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Originally Posted by Claeren

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.

Of course, I didn't say prices wouldn't drop. I was responding to how many people would be compelled to sell at the lower price.

There's waaay to much inventory and hidden inventory out there to think prices are going to remain the same.

Originally Posted by Claeren

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).

I didn't say that things were all roses either, it's a recession.

Originally Posted by Claeren

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...

This is totally different than the US's situation. In the US the government bought tons of toxic mortgages that have no hope of ever being repaid, it's lost money.

In Canada that money was spent on the top mortgages, the government bought the cream of the crop, in order to unfreeze intrabank credit. Unless the default rate exceeds the interest paid on the rest of them, the government will MAKE money on those mortgages.

Originally Posted by Claeren

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 til Winter maybe?) will be back loking 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.

Agreed.

Originally Posted by Claeren

6) People have stopped buying fuel. The numbers coming in are staggering.

Impossible to have stopped buying fuel, I'd be interested in the numbers though.

Originally Posted by Claeren

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?

Not sure but to just assume that it will be the same is no more or less valid as to assume it will be the opposite.

Yes times will be tough, but you're painting a picture of a depression not a recession, and I just don't see that, at least not for a province and a country where regardless of what happens there will still be a need for oil for a long long time. Conventional supplies are going down. As the economy gets worse, global unrest will increase (hey, no job, might as well overthrow the government ) making places like Africa, Venezuela, the Middle East, etc less stable. Where's one of the biggest most politically stable reserves on the planet? In our back yard.

I think that's why despite all the turmoil, layoffs, and uncertainty you don't see companies actually pulling the plug on their huge projects, just pushing them off. There's still $168billion worth of projects for Alberta in active development, that's nothing to sneeze at.

That's a pretty big mitigating factor on external forces isn't it?