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Thread: Alberta recession one of the most severe ever

  1. #1

    Default Alberta recession one of the most severe ever

    Not good:

    A special report released Monday by TD Economics says by the end of this year, Alberta's GDP is anticipated to have posted a three per cent contraction in GDP in 2016, adding up to a 6.5 per cent loss since the downturn started in 2014.

    That's twice the magnitude of the average of the past four recessions to hit Alberta.

    http://www.cbc.ca/news/canada/calgar...cast-1.3684056

    On a more positive note, even when we are in recession, we are doing better than any other province in Canada:

    Even in recession, after so many years of country-leading growth figures, Alberta is still poised to have much higher GDP per capita than any other province. It's expected to drop this year to $77,000, but that compares with $53,000 in the rest of Canada.

    The authors say the strength of Alberta's economic recovery will hinge on how well it tackles the challenges of budget deficits, inadequate pipeline capacity and addressing climate change, among others.

    But it continues to have a competitive tax regime and a young, highly educated workforce "more oriented towards science and engineering than most economies — ingredients that tend to go hand in hand with innovation and diversification," the report says.

    "As such, we remain confident that Alberta can retain its status as a leading growth area not just in Canada, but within North America."

  2. #2

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    Seems like we're achieving a "soft landing" which is better than I'd expected. I rather thought we might go "off the cliff" like we did in the '80s. I think the 2009 dip was a heads up for a lot of people and combined with rock bottom interest rates, people are seeing a slower decline.

    The usual panic and knee jerk reactions just seem to be absent from business and bank management this round. It's quite refreshing.
    Last edited by KC; 18-07-2016 at 05:16 PM.

  3. #3

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    Quote Originally Posted by KC View Post
    Seems like we're achieving a "soft landing" which is better than I'd expected. I rather thought we might go "off the cliff" like we did in the '80s. I think the 2009 dip was a heads up for a lot of people and combined with rock bottom interest rates, people are seeing a slower decline.

    The usual panic and knee jerk reactions just seem to be absent from business and bank management this round. It's quite refreshing.
    The only people freaking out are a super vocal, tragically minor jacked-up-truck kudetah crowd that seems to think gas prices going up $0.10 will cause Alberta to burn. The vast majority of rational people seem to be going about their business knowing we flow with world economics, just like everyone else. We weather it significantly better than most.
    "Men never do evil so completely and cheerfully as when they do it from religious conviction" - Blaise Pascal

  4. #4

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    Quote Originally Posted by Chmilz View Post
    Quote Originally Posted by KC View Post
    Seems like we're achieving a "soft landing" which is better than I'd expected. I rather thought we might go "off the cliff" like we did in the '80s. I think the 2009 dip was a heads up for a lot of people and combined with rock bottom interest rates, people are seeing a slower decline.

    The usual panic and knee jerk reactions just seem to be absent from business and bank management this round. It's quite refreshing.
    The only people freaking out are a super vocal, tragically minor jacked-up-truck kudetah crowd that seems to think gas prices going up $0.10 will cause Alberta to burn. The vast majority of rational people seem to be going about their business knowing we flow with world economics, just like everyone else. We weather it significantly better than most.
    So everyone who lost their job is a jacked-up-truck kudetah crowd member? Im pretty sure there are a lot of struggling families right now who have lost one or two income earners, living off the EI / mortgage insurance / credit cards, who are freaking out. I think things are stabilizing for businesses (although there may be more pain in oilfield service sector once existing projects run out), and we may be better off still than other provinces, but I am not so sure we have seen the worst of it. I still suspect single family homes are going to start dropping rapidly, in that 500 to 800k range, in about a years time, a lot of inventory in that price range is simply not moving.

    My other concern is this is going to be the new normal for the next decade. There is historical precedent for that. If that's the case, how is government going to support its current spend, which was based on 100 dollar oil? The answer, other than borrowing a fortune, is it can't.
    Last edited by moahunter; 18-07-2016 at 05:44 PM.

  5. #5

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    On government spend via borrowing: If it can't, it won't. However, look at how much other jurisdictions have managed to borrow. Everyone seems to have been kicking every possible can down the road for decades now and there's never been any rewards waiting for those who've dealt with them in good times or bad.

  6. #6
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    Im not freaking out, but its obvious the NDP arent helping the matter

  7. #7

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    If you think now is bad, wait about 12 months. Redwater and Fort Hills will be done and this is easily employing 10,000 people in the greater edmonton area with direct and indirect jobs at site and modyards

  8. #8

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    In addition, i know for a fact a big player in the area has reached out to some of the unions to "normalize" wages agreed upon in negotiated union agreements. Rather than the $40+ wages now enjoyed, they are thinking $25 tops for journeymen. This is gaining traction

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    Ten dollars more than minimum wage in a couple years for having a skilled trade? Man, flipping burgers never looked so good. And in this day and age of the $400 000 house?

    Say hello to a massive market correction if this occurs. That or a f*ck of a lot of jingle mail and bankruptcies.

  10. #10

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    Not the most relevant thing I might say, but I believe the spelling is "kudatah".
    Let's make Edmonton better.

  11. #11

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    Quote Originally Posted by happydays View Post
    In addition, i know for a fact a big player in the area has reached out to some of the unions to "normalize" wages agreed upon in negotiated union agreements. Rather than the $40+ wages now enjoyed, they are thinking $25 tops for journeymen. This is gaining traction
    This wouldn't surprise me. I know some companies have hit their white collar contractors with 25% - 50% across the board rate cuts. If supply exceeds demand, prices start dropping, that applies to salaries and wages as well (unless you work for government). I think the exception is if you are one of the few left doing multiple peoples job, then you can still earn very well.

    There is going to remain a need to maintain current production, but the problem is going to be the end of all the projects underway. Those multi billion projects are what has driven up our salaries / wages to the highest in Canada (outside Ottawa). No amount of government stimulus or borrowing can replicate them. Without them, we are going to start descending, and government tax take will descend with it (our deficits are going to get way worse before they get better). Hopefully an LNG terminal goes in BC, so that there will be some other options for tradespeople to move to, but that's looking more and more unlikely now as well.
    Last edited by moahunter; 19-07-2016 at 08:20 AM.

  12. #12
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    Quote Originally Posted by happydays View Post
    If you think now is bad, wait about 12 months. Redwater and Fort Hills will be done and this is easily employing 10,000 people in the greater edmonton area with direct and indirect jobs at site and modyards
    Its going to be bad, thats for sure.

  13. #13

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    Every Albertan knows oil and gas are highly volatile industries so during the boom times when their wages (and hours) go stratospheric they would naturally have saved and prepared for the inevitable downturn/crash. There should be no need to worry over the short-term future of oil and gas workers. Now, as for all the others that didn't directly participate in, and profit off, the boom, that's another story.

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    Edmonton is doing fairly well considering. New businesses are opening lots of construction going on . By the time it does start to have a impact Oil prices will probably return to 70-80$ mark. Why I bought a lot of gold and silver when Oil started to drop and I am glad I did as gold is up 200$ a oz and silver 7$ oz since I purchased.
    Last edited by buildthemhigh; 19-07-2016 at 10:59 AM.
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  15. #15

    Default Oil prices to sink again

    Quote Originally Posted by buildthemhigh View Post
    By the time it does start to have a impact Oil prices will probably return to 70-80$ mark.
    Maybe, but maybe not. There is a lot of supply that can rapidly be dipped into if prices even hint at moving back up, I fear we are more like in a 1980's situation where prices will stay down for a decade or so, because the ability to produce more is already developed and so easily turned on (e.g. bakken fracking), but the increase in demand not so significant.

    http://edmontonjournal.com/opinion/c...in-second-half

    I think we’re going to go down from where we are now. Second-quarter results are going be horrible when they come out for the majority of companies and I think the glut issue will really hit in September,” he says.

    “So I think we’ll meander between $40 and $46 a barrel between now and the end of August. Then in September, if the seasonal slowdown kicks in and OPEC is still producing in excess of demand, and China’s imports drop as I expect, I think we’ll bust to the low $30s. There is even a risk that we bust $30 and go back to the lows of February.”

    Depressed now? Join the club. But I can’t finish on that gloomy note. Eventually, Alberta will recover, as it always does.
    Last edited by moahunter; 19-07-2016 at 11:44 AM.

  16. #16
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    It's pretty much over already. Q2 numbers for many will be disastrous, maybe the worst, but everyone knows this. We're passed the trough though and already on the uptick. My company (one of the largest, if not the largest oil service co in the province) has already started re-hiring in some divisions. We've added new shifts in certain plants and are worried we're not going to have enough capacity next year.

    We were on double furlough (one unpaid day off every week) plus a suspension of matching RRSP contributions for Q2, but it's since been changed to single furlough (one unpaid day off every 2 weeks). By the end of the year, everyone believes things will have returned to the point they can eliminate the furlough and get back to RRSP matching.

    Its never going to be like it was before though. Companies are way leaner and when the tide turns, will be far more profitable. We're unlikely to see wild positive price changes, at least in the near to mid term.

  17. #17

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    Here was a MaCleans article from about a year ago, on the risk of a 1980's / 1990's style low price trough:

    What’s remarkable and more apparent in this chart is the similarity between the second-stage declines. The dramatic 1985-86 crash and the one that started last year occurred at roughly the same number of months after oil first topped out (67 months in the 1980s versus 71 months in this cycle).

    As always the past is no indication of what will happen in the future, but as oil markets gyrate wildly from optimism to pessimism, greed to fear, it’s worth remembering just how long the process can last before the next upward cycle begins. Those waiting for the quick rebound should keep that in mind.
    http://www.macleans.ca/economy/econo...e-1980s-crash/

    If that is what happens, the sooner government right-sizes like the private sector has, the less pain there will be.

  18. #18

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Chmilz View Post
    Quote Originally Posted by KC View Post
    Seems like we're achieving a "soft landing" which is better than I'd expected. I rather thought we might go "off the cliff" like we did in the '80s. I think the 2009 dip was a heads up for a lot of people and combined with rock bottom interest rates, people are seeing a slower decline.

    The usual panic and knee jerk reactions just seem to be absent from business and bank management this round. It's quite refreshing.
    The only people freaking out are a super vocal, tragically minor jacked-up-truck kudetah crowd that seems to think gas prices going up $0.10 will cause Alberta to burn. The vast majority of rational people seem to be going about their business knowing we flow with world economics, just like everyone else. We weather it significantly better than most.
    So everyone who lost their job is a jacked-up-truck kudetah crowd member? Im pretty sure there are a lot of struggling families right now who have lost one or two income earners, living off the EI / mortgage insurance / credit cards, who are freaking out. I think things are stabilizing for businesses (although there may be more pain in oilfield service sector once existing projects run out), and we may be better off still than other provinces, but I am not so sure we have seen the worst of it. I still suspect single family homes are going to start dropping rapidly, in that 500 to 800k range, in about a years time, a lot of inventory in that price range is simply not moving.

    My other concern is this is going to be the new normal for the next decade. There is historical precedent for that. If that's the case, how is government going to support its current spend, which was based on 100 dollar oil? The answer, other than borrowing a fortune, is it can't.
    Things are never good for those out of work, don't be pedantic. The idiots I see making the most noise are still gainfully employed and complaining that driving their overpriced rig rocket will cost an extra $10 to fill despite never hauling more than Cheeto dust and white Oakley's.
    "Men never do evil so completely and cheerfully as when they do it from religious conviction" - Blaise Pascal

  19. #19

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    I might not agree with everything the NDP does (like where is our Calgary-class courthouse? Where is our Calgary-class hospital? Where I our Calgary-class LRT system? This is getting pathetic... )

    ...but their handling of the recession is far far better than that imbecile Ralph Klein's was. Buy when prices are low is the correct answer.
    Let's make Edmonton better.

  20. #20
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    Quote Originally Posted by JayBee View Post
    I might not agree with everything the NDP does (like where is our Calgary-class courthouse? Where is our Calgary-class hospital? Where I our Calgary-class LRT system? This is getting pathetic... )

    ...but their handling of the recession is far far better than that imbecile Ralph Klein's was. Buy when prices are low is the correct answer.
    I wonder if you feel that way in a year, I think worse..

  21. #21

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    Quote Originally Posted by moahunter View Post
    Here was a MaCleans article from about a year ago, on the risk of a 1980's / 1990's style low price trough:

    What’s remarkable and more apparent in this chart is the similarity between the second-stage declines. The dramatic 1985-86 crash and the one that started last year occurred at roughly the same number of months after oil first topped out (67 months in the 1980s versus 71 months in this cycle).

    As always the past is no indication of what will happen in the future, but as oil markets gyrate wildly from optimism to pessimism, greed to fear, it’s worth remembering just how long the process can last before the next upward cycle begins. Those waiting for the quick rebound should keep that in mind.
    http://www.macleans.ca/economy/econo...e-1980s-crash/

    If that is what happens, the sooner government right-sizes like the private sector has, the less pain there will be.
    Demand growth off a much, much larger global user base than in the 80s, can quickly eat up even a massive surplus. However, the ability to feed incremental demand growth via low cost shale (the lowest cost being exploited first) means investors may wait for far more certainty of demand before committing to the upfront capital and long lead times of tarsands plants.

    Then there's changing technology and carbon regs and taxes (in light of being in an era of massive deficits in many countries), opportunistic carbon taxes are coming down the pike (or rather pipeline).

    Bottom line - I can't predict the future.

    I wouldn't even be surprised if many knowledgable and skilled investors may put investing in Alberta in the too hard to estimate pile.
    Last edited by KC; 19-07-2016 at 05:17 PM.

  22. #22

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    Quote Originally Posted by hello lady View Post
    Quote Originally Posted by JayBee View Post
    I might not agree with everything the NDP does (like where is our Calgary-class courthouse? Where is our Calgary-class hospital? Where I our Calgary-class LRT system? This is getting pathetic... )

    ...but their handling of the recession is far far better than that imbecile Ralph Klein's was. Buy when prices are low is the correct answer.
    I wonder if you feel that way in a year, I think worse..

    If I feel "buy low and sell high" in a year? Are you nuts? Obviously I still feel that way.

    You don't even need to have heard of Keynes to know that about investing.
    Let's make Edmonton better.

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    Quote Originally Posted by JayBee View Post
    Quote Originally Posted by hello lady View Post
    Quote Originally Posted by JayBee View Post
    I might not agree with everything the NDP does (like where is our Calgary-class courthouse? Where is our Calgary-class hospital? Where I our Calgary-class LRT system? This is getting pathetic... )

    ...but their handling of the recession is far far better than that imbecile Ralph Klein's was. Buy when prices are low is the correct answer.
    I wonder if you feel that way in a year, I think worse..

    If I feel "buy low and sell high" in a year? Are you nuts? Obviously I still feel that way.

    You don't even need to have heard of Keynes to know that about investing.
    I actually meant how you would feel about the NDP...the ones that haven't met a tax they don't like.

  24. #24

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    ^ that will depend if they allow Edmonton to get provincial facilities on par with Calgary.

    They certainly couldn't do any worse than the PC/Wildrose, if that's what you're getting at.

    What is Calgary now? Quintuple the LRT? Thanks a lot, Ralphison.
    Let's make Edmonton better.

  25. #25

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    Quote Originally Posted by KC View Post
    On government spend via borrowing: If it can't, it won't. However, look at how much other jurisdictions have managed to borrow. Everyone seems to have been kicking every possible can down the road for decades now and there's never been any rewards waiting for those who've dealt with them in good times or bad.
    No rewards? In Ontario, the third largest expense, after education and health care, is debt servicing. More than they spend on post secondary education. And that's in a time of historic low interest rates. There is no reward to that, they could be building subways all over the city out of current revenues with that money they are losing forever every year because of the recklessness by past and current generations. Once politicians get addicted to inefficient spending, eventually we all pay big time. I can accept borrowing to pay for infrastructure. I don't accept it to pay for day to day costs on the "assumption" a boom will bail us out, especially since last time we had a boom, the mantra was we had to spend even more because of that boom. Alberta has to face up to a painful right size of government, either that, or deficits will balloon even more and we will move rapidly down Ontarios path. The sooner we change direction the less painful it will be.

    http://www.torontosun.com/2016/07/19...ed-to-spending
    Last edited by moahunter; 20-07-2016 at 07:52 AM.

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    The issue is when the "right size of government" for our population costs more than we can bring in due to the stagnant economy. We will need to adjust to lower servicing levels long term, or increase taxes to compensate. I agree that operational spending should not be paid with debt. The only disagreement I have is on the timeframe. Governments cannot effectively restructure without long term damage in the short term. We need a phased approach over two full government terms to limit the damage to the economy.

  27. #27
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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by KC View Post
    On government spend via borrowing: If it can't, it won't. However, look at how much other jurisdictions have managed to borrow. Everyone seems to have been kicking every possible can down the road for decades now and there's never been any rewards waiting for those who've dealt with them in good times or bad.
    No rewards? In Ontario, the third largest expense, after education and health care, is debt servicing. More than they spend on post secondary education. And that's in a time of historic low interest rates. There is no reward to that, they could be building subways all over the city out of current revenues with that money they are losing forever every year because of the recklessness by past and current generations. Once politicians get addicted to inefficient spending, eventually we all pay big time. I can accept borrowing to pay for infrastructure. I don't accept it to pay for day to day costs on the "assumption" a boom will bail us out, especially since last time we had a boom, the mantra was we had to spend even more because of that boom. Alberta has to face up to a painful right size of government, either that, or deficits will balloon even more and we will move rapidly down Ontarios path. The sooner we change direction the less painful it will be.

    http://www.torontosun.com/2016/07/19...ed-to-spending

    Wynne is a hopeless, hapless leader, just awful.

  28. #28

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    Quote Originally Posted by Jaerdo View Post
    The issue is when the "right size of government" for our population costs more than we can bring in due to the stagnant economy. We will need to adjust to lower servicing levels long term, or increase taxes to compensate. I agree that operational spending should not be paid with debt. The only disagreement I have is on the timeframe. Governments cannot effectively restructure without long term damage in the short term. We need a phased approach over two full government terms to limit the damage to the economy.
    Fair enough, but I'd like to see the NDP say this, and start the phased approach. The current approach seems to be head in sand / oil prices will return optimism. In a way, if we ever were to save the money when we next have a boom (if that's what people want), we have to be able to sustain ourselves in non boom years first.

  29. #29

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by KC View Post
    On government spend via borrowing: If it can't, it won't. However, look at how much other jurisdictions have managed to borrow. Everyone seems to have been kicking every possible can down the road for decades now and there's never been any rewards waiting for those who've dealt with them in good times or bad.
    No rewards? In Ontario, the third largest expense, after education and health care, is debt servicing. More than they spend on post secondary education. And that's in a time of historic low interest rates. There is no reward to that, they could be building subways all over the city out of current revenues with that money they are losing forever every year because of the recklessness by past and current generations. Once politicians get addicted to inefficient spending, eventually we all pay big time. I can accept borrowing to pay for infrastructure. I don't accept it to pay for day to day costs on the "assumption" a boom will bail us out, especially since last time we had a boom, the mantra was we had to spend even more because of that boom. Alberta has to face up to a painful right size of government, either that, or deficits will balloon even more and we will move rapidly down Ontarios path. The sooner we change direction the less painful it will be.

    http://www.torontosun.com/2016/07/19...ed-to-spending
    No rewards. Did you buy your house via mortgaging the property or deferring consumption until the day you could pay for it up front? I know only two people that deferred consumption. Myself and an ultra fiscal conservative friend. I wouldn't do it again.

    How was Klien ultimately rewarded for his cuts and shift to pay as you go governance? Protests of "Where's the plan" and a massive about face on spending. Ontario, they have been bringing forward years of consumption via debt spending and that hasn't hurt their government either.

    Any government that attempts to right the ship (no matter how even handed, fair and equitably they spread the pain, will be tossed from power and replaced by a government promising immediate benefits for all. Only in a crisis will the NDP be able to shift Alberta off royalty based spend to a sustainable, stabilizing, diversifying methodology. So I just don't think that's going to happen. To survive, the NDP has to mostly repeat the bumbling processes of the NDP and defer much of any shift away from our resource based system. Simple political reality when it comes to maki g touch choices.

    The NDP though can soften the blow to the poor, displaced and non-boom-time-participants. The PCs would have heaped the losses (financial, service cuts, job losses, wage cuts etc) on those same weak people.
    Last edited by KC; 20-07-2016 at 09:25 AM.

  30. #30
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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Jaerdo View Post
    The issue is when the "right size of government" for our population costs more than we can bring in due to the stagnant economy. We will need to adjust to lower servicing levels long term, or increase taxes to compensate. I agree that operational spending should not be paid with debt. The only disagreement I have is on the timeframe. Governments cannot effectively restructure without long term damage in the short term. We need a phased approach over two full government terms to limit the damage to the economy.
    Fair enough, but I'd like to see the NDP say this, and start the phased approach. The current approach seems to be head in sand / oil prices will return optimism. In a way, if we ever were to save the money when we next have a boom (if that's what people want), we have to be able to sustain ourselves in non boom years first.
    I agree with you here. The first NDP budget was a massive let down signifying that they aren't out to change anything. We need a budget that completely removes both royalties and debt financing from operational spending within two government terms. If that means targeted cuts (again, phased in and through attrition and careful restructuring, not blind slashing that just costs us more in the long term), so be it. If that means a sales tax, so be it. Sometimes fiscal conservatism means accepting that you have an income problem, too.

    In a way the Prentice budget was far better than the NDP budget for this reason. He had a real plan to wean off our royalty addiction. Unfortunately with his party's track record he just couldn't be trusted to actually carry it out.

  31. #31

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    The debt of Alberta is going up $1 Billion every 32 days.
    http://www.debtclock.ca/provincial-d...lberta-s-debt/

  32. #32

    Default Single-family construction in Alberta falls to lowest level since 2009 recession

    Eventually it will flow onto multi-family as well, which is going to result in even more people out of work

    Don Campbell, a senior analyst with the Real Estate Investment Network, said single-family-home builders in Calgary and Edmonton "know how to play a downturn" better than builders in other cities because they "are used to booms and slowdowns ... so they generally don't overbuild."

    "Compared to other regions … they are much more adept at putting their foot on the brake when a market slows down," he said.

    "Albertan builders go: 'Oh! I've seen this before. Lay everybody off. Stop building.'"

    Condo and apartment builders can't adjust as quickly, Campbell added, as they tend to have longer construction times.

    "A house takes six months to build and an apartment building takes a couple years, so the investment still is flowing in to the apartment building, even as the market starts to turn," he said.
    http://www.cbc.ca/news/canada/calgar...2009-1.3731036

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    Shortly we'll be entering the third year of this downturn. Now the real bleeding begins.

  34. #34

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    Quote Originally Posted by harrington65 View Post
    The debt of Alberta is going up $1 Billion every 32 days.
    http://www.debtclock.ca/provincial-d...lberta-s-debt/
    Not to split hairs, but I get about 34.5 days.

    NDP needs to consider a sales tax. They might be hated for it, but they need some meaningful revenue to plug some holes. Other than that, they can restructure health/education, but that will have front loaded costs that go along with it.

  35. #35

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    Quote Originally Posted by Moodib View Post
    NDP needs to consider a sales tax.
    Carbon tax = sales tax (just on selective services / products). Its not a revenue issue though, its a spending issue, that started post Klein. The proof of this is even during the boom years when our revenues were good, we couldn't save, if you can't then, when can you? We are living beyond our means, so changes are needed. If we have to wait a bit longer for an operation, or our kids have to have a few more kids in their classes, or civil servants have to take a pay cut much like us in private sector, those are first world problems. Raising taxes will just drive more unemployment (reduced consumer spending = less jobs) which is the last thing needed right now, if anything taxes need to drop to encourage businesses to expand and consumers to spend, taxes are negative stimulus to the economy, NDP has already sucked enough of that out of the economy with the top personal tax rate hike.
    Last edited by moahunter; 23-08-2016 at 04:24 PM.

  36. #36

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Moodib View Post
    NDP needs to consider a sales tax.
    Carbon tax = sales tax (just on selective services / products). Its not a revenue issue though, its a spending issue, that started post Klein. The proof of this is even during the boom years when our revenues were good, we couldn't save, if you can't then, when can you? We are living beyond our means, so changes are needed. If we have to wait a bit longer for an operation, or our kids have to have a few more kids in their classes, or civil servants have to take a pay cut much like us in private sector, those are first world problems. Raising taxes will just drive more unemployment (reduced consumer spending = less jobs) which is the last thing needed right now, if anything taxes need to drop to encourage businesses to expand and consumers to spend, taxes are negative stimulus to the economy, NDP has already sucked enough of that out of the economy with the top personal tax rate hike.

    It's probably an over spending issue and an under taxing issue for the level of services and imbedded costs in the system. Two sides of the same coin. Improved efficiency and cutting waste could likely create savings. Offloading costs onto others might work as well, though often I wonder if such offloading doesn't just drive up overall costs just to get them off ones own books.

    Raising taxes doesn't remove the money from the economy. If redistributes it. It all depends on what spending / investing the tax eliminates and what spending / investing those dollars are destined for.

    Eg.
    Taxing someone who would otherwise just take their high income and invest it in say US shares doesn't cause a near-term loss of jobs in the local economy because that money was going to leave anyways.

    However, if those taxed funds are then spent by government on some labour intensive infrastructure project or service then it's a near-term benefit for the domestic economy - at a potentially large long-term cost to future spending by the high-income individual, assuming that they don't retire somewhere else, sell their shares and spend it locally.
    Last edited by KC; 28-08-2016 at 08:17 AM.

  37. #37

    Default

    The fate of Alberta, will be the same as the global economy.
    Global GDP, around $80 Trillion, Global debt, over $200 Trillion.
    European and Japanese central banks are buying $200 Billion/ month (in cdn dollar terms) of bonds with printed money,oops, not printed, money is now digital.Stocks are in nosebleed territory, bonds are paper promises, (ask a German in the 1920s about the value of bonds, and paper cash)
    Keep things simple, there are only 3 things that can happen to massive govt debts,
    1) they can be paid off, lol lol, ha ha ha
    2) they can be printed away,...Germany 1920s, Venezuela right now
    3)govts can default

    It is no wonder Germans and Japanese are buying a record number of home safes and stashing cash and a few gold/silver coins.
    Strange things happen, young people think I am crazy when I tell them 5 year mortgage rates in Canada were 21℅ in Sept 1981.
    35 years of declining interest rates.
    Oh, by the way, the 2014 G20 accord in Brisbane assured the banksters will get your money, there will be bail- ins. Canada signed this treaty. When the next financial crisis happens, bank deposits will be considered part of the capital structure of the bank, and banks will be able to legally refuse you the right to your money. They did this because they did not want another taxpayer bailout of the big European and American banks after the 2008 crash, let the depositors pay.

  38. #38

  39. #39

    Default

    Quote Originally Posted by KC View Post

    Raising taxes doesn't remove the money from the economy. If redistributes it. It all depends on what spending / investing the tax eliminates and what spending / investing those dollars are destined for.

    Eg.
    Taxing someone who would otherwise just take their high income and invest it in say US shares doesn't cause a near-term loss of jobs in the local economy because that money was going to leave anyways.
    .
    No, we need people to invest in Alberta. If the business climate is poor because of government uncertainty (royalties, carbon taxes, market access issues, unsustainable deficits), then people will choose to invest in places where the business climate is stronger. The jobs, and the tax revenues, follow the capital. For all their flaws, the PCs understood this, there is nothing special about Alberta that can't be found elsewhere (and often closer to bigger markets), the deciding difference that gave us a sustained edge was government policy / stability. We have lost our advantage with that, and are no longer a safe and profitable place to put capital. Trying to tax what capital is left even more, will just cause more capital to leave.
    Last edited by moahunter; 03-09-2016 at 09:13 AM.

  40. #40
    C2E Hard Core Contributor
    Join Date
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    Edmonton, AB
    Posts
    2,458

    Default

    Quote Originally Posted by harrington65 View Post
    The fate of Alberta, will be the same as the global economy.
    Global GDP, around $80 Trillion, Global debt, over $200 Trillion.
    European and Japanese central banks are buying $200 Billion/ month (in cdn dollar terms) of bonds with printed money,oops, not printed, money is now digital.Stocks are in nosebleed territory, bonds are paper promises, (ask a German in the 1920s about the value of bonds, and paper cash)
    Keep things simple, there are only 3 things that can happen to massive govt debts,
    1) they can be paid off, lol lol, ha ha ha
    2) they can be printed away,...Germany 1920s, Venezuela right now
    3)govts can default

    It is no wonder Germans and Japanese are buying a record number of home safes and stashing cash and a few gold/silver coins.
    Strange things happen, young people think I am crazy when I tell them 5 year mortgage rates in Canada were 21℅ in Sept 1981.
    35 years of declining interest rates.
    Oh, by the way, the 2014 G20 accord in Brisbane assured the banksters will get your money, there will be bail- ins. Canada signed this treaty. When the next financial crisis happens, bank deposits will be considered part of the capital structure of the bank, and banks will be able to legally refuse you the right to your money. They did this because they did not want another taxpayer bailout of the big European and American banks after the 2008 crash, let the depositors pay.
    This is simply silliness.

    Global economic growth is steady at this time.

  41. #41
    I'd rather C2E than work!
    Join Date
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    Westmount, Edmonton
    Posts
    5,326

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    Filed under "What happens when you base most of your economy on a single commodity"

    That said, things are much, much better overall than they were here in the 80s. Unemployment is lower than then, our per capita GDP still leads the country, and our average weekly wages are still substantially higher than the rest of the country. Given the rest of the country is doing all right, in the long run we'll weather this and move on.

    "For every complex problem there is an answer that is clear, simple, and wrong"

  42. #42

    Default

    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by KC View Post

    Raising taxes doesn't remove the money from the economy. If redistributes it. It all depends on what spending / investing the tax eliminates and what spending / investing those dollars are destined for.

    Eg.
    Taxing someone who would otherwise just take their high income and invest it in say US shares doesn't cause a near-term loss of jobs in the local economy because that money was going to leave anyways.
    .
    No, we need people to invest in Alberta. If the business climate is poor because of government uncertainty (royalties, carbon taxes, market access issues, unsustainable deficits), then people will choose to invest in places where the business climate is stronger. The jobs, and the tax revenues, follow the capital. For all their flaws, the PCs understood this, there is nothing special about Alberta that can't be found elsewhere (and often closer to bigger markets), the deciding difference that gave us a sustained edge was government policy / stability. We have lost our advantage with that, and are no longer a safe and profitable place to put capital. Trying to tax what capital is left even more, will just cause more capital to leave.
    Well the edge we had was pretty dull. Allowing hundreds of billions in investment dollars to flood into the province in the mid-'00s causing operating costs to double or triple plus embedding permanent population related cost increases, upfront capital cost increases, into the municipal and provincial obligations pretty much set their fate in stone -higher taxes.

    I'd say the investment came here because of the oil and expectations at the time that massive capital projects would pay off and not simply because of the reduced taxes. Case in point was the rush away from Alberta to develop horizontal drilling first for gas and then for oil, not here but in the shale gas and oil regions, despite our PC government of the day, with their business friendly policies. The investment quickly moved to the regions with shale, with little consideration for the tax and policy regimes in place.
    Last edited by KC; 03-09-2016 at 06:40 PM.

  43. #43

    Default

    The absurdity of global zero interest rate policy.

    http://www.zerohedge.com/news/2016-0...aid-issue-debt

    Two European companies are getting paid to borrow money.
    Also, in many European countries, banks charge you -.05 % interest, so if you have €10,000, one year later you will have €9950.
    When I was in my early twenties, I could walk into the Canada Trust on Whyte Ave and buy a 5 year GIC and get around 10℅ guaranteed, and easily build wealth. I have no idea how millennials will build wealth.As legendary bond king Bill Gross said "Artificially depressed interest rates destroy the economic model of every pension plan, insurance plan, and bank.

    The end result... Alta govt news release November 2019.
    "Due to the low interest rates of the past 5 years, the Alberta gov' t defined benefit pension plans are underfunded by $5 Billion . The Alberta govt will need to borrow money to compensate for the shortfall."

    Anyway, I need to go to work,with today's low rates I will need at least $2.5 million to retire comfortably.

  44. #44

    Default

    Quote Originally Posted by harrington65 View Post
    The absurdity of global zero interest rate policy.

    http://www.zerohedge.com/news/2016-0...aid-issue-debt

    Two European companies are getting paid to borrow money.
    Also, in many European countries, banks charge you -.05 % interest, so if you have €10,000, one year later you will have €9950.
    When I was in my early twenties, I could walk into the Canada Trust on Whyte Ave and buy a 5 year GIC and get around 10℅ guaranteed, and easily build wealth. I have no idea how millennials will build wealth.As legendary bond king Bill Gross said "Artificially depressed interest rates destroy the economic model of every pension plan, insurance plan, and bank.

    The end result... Alta govt news release November 2019.
    "Due to the low interest rates of the past 5 years, the Alberta gov' t defined benefit pension plans are underfunded by $5 Billion . The Alberta govt will need to borrow money to compensate for the shortfall."

    Anyway, I need to go to work,with today's low rates I will need at least $2.5 million to retire comfortably.
    I must be a bit older. I got CSBs at 17.5% or so.

    The thing about pension shortfalls is that a portion of a portfolio allocation would be into bonds, strips and resids. Now, as interest rates drop, bonds go up in value, some fixed instruments go up quite dramatically in value. So in the past few years we've had nirvana for bond holders. In their wildest dreams they wouldn't have dreamt of the returns they've been able to attain. Then you've had full-recovery-plus in equities. By many measures equities are at values of the late 1920s or 1990s. Some experts say equities are in bubble territory by most reliable measures. So, essentially you've had excess return in fixed income allocations and great equity returns. Yet, markets and ZIRP, etc. are somehow to blame for significant unfunded liabilities?

  45. #45

    Default

    CSB at 17-18 %, amazing returns and guaranteed.!
    Yes, bonds have been an amazing asset class over the past 35 years, now,the central planners are trying to steepen the yield curve. The yields are spiking up a bit in the US, Libor is rising.
    Thr best macro guy on twitter(not everyone on social media is an *****) in Northman trader "northy". He just wrote 2 great macro economic pieces over the weekend that are must reads for any serious investor. Northy lays out the serious headwinds the global economy is facing. Part 3 is out Monday.
    During the 2008-early 2009 crash, the stock market reached fair long term value, it did not get cheap, like in 1980, when most stocks on the NYSE were trading at less that book value and 7 times earnings.


    Read northman trader on Twitter, he does an amazing job and his arguments are backed up with data.
    Last edited by harrington65; 11-09-2016 at 02:49 PM.

  46. #46

    Default

    Quote Originally Posted by harrington65 View Post
    CSB at 17-18 %, amazing returns and guaranteed.!
    Yes, bonds have been an amazing asset class over the past 35 years, now,the central planners are trying to steepen the yield curve. The yields are spiking up a bit in the US, Libor is rising.
    Thr best macro guy on twitter(not everyone on social media is an *****) in Northman trader "northy". He just wrote 2 great macro economic pieces over the weekend that are must reads for any serious investor. Northy lays out the serious headwinds the global economy is facing. Part 3 is out Monday.
    During the 2008-early 2009 crash, the stock market reached fair long term value, it did not get cheap, like in 1980, when most stocks on the NYSE were trading at less that book value and 7 times earnings.


    Read northman trader on Twitter, he does an amazing job and his arguments are backed up with data.
    For data and macro views here's Hussman's commentary.
    Failed Transmission - Evidence on the Futility of Activist Fed Policy
    http://www.hussman.net/wmc/wmc160905.htm

    His archive is here. Read some before and after major market issues to test data analyses foresight.
    http://www.hussman.net/weeklyMarketComment.html

  47. #47

    Default

    Hussman agrees with Robert Schiller, nominal returns for the next decade will be a less than 2%. Then we have inflation and taxes. In my pension, I am allowed 2 free adjustments/ year. In mid July, I went from a 60/40 stocks bonds mix, to 70% cash, and 30 % equities.
    Buying bonds now is like buying gold at $1900 /oz 5 years ago.

    http://www.zerohedge.com/news/2016-0...ed-their-drugs

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