Wednesday Night #1418

The market and the economy
The TSX has broken through the ten thousand barrier first achieved in 2000 and there is some anticipation of an early end to the current painful financial situation.  The market, in fact, anticipates an impressive stimulus from financial support provided by the government.  In fact, the rebound is largely built on sentiment.  Similar encouraging words were offered the public in 1930, which turned out to be one of the worst – if not the worst year – of that depression.  Technically, the market has breached the 200-day moving average, therefore is likely to test it for some time to come.  A real improvement in the economy is unlikely but a lower rate of deterioration, largely due to government intervention, is possible.
What we would see, if the market were to recover, would surpass the 200-day moving average – doubtful.  When the market deteriorates, it takes a long time to recover and we are still in a downward spiral while bouncing along.  The anticipated report on the recovery of the U.S. banking system, even if positive, is not expected to constitute proof of a recovering economy.  Apart from the obligatory window dressing, especially with the relaxed rules in the U.S., there is no indication as to whether their assets are being priced at current value rather than their inflated acquisition cost.
This is a highly uncertain market.  Assets are not growing. Recovery will not be achieved until the solution to structural problems, old technology and other anachronisms are resolved.  Housing prices, particularly in the U.S., will continue to fall.  Gold and other metals are overrated.  The illusion of some recovery in the market might very well merely be the result of inflation.  The serious nature of the situation is evident in the southeast vacation areas of the United States.  Real estate is readily available for sale at historically low prices, unemployment is high and many of those employed have accepted jobs at salaries well below their previous earning capacity.

Linguistic courtesy
Peoples, if not individuals, are largely defined by the language or languages that they speak.  With the possible exception of the Flemish population of Belgium, Europeans in the European Union do not appear to feel threatened by the proximity of linguistically different neighbours and Floridians seem to be comfortable with large number of Spanish speaking immigrants.    Historically, in the light of the virtual imposition of English and its prerequisite for meaningful employment, the preservation of the French language has been and remains a defining, unassailable feature of Québec.  With the acceptance of the historical sophistication here and the importance of preserving Francophone language and culture, a unique expression of the current intercultural situation is evident in increasing numbers of exchanges in which Anglophones express themselves in French, Francophones reply in English and vice versa.  Although this politesse speaks favourably to the evolution and maturation of the province, there are those who would take umbrage in their mistaken belief that their second language had not been considered adequate or whose native tongue was, in fact, French but accented, reflecting their country of origin.  Despite the misgivings expressed by some, these recent changes reflect a healthier Québec that might once again attract talented Anglophones to offer their talents and work here.

With the impending Mulroney-Schreiber Inquiry, debate turns to what is acceptable behaviour by public servants, elected or otherwise.  There is no free lunch.  Whether it be civil servants, elected representatives, would-be or former politicians, the acceptance of perks, be it a meal, a vacation, employment, a payment for services or a trip abroad should be totally unacceptable.  Except for the anachronistic ritual of exchanges of gifts between heads of state, the acceptance of any good or service without charge implies an obligation, however vague at the time, repayment in some form or at least, a nebulous, undefined relationship.  The strictness of the conduct code of the judiciary should be rigorously applied to our elected representatives and civil servants.

The decline of the media
The “let’s you do it” philosophy is evident in our concern regarding the decline in quality and depth of reporting of our daily newspapers.  The print media are certainly not the only ones that have been the victims of the electronic media but whether for the better or the worse, evolution and change are painful to some and profitable to others.  Certainly there are those who prefer reading news in print to viewing electronic reporting, and many who rightly recognize the unfairness of free electronic reporting over paid print, but this is not the first or only instance where the will of the masses ignores the health and welfare of others or in some cases of themselves.

The aftermath of Madoff 
There are times when gullibility and/or greed overcome good judgment. Certainly, in the case of many who were the victims of Bernie Madoff, the returns  they enjoyed over the years outweighed any misgivings they might have had regarding their lack of due diligence. In the wake of the collapse of the scheme, many wealthy individuals have been ruined – creating a situation in Palm Beach and other resort areas that was almost incnceivable. One of the consequences is that many hospital and benevolent foundations especially in the Jewish community have been the indirect victims of the Madoff scam, as their wealthy benefactors fleeced by Madoff can no longer afford to maintain their donations.  Sadly, this is already having a ripple effect on education and research and thus the health and/or well being of the most vulnerable.

T H E  I N V I T A T I O N

First the good news: Wednesday Nighter Brigitte Garceau was acclaimed Vice-president (francophone) of the Liberal Party of Canada at last weekend’s Convention. We are sure that the beautiful photo by Robert Galbraith on her poster went a long way in influencing the vote!  We are of course delighted for her – and for the Party. Congratulations to her and her able campaign manager, Leanne Bourassa. The Liberal Convention was a great success by all accounts (other than those in Canwest media) so now we can wait and wonder when the election will be upon us.

The other intriguing guessing game is who will be picked as the next U.S. Supreme Court Justice following the retirement of Justice David Souter. Amidst the names being floated and there are many, we like Sonia Sotomayor, who seems to have the perfect C.V. AND is a Princeton graduate  Most pundits are saying the nominee will be a woman, and some, rather waspishly (yes!) are saying that no white men need apply.

The suspense has ended – a young Brit has landed the dream job as caretaker of the Australian island – remember that story in January? The poor fellow: his job description requires him “to explore the islands of the Great Barrier Reef, swim, snorkel, make friends with the locals and generally enjoy the tropical Queensland climate and lifestyle”.

Aside from the rise in the markets – as predicted last Wednesday Night  – and the apparent abatement of H1N1 in Mexico (with no concomitant reduction in  the drug wars),  the outlook is gloomy.

The appalling news of the execution of the young Iranian woman, Delara Darabi, last Friday has left us deeply saddened for the people who live under the regime of religious courts and extremely sceptical  about the possibilities of ‘accommodation’ with the government of Iran.

 The ‘Afpak’ situation continues to deteriorate and one can only wonder what, if anything, can be accomplished at President Obama’s meeting with Presidents Karzai and Zadari this week. Mr. Karzai’s announcement of a former warlord, Fahim Khan, as his running mate won’t do much to endear him to the Administration, while Mr. Zadari’s failure to dislodge the Taliban from the Valley of Swat is making the world nervous about the vulnerability of Pakistan’s nuclear capability.

The Tamil insurgency in Sri Lanka appears to be all but terminated (with extreme prejudice), just as  murdered Sri Lankan journalist Lasantha Wickrematunge was posthumously given the World Press Freedom Prize 2009. His widow’s moving and forthright acceptance speech should be carefully read.

We look forward to some informed comment on the results of the ASEAN finance ministers’ meeting and the implications for the world economy of the ratification of the Chiang Mai  Initiative.

The HuffPost is huffing and puffing over the delay in making the results of the banks stress tests public and in view of the news that is leaking out about 10/19 banks requiring more capital  (Bloomberg reports that regulators have determined that Bank of America requires about $34 billion in new capital, the largest need among the 19 biggest U.S. banks subjected to stress tests) ,  there does seem to be a fair amount of logic in what Ms Huffington says. “It’s been ten days since the Treasury Department and the Fed let the banks in on the preliminary results of the tests. So how come the public — the ones who keep bailing out the banks — are still in the dark?”

The Science, Technology and Innovation Council has released its first report , which says the country ranks sixth out of the G7 grouping in business research and development as a proportion of gross national product, despite federal tax breaks and funding. The document also says Canada ranks 14th of 19 countries ranked by the Organization for Economic Co-operation and Development. In view of the tenor of the report the WSJ Market Watch headline: “Ministers Welcome Report by Science, Technology and Innovation Council” strangely out of synch – but it was after all, a press release.

We could go on, but are sinking into Eyeore mode, so will offer this one last thought.  For those inclined to do some serious, thought-provoking  reading  that offers some interesting views on government-sponsored healthcare, among other topics, we highly recommend: Going Dutch