I am slowly adjusting back to Canadian life after spending the better part of January in Bangladesh. I arrived last Wednesday to a snow storm in Toronto. Stumbling out of the airport after a 13.5 hour flight from Dubai, it’s a wonder I could drive. I suppose driving through a snow storm is the quintessential Canadian experience, perfect for my adjustment back into Canada.
You can read about it by clicking on http://philipshaw.ca/category/phils-news/. In the upcoming weeks, Dr. Haque and I will surely be chiming back in with East West.
With jet lag leaning on me constantly I heard over and over again about the Canadian economy. Last week I was just musing regarding the “about to be announced” budget. Now its here with its $60 billion plus stimulus over a 2 year period. The Iggy Liberals have decided to support it. So Stephen Harper lives another day.
We will see if it works. That is essentially the point. Case in point is something that came up after I got back. It came to my attention that the Wallaceburg hospital emergency room was once again at risk of closing. I had heard rumblings of that earlier, however, my editor and friend John Gardiner filled me in on the details. A few days later I received email from many people about the probable closing of this emergency room.
I will leave the nuts and bolts of that to others who are much more attune to the subject than me. However, what I think is important to realize is the emergency room closure is a symbol of what is very wrong in our greater socio-economic Canadian world. In a rich country like Canada, we shouldn’t have those debates. I always thought progress was building more hospitals, not closing them down.
To be fair the hospital emergency room referred to above is in a part of Ontario which is losing population. So if you are reading this in Calgary, Edmonton, Dhaka or Dubai, keep in mind it’s a question of scale and managing resources. However, within that $60 billion of economic Canadian stimulus last week, you would think somebody would find some money to keep an emergency room open. Sometimes common economic sense just screams at you. I thought the emergency room example was one of those.
Still, its easy to pretend, our economic malaise isn’t quite as bad as the numbers say. Take our American friends for example. US economic numbers are much worse than Canada’s. US consumer spending has fallen for the sixth consecutive month while saving rates are the highest since last May. Overall economic growth fell 3.8% in the final quarter of 2008, the biggest decline since 1982.
In Canada the Bank of Canada lending rate sits at 1%. 1%! For many of us who cut our teeth on interest rates of over 20% in the early 1980’s, that’s like zero. However, it is a reflection of just how much stimulus is needed. Borrowing money is cheap, if only it was easy. There have been job losses over the last three months of approximately 140,000 people.
So it’s rough out there. That Bank of Canada rate has not been that low since 1958 and even that was an aberration. Simply put, these interest rates are the lowest since the bank was formed in 1935. What I do think is interesting is the Bank of Canada is offering hope. The following is how Senior BMO Capital Markets economist Michael Gregory puts it.
The Bank is projecting a robust recovery from recession to begin in Q3—stronger than the rebounds after the much-worse recessions in 1981-82 and 1990-92—pointing to the potential for policy rate re-normalization to commence well before year end. There are two key tenets to the Bank’s projection: (1) global economic and credit conditions improve as the year unfolds; (2) a sturdy banking system and solid household and corporate balance sheets allow the Canadian economy to quickly leverage this global normalization and take full advantage of “the stimulus coming from monetary and fiscal policies”. (Michael Gregory BMO Capital Markets)
That description regarding the Bank of Canada’s projections is almost “over the top” optimistic based on what we know now. As of February 2009 I cannot see this. However, Mark Carney and the men and women at the Bank of Canada should know better. They are paid much more than me.
Within this economic cauldron somebody wants to close a small town Ontario hospital emergency room. It sounds like a simple turf war to me. As one friend mused this past week, don’t we elect councilors, MP’s and MPP’s to defend these interests? I think so. While discussing the great economic issues of the day in Ottawa and Toronto, surely an emergency room can be saved. Somewhere in that $60 billion Canadian stimulus, there must be a solution, maybe one emergency room at a time.