Andrew Bell

Anchor, Reporter

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“Who can say how much is endurable, or in what direction men will seek at last to escape from their misfortunes?" - John Maynard Keynes

On this day in 1919, the Germans returned to the negotiating table at the insistence of the Allies and eventually agreed to the Treaty of Versailles, which included impossible-to-pay reparations for the First World War. Keynes, an acclaimed 35-year-old  economist, said the terms were far too tough. 

“If we aim at the impoverishment of Central Europe, vengeance, I dare say, will not limp,” he warned in his 1919 book The Economic Consequences of the Peace.

“Nothing can then delay for very long the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the later German war will fade into nothing.”

However, by some accounts, his widely-read book had the consequence of convincing politicians that the Treaty was in fact too onerous on the Germans – and this contributed to the later appeasement of Hitler, with cataclysmic results.

Markets are calmer this morning, with the big European bourses up more than 3 per cent, after two days of turmoil sparked by the British vote to abandon the EU.

But the potential shift in Europe’s political geography still carries threats for Canadian companies doing business in the region. At 10:10 a.m. ET on BNN, we’ll get a risk assessment for the banks from National Bank analyst Peter Routledge. He says Royal is the most vulnerable “to the dislocation in the European markets intensified by the referendum result and the political uncertainty that will follow” because its European capital markets platform accounts for 15 per cent of RBC Capital Markets’ revenue and 3 per cent of the bank’s total revenue.

He cautions that “Royal Bank’s vulnerability will not cease with this particular referendum. The United Kingdom’s decision to exit the European Union will, in all likelihood, trigger similar drives in other countries…  We suspect RY’s relative valuation will deteriorate over the next several weeks as the consequences of this outcome reverberate throughout Europe and global financial markets.”

Brits are fretting over the prices of their homes amid the uncertainty. Some real estate people (usually such a chirpy lot) are even predicting declines.

London, which could lose some of its braying bankers, has seen annual price increases of 13 per cent and may be especially at risk.

Jefferies analyst Mike Prew foresees a “demand shock” with office rents in London potentially slumping 18 per cent in the two years. “We expect London will ultimately end up being less successful, and it will be different.”

Closer to home we return to the politically thorny issue of high house prices in Vancouver, and the role of foreign buyers, when we’re joined at 10:20 a.m. ET, by Chris Catliff, CEO of wealth manager BlueShore Financial.

One phenomenon he has seen in torrid Vancouver:  parents and grandparents buying condos to give kids a “toe hold” in the market.

Sorry for truncated missive but gotta go. Taping an interview for later with Bruce Linton, CEO of Canopy Growth, which sold almost three-quarters of a tonne of marijuana last year.

That sounds like enough weed to assuage the pain of seeing a price drop for your wretched house in Basildon.