Is it a recession yet? Is there a chance that the recession could disintegrate into a depression?
Neither question is easy to answer. The definition of a recession varies from economist to economist, while the definition of a depression — well, I guess we’ll all know it if we see it.
Whatever you believe, we’re living in extraordinary times.
Giant investment houses in the U.S. are now being propped up by taxpayers through the federal reserve bank. The price of gold broke $1,000 an ounce for the first time, while the price of oil seems to reach new heights every week. The U.S. dollar, once the foundation for the world’s economy, is being supplanted by the more stable Euro and declining in value against almost every major currency.
There are stories of families buying K Rations and farms to grow their own food, and even burning down their overvalued homes to collect on the insurance. It seems that people are hunting animals in the parks outside of San Francisco, heralding a return to the depression era when the U.S. was almost emptied of deer and other game by its hungry, cash-poor citizens.
Meanwhile the cost of food has doubled in some poor countries as a result of rising commodity and gas prices, drought, and agricultural subsidies to companies making car and jet fuel out of corn and other staples.
So far Canada has been isolated from a weakening U.S. economy. I’m encouraged that our bankers didn’t sink all of our savings into buying repackaged subprime mortgages. Our homegrown experts are still predicting continued strong employment and maybe even some growth as global demand for our resources makes up for shrinking U.S. demand.
But as a resort that does rely to some degree on U.S. and international visitors, it’s plain that Whistler is vulnerable. That makes us, the employees of Whistler, vulnerable as well.
If things do go sour for our town in an economic collapse, even for a little while, here’s a list of things we can do to keep our heads afloat.
1. Get out of debt now — I know, it’s easier said than done, but nobody should be keeping a monthly balance on a credit card at 19.5 per cent, or making car payments on a vehicle that they can live without. Do whatever it takes to put yourself in the black — work a second job, brown bag your lunches, fix up the old bike instead of buying a new one, cut the things you can live without, and save some money. We may all need to live off our savings for a while.
2. Have a Plan B. Right now about one in 20 people in Canada is unemployed, but during the Great Depression it was five in 20. That’s bad, but it also means that three out of four people still worked, paid mortgages, and managed to feed themselves through the worst economic crisis in a century. Plan B might mean finding a labour job somewhere remote, leaving Canada to work, moving back in with your parents, or just making a budget you can stick to if your earnings are scaled back.
3. Spread the wealth. Thousands of banks collapsed in the last depression, prompting the U.S. Federal Reserve to push the concept of super banks that are supposed to be too big to fail. It seems to have worked because none of the big banks have buckled under the strain just yet. However, it might be safe to diversify your savings between a few banks, and purchase a few low yield but sure things like bonds and GICs that are guaranteed by government. Or, if you’re really worried, you can always stuff your cash in a mattress.
4. Redefine your life. Figure out how your every dollar is spent, and separate necessities from luxuries. Make a prioritized list of things you can cut back on if you absolutely need to find more money in your budget. My “easy” list includes cable, an optional additional life insurance plan, a monthly investment, my wife’s monthly RRSP contributions, my RRSP contribution, and additional mortgage payments. My “hard” list includes our long distance plan, Internet, vacation plans, letting the car sit for the summer without insurance, and getting a second job. The goal is to find a bare bones lifestyle you can live with, and that doesn’t cost a lot of money to maintain.
5. Unleash your inner pioneer. In a worst of the worst case scenario you’ll need to have skills to get by. Can you skin a deer? Catch a rabbit? Gut a fish? Tell a poisonous mushroom from an edible one? Do you know how to dehydrate foods? Make preserves? Grow a bean plant? Cut down a tree so it doesn’t land on top of you? Believe it or not, these types of survival skills came in handy during the last depression.
I really hope Canada won’t suffer much more than a minor recession, but sensible people hope for the best while preparing for the worst.
Anybody know how to gut a fish?