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Not A 'Normal' Downturn In The Economy

By Peter Ewart

Tuesday, January 22, 2008 09:19 AM

This is not a “normal” downturn in the North American economy that is coming our way.  For the last several years, a number of media pundits and politicians have been afflicted with a terrible case of “false optimism,” either outright denying that a bunch of very black economic clouds were coming our way or, more recently, downplaying their severity.  As a result, a lot of ordinary people, whether workers, businesses, pensioners or youth, are being caught unprepared as the full fury of the storm unleashes.

 For my part over the last several years, I have become increasingly alarmed over the ominous nature of this storm and have communicated this in various articles and statements.  Ben Meisner, editor of Opinion250, has done the same, as have a small number of independent analysts on the national and international stage.

It has given no pleasure to present this gloomy view in articles, but journalists have a responsibility and obligation to their readers and community to present what they see and analyze, even if it runs counter to prevailing opinion.

At this point, I won’t go into the factors that distinguish this economic storm from the “ordinary” ones, as I have written about these in previous articles.  Suffice it to say that, as someone aptly put it, “a great reckoning” is coming that is going to shake the Canadian, American, and our own regional economy to their foundations.

That being said, I also have optimism.  And that is what I want to talk about today.  The people of our region have tremendous strength and ingenuity, and they have shown this time and again since the first native people established societies here thousands of years ago. 

We have huge natural resources, whether it be forests, oil, gas & coal, minerals and metals, hydroelectric energy and so on.  We have built a world class forest industry and other industries, as well as a modern health, social and education infrastructure.  Indeed, we have built a way of life.

But we are entering a period when we will have to fight like hell to survive and hang onto that way of life.  Some people are already taking initiatives on various fronts, whether it be on the pine beetle issue, economic development, saving jobs, and so on.  This is to be applauded.  But much more is necessary.

The fact is that, if we don’t fight or don’t fight hard enough, we could be “written off” as a region or “marked for exit” as communities, and go into a long decline.  We, as a generation of northerners, cannot let this happen on our watch.  We owe it to those generations who came before us, and those still to come.

This means workers must fight to save their jobs; business people to save their businesses; forestry people to save the forest industry; and communities to ensure their survival.  It means challenging any government, corporate or other interest that, in any way, undermines or does not support our survival as communities and a region.

It also means people putting aside political partisanship and fighting together in common cause.  As mills and businesses close and people lose their jobs, any passivity or “wait and see attitude” will be fatal, given the severe economic and political storm we are entering. 

History has shown that we, as a people and a region, can prevail in the midst of difficult conditions.  Let’s make double sure that we do in the coming period.

Peter Ewart is a college instructor and writer based in Prince George, British Columbia, Canada.  He can be reached at: peter.ewart@shaw.ca


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Comments

Please check spelling in story title. =)
Time for that old war horse.."revitalization".
Spelling incorrect,but probably true!
Journalists should stick to journalism and not become market analysts. Micahal Campbell comes to mind who appears on CTV and gives us his best shot on our economy. He is after all only a journalist and talks about things he likes to believe that may actualy not be facts.

The CBC has given us a run down on the present storm on their website this morning which gives us some facts that are the view of market analysts. Are they accurate? Only time will tell.

I'm not an expert but as the American economy goes so do we. This has been a fact in the past. Why would it be different now? There is lots of talk that BC will weather the storm. It never has on its own so why would it at this time? There is a lot of airy-fairy information out there but is it fact or fiction only time will tell.

Is my spelling OK?

Cheers
The US is going to tank bigtime & the more we integrate our economy with theirs, the worse off we'll be.
That is the reason for the push on the North American Union which will officially join Mexico and Canada to the ailing godzilla in the middle.

We will all be allowed to tank big time together...
So don't we really need a mechanism to hold all levels of government accountable for their spending decisions?

There is no doubt our economy has been in decline and will not likely hit bottom for several months yet and then it's a matter of how long recovery takes. BC will suffer but not as bad as past declines - however you won't agree if you are in our smaller towns dominated by business who depend on exports to the US.

Now back to my opening comment - There has been lots of articles and comments about new and sometimes questionable spending. Questions about where the health care money is going, spending on questionable new city facilities and so on. Perhaps it is time we (the voters) started demanding more accountability for these decisions and worked to ensure spending was directed to serve the 'many' rather than the 'few' special interest groups.
Mr Ewert fails to point out why this is not a normal downturn in the economy. Primarily all capitalist markets are affected by what is known as a business cycle. Economists use many tools known as indicators to determine what point on that cycle we are on and where the economy may be heading. What has happened "out of the ordinary" is the not so smart bankers in the US used subprime mortgage rates to lure investors into the real estate market and loaned whacks of money to people who really shouldn't have been loaned the money to in the first place. Thus, the banks incurred bad debt! Billions of bad debt. If the banks weren't able to write that off, The Depression of the 1930s would look like a cake walk! To compound the problem, global investors now hold shares of the real estate in the US - think mutual funds (too simplistic, but just to illustrate). So now we have thousands of investors trying to cut their losses. If it wasn't for government and banks ability to take measures to counteract the downturns of the economic business cycle the hits would be harder.

I disagree that there is a black cloud looming in our economy, at least on the macroeconomic level. We have a diversified economy. As a capitalist market, we cannot avoid the natural slowdowns, and recessions of the business cycle. However, if you are looking to invest, wait a little while longer for the US real estate market to hit bottom, scoop up a couple of real estate bargains and in ten years or so, you can take your profits and retire!

:)
I would question the recent sell off in the markets. I don't think thousands of investors trying to cut their losses were responsible for what happened on Monday. The culprits were Institutional investors, Currency Traders and Hedge fund managers dumping emerging market stocks to raise cash to shore up their balance sheets. After all, what sectors have rewarded investors the most over the past 4 or 5 years? Emerging Markets, Resources etc. Easy to dump, take profits and who cares about the individual investor, they needed to raise cash.

Tuesday's headlines read "TSX posts another Monster Loss Monday" (down 600 points)

Interesting how the headlines on Wednesday focused on "Central Banks come to aid of Markets" and "Rate Cut Aimed at Market Plunge". Just reading the headlines you wouldn't know that the markets rose 508 points on Tuesday. Fear, panic, and negative reporting is consistant with our media. We have to hunt for the good news. It's very disappointing with such slanted reporting. But it is consistant. Chester