Saturday, November 22, 2008

Recession Hits Alberta

I love it when folks who are in charge of the eonomy claim that they didn't see the recession coming, or they didn't expect it or they are shocked by it.

There is little doubt this week's developments signalled a change in the economic conditions affecting the province -- and in the messages coming from the Stelmach government, said political scientist Peter McCormick of the University of Lethbridge.
"I do think Alberta thought it was flying pretty high -- 'Recessions might hit lesser economies but they can't hurt us because we're oil, and oil never hurts,' " he said Friday."This is completely new territory for the government."

Oh please Peter gimme a break. There was the recession and oil crash of the seventies when the Tired Old Tories first took power. Then there was the oil boom and crash of the late seventies and early eighties which occured while the rest of Canada went into recession, by 1982 the oil market collapsed and Alberta followed the rest of the country into a downward spiral. Then there was the recession and debt/deficit crisis of the ninties. And through out it all the Tired Old Tories were in charge. So this ain't new territory.

Indeed the rose coloured blinders of the oil boom that the Tired Old Tories wear are the same ones they wore in the seventies and eighties. And now the recession has hit Alberta, we still have a budget surplus, just as we did in the ninties. But like the ninties, watch for the Tired Old Tories to start belt tightening and attacking the public sector while giving royalty holidays to their pals in Big Oil.

Indeed, the economic woes have hit on a number of fronts: the stock market slide has hammered Calgary-based petroleum producers; Alberta's housing market is slowing; retail sales are down; a handful of jobs have been cut.
While Ontario's manufacturing sector has been feeling the pain for months, the downturn in commodity markets -- particularly for crude oil -- is squeezing Alberta.
"We have been living in a bit of a dream world for the last little while. Things have not been well in other parts of the country," noted University of Calgary economist Ken McKenzie. "Until recently, we've been relatively removed from that because of high oil prices."

Much of the concern stems from just how quickly economic conditions, including commodity markets, have changed.
Resource revenue is still on pace this year for a record $14.6 billion, but it's about $4.3 billion less than what was predicted only three months ago.

Banks predict the Alberta economy will grow 1.9 per cent this year, gearing down to 0.3 per cent in 2009 -- the slowest since 1986.
"A $2-billion surplus is not a catastrophe compared to other provinces," Bernard said Friday. "There are a lot of positives, I think, for the Alberta economy, but for sure the drop in commodity prices is going to hurt."
McCormick agrees the province is faring better than other parts of the country where deficits are now being calculated. However, the government is trying to manage expectations by talking about tough times ahead.
"It's directed at universities, hospitals, school boards and government employees who are thinking about salary negotiations coming up -- that's who they are talking to," he said. "They are trying to get rid of boom-talk and boom-mentality now."

Alberta veers on royalties
Financial crisis forces energy-rich province to back down on its demands for a "fair share" from the development of its resources; New transitional rate for oil and gas wells will cost government $1.8-billion over the next five years.

It's the second time this year Alberta backtracks on the new policy, launched when energy prices were thought to rise forever. Last April, it backed off royalty increases affecting gas wells deeper than 2,500 metres and oil wells deeper than 2,000 metres.
The changes won't be the last.

Black Gold
Steady Eddie Runs Away
Lougheed Spanks Klein
Don Getty's Legacy
You Won't Have Me To Kick Around
Lack of Planning Created Skills Shortage in Alberta
Laundry Workers Fight Privatization

Find blog posts, photos, events and more off-site about:, , , , , , , , , , ,, , ,,,


Larry Gambone said...

I know exactly what you mean. If it weren't for all the lives ruined I would be laughing myself sick. I am just a worker but I knew the crisis was coming. Been expecting it for the last 3 or 4 years, figuring as soon as the real estate bubble burst it would all come down. About this April figured this was it, pulled out my mutual funds, saving them, soon after. Am I a genius that I know what all these pundits didn't? No, not by a long shot. All you got to know is a few basic facts about capitalism, which you can get by reading marxist and anarchist economic writings and keeping an eye on the global economy. Quite simple really. Too difficult for our "experts." But then they aren't really experts in political economy but paid shills to tout the system.

eugene plawiuk said...

I have been prediciting the crash on this blog for a couple of years now as I traked the housing boom. Our fundamentalists on the right, the business talking heads and the politicians like Harper and Bush, were as you say shills for capitalism and continue to be, calling for more free trade as the system melts down.