China announced a USD586 billion stimulus package Nov. 9, an amount equal to nearly a fifth of the country’s GDP. Global markets reacted with initial glee before turning negative in the face of discomforting economic news.

Resource-intensive Canadian indexes posted their worst month in 10 years in October, the Standard & Poor’s/TSX Composite Index shedding 17 percent, the biggest monthly decline since August 1998.

Canada’s tighter regulatory system and more cautious approach to banking distinguish it from the US and the rest of the Anglo-Saxon financial system, but that doesn’t mean the crisis gripping the global economy won’t have a serious impact on its domestic economy. It’s important to understand that Canada entered this volatile period from a stronger position than other developed nations and that steps taken by its responsible authorities have been focused on mitigating the impact of external problems and maintaining competitive advantages its long-term conservative practices have made possible.

The Bank of Canada (BoC) lowered its target overnight rate by 25 basis points to 2.25 percent Tuesday morning, citing severe strains on financial markets, a coming global recession triggered by an ongoing US recession and a sharp decline in commodity prices as its primary concerns going forward. The BoC is the first central bank to follow up the Oct. 8 coordinated rate cuts by global monetary authorities with another cut.

Canada elected another minority Conservative government yesterday, giving Stephen Harper another run in the top slot but denying him the mandate he’s angled for since his first win in January 2006.

Canadian Prime Minister Stephen Harper launched an early election campaign with dreams of a majority government dancing in his head. He also wanted to blunt the impact of a Democratic victory in November’s US election that would potentially boost liberal-leaning politicians across North America.  

All eyes are back on Washington following the US House of Representatives’ failure to pass a financial rescue package Monday. Optimism about elected officials’ ability to respond efficiently and effectively seems to have buoyed investor sentiment, as Asian markets recovered from early swoons overnight and US indexes posted triple-digit gains off Tuesday’s open.

It’s two Paulson Plans and several less grandiose patches later and we’re still trying to contain the Global Financial Crisis of 2008. The historic decline in real estate values--the destruction of the “forever up” property value dream--is the widely acknowledged source of today’s problems, but right now the focus, properly, is on arresting the contagion before we start talking depression rather than mere recession.

Yesterday, it was widely reported that US Treasury Secretary Henry Paulson ruled out the use of government money to rescue troubled financial institutions. But his statement during a press briefing leaves some room for maneuvering.

In August 2006, New York University economist Nouriel Roubini predicted a subprime crisis and subsequent recession. In September of that year, he burdened a gathering of the International Monetary Fund with his bearishness. And Roubini was profiled in a recent New York Times Magazine feature headlined “Dr. Doom.”