Market Turbulence

Tony Edwards Everything Else, Perspective

The best article I read on the markets this week was entitled “Don’t read this!”, written in acknowledgement of the tremendous amount of noise that accompanies a market down draft like the one we have experienced.

Of course I read it anyway, because I feel it is my duty of care to sift through the cacophony for some gems of wisdom. Those often come from our Canada Pension Plan managers, or the top economic advisors to President Obama.

Here is my one take-away from the past week, courtesy of Mohamed El-Erian, chairman of President Obama’s Global Development Council. He says that the evolution of global market turmoil has been quite traditional so far. What may be different this time is whether longer-term stability can be restored with the policy tools that were available in the past.

To paraphrase his technical analysis, he suggests that better distribution of global wealth would go a long way towards creating the demand upon which businesses can grow. This is the aim of global leaders for better or worse – to create billions of new consumers from among the world’s less advantaged.

How the world achieves these economic benefits, and the extent to which this growth supports local communities, will be crucial to the well-being of our environmental and social fabric and by extension, the stability of our financial systems.