Results 1 to 74 of 74

Thread: Strategy for next Recession/Depression

  1. #1

    Default Strategy for next Recession/Depression

    Right now everyone is looking at ways to spend the wealth flowing into our province but I haven't heard of anyone preparing for the next recession. I'd like the City of Edmonton to start a special committee to raise the issues we'll face when the economy turns down and make public the likely implementation plans.

    We've been here before and up to only a few years ago our city was still working on paying down the 70's boom debts to workable/sustainable levels.

    A bit of trivia - if you do a regressions on oil prices you'll see projected numbers of around $40/bbl not today's $70/bbl. It might be different this time but why? Lately it's been a case of "Here Come the 70s'" but my worry is about another 80s' hangover returning. What was that old bumper sticker; "Please God let there be another oil boom..."?
    Last edited by KC; 16-04-2008 at 08:59 PM.

  2. #2
    First One is Always Free
    Join Date
    May 2006
    Location
    Edmonton
    Posts
    66

    Default

    One of things we need to do in the next recession is repair infrastructure. We certainly can't afford it during a boom.

  3. #3
    I'd rather C2E than work!
    Join Date
    Mar 2006
    Location
    Strathearn, Edmonton
    Posts
    4,296

    Default

    ^That is so true. Right now money is rolling and its spend, spend, spend. The thing is however, its artificially inflating the price of construction. The private sector boom is fueling a public sector spending spree, which is making any shortage of materials or manpower even worse. Instead of only spending when its a flat out boom, the Government should be building at a steady rate and putting excess money into the heritage trust fund, so that when this boom slows down, the money will still exist to continue to fund infastructure development. You get a two fold benefit, firstly you get a better overall price and timeline for your project and secondly the government helps to bridge the employment gap that can exist in the trades...Goverment aid that people have to work to get, not welfare and EI.

  4. #4

    Default

    To repair infrastructure - we'd likely have to borrow - will we be able to? Does anyone know the City of Edmonton's "current" debt-per-capita? How much will we have to re-finance?

    I wonder, are we better able to withstand the next recession than Calgary?

    My worry is that when things turn down - we'll get the usual knee-jerk, bone-headed mgmt decisions, mass lay-offs, cut-backs, etc. To me - that's just not "management" when a bit of planning could avoid crisis and even create opportunity.

  5. #5

    Default

    I think the best way to prepare for the recession is to keep on building the city vertically. Condense the footprint (except the river valley), and make the middle a nice oasis to contrast the wastlands that the suburbs will become. We'd be saving money every day on services utilities and roads, and have a more enjoyable city to boot. Although of course it should be nice looking vertical too.

  6. #6
    C2E Hard Core Contributor
    Join Date
    Jul 2006
    Location
    Red Deer
    Posts
    2,561

    Default

    The best thing to do is diversify right now. Build an economy that isn't so dependant on resources. I'm for driving for more R&D in the area. With the universityn itself being research orientated, there'd be a natural relationship to develop new ideas.

  7. #7

    Default

    Good points - use our free cash flows (cash drain) to create long run efficiencies and use our new found fame to encourage new businesses.
    Last edited by KC; 15-04-2008 at 10:28 PM.

  8. #8

    Default

    So does anyone remember Alberta in the 1980s - in the early 80s oil was approaching $40/bbl and supposedly on it's way to $80/bbl - the US and eastern Canada were slowing but we were going to be immune because oil was going to run out.

    Sound familiar?

    Are we going to skirt a recession/depression in the next few years or is history going to repeat itself?

  9. #9
    never answered e-mail
    Join Date
    Nov 2006
    Location
    Peachland
    Posts
    1,579

    Default

    Quote Originally Posted by KC View Post
    So does anyone remember Alberta in the 1980s - in the early 80s oil was approaching $40/bbl and supposedly on it's way to $80/bbl - the US and eastern Canada were slowing but we were going to be immune because oil was going to run out.

    Sound familiar?

    Are we going to skirt a recession/depression in the next few years or is history going to repeat itself?
    commodities are cyclical, it will repeat, but perhaps not on the same scale, depending on how much the gov't and markets learned from the last.

  10. #10
    I'd rather C2E than work!
    Join Date
    Jan 2007
    Location
    Edmonton
    Posts
    5,597

    Default

    According to the bankers and accountants that I know, they have not seen as many debt ridden people in this city since the 80"s. Many have said that there are more people is worse personal debt now than then.
    The banks are VERY afraid of a cascading catastrophe in Edmonton.

    Pay your stuff off asap, is the best protection you can get at this time

  11. #11

    Default

    Quote Originally Posted by Blueline View Post
    Pay your stuff off asap, is the best protection you can get at this time
    But how can you get the latest cool flat screen TV then? Or latest version of Rock Star, or Guitar Hero? Or, a boat, or .... we are a little spoiled right now, and I know our family, like many others, are finding it is very very hard to change.

    In a way, the being spoiled, has kept our economy humming - consumption is part of the reason for the success as North America, even if much of it is financed by debt.

  12. #12
    C2E Hard Core Contributor
    Join Date
    Nov 2007
    Location
    Edmonton
    Posts
    3,696

    Default

    The causes of the run up in oil prices right now are quite different than what they were in the 80's, and the global economy is also completely different now than it was then. I don't think we have nearly as much to worry about as we did back then, but it's always a good idea to be cautious and ensure you've got enough savings to cover several months expenses in case you get laid off etc.

    I'm no economist, but wasn't one of the main problems in the 80's extremely high interest rates and inflation? We have neither, and aren't likely to any time soon.

  13. #13
    C2E Continued Contributor
    Join Date
    Mar 2006
    Location
    Old Strathcona, Edmonton
    Posts
    1,914

    Default

    ^ I agree -- the causes of the crash in the '80's were quite different than the conditions in which we find ourselves right now. And don't forget, for Alberta at least, the hated National Energy policy, which effectively killed any incentive to drill for more oil or even produce it. Companies either left the province or went out of business.

    In the 1980's we didn't have two surging economic giants - China and India - whose demand for petroleum products is huge and growing, and the supply has to come from somewhere. I'm no economist, but I think it would take a different set of circumstances to bring about a crash again. We will very likely experience a slowdown, but I think we have enough diversity to avoid a crash.

    Of course we need to be cautious about our spending, but that should apply all the time, not just now.
    Almost always open to debate...

  14. #14

    Default

    Well it seems for every quote there is an unquote...

    "History never repeats itself; at best it sometimes rhymes." - Mark Twain

    "Those who fail to learn the lessons of history are doomed to repeat them" - George Santayana


    I agree that next time will likely be different - but a recession is a recession and a boom is a boom - they too are different each time but each is likely to follow the other.
    As for inflation, there's been some calculations of American CPI today using the 1970s methodology showing that inflation today is on par with that of the 70s!!! (search for I believe it's Williams and shadowgovernmentstatistics ) Actually - here it is: http://www.shadowstats.com/

    All I know is that pretty much no one I've ever encountered can forecast the future so I figure it makes sense to at least be somewhat prepared for extremely good and extremely bad conditions and anything in between as anything is likely. However, people regularly proceed as if the future will be exactly the same as the immediate past. (From my first post to this post I see that oil has gone from around $70/bbl USD to $115/bbl USD today. So, so far so good in terms of the trend.)
    Last edited by KC; 16-04-2008 at 09:03 PM.

  15. #15

    Default

    Does anyone here now feel that we ready for the recession?

  16. #16
    C2E Hard Core Contributor
    Join Date
    Nov 2007
    Location
    Edmonton
    Posts
    3,696

    Default

    Canada as a whole may enter a recession, but I'd be surprised if Alberta or Western Canada in general does. At least the literal definition of one, which is (most commonly anyway) two quarters of negative growth for a country (globally a recession is considered to be annual growth of less than 3.5%). Things are going to slow down, there's no question of that, you can see the signs everywhere and they started last fall when single family housing went in to the tank.

    There's still lots of commercial construction going on, lots of infrastructure going on (and the province and municipalities should keep that up as a recession or slow down is the best time to be doing that kind of work, as opposed to at the height of a huge boom), lots of industrial projects still on the go. People concerned about the oil sands don't realize that those projects are design, costed, and given the green light based on timelines of 30 or 40 years. Yes, maybe a couple of the ones on the drawing board right now (Fort Hills and uh, Kern? Kesle? I forgot!) will be shelved for the time being, and some of the upgraders might also. But there's half a dozen mega projects still being built right now that are years away from being complete.

    As I've said in other threads, when you've been living in a huge boom for the past 5 years, a slowing to moderate or slow growth feels like the end of the world.

  17. #17

    Default

    Well if a recession did happen, wouldn't that lower demand for Chinese and E.Indian products? Thus lowering demand for oil? Which in turn lowers Oil Sands activity?

    This province could've been such a great province, diversified, and a great place to live with proper planning. But no, it feels like a shoot first, ask questions later, then identify the bodies after.

  18. #18
    I'd rather C2E than work!
    Join Date
    Jan 2007
    Location
    Edmonton
    Posts
    5,597

    Default

    do last weeks purchasers of gold feel better ?

  19. #19
    C2E Hard Core Contributor
    Join Date
    Nov 2007
    Location
    Edmonton
    Posts
    3,696

    Default

    Well if a recession did happen, wouldn't that lower demand for Chinese and E.Indian products? Thus lowering demand for oil? Which in turn lowers Oil Sands activity?
    Exports are something like 20% of China's economy, most of their economic activity is actually internal, believe it or not. So even if China's exports take a massive drop, they're still forecasted to maintain growth rates of 8-10% for the foreseeable future. India's similar, and they're not really that big in to exporting goods anyways, they're more software and service industry oriented. But globally yes, oil demand has decreased or at least stayed the same, hence why OPEC is talking about cutting production by 1-2 million BPD, to support prices above $70.

    As far as the oilsands go, yes, as I've said various upgraders and expansions may be slowed or deferred, but in a lot of cases those are projects that aren't being built right now, as we speak. The ones that are, aren't going to be stopped because oil has dropped temporarily. Again, most of them were greenlighted when oil was in the 20-40 range 5 years ago (oil didn't start consistently trading over $45 a barrel until midway through 2004) when no one was forecasting oil past $75, let alone $100.

    This province could've been such a great province, diversified, and a great place to live with proper planning. But no, it feels like a shoot first, ask questions later, then identify the bodies after.
    I agree with you there in a lot of respects. The whole royalty review is long gone now and out of the public mind, when it should be at everyone's forefront. The higher royalties don't kick in until next year, which means that the BEST time to have higher royalties, the past 5 years, we got absolutely screwed and didn't save a penny other than some laughable Heritage fund contributions. The royalty framework should have been analysed and tinkered with a decade ago.

  20. #20

    Default

    I thought the new royalty regime actually had some sort of mechanism that greatly benefitted the companies if the price fell - which no one assumed was possible any more. Can anyone confirm this?

    If so, all those companies that were consumed by greed must be thanking their lucky stars that they lost that battle.

    Nonetheless, as I've said on C2E, I've been worried about what I saw was loose spending in our city without regard to our boom bust economy and most worried about an inevitable emotionl knee jerk reaction to a waking up to a slowing economy without any cushion to take advantage of it - or worse - to even survive it.

    I know this manic depressive behavior is human nature but as always, those that engage in it and cause the waste always seem to come out ahead. And they probably got huge bonuses for "spending like drunken sailors" in the first place.

    Now those same decision makers will simply say "times have changed" and we now have to cut budgets and lay off thousands of people. And those same people, of course will get fully compensated for making these new so called "tough" decisions. "Give me a break!"

  21. #21

    Default

    It would be my opinion that demand for Chinese-made products would actually go UP given the current North American recession (which Alberta is squeaking out of, at least for the moment). Less bucks in your wallet, buy cheaper goods, right? So if anything we will see demand increase for our raw materials from places like China--the only problem is that may not have a corresponding effect on prices for those goods, as domestic producers will be closing shop, reducing the competition for those materials.

  22. #22
    C2E Hard Core Contributor
    Join Date
    Nov 2007
    Location
    Edmonton
    Posts
    3,696

    Default

    Well, you'd be in disagreement with pretty much every metric coming out of China: export growth is predicted to be below 5% this year, if not 0, after years of 20% annual increases. Numerous factories (I'm talking thousands) have been closed, and it's to the point where China's government is stepping in with an $580 billion dollar stimulus package of infrastructure projects to keep the economy growing in the face of a sudden and drastic stop in the growth of exports.

    edit: corrected the worth of China's stimulus package.
    Last edited by raz0469; 10-11-2008 at 10:10 AM.

  23. #23

    Default

    Fair enough I was largely ignoring the whole of the scenario when looking at the economic situation in China...growth of 5% here would barely make a dent in what are likely to be huge stockpiles of goods not being consumed domestically...

    ...and then there is the matter of speculation in building its production capacities--which even as of mid-07 were largely running at only 60-70%

    Anyway my real point was that even if all were well in terms of Chinese demand (who may have been put in a position to compete with the U.S. for our materials had they not decided to invest so heavily in it), we are still facing a major glut of demand in an export-based economy--Alberta as much as anyone. As such...crash boom?

  24. #24
    C2E Hard Core Contributor
    Join Date
    Nov 2007
    Location
    Edmonton
    Posts
    3,696

    Default

    growth of 5% here would barely make a dent in what are likely to be huge stockpiles of goods not being consumed domestically...
    Only about 1/3 of China's economy is dependent on exports, the rest is domestic consumption.

  25. #25

    Default

    I think it's even less than that, even. Makes sense though...18% of the world's population...

  26. #26

    Default

    The US was increasingly shipping its wealth and production (incl. jobs) to China and China was increasingly returning the favour with cheap goods for the US consumer and improved margins and management bonuses to US corporations. So it was inevitable that a recession in the US would slow the transactions. Today, even if China's or for that matter, the world's, demand for oil hasn't changed much, it has slowed and we're seeing the impact on oil prices and project planning now.

    So my original point, now a couple years old, was that the City should strike a recession planning committee to plan for a slowdown. Is it too late?

  27. #27
    In Guantanamo (Banned)
    Join Date
    Nov 2008
    Posts
    75

    Default

    Quote Originally Posted by KC View Post
    The US was increasingly shipping its wealth and production (incl. jobs) to China and China was increasingly returning the favour with cheap goods for the US consumer and improved margins and management bonuses to US corporations. So it was inevitable that a recession in the US would slow the transactions. Today, even if China's or for that matter, the world's, demand for oil hasn't changed much, it has slowed and we're seeing the impact on oil prices and project planning now.

    So my original point, now a couple years old, was that the City should strike a recession planning committee to plan for a slowdown. Is it too late?
    <covers ears> LA LA LA LA LA LA LA LA!

  28. #28
    Addicted to C2E
    Join Date
    Sep 2007
    Location
    North of Little Italy
    Posts
    770

    Default

    Quote Originally Posted by KC View Post

    the City should strike a recession planning committee to plan for a slowdown. Is it too late?
    It is too late - way, way too late............
    When in doubt - follow the money trail...

  29. #29

    Default

    Yup I think you're right - the knee jerk, emotion driven reactions have begun. Fool us once shame on you, fool us twice...

    Anyone note the irony going on right now - in the 1990s we couldn't attract anyone to the oil sands at $10-20/bbl and dirt cheap labour rates and growing world oil demand. The province and the federal gov't even had to step in to subsidize development. Then in the last couple years with oil hitting $50-100/bbl we were over run with demand for development. And now as soon as oil falls to more intelligent levels, labour situation improves, etc - well, proposed plants are being shelved weekly.

    So even though these plants take years to plan, and years to build, the decision makers seem to use a finger to the wind to guide their decision making - or maybe they rely on the media's manic depressive headlines. Anyway, they sure seem to be consistent in doing things bassakwards.

    [At least Warren Buffett was up here snooping around - probably in anticipation of irrational investment and business behavior being the one true constant in life.]
    Last edited by KC; 07-12-2008 at 06:40 PM.

  30. #30

    Default

    And now I hear the City is putting in a hiring freeze!

    Geez, you really have to start to wonder where people's brains are and what the heck is everyone thinking.

  31. #31

    Default

    I still have a problem with a management that approves things like quarter-billion-dollar-overpass-construction (YES - that's a pretty big number) at a time of incredibly active economic conditions and then when the obvious happens and the economy sags, they fail to learn from their flawed thinking processes and do it all over again by cutting, instituting hiring freezes and all the usual manic - depressive management behavior. It's also time for the accountants to earn their pay and break from the flawed textbook practices. Basically, when the times get tough the tough are supposed to get going - not just slough off the pain on others to save their own butts.

    So, where's the creativity? The thoughtfulness? The plan?
    Last edited by KC; 16-04-2009 at 06:57 AM.

  32. #32

    Default

    Read this article the other day on Germany. It's pretty interesting...



    "While the rest of Europe is just beginning to crawl out of crisis and into the first tentative rays of growth and recovery, Germany is positively booming... Germany has actually seen unemployment fall this year to 7 per cent, below Spain’s boom-time level

    A big part of Germany’s resilience can be found in factory towns like these and in the weekly pay statements of workers like Andreas Schieve.

    In most other European countries, Mr. Schieve would have been laid off in late 2008, when the credit-driven economic downturn hit Europe hard and orders for this plant’s commercial trucks dried up. Orders fell from 60,000 trucks a year to around 30,000, and the work force should have been slashed to match – more than 1,000 layoffs.

    But Germany did something different. While its neighbouring countries spent hundreds of billions bailing out banks, financing infrastructure and stimulating the economy, Chancellor Angela Merkel’s conservative-liberal coalition government also took a very large, unique gamble by spending huge sums of money bailing out its work force.

    In a system known as kurzarbeit..."

    http://www.theglobeandmail.com/news/...rticle1659177/

    source: Doug Saunders, The maintenance of hope: Germany's secret to recovery, Mail Aug 1, 2010

  33. #33
    C2E Continued Contributor
    Join Date
    May 2007
    Location
    Royal Gardens
    Posts
    1,694

    Default

    Good article. Funny how it is the schemes that are different from the rest that most times provide a positive result.
    My antidepressent drug of choice is running. Cheaper with less side effects!

  34. #34
    I'd rather C2E than work!
    Join Date
    Mar 2010
    Location
    Edmonton (belevedre)
    Posts
    6,502

    Default

    I must warn that next recession will be a lot worse than it is in 2007 which is the beginning of a recession in states.
    Edmonton Rocks Rocks Rocks

  35. #35

    Default

    Interesting article, and it makes one think. In a very basic theory, it is sound, just because the gov't is keeping skilled workers on the front lines, maintaining their skill sets and loyalty to company and country (yes they can move out of the country); instead of sitting at home looking for a job that may or may not suit them, in or out of the country.

    Just a quick question though... which countries/sectors/individuals are benefiting from this recession and the subsequent recessions that are going to happen right after? I mean, money has to travel no matter what.

  36. #36

    Default

    Quote Originally Posted by JBear View Post
    Interesting article, and it makes one think. In a very basic theory, it is sound, just because the gov't is keeping skilled workers on the front lines, maintaining their skill sets and loyalty to company and country (yes they can move out of the country); instead of sitting at home looking for a job that may or may not suit them, in or out of the country.

    Just a quick question though... which countries/sectors/individuals are benefiting from this recession and the subsequent recessions that are going to happen right after? I mean, money has to travel no matter what.
    Similarly, the US pretty much abandoned the increasingly financially stressed and increasingly unemployed homeowners while rushng to bail out the banks and bond holders. Years later they are still seeing house price drops and economic instability. Keeping people in jobs and paying their debts, even if reduced by gov't decree would have led to much less volatility.

    Hussman had it right: (except maybe he should have said 'before' foreclosure).

    An Open Letter to the U.S. Congress Regarding the Current Financial Crisis
    John P. Hussman, Ph.D.

    "5) To assist homeowners, the bill should allow for a reduction of mortgage principal during foreclosure, but the mortgage lender should also receive a Property Appreciation Right (PAR) that gives the original lender a claim on future property appreciation up to that original mortgage amount. In other words, the homeowner receives a substantially lower mortgage balance and payment burden now, but the lender stands to be made whole over time through property appreciation rather than immediate burdens on the homeowner to make payments."

    http://www.hussman.net/wmc/wmc080922.htm
    Last edited by KC; 17-01-2012 at 06:53 PM.

  37. #37

    Default

    Personally, the Euro crisis doesn't worry me much at all.

    Instead, I've been watching China as I figure that a bursting bubble there could drive down oil prices and the Canadian dollar. (One offsets the other for Alberta's resource exports but I'd bet it could still be very negative for Alberta.)

    Here's one to read. I think we need to consider the risks and the resulting positive and negative scenarios...

    The article seems to ignore the risk that when bad things start to happen in a major sector affecting consumers attitudes and core assumptions, all kinds of unexpected and fearful behaviour can easily follow.




    China's housing market is set for a hard landing
    http://finance.fortune.cnn.com/2012/...-estate-crash/

    ..."For this analysis, I'll borrow heavily from my former professor and mentor at the University of Chicago's Booth School of Business, Robert Aliber. Affectionately known to his students by his initials "RZA," Aliber is now retired to New Hampshire, but he writes a superb newsletter for his friends and clients. He spotted the reckless credit expansion, huge trade deficits and asset bubbles that now haunt both the U.S. and European economies long before most experts."

    "As Aliber puts it, "In China, the housing boom is a far bigger source of growth than is widely recognized, and it's totally unsustainable." ..."

  38. #38

    Default

    The following is an important concept. If not prepared, it takes a long time to adjust to changing conditions if one can change at all. "most analysts and investors have a very short time frame in looking at that" -Chanos


    Jim Chanos, bad news bear, urges market prudence
    By Jennifer Ablan DECEMBER 9, 2013

    Excerpt:
    "Chanos: “One of our views is that we think the commodity super cycle has peaked. But the problem in saying that is that most analysts and investors have a very short time frame in looking at that. We took a look at the publicly-traded mining companies with one of our brokers and we went back and looked at all of their capital spending going back to the early 90s in the mining area and capital spending in the mining area is roughly 50% equipment and 50% the cost of digging the hole. And it’s pretty amazing what you see, that from 1991-2001, basically capital spending in the entire mining industry went from $5 billion a year to $15 billion a year. That’s about an 8-9% compounded growth rate. And then, the China boom came and then from ’01 to 2012, annual capital spending in the mining industry went from $15 billion a year to $145 billion a year! Which is a 24% compounded rate of return. It went from an arithmetic function to a geometric function in the post-millennium and it’s come off a little bit from that peak now. When you understand just what a massive boom we have had in digging holes in the ground globally to fill this voracious demand in China in building these cities and people say,....” and if we ever revert to the mean because China stops building one new city seemingly every every weekend, I think..."


    http://blogs.reuters.com/unstructure...rket-prudence/




    Renewing a dead link above

    Germany's secret to recovery, Mail Aug 1, 2010
    http://www.theglobeandmail.com/news/...5263/?page=all



    .
    Last edited by KC; 21-12-2013 at 04:44 PM.

  39. #39
    I'd rather C2E than work!
    Join Date
    Mar 2010
    Location
    Edmonton (belevedre)
    Posts
    6,502

    Default

    I believe that next recession will be as much worse than the last time in 2008 and also in next few years from now , it will going to be worldwide economic collapse. once that happens, there is no hope to getting back up on track to recover.
    Last edited by jagators63; 21-12-2013 at 06:40 PM.
    Edmonton Rocks Rocks Rocks

  40. #40
    C2E Hard Core Contributor
    Join Date
    Dec 2007
    Location
    Netherlands
    Posts
    3,713

    Default

    ^sounds legit
    be offended! figure out why later...

  41. #41

    Default

    ^ It's one of many possible future scenarios. However it's usually safer to act and invest assuming the world of the future will mainly be like the world of the past operating within the bounds of past cycles.

    Then one sits ready to act with a mental list of anomalous outcomes and events like wars, depression, hyperinflation, disasters, hyper-growth, amazing new discoveries, etc. of course, prudence always demands that one take out some little bit of insurance for extreme positive and negative events.

  42. #42
    C2E Continued Contributor
    Join Date
    Jun 2006
    Location
    Edmonton
    Posts
    1,679

    Default

    We live in a province that is based primarily on a commodity - oil.
    Oil prices move up and down, and with it so does Alberta's economy.

    We're hardly diversified here, and the diversification is based within oil and gas.

    There have been booms and busts in Alberta in the past, and I'm sure that this will continue on. The extent of a bust is hard to say though. Who really knows, until it happens. Also to add, the last decade we've had low interest rates, which have really done nothing but add debt to consumer's wallets.
    The world is full of kings and queens, who blind your eyes then steal your dreams.
    It's heaven and hell!

  43. #43

    Default

    Any thoughts on what specifically the City of Edmonton would do if Edmonton were to enter a recession in the next year or so?

    Will it increase spending, increase hiring, increase property taxes (beyond current budgeted increases) to take advantage of a recession, to repair infrastructure, to plan for the next recovery?

  44. #44
    C2E Continued Contributor
    Join Date
    Mar 2006
    Location
    The Big E
    Posts
    1,205

    Default

    Quote Originally Posted by jagators63 View Post
    I believe that next recession will be as much worse than the last time in 2008 and also in next few years from now , it will going to be worldwide economic collapse. once that happens, there is no hope to getting back up on track to recover.
    I'd be a lot more worried about World War III. Economic depressions don't last way too long, but I'd be lot more worried if the next depression ends up leading to WWIII - look at what happened to Hitler's Germany during the Great Depression (although the real causes came well before that), and now look at Putin, and if both the US and Russia start throwing nukes at each other...
    Is there hope for Edmonton? Yes!!! The Oilers? Wait and see.

  45. #45

    Default

    Quote Originally Posted by MikeK View Post
    Quote Originally Posted by jagators63 View Post
    I believe that next recession will be as much worse than the last time in 2008 and also in next few years from now , it will going to be worldwide economic collapse. once that happens, there is no hope to getting back up on track to recover.
    I'd be a lot more worried about World War III. Economic depressions don't last way too long, but I'd be lot more worried if the next depression ends up leading to WWIII - look at what happened to Hitler's Germany during the Great Depression (although the real causes came well before that), and now look at Putin, and if both the US and Russia start throwing nukes at each other...
    Well we can also hope that any pain caused by this type of global warming would be short lived.

  46. #46

    Default

    Edmonton mayor Don Iveson calls Alberta’s capital ‘a humble city’
    JUSTIN GIOVANNETTI
    EDMONTON — The Globe and Mail
    Published Thursday, Nov. 13 2014,

    excerpt:

    "Are you concerned that with oil prices falling toward $70 a barrel, incomes may start to fall?

    "The $70 barrel of oil isn’t great for Alberta, but it affects Calgary and the provincial government more than it does Edmonton. Calgary relies on the cash flow of high prices and new deals coming online. Edmonton is much more in the building-it and running-it business, which is a steady business. We can now export what we’ve learned about running things in challenging, northern climates."

    http://www.theglobeandmail.com/news/...ticle21581324/

  47. #47
    C2E Hard Core Contributor
    Join Date
    Feb 2014
    Posts
    2,591

    Default

    ^ To an extent Iveson is right, but I think it is somewhat naive to suggest Edmonton will be well-insulated from collapsing prices. A huge amount of our economy is still directly tied to oil/gas, and another huge section is the provincial government itself, and things funded by it like healthcare and post-secondary education.

    A hurting provincial government and oil sector can only be bad for any community in Alberta. Maybe Edmonton is the best suited to weather the storm, but a hurricane is still a hurricane, and there will be damage.

  48. #48

    Default

    Today on the radio I heard from city employee all kinds of wonderful things about how our City's diversity will sustain our economy over the next couple years. Then he said, of course that's all predicated on oil being (I believe he said) $55-60/bbl.

    Then he said: "Otherwise all bets are off."

    OK, so, here we are again. Running our city based on very accurately "predicting the future" using a historically volatile commodity.



    I'm back with quotes from a City economist:

    Edmonton’s chief economist says 2015 is not going to be fun 11
    BY CLAIRE THEOBALD, EDMONTON SUN, DECEMBER 16, 2014

    “People have good, well paying full-time jobs so they’ve got the income and the confidence to go out and buy that house, get that chrome encrusted pick up truck, to go out to dinner with friends,” said Rose."

    "However, the black cloud over Edmonton’s outlook for 2015 is the steep drop in oil prices, which – should the provincial government respond to by cutting expenditures instead of finding new revenue streams – could have a significant impact on Edmonton’s economic position."

    “People are going to feel this,” said Rose. “We’re not going to have a recession, we’re not going to have a depression, we’re not going to see the value of your house collapse on you, but growth will moderate significantly.”

    http://www.edmontonsun.com/2014/12/1...oing-to-be-fun
    Last edited by KC; 22-12-2014 at 09:00 AM.

  49. #49

    Default

    I think the City economist is too young to remember the 1981 recession.

    Judging by the economic Boom & Bust history of Edmonton, the COE has been spending vast sums on projects that are no sustainable when our economy relies on a >$80 barrel of oil.

    I believe the price of oil will stay down for several years and the effects of the recession are just beginning. New Brunswick is already reporting that many of the people that have been working in Alberta's oil projects are coming back to their province and may not have jobs to return to. If New Brunswick is worried what is going on in Alberta and how it will affect the New Brunswick economy, then Edmontonians should be VERY concerned.

    http://atlantic.ctvnews.ca/could-fal...line-1.2150816

    The relationship is symbiotic: Communities in Eastern Canada supply labourers for the resource-rich West, while western paycheques build new homes and buy new trucks in the Maritimes. But it is also a tenuous connection — if plunging global oil prices result in stoppages in Alberta, demand for workers will collapse, resulting in mass layoffs. There would be little to keep Miramichi from becoming the next Canadian ghost town.

    Oilsands money breathes life into an economy desperately in need of resuscitation. Half of downtown Miramichi’s shops and restaurants are closed and church signs that once posted Sunday services are now “for sale” signs. There is a shortage of volunteer firefighters and a decline in the number of parents who coach little league sports.
    http://www.huffingtonpost.ca/2014/12...n_6335842.html


    Last edited by Edmonton PRT; 22-12-2014 at 09:19 AM.
    Advocating a better Edmonton through effective, efficient and economical transit.

  50. #50

    Default

    I wonder what advance planning their leaders did.


    In oil boomtown Fort McMurray, ‘it’s like the place has gone dead’
    JOSH WINGROVE, FORT MCMURRAY, ALTA. — The Globe and Mail, Jan. 12 2015



    http://www.theglobeandmail.com/news/...ticle22422885/

  51. #51

    Default

    There' a lot more in this article than just the portion I've quoted. It's a good read.

    Economic Crisis Survival: Germany Shows That Preparation Is Key
    Romina Boccia, June 19, 2014

    "By keeping workers on staff during the recession rather than laying them off, German producers could rapidly take advantage of rising demand when the global economy improved. Government intervention comes with costs and unintended consequences, but given the choice between expanding unemployment benefits or temporarily reducing worker’s hours, the latter proved successful within the German context.

    Although large bailouts and stimulus efforts during the recession steeply increased Germany’s national debt, the country responded by adopting a Swiss-style debt brake and a spending-cut-heavy budget to get there, suggesting a commitment to control spending and debt moving forward."

    http://dailysignal.com/2014/06/19/ec...eparation-key/

  52. #52

    Default

    Buffett and the Noah rule:


    "PREDICTING RAIN DOESN'T COUNT, BUILDING ARKS DOES."


    So, did the Mayor and Council build an Arc? ...or have we operated with a dangerous level of risk?






    Buffett and ‘The Noah Rule’
    By Charles E. Boyle | March 25, 2002
    excerpt:

    “Why, you might ask, didn’t I recognize the above facts before September 11th?” he wrote. “The answer, sadly, is that I did—but I didn’t convert thought into action. I violated the Noah rule: Predicting rain doesn’t count; building arks does. I consequently let Berkshire operate with a dangerous level of risk..."

    http://www.insurancejournal.com/maga...3/25/18979.htm

  53. #53
    C2E Hard Core Contributor
    Join Date
    Dec 2007
    Location
    Netherlands
    Posts
    3,713

    Default

    ^ you really like Warren Buffett...
    be offended! figure out why later...

  54. #54

    Default

    Quote Originally Posted by richardW View Post
    ^ you really like Warren Buffett...


    I like the unconventional people. Milton Glaser (artist), James Burke (the science historian), Edwards Demings (statistican), George Orwell, Aldous Huxley and a whole lot of others but Buffett's words fit very well with turning crisis into opportunity, minimizing losses, avoiding crisis, intelligence financial conduct, the good and bad of a capitalistic society and wealth (and all the hubris that goes with it). In other words, he's perfect for quoting to people living in a manic-depressive, narcissistic, market driven, boom-bust, commodity based economy that periodically rather ruthlessly slams the young and vulnerable into the ground. (Plus I've owned shares in his company for decades now, so I've read everything he's written.)

  55. #55

    Default

    After a while it gets rather funny to read these types of articles... With a population in the millions, it's obviously not JUST institutional memory that is failing.


    Simons: City of Edmonton braces for provincial budget impact
    BY PAULA SIMONS, EDMONTON JOURNAL FEBRUARY 4, 2015
    excerpt:

    "For Mike Nickel, one of council’s fiscal hawks, it’s beyond frustrating. He’s worried cuts to city grants, on top of expected cuts to the post-secondary and public sectors, could hit Edmonton hard.

    “Can we not learn from the 1990s and the mistakes we made then? Why is our institutional memory so poor?” he asks.

    “They promised us stable funding. Now, they’re punting this stuff down the road. After 40 years, you’re still surprised by the boom-and-bust cycle? Where’s the plan? We, as municipalities, are just saying,..."

    http://www.edmontonjournal.com/Simon...109/story.html

  56. #56
    C2E Hard Core Contributor
    Join Date
    Feb 2014
    Posts
    2,591

    Default

    ^ I wouldn't call it "poor institutional memory". I would call it willful ignorance, extreme selfishness, and incompetence.

    In boom times the government is too incompetent to make ANY reforms, the public is willfully ignorant of the last time their plans backfired, and both are too busy selfishly hoarding the short term returns to worry about changing things.

    In bust times the government is too incompetent to make the RIGHT reforms, the public is willfully ignorant of the last time cutting spending backfired, and both are too selfish to take a tax increase that would both save the province and lower cost for half our citizens.

  57. #57

    Default

    Quote Originally Posted by Jaerdo View Post
    ^ I wouldn't call it "poor institutional memory". I would call it willful ignorance, extreme selfishness, and incompetence.

    In boom times the government is too incompetent to make ANY reforms, the public is willfully ignorant of the last time their plans backfired, and both are too busy selfishly hoarding the short term returns to worry about changing things.

    In bust times the government is too incompetent to make the RIGHT reforms, the public is willfully ignorant of the last time cutting spending backfired, and both are too selfish to take a tax increase that would both save the province and lower cost for half our citizens.
    Your thoughts now? Does a change in prov. govt make any difference, or will fate play out as it did before?

  58. #58

    Default

    Quote Originally Posted by KC View Post
    Personally, the Euro crisis doesn't worry me much at all.

    Instead, I've been watching China as I figure that a bursting bubble there could drive down oil prices and the Canadian dollar. (One offsets the other for Alberta's resource exports but I'd bet it could still be very negative for Alberta.)

    Here's one to read. I think we need to consider the risks and the resulting positive and negative scenarios...

    The article seems to ignore the risk that when bad things start to happen in a major sector affecting consumers attitudes and core assumptions, all kinds of unexpected and fearful behaviour can easily follow.




    China's housing market is set for a hard landing
    http://finance.fortune.cnn.com/2012/...-estate-crash/

    ..."For this analysis, I'll borrow heavily from my former professor and mentor at the University of Chicago's Booth School of Business, Robert Aliber. Affectionately known to his students by his initials "RZA," Aliber is now retired to New Hampshire, but he writes a superb newsletter for his friends and clients. He spotted the reckless credit expansion, huge trade deficits and asset bubbles that now haunt both the U.S. and European economies long before most experts."

    "As Aliber puts it, "In China, the housing boom is a far bigger source of growth than is widely recognized, and it's totally unsustainable." ..."
    China's slowing reports this week highlighted our dependence on them. It's a sad state.

  59. #59

    Default

    This (see below) is right out of the 1990s playbook. Austerity measures kick in and force out continuous improvement, opportunistic spending, smart debt and building for the future.

    Throughout the 1999s I repeatedly read articles bashing any tax or spending increases as unaffordable even though improvement costs were at rock bottom, recessionary pricing levels.

    Then came the catchup and binge spending of the 2000s when tax increases were publicly palatable - to pay for expenditures at peak boom time prices. The spending equivalent of "buy high / sell low".



    Calgary city council expected to cross swords over 2016 budget this September 30

    BY RICK BELL, CALGARY SUN
    FRIDAY, JULY 24, 2015


    "...says folks in his northwest ward want taxes down and they’re getting more insistent.

    “They’re seeing everything going up,” says Sutherland. “They’re seeing different levels of government spending and they’re going: Whoa! When is this all going to end?”

    “It’s time to claw back a little bit.”

    Sutherland says there’s support on city council for a reduction in spending but it might be for a one percentage point cut rather than two points.

    One councillor who will be onside for any scissors action is Sean Chu.

    He stands up for controlling spending even if there is not another soul in the room agreeing with him.

    You know, Chu is either really feeling the pulse of the public or is so far off the mark he will end up politically dead.

    To those who want to treat taxpayer dough like Monopoly money he is Public Enemy No. 1.

    This day, Chu mentions the tanking economy, the loss of jobs."...



    http://www.calgarysun.com/2015/07/24...this-september



  60. #60

    Default

    Hmm

    I'd have hoped to see talk of hiring if we go into a recession.


    City dips into reserves to cope with building slowdown


    "The city’s planning department is already dipping into its reserv and says it will not weather a recession without layoffs.

    “We don’t have enough to carry us through a recession,” said Scott Mackie, branch manager of current planning, a department that’s funded through development-related permitting fees.

    “We will start looking at staffing levels,” he said, adding that will be handled with vacancies and will not require layoffs at this point. ..."


    http://www.edmontonjournal.com/city+...793/story.html
    Last edited by KC; 09-09-2015 at 03:10 PM.

  61. #61

    Default

    So the city is now planning to perform a comprehensive review all programs. First time since something like 1997! So, here we are entering tough times, a time we'd hope someone, say our governments, would step up spending to compensate for declining private sector spending. (That's the whole concept behind "economic diversification" - to remove dependency on resources and create economic activity that stabilizes if not grows the economy.) So to make program cuts now, and not over the years before, out of sympathy for those facing tough times, risks making tough times even tougher for those very same people.


    We could keep taxes lower and maintain program spending by financing some spending through additional debt. That would be too bad but possibly necessary. Moreover maybe there are other opportunities to redeploy staff on projects that are considered eligible for "smart debt" financing.

    Edmonton used to be very conservative up to about the time of Mandel's arrival on the scene, and then people began pushing for the adoption of "smart debt" to finance projects. I'd say we are approaching a time to seriously consider taking on smart debt at the city level.

    Edmonton city councillor wants tax hike reduced

    BY KEVIN MAIMANN, EDMONTON SUN
    FIRST POSTED: MONDAY, NOVEMBER 02, 2015 05:17 PM MST | UPDATED: TUESDAY, NOVEMBER 03, 2015 07:46 AM MST

    economic times and I think it's going to be worse next year, so we've got to see what we can do to hold the line," he said Monday.

    Coun. Scott McKeen said this year's budget will be especially challenging. He suggested a delay in civil service hiring -- not a freeze -- and a possible reduction of facility hours and other services.

    "I certainly am keenly aware of the impact tax increases have on, especially people living on a fixed income. So we've got to do our best to keep it down," he said.

    ...


    http://www.edmontonsun.com/2015/11/0...x-hike-dropped

    Last edited by KC; 03-11-2015 at 01:55 PM.

  62. #62
    highlander
    Guest

    Default

    I don't know that we're in the kind of bust/recession times where we want to be spending to stimulate, and if we were the municipal government spends so much less than the higher governments and gets so much less back from economic activity that it's not at all the place to be concerned about stimulus or the effects of austerity.

  63. #63

    Default

    Interesting comments...



    Nenshi's $30-million resiliency fund proposal approved
    Trevor Howell, Calgary Herald, December 14, 2015

    http://calgaryherald.com/news/local-...oes-to-council

  64. #64

    Default

    Quote Originally Posted by highlander View Post
    I don't know that we're in the kind of bust/recession times where we want to be spending to stimulate, and if we were the municipal government spends so much less than the higher governments and gets so much less back from economic activity that it's not at all the place to be concerned about stimulus or the effects of austerity.
    Currently, we are far, far from the worst case scenario. However, one thing we know now is that any cutbacks in spending now will add to those occurring in the energy sector.

    However, waiting for a crisis be on one's doorstep to then try to figure out what to do and where the money is going to come from seems silly to me.

  65. #65

    Default

    It's sad that the City isn't doing anything in regards to preparing itself for an economic collapse.
    There's no way that they'll be able to say:

    "Gee we were doing so well, even with low oil prices, who'd have thunk..."


    One, they need to maintain confidence and two, they need to state that they have a plan and what that plan will be for a worst case scenario. Failure to do so creates panic, slams unsuspecting citizens and city employees in the worst ways, etc. By stating what their plan would be, that the City even has a worse case scenario plan, would do a lot to help maintain confidence.

    Are they going to increase borrowings, advance projects increase hiring, cut wages, pare back on wages and services, redeploy employees, or what?

    Or are they going to go into knee-jerk mode, from manic to depressive, institute a mindless hiring freeze, slash services, suddenly become fearful of borrowing as opposed to the past decade when they embraced massive borrowing in the face of rapidly escalating costs, higher rates, boom time economics...)?



    ~
    Last edited by KC; 12-01-2016 at 08:51 AM.

  66. #66
    C2E Long Term Contributor
    Join Date
    Feb 2006
    Location
    Downtown Edmonton
    Posts
    46,996

    Default

    Brad Ferguson had an interesting take on this today at the EEDC luncheon, watch the news tonight. I'd say he is damn near bang on, but the devil is in the execution.
    www.decl.org

    Ottawa-Edmonton-Vancouver-Edmonton

  67. #67
    C2E Long Term Contributor
    Join Date
    Feb 2006
    Location
    Downtown Edmonton
    Posts
    46,996

    Default

    Individuals, communities and governments need to band together now if they hope to emerge from the current “age of anxiety” prepared for whatever will come next, the head of Edmonton Economic Development Corp. told 1,000 business leaders Tuesday.

    “It is what you are doing in a down cycle that determines your readiness when the market goes back,” EEDC president and chief executive Brad Ferguson told the organization’s Impact 2016 luncheon at the Shaw Conference Centre.

    http://edmontonjournal.com/business/...eedc-boss-says
    www.decl.org

    Ottawa-Edmonton-Vancouver-Edmonton

  68. #68
    C2E Long Term Contributor
    Join Date
    Feb 2006
    Location
    Downtown Edmonton
    Posts
    46,996

    Default

    EEDC CEO Brad Ferguson says that "it is out of this extended period of darkness that prosperous days will come." He suggests five areas to focus on:

    Entrepreneurship: Local companies hiring post-secondary students and local governments finding ways to support new business ventures will help keep the province from losing human capital to places like Saskatchewan that have recently ranked higher in attracting new labour.

    Export and Trade: Along with pipelines to bring Alberta oil to sea ports, Ferguson said private firms advocating for trade deals like the Pacific-Rim's Trans Pacific Partnership (TPP) and European couterpart Comprehensive Economic Trade Agreement (CETA) will help bring Canadian goods to new markets and increase local growth.

    Energy Innovation: "It is not a time to turn our backs on our industry," Ferguson said about the need to bring down the price of oil and gas production and distribution so that Alberta oil can compete on world markets even at lowered global prices.

    Tourism, Conferences, Major Events: Coming off a year that saw Edmonton host the Women's World Cup of Soccer and Red Bull Crashed Ice along with other festivals and events, Ferguson said more has to be done to attract even more to town. He said private business can play a big role in promoting the city within their circles of influence.

    Leadership and Public Service: "There needs to be an intervention," Ferguson said, alluding to rising public debt levels and what he said is too much duplication of spending between government areas. He said for wealth to be found in the future, it must be found through responsible government confined to essential spending, not pet projects.

    Edmonton sun
    Last edited by IanO; 12-01-2016 at 09:38 PM.
    www.decl.org

    Ottawa-Edmonton-Vancouver-Edmonton

  69. #69

    Default

    Impressive!

    As Calgary taxpayers scrimp, city racks up $2 billion in reserve funds

    Michael Platt, Calgary Sun, Dec 11, 2016


    If only you as a taxpayer could be so fiscally responsible.



    But even as half of Albertans teeter within $2,326 of financial disaster — one average paycheque is all that currently stands between 50% of citizens and ruin, according to The Canadian Payroll Association — the City of Calgary is squirrelling hundreds of millions away in savings.

    And it’s one hell of a savings account, built on a decade of successive property-tax hikes, at almost three times the rate of inflation.

    As of Dec. 31, 2015 (it apparently takes a long time to count so much cash), the city had $1.995 billion in reserve funds, a figure that will have easily topped $2 billion this week, when an accounting report on the 43 separate savings accounts finally reaches city council.

    Two billion dollars, all safely tucked away.

    That includes city council’s fiscal stability reserve — the so-called “rainy day fund” that has been steadily ballooning in recent years, from $80 million in 2006 to a current $544 million, as per this latest year-old count.

    And that’s just the rainy day fund: it doesn’t include the other 16 operating reserves, 17 capital reserves or nine “sustainment” reserves.

    Unlike half of homeowners in this city, who can’t even tuck emergency money away for a new water tank or tire repair, city council has a savings account for every...




    http://www.calgarysun.com/2016/12/11...-reserve-funds
    Last edited by KC; 11-12-2016 at 08:56 PM.

  70. #70
    C2E Hard Core Contributor
    Join Date
    Jan 2012
    Location
    Sherwood park
    Posts
    2,522

    Default

    Overtaxing is impressive?

  71. #71

    Default

    ^^Wonder how the C of E fairs against that amount. I should imagine they are 2 billion in the red due to stupidity.
    Gone............................and very quickly forgotten may I add.

  72. #72

    Default

    CITY OF CALGARY RESERVE FUNDS EXCEED THOSE IN OTHER CANADIAN CITIES

    https://www.manningcentre.ca/blog/ci...anadian-cities

  73. #73

    Default

    Quote Originally Posted by SP59 View Post
    Overtaxing is impressive?
    Well more often than not it's the other extreme of undertaxing via over-borrowing. Then in a downturn, the grandpoohbahs get into knee jerk slashing and burning and "holding down costs" further exacerbating the downturn. Then when conditions improve they play catchup and pay top dollar to do so.
    Last edited by KC; 17-12-2016 at 02:13 PM.

  74. #74

    Default

    The “unintended consequence” comment is such BS. Bailout borrowers big time. Bail out the stock markets over and over again and people start to see that borrowing big time is a safe way to get rich or get votes. The government has your back and will protect your downside - until it suddenly can’t.

    Also from my past professional experience I know that any advance preparations and communications they didn’t go far enough.


    Canada dodged the worst of the Financial Crisis, and it wasn't just dumb luck
    Kevin CarmichaelKevin Carmichael
    September 14, 2018 3:16 PM EDT


    “Macklem, who was in the running to replace Carney at the Bank of Canada, defended ultra-low interest rates as “necessary,” but acknowledged that the extreme levels of corporate, government and household debt that have piled up around the world were an “unintended consequence.” The central banks knew there would be some borrowing — that was the idea. Regulators in Canada and elsewhere have tried to dissuade borrowers from over-extending themselves, but it’s hard to push back against the allure of once-in-a-lifetime lending rates. Macklem is stunned the U.S. cut taxes and increased spending when the economy already was doing well. ...”

    https://business.financialpost.com/n...just-dumb-luck
    Last edited by KC; 17-09-2018 at 10:22 AM.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •