National Post from Toronto, Ontario, Canada on January 26, 1991 · 9
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National Post from Toronto, Ontario, Canada · 9

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Toronto, Ontario, Canada
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Saturday, January 26, 1991
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9
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The financial rosT COMMENT & OPINION January 28, 1991 Powell for vice-president? now that you have square eyes from watching the boob tube, you will be well-acquainted with the tall chap with all the chest ribbons who talks so well and so confidently. There is a reason why Gen. Colin Powell, the U.S. chief of staff, is being given such a high profile on television, second only to George Bush himself. The reason is that Powell will be the Republican Party's vice-presidential candidate in the 1992 election and, as such, will have a chance of becoming the first black to be president. Republican strategists have been gloating for some time over the fact that Bush - elitist, private-school Bush - had scored one on the Democrats by putting a black man in charge of the armed services. Now, thanks to Saddam Hussein, every single American voter sees evidence several times a day of the chap's obvious intelligence and ease in communicating. It s the greatest free advertising the GOP could ever have for a dream ticket in 1992. The problem of Dan Quayle, the Vietnam draft-evad er, has troubled the party ever since his inexplicable pick by Bush as the No. 2 man in the White House. Republicans, not to mention ordinary Americans, have silently offered prayers for Bush's good health ever since. Presuming this insane war ends as expected, there will be live on your screen ample evidence in the erect body of Colin Powell that Quayle can be jettisoned in favor of better electoral ammunition. Americans like generals as presidents. Their first, of course, was George Washington, who proved his brilliance in the field by routing the Brits in the American Revolution. Ulysses S. Grant, commander of all of Abraham Lincoln's armies, became the 18th president three years after accepting Robert E. Lee's surrender to end the Civil War. (When someone complained to Lincoln about Grant's drinking, Honest Abe suggested they find out Grant's brand and ship a case to all his other generals.) William Tecumseh Sherman, famous for his march through Georgia that was immortalized in Gone with the Wind by the burning of Atlanta, could easily have been president but instead became part of the political language with his famous vow that "if nominated I will not stand, if elected I will not serve." Every dancing politician ever since who toys with the idea of running is judged by the "Shermanesque" standard. Dwight Eisenhower, after leading the Ames to vic- ALLAN FOTHERINGHAM is a weekly columnist for Maclean's magazine. i dnlUi iif Life after Quebec for anglophones I am sure The Financial Post receives a great many suggestions for articles on Quebec and the "crisis of Confederation" and probably doesn't want to hear any more. But here goes, anyway. I would like to see The Post devote several balanced articles or opinion columns to what "English Canada" would be like once Quebec seceded. At the moment, we seem to have two dialogues going on: an intratribal one within Quebec itself, and a dialogue between Quebec and a Quebec-dominated federal government. Add to this that the nine provinces of "English Canada" speak with disparate voices, whereas French Canada is represented by a single government that sees itself primarily as the spokesman for the aspirations of a racially homogeneous group within Quebec. The situation could change dramatically if the nine provinces formed a permanent secretariat and drew up a position paper. But I do not see that happening immediately and the federal government is powerless to give leadership. What struck me forcibly about the dying days of the Meech Lake negotiations was that the federal Conservatives could advance no positive arguments for Meech; instead they threatened "English Canada" with the breakup of Confederation. We crossed that bridge a decade ago with the Quebec referendum. Canada cannot have much future if we are faced with the threat of secession every ten years! The suspicion is beginning to grow that "English Canada" can accommodate itself to the secession of Quebec as easily as can Quebec perhaps, in purely economic terms, more easily. I have come to this conclusion very reluctantly, for I was raised with the concept of a Canada stretching from sea to sea, with French and English maintaining a productive relationship, however quarrelsome at times. I supported the idea of a bilingual Canada and welcomed French immersion schools in Vancouver for my children. Yet I would still say that the effort to make a greater percentage of Canadians bilingual was worth it, if the ideal of bilingualism were accepted in all ten provinces. But Quebec has rejected bilingualism. I think the French-English dialogue (I don't like the cliche, but can't think of a better way of putting it) would be healthier if anglophone Canada began serious ly to consider what life without Quebec would be like. there might be some real advantages. The domination of central Canada would come to an end. The Canadian federal system would no longer have to cope with a large group of voters who traditionally vote en bloc. The federal treasury might benefit, for Quebec has always been a hearty feeder at the federal trough and the burden of transfer payments to the provinces would be eased. There would be psychological benefits as well: what Lord Durham called the "war of two nations would finally be over and both parts of Canada could go about their proper business of building a country. Finally, I think Canadians should rid themselves of the notion that the West is bitterly anti-French. Westerners on the whole dislike the French less than the French dislike the anglais. The problem is rather that politics in the old Province of Canada before Confederation was a stately quadrille between Canada East and Canada West. After Confederation the quadrille continued, with wallflowers added from what Sir Edward Cartwright once called "the rags and tatters of Confederation." Western resentment is simply the bitterness of would-be club members who have been denied membership. To be sure, Western provincial politicians who are low in the polls like a good quarrel with Ottawa, but patriotism of that sort is widely recognized as the last resort of scoundrels. If Quebec secedes, the quadrille between Upper and Lower Canada will come to an end, new partnerships will form and much of the old resentment of the West will disappear. ALLAN EVANS is professor and head, dcparttnent of rlKsift. Hniversitv afRritish ColumhitL Vancouver. John Godfrey responds on the editorial page. UL By Allan Fotheringham tory over Germany, was such a cinch for the White House that both the Democrats and the Republicans made him offers, since no one seemed to know what his politics were. After two blissfully popular terms, many people still were not sure. Gen. Douglas MacArthur, whose military skills almost matched his theatrics, thought he could ride his defiance of Harry Truman into a Republican presidency but the little guy from Missouri shocked the great man into reality by abruptly sacking him. Bush's use of Powell as an electoral weapon is masterful, as the discouraged Democrats well know. They had based their control of Congress over nearly four decades on the coalition put together by Franklin Roosevelt: labor, intellectuals and the South. Ronald Reagan began to erode that coalition when his initial popularity was such that Republicans made inroads among black voters in the previously impenetrable South. Democrats who for years didn't even have to campaign in black districts found themselves in a fight. Bush held on to those gains in his rout of the doomed Michael Dukakis. Now Bush, leading the party of the rich, has his ace -the vigorous war hero who is going to "kill" Iraq's army. No one takes seriously any more Jesse Jackson with his publicity-hound posturings. His dream of becoming the first black in the White House is now just trouble-making mischief within the Democratic ranks. Watch that man on the screen with the pointer and all the chest salad. You're watching a man audition for a bigger role. Thais prefer to sit out gulf war ON the night the lights went out in Iraq. Thailand stirred, paused, and shrugged. Then it went back to work, unfazed by a headstrong Arab with a Masada complex. Oh, a few Thais showed interest. The taxi drivers, choking in traffic, turned up their radios. The smart shoppers in the Siam Centre gathered in front of their television sets to watch Cable News Network. And Prime Minister Chatichai Choonhavan canceled an appointment with a journalist to convene his defence council. However marginal his role, he wanted to look engaged. Chatichai declared his support for the liberation of Kuwait. He said his country's prosperity would be unaffected, although he did urge using less energy. In Thailand, the first casualty of "the mother of all battles" were the neon signs of Patpong Road, where the lights were a little less red. Eerie calm War in the gulf? In Thailand, it's an abstraction. To most Thais, it seems less important than last night's kick-boxing at Lumphini Stadium. The papers are full of news some run afternoon extras - but there is an absence of worry here, and an eerie calm. Thailand, which craves international legitimacy as a newly industrialized country, and fancies itself the emerging power in a surging region, is sitting this one out. Bangladesh, Senegal and Sierra Leone might join the war, and so might a score of nations with smaller armies, but not Thailand. It shuns foreign ad- ANDREW COHEN is a Financial Post senior editor By Andrew Cohen ventures. Wars are bad for business, and here business comes first. In truth, Thailand is no different from the rest of Pacific Asia, which has shown a collective ambivalence to the war in the gulf. Its independence, even indifference, is a strong counterpoint to the European Community, which is actively supporting Operation Desert Storm. The Middle East comes to the Far East, and Asia looks away. Everyone has reasons to avoid involvement. Japan, constrained by its constitution, considers a military role but offers only money. Malaysia and Indonesia try to reassure restive Muslims sympathetic to Iraq. The Philippines worries about the safety of its migrant workers. If the coalition fighting Iraq is the beginning of a new world order, the world stops at the Arabian Sea. Asia has no use for Saddam Hussein, but sees him as a tinhorn tyrant, more a regional than a global problem. Thailand, most pointedly, says the right things but keeps a healthy distance from the firestorm. Its biggest concern is the safety of its 80,000 nationals stranded in the region. The Thais are acting with characteristic pragmatism. Support the alliance because it is led by the U.S., your largest trading partner, but send no men or materiel. Let your workers stay in the gulf as long as they can, be cause there is a baht or two to be made. Offer the Saudis technicians to service their planes, and to show your humanity, send doctors. It is a practical some would say cynical foreign policy. But in some ways it is similar to the way the Thais deal with Burma, a country with whom it does business, whatever its reservations about its regime. It was Thailand, after all, which banned logging on its dwindling forests, trumpeted its commitment to the environment, and then signed a deal to log the forests of Burma. Business prospects Still, one way or another, Thailand and the rest of Asia will be affected by the gulf. You can run from this kind of war, and maybe you should, but you can't hide from it. The global economy is too small. Not even isolationists, like Thailand, will escape the maelstrom. The biggest threat here is rising oil prices and falling trade. Thailand can replace oil from the Middle East with oil from its neighbors. But if the war deepens the recession in the U.S., that will hurt Thailand, whose explosive growth in recent years has been fueled by exports. Tourism, the country's largest industry, will also suffer from a long war. The Thais, though, are not worrying. They predict their economy will continue to expand and talk of business prospects after the war. They see a great reconstruction in Kuwait and Iraq, and a market for their goods, particularly rice. In sitting on the fence, the government is confident and shrewd. Thailand, like other Asian countries, is determined to be around to pick up the pieces, and to make a profit doing it. 1,000 800 600 400 200 .. ..-7 I I I I I I I 1 I I I I I 1 $1,158,220 AGF Asset Allocation AGF Canadian Equity Fund Limited $694,930 AGF Canadian Bond Fund $499,920 AGF Money Market Account $465,450 76 78 82 84 90 RRSP TIMING MISTAKES Many financial analysts believe the best way to get the biggest return on your RRSP is by shifting your assets between stocks, bonds and the money market. The problem is avoiding mistakes in timing. When should you get out of the stock market? When is it time to switch into bonds? Does keeping your RRSP in cash make more sense in this kind of economy? OBJECTIVE ANSWERS AGF's Asset Allocation Service offers a computer based system for deciding on when to change your RRSP asset mix. The system is based on a proprietary computer model of a major U.S. brokerage firm, which evaluates over 17 years of relative returns of cash, stocks and bonds. The model has been tracked through all kinds of markets, and although the past is no predictor of the future, the results were impressive. For example, in October 1987, just before the major market decline, the model weightings were 9 cash, 86 bonds and only 5 stocks! HOW ASSET ALLOCATION WORKS The model operates by constantly calculating expected rates of return on cash, stocks and bonds in the U.S. and comparing current relationships with historical relationships. As deviations from normal increase, the model allocates a greater weighting to the asset that has deviated positively. Thus the model develops a mix of assets, and depending on circumstances, the weights can vary from 0-100 in any single asset. HOW IT APPLIES IN CANADA AGF implements the Asset Allocation Service by utilizing three AGF funds to represent the three asset types: AGF Canadian Equity Fund Limited (stocks), AGF Canadian Bond Fund (bonds) and AGF Money Market Account (cash). When AGF backtested the model using these funds, the results were impressive as illustrated at left. An RRSP 'investment of $100,000 on December 31, 1975 would have grown to $1,158,220 by December 31, 1990. These returns are after all management fees, assume a 2 transfer fee with each switch and assume reinvestment of dividends distributions. COST An RRSP investment is made among the three funds, and is subject to an initial or deferred sales charge (detailed in the prospectuses). Transfer fees of 0-2 will be charged each time a switch is made, subject to an annual maximum of 2 of the aggregate net asset value of your holdings. MORE INFORMATION For more information on AGF's Asset Allocation Service and relevant prospectuses, talk to your stock broker or mutual fund specialist. You can also use the coupon below or call us Toll Free at 1-800-387-1780 and we'll arrange to have this material sent out to you. In Toronto call 367-3967 FyES, I'D LIKE TO HEAR MORE: PLEASE I ARRANGE TO HAVE INFORMATION I ON AGF'S RRSP ASSET ALLOCATION SERVICE SENT TO ME. PO. Box 50, Dept. A Toronto Dominion Centre Toronto, Ontario M5K 1E9 j J1GJF I Name: I Address: I City: I Home Phone:. Mil J Postal Code: I Kwni?n .Prov. . Bus. Phone jpiw rjwmm- dmwm- yjwnm- t l "IS" ? ' I I I J III I -M I I II MR t mmmmm mmsM mm Khmms '3 Vr vTTl MM mijmSmmM3um tim. Mtvr kal bawl fc,,iJ mZie mM tdM This advertisement is not to be construed as a public offering The offering is made solely by the relevant prospectuses, which contain details of all charges The Asset Allocation Service may be utilized by investors resident in those jurisdictions where AGF is permitted to administer the service Copies of the prospectuses may be obtained from an investment dealer or mutual fund specialist in those lurisdictions Please read them prior to making a purchase and retain them for reference Rates of return shown are average annual compound returns for the periods indicated, and are calculated on the net amount invested All returns assume reinvestment of dividends or distributions Rates of return as calculated by AGF for Asset Allocation Service and for the underlying funds are as follows, for periods ending December 31, 1990 Asset Allocation: 15 years 17 8, 10 years 15.1, 5 years 8 2, 3 years 6.9, 1 year 19. For AGF Canadian Equity Fund 15 years 14 0, 10 years 8 1, 5 years 17, 3 years -0.5, 1 year -20.0. For AGF Canadian Bond Fund: 15 years 11.4, 10 years 13.1, 5 years 8 6, 3 years 9.2, 1 year 5.5. For AGF Money Market Account: 15 years 10.8, 10 years 11.3, 5 years 9 9, 3 years 110, 1 year 12 5. Rates of return will be reduced by any sales charges which apply

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