It's the economy stupid and it doesn't look good

A momentous economic event happened this week and I'm sure you noticed. I'm referring, of course, to the drop of the Canadian dollar below par with the U.S. green back for the first time since January this year.
Yikes, that hurts! A 96 cent loony doesn't go near as far in Kalispell or Spokane. And when you combine that with $1.29-a-litre gas prices while oil has fallen to as low as $78-a-barrel it hurts like a double whammy. And sad to say, the worst may yet to be come.
You'd have to be living under a rock these days to be unaware of the grim financial future being painted by financial forecasters, bankers and investment dealers around the world as the global economy teeters on the edge of another recession or is already well into one as many believe.
“It's recession or depression,” says Nouriel Roubini, the celebrated American economist who predicted both the collapse of the U.S. housing market and and the world-wide recession in 2008. Another recession is almost inevitable, the seer says.
But are you really surprised to hear this? I'm not because I've believed for years that we've been living beyond our means and by “we” I mean almost every country of the world other than Somalia where they've taken up piracy to improve their lot. Give me some examples, you say. Well, where do I begin.
Every time I see a 60 foot motor-home going down the road or a 40 foot “fifth-wheel” being pulled by a beefed-up SUV on steroids, I shake my head and my loving wife tells me to stop being so negative. She may have a point, but I believe I have one too.
Look around our fair city and count the “toys” in almost every yard. On my running route, you can't see the front yard of a modest, southside home because of the motorboat, sailboat, SUV and fifth-wheel parked on it. Quads are a dime-a-dozen in our outdoor city. And what's wrong with that, you say. Nothing necessarily, but I'd like to know how many of those expensive trail-gougers were bought on credit, the very abuse of credit that many financial experts say was a key factor in causing the Great Recession of 2008.
Yes, Canada is doing quite well financially now thanks to our conservative banking system, high commodity prices and a steady hand on the economy by Ottawa. But just to the south of us our biggest trading partner is being sucked into the black hole of $14 trillion U.S. worth of debt and if they disappear into that black hole Canada and the rest of the world won't be too far behind. And it doesn't help to know that despite the strong balance sheet the federal government has here, Canadians as individuals have the highest per capita household debt in the world.
And is it any wonder? I had a higher than normal credit card bill a couple months back of over $2,000 yet I was only required to pay $54 to keep my account current. Is it any wonder that so many fall into the credit card trap? And that trap can bring an interest rate of more than 20 per cent compounded monthly. Scary.
And speaking of scary, speculation now in Frankfurt, headquarters of the European Central Bank, is that the euro may collapse and the 16 countries belonging to the European Union may go back to their individual currencies. That won't exactly build financial confidence around the world and may be the straw that will push the American dollar over the edge and all hell will break loose. We would then be into a dread “double-dip” recession, if not an outright depression.
I think I'm going to re-read Barry Broadfoot's classic “Ten Lost Years” again to get some tips on how to survive a depression. Our grandparents did it and I suppose we can too. But I certainly hope it doesn't come to that.
Just the same, I think it behooves all of us to be a little more careful and financially prudent in upcoming months. Pay off your credit card balance. Pay the mortgage down . Resist the siren song of the latest “toy” you crave.
Yogi Berra once said: “A nickel ain't worth a dime anymore.” Considering the current dark clouds on the economic horizon, it's going to take us more than nickels and dimes to get through it.”

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