Featured, Latest Videos

Is it really better to give or to receive?

 

What a pleasant surprise to hear the diversity of opinion in the answers of our guests this week on The Core Question (resourceINTELLIGENCE, Episode 1, Part 5 ). Terry Salman, Scott Drever and Mark Jarvis aren’t exactly slouches: Terry’s firm Salman Partners has raised over 1 billion this year; Scott’s just signed a deal to finance his project in Mexico through to production; and Mark has already retired once from successes in the resource sector. Yet here these three are with such a broad range of answers to our question:

At least 7 trillion dollars has been invested/lent/guaranteed/given directly or indirectly into world markets. What do you think  are the  IMPLICATIONS FOR THE RESOURCE INDUSTRY AND SPECIFICALLY TSX AND VENTURE companies?

Terry looked at the macro and longer term picture really, and believes that the big “bailout” bucks are going to do a lot of good–to markets, to confidence and to the resource sector. Where Mark Jarvis noted that it will take a while for the funds to dribble down to the companies we’re really talking about here–the resource companies–he clearly felt that doing something (IE throwing money at walls to see what sticks) is better than doing nothing. He recalled the tragedy that was the Great Depression and cited government inaction as the cause of that protracted downturn. Scott Drever (Goldsource Mines), was less of an optimist (more of a realist?). His answer was a simple, “None.” He elaborated that the money “is going to places that aren’t sources for those kinds of companies for financing.” Point well taken, Scott.

And yet, even if the funds don’t go directly to companies that fund exploration (such as Terry’s company, Salman Partners), the funds are being distributed (thrown, tossed, heaved?) into the economy, with the intention of greasing the rusted, creaking (grinding?) wheels of the economy. Perhaps the better question is, Are the right companies/sectors getting the money? Certainly some banks havebenefited from the injections–they’ve been kept from total collapse by promises of funds from central banks. But so great is the regulatory burden of the hand outs that some banks have done 180s and handed back the funds, or declined them entirely.

Even Raymond James, which is one of this continent’s largest brokerages, has decided to cancel its application for TARP. Not needed, apparently.

This reminds me of the story of a church recently in the US where the pastor, realising the stress his congregation was under, asked that those in his flock who were really feeling the pinch simply take from the offering plate. What a novel idea. And it worked so well that the church had it’s highest collection of tithings in four months.

Not that the money lenders in our “congregation” are lending much more at the moment, but it does look like they’re taking less than was expected. And perhaps they’ll be in the financing mood again sooner than we thought as a result.

Enter your email address to receive actionable daily news.

Delivered by Google's Feed Burner!