For complete text please see: http://www.wednesday-night.com/Wed1207page2.asphumans are becoming more sophisticated and more cynical. Two recent events demonstrate that, at least in Canada, people are becoming more disillusioned over what was, up until a generation or two ago, commonly accepted. Canada and Adscam One is the ongoing confession of past political patronage sins by the Liberal government of Canada and the sudden shock over what had been acceptable practice by politicians in power over the entire history of the country and indeed, the world. The fallout can go in one or more of several directions, including the unlikely scenario of more honest government or, more likely, total disillusionment with politics, a third being the disintegration of Canada as a country. We should, however, bear in mind that unlike the Latin American political parties, there is very little fundamental difference between the major political parties in North America. Therefore, some predict that six months after the Gomery Commission report, most, if not all, will be forgiven and forgotten. Nonetheless, a June or autumn election will likely see the Bloc and Conservatives teaming up federally, creating "The Perfect Storm"; and a Parti Québécois government in Québec, bringing yet another referendum on independence which, this time, could gain considerable support (if young voters follow tradition and stay away from the polls). We live in interesting times. Benedict XVI On the world scene, perhaps even more astonishing although not as surprising, has been the miraculous transformation by spin doctors of a Rottweiler into a soft fuzzy puppy. Pope Benedict XVI appears to be extremely conservative, but it is hoped that those who surround him will be able to convince him of the necessity of blending traditional conservatism with the reality of today’s world. Especially to be watched will be his treatment of Bernard Cardinal Lord and of the issue of condoms and AIDS in the developing world. Humility is an absolute requirement of the office and it is not too much of a stretch to expect that the mantle of responsibility might aid considerably in the transformation. He certainly has the intelligence to do what is required of him. It is hoped that he has the will. [Editor's note: we cannot resist including that CBC’s Paul Workman signed off his report Wednesday holding up an Italian newspaper that read simply “The German shepherd.” To which our beloved American correspondent, Jim Heffernan, replies with: The Lord is my German shepherd, I shall not weep. He will maketh me to lie down whenever he barks.] Meantime, just beyond the Vatican Concurrently, voters turned out in strength in the regional elections held on April 3rd and 4th, defying expectations that Italian Catholics would stay away from the polling booths as they mourned the death of the Pope, and delivered a crushing blow to Silvio Berlusconi. His government is looking increasingly likely to lose next year’s parliamentary elections to the centre-left opposition alliance, led by Romano Prodi—the former prime minister who was until recently president of the European Commission. See The Economist: http://www.economist.com/agenda/displayStory.cfm?story_id=3834194nesday-night.com/Cleo[censored]l.asp[/url] ) The U.S. and China Today, America is the world's biggest debtor, with China as an important creditor. U.S. politicians blame China and its fixed exchange-rate regime for America's trade deficit. The Schumer Bill which would impose a 27.5% tariff on all goods from China unless Beijing adjusted its currency within six months would cause havoc for the American economy. A sharp reversal in China's appetite for American Treasury bonds could send interest rates soaring. Alan Greenspan has stated that the Chinese government’s massive exchange-rate interventions were causing growing imbalances in the domestic economy that will force China to abandon its currency peg. The head of China's central bank has also indicated that the yuan could be revalued in the near future (though he blamed international pressure, rather than internal imbalances). Once this happens, the People's Bank of China can stop stockpiling dollar reserves—meaning its demand for American government securities will also dry up. The Economy Canada Indications are that we are entering a period of rising prices and slow growth in the western economies. If Canadian consumer prices begin to climb (more than 2%) then the Bank of Canada will not be able to resist pressure to increase rates. Some experts believe this will be within the next two years. Canadian political instability will inevitably put downward pressure on the $C. In addition, Canada faces big problems because of the lack of necessary investment in infrastructure. REPORT ON THE ECONOMY http://www.wednesday-night.com/Jacques-Report.asp#1206