A Dangerous Game Indeed

VANCOUVER - Oct 10/08 - SNS -- Fear.

That is the defining emotion for commodity and financial markets and could well be so into 2009. Not just companies, but entire countries are teetering on the brink of bankruptcy as deficits mount and wealth evaporates amid plunging commodity and stock markets.

The federal deficit in the United States is expected to top $750 billion this year, after hitting $450 billion in 2007. Canada's government finances are most likely in a deficit. Spending on the war in Afghanistan has been running at least 25% higher than revealed to parliament. At the same time, Canada's government has suddenly jumped into its financial markets at week’s end, offering to spend $25 billion buying mortgage backed securities from its banks.

Iceland is bankrupt and seeking salvation from Russia. Pakistan is searching for a $100 billion bailout, reminding the western world that it is a frontline state in the fight against Al Queda and for the war in Afghanistan. India's oil companies have been refused bank credit to finance oil imports, while the Indian government dithers over the issuance of new bonds to finance them. Those companies sell oil below cost on India's domestic market, with the result they are a net drain on the Indian economy.

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