Back in October, on the day before the last federal election, in fact, I said “For the last four years, Justin Trudeau has been spending wildly and unproductively. He has put Canada in a “precarious” (weak) fiscal position. I’m afraid that it doesn’t matter what Greta Thunberg says, the climate and the planet will still be with us in a decade or a century or a millennium ~ perhaps damaged, but both will be here and humans will be, too. But, if a recession or worse, a depression, comes in the next five years ~ and they always come and we are, likely, overdue for one, already ~ then Canada will be in poor shape to meet it, hundreds of thousands, even millions of Canadians will use less energy because they will be unemployed and unable to heat their homes and our government will not have the fiscal resources to fight against climate change because Justin Trudeau and Bill Morneau have seriously mismanaged Canada’s economy.” Of course, I couldn’t have predicted a global pandemic. I simply thought, then, that economic problems always come along and I believe that successful countries prepare for them by following the Keynesian principle of cutting back on government spending when times are good, paying down debt and making fiscal room for the eventual ~ it’s always 100% guaranteed ~ recession. My complaint was, and remains, that Justin Trudeau and Bill Morneau didn’t do any of those good things. They borrowed and spent, but they didn’t spend on Canadian infrastructure; the borrowed money went on virtue signalling and vanity projects.
Now, I see in an opinion piece by Anthony Scilipoti, who is president and CEO of Veritas Investment Research, and Sam La Bell, who is head of research there, in the Globe and Mail, in which they say that “We are about a month into the market turmoil from the pandemic. From week to week, the markets seem to go back and forth between panic and blind optimism … [and, recently] … Stocks sharply rebounded from their lows. Yes, our successes in fighting the COVID-19 pandemic are building; and yes, governments have been quick to deliver support. But for the investor, what lies ahead?“
They say that “Getting back to “normal” within a quarter or two – the so-called V-shaped recovery – seems to be quite a long shot and a vaccine sounds as if it is still a long way off in 2021.” Some estimates are that a vaccine will not be generally available until 2022.
“Unlike the Chinese economy, which is much more dependent on manufacturing and exports,” they explain, “the North American economy relies heavily on domestic consumers and business services. It’s one thing to get back to work, quite another to get businesses and consumers spending again … [and]… The COVID-19 crisis is not like 2008-09. The financial crisis was a Wall Street problem that became a Main Street problem in the United States and then spread globally. The COVID-19 crisis is happening everywhere at once and Bay Street and Wall Street are playing catch-up to try and adjust.“
Messers Scilipoti and La Bell tell us. that “During a typical economic crisis, we might expect gross domestic product to contract by a few percentage points in a given quarter. In 2009, when all was said and done, real U.S. GDP declined by 3.1 per cent for the full year, while Canadian GDP fell by 2.5 per cent … [but] … This time the contraction is likely to be much more severe. Businesses are not facing normal, recessionary declines. Rather, they are facing a drop from 100-per-cent operating capacity to 70 per cent, or 50 per cent or even zero per cent. The resulting disruption is, therefore, more like a Depression-era correction than the downturn of 2008-09 … [and] … Governments have committed to massive bailout packages, which are certainly positive in the short term. But job losses are likely to be staggering. By May, some estimates have the U.S. losing more than 25 million jobs, representing a peak-to-bottom decline in employment of 16 per cent in three months. At the bottom, the U.S. lost 6.3 per cent of its jobs in 2008-09, and that took 26 months to play out … [and, further] … The bailouts will also come at a substantial cost to taxpayers in the longer term. In Canada, all forms of debt – consumer, corporate and government – were already at record levels before the crisis, with Canada’s precrisis public and private debt-to-GDP already more than 300 per cent.” That’s right Justin Trudeau and Bill Morneau had already driven Canada debt-to-GDP ratio up to dangerously high levels by sending Canadian money on all manner of globalist, green, feel-good, sunny ways, projects designed, primarily to make Justin Trudeau look
good less bad on the world stage.
There are, the authors say, three critical sectors for the Canadian economy: housing, banking and energy. They believe that all three are facing significant pressures. Those three sectors make up a huge share of millions of Canadians’ retirement fund portfolios.
Their advice is aimed at investors, and what they see is “at least two quarters of terrible news and financial results and for consensus earnings numbers to drop sharply,” while, according to many sources, including the BBC, “The global economy will contract by 3% this year as countries around the world shrink at the fastest pace in decades, the International Monetary Fund says … [and] … The IMF described the global decline as the worst since the Great Depression of the 1930s … [further, the fund, which calls this a “crisis like no other” added that] … a prolonged outbreak would test the ability of governments and central banks to control the crisis.“
It’s not just Canada, The Independent says that “France is in the midst of its worst recession since the Second World War. The country’s finance minister, Bruno Le Maire, has warned that the economic crisis resulting from the coronavirus lockdown could eventually be of a similar magnitude to that of the 1929 Great Depression.”
The IMF’s chief economist says that:
The news is, unfailingly, bad. Canada is in economic distress, just like all of its G7 partners. Does anyone trust Justin Trudeau and Bill Morneau to lead Canada through a financial crisis much, much worse than the one Stephen Harper faced in 2008? I know I do not.
I believe that Canada needs fresh, new, better, more responsible ~ and that, in my considered opinion, means Conservative ~ leadership soon:
Justin Trudeau must go, and Bill Morneau must go with him. Both have failed Canada. Canada needs better leadership, now.