Kate, I take it you don't follow Calculated Risk or Maxed Out Mama? Because if you look at the numbers the U.S. is definitely in a recession at this point.

I check out MOM every so often, but that's not really the point. It's the Reagan Economic phenomenon all over again. If your only source for news on the US economy was Canadian media, you'd think they were a wasteland of despair by now - when, in fact, the US growth rate exceeded ours and unemployment rate has been lower for virtually his entire presidency.

With the upcoming presidential election, expect the hysteria over the US economy to escalate.

The local CBC radio uses the phrase…bla, bla, blah “economic melt down” in the United States… “They deserve a hat trick for conjuring up in one short sentence a scene of, Yankee disaster, out of control nuclear reactors and drowning polar bears.

Actually, there was a recession in the US shortly after Bush took over. Are you saying the tech bubble bursting - which people had been predicting since before there even was a bubble - and the economic fall-out from 9/11 were mere fabrications of "The Media"? That's right up there with someone saying the NEP was good for the Alberta economy.

While "The Media" - and clearly blogs - certainly does like to over-hype and hyper-sensationalize to increase the drama that drives up subscriptions/viewers/readers, that is hardly the same thing as there isn't a real world out there. The US is in a recession right now and no about of over-hyping and hyper-sensationalizing by conservatives wishing to preserve Bush's legacy is going to change that.

The problem with "The Media" sensationalism is that those who are not in business (or bloggers) end up with the sense that a recession economy - like this one - is a huge major crisis we need to worry aboutround the clock.

But that doesn't change the facts of the state of this US economy: it is in recession, it is suffering a downturn, in some areas of the economy it is positively disastrous and certainly in depression but in other areas it is very strong and healthy.

Your comments are great, kate.

By the way, it isn't simply the percentage relative to population of people using food stamps; it's also the acceptability and normative use of such food stamps. Decades ago, it wasn't so acceptable for use unless you were really almost destitute. Nowadays, their use is more accepted and even encouraged.

Sean, the existence of a US recession is not confirmed at this point; there's debate both pro and con. The housing crisis was a created crisis - giving mortgages to people who couldn't afford them isn't the most intelligent way to do business.

Yes, kate, I'm sure that it's our 'universal health care' that does the trick up here. Also the fact that most of those who can afford it go down to the US for treatment because they can't get it here in Canada.

Oh, and since our economy is a dependent and secondary economy, it also means that we don't fund the costly infrastructural requirements of an economy. You know, buildingn and funding the plants and factories, carrying out all the long term research, developing the new technologies and patents. Canada doesn't do/pay for that; we just do the secondary manufacturing stuff. Less costly and we get immediate returns for our unionized workers.

add the "Ontario auto assembly plants" to the list ET.

and the "Ontario newspaper plants" where paper is made. the finished product is when "ink" is applied.

of course add "Alberta oil and natural gas" and Quebec and BC "hydro".

hewers of wood.........to the great satan.

Just for some comparisons, the GDP for 2007 of Canada is 2.7; that of the US is 2.2

Unemployment: Canada 5.9; US is 4.6

Public Debt: Canada 64% of GDP; US 36.8% of GDP

Since a recession requires, by definition, a lowered or negative GDP for two succeeding quarters, I think we need a bit of a wait for Sean and Ted's joy to come to the 'ripe fruit stage' (Dion).

Definition of "recession": two consecutive quarters of negative GDP growth. In the recent past, the US has not had ONE quarter of declining GDP, let alone two. The Independent does not know what it is talking about.

This is the oldest media trick in the book. I can remember when Slick Willy was in there were almost daily news broadcasts about how great the NASDAQ and DOW were doing. Every day there seemed to be a news item about a new high the market reached. Well...the markets under Bushhitler have been outperforming the markets under Clinton big time and I have heard nary a POSITIVE peep from the media about it.

The current slowdown was/is long overdue and it will come home to roost in Canada about a year after visiting the States just like it always does. And then we can listen to the CBC tell us how incompetent Harper is with economics and how great the Liberals were at "managing" Canada.

Bet on it.

Who's administration was the architect of sub prime legislation? Would that have been BJ billy and company?

The US economy is in recession...it is probable from all indicators it will be a serious recession. The possibility of depression is always present in a fiat currency/credit system but there are a lot of management tools available to central economic controllers that were not available in Hoover's day.

To scare monger a depression is a tad premature and certainly not helpful to efforts to patch up holes in the leaky credit/debt management system.

ET:

It is not joy. It is looking at facts and living in the reality-based world.

Call it downturn, slowdown, recession, correction, whatever, but it is real and no amount of blaming it on "The Media" or burying your head in the sand changes that.

It is not a recession caused by the Republicans or the Conservatives. Governments in Canada just are not that powerful, frankly, to cause a full blown recession of this sort. They can make it better or worse, they can make it easier or harder to get out of it, but the economy will go into the tank and eventually come out of the tank on a pretty regular basis once every 7-10 years. Tempted as I am to lay as much blame on the Bush tax cuts for this downturn as readers here credited the Bush tax cuts for the post-9/11 recovery, both such claims are unsupportable by the economic facts in the reality-based world.

And like I said, if people really knew what they were talking about, saying the economy was in a recession would not set off the kind of alarm bells and knee-jerk partisan posturing and defensiveness that it does.

CANADA- PLEASE SAVE US!!!!!

The only thing we have to worry about is that Obamania and/or the Hildebeast get in and hike corporate US taxes already the highest in the industrial world and they then attack the drug companies and big oil. Then we would see a Wall St melt down .. not to mention an oil and perscription drug shortage.

These zealous liberals are not much different from Eliot Spitzer who wanted micro manage everything in the global economy yet he can’t even run his own life.

The reason the free market economy looks volatile is because it gets “marked to market” every few seconds. Whereas whatever the government owns and operates doesn’t ever get a monetary evaluation .. underneath it all would be valuation volatility too, we just aren’t aware of it.

We need to learn to live with market evaluations and volatility as it continues to accelerate with a global economy and increasing disclosure of financial information.

I Remember the words of Ronald Reagan when he answered this question:

Q: Mr Reagan, What's the difference between and recession and a depression.

A: Well, a recession is when your neighbor loses his job. A depression is when you lose your job."

The great depression is taking place mostly in the mainstream print media who are in a downward spiral and in many cases going our of business. Why else are they clamoring like it's the end of the world. For them it is.

28 million Americans using food stamp. That's about 8% of the population.

It is very easy to get food stamps in the US. At lest half the people using them are scamming. In any government 'free stuff' situation you can bet at least half of the recipients are scamming. That is the nature of people with low values and there is not shortage of lazy people with low values.

Our 40 year move toward socialism in the US and Canada has given rise to that class of people they exist at all levels of society so this is no biggie.

Besides, ET, I think no one is fool enough to rely on the economic analysis of someone who writes "we don't fund the costly infrastructural requirements of an economy. You know, buildingn and funding the plants and factories, carrying out all the long term research, developing the new technologies and patents. Canada doesn't do/pay for that; we just do the secondary manufacturing stuff. Less costly and we get immediate returns for our unionized workers." Clearly, such a person hasn't any clue about the Canadian economy, let alone the US.

Illegal immigrants need food too..... Food stamp living, still better than Mexico.

the money quote:

""They should be refilling it in the next three or four days," Liepnieks says. At times, he admits, he and friends bargain with owners of the smaller grocery shops to trade the value of their cards for cash, although it is illegal. "It can be done. I get $7 back on $10.""

So I wonder how many scammers are using the food stamp system to finance their purchases of cigarettes, booze or drugs with their 70% cash back ?

What I find remarkable is the consistency the lefty media shows in reporting about finance and economics.
One has to wonder though who it is that bases world view on the likes of The Independent??

tsk, tsk, ted - back to the ad hominem again? That's the Sign of a Liberal - personal attacks.

Now, anyone with er..brains..ought to know that you can't define X with multiple terms, each having a different meaning. If you do that, you end up with..nothing. So, calling an economy "downturn, slowdown, recession, correction, whatever" (ted 10:58) is a 'nothing-definition'. So, ted, which is it? Try again, and use ONE term and one meaning this time. Not multiple terms/meanings.

Oh, and attempting to say that IF someone refutes an opinion, THEN this means that that opinion is the truth - is illogical. So, your attempt to 'prove' (heh) that the US is in a recession, because people say that it isn't...isn't much of an Argument, is it?

And, I repeat, we don't fund long term infrastructural development in Canada. We leave the bulk of that to foreign investment. Same with research and development. Got that, ted? That's why Harper is trying to reduce capital and corporate taxes - to enable the development of what Canada lacks, namely, an Investor Class. Know what that means? We don't have private foundations, private R&D,...that's a serious loss.

john west and fred - yes, agreed; there's quite a class of people both in the US and here (and in any welfare state) that scams the taxpayer. The permanent food stamp users, despite their income; the welfare users with jobs that pay cash..etc.

That’s right, keep the southern boarder wide open because the US needs more illegal immigrants to fill the jobs that 28 million Americans on food stamps are too proud to do!

Further to the other theory of what goes up must come down ...

After the adjustment period after 9/11 when the US economy took a deep breath and the stock markets crashed, there was a long period of economic growth.

From what I've gleaned, the US economy enjoyed increased employment levels for 52 straight months. For those mathematically-challenged out there, that's four months longer than four years.

The latest 'crisis' has been percipitated by a sector meltdown caused by pushing the limits of reasonable credit practises, where lenders who would normally been disqualified were 'approved' for loans they would not have qualified for in a saner environment.

While mortgage brokers partied, the US taxpayer is left picking up the tab.

And, there already is an over-reaction to this in the financial markets, where only those who do not need the money are the only ones who qualify for credit.

The big stat to watch for is employment rates. That measures how much disposable income there will be to keep the US consumer-driven economy going.

After their taxes are raised, while the guilty parties get off scot-free, of course.

ET:

You know you have a reading comprehension problem with ordinary political topics, so don't venture into the more complicated terrain of economics, 'kay?

Anyone who knows how to read knows that when someone writes "downturn, slowdown, recession, correction, whatever" that person is trying to avoid the use of a specific term. Whatever you want to call it, the US economy is in worse shape than it was 12 months ago and it is going to get worse before it starts getting better and growing which it inevitably will.

And don't tell me what Canada does and doesn't do when it comes to infrastructure and R&D. That is what I do. The government spends billions each year on both and the amounts Canadian governments, including finally the Harper Conservatives, are investing are soaring. If you think all Ontario is is manufacturing you should either get your head out of your partisan blinders or stop talking/writing about it. (Actually, I vote for the latter.) While manufacturing is certainly very very significant, the largest industry by far is the services sector. Despite a decline ("downturn, slowdown, recession, correction, whatever") in manufacturing, Ontario still led the entire country in job growth in the first quarter.

Learn to live in the reality-based world. It's more complicated but it's not to be feared.

Ted:

What part of natural economic cycle don't you understand?

Ted the lawyer, as he addresses the judge:

"Your honour, the accused is guilty of murder, manslaughter, abuse, hurting feelings...whatever you want to call it, it wasn't nice. So send him to the electric chair."

Liberals and progressives just don't like defined terms or stable definitions of words, do they? Definitions get in the way of their unceasing spin and deception.

Is the US economy in a decline? Yes.

Is the US economy in a "Recession"? No, not yet, it hasn't achieved two consecutive quarters of negative growth yet.

Is the US economy in a "Depression"? No. Are you a COMPLETE moron?

Is there a risk of a "Recession" or "Depression" occurring in the next year in the US? I'm no economist, but I would think that there is.

Ted, you are a malignant tumour, jerk, goof, obstinate fellow...whatever you want to say, you're not nice.

What's with the 'kay', Ted? Attempting to be 'laid back' in your armchair?

Now, it is absolutely untrue that IF anyone uses multiple terms, each with a different meaning, that 'that person is trying to avoid the use of a specific term" (ted. 12:08). Why would they be trying to avoid the use of a specific term?

It could very well mean that they don't know enough about the terms and the 'real situation' to be able to describe it accurately. So, they use ALL terms. Heh. That's like informing a patient that they have all diseases.

You yourself said: "it is in recession' (10:05) and your several references to 'recession' in 10:58.
Now, you can't say that a recession is equivalentn to a 'downturn, slowdown, correction, whatever'. Because it isn't.

As for telling you anything - I'm not. The fact that you read and respond to my posts is your decision. Not mine.
Again, you aren't reading what I said. I repeat: Canada doesn't have an investor class. It relies on foreign govts to finance infrastructural development and research and development. That includes all the megacorporations set up in Canada; and the fact that R&D is primarily carried out in other countries; we reap the benefits. Canada has no private foundations funding research and development. Just the govt and its worn out SSHRC and NSERC.

That problem also includes the fact that Canadian industrial development requires massive subsidies to sustain them. They aren't, themselves, profitable (Bombardier, forestry, etc). Remember, the unionization of Canada prevents a market economy because unionization changes the focus of that business from consumer satisfaction to employee satisfaction.

As for jobs in Ontario, most of them are with the govt; paid for by the taxpayer. Ontario doesn't do enough to enable small and medium size businesses. That's McGuinty and his Liberals for you. Oh, sorry, you're a Liberal, aren't you, ted.

Now, ted, don't read this and don't answer. It upsets you.

If you want an idea of the economy.

Look at the number of Commercial Trucks on the road and in the truckstops. More is good.

Everything moves by truck at some time. That is the guage of the economy.

"As for jobs in Ontario, most of them are with the govt; paid for by the taxpayer. Ontario doesn't do enough to enable small and medium size businesses. That's McGuinty and his Liberals for you. Oh, sorry, you're a Liberal, aren't you, ted."

ET...guess you saw this:

http://www.torontosun.com/News/Canada/2008/04/01/5157501-sun.htm

Ah - The Independent. The paper of Robert Fisk. Need we say more?

The Independent is the Rodney Dangerfield of British "broadsheets": no matter how hard it tries, it "just don't get no respect."

A five per cent unemployment rate equals a ninety-five per cent employment rate. If unemployment goes from 5 to 8 per cent, that is a big increase. However, employment would fall from 95 to 92 per cent.

"Canada doesn't have an investor class. It relies on foreign govts to finance infrastructural development and research and development. That includes all the megacorporations set up in Canada [...] Canada has no private foundations funding research and development."

That is just such an absurd, patently untrue statement. If that is what your books tell you, ET, you need to get different books or come join the rest of us in the real market.

Canada is a small country, especially compared to our neighbour, but we pull more than our weight on the financial markets and Canadian-based investors are funding mega-purchases and mega-projects throughout Canada and across the world.

"And don't tell me what Canada does and doesn't do when it comes to infrastructure and R&D. That is what I do. The government spends billions each year on both and the amounts Canadian governments, including finally the Harper Conservatives, are investing are soaring. If you think all Ontario is is manufacturing you should either get your head out of your partisan blinders or stop talking/writing about it. (Actually, I vote for the latter.) While manufacturing is certainly very very significant, the largest industry by far is the services sector. Despite a decline ("downturn, slowdown, recession, correction, whatever") in manufacturing, Ontario still led the entire country in job growth in the first quarter."

Yes, Ted, and there is a new call centre moving in to pollute my building with rif-raf. I think if I was unskilled, I'd prefer to work a line at ford for $30/hour rather than working at a call centre for $10/hour.

The "service" sector includes menial, low-paying jobs like "would you like fries with that." Manufacturing has to be replaced by work of at least equal value to maintain Ontario's fiscal strenght. This is not happening in Ontario. Yes, there are some good companies doing good work (Markham and Mississauga is full of them) but they don't amount to what the manufacturing sector does and they haven't been expanding as fast as manufacturing is leaving. McShifty isn't helping matters.

Strip all of the low-tech, badly paying "service" jobs out and what are you left with?

If you don't have a business climate conductive to new investment, you won't get any. Capital taxes are just as bad as payrole taxes - they discourage investment and hiring respectively.

The Feds pay Quebecers to do bio-research. They pay Quebecers to do aerospace research. They pay university professors coast-to-coast and their "peer-review" process keeps new ideas to a minimum - especially politically incorrect ones. Ontario can't count on the feds regardless of who is in power.

I'm not sure how much useful work the Ontario government funds but I suspect it's like every other government project: all optics, no substance.

Lastly, in a trillion dollar economy, what's a few billion going to do? I bet the world's top drug company spends more in R&D in a year than all levels of government in Canada combined.

ET,

We may not have an investor culture in terms of media and public perception, but almost all working Canadians are part of the "Investor Class" whether they know it or not.

Especially the unionized ones.

The largest investors in Canada are the unionized employees, not the fictitious "oligarchy" of bankers in pin-stripe.

Sorry, but I'd stick to sociology or whatever it is you do. Sure as hell, economics and business isn't it.

Today is a perfect example of what I call "The Looking Glass Economy". UBS announces $12 BILLION in writeoffs, which is more than all of 2007's profits, and represents fully one third of the bank's capital - and the stock market bids them up! Goldman Sachs predicts in Barron's last weekend that they expect further bank writeoffs with an upper limit of $1.2 trillion, so of course, Lehman, Citi, and all the other US banks get bid up. The Fed has basically announced that it will create approximately $1 trillion in US$ out of thin air, so the US dollar gets bid up.

Meanwhile, real stuff like oil, gold, copper, etc. get knocked down. People are writing that the commodity boom in food stuffs is over, but last week, Egypt banned ALL rice exports, Vietnam (2nd largest rice exporter in the world) has ordered officials to sign no new contracts, and India has banned exports altogether. In Manila, Philippine police are searching the warehouses of suspected rice hoarders (and virtually every meal in the Philippines eaten at home includes rice of some kind).

I feel like Superman on Bizzaro world!

Gas is too expensive and ethanol is laying waste to farm commodities prices. The subprime is a large problem that needs as little government intervention as possible. Let the banks clean up their own disaster and the homeowners MAKE THEIR PAYMENTS or lose their property like the rest of us. But, calling it a depression is typical UK wishful thinking. To them I say:

TATA, HA HA. There goes two great British marques back to the land of the Raj. The delicious irony in that sale I hope causes excruciating pain to that small island of small minds.

[Sorry, I've been watching "John Adams" and while it's a fairly amateur production, I'm furious at those Redcoats all over again.]

KevinB

Don't take this as any sort of advice to buy or sell any investment product, but if you have a sector priced for the "worst-case scenario" and you end up with a better-than-worst-case result (or at least the expectation of which,) your price adjusts to reflect that.

If you have a hedge against the "worst-case" the opposite happens.

Asset pricing is forward-based. This is the source of volatility. If you are pricing something on your best guess of what the outcome is, and you can never tell with certainty what that outcome will be, you have to constantly re-evaluating your position every time a bit of new information presents itself (which is constantly.)

If your expectations change, so do your pricing models.

The other thing is that as information provides more certainty, your volatility will decrease. The opposite is also true. You get the widest price movement when you have the least information.

Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are all part of the problem. Its like a game of Monopoly. In America, the richest 1% now hold 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates, this includes all stocks, bonds, cash, and material assets held by America’s richest 1%. Even that filthy pig Oprah acknowledged that it was at about 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING HYPOCRITE SLOB. THE RICHEST 1% HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for any of their ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. At any given time, there is a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the middle class slip further into debt and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars which have been transfered FROM US TO THEM. All over a period of about 27 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They just keep getting richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductible crumbs and call themselves ‘humanitarians’. Cashing in on the PR and getting even richer the following year. IT CAN’T WORK THIS WAY. Their bogus efforts to make the world a better place can not possibly succeed. Any 'humanitarian' progress made in one area will be lost in another. EVERY SINGLE TIME. IT ABSOLUTELY CAN NOT WORK THIS WAY. This is going to end just like a game of Monopoly. The current US recession will drag on for years and lead into the worst US depression of all time. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. So don’t fall for any of this PR CRAP from Hollywood, Pro Sports, and Wall Street PIGS. ITS A SHAM. Remember: They are filthy rich EVEN AFTER their tax deductible contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. Crime, poverty, and suicide will skyrocket. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that HUGE transfer of wealth to the rich. Anyway, those other factors are all related and further aggrivated because of GREED. If it weren’t for the OBSCENE distribution of wealth within our country, there never would have been such a market for sub-prime to begin with. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. The credit industry has been ENDORSED by people like Oprah Winfrey, Ellen DeGenerous, Dr Phil, and many other celebrities. IT MAKES THEM RICHER. Now, there are commercial ties between nearly every industry and every public figure. IT MAKES THEM RICHER. So don’t fall for their ‘good will’ BS. ITS A LIE. If you fall for it, then you’re a fool. If you see any real difference between the moral character of a celebrity, politician, attorney, or executive, then you’re a fool. No offense fellow citizens. But we have been mislead by nearly every public figure. WAKE UP PEOPLE. THEIR GOAL IS TO WIN THE GAME. The 1% club will always say or do whatever it takes to get as rich as possible. Without the slightest regard for anything or anyone but themselves. Reaganomics. Their idea. Loans from China. Their idea. NAFTA. Their idea. Outsourcing. Their idea. Sub-prime. Their idea. High energy prices. Their idea. Obscene health care charges. Their idea. The commercial lobbyist. Their idea. The multi-million dollar lawsuit. Their idea. The multi-million dollar endorsement deal. Their idea. $200 cell phone bills. Their idea. $200 basketball shoes. Their idea. $30 late fees. Their idea. $30 NSF fees. Their idea. $20 DVDs. Their idea. Subliminal advertising. Their idea. Brainwash plots on TV. Their idea. Vioxx, and Celebrex. Their idea. The MASSIVE campaign to turn every American into a brainwashed, credit card, pharmaceutical, love-sick, celebrity junkie. Their idea. All of the above shrink the middle class, concentrate the world’s wealth and resources, create a dominoe effect of socio-economic problems, and wreak havok on society. All of which have been CREATED AND ENDORSED by celebrities, athletes, executives, entrepreneurs, attorneys, and politicians. IT MAKES THEM RICHER. So don’t fall for any of their ‘good will’ ‘humanitarian’ BS. ITS A SHAM. NOTHING BUT TAX DEDUCTIBLE PR CRAP. In many cases, the 'charitable' contribution is almost entirely offset. Not to mention the opportunity to plug their name, image, product, and 'good will' all at once. IT MAKES THEM RICHER. These filthy pigs even have the nerve to throw a fit and spin up a misleading defense with regard to 'federal tax revenue'. ITS A SHAM. THEY SCREWED UP THE EQUATION TO BEGIN WITH. If the middle and lower classes had a greater share of the pie, they could easily cover a greater share of the federal tax revenue. They are held down in many ways because of greed. Wages remain stagnant for millions because the executives, celebrities, athletes, attorneys, and entrepreneurs, are paid millions. They over-sell, over-charge, under-pay, outsource, cut jobs, and benefits to increase their bottom line. As their profits rise, so do the stock values. Which are owned primarily by the richest 5%. As more United States wealth rises to the top, the middle and lower classes inevitably suffer. This reduces the potential tax reveue drawn from those brackets. At the same time, it wreaks havok on middle and lower class communities and increases the need for financial aid. Not to mention the spike in crime because of it. There is a dominoe effect to consider. IT CAN'T WORK THIS WAY. But our leaders refuse to acknowledge this. Instead they come up with one trick after another to milk the system and screw the majority. These decisions are heavily influensed by the 1% club. Every year, billions of federal tax dollars are diverted behind the scenes back to the rich and their respective industries. Loans from China have been necessary to compensate in part, for the red ink and multi-trillion dollar transfer of wealth to the rich. At the same time, the feds have been pushing more financial burden onto the states who push them lower onto the cities. Again, the hardship is felt more by the majority and less by the 1% club. The rich prefer to live in exclusive areas or upper class communities. They get the best of everything. Reliable city services, new schools, freshly paved roads, upscale parks, ect. The middle and lower class communities get little or nothing without a local tax increase. Which, they usually can't afford. So the red ink flows followed by service cuts and lay-offs. All because of the OBSCENE distribution of bottom line wealth in this country. So when people forgive the rich for their incredible greed and then praise them for paying a greater share of the FEDERAL income taxes, its like nails on a chalk board. I can not accept any theory that our economy would suffer in any way with a more reasonable distribution of wealth. Afterall, it was more reasonable 30 years ago. Before Reaganomics came along. Before GREED became such an epidemic. Before we had an army of over-paid executives, bankers, celebrities, athletes, attorneys, doctors, investors, entrepreneurs, developers, and sold-out politicians to kiss their asses. As a nation, we were in much better shape. Strong middle class, free and clear assets, lower crime rate, more widespread prosperity, stable job market, lower deficit, ect. Our economy as a whole was much more stable and prosperous for the majority. WITHOUT LOANS FROM CHINA. Now, we have a more obscene distribution of bottom line wealth than ever before. We have a sold-out government, crumbling infrastructure, energy crisis, home forclosure epidemic, 13 figure national deficit, and 12 figure annual shortfall. The cost of living is higher than ever before. Most people can't even afford basic health care. ALL BECAUSE OF GREED. I really don't blame the 2nd -5th percentiles in general. No economy could ever function without some reasonable scale of personal wealth and income. But it can't be allowed to run wild like a mad dog. ALBERT EINSTEIN TRIED TO MAKE PEOPLE UNDERSTAND. UNBRIDLED CAPITALISM ABSOLUTELY CAN NOT WORK. TOP HEAVY ECONOMIES ALWAYS COLLAPSE. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. The American dream will be shattered. and thats just the beginning. Greed will eventually tank every major economy in the world. Causing millions to suffer and die. Oprah, Angelina, Brad, Bono, and Bill are not part of the solution. They are part of the problem. THERE IS NO SUCH THING AS A MULTI-MILLIONAIRE HUMANITARIAN. EXTREME WEALTH MAKES WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. WITHOUT WORLD PROSPERITY, THERE WILL NEVER BE WORLD PEACE OR ANYTHING EVEN CLOSE. GREED KILLS. IT WILL BE OUR DOWNFALL. Of course, the rich will throw a fit and call me a madman.. Of course, they will jump to small minded conclusions about 'jealousy', 'envy', or 'socialism'. Of course, their ignorant fans will do the same. You have to expect that. But I speak the truth. If you don’t believe me, then copy this entry and run it by any professor of economics or socio-economics. Then tell a friend. Call the local radio station. Re-post this entry or put it in your own words. Be one of the first to predict the worst economic and cultural crisis of all time and explain its cause. WE ARE IN BIG TROUBLE.

I agree with ET. Warwick, unions may be investing their sweat but what is meant by investor class versus chattering class is cash investment versus a chattering class of Liberal elites who have too much to say about what is Canadian and what is un-Canadian.

The US entering a recession or not is a moot point. It is shrinking in world domination; it is only 300 million people in a world approaching 7Billion. The world GDP is growing at about 5%.

The big “Lag” problem that Canada has is in productivity.
Our productivity is pathetic compared to the US, we simply ride on the back of the US in terms of private enterprise R&D and investment in new technology etc. The Harper government is begging Canadian companies to start using the par dollar to invest in new equipment.

Canada’s poor productivity performance certainly has longer-term implications for the nation’s overall standard of living,

Productivity improvement in Canada runs about 1% in Canada compared to 3.3% in the US. Overall our productivity is 74% of the US.
Canada’s productivity standing in the OECD was 2 or 3 in the 50’s and 60’s and now it is 17th.

Productivity is by far Canada’s biggest economic challenge. To fix the problem we need a larger, wealthier, investor class instead of a CBC class of utopians whose solutions only involve redistribution of income. We need to drop taxes across the board and starve the utopians at the CBC. We need to reduce our economic dependency on the USA for trade and investment and their R&D.

We need to compete in the global economy which is not in a recession!

nomdeblog

The largest source of private equity in Canada is the pension plans like Ontario Teacher's Pension Plan, OMERS and the CPP's new fund. There are also foreign private-equity funds who invest in Canada. When you see a good bet, you take it - regardless of where it is. Private equity funds new, riskier ventures with the potential for huge payoffs for a small number of winners. This investing is best left to huge pools which can afford to spread risk. We have them.

We do lack private foundations but that is a result of our tax laws. We discourage them unlike the US as our political masters have decreed that they should get their hands on our money because they know best how to spend it. If our money went into foundations, then the control leaves the politicians and they can't have that!!!

Our lack of productivity growth is due to Capital taxes and our formerly-low dollar insulating Canadian companies from global economic reality. The other issue is that too often our liberal-connected corporate giants have whined to the Feds to protect them rather than invest in technology that would enable them to compete globally. Far too many of our companies (especially Quebec and Rosedale controlled companies like Bombardier, the banks, and our supposedly fragile cultural sector like bookstores and movie theatres) are addicted to protectionist policies and corporate welfare.

If you tax new investment you won't attract any. We can't fix the dollar, we can fix corporate tax structure.

Investment potential is not our problem. Results are.

If you want to see what government policy does to investment, contrast the oil industry in Alberta to the Oil industry in Sask over the last 20 years. Kate has put up very good maps of wells. I don't think anyone thinks nature could have known the political line drawn through the prairies and put all the oil on one side so the only rational reason for the differences in investment right along that boarder is government discouragement on the Sask side and encouragement on the AB side.

Investment dollars go where they are best utilized.

"Ah - The Independent. The paper of Robert Fisk. Need we say more?"

Alarmingly, brain drain in the Great Borehole has reached catastrophic proportions.

Agree with much of that Warwick

Crony capitalism is what the Liberals were all about after a century of dominance in Ottawa and the resultant 2-way patronage game that would make a Mexican politician blush.

The CPC is in fact the party of small business the real job creator. The Liberals subsidized family controlled wealth destroyers like Bombardier. It is now hard to detoxify those schemes. We need to encourage more tax cuts like Manitoba’s new tax policy on small business that is now ZERO.

The new $5000 investment account is a start towards an investment class. Canadians don’t even use up their RRSP allocation but hopefully this new account will be more attractive because it is much more flexible.

In the US over 60% of Americans are invested if you count their mutual funds and 401Ks. Therefore they don’t say “oh may gosh, big oil and big wheat just made a billion dollars this quarter.”

Instead they go “thank God my investments are doing well”.

warwick - I'm not talking about an 'investor class' made up of the funds gathered up by a parasitic union!

I'm talking about an investor class that develops a business, gathers profit, and then, invests that profit in some further business. And Canada doesn't enable such profitable private enterprise. Our taxes, ..oh, and our union dues and necessity for hiring unionistes..prevent people from gathering such a profit.

Who's talking about bankers in pin stripes? I'm talking about ordinary Canadians who set up small to medium businesses, for a profit, and then, invest that in other businesses and in research and development. We don't enable that.

So, these ordinary business enterpreneurs can't decide, themselves, to gather a group and invest in a new business. Or set up a research foundation.

The money stolen (a metaphor) by unions from the workers (called 'union dues') goes to support the massive union bureaucracy. Unions are parasites on workers. What good do unions do? Zilch. Heh - workers have to give up their wages to support union bureaucrats..heh. So, unions get the money from workers, and then, invest it! How about leaving the money with the guy who earned it, the worker. He can decide what he wants to do with it. Oh..unions are leftist; they think that workers are peasants and can't make decisions on their own. Beer and popcorn.

No, I don't do sociology, which I presume you mentioned as an insult. Don't go into ad hominem; stick to the issues.

By the way, warwick, I completely agree with your assessment of research; the feds pay the research and the peer review does indeed slam the door on innovation. Canadian 'research' for the most part is non-existent.

Heck, ted, are you still reading my posts? Still trying to insult me? Why? Give it up.

No, Canada doesn't 'pull its weight' in international projects with Canadian investors. We primarily just have the Desmarais, PowerCorp, Moe Strong group. Your friends? I repeat. Canada doesn't have private foundations funding R&D. Canada doesn't have a robust investor class. We rely on foreign private and govt investors for our industrial infrastructure.

Kate said: "With the upcoming presidential election, expect the hysteria over the US economy to escalate."

With pearls 'o wisdom like that - I mean, I never woulda thunk that them US elections hinge a lot on teh economie, thanks Kate! - I think SDA has earned its stripes as required reading for the very, very smart.

That's why, when I'm looking for a source for trustworthy, informed economic news and analysis, I look no further than the blog owned by a graphic artist who paints cartoons on hockey helmets, with no formal education in economics (or, so far as can be determined, much else).

Recession? What? MSM!!11!! Liberal media!!

Kate, honestly, I think you should get paid for all the energy you expend into this...someone's missing out, that's for sure.

Warwick, explain how unions,I am guessing you are talking about OMERS as they are awash in the fabulous tax dollars paid to the public unions, are investors. They may invest in infrastructure or the Maple Leafs but I believe ET is writing about venture capitalists that invest in potential ideas or inventions that may produce results down the road.

Anyone in business knows Canada is highly risk aversive. Public money is rarely spent on developing concepts just supporting high union wages like the auto industry or Bombardier. And when the Liberals spent 500m for the robot arm company they didn't lock it in and we may lose the whole thing, brilliant.

Recessions are a natural part of a healthy economy. Like pruning a fruit tree, the short-term implicationsa re less fruit but in the long-term it is more and much better quality fruit and a much healthier stronger tree. More than any other economy the US seems to be the most adept at allowing the pruning to take place.

The US is likely at or near the classic definition of a recession. But I disagree with some of the commentoers above who say that it is a "serious" recession. With the huge devaluation of the US currency and decrease in interest rates a huge boom in exports has already begun that will wipe out the trade deficit as early as the end of this year. (Hopefully it will pressure China to finally adjust the Yuan upwards and much of the current trade irritation will dissapate(SP?).) And in an economy as diverse as the US' some areas are suffering while others are not at all - IOWA vs OHIO, for example.

Add-in the addition of a president McCain with advice from the old turk Newt Gingrich (fabulous new book, BTW) et al and things will look very rosy by the beginning of 2009.

...

I agree with ET re: Ontarion and the general lack of economic muscle and sinew in the Canadian economy. Like it or not we are a natural resource producer living off of the bounty of the land to a much much greater extent than the US has. Will we never seem to develop any long-term multi-national successful companies (bombardier and the paper companies? please take away the subsidies and what do you have?). Our banking and venture capital system is a stunted joke and our service sector is predominantly public services versus business services - the diametric opposite of the US.

Meanwhile the US has used its resource bounty to develop other non-resource-based ventures - software, consumer non-durables, entertainment etc. They are the world leaders in every high-profit per unit sector (i.e. software, aerospace, banking, pharma etc.) there is.

It also has a much more productive workforce due largely to its mobility compared to Canada. the resistance - both structural and cultural - of someone in Michigan moving to Alabama is a lot less than from NL to Alberta.

The myth that Ontario is some kind of Economic "engine" ranks right up there with all of the other Myths - Healthcare, Avro Arrow, Bilingualism, multi-culturalism, peacekeeper, canadarm, Candu etc. - that this confederation seems to based on versus the hard facts that the US's identity is based on.

"I'm talking about an investor class that develops a business, gathers profit, and then, invests that profit in some further business. And Canada doesn't enable such profitable private enterprise. Our taxes, ..oh, and our union dues and necessity for hiring unionistes..prevent people from gathering such a profit."

ET, that's utter BS. Completely false.

There is an enormous amount wealth in individual private hands that is being invested and reinvested. There are not only individuals who grow businesses, sell them off, start up new ventures, but there are many investment funds that do this. In fact, there are whole industries dedicated to helping this very real Canadian investor "class". The Canadian pension fund based firms (which act like private investors but obviously are not managing private funds for private profit) are certainly among the world's largest investors, but there are hundreds of truly private investment funds. Are they as big as the Blackstones or the KKRs of the world? No but that doesn't mean they don't exist.

You really really have zero idea about what the financial world is like. Just because that fits your academic books and arguments, doesn't change the reality on the ground. Classic ivory tower observation.

ET,

That parasitical union is buying BCE in conjunction with the world's largest private equity fund. And it isn't run by the unions (much to their chagrin.)

The unions have tried several times to slim their way into the pension's management but it isn't the union's money. It's the employers money. It's the employers until it gets paid out to the employees in benefits which the company has agreed to pay. The employer is on the hook for any shortfall so management is rightly the job of the employer's representatives.

The Teacher's plan is the best run pension plan in Canada. I wish mine was run as well. It's managed by the largest team of investment pros in Canada. It is so because it is independent of the government and the union. The government (who is ultimately responsible for the money) doesn't interfere with the management. It's actually hard to believe given that politicos generally like to input their greedy maws wherever they can.

The banks don't have the private equity specialists the Teachers have. OMERS is almost as big on the private equity side.

All of these Private Equity divisions within the big pension firms "develops a business, gathers profit, and then, invests that profit in some further business." That's what private equity is.

The pensions of large, private companies do the same thing. We also have hedge funds (although many of them operate out of tax havens) doing the same thing. You don't hear about them much as they don't like publicity and tend to be much smaller than US hedge funds.

There are many groups/companies/people doing private equity. You just don't hear about them from the media. What do Yanks hear from the New York Times?

And If you don't do sociology, it's something similar - but I'm going from memory. Anthro? And it wasn't meant as an insult (although I can see why you'd take it as such,) just a comment that economics may not be your forte.

Ted, name me some products that these investor groups have brought to market. I don't see to many "Made in Canada" stickers on things but I bow to your knowledge and expertise and am eager to learn.

To me, this little factoid explains how government is crowding out the investment class entrepreneurs with cushy government unionized service sector jobs that should be outsourced to the real economy:

Canwest News Service
Published: Monday, March 31, 2008
TORONTO - The number of top earners in Ontario's public sector rose 24 per cent last year over 2006, according to documents released Monday.
In total, 42,527 employees earned more than $100,000 in 2007. That number represents an increase of 8,106 - or nearly one quarter - from a year earlier.

The entrepreneur class of investor is completely different from the Teachers Pension fund. Entrepreneurs bring not only their cash equity but their sweat equity, their brains and their passion to the enterprise. This is very different from pension fund investment … we need more of both.

Oh, and "private equity" doesn't mean that the money is from "private" individuals.

It means the companies they are investing in are private companies. As in they don't trade on exchanges.

There is a process of corporate development where a start-up needs seed capital with or without management consulting to mezzanine financing to listing on the stock market as a public company.

Private equity finance is the investment side of that equation. The entrepreneurs with marketable ideas are the talent they're funding.

Teacher's, Omers, CPP, countless private sector pensions, some mutual funds, hedge funds, private-source equity, Banks, insurance companies and other financials, and even BCE Capital (ironic as they're being taken out) all engage in private equity finance.

Cont’d … Plus we need more just plain middle class investors who have some savings left over from what Revenue Canada and Queens Park take away from them to redistribute to entitlement schemes.

Oh and I’m begging to like this new kind of recession :

April 1 (Bloomberg) -- The U.S. stock market posted its best start to a second quarter in 70 years … with the S&P up 3.6%.

correction
begging ... should be ... beginning (Fraudian?)

Investment flows and individual tax burdens are separate issues.

I agree whole-heartedly that taxes are too high, government too big and doing too many stupid things they shouldn't be.

The problem with "middle-class" investors in general is two-fold: 1)Scale, and 2)regulatory problems.

The government/OSC/etc runs on the basis that people are stupid and have to be protected from themselves (and Ted, lawyers haven't helped the issue.) Therefore, the investment industry is the most onerous and regulated industry on the face of the earth. You can run a nuclear power plant with less regulation than a mutual fund company.

Given this, private equity is regulated out for most small investors (in order to invest in private equity/hedge funds/pools, you have to be a "qualified investor" the definition of which depends on province but the quick answer is it's between $100-250k to invest or you have to be a licensed investment professional.) Small investors can only invest in Labour Sponsored funds which have a less than stellar track record.

The main problem is that you need large pools of illiquid money (in other words, you need to invest a lot of money for long periods of time) to produce results. A start-up can take a decade to bring to market and a pool has to fund many to spread risk. Small investors have a history of pulling out their money and switching investments every 40 seconds or so. Thus, even with a 100-250k regulatory minimum, you often have much higher minimums to buy into most hedge funds and pooled investments. Soros (every conservative's enemy) had a $10 million minimum before he capped his fund and 1mm isn't uncommon putting most hedge funds out of reach to middle-class investors.

That said, you can still make a good return in your average, boring mutual fund. Just get yourself some good advice on what/which to buy.

Warwick, agree pretty much with all you said (including about lawyers!).

I would add there is a huge swath of investors in Canada that invest outside of the regulated markets - individuals or small/medium/large/mega companies putting their own money directly into other companies that are developing a new product or technology. Truly private seed/venture capital investing that would never or rarely make headlines and so doesn't count for those complainers about Canadian business here.

Warwick “Investment flows and individual tax burdens are separate issues”

No because if you elect the Liberal/NDP they will have the new whiz team of Bob and Martha Who-Who put your money in National Day Care run by government unionized workers who have an interest in redistribution of wealth instead of creating it.

Or

They’ll do this with your money:
“CP March 31 2008, WINDSOR, Ont. - Ford of Canada will use a $17-million investment from the Ontario government…The plant became a political football as federal Finance Minister Jim Flaherty insisted tax cuts - not direct government investments - are the best way to encourage investment and create new jobs. Premier Dalton McGuinty countered that governments must do their part to secure large projects by multinationals like Ford "We think the auto sector is key to growing our economy," McGuinty said Monday.”

Will someone explain to me why Ontario with nearly the highest corporate taxes in Canada would tax RIM a Canadian success story so that McGuinty can give the money to Ford an American owned faltering company? Could it be that Ford is unionized and RIM isn’t?
This is why Ontario will become a “have-not” province and why this relates to the original post on food stamps.

Warwick and Ted:

Where are all of the hugely successful that these private equity firms are funding?

Private equity in canada is cowardly what little there is that hasn't moved offshore. Talk to the patent lawyers and they will tell that it is a fact that most things created here swiftly move south of the border to commercialize their product/idea. There simply is very little venture capital in Canada.

Since so many here are throwing various conjectures around, here is a quote from a recent BEA press release:

"Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 0.6 percent in the fourth quarter of 2007, according to final estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.9 percent."

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

US real GDP has not declined since Q3 2001 (when it dropped slightly for one quarter only).

If this is a recession, it is unlike any recession of the 1970s or 1980s.

apparently opinion is very much divided on the chances of there being a recession this year:

http://forums.macleans.ca/advansis/?mod=for&act=dip&pid=109268&tid=109268&eid=61&so=1&ps=0&sb=1

"Only about 45 percent of economists in the United States say that the country will go into a recession this year, according to a survey last week by the National Association for Business Economics. (And those who do see a recession on the horizon predict it will be a short and shallow one). A survey of economists by Bloomberg last month put the odds of a recesssion at closer to 50 percent. But over at the prediction market Intrade (intrade.com), the odds of a recession are now at 60 percent..."

Recession?
What recession?

GM buyouts offered to 74,000 workers.
Ford buyouts to 10,000 workers.
Chrysler buyouts to 10,000 workers.
Why?
Auto sales are projected to decline bigtime.

Citibank/group to layoff est 37,000 or 10% of workforce.
Bear Sterns layoffs in the thousands, after devaluation by Federal Bank Chariman Bernanke (not MSM) from $30 billion to $210,000 in Sunday Nite garage sale to JP Morgan.
JP Morgan now has close to $100 trillion of derivatives under its wing.
Layoffs still to come from Lehman, Goldman Sachs etc.

ABCP (Asset backed Commercial Paper debt, ie worthless paper notes) totals over $400 billion, and there is another $600 billion of credit card, car debt, etc debt to resolve before this sick puppy is fixed.

BTW, the banking/investment industry is 35% of New York state economy.

Over 7000 retail stores (Brand name ones too) are closing, or in the process of Chapter 11 bankruptcy.

The MSM did not cause any of the above, as much as some people would like to blame them.

Estimated world derivatives market at $600 trillion.
USA total economy about $15 trillion.
Can you say swamped in the bat of an eye?

Not surprisingly most people, including the MSM, can't balance their own monthly cheque book, why would they ever grasp/understand the size of the numbers involved in this financial fiasco?
Greenspan obviously didn't either.

Why heck, even UCLA can't.

People in Canada don't invest as they might because of the high taxation and fees involved the gains, or losses.

I am sure the super hero Al Gore, the man of inaction, will swoop down from on high, & make another movie "Global depression". Gee what will it be next year Killer lice? Is Chicken little being cloned?
Just tired I guess from all the fakes & flakes with a new “The world dies tomorrow” line for funding, or political fear mongering.

If this a terrible recession here in the States, it must be a new type. Every where I go here and in nearby Billings, Montana I see "Help Wanted" signs. My employer is having lots of trouble keeping employees despite good pay. Anyone who compares this to the Great Depression is a moron.

Mike Kelley: As long as government will pay people to stay unemployed in Milwaukee, Detroit, etc, you'll probably keep seeing those signs. Twice in the 20th century there were great migrations of lesser-skilled workers from where-the-jobs-weren't to where-the-jobs-were; LBJ's welfare society stopped that cold.

For citizens, anyway. Illegal aliens are migrating as far north as Milwaukee and Green Bay so it's probably only a matter of time before they get to Billings.

rockyt:

You greatly overstate your case.

The big three are sunset (unionized) manufacturers in a sunset industry - Toyota et al who also manufacture in the US are doing fine. (see pruning metaphor in my post above). Margins are very low relative to the new economy sectors and it can be argued that much if not all of the US auto sector should have moved to lower labour-cost juristictions long ago. Tradition and politics are all that has kept them in place to date (see also the Canadian Pulp and Paper industry).

Same goes for a slothful, overstretched conglomerate like Citibank.

You overlook the big US cos that are doing very, very well - ADM, Cargill, Exxon, Google etc.,etc.

Most analysts think the Bear Stearns deal was over done - but that it was also much overvalued (see Nortel circa 2002) prior to the deal. And the job losses were a pittance in the whole scheme of things.

As a % of the economy the 5 year-long S&L crisis was a much bigger deal than the problems we are having in the high risk paper market. And none of these weak mortgages will go completely to zero as they are backed by real estate.

The derivatives market comparison to the size of the US Economy is completely bogus. Derivatives have a buyer and a seller thus when one loses the other wins - net effect=0 (see JP Morgan re: Bear Stearns). The numbers (600 trillion) are much greater than the whole economy because leverage is used to maximize the speculative return and they are often buying based on the entire basket of world production - ie all of the world's oil output not just the US's. Derivatives are extremely useful in that speculators provide liquidity for producers of the underlying product to hedge and lock-in profits well prior to the harvest delivery date. (for those in western Canada growing wheat, please talk to your corn-producing compatriots in Ontario) The bigger the derivatives market the better. In fact it is probably one of the keys to why the western world has done so well these past few decades of the information age.

7000 stores sounds impressive until you figure that Walmart has nearly 5000 stores alone. In reality this is a mere pittance. I would guess that even in good economic times 2000 to 3000 stores close (maybe more). It is the sign of a healthy market. (and do you include the number of new on-line stores created over the same time-period?)

Perhaps you should stick to balancing you chequebook instead of engaging unbalanced fear-mongering.

(having said all of the above, I reiterate that I do think it is possible that the US has entered into a healthy (mild) recession period)

Mike Kelley:

Read an interesting article on the weekend that suggests the boom in home ownership during the last 10 years is partially responsible for "sticky" job markets, where some places need workers and other places suffer unemployment. If you have an apartment, it's pretty easy to pack up and leave; if you have a house, it's a lot more difficult. Do you leave, and hope that someone else will sell your house for you? Do you wait until you've sold before you leave, in which case the job may no longer be waiting for you? Most people opt to sit tight, tighten their belts, and wait for jobs to come back. The author noted that three states with the highest rate of home ownership (which included Michigan, Alabama, and some state I forgot) also had three of the highest unemployment rates.

In addition, there's the disruption factor. My youngest daughter has lived in the same house all her life; she has friends and relatives nearby. There have been many stories about how kids feel when they are uprooted. Do I want to do that to her, or her sister, who has just entered her teenage years? Not likely - I would be more likely to stick it out, and wait until I found work.

Kevin B:

NL has the highest home ownership in CDA. Could it be more of an indicator of a stagnant economy (low home prices, little new home building)- one that is a lagging indicator of an weak econmoy rather than a particular impediment to some one moving?

Granted trying to sell a house is more onerous than breaking a lease but not an insurmounable one and it is one that is made easy if the cashflow stops. In CDA the structural impediments (ie the cashflow does not stop) are much greater - EI for independent fishermen, Make-work projects, dumb-ass subsidies to failed industries - (Cape breton steel/coal, any eastern pulp and paper mill you care to mention)etc., all prevent the free-flow of labour to a much greater extent than in the US.

Good points Gord.

But you should read more of Warren Buffet, not rockyt for a derivatives analysis.
He is better at cheque books than either of us.

Seems you haven't heard about Buffet's analysis in his 2002 newsletter describing derivatives as 'financial weapons of mass destruction'?

An update tonite over at www.Bloomberg.com says banking job losses will be about 200,000.

You are right about online-stores being created.
But how many people does it take to run an 'on-line' store.
Is it anywhere near the same as a real store? Including the people for building maintaince, etc?

Tent cities for house-losers have already sprung up in southern California.

Being a business person you know that when times get tough, companies start cutting costs to the bone and job cuts are the easiest to do.
No job, no consumer confidence, no spending.

As for the savings and loan disaster which lasted 5 yrs, the S+L numbers are mickey mouse compared to today's market numbers and is a really poor comparison.
And it was confined to the USA only.
This one has world-wide implications with far more nations involved than the S+L.

Go look at the UK (BBC)and Europe (Spiegelonline) for stories on the precarious state of their economies.

You think Bernanke just panicked with his Bear Sterns garage sale?

Or do you think that the world central bankers are just beating their gums for no good reason to frantically keep the world financial system from collapsing?

Obviously many people don't, and that's why the corporate world is battening down the hatches.

What is interesting is the way that the Bush administration (and the Fed) is aggressively attacking the recession and proposing fundamental changes to policing the US banking system.

Bush did a good job in ditching Greenspan (this guy was long in the tooth and short on brain power). He recommended Bernanke, which in my opinion, and as we are now seeing, was a brilliant move because this guy is not going to let the US (and world) economy fail because he is practical and has common sense.

The Banking industry will always be in the fore when coming up with new ways to make money - God love 'em. Therefore there will always be the possibility of something unexpected happening. The new proposals by Paulson will go a long way in keeping these guys honest - and actually saving them - and keeping the public educated about new financial tools and schemes.

rockyt

Every time there is some screw-up in the economy, the usual suspects (socialists, MSM, academics and other economic illiterates) predict the end of the US economy and the start of never-ending depression. This is nothing more than the projection of wishful thinking.

The nominal value of a derivative contract is not the same thing as exposure. You're dealing with deltas, not totals.

Yes, Buffet warned of derivative stupidity (as did others like Gross and Coxe) and those who didn't listen will pay (as will the taxpayer through bailouts.) The rest of us will operate as usual.

There will be a slow-down. There may be a small, short recession. The idea of a depression is idiocy by the same usual suspects listed above. The banking sector represents the grease in the economy, not the machine. The fed will ensure the grease keeps things moving as it should.

cconn

Fed bailouts may be necessary but you shouldn't be too happy about them. They amount to subsidies for irresponsible greed paid to billionaires by regular taxpayers. It's another reward for poor behavior. There really ought to be some accountability in these things.

I'd start with the bond rating agencies who declared a pile of trash a diamond. If you have 10 junk bonds and you put them into 1 piece of paper, how on earth is that going to get you a AAA rating in an honest world?

The entire sub-prime problem was as a result of trying to pick-up spread while pretending not to take additional risk. You don't get something for nothing.

Scummy investment bankers shilled their crap because the consequences of a burst bubble was shifted to others. Pension funds, banks and insurance companies who are banned from holding non-investment-grade debt got around it with the help of these investment bankers and bond rating agencies who were all wallowing in the mud.

With the taxpayers and investors on the hook, there ought to be some scalps sheared off.

We on the conservative side don't usually show much sympathy to common thieves and crack-whores, why should be show sympathy to a fraudster just because they're in a pin-stripe suit?

Wednesday morning, 10:00 am -

Fed Chairman Bernanke, testifying before Congress, says growth in the first half of 2008 will be "slower than forecast, and may actually decline".

Last time I looked, Helicopter Ben was not a member of the MSM.

KevinB

Cool, Ben agrees with me. Nice to know he has my back...

Says I @9:33am: "There will be a slow-down. There may be a small, short recession."