Wasn't it only a mere matter of weeks ago that the national economic thermometer was a thousand points higher, creating the idea that we might be shrugging off the last of these long economic doldrums and finally moving forward? How did this happen?
Many things happened, and some of them self-inflicted.
The price of crude is rising, in part to the fact that we cannot really control all the places we invade. Remember the nod and the wink that taking Baghdad would open the oil spigots and pay for itself? Now crude grazes against the 100 bucks a barrel limit and our prices at the pumps spin accordingly.
We've been selling our debt for the last little while, and sometimes it seems to be our largest export. Lenin's old comment about how a capitalist will sell you the rope you hang him with seems appropriate, but it really was the comment by a mid-level cabinet official that cast fear into the heart of Wall Street Profiteers. The comment was that they might be looking for other, stronger currencies to collect.
And then there is the depleted dollar, now surging well below the loonie (making Canadians in the office both confused and slightly smug (well, smug for Canadians)). Supposedly a weaker dollar is good for tourism, but "Psychotic TSA Agent" has replaced "Snooty French Waiter" in the pantheon of feared tourist enemies, and may have a negative affect on all those Canadians streaming south.
And finally, we have the weakening housing market, which is mainly due to massive defaults on sub-prime mortgages. This one is oddly self-inflicted. A few years back, in its corporate wisdom, our government chose to make it tougher for individuals to declare bankruptcy and get out of credit card debt. So now those in over their heads are defaulting on the mortgages instead. Good going, guys. Here's a basic in fluid dynamics which applies to economics as well - if you dam up the river, it will just go somewhere else.
Ah, well, so we are in danger of finding out that the past few months were "the good old days". Hope springs eternal, but the market is crying for another rate cut/cookie, and may yet get it.
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