The term Branch Plant Economy is not a new one, and gained specific relevance for Canada in the early 20th Century, when US Companies began to build factories in Canada to circumvent pricey tariffs on importing their wares to the Canadian market. One example where this really took hold is the automobile manufacturing industry, centered in Ontario, that has churned out Chevys and Chryslers, among other makes, for both Canadian and foreign markets. While NAFTA destroyed the tariffs that caused these plants to be set up in the first place, Big Auto successfully lobbied the Ontario and Federal governments for subsidies and tax credits that helped their north-of-the-border plants remain cost-effective, and in some ways cheaper to operate, than their US counterparts. That lobbying strategy has been highly successful, and while it was overshadowed by the US auto industry bailout, the Ontario and Federal Government bailout of Canada’s auto industry was $3.3Billion, nearly 20% of the proposed US bailout package in 1998.

The Canadian auto industry typifies the modern idea of the branch plant economy. The term really grew legs in the 1960s and 1970s during a rise in Canadian economic nationalism, and fears that our country was becoming a U.S. Protectorate as a cause célébre during Trudeaumania. Most of the rhetoric around this idea is centred on the not-so-great visage of a nation whose factories (literal and metaphorical) and workforce are wholly owned and commanded by foreign companies, with the profits and fruits of their labour remaining largely overseas. For economists, this is tantamount to the surrender of the nation’s sovereignty. If your paycheque in Canadian dollars is signed by a US-based company you are likely keenly aware how much command and control of your company’s destiny resides this side of the border.

In a white paper from the Canadian Advanced Technology Alliance, the organization argues that our country’s philosophy on innovation is all wrong. On that point I couldn’t agree more. The CATA argues that while we have many programs in place to fund R&D, whether it’s the soon-to-be-reformed SR&ED or the NRC’s IRAP program, we have none in place which explicitly helps our countrymen reap the benefits of this R&D through commercialization. The white paper suggests that the effect of this more than $7Bn/year in R&D subsidy spending is for taxpayers’ money to act as a stimulant to profitability outside of Canada’s borders.

Why? Because funding the research without funding commercialization leads to a familiar story for those of us in the technology scene: the flip. Canada’s venture financing having been aenemic as it has during the past ten years, Canadian companies chasing great ideas have had to bootstrap, scrape, and starve their way forward — typically leading early investors and founders to the mutual desire to sell the business early.

Many of us, myself included, bemoan that while some great products and technologies have emerged from Canada (such as Flickr or BumpTop or Radian6) we typically fail to commercialize these in scale until they are purchased by a US entity. Certainly these companies’ (mostly Canadian) investors are happy — since Flickr went to Yahoo!, BumpTop to Google, and Radian6 to Salesforce at sizeable bumps in valuation — but the profits generated from these innovations will be realized by a US entity, and in most cases the workforces don’t even remain in Canada.

A pessimist’s way to evaluate those three deals, presuming that they all claimed SR&ED / IRAP / CNMF money at some point in their evolution, is as the Canadian taxpayers in effect assuming R&D risk to the benefit of US companies and, arguably, a handful of investors. In other words, much like the film and video game industries, not to mention the automobile manufacturing business, Canada’s tech industry functions as a Branch Plant Economy at worst, or as the equivalent of a Junior A hockey league at best.

The CATA advocates that the SR&ED program be reformed in a few trivial ways and, using the savings, that the subsidy be expanded to support commercialization activities associated with innovation. This is an interesting idea and worth the read. On the other hand, having read the tea leaves I believe that the government’s position is that if it’s supporting the R&D component, the investment community is incentivized to fuel commercialization.

However, this is clearly not how things are going down in practise. Next to RIM, or previously Nortel, Canada can boast very few large-scale domestic tech industry successes. Anecdotally there are as many examples of global companies, such as Lululemon, which were built in Canada without any form of subsidy as there have been tech giants facilitated by giant R&D grants. Across the border programs like SR&ED and IRAP are unheard of, though the US Government has subsidized a great many technologies via DARPA and NASA.

And startup veterans such as myself frequently argue that Canada’s SR&ED, IRAP, and CNMF funding strategies represent a rare advantage over founding and operating a technology company in Silicon Valley — so long as they are well-run programs and do not overburden startups with oversight and administrivia.

As for our neighbours to the south, it may simply be that proximity to their more free-flowing investment economy and greater density of large tech-oriented businesses (not to mention a market 10x the size) is too much of a temptation to resist for fledgling Canadian tech ventures. Perhaps our nationalistic pride is a whimsical relic of the past, and we should instead just stop worrying and learn to love the bomb.

Does the CATA solution of “subsidizing” the commercialization, and not just the R&D component, of new technologies carry water for Canadian tech startups?  Maybe. Does it open up SR&ED to even greater abuse by recipients who do not require it? Probably. Is there anything we can do to mitigate the prevailing trend of Canada’s tech industry as a Branch Plant Economy? You tell me.

This was likely their way of addressing the rather dramatic deflation of that facility in the winter of 2007, when the ceiling literally collapsed during a storm.   This sounded like a good idea — it was anchored on attracting a Major League Soccer franchise to the city and for PavCo was designed to foil proposals for a ~$70M, 20,000 seat shoreline stadium fronted by Greg Kerfoot et al, owners of that MLS franchise (the Whitecaps). BC Place opened in 1984 and has never once turned a profit.  Presently it loses approximately $6.3M per year of taxpayer dollars.  It was built for Expo ’86 and was designed as a modernist building in an era when the city around it was humble and underdeveloped — a shining example of the future, or what we thought it might hold architecturally, way back in 1980.

In the intervening 30 years, the City of Vancouver has very much grown up around it, both physically and spiritually.  Many glass and brick (honouring Yaletown’s storied history) buildings have grown up around it, and as a result BC Place now stands as an architectural anachronism casting its giant hulking bare concrete mass amidst what might otherwise be termed a neighbourhood.

I think I am not speaking out of turn when I suggest that it is objectively, fundamentally, and irreparably ugly. At $150M though, retrofitting this beast with a retractable roof (which it always should have had) seemed more sensible than a new stadium which we were told could cost 3x-4x as much — of taxpayer dollars, of course.  So there we set the course.  Fund it.  Build it.  Move on.

Had this been any other city, any other country, or any other province it might have ended there.   But of course it hasn’t. By January 2009, this $150M price tag was inflated to $365M.   Construction costs for the roof and supporting structure were attributed to “seismic upgrades”, “plumbing”, and other euphemisms to mask the fact that the project began experiencing overruns even prior to commencement.   Then by the end of 2009 it was announced that the official budget was now $458M… with no mention made of earthquakes or plumbing. This now exceeded the cost of the proposed Whitecaps stadium (which was also to have a retractable roof) by 650%.

… and now rivalled the cost of building brand new structures around the world with retractable roof capabilities and much, much more.   Munich’s Allianz Arena, which I toured just after it opened, was completed in 2006 for a cost of €286M and seats 60,000.   That stadium houses two Futbol teams and is near capacity for every event.   In a disastrous project gone wrong, the good citizens of Indianapolis still ended up with a massive 70,000 seat stadium and conference centre for the bargain price of $700M (and which actually looks like it might fit in nicely in Yaletown).  By comparison, BC Place has 50,000+ seats — but it has almost never been full in 25 years of operational history.

Kerfoot’s earlier proposal highlighted the fact that Vancouver doesn’t need a 50,000 seat stadium.   So to get to a stadium of the size we really need?

An example might be Seattle’s SafeCo Field, which seats 30,000 for football, at a price tag of about $516M 10 years ago. But not us.   We didn’t need a huge stadium but we’ve got one, and now we’re doubling down on a 30-year-old bad bet by Bill Bennett which, it was revealed today, doesn’t even work in the rain.   That’s right.   We live in the rainiest big city in North America, and the retractable roof cannot retract in the rain. So… let’s see.   We’re spending more than the cost of building a brand new stadium that could be designed to fit into the neighbourhood around it.

And as the curtain is lifted on the publicly-funded project it’s becoming quite clear that the finished product is doomed to cast a huge, ugly shadow over the entire city, doesn’t function as promised, and has a capacity hugely in excess of that which we need.   Have I got everything correct? Thought so.

** UPDATE Nov. 5/2010 – Bob Mackin reveals the new price tag is now an unconfirmed $563M.

Poppies - painted by Steve Thoms

In Honour of Canadian Remembrance Day, which honours the Armistice of November 11, 1918 and the service of soldiers before and since that bloody war, I am republishing two excerpts from the collected memoirs of my Great Grandfather, a veteran of two world wars, and in particular Vimy Ridge.  William Markle Pecover died in 1986 when I was about 15, a mountain of a man filled with vitality, and an inspiration to generations who followed him down the family tree.

On such a day, it bears reflection that as you read this there are more than 2800 soldiers posted in Kandahar, a battlefield equally dangerous and significantly more complex than Vimy Ridge.  So far, 133 of those have perished and more will soon.

Here is my Great Grandfather’s account of Vimy Ridge, excerpts of which were reprinted in Pierre Berton’s book Vimy:

A Memory of Vimy Ridge
By One Who Was There

By William Markle (Mark) Pecover
Private, D Company, 27th (City of Winnipeg) Battalion

William Markle Pecover and father, 1916

I have been looking over a little, old, dirty, worn, khaki-covered diary tonight — one of those “Bound In Cloth” one-shilling affairs,  “Soldiers Own Diary for 1917, Containing Information Invaluable To Every Soldier At Home Or At The Front.” Here I have a record scribbled in pencil day by day, G.H.Q. orders to the contrary, of the lifetime of events crowded into those few months and years of war.

The memories that are brought back by such a record, who can tell? Something of pain — of a lingering witsfulness for the glorious cameraderie and high adventure of those days — a shudder, perhaps, at the horror — a thrill of pride at having gone, a prayer of thankfulness at having come back. A feeling almost akin to despair at the futility of it all that the years have revealed.

Turning over the pages, I come to that far-off Easter of 1917:

“Sunday (Easter Day), April 8: Left Petit Servins and marched to Mont St. Eloi en route to Neuville St. Vaast.”

“Monday, April 9: Over the bags to Farbus Woods.”

“Tuesday, April 10: On captured outpost in Farbus Woods, in a sunken road. Mac wounded. HELL!”

“Wednesday, April 11: Back to Neuville St. Vaast last night. Slept all day in cellars under the ruins; parcels from home.”

No very extended account of Canada’s greatest battle, yet enough to recall with perfect clearness and vividness of detail the events of two days that were burned into the very souls of those of us who “went over.” And on this Easter Monday, April 9, eleven years after, how many  thousands of us will in memory again climb those muddy, bloody heights of Vimy in the cold, wet, grey dawn — again live that ”crowded hour of glorious life?”

Bivouac at St. Eloi

Easter Sunday I remember — who of the “Sixth” does not? — around the woods of Mont St. Eloi. There in the welcome warmth of an early spring sun we bivouacked, enjoying what the stress of army life seldom permitted, a day of real rest. Pals gathered around in little groups and laughed and sang together in a comradeship that underneath all its lighthearted banter and good-natured chaff carried an undercurrent almost of sadness, because of what the next day might bring.  The regimental bands played throughout the day — airs contrived to keep down that question uppermost in the mind of every mother’s son of us lounging there in Mont St. Eloi, the question which I find pencilled across the page of my little khaki memo — “I wonder.”

Village of Mont St. Eloi, 1917

“Madamoiselle From Armentiers” they played, and “Pack Up Your Troubles In Your Old Kitbag,” and “Blighty.” Jazz, ragtime, doggerel verse, if you will, but immortal in the minds of those who sang them “over there” because men went to their death with these songs on their lips. So we sang while the bands played, and adjusted our equipment and drew down our ammunition and packed away our bully and biscuits and wrote letters home,  trying carefully to keep out any suggestion of the possibilities that Easter Monday might bring.

So at last Easter Sunday darkened into night, and with darkness came a chill, wet wind. We huddled together and shivered in little groups, and wished that we were away and through with the bloody business that we had come to carry out for Canada. As the night wore on, line upon line of Canadian boys marched past — silent, grim, with faces set and determined, splashing through the mud and wet to the front line. And when our turn came we formed up quietly in the darkness and swung into our place in the seemingly unending files of Canada’s young manhood.

An Ominous Silence

Neuville St. Vaast is but a short march from Mont St. Eloi, and soon we found ourselves crowded into a bit of a shallow, muddy “jumping off” trench. The front was strangely and ominously silent that night, evidencing the fact that Fritz had no inkling of pending events that were to cost him so dearly in a few short hours. We crouched down as close as we might to the mud bottom of the shallow trench and shivered under the merciless elements. A cold, drizzling sleet made the night miserable, and we longed for daylight and an end to this chilling inactivity.

How miserably any words of mine must fail in trying to picture the beginning of that glorious, terrible day — the terrific suddenness of it all, the fearful, maddening, terrifying roar that in one brief, awful moment broke the uncanny quiet of the black, early April morning, the roar from the throats of what seemed a thousand thousand  great guns. On the stroke of five — zero hour — in one great, terrible chorus as one unit they roared out across Vimy the first warning to the Germans that Canada wanted Vimy, that Canada’s young manhood had started up that fearful blood-bought road to Farbus Wood and Thelus and Petit and “the Pimple.” Wheel to wheel, line upon line, thousands of artillery hurled their challenge of death into the enemy lines. From behind us for miles came that deafening roar, while overhead screamed the great shells to burst out in front over the German lines. Lloyd George had kept his promise well. We were “battering our way to victory with big guns.”

The Taking of Vimy Ridge, Easter Monday 1917 - Painted by Richard Jack

Then as we watched, the mud all about us seemed stirred to life. From a myriad of dark shell holes and bits of trench Canadians crept and leaped and stumbled, their dark forms silhouetted against the lurid background of flame from the belching guns, moving with their faces toward the east, toward the crest of that much coveted strip of ridge which in a vain vain attempt to gain France had lost half a million men. Wave followed wave in endless succession, moving slowly, resolutely, silently as men filled with a fatal purpose and determination.

The Spectacle At Dawn

While we stood watching in silent awe the spectacle unfolding before us in the red light of the gun flashes, the wet grey dawn began to spread across the sky. Then we saw lines of prisoners beginning to wander towards our trenches — a scattered few at first, but steadily increasing in numbers, arguing well for the success of our first early attack. They came willingly, gladly it seemed. We watched them without malice — envied them their lot perhaps at being through with the bloody business, and wondered if we would get out of it as well as they.

German prisoners follow wounded Canadians to the rear, April 1917

As the daylight increased and we could look out over the ridge, we wondered whether anyone could be alive there. The havoc wrought by our guns was terrible — staggering, complete. As far as could be seen. the air was filled with gas and smoke and bursting shrapnel, and mud and debris blown to the skies from the merciless rain of fire. It seemed as if no inch of ground held by the enemy could escape that rain of death. And into the black cloud pressed wave upon wave of our boys. , while from continued to emerge new groups of prisoners, endless hundreds of wounded, with a smile of victory and satisfaction struggling through the suppressed agony of pain that filled the eyes.

Then, while we stood by, enthralled, horrified, yet filled with a strange exhultation because we were there, came a short word of command passed along the trench, and our wave clambored out into the mud and wire to take its place in the Juggernaut of war rolling mercilessly over Vimy. What a glorious moment this — yes, glorious in spite of all. War! War! War! The grand climax of the great adventure! And we who a few short months before had thrown aside school texts and laughingly, carelessly donned the khaki, felt ourselves thrilled and ran into the bloody business with the wild abandon of youth.

Fury Dies Down

Moving forward in the dull light of that clouded April morning, we learned full well the nature of a great modern battlefield. This was war. Many things we saw as we stumbled over the desolation of what had been bitterly contested ground but an hour earlier. And just ahead of us roared the barrage and all the fury of the fight — the death-rattle of the machine guns, bursting ov erhead of shrapnel, thousands upon thousands of great shells, all the fiendish implements of death that man had devised. . In contrast, the area through which we passed seemed strangely quiet. Here the fury had spent itself Here death reigned, and the agony of pain.

For weeks we had been drilled in the plan of the battle. Day after day we had gone “over the tapes” back at Maisull Bourche, across the open field of the French countryside where our lines of attack were laid out by white tapes. And so we were familiar in a general way with our direction and distance and final objective. It was to be the work of the “Sixth” to establish the furthest outposts along the steep eastern slope of Vimy. Farbus Wood was our objective, and Farbus village, a straggling clutter of ruins at the foot of the ridge. Here our orders were to “dig in,” establish a new front line and bear the brunt of the counter-attack which by all the rules of war Fritz could be counted upon to make.

Vimy Ridge, Officers' Dugout in the Canadian Lines - the light was added later

Easter Monday was drawing to a close when, in the cold wet of the afternoon, we reached the crest of the ridge. Out in front of Farbus Wood we crouched in shell holes, waiting for the word of command to move forward to capture this last objective in the day’s great adv ance. But the first wild, fierce frenzy of the fight had spent itself, and the enemy, thoroughly beaten for that day, seemed to have no heart for further encounter. Broken and disorganized, they took what cover they could and escaped or gave up, willingly it seemed, to our boys. Only a broken, desultory fire met our advance, the most effective resistance  being offered by a battery of field guns — whizzbangs — at the bottom of the ridge, which fired at short range point blank into us, causing a number of casualties.

Germans Disorganized

Typical German Machine Gun Position, 1917

Out across the Lens coal plains, from our high point of vantage, we watched with intense interest and satisfaction the disorganization of poor old Fritz. Not knowing the magnitude and extent of the Canadian plans for the day, the Germans could be seen moving back over the roads and across the fields of the Lens-Douai plain with every evidence of haste and disorganization — long files of troops, trucks, wagons, gun carriages in full retreat.

Scattered throughout the wood were many massive gun emplacements housing heavy artillery and so placed that they had been well protected from our artillery by the crest of the ridge. Underneath the guns were well positioned dugouts, and in these large groups of thoroughly frightened, thoroughly cowed and thoroughly beaten Germans had taken shelter. Our orders were to bomb out these remnants of a proud and arrogant army that a few hours before had considered itself invincible and the Ridge secure.

At a shouted order from above they came up the dugout stairs, haltingly, with hands raised above their heads, and a pleading “Mercy! Kamerade!” echoing along the bedraggled files. They were hesitant to respond to a harsh shouted order in pure “Canadian” embellished with a bit of fluent Canadian army profanity. But when, recalling a few words from a high school class, I shouted down: “Kommen si hier, Herr Fritz!” They appeared to be more willing to respond, although somewhat mystified and disappointed to find, when they reached the surface, that my total knowledge of Deutsch had been expended. They were disarmed, frisked and “desouvenirized,” and told to get out by pointing in the general direction of our lines, an order that they appeared glad and willing to obey. A couple of Mills bombs tossed down the dugout steps sealed the fate of those who had refused to come up.

At our objective, we captured several big guns in cement emplacements and I was through the dugouts connected with these and got quite a collection of souvenirs — belt, saw-bayonet, rifle and a German haversack full of odds and ends: leather tobacco pouch, old Dutch pipe, nail brush in leather case, silver-plated safety razor, officer’s cap and a few other little things. In the afternoon, however, we were called on to make an attack on the snipers along the track. I had to leave my souvenirs in the woods as they were too much to carry. Although the attack was cancelled at the last moment, I did not have an opportunity to go and collect my souvenirs, as the place where I left them was under fire. . .and after all, the best souvenir is a whole hide to go back with.

Canadians celebrating after fighting at Vimy - 1918

But we had done our day’s work. Night heralded by a cold snowflurry was beginning to draw its curtains over the desolate scene. We unstrapped our spades and dug in along a sunken road, a weary, weakened, depleted “thin khaki line” of young Canadians, yet proud withal, that our boys had proved worthy of the trust imposed on them. Vimy Ridge, the impregnable bastion of German strength along that sector of the Western Front,  had been captured.

Conspicuously absent this week from Amazon’s announcement on the list of international markets where the Kindle would soon be sold in a host is a little backwater known as Canada.  Theories abound as to why this is:  some blame Heritage Canada, which I think is a bit of a lark.  For one thing, Heritage Canada is not a regulatory body in the sense that it enforces no laws, and has no specific jurisdiction over the publishing industry in our country apart from administration of the Copyright Act.

No, the politics involved in preventing the Kindle from reaching the grubby hands of Canadian consumers is probably the same old culprits we always pick on around here:  Canada’s wireless carriers.  This article reveals a bit of a crack in the story.  While the Domestic US Kindle is using the Sprint EVDO network, Amazon is not working with local wireless partners in each individual country for the International version… the company has done a single deal with AT&T Global Networks, which in turn has gone out and negotiated low-cost data roaming agreements with carrier partners all over the world.

The Kindle, you see, downloads books and connects via AT&T’s 3G Data Network.  But it is a unique proposition for the wireless carriers, because the Kindle subsumes the carrier’s network and buries it behind Amazon’s brand.  As a result the customer is completely unaware of which network the Kindle is running on, never receives a bill from AT&T, and never calls AT&T for support.  It is a complete inversion of the traditional wireless carrier model.

In Europe some carriers embraced this, as has AT&T Global, and pitched Amazon on providing the network capacity for the Kindle.  In Canada, however, the concept of becoming a bare pipeline has likely met with a far chillier reception from the omnipotent stewards of our wireless spectrum.  While AT&T may have negotiated decent wholesale rates for its customers roaming on Rogers in Canada enabling affordable world data roaming, Rogers may have (knowing their personality well) stipulated that this wholesale rate not be resold in any way apart from direct-to-consumer.

And just as Rogers resisted Apple’s will to gradually subsume them as a carrier, and is now paying the price by being the first iPhone operator in the world to officially lose iPhone exclusivity, Rogers likely isn’t enthusiastic about Amazon taking over the customer relationship.  The irony is they probably should be — their quality of service and customer support is so absurdly poor that they could do no better than by washing their hands of the customer relationship entirely.

Below is a chart on several key players, some relevant data, and what I think I might try to do:

	Roberto Luongo Age: 30 Salary:  $6.75mm Expires:  2010 W-L:33-13-7 GAA: 2.34
It becomes quite difficult to solidify a reputation as the best goalie in the league when you continually play for dog teams that can’t perform in the playoffs.  This team (and every team you’ve played for) leans far too heavily on your unique talent but east of Cambie street you get very little respect in this league.Giving you the captaincy (even without the C sewn on) was a bullshit PR move and could only have served to cause you to lose focus and get off the bead of what it is that you do so well.  Get back to being “just” the greatest goalie ever, stick with us through some changes, and for emotional balance leverage the two guys you have in your own back yard that have lots of mental toughness and carried weak teams through the playoffs:  Richard Brodeur and Kirk McLean.  The armchair GM would be happy to hire them as consultants to focus on the mental aspects of your play.
	Mattias Ohlund Age: 32 Salary:  $3.5mm Expires:  2009 25 points
I think we’re going to lose you to an East Coast team in bidding this summer. Vancouver fans don’t respect your contribution enough.  I think you’ve had a tough couple of years trying to fit into the Vigneault system, which has required you to take too many penalties and lose focus from your offensive play.I don’t want to lose your grit, but the budget’s tight.  I’d like to sign you to a multi-year contract at your present salary, but I doubt you’d go for that considering who’s been calling.  So I would hope to keep you here with a two-year at $2.5mm — and it’ll be hard to find room under the cap for that.  You’re a franchise player.  Stay here 3-4 more years and we’ll retire your jersey, give you a shot at a cup with some rebuilding, and you can play in front of the home crowd for Sweden in 2010.
	Sami Salo Age: 35 Salary:  $3.5mm Expires:  2011 25 points
What, are you made of porcelain?  We need you to play a whole season.  Please ensconse yourself in bubble wrap and suspend yourself with bungee rope in a lcoked room between games.  We’d like the keys to your Porsche — we’ll be sending a driver in an armoured, padded vehicle with a 7-point safety harness to pick you up for games from now on.If you can put together a full season you’re awesome — but we can’t keep backfilling you.  Fans love you.  I like saying your name with a Squire Barnes lisp.  What the hell: you can’t go anywhere, we’re not trading you… get out of my office and back to the gym (though please pick up some tensor braces and make sure you stretch thoroughly in order to prevent injury or strain).  Please do not buy a Segway or any two-wheeled vehicle.
	Taylor Pyatt Age: 27 Salary:  $1.575mm Expires:  2009 19 points
You are six-feet four, and you weigh 235 lbs.  In today’s NHL that is neither lean enough to be fast, nor thick enough to be tough.  You’re a UFA this summer.  I don’t understand why Vigneault continues to throw you on the ice in critical situations — end of the game, power plays, penalty kills, etc.  You are almost always behind the play.You were a healthy scratch several times in the past two years.  You are being given chances to showcase your skills (probably because we were hoping to trade your ass) but you’ve really let us down.  19 points in 69 games, especially given the guys you’ve played with, means you haven’t been a factor at all.You have NO grit, speed, nor puck-handling dexterity.Happy to let you go — but if you want to stay here 1) figure out what kind of player you are, 2) hire a personal trainer and develop this summer, and 3) we’ll pay you $1M on a one-year contract.  Sorry about your tragic loss, but this is a business.
	Mason Raymond Age: 23 Salary:  $833.33K Expires:  2010 (RFA) 23 points
In your case, I don’t think the stats have told the story.  You’re a hungry, fiery player with grit and I feel that AV has completely underutilized you.  For a 6’0 guy to be the team’s fastest skater is impressive.  You’ve gotten your feet wet in the league, you played your way onto this roster, and you’ve tasted the playoffs.  Now you need to play your way up to the second line.  I think you could be huge as a forechecker and your hands are awesome.This is your sophomore NHL summer.  You’re only 165 lbs. soaking wet.  Would like to see you bulk up without losing speed, just to prevent you from getting knocked around too much.  Work on the upper body, not just the legs, and eat a sandwich once in a while.  You’re great kid, now get out of my office so I can deal with the next guy.
	Willie Mitchell Age: 32 Salary:  $3.2mm Expires:  2010 23 points
Hockey loves the hometown boys.  Port McNeill is pretty close to Vancouver.  Check.OK somebody liked you last summer and gave you a pretty rockin’ deal despite a weak season.  This year you did a lot better, so she time is right to keep that momentum and own the zone.  At times this year I watched you and you seemed to have your head in the clouds, crossing over inexplicably and floating the puck when a slap-pass was required.  Your turnover stats look pretty bad.  You are, though, a big part of the breakout.  If Ohlund goes this summer, you’re a huge part of the defensive corps and the younger kids will be looking to you for leadership.  At times you seem disinterested in defensive play.  Get angry in September and find your grit.Step up, and we’ll renew next summer — no probs.  Want you to finish your career here.
	Alex Burrows Age: 28 Salary:  $2mm Expires:  2010 51 points
You have played your way onto every team throughout your career.  With 52 points in 82 games you have really delivered in 2008-2009, particularly since AV has not always played you on top lines.  You’re probably the fittest player on the team, and a role model for guys making twice your salary.Your unique attribute is your work  ethic.  You need some bulk up top, because when you eventually settle into second line left-winger status you’re going to get tossed around like a bean bag.  I think you’re going to look like the bargain of the century in two years.  We’ll get you a speedy centre to get things going.
	Kyle Wellwood Age: 25 Salary:  $998K Expires:  2009 27 points
I’ve known and played with a lot of guys like you who never got the chance to play in The Show.  You’re immensely, naturally gifted as a player but as a teenager it always came so easily to you that you never really developed a work ethic.  After a few years with the Leafs you became a guy constantly on the bubble, and nowadays that is what is driving you.Wake-up call:  We signed you and put you on waivers (for no really good reason) last year after you failed the fitness test, and nobody even called.This is it.  I’ll sign you right now for $800K for a year because I know I’m the only guy who’ll take a chance.  You’re still on the bubble.  We saw flashes of brilliance this year, but you’re still falling behind.  That’s OK if you use this summer as your time to train like crazy, make me a liar, and come back to camp in lean and mean shape with some speed that can match those hands.  Keep skating all summer.
	Mats Sundin Age: 38 Salary:  $7mm Expires:  2009 28 points
You’re no Neidermeyer.  You’ve proven that you can’t sit out half the season and expect to compete in the NHL.  You came back from semi-retirement old and slow and not nearly pissed-off enough.  You hoped the Sedins and Luongo would carry you to your ring but we did not get the leadership on the ice I’d expect to see from a guy who’s been a consistent 70-80 point-getter for 10 years — and one that we paid $4 million bucks for.So yes, this is goodbye.  There’s no role on this team for you, but I think you knew that.  I always knew you were a summer rental.  See you at the retirement press conference, and enjoy the flight back to Sweden.  And when the Rangers call?  Don’t do it.  You’ll smear your glorious Leafs legacy (choke).
	Ryan Kesler Age: 24 Salary:  $1.75mm Expires:  2010 59 points
When we originally signed you, we thought you were the next Trevor Linden.  It hasn’t exactly been an easy path, and so you were often on the bubble.  This past year you really shined.  What I’d like to see you deliver is a 75-80 point season in 2009/2010 as a center.  If so, you could be our future and we’ll hit you with a contract at least as sweet as your wild-eyed three-year, $2.475-million entry level contract a few years ago.Time to step up and deliver on the promise that we saw when we passed up Mike Richards and Corey Perry for your ass.  I’d like to think you could be the captain of the team but not yet.  One more season like this year’s and we’ll talk about it when you’re up next sumer.  You play better when you’re hungry.  You ought to be a second-line centre by now.
	Kevin Bieksa Age: 27 Salary:  $3.75mm Expires:  2012 43 points
This was the best year of your career, despite a couple of injuries that had us leery.  You’ve showed real toughness at times and delivered 43 points offensively which made you the top-scoring D-man on the team.We have however noticed your defensive play suffering.  You’ve made some brutal bets on the pinch and lost, creating momentum-killing 2-on-1s and leading to some highlight reel goals for other teams.  Luongo can only do so much to cover for a defenseman who’s not even in the play.  Additionally, while we like your grit, we hate your timing.  Pitchforking that guy in Game 5 vs. Chicago with 6 minutes to go almost definitely cost us a Game 7.Clean it up and work on your D game and you’ll be worth every penny.
	The Sedins (H D) Age: 28 Salary:  $3.58mm Expires:  2009 82 points each
You each got 82 points this year — one each per game — with no injuries.  Once again, you were absent for much of the playoffs.  You need to understand that people will key in on you and work with the Right Winger we give you.  Because you are a package deal, any team that signs you to a big contract is going to mortgage their whole future to do so.  I know the Rangers will call. Anyone who can sign you both won’t be able to field a very good team beyond your line.We have invested a lot in you and consider you to be franchise players.  I would match any offer up to $4mm each and for 3-4 years, but above that I’m pretty hamstrung by trying to surround you with the league’s best goalie and a strong D.  But ANYONE who signs you at your presumed asking price, given that there are two of you, will be challenged to surround you with a talented team.
	Alain Vigneault2007 Jack Adams award winner 2007/08: 39-33-10 2008/09: 45-27-10
Some coaches are able to work their magic in the locker room, some do it by running perfect practices, and others do it behind the bench.  In the regular season great practices, and solid locker room and off-ice leadership keep teams healthy, prepared, and in-the-game.  In the playoffs, though, coaches do their work behind the bench.As this was your first career NHL playoff run as a coach, I guess we can’t be too harsh with you for losing.  I have to be honest — watching what happened in Chicago, where the Hawks clearly changed the entire complexion of the play without any adjustment or response from the Canucks — I wanted to fire you.  But then, reflecting on the stats of the regular season, I think we just need to develop you and get you some help.Speaking of which…
	Trevor Linden Requires no introduction.
Hey Trev, ‘sup?  Feeling refreshed after a year off, freed from the shackles of watching Naslund flail as a Captain and watching the NHLPA eat itself alive trying to maneouvre with that weasel Gary Bettman?We miss you.  Fans still show up to games wearing #16 jerseys.  You cast a long shadow, my friend, and rumour from some former Canucks players has it that even thought you didn’t wear the “C” these last few years in Vancouver, you were.  Suffice to say:  You cast a long shadow.Within the next 16 months, Ryan Walter or Rick Bowness will be moving on.  I’d say you’re a shoo-in for Assistant Coach.  The salary sucks, but face it — you bleed blue and green.
	Cody Hodgson Age: 19 Salary:  $875K Expires:  2011
I think we made the smart decision growing you slowly this year, sending you to the Battallion, letting you play on Team Canada in the Canada-Russia series, and now pulling you up to the Moose.  Your play has been exceptional — now you know what it’s like to spread your wings and rock the ice and be a dominant force.Next season please arrive at camp prepared to play in the NHL.  Speed and dexterity are your biggest assets, and you’re big enough not to get tossed around.  Toughness and grit will have to come over time.  You’d make a great roommate for Burrows — only you’re a little more talented than Burrows — because he’ll keep you focused on your fitness and work ethic.  Don’t let this go to your head, we’ll give you a lot of PP ice time next year, probably playing on the Right Wing.
	Marian Gaborik MINNESSOTA Age: 34 Salary:  $3.2mm Expires:  2009
Wanted:  RIGHT WINGER who can hold his own with the Sedins, stand in front of the net when he has to, and wire shots top-corner while hapless defensemen chase the Swedes around in the corners.  Hey Marian, know anybody?Oh that’s right… your pal Pavol is on the Canucks, hit 53 points, and will be here til summer 2010.  Unless of course we can’t attract you as a free agent this summer, in which case we’re going to trade his ass (he nets a $4 million salary).  Since your injury makes you a bit of a risk, I’ll throw $3.5mm on a one-year contract to you but would discuss anything up to $4.0mm on a two-year deal.  If the latter, then you’ll be riding to games in the bubble van with Sami Salo.We’ll try you with the Sisters, and if that doesn’t work out I’m sure you’ll enjoy spinning around the ice with Demitra.  And hey, Willie’s here too… you remember him?
	Ossi Vaananen Age: 28 Salary:  $1mm Expires:  2009
I checked my magic 8-Ball: “future hazy”.  Will re-sign for 2 years at $875K.  Otherwise, seeya.  Thanks.  See you in September.  PS – there are too many vowels in your name.
	Alexander Radulov Age: 22 Salary: $919K Expires: 2009
Ok now, if ever there is a Russian player destined for first-line greatness in the NHL, it is 22-year-old Alexander Radulov.  He is, though, the centre of a huge controversy between the NHL and the Russian Kontinental Hockey League.  Last year, though he was signed to a pithy $1mm contract with the Predators, he ended up inking a three year deal worth $13mm with the KHL’s Salavat Yulaev Ufa.  This contract was signed days before a treaty agreement was reached between the NHL and KHL regarding transfer of players. The Russians view this as payback for the yanking of Ovechkin and Malkin, among a host of others, into the NHL from domestic clubs. What’s happened to the Preds now is essentially what might have happened to the Canucks had they not been able to lure Bure overseas after picking him so many years ago.  This summer, the stage is set for a Battle Royale between the NHL and the KHL’s Alexander Medvedev — the outcome of which might mean Radulov’s return to the National Hockey League as an unrestricted free agent.  This will be THE story of the summer.
	Maxim Afinogenov Age: 29 Salary: $3.5mm Expires: 2009
Building on the Russian Right-Winger theme:  Hey Max!  How would you like to play with the twins?  I know things have been sucking in Buffalo lately.  You need a change of pace!  Your scoring is off, but I think you’ve got potential.I’d throw you a three-year, $3.0mm bone to head over to Vancouver where the ladies will love ya, the Sedins will pass to you, and you can head back up the roster to the first line and net around 75+ points.  Sound good?  Sign here.

Going back over this post, I have committed the Canucks to around $50mm, give or take $2mm.  For instance I’d obviously be happy to say goodbye to Pyatt were Afinogenov to be lured to the team.  But with a cap of $56.7mm next season for team salaries, that leaves very little room and I have filled 15 of 23 roster spots.

According to HockeyBuzz O’Brien, Bernier, Rypien, and Hansen are also key free agents this year.  They will be demanding salary bumps and presently the four of them account for about $4.5mm all in.  Add to that Edler’s $3.25mm salary, Demitra’s $4mm, and various odds & ends, and that’s another $9mm unaccounted for in my planning.

The reality is that the Canucks are not going to be able to strengthen the roster substantially from within the Free Agency market.  The youth movement, as Chicago has evidenced, where underpaid young players overperform, is where teams get a solid strategic advantage these days. This places heavy emphasis on Hodgson to crack the lineup and be a dominant player in 2009-2010, as the Canucks don’t have much else under development.

That said, a couple of things happened this past year:  1)  Salaries inflated across the board, but teams are seeing revenue decline, and 2) The economy collapsed, and the NHL started talking about lowering the cap in the next few years.  This will see teams being far more conservative in their offers to Free Agents, which will be enhanced by the frankly startling diversity of talent that is set to hit the market in June.

So:  Will Ohlund take a pay cut to stay with the only NHL team he has ever known?  Will Bernier (and other teams) recognize that he’s not worth $2.5mm yet?  Will Hank and Daniel bankrupt the team that has developed them into Top 20 players by making a big cash grab, or would they like a shot at the cup?  If they reach for a $6mm salary each, as some suspect, the twins and Luongo alone could account for more than one third of the team’s salary cap at nearly $20mm.

Mike Gillis has a real problem.  If few or none of these situations plays in his favour, then I suspect it’ll be 5 or more years before they have a team in contention… and they’ll have to do something the Canucks are rarely successful at doing:  developing a group of players from the draft into top-line players right away.  It could be a very long winter indeed, even by Vancouver fans’ standards.

… all of which underpins the fact that, strong or not, this was probably Vancouver’s best chance at a Stanley Cup for the past 15 years, and at least the next 5.

I’m thinking that might be a dramatic oversimplification, and a statement made by a PR flack who can’t be expected to understand or even correctly parrot the complexities of this kind of issue.  Since Skype uses its own CODECs in many applications it is in a position to choose whichever is most convenient among those which they license and proprietarily own.  I am unaware of any CODECs which apply to the mobile VoIP space, which would be patented exclusively in Canada, that Skype might trip over. 

I’m going to guess that this is probably more related to signaling and/or call setup and I am aware of a few granted patents in Canada that might foul up Skype.  Regardless: given the murky nature of patent disputes, if they were to take on the patent holder in Canada and lose that might have a negative effect on their intellectual property claims elsewhere.  Given the cost and the risk, they may have decided it was easier to fold up the tent and give up on Canada until whomever the stool pigeon is comes to them with a reasonable settlement.

There is, fellow Canadians, an interim solution that’s pretty easy.  Thanks to a commenter from TMCNet, here’s the easy way to get it:

1. De-authorize the computer you use to sync to the iPhone from within iTunes
2. Grab a coupon code from a place like here.   This allows you to bypass the credit card payment process later.
3. Redeem the code from within the iTunes Music Store … the “Redeem” button is cleverly hidden in the top right-hand side of the screen.
4. Create a new account.  Where it asks for payment select “None” and enter a US address and zip code.  I hear 90210 is FILLED with millions of people!
5. Search for Skype, download, and Sync.  This will *NOT* destroy existing apps you have installed, curiously enough.  YRMV.

I am really hoping that some work I did in 2005 with EQO is not responsible for this everybody-but-Canada restriction.  Here’s Skype’s preview:

Gutfeld, who also publishes a ponderous blog called the “Daily Gut” was responding to a report issued by the Canadian Chief of Land Staff Andrew Leslie that the Canadian Military would need a break before redeploying to another hotbed in order to retrain, repair, and rebuild forces after their withdrawal from Aghanistan in 2011.

Not since they demeaned to put Rachel Marsden on the air has Faux News offended Canadians so deeply.  Gutfeld weighs in with his obviously astute knowledge and understanding of international politics and warfighting.  What he fails to observe is that Canada has so drastically overcommitted itself to a deployment in Afghanistan that it is wearing out equipment faster than it can be replaced.  It has made a number of emergency interim equipment purchases and leases including tanks, transport aircraft, tactical transport helicopters, mine-protected vehicles, and blast-resistant transport trucks.  We have spent tens of billions of dollars helping George W. Bush perform his best impersonation of Emperor Nero against increasing resistance at home as young men and women return from what can fairly be perceived as an aimless fight in bodybags.

It fairly sparked the ire of Peter McKay, Canada’s Defense Minister, who appeared on CTV to demand an apology.  Really, though, Fox needs to consider whether a program like RedEye, which as the Tyee points out, is apparently “designed to appeal to the demographic most likely to be found on a beer-soaked dormitory couch at 2 a.m.” and “is chock full of fart gags and homoerotic innuendo” is befitting something that purports to call itself a news network.  Thinning pretense of news at Fox notwithstanding, stirring up this sort of controversy is dangerous for American and global politics, as it further widens the gap and reinforces a fundamentalism of American ignorance.  If you’re going to attempt to distort the truth, at least pay your audience the respect of starting from the truth.

Gutfeld is a clown, not a journalist — without the polarizing politics that are driven by America’s right-wing Taleban who converge around Fox News, he would have neither the audience nor the medium with which to reach them.  He is proof that neither a basis in education, nor in service, nor in intelligence is required to assert the airwaves in what shred remains of American journalism.

Crashed C-17: that'll buff right out, sir!

This isn’t the first time this kind of incident has happened at Bagram.  In October a P-3 Orion crashed after overshooting the runway, and the Navy quickly relieved the Commander (who was piloting the plane) of his post.  Only a week or so before this latest incident, the overshoot of a C-17 at Bagram resulted in minor damage and caused only limited disruption — but in 2005, another C-17 (tail #01-0196) was very nearly written-off after overshooting the runway, causing extensive damage (see below).

C-17 at Bagram in 2005: another fixer-upper

The 2005 crash resulted in a fairly remarkable recovery and restoration.  The plane was very nearly considered for a writeoff, however it was made (barely) airworthy by Boeing technicians on the airfield and then hopscotched back to Long Beach for an extensive reconditioning.  It has been flying again since the summer of 2006.

Bagram, an ex-soviet base built during that country’s (understatement) expedition in Afghanistan, is a forward operating airfield run by the US Army in a rather hotly-contested area of the country.  This means that it primarily supports A-10 attack aicraft as well as the Army’s usual complement of AH-64, UH-60, and CH-47 helicopters.  In 2007 an ambitious suicide bombing attack against the Bagram airfield claimed 23 dead and might have killed Dick Cheney while he was on a special morale-depleting visit.  That said, a town has now built up around the airfield and the base itself is considered relatively secure.

A number of other pilots have criticized aircrews of the C-17 and other non-attack aircraft of “flying hard” and using “combat zone” landing techniques when coming into Bagram.  This means landing hard, low, and fast and would certainly explain many of the overshoots.  Whatever the cause, in order to mitigate the overshoots and to make the field more usable by larger aircraft, the runway was extended in 2006 after the 2005 C-17 overshoot (C-17s can land in as little as 3,500 feet, and after the 2006 lengthening Bagram’s main (and only usable) runway is 11,000 feet long).  However, the overshoots have persisted.

The cautionary note on Bagram’s pilot’s briefing is pretty benign (for a combat airfield):

Ctl explosions and de-mining ops in vcnty of arpt, ATC will advise. Acft opr blw FL210 may experience a loss of rdo and/or radar ctc with Bagram ATC at dist greater than 30 NM. MPN-25 (ASR/PAR) PMI Mon-Fri 1930-2130Z. Hi potential for hydroplanning when rwy sfc is wet. Rwy in advanced state of decay, increased possibility of FOD. Avoid ovft 1/2 mile NE dep end Rwy 03, burn pit will cause inadvertent flare dispersal. tkof obstacle rwy 03 4900′ MSL ant , 599′ fr DER, 510′ leftof cntrln. Lit twr, 120′ AGL, Rwy 03 apch end 1,250 ft E of cntrln. Lit twr, 120′ AGL, 1,250 ‘ E of cntrln midfield Rwy 03/21. Poss 1/2 rwy width clsd for const, ctc App for status. Twy H btn twys B and E is 44 ft wide. Acft use inboard eng only to reduce FOD.

It goes on to warn that if the airfield is under attack, you should stay above 25,000 feet; and avoid flying below 1000 feet West of the airfield or you could get shot down by US air defenses.  :)   That said, though, for a C-17 to come in to Bagram these days doesn’t seem to be particularly challenging, unless you fly over the burn pit and your anti-SAM flares go off from the heat.  Baghdad’s briefing is a little more frightening.

Concerningly, the peanut gallery seems to think that this particular air crew failed to follow their checklist in the heat of .. erm .. battle and essentially forgot to deploy the landing gear.  It will take some time in order to figure that out of course, but C-17s are outfitted with cockpit voice recorders and if the pilots have anything to hide, news will come out soon enough.  Others have pointed out that hot-dogging it into Bagram is becoming a bit too commonplace.

The briefing above does contain a bit of a nugget, though:  “use inboard eng only to reduce FOD”.  In other words, pilots are instructed to run outboard engines at idle in order to prevent them from sucking in debris from the outer edges of the runway and adjacent desert (thought this might apply only to taxiing).  As Global Security points out, the thrust reversers are an integral part of the C-17’s ability to land in short distances –and if pilots are coming in hot but only using inboard thrust reversers to slow down upon landing, they’ve got 50% less thrust to use in braking.  That’s a problem.  Maybe our most recent celebrity C-17 crew just figured the easiest way to slow down in a short distance was to retract the landing gear.

In the meantime, Canada now has 4 C-17s, designated the CC-177.  If one of ours were to crash at Kandahar while the pilots were playing “Top Gun” the consequences would be disastrous to the Canadian military’s mobility, and to its budget.  Both of the badly damaged C-17s hail from Charleston, South Carolina.  Let’s hope that if the “hot-dogging” allegations have any merit, that our guys are a little more Formula One, and a little less NASCAR.

UPDATE: Welcome trolls from Charleston!  Your comments will be approved (see below)…

UPDATE 2/22: New photos popped up last week from the night of the crash… some interesting details were revealed.

Nortel hits the skids

Om has a piece today written by Venture Capitalist Allan Leinwand asking whether Canada should bail out Nortel.  He asks:  “But is preserving the country’s technological heritage reason enough to spend millions in taxpayers dollars?”

I think that the answer to the question is contained within the question.  There is no such thing as technological heritage … only a technology’s future.  Once a company has ceased to innovate with effectiveness, market forces must be allowed to run their course.

Nortel, whose turnaround CEO Mike Zafirovsky appears to be a bit of a jet-setter, was a global source of technical innovation for most of the last century, peaking in the 1980s.  Its DMS line of switches grew to become the dominant means by which incumbent local exchange carriers rolled out circuit-switched voice networks; and the means by which long-distance companies expanded their reach globally. 

This gave the company a lot of cash to throw around, chasing R&D with aplomb, but it wasn’t spent wisely and efforts to embrace IP were insincere and too little too late.  What Nortel failed to see coming was the enormous destruction of value that would occur when Voice became just another application on IP networks — and the opportunity to build massively expanded value by building new applications over that infrastructure.  Even as recently as a few years ago Nortel has been tremendously innovative, however their solutions have failed to reach into the marketplace as they were targeted at a single customer group — the incumbents — who themselves are flailing and sputtering.

They also have a broken corporate culture.  This happens when organizations get fat and lazy … and political.  I watched that culture attach itself, like a parasite, to Cisco in the late 1990s as we were hiring entire teams from Nortel and moving them to North Carolina and San Jose.

The issue of a bailout should be (but isn’t, since the Canadian taxpayer is already subsidizing the company’s operations to the tune of $30M) irrelevant:  Nortel has strong market and asset value still and should not need it.  The company suffers from the burden of expectations, both of the marketplace and of irrational shareholders; and from the criminal efforts of loathsome executives who tried to feed that beast rather than confront reality.

When AOL’s executives realized they had an overvalued asset with little-to-no real growth prospects, they limpet-mined themselves onto a depressed company with unrealized value.  That’s what Nortel could have / should have done several times in the past 15 years, but didn’t.

The chalice of innovation in telecommunications in Canada has passed on to RIM (neither of whose founders ever worked for Nortel — a rarity in the technology industry in Canada!).  Is the company wobbling simply as a casualty of the current economic cycle, or because of a deeper cancer and an endless stream of financial scandals?  Would $30M in investment be better spent on Nortel or on RIM, in the long term?

My guidance is: embrace the bankruptcy.  It’s an opportunity to restructure the business, re-orient the strategy, clear out the dead wood, and reset irrational expectations.  Nortel could yet again be an invigorating business, but shoring up the business that it is today is no way to get there.  In the meantime, Nortel has served its purpose in stimulating innovation in Canada and acting as an apprenticeship program for our country’s technology leaders.  Let it run its natural course.

Falling Apart?

This just in:  Vancouver has been ranked fourth on the world’s list of least affordable cities.  This is well ahead of cities like Manhattan, San Francisco, London, Paris, and Hong Kong.  As most rational people know, the city’s thundering real estate market has been bolstered by rampant speculation and constant construction of new condominiums.. but salaries, and the city’s economic development, have not kept pace.

The survey quoted in the article cites research indicating that the cost of housing in Vancouver is massively disproportionate to median salaries earned by its residents, specifically when compared to other cities around the world.  The median house price in Vancouver as of the time of the survey is 8.4 times the median income — 8.4 years’ average income to purchase a house, compared to the average median in Canada: 3.5.

What this tells you is that the fundamentals that support high real-estate prices are simply not there in Vancouver.  People just don’t earn enough income to sustain this market at such lofty prices whereas in cities like New York and San Francisco, where real estate prices are indeed higher, median incomes are substantially higher and thus can support high prices.

Vancouver is plagued by a number of problems that keep the salaries of its citizens low:

1. Affordable commerical real estate is hard to come by in the city — leading in some cases to a perverse reverse-commute where urbanites must schlep out to the suburbs to their workplaces — but more importantly this discourages companies from locating here.
2. Most large cities with expensive downtown cores operate as financial centres — the aforementioned London, Hong Kong, and New York spring to mind.  Vancouver does not, except for our storied love affair with ponzi schemes.  Without the sustaining flow of capital through our city there is highly limited opportunity for local investment.
3. We’re still a bunch of tree-cutting, pickaxe-wielding hicks.  And BC’s resource industries, the bread and butter of Vancouver for more than 150 years, are weak thanks to everything from the US softwood lumber tarriffs to Kyoto to a number of key mining company collapses.  Our province has failed to diversify its economic base substantially away from resource businesses.
4. The advanced industries like software and aerospace that keep California sizzlin’ have failed to grow in scale in this city.  Investment in this area is weak, with very little private investment and weak government support (nearly all of the Venture Capital in Vancouver is government-derived).  We did however blow >$500 million on a handful of useless fast ferries, though.  Two notable exceptions are alternative energy and biotech.  For now, at least, they are humming along.
5. The film industry, which we in BC have courted for decades, is a fickle bride.  Since productions are built for each project and torn down when completed with little long-term planning, unfavourable economic winds mean that producers can pull up stakes and shoot in South Carolina, Mexico, or wherever they can cost-optimize.  In any case, the profits are retained in New York and LA… like a Mumbai call centre, we’re just an outsourcer.
6. Drugs, and by “drugs” I mean the cultivation and distribution of marijuana, constitutes probably the largest industry in BC and it flies completely under the regulatory / taxation radar.  Conservative estimates peg this at between $5Bn and $7Bn per year.  These people have a hard time getting mortgages.  They also tend to be undesireable tenants, since they tend to get arrested/shot at/sent into hiding — that is if they don’t blow up their penthouse with a meth lab.
7. Our transportation infrastructure is pathetic, particularly when compared with major metropolitan areas (of which Vancouver is now one) such as Boston, Montreal, Toronto, New York, London, Tokyo, and others.  If we wish to become a center of commerce then we need to be able to move people around better.  Skytrain is a laughing stock and the West Coast Express, which goes to a handful of proximate suburbs from the downtown core twice a day each way, doesn’t even merit comparison with the British Urban Railway system.  Our highways (such as they are) subject people to multi-hour commutes to travel 20km.  We have failed, failed, FAILED to build infrastructure and it will continue to haunt the city for decades to come.

For those of us in the technology industry, certainly during this housing price spike, Vancouver seems an illogical place to locate our startups or ply our trades in information technology.  While the average condo price can be as high as 2x-2.5x the price of a comparable condo in Toronto or Montreal, our salary variance is just 103.5% the national average, versus 104.2% for Toronto and 103.9% for Montreal (this according to the 2009 Robert Half Salary Guide for Technology Professionals).  While we spend more to live here in Lotus Land, we sure don’t make up for it in income.

Comparing Income to Housing Prices

So how high is too high?  Right now we are finding out.

If you were blindsided by the Vancouver Real Estate crash then you were clearly in a profound state of self-delusion.  Evidently that list of deluded fools includes our civic leaders who played russian roulette with the city’s finances, underwriting the now disastrous Olympic Village project in which the taxpayers stand to lose as much as $750 Million.  Still, even amid the free-falling values, Realtors and Developers are outright lying to you… inviting you to join in their deathmatch with catch phrases like “don’t wait too long” and “strong fundamentals“.  Where have we heard that before?  Oh right, it was John McCain, about the US Economy in September – days before it collapsed.  Oops.

UPDATE: In a passionate article, former mayor Sam Sullivan says the Olympic Village is not a clusterf*ck.

Speculators and developers will beg to differ (they’re invested in fostering positive vibes) but remember:  they’re betting with your money, not their own.  Condos down the street from ours were forced into liquidation at 40% off, and there have been stories of other developers dumping their inventory at similar price cuts.  This is the beginning of a trend, not a sign of the bottom, so if you’re foolishly lining up to jump in at this point, you get what you deserve.

Not until a software engineer making $60K-$70K per year can buy a 1-Bedroom apartment in the city will the fundamentals be aligned and the market be stabilized.  This means mortgage + maintenance of less than $1500 per month using the 30% rule.  On a 25-year mortgage that probably means this 1BR apartment has to be less than $200K.  If the research that started this article can be believed, we should expect an adjustment of as much as 60% across the board to bring Vancouver back to the Canadian mean.

So in other words, wait ’til the bottom really drops out, Vancouverites..

And then we can start figuring out why no one in this city (not even the property developers, after 2007) makes any real money.