Monday, September 15, 2008

Thirty-six candles ...

And what news greets me on this day?

I predicted something huge would happen to the financial markets and I was right! To stave off further huge losses on top of the $40 billion already written down , Merrill Lynch agreed to an all-stock sale to Bank of America. Interestingly, however, this purchase became possible after B of A walked away from a possible purchase of another company that turned out to be far worse on the balance sheet. This morning, Lehman Brothers will file for bankruptcy protection.

The markets are reeling over this. As I write these words, share prices for blue chips in London are down about 3 ¾%, Paris nearly 4 ½%. Oil has dropped below $100 (finally!) but there's no trickle down for the economy. Don't forget, our pension contributions are played on the market -- by the CPP's Investment Board and by the Caisse de dépôt for those who live in Québec. It is possible for the slush fund to be hammered even during the best of times, as people in La Belle Province found out a couple of years back. And these are hardly the best of times.

Reassuring words from politicians in both the US and Canada, as we are both in election campaigns, are not reassuring enough. There have been major job losses, in all sectors. We need bold action to avoid something like the Great Depression. If guys as big as Lehman and Merrill can go, what's next?

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