Wednesday Night #1597

For a change of pace after last week’s Obama-Romney debate, Peter Berezin will be with us this week, armed with two Bank Credit Analyst reports and Wednesday Night reverts to its traditional focus on the Economy. Setting the scene: Global Economy Gets IMF Downgrade As Farsighted Planning Urged

The September edition examines “Euro Zone Banks: From Sin To Salvation”, noting that The “Draghi Plan” to stabilize euro zone debt markets is a clear step in the right direction, but having a plan and acting on it are two different things. For now, investors should maintain a cautious stance towards risk assets. In the Special Report, BCA Strategist Annie Liu discusses the role that euro zone banks played in the lead-up to the crisis, and how they are likely to fare in the years ahead.
A propos the “Draghi Plan”, please see Euro survival in an austerian EU written by financial economist Ioannis Filopoulos, who works as a consultant for various international organizations, and is a Vice President of the New School of Athens.
Also of interest is Draghi Euro Humbles Thought Leaders Seeing End of Union about which Kimon Valaskakis – who has just returned from Europe – comments:
The three minutes to midnight refrain we have heard so often in the last few years announcing the imminent end of the euro, has proved premature.As I have argued consistently, the break-up of the eurozone would be a lose-lose for all the principal actors. In this case an imperfect marriage is seen as better than a resounding divorce.Mario Draghi assumed the role of a forceful marriage counsellor. This does not mean that trouble does not lie ahead but it does imply that if the stakeholders act rationally they will work out their differences, including Germany.

October’s BCA Report asks “Are U.S. Corporate Profit Margins Really All That High?” – The U.S. economy is approaching stall speed and the European recession is deepening. While the medium term outlook for risk assets still looks reasonably good, equity investors should avoid chasing the market rally. The special report argues that U.S. corporate profit margins – if properly measured – are not especially high by historic standards. That said, near-term profit estimates are still too optimistic, which is likely to be a headwind for markets in the months ahead.

We are grateful to friends who point us in the direction of public policy sites, even if sometimes this contributes to information overload – has someone invented a word for the pursuit of links to extremes that have nothing to do with the original topic? It would be a major contribution to current English usage. –  This week we discovered the Ottawa U. CIPS Blog which offers a number of thoughtful contributions to our storehouse of information, including “Will the ‘Future of Europe’ Group Save the EU?” ,  an overview of the Final Report issued by the ‘Future of Europe’ Group on September 17.

As we discovered early on, the economy is an all-embracing subject with ramifications (and unintended consequences) for every sector as evidenced by the effects of Mr Harper’s austerity program on services to distressed French-speaking mariners. In case you missed this item from the infamous Omnibus Bill, the Department of Fisheries and Oceans plans to close the Maritime Rescue Sub-Centre in Quebec City next spring, saving an estimated $1 million per year by sending distress calls from Quebec waters to centres in Halifax, N.S. and Trenton, Ont. There are worries that individuals working in those centers may not have the necessary fluency in French. It doesn’t take much imagination to envisage reactions from the new Québec government – and are there international obligations vis à vis the French authorities in St Pierre et Miquelon?  If you have not read Allan Gregg’s September speech at Carleton University 1984 in 2012 – The Assault on Reason, we suggest that it is relevant to any discussion of the Omnibus Bill. Warning: it is long, but a very well formulated argument.

After the disappointing-to-many first presidential debate, the pundits of all persuasions pounced – you have no doubt read more commentary and explanations than you cared to, so we will offer only Maureen Dowd’s entertaining account of a what-if meeting between President Obama and (former) President Jed Bartlet [if you don’t know who he is, don’t bother to follow this link].  Michael Enwright conducted a delightful interview, Cicero and Modern Politics, with Professor Philip Freeman, author of How to Win an Election: An Ancient Guide for Modern Politicians — A translation of a little known Latin text by Quintus Cicero, this little book gives shamelessly practical advice on winning an election in any age. on Sunday morning with What Barack Obama and Mitt Romney can learn from an ancient Roman leader who has been out of politics for two millennia.

And to conclude with the really, really important news, that you may have missed– last Friday, October 5^th was the 50^th anniversary of the world premiere of the first James Bond film, Dr. No. Presumably none of us knew the significance of the date at the time, but some may remember where and when they saw their first Bond movie – was it Sean Connery in the title role or one of the later ‘pretenders’? We do remember that we first became aware of Ian Fleming’s hero when President Kennedy cited his novels as favorite reading (how very appropriate). In any event the story of the films is wonderfully told in Vanity Fair’s Fifty years of Bond: James Bond