Quote:
Originally Posted by photon
Canada and the US are in vastly different positions, I don't see anything that supports that severe a downturn in the Canadian economy. Other countries are saying Canada will weather the storm better than most.
What kind of unemployment rate are you expecting next year? 15%? You do realize that Alberta itself might even avoid a recession altogether right?
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1) Real Estate prices can drop without a recession. They will merely drop further/faster with a recession. But the underlying fundamentals in real estate can easily lead to a world of falling prices in a good market, bad market or inbetween market. High prices always attract more builders who provide more and more supply until demand is met and then exceeded -- just like for any product around the world.
2) The Canadian situation is deteriorating quickly. We now are looking at a 2-year $68-Billion deficit, rising unemployment, plummeting home sales/real estate industry, plummeting commodity prices, plummeting prospects in our biggest trading partner, and a massive shift in consumer spending from borrowing to saving. All of that will lead to substantial long term deflation OR to the negative outcome brought about when the government counters that deflation with massive inflationary policy (which they are trying but failing at).
3) One of the largest stimulators on the economy was new found home equity. Not only has this source of 'wealth' disappeared but it has been replaced by negative equity which is as destructive now as the spending of that money was way back in 2004-2008.
4) The federal government has already quietly moved $75 Billion in liabilities off the banks books and on to the taxpayers backs. This massive bailout, not even voted on, would be worth $750 Billion in the states if you adjusted it per capita and would indicate to me that things are not so rosy here at home. AS home prices continue to sink, and people and businesses start defaulting on their debts through 2009 and into 2010 banks will come back looking for more money. When the federal government goes to give them another $75 Billion bailout in a backroom deal I will be interested to hear whether you still think Canada is in such great shape...
5) The north american auto industry, and along with it the industrial base of Canada and the USA, is on the brink of collapse. By late spring the big 3 (maybe not Ford, they could make it until Winter maybe?) will be back looking for more money. I am not sure how this will play out but I can say for sure, 100% confidence, it is not good for Canada, the economy, unemployment, or home prices - In Alberta or Ontario or elsewhere.
6) People have stopped buying fuel. The numbers coming in are staggering. Guess you need a job in order to have a reason to drive to work?
7) Britain is literally on the verge of national default. They are also about a year further into this than the USA and 2-3 years ahead of Canada. How does that scenario play out when it gets here?
http://www.nytimes.com/2009/01/22/bu...s/22pound.html
Claeren.