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Fear, Greed and Silver Linings

It is a tradition on the New York Stock Exchange to invite someone, normally the owners of a newly listed company, to ring the bell signifying a start to the day’s trading. On the Monday morning immediately after financial markets in the US approached meltdown, the bell ringer was a blue blooded Arab sheik adorned in full robe. The China Investment Corporation is already owner of significant pieces of Wall Street. And if the Iranians would just ease up on their nuclear ambitions they too could now buy a chunk of Manhattan on the cheap.

The crashing sounds from Wall Street are a sign of the accelerated unwinding of American-style capitalism run amok. Taxpayers south of the border are ready to load up and take aim but don’t know who to shoot first – the nearest CEO or their political surrogates. The US dollar is in deep trouble. Soon to be President Obama (a new generation of voters will put him over the top) faces one of the most difficult transitions in his country’s history. There is no easy way out of this financial mess, and the inevitable consequence will be a way of life considerably more restrained than people are accustomed to.

Canada will not emerge completely unscathed since much of our economic and political policy has taken us down a similar road. We’ve already begun to stumble. If you own a financed truck that needs to be filled up twice a week, or live in an oversized house with a fat mortgage, or have a job that depends on the American consumer, then the changes in store may cause you to tighten your belt into an uncomfortable position.

But for those who live reasonably within their means, and can walk, bicycle or drive a Prius to do the bulk of their shopping at the local farmer’s markets, this economic ‘crisis’ may actually be welcomed. Runaway growth and consumption is completely unsustainable from any perspective, and many will be thankful for the coming respite.

After all, there are many degrees of separation on the way from Wall Street to Main Street USA, then to Bay Street in Toronto, Macleod Trail in Calgary, 5th Street in Courtenay and finally to your kitchen table. There are many places to diverge along the way. For those who tend to be savers and investors rather than spenders and borrowers, there are opportunities to increase those degrees of separation by investing in our local economy or social infrastructure.

It’s not so difficult anymore to find socially responsible investments that have little correlation to events on Wall Street. Here are just a few examples:

  • From time to time The Land Conservancy of BC offers investment opportunities in which they seek funds in the form of loans or mortgages to help acquire or operate environmentally sensitive properties.
  • La Siembra CoOp is a Fair Trade partner of cocoa farmers in Costa Rica, the Dominican Republic, Paraguay and Peru. They are distributor, wholesaler and manufacturer of the popular Cocoa Camino line of chocolate products found in local stores, and are currently seeking to raise funds from investors through an RRSP-eligible share offering.
  • The BC Discovery Fund is a diversified venture capital fund that allows investors to participate in the emerging technology industry in British Columbia. Because shares are issued under the BC Venture Capital Corporation (VCC) program, investors receive significant tax concessions.

If you’re still inclined to take your cash, pack the survival gear and head for the hills, first ask yourself how you might be impacted by the upheaval in financial markets. Do you own significant assets that are valued in US dollars? Are you a retiree with too much of your savings tied to world stock markets? Do you know about the Canadian Investor Protection Fund, the Canada Deposit Insurance Corporation, and Provincial Deposit Insurance? Or do you perhaps have a 30-year investment horizon in which to participate in the evolution of clean energy and a more sustainable economy?

When trouble looms, nobody wants to be told not to worry. “Pay no attention to the man behind the curtain,” sputtered the The Wizard of Oz. Well I’d say please pay no attention to the men who tell you not to worry. For some, there is much to be worried about. But first, take a deep breath and assess where you stand. It may not be as grim as the loudest fear peddlers would have you believe.

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