WHIT3Y FREE PRESS, WEDNESDAY, JANUARY 13 1 PAGE SETV NEVER, NEVER LAND AT WALL ST. & BAY Last week, Statistics Canada released the latest unemployment figures - the lowest in many years - the Cana- dian economy appears to be in great shape. On Friday, the U.S. Labour Department announced that their jobless rate had dropped to an eight year low of 5.8%, evidence of a continuing strong economy in the United States. So how did the stock markets respond to the good news? Wall Street dropped 141 points, its third largest drop in history and Bay St. played catch-up at only 118 points. If there was still any lingering doubts as to whether the stock markets were a relevant·indicator of anything, last Friday should have dashed any remaining sense of confidence. The "explanations" of the "analysts" weie fascinating, especially the ones who blamed the plunge on the better than expected employment figures because they might preclude lower interest rates. The only valid observation was one two days later which admittéd that most analysts were still scratching their heads. In the last few months, analysts have resorted to, "The market has developed a life of its own." to explain? what was happening. Well, the market has developed a life of its own and because nobody has the foggiest any more, what is happening, brokers are scared of their own shadows and are reacting irrationally on the slightest impulse. 1 , The currency markets are equally schizophrenic. The Globe & Mail reported last Wednesday that "markets remain thinner than normal with many traders who deal in large volumes still on vacation." The implication, although I'm not sure the writer realized it, was that because some traders were still living it up in the sunny south, we really couldn't be- too sure how the currency markets were reacting to the new year. Do a small bunch of horse-traders have the right to decide the value of not just our investments but even our money? In reality, e~verything has an inherent value which may change slightly over time but doesn't fluctuate measurably from day to day. The value of each country's currency is determined by its relative. purchasing power and that too will remain relatively constant except in a 'financial crisis. The sudden devaluation of the American dollar in the last few months was a catchup of a gradual decline in real worth over several years - a decline that the experts who populate these markets failed to recognize and react to. By and-large, John Q. Public has responded with much greater maturity to the gyrations in the market than the markets themselves. Unemployment is at its lowest levels in years, businesses are expanding, purchasing has not declined by any noticeable amount, even new investment has remained strong. If the public is not concerned about the state of the economy and the government isn't either, then why are our markets so unstable? . Once upon a time, markets had the primary purpose of providing a forum where businesses could raise money. That function still exists but it has been overshadowed by the Investor" with the sole intention of buying stocks at a low price, selling them high and living off the capital gain. These people add nothing to the value of their stocks and hence are simply parasites of the system. Since every gain they make is a loss to someone else, the real investors - the people the market was supposed to serve, are. usually the losers. One tangible result of last October's crash has been that several public issues of new stock had to be suspended - the speculators had destroyed the system for its primary users. It's like a neighbor who borrows your lawnmower and uses it to mow everybody else's grass at $10 an hour and then returns it when it wears out, "Hére, you can have it back, it's broke." If there is a recession it will be because the market has become too unstable for its legitimate purpose of raising capital. Without new capital, businesses will be unable to expand and the economy will slow down. The tragedy is that these gamblers in the pin-striped suits are so entrenched as part of the system that most observers fail to see the damage that's been done. When the Globe & Mail reports on the market and what the "analysts" say, they do it with a straight face. They fail to recognize that the chief problem is traders who had no interest in the value of stocks, only in the profit they could nake by selling them. It was selling - uncontrolled panic selling - that brought about Black Monday. Clearly there is need for drastic reform, a need te return to the fundamental purpose of markets. Since about three quarters of the brokerage industry would be out on the street as a result, the forces 'against reform are powerful and well-heeled. The forces against reform probably extend into government itself since many of our parliamentarians have undoubtedly made their own "killing" from time te time. Our jobs and our standard of living depend on the ability of the business community te grow. That requires investment. Governments throughout the world have an obligation to restore confidence in their markets. Throw the gamblers eut! ~= fl~ = ~ 'i HEYDENSHORE PARK PAVILION, C. 1920 An open-air dance Pavilion was built at Heydenshore Park in 1901 1930s. The upper floor was for dancing and the lower floor contained The present Heydenshore Pavilion is named after this building. and stood until the refreshment booths. Whitby Archives Photo 10 YEARS AGO from the Wednesday, January 11, 1978 edition ofthe WHITBY FREE PRESS • Recreation chairman Bob Attersley wants a study on the feasibility of a fitness centre in. Whitby. Councillor Joy Thompson wants a bus service. • Durham Region will build a works depot in Whitby despite pleas from some councillors for a senior citizens' home • Mayor Jim Gartshore says any major development in downtown Whitby must come from private enterprise. Heavy truck traffic on residential streets is posing a problem. 25 YEARS AGO from the Thursday, January 10, 1963 edition of the WHITBY WEEKLY NEWS • The Federal Department of Transport will not .place life saving equipment at the Port Whitby docks. • School boards are criticized for not providing sidewalks when new schools are constructed. • Deputy Reeve George Brooks wants the municipal franchise extended to all people over age 21 who have lived in Whitby at least one year. • Mayor Stanley Martin reported in his inaugural address that the Town of Whitby operated without a deficit in 1962. 100 YEARS AGO from the Friday, January 13, 1888 edition of the WHITBY CHRONICLE • Brooklin postmaster D.W. Macdonald has been temporarily -suspended because money is missing from the post office. • Whitby promoter F. Howard Annes says Whitby's closeness to Toronto should be an advantage rather than a disadvantage to development. • A Farmer's Institute provides lectures on the latest farming methods. • A barber shop operates in the Hotel Royale. t' >1 I 9)88, PAGE .7 t: EN" -i.-