Paul Volcker came to Toronto this week, and Bay Street turned out to listen. Bay Street is Canada's Wall Street, and the financial community packed two large meeting rooms to see and hear the chairman of the United States Federal Reserve Board. To this group Mr. Volcker is a sort of matinee idol. Their children may swoon over Michael Jackson, but this pin-striped audience wildly applauded the man from the Fed.
His remarks that inflation remains under control and his mention of a ``relatively accommodative monetary policy'' sparked a huge rally on the US bond and stock markets Tuesday. Investors interpreted Volcker's words as meaning the Fed would continue to try to ease down interest rates.
Nor was the ``superbanker'' afraid to ham it up. He waved a pennant from the Toronto Blue Jays, who lost the American League race to Kansas City, and joked about Canada's intruding on an American institution, the World Series. Upstairs they watched him live, downstairs he was on the big screen. It was a combined meeting of the Canadian and Empire Clubs, two luncheon groups that joined for an evening event.
The turnout of 2,200 was a tribute to Mr. Volcker's importance in the financial world. Brokers, bankers, and corporate treasurers eagerly listened to every phrase. He spoke about Japan. ``By every economic characteristic, it should be able -- in its own interest -- to help lead the world toward more-open markets rather than feeding protectionist instincts in the United States and elsewhere.''
Hearing those words from Mr. Volcker, a commodity broker here -- who is an avid currency speculator -- leaned over and said, ``There goes the Japanese yen. Glad I'm long.''
Volcker appeared to endorse free trade between the US and Canada -- a move the Toronto financial community generally favors. He added that unless other countries started lowering their trade barriers -- a dig at Japan -- trade protectionists in Washington would be difficult to stop.
Volcker used the old analogy of Canada's being a mouse tied to the elephant of the American economy. But he quickly took that quip and turned it into a serious criticism of other countries using the US to pull them out of recession. ``Plainly the economic elephant of the United States is carrying a heavy load,'' he said.