Tag Archives: Great Recession

An Atlantic Canadian field guide to surviving recessions

The one thing Atlantic Canadians manage better than almost anything else is recession.

When the economic wind blows cold, we throw another log into the wood stove and cinch our collars.

When our spending money runs short, we whip out a tin of beans and tighten our belts.

When others across the country tremble at the mere thought of stock markets circling the drain, we cast a rueful eye to the storm clouds gathering on the near horizon and mutter, “Yeah, what else you got?”

Of course, we’ve had plenty of practice. Recessions – or weathering them – are kind of our thing. After all, two consecutive quarters of what experts call “negative growth” is, relatively speaking, a permanent way of life along the East Coast. It’s certainly no reason to panic.

But just tell that to the chattering class.

In times of yore, when the mighty wanted to know the shape of things to come, they would instruct an augur to read the entrails of a small animal. Today, they’re more likely to consult an economist.

Are we, in the western world, barrelling toward another recession?

Yup, says Martin Feldstein, a former chairman of the Council of Economic Advisers and a professor at Harvard University. “Ten years after the Great Recession’s onset, another long, deep downturn may soon roil the U.S. economy,” he wrote in a recent edition of the Wall Street Journal.

Maybe or maybe not, thinks The Toronto Star’s David Olive, who wrote this fall, “The Canadian financial system is among the world’s most stable. . .

But that is small comfort for Canadians. The global financial system is intimately interconnected. . .At all times, the world’s 300 or so biggest banks, including Canada’s Big Six, have enormous short-term loans outstanding to each other. Which means that the failure of just one giant financial institution could bring them all down.”

Anyone ready for a second helping of entrails?

Never mind. Here are some hard-won – if not exactly failsafe – tips for surviving the next recession in Atlantic Canada:

Avoid obvious and precarious flights of fancy. I once worked for a guy in the United States who truly believed that starting a magazine in the middle of a downturn was a grand idea. After all, there’d be no competition. Advertisers would surely flock to his venture, begging to spend their marketing budgets. The lesson learned? Don’t start a magazine in the middle of a downturn.

Still, don’t be afraid to embrace the big, wide world. If we have jobs, we should do everything we can to keep them. But if we don’t, because, well, we just don’t roll that way, we ought to double-down on our enterprising instincts. Is there a promising, new revenue stream just waiting for our particular talents and experiences? Are there two or three or even four? Indeed, when the world finally comes up for air again, our bank accounts will thank us.

Be pennywise, but not essentially miserly. It’s important to know the difference, which is sound advice even when good times roll. Ask ourselves whether the dollar we’re planning to spend will vanish like rain on a sun-caked riverbed, or germinate the seeds of new growth. We might take a course that will upgrade our suite of professional skills. But, unless the world’s supply of wicker suddenly dries up, we should ensure that course is not applied basket weaving.

Finally, float like a boat. If history teaches anything about Atlantic Canada it’s that periodic highs and lows in the regional economy are like Fundy tides: They come, they go, and there’s nothing we can do about them.

So, we throw another log on the fire. We crack open a tin of beans. We wait for the light.

Meanwhile, we manage.

We always do.

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Crowing all the way to the bank


For ripping off the global economy between 2008 and 2012 – contributing to the worst recession since the Dirty Thirties, throwing millions of people out of their work, their homes and demolishing their sense that, in the end, universally applicable golden rules of fair play and decency trump the periodic predations of barbarians digging beneath the gates of civilization – some of the world’s biggest banks have just received slaps on their wrists.

Naughty, naughty boys you are. Oh, please don’t make us admonish you again. It hurts us to cut your allowance. Now, go forth and play nice.

According to a recent New York Times article by Ben Protess and Michael Corkery, the U.S. Justice Department has reckoned that Citigroup Inc., JPMorgan Chase & Co., Barclays Bank PLC and Royal Bank of Scotland PLC conspired to commit “multiple crimes” in the five years following the Great Financial Collapse of 2007 by “manipulating foreign currencies and interest rates”. These once-venerable institutions employed pinheads who executed “a scheme that padded the banks’ profits and enriched the traders who carried out the plot.”

Apparently, “The traders were supposed to be competitors but. . .they colluded to manipulate the largest and yet least regulated market in the financial world, where $5 trillion changes hands ever day.”

These criminals may have pilfered as much as $1 trillion from global markets, and yet the highest law enforcement agency in the United States has seen fit to level fines against these carpetbaggers (all of whom have plead guilty) in the collectively paltry amount of $5.6 billion – a book entry, given the value of their ill-gotten gains. No one is actually accountable. No one goes to jail.

Still, as the Times story reveals, the dimension of hubris was breathtakingly brazen:

“To carry out the scheme, which went for five years through 2012, one trader would build a huge position in a currency and then unload it at a crucial moment, hoping to move prices. Traders at the other banks agreed to, as New York state’s financial regulator put it, ‘stay out of each other’s way.’

“The banks also misled their clients about the price of currencies, the federal and state authorities said, imposing ‘hard mark-ups,’ which one Barclays employee described as the ‘worst price I can put on this where the customer’s decision to trade with me or give me future business doesn’t change.’ Or, to put their mission in the starkest of terms, the employee said: ‘If you ain’t cheating, you ain’t trying.’”

How exquisite is this, how predictably reliable are our runaway capital marketeers?

In fact, this sort of aberrant, sociopathic behaviour along the virtual highways that connect Wall and Lombard Streets should now be boring. But the sheer scale of the larceny sheds a bright light on the fundamentals that underpin growing income and wealth disparity, not only in the West but everywhere in the world.

When a small cartel of “players” can and do game global markets for their own fun and immense profit without fear, what hope remains for the rest of us who, playing by the rules, assume that our small chest of treasures in capital markets will keep us safe, housed, clothed and fed?

And, here’s the final insult, courtesy of the Times report: “For the banks, life as a felon is likely to carry more symbolic shame than practical problems. . .The banks have obtained waivers from the Securities and Exchange Commission that will allow them to conduct business as usual.”

Laughing all the way to the bank, indeed.

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