Axel Christiansen, CFA Investment Manager VanCity

Axel Christiansen was our speaker for today. He spoke on the world economic outlook and how it is affecting B.C. Axel told us he is not an economist so perhaps he will do better in his predictions than them. He spoke about the real problem. This has been 20 years in the making so a quick recovery is unlikely. It has been caused by a stockpile of debt. Household debt, hedge fund debts, you name it we have had them all. There is too much debt and too little income. Simple really! What caused it was an unregulated market. Not like Canada's! The US consumer has been like a cockroach in that you couldn't seem to stamp them out. Borrow and spend seem to be their motto. That worked so long as we were highly leveraged. At times as high as 40 times, so today if a bank loses one million it affect 40 million of credit. Wow. Banks are hording the Govt loan money today because they are scared to spend it. It has to be re-paid and they don't want to lose it so why lend it? Everyone is waiting for the bottom of the market. So all assets are declining at the same time and will continue to do so. This is unusual. A second Tsunami wave of debt will hit the banks and that is still to come. There will be a steep decline in Real Estate values. Finally savings are going up in the U.S because there is no other choice. The economic pain will continue as more people get laid off. The Govt stimulus package will take time to work its way through. Inflation will be the next thing as Govt money feeds its way through the system. Interest rates could spike upward again. Nouriel Roubini is a good source of information. http://www.rgemonitor.com/