John Maloof bought a box full of never developed negatives at a local auction for $380.

an Buys 10.000 Undeveloped Negatives At a Local Auction and Discovers One of The Most Important Street Photographers of the Mid 20th Century

Oct 30, 2013

0 52605

Imagine this : perhaps the most important street photographer of the twentieth century was a nanny who kept everything to herself. Nobody had ever seen her work and she was a complete unknown until the time of her death. For decades Vivian’s work hid in the shadows until decades later (in 2007), historical hobbyist John Maloof bought a box full of never developed negatives at a local auction for $380.

street photography 001

John began to develop the negatives and it didn’t take long before he realised that these were no ordinary street snapshots from the 50′s and 60′s — these pictures were a lot more then that. Maier’s work is particularly evocative for those who grew up in the 50′s and 60′s because she seemed to stare deep into the soul of the time and preserve the everyday experience of the people. She ventured outside the comfortable homes and picturesque residential neighborhoods of her employers to document all segments of life in and around the big city.

street photography 002

street photography 003

street photography 004

street photography 006

street photography 007

vivian maier

He embarked on a journey to find the legend who took these beautiful pictures and he quickly discovered her name: Vivian Maier.

street photography 005

Here’s a self-portrait of Vivian

Before he could find her, John discovered  her obituary in the newspaper of 2009 . She slipped on ice, suffered a head injury and never fully recovered. She was 83 years old when she passed away.

Since then, the work of this mysterious and incredibly talented woman has turned the art world upside down. The pictures gained international media attention with exhibitions in London, New York , Los Angeles , Oslo and Hamburg.

John has also made ​​a documentary about Vivian and her work  – you can check out the trailer below. Wow! What an incredible story and what an inspiration.

street photography 001

John began to develop the negatives and it didn’t take long before he realised that these were no ordinary street snapshots from the 50′s and 60′s — these pictures were a lot more then that. Maier’s work is particularly evocative for those who grew up in the 50′s and 60′s because she seemed to stare deep into the soul of the time and preserve the everyday experience of the people. She ventured outside the comfortable homes and picturesque residential neighborhoods of her employers to document all segments of life in and around the big city.

street photography 002

street photography 003

street photography 004

street photography 006

street photography 007

vivian maier

He embarked on a journey to find the legend who took these beautiful pictures and he quickly discovered her name: Vivian Maier.

street photography 005
Here’s a self-portrait of Vivian

Before he could find her, John discovered her obituary in the newspaper of 2009 . She slipped on ice, suffered a head injury and never fully recovered. She was 83 years old when she passed away.

Since then, the work of this mysterious and incredibly talented woman has turned the art world upside down. The pictures gained international media attention with exhibitions in London, New York , Los Angeles , Oslo and Hamburg.

John has also made ​​a documentary about Vivian and her work – you can check out the trailer below. Wow! What an incredible story and what an inspiration.

Man Buys 10.000 Undeveloped Negatives At a Local Auction and Discovers One of The Most Important Street Photographers of the Mid 20th Century

Oct 30, 2013
0 52605

Imagine this : perhaps the most important street photographer of the twentieth century was a nanny who kept everything to herself. Nobody had ever seen her work and she was a complete unknown until the time of her death. For decades Vivian’s work hid in the shadows until decades later (in 2007), historical hobbyist John Maloof bought a box full of never developed negatives at a local auction for $380.

street photography 001

John began to develop the negatives and it didn’t take long before he realised that these were no ordinary street snapshots from the 50′s and 60′s — these pictures were a lot more then that. Maier’s work is particularly evocative for those who grew up in the 50′s and 60′s because she seemed to stare deep into the soul of the time and preserve the everyday experience of the people. She ventured outside the comfortable homes and picturesque residential neighborhoods of her employers to document all segments of life in and around the big city.
xa>

street photography 003

street photography 004

street photography 006

street photography 007

vivian maier

He embarked on a journey to find the legend who took these beautiful pictures and he quickly discovered her name: Vivian Maier.

street photography 005

Here’s a self-portrait of Vivian

Before he could find her, John discovered  her obituary in the newspaper of 2009 . She slipped on ice, suffered a head injury and never fully recovered. She was 83 years old when she passed away.

Since then, the work of this mysterious and incredibly talented woman has turned the art world upside down. The pictures gained international media attention with exhibitions in London, New York , Los Angeles , Oslo and Hamburg.

John has also made ​​a documentary about Vivian and her work  – you can check out the trailer below. Wow! What an incredible story and what an inspiration.

VI Sustainability

What socialists need to do in BC is to set Vancouver Island up as the alternate culture.

The 2013 Election shows that the Right will always win by accepting vey high levels of degradation of the environment as the price for jobs that permit very high levels of consumption, especially imported products such as cars, third world food products and luxury items.

As a result no government action in support of post-fossil energy sources or food security or full-employment can be expected.

Vancouver Island, through innovative policies, can have all of these.

There are many post-fossil-fuel innovations underway around the world. This part of the blog will catalogue and analyze many of those. It will look at the types and amounts of energy that islanders consume and set the bar for the elimination of at least 90% of fossil fuels within 20 years,

It will also analyze food consumption on the island and what part of the imported component can be replaced and what kinds of jobs that can create.

It will also look at the employment, non-employment and under-employment situation on the island and look at ways and means of moving towards not only full employment but an array of jobs that are stimulating and fulfilling. Crucial to that is developing sources of expertise that are local and localized. We need to stop hiring experts from International Firms to design and construct sewage plants in a fashion that is at once costly and out of date.

 

EXAMPLE:

WASTE INTO ENERGY

There’s an almost comical juxtaposition of glamour and grime in New York. The trendiest dessert spot and most expensive new boutique are often barricaded behind a bulging wall of trash bags, spilling onto the sidewalk. Designer perfume and decaying food notes mingle in the air together.

Fortunately for New Yorkers, obsessed with the newest and the best, enormous trucks routinely appear out of nowhere to rescue them from their banana peels, old sneakers and unwanted lamps. Within seconds the putrid black bag barricades are dismantled, stuffed out of sight in the back of the truck and disappear down the street, out of the city and across state lines. The vast majority of the city’s trash — 10,000 tons a day — ends up in Ohio, Delaware, Pennsylvania and North Carolina. Once the trash is properly out of sight and out of mind in a distant landfill, that’s the end of the story as far as most people are concerned. But while it might no longer be an immediate nuisance to a New Yorker, trash ‘lives’ on for decades in landfills and the methane produced from rotting organic matter, which accounts for one third of what gets thrown away, exacerbates climate change, impacting everyone on Earth.

The Fifth Assessment of the Intergovernmental Panel on Climate Change recently increased its estimate of the global warming potential of methane to 34 times more powerful than carbon dioxide. According to the Environmental Protection Agency (EPA), landfills are the third largest source of methane in the nation. In landfills, food waste also adds an enormous amount of water to the decaying mess, which causes toxic chemicals to leach into the soil.

But what if there was a way to not only keep food waste out of landfills but actually create something valuable out of what otherwise produces only methane and contaminated soil? There is, and the technology has been around for decades.

Anaerobic digesters have been used on farms to help process manure for several years. An anaerobic digester is essentially just an airtight tank filled with a special mix of bacteria, similar to what you’d find in the stomach of a cow. In fact, Patrick Serfass, Executive Director at the American Biogass Council, likes to call anaerobic digesters “optimized cow stomachs.”

When organic waste is shoveled into the digester tanks, the bacteria devour the food and other scraps and produce a biogas, which is mostly methane. The biogas can be combusted to generate electricity and heat, or can be processed into natural gas and transportation fuels. Unlike natural gas from shale, the biogas produced through anaerobic digestion is completely renewable. The digestion process also results in separated solids that can be composted, used for dairy bedding, or just spread directly on fields as a fertilizer. Nutrients from the liquid stream can be used as fertilizers as well.

“Just like a cow, you get a solid, a liquid and a gas after digestion,” said Serfass.

Anaerobically digesting just 50 percent of the food waste generated each year in the U.S. would produce enough electricity to power 2.5 million homes for a year, according to the EPA. Cities across America are just beginning to wake up to the potential of anaerobic digesters as a means to manage waste and generate renewable energy. One of the biggest obstacles remains persuading or compelling people to keep their vegetable peelings and apple cores out of their trash cans.

“In the 80s and 90s Americans started to get serious about recycling,” said Eric Goldstein, a senior attorney with the Natural Resources Defense Council (NRDC) in New York. “But that paper, glass, metal and plastic that we so carefully keep out of the trash can only accounts for about one third of the total waste stream. And because we don’t do it perfectly, we only actually keep about one quarter of our trash out of landfills. I don’t think most people realize that when they toss takeout in the trash they are contributing to climate change.”

Europe is far ahead of America in diverting food waste from the dump. The European Landfill Directive mandates that European Union member states reduce “biodegradable municipal waste” sent to landfills to 35 percent of 1995 quantities by 2016. As a result, 40 percent of waste in the EU is now composted or recycled. Norway, Sweden, the Netherlands, Denmark, Switzerland, Belgium, Austria, and Germany now send less than three percent of their waste to landfills. Copenhagen stopped sending organic waste to landfills in 1990.

While the U.S. clearly still has a lot of catching up to do, municipal composting programs have been springing up across the country. Neil Seldman, senior staffer for the Waste to Wealth Program at the Institute for Local Self Reliance, estimates that there are about 150 U.S. cities, serving 1.2 million households, that now have local composting programs in place. The food waste disposal system that these composting programs put in place, is often the first step towards transitioning to an anaerobic digestion system. Even New York is getting serious about tackling the problem.

In February, New York City Mayor Michael Bloomberg called food waste the city’s “final recycling frontier” in his annual State of the City Address. The city has begun a two-year  pilot program for collecting organic material from the curbsides of several Staten Island neighborhoods, two high-rise apartment buildings in Manhattan, and about 100 schools in three boroughs. Should the two-year pilot succeed — with high participation rates and the diversion of significant tonnages — the program will roll out across the city and no longer be voluntary.

Other cities such as Portland, Seattle, San Antonio, and San Francisco have had city-wide composting programs in place for years.

In San Francisco, composting began with restaurants and grocery stores. Then in 2009, an ordinance made it mandatory for all residents to separate organic material for collection. The city collected its millionth ton of organic waste for composting last fall. Overall, 78 percent of San Francisco’s waste is now diverted from landfills.

While composting programs keeps food waste out of landfills and produces a natural fertilizer that returns nutrients to the soil, it has it’s limitations. Most of New York City’s compost or that of any other city, still has to be hauled across state lines — burning fuel all the way.

“You can’t locate a compost pile in Bryant Park,” said Seldman. “It may not smell as bad as a landfill, but it needs to be open air to work, so it can’t be in a residential neighborhood.”

For example, compost from New York City is often taken to a 20-acre site in Wilmington, Delaware. It’s hardly in a country field, but located between all the super highways, it isn’t right next to someone’s house either.

“Anaerobic digestion is going to just explode in the Northeast and Bay Area in the next few years,” predicted Seldman. “In these crowded urban areas, it costs at least one hundred dollars for every ton of trash you have hauled away. It just makes sense to deal with it locally and get value from your waste.”

Where the trend will be slower catching on is in areas where it is still relatively cheap to send everything to the dump. According to Seldman, in Texas and Georgia, the removal of a ton of trash is priced at just twenty dollars.

Some states, however, are leading the way by requiring all commercial generators of food waste, like grocery stores and restaurants, to send all their food waste to an organics recycling facility — a site for composting and anaerobic digestion. Vermont started the trend, passing legislation in the summer of 2012, and has since been followed by Connecticut last summer, Massachusetts this fall and now, New York State is just beginning to consider a similar move.

“The leadership of these states is a big deal,” explained Serfass. “Although the technology is straightforward, an anaerobic digester isn’t cheap to build. If we want companies to be willing to invest in the infrastructure, it certainly helps them to know that they will have a constant stream of food waste coming their way for years to come.”

Several cities, especially on the West Coast, are also out in front on the anaerobic digester trend. In January, the Sacramento BioDigester officially went online. The site currently converts 25 tons of food waste per day into various forms of renewable energy, including heat, electricity, and renewable natural gas. It also produces fertilizer and soil enhancements for California farms. The Sacramento BioDigestor, which is run by CleanWorld, is planning to add a second facility which will increase the daily food waste intake capacity to 100 tons or 40,000 tons per year.

One of the largest anaerobic digesters for food waste is about to go online in San Jose, California. The digester located near the southern tip of the San Francisco Bay was developed by Zero Waste Energy Development Company and has 16 massive digestion chambers, each with a capacity of 350 tons.  The digester site will continue to undergo development to expand in three phases over the next several years, with each phase capable of processing 90,000 tons of organic waste a year. When fully completed, it will be one of the largest plants in the world.

California utilities are required to buy 33 percent of their electricity from renewable sources by 2020 in accordance with the state’s Renewable Portfolio Standard. While wind and solar have generally been considered the primary sources for renewable energy, biogas generated through the anaerobic digestion of food waste would also count towards meeting the standard.

“Anaerobic digesters transform food waste from a climate liability to a tool we can use to fight climate change,” said Seldman. “And even if you’re not interested in climate change, it’s still a way to turn trash into money, which is something I think everyone could support.

 

 

 

The Rap Sheet

Duffy and Wright.

Time for a trial!!!

https://www.documentcloud.org/documents/837418-rcmp-mike-duffy-nigel-wright-nov.html

This is a LONG document. A novella.

You can read it as a pdf-image at this site, or in text form.

A FEW PAGES OF THE TEXT DOCUMENT

p. 1

CANADA 
In the matter of an Application for Production

PROVINCE OF ONTARIO Orders pursuant to section 487.012 of the Criminal
Code.
EAST REGION 

INFORMATION TO OBTAIN PRODUCTION ORDERS

This is the Information of Corporal Greg Horton a Peace Officer of the Royal Canadian
Mounted Police, in the city of Ottawa, Ontario.

I have reasonable grounds to believe and do believe that offences contrary to an Act of
Parliament have been committed, to wit:

0 Michael Duffy between February 6, 2013, a11d March 28, 2013, at Ottawa, Ontario, being a
member of Parliament did directly or indirectly corruptly accept, obtain, agree to accept, or
attempt to obtain, for himself, money, valuable consideration, or office in respect of
anything done or omitted, or to be done or omitted by him in his official capacity contrary
to section 119(1)(a) of the Criminal Code.

0 Nigel Wright between February 6, 2013, and March 28, 2013, at Ottawa, Ontario did
directly or indirectly corruptly give or offer to a member of Parliament for the benefit of
that person, any money, valuable consideration, or office in respect of anything done or
omitted, or to be done or omitted by him in his official capacity contrary to section 119(1)(b)
of the Criminal Code.

0 Michael Duffy being an official of the government of Canada between February 6, 2013,
and March 28, 2013, at Ottawa, Ontario did without the-consent in writing of the head of
the branch of that government of which he is an official demand, accept, offer to accept, or
agree to accept a reward or an advantage or benefit of money from Nigel Wright a person
having dealings with the government of Canada contrary to section 121(1)( c) of the
Crimimtl Code.

0 Nigel Wright 21 person having dealings with the government of Canada, between February
6, 2013, and May 19, 2013, at Ottawa, Ontario, did, without the consent in writing of the
head of the branch of that government, pay a reward or confer an advantage or benefit on
Mike Duffy, an official of the government of Canada with respect to those dealings contrary
to Section 12l(1)(b) of the Crimimtl Code.

0 Michael Duffy and Nigel Wright between February 6, 2013, and May 19, 2013, at Ottawa,
Ontario, being officials within the Government of Canada, did commit breach of trust i11
connection with the duties of their offices contrary to section 122 of the Crimimll
Code.

PAGE 2.

AND THAT there are reasonable grounds for believing that the following documents and/or
data will afford evidence of the said offences:

See Appendix 

AND THAT there are reasonable grounds for believing that the said documents and/or data or
some part of them are in the possession or control of:

See Appendix 

INTRODUCTION

I, Greg Horton, a member of the Royal Canadian Mounted Police (RCMP) in the Province of
Ontario, make oath and say as follows:

1.

I am a peace officer in the RCMP for the past 21 years with experience in major crime
investigations and applications for judicial authorizations. I have personal knowledge of
the matters hereinafter set out, and I believe all of the information in this Information to
be true.

I am currently assigned to Sensitive and International Investigations within the National
PAGE 3.
housing allowances in relation to where the Senators actually live. A Senator is eligible
for certain housing and travel expenses while working in Ottawa, if their primary
residence is located more than 100 km fi'om the National Capital Region (NCR). Because
of the extensive media coverage, and the mandate of RCMP National Division, I
commenced this investigation in preparation for the release of the Deloitte Reports. In
May 2013, the Senate received and publicly released three Deloitte Reports, one
pertaining to each Senator being audited. My team then commenced a review of the three
reports, as well as laws, rules, policy and guidelines which govern the Senators. We also
monitored developments in the media. While the investigation is focusing on all 3
Senators, this application is specifically related to Senator Duffy and Mr. Wright.

5. During the period that Deloitte was conducting its audit, Senator Duffy publicly
announced that he had repaid more than $90,000' in living expenses, citing unclear
Senate rules for having made the claims. The Senate acknowledged his repayment to the
Receiver General of Canada. After examining an 18 month period of expense claims,
Deloitte produced a report finding that Senator Duffy referred to his cottage on Prince
Edward Island (PEI) as his primary residence, and filed expense claims relating to the
house he owns in Ottawa, claiming it as his NCR secondary residence. He collected a
housing allowance for that secondary residence. The Deloitte Report found that there was
a lack of clarity in the Senate regulations and guidelines when referring to primary and
secondary residences. It did not conclude any fault on Senator Duffy's part, but did
provide a breakdown on where he spent his time, the majority being in Ottawa.

6. As a result of the Deloitte Report, the Steering Committee produced its own report (The
Senate Report) on May 9, 2013, which summarizes the Deloitte Report, and the findings
of the sub-committee. The Senate Report acknowledged that Senator Duffy paid back
more than $90,000 in expenses, and that Deloitte was not able to assess the status of his
primary residence based on the Senate regulations and guidelines. It recommended that
Senator Duffy's expense claims be monitored for a period of not less than one year. The
Senate Report was not critical of Senator Duffy, and did not find any fault on his part.

7. Media reports soon emerged alleging that Senator Duffy had not paid back the $90,000
himself, and that it was in fact paid back by the Prime Minister's then Chief of Staff,
Nigel Wright. The reports claimed that there was an agreement, possibly a written
agreement, between Senator Duffy and Mr. Wright, stipulating that Senator Duffy would
publicly acknowledge making the claims in error and taking the personal decision of
paying back $90,000. In exchange for this public acknowledgement, Nigel Wright would
actually cover the cost of the $90,000, and the government would "go easy" on Senator_
Duffy in its report. The media reports were not entirely accurate, however there was some
validity to them. The circumstances of that repayment are the subject of this application.

8. After reviewing hundreds of e-mail exchanges and conducting interviews with many of
those involved, I believe the true circumstances surrounding the repayment of the

The actual amount is $90,172.24. For ease of reference, I will refer to this amount as $90,000 throughout this
In formation.

FOR THE OTHER 73 PAGES: see the original. https://www.documentcloud.org/documents/837418-rcmp-mike-duffy-nigel-wright-nov.html

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Life goes better with Coke

The influence of Sir Edward Coke remains.

“for when an Act of Parliament is against common right and reason, or repugnant, or impossible to be performed, the common law will controul it, and adjudge such Act to be void.”

As Canada and BC fall further under the tyranny of governments who represent only a minority of the potential voters but act as though they have a strong and complete majority behind them, we need to remember and refine the meaning of Repugnant.

The Body of English Law

That is: The system of law that has developed in England from approximately 1066 to the present.

The body of English law includes legislation, Common Law, and a host of other legal norms established by Parliament, the Crown, and the judiciary. It is the fountain from which flowed nearly every facet of Commonwealth law and US law during the eighteenth and nineteenth centuries.

 

The story of English Constitutional Law  can be told in three parts: the centralization of power in the monarchy, the creation of Parliament as a limitation on the absolute power asserted by the monarchy, and the struggle for supremacy between Parliament and the monarchy. In large part, the American Revolution resulted from Parliament’s failure to check the monarchy’s sovereignty and establish itself as the supreme lawmaking body representing the people of England and its colonies. The separation of the other former colonies of England followed a more evolutionary path.

When William, duke of Normandy, also known as William the Conqueror, vanquished England in 1066, there was no body English law as we  came to know it. No national or federal legal machinery had yet been contemplated. Law was a loose collection of decentralized customs, traditions, and rules followed by the Angles and Saxons, among others. Criminal cases were indistinguishable from civil cases, and both secular and spiritual disputes were resolved at the local level by community courts. Trials in the modern sense did not exist, nor did juries. Guilt and innocence were determined by battle, ordeal and compurgation. Battle was the preferred Norse method.

Compurgation was a ritualistic procedure in which accused persons might clear themselves of an alleged wrongdoing by taking a sworn oath denying the claim made against them, and corroborating the denial by the sworn oaths of 12 other persons, usually neighbors or relatives. If an accused person failed to provide the requisite number of compurgators, he or she lost. The number of compurgators was the same as the number of jurors later impaneled to hear criminal cases under the common law.

Trial by ordeal was a superstitious procedure administered by clerics who subjected accused persons to physical torment in hopes of uncovering divine signs of guilt or innocence. The most common forms of ordeal involved boiling or freezing waters and hot irons. In the ordeal of freezing water, accused persons were thrown into a pool to see if they would sink or float. If they sank, the cleric believed they were innocent, because the water would presumably reject someone with an impure soul. Of course, persons who sank to the bottom and drowned during this ordeal were both exonerated of their alleged misbehaviour, and dead. Battle was a form of primitive trial that was thought to involve divine intervention on behalf of the righteous party once Christianity had replaced Norse beliefs. The combatants were armed with long staffs and leather shields, and fought savagely until one party cried, “Craven,” or died.

Trial by battle, though in many ways as barbaric as trial by ordeal, foreshadowed modern trials in several ways. The combatants fought in an adversarial arena before robed judges who presided over the battle. The accused person was required to put on a defense, quite literally in the physical sense, against an opponent who was trying to prove the veracity of his or her claims. Some parties to a battle, particularly women, children, and older individuals, were entitled to hire stronger, more able champions to fight on their behalf..

Dr. Bonham’s Case

Dr. Bonham’s Case, 8 Co. Rep. 114 (Court of Common Pleas [1610]), stands for the principle that legislation passed by the English Parliament is sub-ordinate to the common-law decisions made by trial and appellate court judges, and any statute that is contrary to “common right and reason” must be declared void (Thorne 1938).

The decision in this case, which was written by Sir Edward Coke sitting as chief justice for the Court of Common Pleas in England, spawned the concept of Judicial Review under which courts of law, as the primary oracles of the Common Law in the British and U.S. systems of justice, are authorized to invalidate laws enacted by the executive and legislative branches of government. The power of judicial review, which was first recognized by the U.S. Supreme Court in marbury v. madison, 5 U.S. (1 Cranch) 137, 2 L. Ed. 60, is invoked by courts every day across the United States but has since been rendered obsolete in England.

Bonham’s Case arose from a dispute regarding the unlicensed practice of medicine. Dr. Thomas Bonham had received a degree in physic medicine from the University of Cambridge. In 1606, Bonham was discovered practicing such medicine in London without a license, and was summoned to appear before the censors at the London College of Physicians, who maintained jurisdiction in that city over the practice of medicine.

Bonham was examined by the college censors in a number of areas regarding his professional practice, and provided answers “less aptly and insufficiently in the art of physic” (Stoner 1992, 49). As a result, Bonham was determined unfit to practice medicine in this field, and was ordered to desist from such practice in London. When Bonham was later discovered flouting this order, he was arrested and placed in the custody of the censors.

Bonham refused to undergo further examination. As a graduate of Cambridge, he asserted that the London College of Physicians had no jurisdiction over him and thus possessed no authority to arrest or fine him. Promising to continue his practice of physic medicine if released, Bonham was immediately jailed.

The case came before the Court of Common Pleas when Bonham claimed that his continued detention by the college amounted to False Imprisonment. As a defense, the college relied on its statute of incorporation, which authorized it to regulate all physicians in London and to punish practitioners not licensed by the college. The statute also entitled the college to one-half of all the fines imposed by it.

The Honorable Justice Coke, also a Cambridge graduate, sided with his fellow alumnus. After singing the praises of their alma mater, Coke argued that because the college censors were entitled to receive a portion of the fine they imposed on Bonham, the statute made them prosecutor, plaintiff, and judge in the dispute: “The censors cannot be judges, ministers and parties; judges … give sentence or judgment; ministers … make summons; and parties … have moiety [half] of the Forfeiture, because no person may be a judge in his own cause … and one cannot be judge and attorney for any of the parties.” Coke suggested that the impartiality of a judge is compromised when the judge is also the plaintiff who will benefit financially from any fines imposed on the defendant, or the prosecutor who is the advocate responsible for seeking such fines. Although the parliamentary statute in question clearly contemplated that London College would wear all three of these hats, Coke observed,

[I]t appears in our books, that in many cases, the common law will controul Acts of Parliament, and sometimes adjudge them to be utterly void: for when an Act of Parliament is against common right and reason, or repugnant, or impossible to be performed, the common law will controul it, and adjudge such Act to be void.

Coke placed the judiciary in the middle of what was becoming a titanic struggle for power between Parliament and the ruler of England. Until the seventeenth century, the English monarchy enjoyed nearly absolute power over all political and legal matters that concerned the country as a whole. Despite the growing popularity and importance of Parliament during the fifteenth and sixteenth centuries, the monarchy’s autocratic power, which King James I (1603–25) asserted was divine in origin, included the prerogative to enact laws without parliamentary consent.

By the close of the seventeenth century, however, the pendulum of power had swung in favor of Parliament. The Glorious Revolution of 1688 subordinated the power of the English Crown and judiciary to parliamentary sovereignty. In 1765, English jurist Sir William Blackstone described “the power of Parliament” to make laws in England as “absolute,” “despotic,” and “without control.”

The American Revolution, which began eleven years after Blackstone’s pronouncement of Parliament’s unfettered power, was commenced in response to the coercive legislation passed in the colonies by what had become a despotic Parliament. Thomas Jefferson, James Madison, and their contemporaries believed that a legislative despot was no better than a monarchical despot. In 1787, the U.S. Constitution established the judiciary as a check on the legislative and executive branches of government, a check that was foreshadowed by Coke’s opinion in Bonham’s Case.

James I was cognizant of the dangers Bonham’s Case presented to his claims of divine royal prerogative. The king understood that the “common law,” which Bonham’s Case said controlled acts of Parliament, was really just a decision made by a court of law, or, more particularly, by a judge or panel of judges. James also understood that if the judiciary were allowed to assert the power to review acts of Parliament, it was only a short step away from passing judgment on actions taken by the Crown.

Accordingly, King James removed Coke from the Court of Common Pleas in 1613, appointing him chief justice of the King’s Bench. This constituted a promotion in name only, since Coke was now under closer scrutiny by the Crown.

Much to the Crown’s chagrin, Coke’s replacement on the Court of Common Pleas, Sir Henry Hobart, expanded the concept of judicial review intimated by Bonham’s Case. In Day v. Savadge, Hob. 84 (K.B. 1614), Hobart declared that “an act of parliament made against natural Equity, as to make a man judge in his own cause, is void in itself”. Where did the new chief justice derive the court’s power to invalidate the laws of Parliament? Hobart said, “[B]y that liberty and authority that judges have over laws, especially … statute laws, according to reason and best convenience, to mould them to the truest and best use” (Sheffield v. Ratcliff, Hob. (K.B. 1615), as quoted in Plucknett 1926, 50).

Exasperated by such further attempts to limit his prerogative, James I dismissed Coke from the King’s Bench, and ordered him to “correct” his decision in Bonham’s Case, which had subsequently been published in England’s case law reporter known as The Reports. Coke refused to accede to the king’s demands.

The importance of Coke’s opinion in Bonham’s Case is sometimes downplayed by some scholars who point to England’s later recognition of Parliament as the country’s supreme sovereign entity. However, this criticism overlooks the indelible imprint left by Bonham’s Case on U.S. law.

The American colonists were intimately familiar with the writings of Lord Coke. Coke’s Reports first came to America on the Mayflower, and the Massachusetts General Court ordered two complete sets from England in 1647. Coke’s opinion in Bonham’s Case was among his most popular writings.

In Paxton’s Case of the Writ of Assistance, Quincy 51 (Mass. 1761), colonist James Otis challenged Massachusetts’s authority to issue writs of assistance, general search warrants that empowered local sheriffs to enter private homes and businesses to seize smuggled goods. Otis told the colonial court that he objected to such writs, which were created by a parliamentary act in 1662, because they violated the principle of Bonham’s Case: “As to acts of parliament, an act against the Constitution is void. An act against natural equity is void; and if an act of parliament should be made in the very words of this petition, it would be void. The Executive Courts must pass such acts into disuse.”

John Adams, who was in the Boston courtroom where Otis made his argument for the colonial application of Bonham’s Case, later exclaimed, “Then and there the child Independence was born.” Adams might also have exclaimed that the seeds of judicial review had been planted in the American colonies by Otis, who was unequivocally assigning to “Executive Courts” the responsibility of invalidating parliamentary legislation that violated constitutional precepts.

Four years later, the colonies again relied on the principle of Bonham’s Case, this time in their opposition to the Stamp Act, a parliamentary statute that taxed everything from newspapers to playing cards. Thomas Hutchinson, lieutenant governor of Massachusetts, encouraged the “friends of liberty” and opponents of the Stamp Act to “take advantage of the Maxim they find in Lord Coke that an act of parliament against Magna Carta or the peculiar rights of Englishmen is ipso facto void.”

In 1786, the Superior Court of Rhode Island relied on Bonham’s Case to strike down a statute that denied the right to trial by jury for certain crimes, because “Lord Coke” held that such statutes were “repugnant and impossible” (Trevett v. Weeden [Newport Super. Ct. Judicature], as quoted in Plucknett 1926, 66).

Further readings

Edwards, R.A. 1996. “Bonham’s Case: The Ghost in the Constitutional Machine.” Denning Law Journal (annual): 63–90.

William the Conqueror understood the importance of revenue, and that is where he began building the English empire. In 1086, William initiated the Domesday Survey, which sought to determine the amount and value of property held in England, for the purpose of assessing taxes against the owners. The Domesday Survey was conducted by eight panels of royal commissioners who traveled to every county in the country, where they collected information through sworn inquests. Although the survey began as a method of recording real property held in the kingdom, one contemporary Saxon chronicler moaned “that there was not a single hide … nor … ox, cow or swine” omitted (Trevelyan 1982). The Court of Exchequer served as auditor, accountant, and tax collector for William, and provided a venue to settle disputes between the Crown and taxpayers, becoming the earliest department of state.

William’s system for revenue collection began a process that gradually replaced the community courts of justice with a legal system that emanated from a central location, the king’s castle in Westminster.

Henry II (1154–89) further strengthened the central government by enlarging the power and jurisdiction of the royal system of justice. During his reign, any crime that breached the ruler’s peace was tried before a royal court sitting in Westminster, or by royal itinerant justices who traveled to localities throughout England to hear disputes. Heretofore, the royal court heard only cases that directly threatened the monarch’s physical or economic interests. Most other complaints, except for those heard by the Catholic Church, were leveled by private individuals, who were also responsible for proving their accusations. Henry II also laid the groundwork for the common-law method of deciding cases, whereby judges make decisions in accordance with other decisions they have rendered in similar matters. The royal system of justice was governed by a single set of legal rules and principles, which was applied even-handedly to litigants presenting claims to the monarch’s justices. This system superseded one that applied the often inconsistent customary laws of neighboring communities of different ethnic backgrounds. Because the monarch’s law was applied in a uniform manner, it became “common” to every shire in the land. .

In addition to becoming more prevalent, the royal system of justice was becoming more popular. Its popularity stemmed from the rational legal procedures and reliable modes of evidence developed by the King’s Court, which slowly supplanted their superstitious, ritualistic, and dangerous predecessors, compurgation, ordeal, and battle. One new rational procedure was trial by jury, which Henry II made available in land disputes between laypersons and the clergy. The juries comprised 12 sworn men who possessed some knowledge of the property dispute, and were asked to announce a verdict to the royal justices based on this knowledge. The trial-by-jury system employed by Henry II, though only an embryonic form, reflected society’s growing understanding that verdicts based on personal knowledge of a dispute were more reliable than verdicts based on ordeals of freezing water and contests of brawn and agility.

Henry II also made the law more impersonal and less vindictive. In 1166, the Assize of Clarendon prohibited the prosecution of anyone who had not first been accused by a “presenting jury” of 12 to 16 men from the community in which the crime occurred. The presenting jury fore-shadowed the modern Grand Jury as an accusatory body that identified persons for prosecution but made no determination as to guilt or innocence. The presenting jury was seen as a more neutral and detached alternative to the system it replaced, which required the alleged victims, some of whom were waging a personal vendetta against the accused person, to identify alleged criminals for prosecution.

The writ de odio et atia provided additional safeguards for defendants wrongfully accused of criminal activity, by permitting the defendant to appeal legal issues to the King’s Court in cases where the complainant was proceeding out of spite or hatred.

The presenting jury and writ of appeal underpin two beliefs that have been crucial to the development of the English and system of justice. The first is the belief that a wrongfully accused person is no less a victim than is the target of civil or criminal malfeasance. The second is the belief that the legal system must provide an impartial forum for seeking the truth in disputed legal claims. These two beliefs paved the way for an assortment of procedural and evidentiary protections that have evolved to protect innocent persons from being unjustly convicted in criminal cases, and to keep prejudices from biasing judges and jurors in civil cases.

However, the English monarchy did not centralize its power without cost. Frequently, English rulers abused their enlarged power to such an extent that they met with popular resistance. One of the earliest such confrontations occurred in 1215, and produced the first great charter of constitutional liberties, the Magna Charta. The Magna Charta can best be understood as a peace treaty between three rival jurisdictions of political and legal power: the Crown, the church, and the barons.

In the thirteenth century, the king’s system of justice competed for influence with ecclesiastical and manorial courts. The ecclesiastical courts were run by the Catholic Church, with the pope presiding as the spiritual head in Rome. Manorial courts were run by barons, who were powerful men holding large parcels of land from the king, known as manors. Each baron, as lord of his manor, retained jurisdiction over most legal matters arising among his tenants, also called vassals, who agreed to work on the land in exchange for shelter and security. The jurisdictions of the Crown, the church, and the barons overlapped and each depended on the others for support.

The tyranny of King John (1199–1216) alienated the church and the barons, converting them into adversaries of the Crown. John was excommunicated by the pope, church services and sacraments were suspended in England, and the barons renounced homage to the Crown. Spearheaded by Stephen Langton, archbishop of Canterbury, the barons confronted King John on the battlefield at Runnymede, where they won recognition for certain fundamental liberties contained in the 63 clauses that make up the Magna Charta.

The Magna Charta granted the church freedom from royal interference except in a limited number of circumstances, establishing in nascent form the separation of church and state. The Great Charter required that all fines bear some relationship to the seriousness of the offense for which they were imposed.  ,

Most important the Magna Charta prohibited any “free man” from being “imprisoned, or disseised, … or exiled, … except by the lawful judgment of his peers, or by the law of the land” (ch. 39).

Fifty years after Magna Charta, Parliament was created to serve as an additional check on the Arbitrary power of the monarchy. In 1265, Parliament was a very small body, consisting of two knights from each shire, two citizens from each city, and two burgesses from each borough. By the fourteenth century, Parliament was being summoned to advise the monarch, vote on financial matters, and supervise the excesses of local officials. Representatives for the barons, later known collectively as the House of Lords, wielded more power than did representatives for the commoners, later known collectively as the House of Commons, who were summoned merely to assent to royal will.

It was not long, however, before the Commons realized that its approval carried a measure of authority. In 1309, the Commons granted a subsidy to King Edward II (1307–27) on condition that he redress its grievances. During the reign of Edward III (1327–77), Parliament asserted three claims that would be echoed with minor variation in the American colonies: taxes assessed without approval from both houses of Parliament were void, legislation passed by only one house of Parliament lacked legal effect, and the Commons reserved the right to investigate and remedy any abuses by the royal administration. A century later, during the reign of Henry VIII (1509–47), the Commons asserted the power of the purse, arguing that all money bills must originate in its house.

These claims, although fairly innocuous when originally asserted by the Commons, were interpreted by subsequent Parliaments to mean that no one could rule without the consent of Parliament, and royal officials who abused their power, including the ruler, could be impeached and removed from office. When the English civil war known as the War of the Roses (1455–85) substantially depleted the ranks of the barons, the voice of the Commons grew louder as the representatives of the commoners were left to fend almost for themselves against a monarchical power that, culminating in the reign of James I (1603–25), claimed to be divine in origin and absolute in nature.

The struggles between Parliament and the crown for authority over England in the seventeenth century were a prelude to the struggles between Parliament and the colonists for control over the American colonies in the eighteenth century. The monarchy maintained that its power to govern England derived directly from God and thus overrode any earthly power, including that of Parliament and common law. Parliament, on the other hand, maintained that “the people, under God, were the source of all just power, and that Parliament represented the people.”

Parliament and the monarchy waged battle on three fronts: military, political, and legal. The military struggle for power began in 1642 when England again erupted into civil war. The political battles constituted a series of muscle-flexing exercises conducted by Parliament and the monarchy. The Commons impeached several of the king’s top advisers and demanded redress of the grievances it summarized in the 1628 Petition of Right. The monarchy, in turn, dismissed Parliament on a number of occasions, and attempted to govern without requesting revenue from the Commons.

These political struggles came to a crescendo when King Charles I (1625–49) and Thomas Wentworth, the commander of the king’s largest army, were tried, convicted, and executed for subverting Parliament and the Rule of Law. The charges were as follows.

Whereas it is notorious, That Charles Stuart, the now king of England, not content with those many encroachments which his predecessors had made upon the people in their rights and freedoms, hath had a wicked design totally to subvert the ancient and fundamental laws and liberties of this nation, and in their place to introduce an arbitrary and tyrannical government; and that besides all other evil ways and means to bring this design to pass, he hath prosecuted with fire and sword, levied and maintained a cruel war in the land against the parliament and kingdom, whereby the country hath been miserably wasted, the public treasure exhausted, trade decayed, thousands of people murdered, and infinite other mischiefs committed. During the sentencing phase of the trial, the president of the High Court of Justice instructed the king: “[T]he Law is your Superior,” and the only thing superior to the law is the “Parent or Author of Law, [which] is the people of England.”

In 1689, Parliament achieved victory in its constitutional struggle with the monarchy when William and Mary (1689–1702) agreed to govern England as king and queen subject to a bill of rights. This English Bill of Rights, declares that the monarchy’s “pretended power of suspending of laws or the execution of laws by regal authority without consent of Parliament is illegal.” It also guarantees the right of each English subject to “petition the king” for redress of grievances, and acknowledges Parliament’s role in “amending, strengthening, and preserving … the laws” of the country.

The English Bill of Rights ended England’s seventeenth-century constitutional struggle between Parliament and the monarchy. By 1765, the pendulum of power had swung fully toward Parliament, prompting eminent English jurist Sir William Blackstone to write that “[s]o long as the English constitution lasts … the power of Parliament” is “absolute,” “despotic,” and “without control.” Because England had no written constitution that constrained the legislative power of Parliament, “every act of Parliament was in a sense part of the [English] constitution, and all law … was thus constitutional.”

 

Software is Eating the World

In the good old days you bought a computer and it had hardware. You bought IBM, or Honeywell or DEC and that became your world: hard or soft it was all from one company. Now software is flexing its muscles and Google’s Android software packages are a key element. They have become what UNIX hoped to become.

Apple is swimming strongly against the tide. They feel that if you like their software you will have to buy their hardware. And to a very large extent that is true. Let’s call this model A.

Elsewhere, cheap chips mean cheaper tools. Wholesale prices of bottom of the line Android phones are under $50. Google sells the operating level of the software and thousands of hackers and small firms and rapidly growing firms make the software gadgets that some of these users want. If the potential market for your $8.95 software gadget is a billion plus [as of September 3, 2013, 1 billion Android devices have been activated] then you need a tiny percentage of that to be profitable.

The Android software is based on Unix principles and Open Source philosophy. Android was unveiled in 2007 along with the founding of the Open Handset Alliance: a consortium of hardware, software, and telecommunication companies. So although it’s not a huge cash generator for Google, it shows them building a different customer-ecology than Apple and demonstrates their software expertise.

At the moment then, Google is sitting on a mound of cash from its main source of revenue: on line ads and clicks. Here’s a summary from Rizzi Capital.

Nov 20 2013, 08:59                              by: Rizzi Capital  |              about: GOOG

Google (GOOG), the third largest company by market cap in the world has been on a tear lately. It’s shares are trading just shy of an all time high, and investors are rejoicing. And soon, shareholders will have another reason to cheer – Google may be just a few months away from announcing its first dividend. The blogosphere and analysts have been buzzing with speculation on this subject for the last year, and now the writing may be on the wall.

Google fights every day to win over consumers, and the Google investor relations team works diligently from morning to night working to please investors. With major tech competitors such as Apple (AAPL), Microsoft (MSFT) and Cisco (CSCO) all returning huge shareholder value via buybacks and dividends, Google will have little choice but to join the tech stock dividend bonanza. Considering Google’s massive cash hoard and abundant free cash flow, it seems like a very small price to pay.

Cash Is Flowing

Google has always been a cash flow generating machine. Its basic core business model of selling advertising space on the back of its search engine results required low capital expenditures and provided fat profit margins. As Google expanded its offerings and made some expensive acquisitions, such as YouTube, DoubleClick and Motorola, as part of its growth strategy, its cash flow generation slowed marginally. However, now, under the leadership of CEO Larry Page, it has integrated most of its businesses and is focusing on strategic, organic growth opportunities. Cash flow is once again powering higher at an accelerating rate and capital expenditures are remaining rather tame.

The chart below shows Google’s net operating cash flow as well as its capital expenditures.

(click to enlarge)google cash flow

It’s always a beautiful thing to see. As net operating cash flow has increased dramatically since 2009, capital expenditures seem to have reached a plateau. In 2013, a year which is not shown in the chart, the numbers only get better.

A cash flow of this size is something which few companies can brag about, and it’s an enviable problem to have. Google has been storing away a large portion of the cash on its balance sheet, and has accumulated more than $50 billion so far. This is more than enough cash for the company to have on hand for any foreseeable capital expenditures. Furthermore, given their debt level, stock price, and the current rock-bottom financing costs, Google would have ample resources available if it wanted to make a major acquisition in the future. There is just no good reason for the company to continue stockpiling cash.

Options

The company fundamentally has two main options. Google can either use their cash to buy back shares on a massive scale, or they can institute a quarterly cash dividend. Either one of these options would be applauded by shareholders, but one option is more likely than the other.

In terms of a share buyback, we should note that Google shares are currently trading near an all time high at over $1000 per share. I know Google. I love Google. But can the company really justify a massive share buyback? Even though Google operates in a virtual monopoly and it is growing rapidly, investors would be hard pressed to say that the shares are cheap based upon any commonly accepted valuation methods. Apple recently announced a massive share buyback worth $60 billion. But Apple has a P/E ratio of 13.12. By comparison, Google’s P/E ratio is 29.5. That’s not exactly discount territory.

In addition, it should be noted that Google “only” has a cash hoard of about $50 billion, of which only 20% is held onshore. Considering that Google’s present market cap is over $300 billion, a small share buyback valued at under $10 billion, would not be particularly meaningful.

For this reason, the most likely course of action will be for Google to institute a dividend program similar to that of its rival, Apple. The program will likely start small, with quarterly payments, and then rise as cash flow continues to increase. For comparison, when Apple initiated its dividend program, the initial payout ratio was about 12% in the first year but was boosted to almost 30% in the second year. Google would likely follow a similar path. At a 12% payout ration, Google would have an initial dividend of about $5 per year, based on analysts 2014 earnings per share estimates of $43.50. Although a dividend of this amount would not compute to a very high yield, it would send a clear message to investors that Google is committed to return value to investors, and not only through price appreciation of its shares.

At the same time Google would be retaining a large enough portion of its cashflow to fund any foreseeable acquisition or to implement a share buyback if market conditions would warrant it. Analysts are predicting that by 2016 Google will have free cash flow of over $20 billion per year. Google would clearly be able to adjust the dividend higher as the cash flows increase.

Counter Arguments

Some analysts have been vocal that Google will not implement a dividend policy for at least 2 more years. These analysts state that Google will want to hold on to as much cash as possible in order to finance a possibly huge acquisition. They claim that until Google reaches the goal of having $100 billion in the bank, it will not return value to shareholders via a dividend. To be honest, I dismiss these claims.

Google is now the largest company in the world not paying a dividend. It has made large acquisitions in the past, such as Motorola and Youtube, but when we really compare these purchases to the massive size of Google’s cash balance, they are minor. Google is a tech company headed by a CEO who is focused on changing the world. Larry Page pumps Billions of dollars into R&D and projects like Google Glass and Google X. From time to time there may be a complementary acquisition which might help further his endeavors, but ultimately Google does not have the culture or history of making massive acquisitions which would radically affect the company. Larry Page has his eyes set on using Google’s cash reserve on research and development to create revolutionary products from scratch. These so call “moonshot” projects require large development costs, but given Google’s size, they do not make a significant impact on cash flow.

“While they’re-in absolute dollars-probably significant amounts, they’re not significant for Google, and I think you should actually be asking me to make more significant investments. I wish I knew how to do that,” – CEO Larry Page, when asked about Google R&D expenditures.

Furthermore, stating that the company would choose to only start paying a dividend once it had $100 billion in cash on the balance sheet is arbitrary. Google is already facing scrutiny from the government because of it’s low tax rate and high offshore cash reserve. Would it really want to make global headlines by declaring it had achieved the dubious honor of joining the $100 billion club?

Bottom Line

Google is a company which is growing rapidly and generating more cash than it knows what to do with. It has a war chest worth over $50 billion, and will likely not want to keep adding to that number for very much longer. As all other large technology companies have started paying dividends, shareholder pressure for a return of value is intense and will only increase. In a situation like this, shareholders will inevitably be rewarded. All the elements are in place for Google to implement a dividend policy next year. While it will likely start with a low payout ratio as compared to competitors, as cash generation accelerates, shareholders will be rewarded with a rapid dividend increase. Look for an initial quarterly dividend of $1.25, or $5.00 annually, and expect it soon.

ALR Farmland. Part 1.

Our Scattered Farms and the ALR

With some data from: Vancouver Sun November 16, 2013.
Except for a small board and staff who are charged with overseeing the regulations, BC does nothing positive to preserve and expand farmland. Expenditures on Agriculture have been savagely reduced over the past decade by both senior levels of government. As a result, the ALC is an increasing anomaly. A small Prescriptive group with noble aims but no means of reaching them. Could the province’s4.6 million people ever feed themselves? Especially the 2.5 million who live in greater Vancouver?

Historically, only five per cent of lands in British Columbia are locked in the Agricultural Land Reserve. Much of BC is  mountainous. The largest blocks of arable land are concentrated around the Fraser, Kootenay, Columbia, Skeena and Peace River basins. Even though this is only 5% of all land, it is still a lot of arable land.  4,621,699 hectares.

http://www.alc.gov.bc.ca/Reference_and_Resource_Documents/Docs/ALR%20Area%20by%20Region.pdf

So the simple answer is Yes. On a hectare one can not only grow enough vegetables and grains to feed a family of four, one can keep a cow or two or some sheep, goats, pigs. Some feel you can make a good living from a single acre in a market garden.  http://www.articlesnatch.com/Article/How-to-Become-Self-Sufficient-on-One-Acre-of-Ground/383835

Unfortunately, for every one to get to “their” acre would not be easy. The land is in the north and the people are in the south. So let’s look first at the regions.

So let’s look first at the regions. SIX REGIONS BY A CHART (from the ALC):

Region         ALR Area (hectares)*   ALR Area (percent)  PER ACRE

North              2,210,783                         49%    …. $44.85

Interior           1,528,968                          33%     … $28.20

Island             116,207                               2%       …$1,083.00

Okanagan      224,977                               5%        …$811.42 plus $320 (wine tourism)

Kootenay        392,557                               8%       …$24.60

South Coast   148,207                                3%       …$5,140  (Van) $5,866 (FV)

Total               4,621,699                             100%

THE REGIONS

1. The North includes large blocks of agricultural land clustered around Fort St. John and Prince George. Half of B.C.’s ALR land is in the North, producing alfalfa, beef cattle and most of B.C.’s wheat, barley and canola Peace River Regional District Total ALR land 1,288,967 ha Prime agricultural land 482,000 ha Forage/pasture 339,848 ha Gross farm receipts $144.4 million.

GROSS RECEIPTS PER ACRE: $44.85.

2. The Interior extends from the arid rangelands of Nicola Valley to the rainforests of Bella Bella on the Central Coast. Crops under cultivation are mainly cereal grains such as wheat, oats and barley and feed crops such as alfalfa. Cariboo Regional District Total area in ALR 935,629 ha Total area farmed 486,079 ha Area in crops 54,123 ha Area in pasture 352,000 ha Farm gate receipts $66 million.

GROSS RECEIPTS PER ACRE: $28.20.

3. Vancouver Island. The Island has several significant fertile valleys and was, a century ago, nearly food self-sufficient. Today, much of the arable land is not farmed. While large-scale farms are increasingly profitable, agricultural activity in Cowichan Valley particularly is limited by a lack of irrigation.

3.a  Cowichan Valley Regional District Total arable land 32,830 ha. Total land in ALR 17,719 ha. Land being farmed 11,559 ha. Land under irrigation 2,465 ha Gross farm receipts $48 million.

GROSS RECEIPTS PER ACRE: $1083.60

4. Okanagan Valley Blessed with water, sunshine and warm summer temperatures, it is ideal for crops from tree fruits to vegetables and vineyards. The vast majority of ALR land in the region is rangeland for cattle. The valley also has a growing food processing industry.

North Okanagan, Central Okanagan and Okanagan Similkameen regional districts. Total area in the ALR 175,002 ha. Alfalfa, hay, field crops 27,000 ha Fruits, grapes, nuts and berries 9,402 ha Gross farm receipts $355 million.

GROSS RECEIPTS PER ALR ACRE: $811.42

Okanagan Wine tourism receipts $140 million. GROSS WINE TOURISM RECEIPTS PER ACRE: $320.

5. Kootenay. Once home to a significant cattle industry, the region has had that business decline over the past decade. About 45 per cent of the land in the ALR is Class 5 and 6, unsuitable for crops. A short growing season and frequent drought limit the range of potential crops.

East Kootenay Regional District Total land in ALR 265,910 ha Field crops and hay 10,757 ha Not cultivated 57,940 ha Crown/grazing leases 157,008 ha Gross farm receipts $16 million.

GROSS RECEIPTS PER ACRE: $24.06

6. South Coast This includes the high-value agricultural lands in Metro Vancouver, the Fraser Valley and the Pemberton Valley. More than 200 different crops are grown in the region, which is by far the most productive in B.C.

6.1 Metro Vancouver It produces 27 per cent of B.C. total gross farm receipts in 1.5 per cent of the land base. Main crops are field vegetables and berries. Total land in ALR 61,228 ha Cultivated 24,749 ha Pasture 7,325 ha Woods/wetlands 3,266 ha Farms smaller than four hectares: 49% Gross farm receipts $789 million.

GROSS RECEIPTS PER ACRE: $5,154.50

6.2 Fraser Valley It produces dozens of commodities, but especially dairy, corn, greenhouse vegetables, poultry, berries and flowers.

Total land in ALR 75,000 ha. Cultivated 63,838 ha Gross farm receipts $1.1 billion

GROSS RECEIPTS PER ACRE: $5,866.66

Snookered

Approval for Enbridge pipeline doesn't mean it'll actually get built

Alberta Premier Alison Redford, right, and British Columbia Premier Christy Clark have reached a framework agreement on the Northern Gateway project, but even if it is eventually approved, the pipeline would face many barriers, including lawsuits, political opposition and the threat of physical blockades.

Photograph by: Canadian Press , The Province

With last week’s framework agreement between B.C. and Alberta, another step has been taken on what oil-pipeline backers call their “path to the Pacific.”

Two proposed multi-billion-dollar pipelines connecting Alberta’s oilsands to the British Columbia coast are hugely controversial and face fierce opposition.

Step by step, however, backers of the projects hope to win approval to build, starting with the $6.5-billion Northern Gateway pipeline proposed by Calgary-based Enbridge.

Marathon environmental hearings by the federal Joint Review Panel into Northern Gateway wrapped up in June, with a recommendation on the project expected next month. The panel could recommend the pipeline proceed with a long list of special conditions attached to protect the environment from accidents and oil spills.

Enbridge has launched a blitz of feel-good television ads in anticipation of a green light from the panel. Prime Minister Stephen Harper’s cabinet will get the final say next year. Many observers predict the Enbridge pipeline will be approved and the project will receive a certificate to proceed from the National Energy Board.

But will it be built? That’s another question.

“I fully expect the federal government to give its approval,” said Keith Stewart, campaign co-ordinator for Greenpeace. “But the days of being handed a piece of paper by the government that says, ‘Now you get to to build this’ are long over. The Enbridge pipeline will never be built.”

The pipeline, even if approved, would still face multiple barriers, including lawsuits, political opposition, community backlash and the threat of physical blockades.

“Northern Gateway is the hill to die on in British Columbia,” said Art Sterritt, executive director of anti-pipeline Coastal First Nations.

“I already have people calling me to volunteer to lie down in front of bulldozers. It would make the Clayoquot Sound protests look like a tea party.”

More than 800 people were arrested at the anti-logging Clayoquot blockades in 1993.

But before any bulldozers are blocked, the pipeline could face an even more imposing barrier – in court.

“There’s a high probability of litigation by a number of First Nations that could delay or derail the project,” said Jessica Clogg, senior counsel at West Coast Environmental Law.

Clogg said any lawsuits against the pipeline would likely hinge on the government’s constitutional “duty to consult and accommodate” First Nations, as established in previous court decisions.

“The courts have ability to quash or set aside any unconstitutional decisions of government,” she said, meaning a judge could effectively tear up the pipeline’s approval certificate.

Could the pro-development Harper government avoid years of litigation by referring the Enbridge pipeline case directly to the Supreme Court of Canada for an expedited decision?

Unlikely, Clogg says. “These questions are highly fact-dependent and a lower court would be in a much better position to weigh evidence of whether the Crown had met its duties.”

In other words, the pipeline could be stopped dead in its tracks in court.

Then there’s the political battle. “If the pipeline was approved we would fight it in the legislature and in the court of public opinion,” said NDP environment critic Spencer Chandra Herbert.

The B.C. government is officially opposed to the Enbridge pipeline for now, but has not ruled out supporting it if Premier Christy Clark’s “five conditions” are met.

The conditions include “world-leading” environmental standards and a “fair share” of economic benefits for B.C. Enbridge says it supports Clark’s conditions and now – as a result of last week’s framework agreement – so does Alberta Premier Alison Redford.

“If Christy Clark was to turn around and support this pipeline now it would be a bigger double-cross than the HST,” Chandra Herbert said.

The environmental movement is already gearing up for one of the largest – and most expensive – battles B.C. has ever seen.

“U.S. foundations and environmental groups will escalate their opposition,” said writer and researcher Vivian Krause, who specializes in tracing foreign money pumped into B.C. environmental campaigns.

She figures the Gordon and Betty Moore Foundation, the deep-pocketed environmental organization based in San Francisco, has already granted around $125 million to B.C. groups.

“Now that Clark and Redford have done their détente, the environmental groups will up their ante, and the funders will up their funding,” Krause said.

Of course, environmental groups that receive American funding are quick to point out that Enbridge itself is about one-quarter U.S.-owned, according to the company’s shareownership disclosure.

You can call all this the calm before the storm. With the pieces falling into place for Enbridge’s controversial pipeline to finally be approved, the battle is only just beginning to actually get it built.

© Copyright (c) The Province

How Bad is Fracking for BC?

1. So bad that the Cabinet is afraid to make its own report public.

2. So bad that BC could end up producing more Co2 emissions than the Alberta tar sands.

3. So bad because despite the Natural in its name, every tonne of LNG will, on average,  produce a tonne of carbon. The current cleanest LNG production produces a third of that. So each proposed LNG facility would need to reduce its probable emissions by the equivalent of ALL the emissions that a city such as Vancouver produces just to be able to say that it is “cleanest” and each facility would then still add as much carbon annually as does Vancouver.

Download the full 20 page report from Tides Canada for details. http://cleanenergycanada.org/wp-content/uploads/2013/09/CEC_Cleanest_LNG_World.pdf

Here’s the globes summary of the report the Cabinet does not want you to see:

Globe. November 8th, 2013.

The B.C. government is sitting on a report commissioned by its climate-action secretariat that measures the greenhouse-gas emissions associated with developing a liquefied natural-gas industry.

The pursuit of LNG is Christy Clark’s central ambition as Premier but it is one that is widely expected to collide with the province’s legislated requirement to reduce greenhouse-gas emissions. So far, her government has sidestepped questions about how former premier Gordon Campbell’s legacy on climate change will be reshaped to accommodate Ms. Clark’s agenda around resource development.

The study, commissioned last March at a cost of $16,000, was to be “a high quality, polished report that would be appropriate for sharing publicly on a stand-alone basis if desired at some point in the future,” wrote Stephan Wehr, vice-president of the Delphi Group, in an e-mail last March confirming the government contract.

The documents obtained through a Freedom of Information application are largely redacted – blanked out because the contents are considered advice to cabinet. However it is clear that before the provincial election last May, the government would have had its answers since the Delphi Group promised a report within two weeks.

The ministry of environment refused on Thursday to release the report, however, saying it is “to support ongoing cabinet discussions and not publicly available.” A spokesman said Environment Minister Mary Polak was unavailable for comment.

In the absence of any government data, Tides Canada released its own assessment of the potential impact of LNG on the province’s carbon footprint in September. That report provided estimates showing that if the LNG industry grows as large as the B.C. government predicts, its carbon footprint could amount to nearly double that of the entire oil sands in 2010.

So far, the provincial government has not established any regulations around the energy-intensive process of producing LNG, although planning documents indicate that most LNG plants are expected to burn natural gas to make the massive amounts of energy required to convert natural gas to a liquid state. Electric-drive compression fuelled by renewable energy does not appear to be the favoured option.

The province is expected to announce its new LNG tax regime as early as this month – the details about environmental regulation will likely follow.

But Ms. Clark set the bar high when she repeatedly promised that B.C. would produce “the cleanest LNG in the world.”

By the year 2020, British Columbia must reduce its greenhouse-gas emissions by at least 33 per cent below 2007 levels. The target was a central plank in Mr. Campbell’s commitment to fight climate change. A year ago, Ms. Clark suggested those GHG targets may be bent to clear the way for LNG: “We’ll have to see what happens with some of those targets. We may start thinking more globally about this as a result of it.”

More recently, her government has dismissed questions about the targets as hypothetical, and Ms. Clark has clarified that she doesn’t count the significant emissions associated with the upstream production of natural gas as part of her clean LNG promise.

Merran Smith, director of the Clean Energy Program at Tides Canada, said her organization conducted its own LNG study because the government appeared to have no data of its own about the potential GHG impact.

“There was no information publicly available to let the public know, what is it going to take for the government to live up to its commitment that we would have the cleanest LNG in the world,” she said Thursday.

The Tides Canada report concluded that, unless the province adopts strict and potentially costly rules around production, B.C. LNG could produce three times as much carbon dioxide as the best projects in Norway and Australia. The province is seeking to find the “sweet spot” on taxation and regulation that will land final investment decisions for LNG plants.

  

infographic

What Apple Should Buy

A good summary.  55 Billion shopping spree.

After spending the better part of yesterday digging deeply into Samsung’s (OTC:SSNLF) analyst day materials, it has become clear to me that Apple (AAPL), over the long haul, stands very little chance against the Samsung behemoth. While Apple’s products truly are wonderful, and while its engineering prowess is certainly very impressive, it’s clear that Samsung will brute-force its way into taking more and more marketshare from Apple at the high end while at the same time will enjoy key structural advantages in the low end that Apple would – at least in its present form – not be able to match.

Apple needs to start getting much more aggressive if it is to survive and thrive against the Samsung assault and it needs to move quickly.

Samsing Owns Nearly The Entire Smartphone/Tablet Bill Of Materials

Samsung builds the following:

  • DRAM
  • NAND
  • Displays
  • Apps processors (it even builds them for Apple)
  • Cameras

On the other hand, Apple relies on third parties for just about every one of these. In fact, while Apple has been attempting to move away from dependence on Samsung for many of these components, it has been one of the key enablers of Samsung’s semiconductor manufacturing strength. When you’re building the apps porcessors (as well as potentially modems) for every iPhone and iPad, then that’s going to help drive reinvestment.

Samsung, of course, leverages this great cost structure to not only flood the very high growth low end market with smartphones, but it also pushes the envelope at the high end at prices that match (or even undercut) what Apple provides. Let me show you an example.

Galaxy Note III versus iPhone 5S – An Example

The most obvious comparison is the Galaxy Note III versus the iPhone 5S. For $299 with a contract, Samsung sells users the following:

  • 5.7″ 1920×1080 display
  • 3GB of RAM
  • Either Snapdragon 800 or Exynos 5 Octa SoC
  • 32GB of storage

Apple, on the other hand, gives you the following for $299 on contract:

  • 4″ 1136×640 display
  • 1GB of RAM
  • Apple A7 SoC
  • 32GB of storage

Now, thanks to the superiority (to many customers, anyway) of iOS and the power of the Apple brand, Apple can get away with offering “less” hardware for the same price, but just how much longer can this last?

It’s clear that in order to preserve its margin structure, Apple could not, say, offer 2GB of RAM to go with its new flagship (and moving to 64-bit – which leads to a 20-30% increased memory footprint – without increasing the RAM size seems to be indicative of this). But Samsung has no problems sticking in 3GB of RAM and calling it a day since it produces its own DRAM.

The same thing on the display side of things. Since Samsung builds its own displays, it can not only invest in next generation display technology to gain an edge on competitors, but it can also afford to put such displays in the devices that it sells at very attractive cost structures. Apple, on the other hand, needs to pay somebody else’s margins for its displays, which is why it’s not as aggressive on the display front on smartphones as its competitors are.

Finally, Apple has to pay for the fabrication of its applications processor. In fact, it pays this margin to Samsung. Samsung, on the other hand, builds many of the applications processors that it uses in smartphones (although not all as Samsung uses plenty of Qualcomm (QCOM) silicon built at TSMC (TSM) – for now. This will likely change as Samsung does more silicon in-house)

What Can Apple Do?

Apple needs to stop wasting money on buybacks when there is still plenty of growth ahead. It should use this money, in no particular order, to do the following:

  • Buy Micron (MU) so that it will have DRAM and NAND sourced in-house, thereby significantly improving its cost structure. This not only benefits the phones, but the Macs, too. Apple can also make a mint actually selling DRAM to the other players. Apple also gets NAND flash with such a deal, which will only continue to become more important going forward
  • Buy a semiconductor logic foundry. It’s clear that Apple has the volumes to sustain a leading-edge semiconductor foundry, and if it wants to really improve its cost structure here, owning a semiconductor foundry and funding the development of world-class semiconductor manufacturing technology is probably the way to go. I am sure Mubadala is just itching to get Global Foundries off of its hands, so perhaps either a full ownership of that company – or a big fat equity stake – would be the way to go there.
  • Bring display manufacturing in-house. Apple should either outright buy a company that can build its device displays for it (again, Apple has very nice scale with iPhone, iPad, and Mac), or it should make a very big equity investment in such a firm. Sharp Corporation would only cost Apple ~$5b (assuming a 40% premium to current market price)

So, how much would it cost for Apple to do all of this? Well, buying Sharp would probably cost the company about $5B, Micron would probably cost $30B (slightly over 50% premium to current price), and buying Global Foundries may cost at most $20B. All in all, we’re looking at a shopping spree of about $55B. While this is certainly not a trivial amount of money, it’d all be a much more effective way to create shareholder value than an the absolutely insane (I mean this as negatively as possible) $150B buyback that Icahn is trying to push management into pursuing. I get that Icahn wants quick returns today, but Apple needs to focus on delivering long-term value. Buying back stock when there’s another leg of growth to be had is simply foolish.

In fact, Apple should probably issue stock to do most of these deals. Yeah, it dilutes the shareholders, but so what? If Apple can successfully integrate these acquisitions, then they should eventually drive meaningful top and bottom line growth and the share price could be at well over $1000 as it would be in a position to take back significant share from Samsung and own the majority of the smartphone space.

Bottom Line

Will Apple do this? Probably not, but the point is that Apple needs to drive the next leg of its growth, and it needs to do so by becoming much more like Samsung (and beating it at its own game thanks to its own advantages). Samsung, at its analyst day, says that it sees a path to $400B in revenues by 2020. Apple needs to be able to see the same or this stock will be dead money at best and set to decline substantially at worst.

Source: Samsung Is Apple’s Worst Nightmare