Let' face it. No one who holds a symbol on any market is safe these days. Each day we see markets falling to new lows. Today the Dow reached its lowest point since 2003. It is like five years worth of hard work, sales, risk, and investing amounted to nothing. That is unless a company issued some dividends in the meantime.

While I believe that the Canadian economy today is doing better than most including the US, our ties to the US in particular are strong (80% of our exports go to the US as opposed to 3% to China) and as such our stocks are taking a beating.

I believe this market meltdown is much too large for even the parties to come up with a strategy this close to the Canadian federal election. Whatever happens on October 14, all parties will need to work together to get Canada's position sorted. This is not a party issue. It is a country financial survival issue.

One of the greatest benefits we have in Canada is a very concentrated banking sector. Unlike the US where anybody can open a bank it seems, Canada has a handful of major banks, and few dozen credit unions. When the Bank of Canada makes a decision, it does not take long for the major banks to follow suit. While these banks are monopolies who can get greedy, they have provided a very efficient system for handling financial and investment transactions. I can use my CIBC debit card anywhere in Canada not only take take out money, but also make a purchase on Debit. This is unheard of in the US. Only Visa has a debit card that comes close to being widely accepted, and that really is just a credit card with a positive balance anyway, protected by a PIN which all credit cards should have IMO.

I believe that the Canadian banks will wether this financial crisis quite well given their past history and efficiencies. The bank of Canada is in power here. Unlike the FED in the US which can't seem to loosen the banks grip on easy to access cash which they are lending to these banks at lower and lower rates.

What will not wether the storm as much are the resource and development companies. Forget about startups for the time being. Existing companies that are well on their way in terms of their business plans are going to have a rough go of it when the time comes to raise more investment capital for continued research, explorations, development, or marketing. This goes well beyond mining companies. Pharmaceuticals, aerospace, technology, .. All these stocks have taken a beating.

There is a fear today that is being fueled by the media and the likes of Jim Cramer and others. It is that the plane is crashing and it is better to jump out of the plane now and take your chances in the water than to hope the plane recovers and makes it to the final destination.

This sentiment has fueled some massive selloffs in the market that has not been limited to higher risk companies. Some solid companies with good revenue targets and assets have been innocent bystanders of this meltdown.

Where will the future money come from?

As I write this I see that Canada has delayed the issuing of Canadian savings bonds. I believe for the first time in history. It is likely as a result of the potential of over-subscription in an atmosphere of fear driving many to money investments.

I predict that these CSB when finally made available for sale will have a very low interest rate. A losing one when one considers that the small percentage will be wiped out by inflation.

But what will cause the investors to come back when they are currently content with just breaking even with money market investments?

The normal course of greed may play its hand. Why settle for 0% when you can make 5% in a ... or 10% in a ... or 200% in a riskier play? We could rely on this type of thing in the past.

But it might take more. Yesterday I spoke of one solution I called the Buffet plan. And sure enough today it looks like the Fed in the US will start to bypass banks to get money directly to those in need through debt financing.

In Canada we will likely need something different.

Misfit's prediction:

Following the October 14 election, likely as the next budget is announced in Q1, you will see a set of tax breaks targeted not at business, nor on personal income. I believe we will see incredible temporary breaks on the amount of tax individuals pay on capital gains related to investments in Canadian equities.

While money in the bank is a safe bet, it is useless for reinvestment under credit tightening environments. Incentives must be in place to direct this money towards more risk. Towards investments into Canada's technological and resources future.

When a company like Noront can only return an up to -90% return in a year, things are really sad. And the market knows it.

What will bring them back before it all goes under?

Massive incentives.

Once these incentives are in place, look out share prices! It might take awhile, but the market is oversold, returns over five years are now zero for bluechip and embarrasing for junior chips.

Let's pray to God that our parties can put aside all the BS after the election and focus on what is the most important thing on Canadians minds today. That is the economy.

M1.