D1

Roger Haineault

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While we often think of the Labour Day weekend as the end of summer, as this Thanksgiving Day weekend has shown autumn can be a wonderful time in this region.

Even with the global economic crisis, the weather through this fall has been superb and we know that, in all too short a period, the snowflakes will be falling.

Once again the liquidity crunch has dominated the news. And while I might be wrong, I would expect the markets to be off again this week unless something masterful is pulled off during the past weekend's Washington finance ministers summit.

Basically, we're seeing almost a mass hysteria that has only a nominal basis in reality - at least as it relates to the situation in Canada.

Of course, I have to go the States soon and so in the impeccable sense of timing that most of us seem to have, the loonie is at its lowest level in four years.

On the other hand, while it's tough on snowbirds it's good for Canadian exporters. I know I've continued to point out that any anxiety felt here couldn't be termed a crisis.

Canada's banking system is so restrictive with its lending that the World Economic Forum's survey released at the end of last week has determined that our banks are the soundest in the world.

I had to chuckle when I saw the clip of U.S. President George W. Bush addressing the liquidity shortage during this conference.

"All of us recognize that this is a serious global crisis ..." he stated following the gathering of the G7 economic leaders.

It was almost disingenuous not to point out that the primary reason that this event is happening in the first place is because of a lack of regulatory oversight on systems developed in the U.S., deemed virtually risk free by the U.S. credit rating agencies and then sold to the world.

Regular readers know that this space has talked about the current crunch for a number of years now. While there is no doubt there is hardship being felt around the world as a result of a lack of liquidity, up to now it has been mainly visited upon the institutions.

We are now starting to see the effect at the retail and borrower level, and without some government intervention, this problem will deepen.

This leads me to the other big news at the end of the week. The government has figured out a way to help inject cash into the system and probably make a tidy profit.

Conducting a reverse auction, the banks are going to have the opportunity to sell a certain amount of their insured housing debt to the Canada Mortgage and Housing Corp. Available funds for buying these securities are capped at $25 billion.

Any bank wishing to participate will sell this debt at a discount - the deeper the discount; the more likely it will be sold. So the government has a greater upside for return on investment and the bank can trade off some of its riskier securities.

And all the while, these investments hold mortgages that are ultimately insured, so that everyone will win in this transaction.

One of the reasons that Canada is in such good shape is because of the government departments and agencies that regulate our system. But another reason is because of the excellent stewardship we have enjoyed on the part of our elected federal governments.

Make no mistake about it, the Conservative government has been fiscally responsible with targeted spending and tax cuts. And it can be grateful for the books it inherited from the previous Liberal government that ruled Canada from the early 1990s.

So it's that time again. We find ourselves going to the voting booth to conduct the only poll that counts. While indications are that we are looking at another minority Conservative government, there are worse predicaments we could find ourselves in.

Here in the province, we are fortunate to find a viable set of incumbents from the major parties who work hard for their constituents and who have a strong history in each of their own ridings.

If in fact a minority is what is elected at the end of the day, New Brunswick politicians have always been able to find a way to work together for the benefit of New Brunswickers, no matter what their stripe.

It all begins with you, so go visit with your friends and neighbours at the local school or rink and cast your ballot.

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Roger Haineault is with Help 4 Taxes. He can be reached by email at roger@help4taxes.ca or by calling 443-HELP (4357). His column appears Mondays.