Dow bounces back 485 points credit still stalled

September 29, 2008 5:40 p.m.

The New York exchange in lighter trading moved up 485 points while the Toronto stock exchange gained 465 points after horrible days yesterday. These bounce back gains recovered some but not all of the ground lost and while they seem like respite one has to wonder whether the severe volatility won't continue in the coming days while the Senate tries to get the rescue bill passed and then send it to the House for approval.the credit system remains frozen and interbank lending rates have skyrocketed. In an effort to unlock these markets the central banks have pumped more funds into the financial system.
Typically after a shock like what occurred yesterday the consequences linger in the market for a long time thereafter. In the meantime while these momentous events preoccupy Washington and the US Canadian politicians seem to be fixated on the non economic questions like for example whether or not the Prime Minister plagiarized a speech by a foreign politican about intervention in Afghanistan. Undoubtedly this is important but the question of how the financial crisis in the US will affect Canada in the months to come is even more important and deserves more attention from our politicians than they have chosen to give it.What are their plans and strategies if the economy sours?

Will they dogmatically persist in arguing that balanced budgets even in a major downturn are good policy despite all the evidence from the US that leading economists and political leaders believe it not to be?
Is our regulation and financial oversight system in as good shape as the government claims ? How about some answers on these questions.