Quote:
Originally Posted by Slava
I'm curious about that bolded line. What makes you think that this is the new normal and not a piece of a somewhat usual economic cycle?
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Demand is soft across all commodities, not jsut oil. This is also combined with the fact that technology has advanced rapidly in terms of extraction across almost all commodity sectors. The best example is probably still the ability to access shale with new drilling techniques.
Fiscal and monetary policy since the mid-90's has been terrible. We've had central banks deliberately inflating bubbles, and massive public intervention in the markets. The rapid "growth" that ensued ensured capital flows went towards commodity extraction in an unbalanced way. This made us all feel rich. But we are coming to the end of the monetary and fiscal experiment of the last 20 years. Once the smart economies figure out how to return to open markets, which much less government control and intervation, we will look back on this period of history sharking our heads.
The run-up and wealth generation in the last 20 years in Calgary, when put in context, will be considered windfall profits, not sustainable, structural wealth creation.
The psychological problem in Calgary is that many people got rich, or have been paid handsomely because of highly external factors. But they got it all confused with them thinking they were smarter than the average bear.