Thursday, October 09, 2008



The crisis in the financial world which began in the US and has demonstrated how truly global our economy is, is the hottest topic in the Canadian election so far. Health care, child care and taxes all have been overshadowed by the unprecedented turmoil hitting the financial sector.

Naturally all political parties want to assure Canadians they are best qualified to steer us through the present trouble which all economists will tell you is really uncharted waters. The opposition leaders seem to be joining the 'sky is falling' crowd and some of their rhetoric has the effect of fueling the present panic which seems to have a firm grip on many. Reacting to the present situation with fear, worry and panic being at the forefront of our thinking is a sure fire way of just running head long over the cliff.

Now is the time for calm and sound heads to prevail and is not the time to adopt half baked, unproven ideas which may only add to the present difficulty. Predicting doom and gloom long enough is sure to be a self fulfilling prophecy as banks will hold back finance because they are scared, people will hold back spending because they are scared, investors will dump stocks because they are scared and sooner or later things will indeed stall and we will indeed have a major problem.

This is a time to simply take several deep breaths, count to ten and rationally look at the situation. Firstly much is being said about the loss of value on the stock markets and how that affects peoples savings which are tied to stock prices; well don't forget, that the same stocks which lost large amounts in a short time period can also gain large amounts in equally as short a time period.

The bank crisis? If it should completely collapse on itself what do you think would happen? Banks are glorified accounting firms whose health is determined by numbers on a page, or in todays system, numbers in a data bank. Why do we put so much faith in the 'banking system' and in pieces of paper with dead peoples pictures on them? Over time, these systems have become the masters of society instead of being the servants they were intended to be.

Maybe we will simply have to wipe the whole slate clean and start a new system over again, but that is hardly reason for the wide spread panic that 'numbers on a page' are causing these days.

That said, it is reported in the Financial Post that the World Economic Forum has rated Canadian banks as the soundest in the world followed by Sweden and Luxemborg, while our friends to the south rank 40 in the overall scheme of things. So in spite of all the heated election talk clearly something is being done right in the Canadian banking system and while we do not operate in a vacuum perhaps the biggest thing we have to fear right now, is simply fear itself.


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