Global Economy Too Dependent on Government

Global Economy Too Dependent on Government?

Pacifica Partners’ Financial Post Weekly Column – Sept 17th 2009


Some of the most heated arguments in public discourse these days revolve around whether or not the role of government has become overly pronounced in the functioning of the global economy. In the US, town hall meetings on health care reform have erupted into physical violence as some individuals have come to fear the possibility of increased roles for government in the provision and delivery of health care. In banking, public anger has led some members of congress to declare that in that in future they will “just say no” to bailouts.

At the peak of the financial crisis, government intervention was crucial to keeping the world economic system from going into freefall. That being said, for now markets are satisfied that the crisis has passed and are pricing in a return to economic growth. The big question is how sharp the recovery will be. Will it be “V – Shaped” (sharp rebound), “U shaped” (slow laborious rebound), or “W shaped” (double dip recession). As consumers around the world focus on rebuilding their balance sheets by cutting back on consumption and increase their savings rates, governments are trying to incent them to buy cars (Cash for Clunkers), new homes (tax credits for homebuyers), and ultra low interest rates.

10 Year US Treasuries

To read the rest of this article please visit the Financial Post online: FP Magazine Daily

Pacifica Partners are weekly columnists for the Financial Post

Legal Disclaimer

This report is for information purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. The information contained in this report has been compiled from sources we believe to be reliable, however, we make no guarantee, representation or warranty, expressed or implied, as to such information’s accuracy or completeness. All opinions and estimates contained in this report, whether or not our own, are based on assumptions we believe to be reasonable as of the date of the report and are subject to change without notice. Past performance is not indicative of future performance. Please note that, as at the date of this report, our firm may hold positions in some of the companies mentioned.

Copyright (C) 2009 Pacifica Partners Inc. All rights reserved.

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