The Bank of Canada cut its key interest rate to the lowest point in history on Tuesday. Why?
“The outlook for the global economy has deteriorated since the bank’s December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity,” the bank said in its gloomiest statement yet.
As a result, the dollar plunged to the 78-cent level. It’s now expected inflation will soon be less than zero – which, of course, isn’t inflation any more. It’s deflation. Geez, was it only six months ago economists were saying that was impossible?
On Tuesday Bell said it would dump 1,500 workers, Bank of America sliced 4,000 and stock market traders drove markets hundreds of points lower as they watched the spectacle in Washington and worried about the global banking system.
On Monday came word real estate sales in Toronto have crashed by 50% this month. Last week Nortel went chips up. On the weekend the US bailed out its big banks once again. On Monday Britain did the same – after the mighty Royal Bank of Scotland announced a stunning $41-billion loss. Only a matter of time now before the UK nationalizes its banks. Then Washington.
Last week the Vancouver Sun stated that “B.C. to lose more than 42,000 jobs in ’09” and the Province wrote “Office vacancies on the rise. There will be a crisis of confidence in the big markets”
However, Royal LePage did predict that housing values will fall 3% this year but price and activity gains are anticipated in some provinces. Hopefully they are right, all the job losses, business failures and economic uncertainty will definitely affect the the market, but 3% is much easier to take than other predictions I have seen out there.
Kamloops is not immune to layoffs, as Highland Valley Copper recently announced it would lay off 70 regular employee positions and 14 full time contract positions. Highland Valley currently employs over 1,000 people. Recently Teck Cominco announced it will lay off 1,400 workers globally. The Vancouver-based miner said the move is part of a broader strategy to cut costs, and is expected to save the company about $85-million.
If these were normal times, any one of these events would freak people out. But, this is a developing crisis, so our media puts a positive spin on it or ignores it outright, as do many citizens. I meet property owners who need to sell their homes believing this is a minor blip in the real estate and global markets. Sometimes we need to look at the larger picture because ignorance is not bliss.
The media is overwhelmed with this Obama euphoria. I am not trying to take anything away from this historic event, but to believe one man will be able to reverse the damage done to the world economy over the past decade would be presumptuous.
I hate to be the bearer of bad news, but I like to live in reality and prepare for what is coming instead of being surprised once it arrives. I hope I am wrong, but too many facts lead me to believe otherwise.