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  • 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, 07:59 PM.

  • #2
    One of things we need to do in the next recession is repair infrastructure. We certainly can't afford it during a boom.

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    • #3
      ^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.

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      • #4
        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.

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        • #5
          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.
          Let's make Edmonton better.

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          • #6
            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.

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            • #7
              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, 09:28 PM.

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              • #8
                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?

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                • #9
                  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.

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                  • #10
                    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
                    Still waiting for the Arlington site to be reborn .......

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                    • #11
                      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.

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                      • #12
                        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.

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                        • #13
                          ^ 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...

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                          • #14
                            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, 08:03 PM.

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                            • #15
                              Does anyone here now feel that we ready for the recession?

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