{"id":9477,"date":"2020-07-06T19:00:57","date_gmt":"2020-07-06T23:00:57","guid":{"rendered":"http:\/\/www.irasmithinc.com\/blog\/?p=9477"},"modified":"2020-07-07T09:43:56","modified_gmt":"2020-07-07T13:43:56","slug":"canada-in-recession","status":"publish","type":"post","link":"https:\/\/irasmithinc.com\/blog\/canada-in-recession\/","title":{"rendered":"CANADA IN RECESSION: WILL THE ECONOMY FALL INTO A GREAT DEPRESSION?"},"content":{"rendered":"
\"canada<\/a>
canada in recession<\/figcaption><\/figure>\n

The<\/b> Ira Smith Trustee Team<\/i><\/b><\/a> is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.<\/b><\/h2>\n

If you would prefer to listen to the audio version of this Canada in recession<\/em> Brandon\u2019s Blog, please scroll down to the bottom and click on the podcast.<\/b><\/h2>\n

Canada in recession<\/i><\/b> introduction<\/b><\/h2>\n

It’s official.\u00a0 <\/span>C.D. Howe Institute<\/span><\/i><\/a> has declared that <\/span>Canada in recession <\/i><\/b>because COVID-19<\/em> is now a reality.\u00a0 Canada’s economy is in a recession.\u00a0 <\/span>Nouriel Roubini<\/span><\/a><\/em> is a world-known economist and a professor of economics at New York University\u2019s Stern School of Business.\u00a0 He accurately forecasted the credit crisis of 2007-2008. \u00a0 He has some stark current thoughts on just how bad the Canadian economy can go.\u00a0 He has written and talked at length lately about the components that could take <\/span>Canada in recession<\/span><\/i><\/a> to a depression.<\/span><\/p>\n

Canada in recession – When will there be a recovery?<\/b><\/h2>\n

Dr. Roubini sees three possible scenarios for how things are going to develop in the global <\/span>economy.\u00a0 He says:<\/span><\/p>\n

    \n
  1. His baseline assumption for North America this year is one of a U-shape <\/span>recovery<\/span><\/a>.<\/span><\/li>\n
  2. The equity markets in the US are pricing in a V-shaped recovery with very strong growth in the second half of the year into next year.<\/span><\/li>\n
  3. There is a risk of a greater depression for the rest of the decade but not for this year.<\/span><\/li>\n<\/ol>\n

    He believes there are forces that are going to lead <\/span>Canada<\/span><\/a><\/em> into a depression. His view is that there is going to be a U-shape recovery because this is a global shock.\u00a0 Both households and corporations will have to spend less and save more.\u00a0 Precautionary savings are going to go higher.\u00a0 Income is going to be lower.\u00a0 This will translate into less business <\/span>capital spending<\/span><\/a><\/em>.\u00a0 He says there will be a global investment slump because of a global savings glut.\u00a0<\/span><\/p>\n

    That is a recipe for a very anemic recovery.\u00a0<\/span><\/p>\n

    Could external forces push the US and <\/b>Canada in recession<\/i><\/b> into a depression?<\/b><\/h2>\n

    The question is how long and how deeply related to this crisis the recession will be?\u00a0 Although in the short term there is <\/span>Canada in recession<\/span><\/i><\/a>, later in the decade is when there will be a price to be paid.\u00a0 That potential for depression and deep slump happens later in the decade as a result of fear and panic leading people and companies to save more and spend less.\u00a0\u00a0<\/span><\/p>\n

    So, what can governments do to stave off a worse depression?\u00a0 Dr. Roubini is very pessimistic and believes a greater depression will happen sometime later in the decade.\u00a0 He believes it is only a matter of when and not whether it will happen.<\/span><\/p>\n

    He describes the North American economy as a train wreck in slow-motion.\u00a0 It won\u2019t happen this year but there are fundamental forces like debt and deficits leading people and businesses to <\/span>insolvency<\/span><\/i><\/a>.\u00a0 There will be an inability to fund liabilities coming from demographics that become worse. \u00a0 There will be deflation that is going to make more people insolvent.\u00a0 The need for quantitative easing will debase currencies.\u00a0 The need will be because of the large fiscal deficits that eventually are going to lead to inflation by the middle of the decade.\u00a0\u00a0<\/span><\/p>\n

    There is also digital disruption because manufacturers will have to substitute labour with the capital in equipment and technology because businesses will have to cut costs to save more and spend less.\u00a0 That implies more automation and more robotics; especially if we are going to try to lessen our dependence on China for goods.<\/span><\/p>\n

    We are in the process of a democracy backlash.\u00a0 People who are scared are becoming more populist and will try to elect authoritarian populist governments to come to power all over the world.\u00a0 Relations with China will probably become colder because of the coronavirus related anger towards China.\u00a0 It is going to get very ugly.\u00a0\u00a0<\/span><\/p>\n

    There will be digital rivalries including cyber warfare.\u00a0 It will get worse over the next few years.\u00a0 This is the way warfare is going to be.\u00a0 It will not be the conventional words the enemies of the Western Hemisphere be it China, Russia, Iran or North Korea.\u00a0 They cannot fight the USA using conventional weapons.\u00a0\u00a0<\/span><\/p>\n

    Events in the 2016 US election and the <\/span>COVID-19 pandemic<\/span><\/i><\/a> in 2020 shows our enemies that they can use cyber and biological war to successfully weaken the North American economy and create societal problems.\u00a0 They will continue to interfere with the US democratic process and use man-made disasters.\u00a0 Pandemics and global climate change are two things they can weaponize to try to destabilize our way of life.<\/span><\/p>\n

    This has the potential to make us wind up into a great depression. Government fiscal policy cannot do much about it. That is not the tool we need to fight these new threats.\u00a0\u00a0<\/span><\/p>\n

    What about internal forces pushing the US and <\/b>Canada in recession<\/i><\/b> into a depression?<\/b><\/h2>\n

    One huge issue is the <\/span>debt level<\/span><\/i><\/a>; both personal debt<\/em><\/a> and sovereign.\u00a0 We are in way over our heads.\u00a0 We were before this crisis.\u00a0 In terms of how we get out of it is there a natural path that would resolve it?\u00a0 It doesn’t seem clear right now because governments are having to spend trillions of dollars to keep their economies afloat during the <\/span>coronavirus pandemic<\/span><\/i><\/a>. What has kept things in check prior to the pandemic is that interest rates were close to zero, <\/span>if not negative, like in Europe and Japan.\u00a0 The current economic environment is going to make it impossible for governments to change the historically low-interest rates<\/em><\/a> for the foreseeable future.<\/span><\/p>\n

    I have written many times before discussing different issues relating to record high Canadian household debt<\/em><\/a> levels.\u00a0 The <\/span>debt levels<\/span><\/i><\/a> are the single most internal reason why Canada in recession could become Canada in depression.<\/span><\/p>\n

    Canada in recession<\/i><\/b> summary<\/b><\/h2>\n

    I don\u2019t mean to be pessimistic when talking about Canada in recession.\u00a0 However, today, I just don\u2019t see any silver lining.\u00a0 I am sure there is one, I just can\u2019t see it right now.<\/span><\/p>\n

    I hope you have found <\/span>Canada in recession<\/span><\/i> Brandon\u2019s Blog interesting and helpful.\u00a0 The<\/span> Ira Smith Team<\/span><\/i><\/a> family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.<\/span><\/p>\n

    We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.<\/span><\/p>\n

    Ira Smith Trustee & Receiver Inc.<\/span><\/i><\/a> has constantly used clean, safe and secure ways in our professional firm and we continue to do so.<\/span><\/p>\n

    Income, revenue and cash flow shortages are critical issues facing entrepreneurs, their companies and individual Canadians. This is especially true these days.<\/span><\/p>\n

    If anyone needs our <\/span>assistance for debt relief Canada COVID-19<\/span><\/i><\/a>, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and\/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.<\/span><\/p>\n

    The<\/b> Ira Smith Trustee Team<\/i><\/b><\/a> is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.<\/b><\/p>\n

    [monkeytools msnip=”https:\/\/monkeyplayr.com\/playr.php?u=5173&p=22316″]<\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. If you would prefer to listen to the audio version of this Canada in recession Brandon\u2019s Blog, please scroll down to the bottom and click on the podcast. Canada in […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[4320,586,4319,4322,4121,4324,4106,4264,2,4323,411,370,94,208,863,4321,771],"class_list":["post-9477","post","type-post","status-publish","format-standard","hentry","category-brandon-blog-post","tag-c-d-howe","tag-canada","tag-canada-in-recession","tag-capital-spending","tag-coronavirus","tag-coronavirus-pandemic","tag-covid-19","tag-covid-19-pandemic","tag-debt","tag-debt-level","tag-debt-levels","tag-household-debt","tag-insolvency","tag-interest-rates","tag-ira-smith-trustee","tag-nouriel-roubini","tag-personal-debt"],"_links":{"self":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/9477","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/comments?post=9477"}],"version-history":[{"count":6,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/9477\/revisions"}],"predecessor-version":[{"id":9494,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/9477\/revisions\/9494"}],"wp:attachment":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/media?parent=9477"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/categories?post=9477"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/tags?post=9477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}