Well, it’s been just about a month and a half now that markets have really been in the nosedive.  Maybe slightly more.  It really started to dive maybe just by the end of September.  October was the worst month on record (for several measures) since the post-war (WW2) period.  But November hasn’t really been much better, even though there haven’t been any new financial scandals - just this auto bailout business.

But ever since yesterday it seems we’re on a new roll-down again.  Here’s what I’ve learned. Just about all of this comes from BNN reports - they interview key players in the industry on a daily basis:

(1) Canada’s Royal Bank is almost two-thirds the size of US Citigroup (compare market caps of about 55 billion to only about 35 billion (and the latter might actually be closer to 25 billion).
(2) October was actually a deflationary month.  That’s right.  No inflation in October, but actual deflation.
(3) Canada’s Bank of Nova Scotia and TD are starting to make writedowns on bad debt… others might follow them…
(4) Oil’s under $50/barrell now…. serious stuff.
(5) Citibank fell below $5.00 today.  That’s insane.  They say it’s looking to go to zero… I bought in around $18.00 and I’m glad I didn’t buy more at $9.00…. I’ll keep waiting at this point.
(6) Teck Cominco in Canada is cutting its dividend.  Could be the first of many.

Basically, we pretty much really are in freefall… the early November rallies were comforting, and some of the aid packages probably have helped a great deal, but I guess overall there is still too much uncertainty and too many hedge funds still making redemptions.  (Saturdays are redemption days).  November is also historically known as the time when tax-loss selling for the year begins, so we’re probably seeing some of that, too… I really doubt holiday spending is going to improve anything.  I think not much is going to improve until February, once markets start getting used to Obama in the House, and maybe once one of the auto companies finally goes bankrupt.  Kick out those old white guys who still flew in private jets to the Congress meeting today.  They should be ashamed.

A great article in today’s Financial Post explains how Canada’s really the most fiscally conservative G20 member right now.  Ironic, eh?  Flaherty and Harper don’t want any more government intervention in the markets right now.

Canada has the world’s best and most safe banking system currently.  Corporations here aren’t going bankrupt and can still issue medium-term bonds.

But today Harper and Flaherty suggested they’d consider following in the US footsteps by bailing out part of the auto industry.  The only reason apparently is that with the huge US bailout of the auto industry, if Canada doesn’t do the same thing Canada’s industry would be so much less competitive.  How unfair!

You know, the reason it needs to be bailed out anyway is all about excess.  People don’t need new cars every three years!  And people are sick of buying gas guzzlers!  And we need hybrids and cleaner energy cars anyway!  I say let GM fail… that’s what capitalism is supposed to be about.  GM should have an obligation to its pensioners, of course - but otherwise people need to find work elsewhere.  It’s the way things work.  Maybe I wouldn’t be so harsh if it were an industry like health care, which actually helps people.  But frigging air-polluting, sickness-inducing fat-making machines - let it go.  Cars have hindered society as much as they have helped.  Let a new structure and new, cleaner method of transportation rise up in its place.  Down with GM!

I won’t like it if I see Obama bailing the car industry out.  There’s gotta be a better way.  Maybe bail them out only if they only produce hybrid and fuel-cell…. now *that* would make sense.

So a bailout was finally passed - practically forced - but what difference will it make?  Do you think it’s going to save anything or anyone at this point?  The state of California alone has already said it’s pretty much out of money.  Talking heads and experts are in agreement that we’re basically in a bear market now.  No longer do I hear questions over “whether we are really” in a recession or not.  Over the last two weeks, if you’ve been closely reading the Financial Times and WSJ as I was, you might have felt as scared as I finally did about this mess.

Don’t get me wrong, I haven’t been taken by surprise with this.  I’d been reading about the crash-course the US economy was heading on ever since about 2002 (when I started reading about it; not when the economy took the wrong turn).  August 2007 was just a hint and confirmation of what was coming.

The questions I have now are: (1) why hasn’t the dollar fallen lower? and (2) why isn’t gold up higher?

If you have some good ideas about that, I’d like to know.  One reporter in the Financial Times put it aptly: of course it’s possible for the US government (which is able to print its own money) to bailout some US banks, but what would happen if this scenario played out in Europe?  Deutsche Bank and UBS have holdings and obligations much greater than their respective national governments.  And Germany cannot print its own money.  So Germany could not bailout its own banks.  Do you think it will be the Chinese or Japanese stepping in in such a case?  I think we could definitely see that.  The good thing, though, is that pure real estate speculation, greed and the illusion of the “American” Dream didn’t spread amongst the French and most European countries.  It’s been a product of pure capitalism and its solution will also be a product of such capitalism - i.e., other countries coming in like hawks, like Japan, to buy up the failing entities.

We’re already living in a totally globalized world.  Nations are just names.  Yesterday I fixed my computer by talking to two young kids in the Phillipines and Bangalore.  Most of my house furnishings come from China, some designed in Sweden, others in India.  With an increasingly interwoven world system, there might be less and less places to “hide” your money (ie., keep it safe) in situations such as the US faces today.  I must admit that the media response to the economy currently seems a bit hyperbolic, but nevertheless it’s getting even to me.  I’m thinking it might just be a good time to pay off debt rather than invest.  But some of these income trusts are showing some really good sales, too.