Wednesday Night #1376

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.

The Report

In the wake of the SRO event of the previous week,  it was hardly surprising that there was a dearth of financial gurus this week. Rather than a discussion of the Big Picture, the topic was local solutions for local problems.  The small, but loyal band of Wednesday Nighters was treated to a highly focused evening, thanks to the unexpected presence of David Marler, the disenchanted former Conservative-turned Independent candidate in Brome Mississquoi. David recounted his experience in the 2005-2006 election when he was pressured to participate in the in-and-out finance scheme allegedly (it is being investigated by Elections Canada) designed to permit the Party to spend more than its legal limit. David is writing a book about this experience and will likely run as an Independent in the next federal election.  [Editor’s update: David’s book Sixty-six said yes is available for download from his website and he is running as an Independent in the fall 2008 election].
Beyond the discussion of the finance scheme, David shared with us his ideas regarding the outstanding issues in his area, stimuating lively debate. He pointed to the efforts of the local community to foster local ecologically-sound agriculture. He remindede us all that most of the food we consume is contaminated with preservatives and grown with pesticides, herbicides, chemicals and hormones, the only way that agro-industry can thrive, but at what cost to human health and the well-being of our agricultural communities?  Our health suffers and so do our local farms, leading none-too-gradually to the death of rural communities. Knowlton is making huge strides in creating a thriving food co-op, an effort that should be emulated in many areas of the country.   This also conforms to and strengthens other aspects of David’s political philosophy regarding the need to address environmental issues at the source and by, supporting local industries and businesses, reduce wasteful energy consumption on transportation of goods and people across long distances.