It’s the Economy

Maple Leaf
Maple Leaf

The Canadian economy is hurting. This isn’t a surprise to anyone who understands how business works, but appears to have surprised the Conservatives, Liberals, and New Democrats…

In business it is a simple rule of thumb that you need three separate incomes sources to be stable. Most companies never manage to reach that stage. It isn’t easy.

Why three separate sources of income? Hopefully, if you pick the right sources, when one source is low on sales, another source will be up.

In other words, it is a balancing act.

Canada didn’t try to balance, instead we’ve put most of our eggs in the Natural Resource basket, and natural resource prices are dropping. The Conservatives and Liberals have been acting like the oil bubble would never break. Guess what folks, it broke.

The New Democrats made noises about diversifying, but it doesn’t look like they really meant it, or had any idea of how to do it.

So, the Canadian economy is currently hurting. The dollar has dropped, income in the oil producing provinces has dropped, and we don’t know when the price will go back up.

And it will go back up. The problem is when? If it is next year (2016), then income will have only dropped for about eighteen months, which is liveable. If it is 2020, then things are really going to get nasty.

Meanwhile the provinces which don’t produce oil are undergoing deflation, as fuel costs drop. Manufacturing is more competitive because of the weaker dollar. The weaker dollar helps other natural resource sectors to some extent as well.

But those sectors did not have enough government support when they were less competitive, and aren’t best situated to take advantage of the changing market.

The Conservatives were planning to run on their stewardship of the economy. That doesn’t look like such a good idea today.

The Liberals have been pretending to be the same as the Conservatives on most issues. That doesn’t look like such a good idea today.

I’m not sure what the NDP is doing, and the Greens and the Bloc have so little support at present, that no matter how good their plans, they don’t have a hope of implementing them.

But it is early. Give the Greens and the Bloc a bit of time, and some luck, and they might surprise everyone.Unlikely, but stranger things have happened.

Wouldn’t that make the Conservatives and the Liberals hurt? It would, but odds are that the Conservatives and Liberals will come up with something. While they’ve been caught off-guard, they aren’t stupid.

But the time they spend coming up with a plan, may play into the hands of the New Democratic Party, which is looking really good right now.

Ah, gotta love politics, the one true Blood Sport.

Regards

Wayne Borean

Monday February 9, 2015

 

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