Wednesday-Night

Last Wednesday will go into the annals as one of the Great Wednesday Nights. Robin Griffiths and Maureen Farrow were a superb dog & pony show, knowledgeable, articulate and dare we say, entertaining… and so was everyone else. Although it was a hard-headed review of many aspects of the global economy, we emerged with a generally optimistic outlook, little prepared for the dramatic events precipitated by the Fannie Mae-Freddie Mac débacle.
As The Economist puts it: “FANNIE MAE and Freddie Mac, the two government-supported mortgage giants at the centre of America’s housing market, pose a particularly acute problem for the Bush administration. Not only are they too big to fail. They are almost too big to rescue.”
Reuters headlines Economic crisis called worst since 70s, continuing “The bursting of the dot-com bubble in 2000 and 2001 seems tame by comparison, and the savings and loan crisis of the late 1980s and early 1990s almost forgettable. Similarly, the global impact looks to be greater than that of the Asian financial crisis of 1997 and 1998. Most comparisons turn to the low growth, high inflation, weak dollar and soaring energy prices of the 1970s, but this time with a housing crisis and spiking commodities prices thrown in, all threatening a prolonged recession.”
Ben Bernanke’s testimony today before Congress “highlighted the ‘numerous difficulties’ facing the US economy in a sobering testimony on Tuesday that sent markets on a rollercoaster ride as he signalled serious risks on both the growth and inflation fronts.”
Only Ron Meisels will be happy — gold rose to its highest level in 4 months.
The Guardian reports that Inflation rate soars and economists fear 6% on the way
The Globe & Mail warns that Canada’s main stock market plunged, the central bank warned of slowing growth and rising inflation, and a report showed that prices for existing homes are falling for the first time since 1999. The National Post is equally sombre: Central bank warnings drive down stocks
It’s not only in North America; Asian stocks declined for the third day and the International Herald Tribune tells us that Europe looks no longer immune to U.S. economic storm. “Spain, Ireland and Denmark are either in, or on the brink, of a recession. Italy is stagnating. France is weakening fast. And Germany, the sturdy locomotive of European growth, is suddenly faltering - dashing most residual hopes that Europe could escape the upheaval in the United States.”
- And we were all excited about Nicolas Sarkozy’s Club Med aka Union for the Mediterranean !
Amongst all the mayhem, did you notice that yesterday the Department of Finance released proposed legislative amendments which provide guidance on the rules of conversion for income trusts? George Kesteven, Chairman of the Canadian Association of Income Funds (CAIF), pronounced himself ‘guardedly optimistic’ - don’t expect further information from the CAIF website, it is woefully out of date.
Last week, Maureen Farrow referred to “bubble, bubble, toil and trouble” - it would seem to be even more apt this week.