South Cowichan Life Magazine

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Planning Tomorrows:
Kicking the Can down the Road
By Pete Keber, FMA
The recession succeeding the Dot-Com bust seemed to
surrender very quickly to interest rate cuts and tax cuts.
After a longer lag time we appear to be getting similar
results from the great recession caused by the subprime
and real estate fiasco. At least that is what the media
pundits might have you believing.
Ever since Alan Greenspan began a regime of cutting
interest rates every time there was a financial slowdown, we have
been seeing a series of booms and busts that become increasingly
larger, fuelled by monetary heroin. The trouble is, we have never
dealt with the structure of our whole financial system, with the way
that corporations are allowed to run roughshod over the system. If
we don’t have a good framework in place, how can we ever expect
to resolve the issues that cause widespread instability and suffering
throughout society. If we keep on delaying the day of reckoning
by smoking another crackpipe, our addiction will become what
we are, and the withdrawal will be so painful, that we may not be
able to recover.
For those that were not threatened with job losses during the
last crisis, and whose businesses survived unscathed, it probably
did not seem like any great calamity occurred. They may have read
about a world that was on the brink of crashing, but they certainly
didn’t feel it in their pocketbooks, or their daily lives, so they can
be forgiven for thinking that it wasn’t all that bad. Canadians were
particularly blessed, as we did not see our financial institutions teeter,
or our real estate market collapse. Everything happened elsewhere,
so we were almost immune. We have reasonably strong safeguards
in place, so we shouldn’t be too worried about the next bust.
Or should we?
Everyone knows that we depend heavily on US markets for our
exports and the US is our largest trading partner. The developing
world managed to take up some of the slack the last round, but the
US is still numero uno and the rest of the world depends on their
shameless consumer society to fuel their continued prosperity. Despite
all the happy talk about economic recovery accelerating south of us,
the reality may be somewhat different than the perception.
The middle class is eroding around the edges as imbalances
climb. In the US in the 1970s the top 1% earned about 9% of total
income. In recent years that top 1% now earns 20% and yet the
Republicans made sure that they retained their tax cuts. They tell
us that those cuts will help stimulate the economy, though that has
not been the case over the last decade. During the fifties and early
sixties, when the imbalances were smaller, the rich paid much higher
taxes and the GDP was much higher.
Real unemployment hovers around the 20% mark in the
US which is much higher than the reported rate of 9%, but they
continually remove more discouraged workers from the employment
rolls. Housing is still at historic lows and likely to plunge lower. The
inflation rate appears low if you take out food and energy, so the
Fed feels comfortable about printing more money. Federal and State
budgets are looking for places to cut spending, and it seems that
their employees are their primary targets.
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Garden Projects & Maintenance
Sylvia Carruthers
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250-710-2689
2810 Gregory Road
Shawnigan Lak e, BC V0R 2 W1
Cedarcoastg ardenscap es@shaw.ca
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cowichan valley 250-732-PAWS (7297)
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South Cowichan life Page 27