After years of listening to financial reports, market projections, and economic forecasts Ive reached the conclusion that the global economy is based more on psychology and emotions than figures and statistics. When people collectively feel the economy is good, they buy and the economy is good. When people have their doubts, they horde, and the economy shrivels up. When people are convinced that theyre going to lose everything in a 1930s style depression, they sell and sell until the financial world crumbles and they do, in fact, have nothing left.
Now that some American economic analysts are predicting a slowdown or even a recession in the near future, you know that its going to happen because economic predictions are, at the root, a self-fulfilling prophecy.
Companies will use the levelling of the economy and the threat of a recession as an excuse trim thousands of jobs in preparation for the "lean" years ahead. Consumers, afraid for their jobs, will become incredibly stingy and will inevitably prove those companies right.
When finance Minister Paul Martin recently told Canadian businesses that a slowdown in the U.S. will only make Canadas more diversified economy attractive to foreign investors, thats called damage control. If American companies and consumers panic, youd better believe that the Canadian economy is going to feel the effects just as badly, if not worse than our cousins to the South.
Whistler, which exists primarily for tourism, is particularly vulnerable to the effects of a recession if things start to get tight for American and Canadian families, the first expense to go will be the ski vacation.
All because of speculation and the inner workings of a faulty economic system that is built solely on growth (new houses, new cars, new clothes). Like the shark that dies when it stops moving forward, the economy tends to crumble when the growth slows or tapers off. And the only reason it slows in the first place is because of our justified lack of confidence in the economy and the systems that prop it up. There is no middle ground in our cyclical "boom" and "bust" economy.
Skeptical? Then consider this: in the same speech where he forecast that Canada would prosper in an economic slowdown, Martin said that the only reason the value of our dollar is so low is because of the global misconception that our economy is primarily resource-driven when in fact it is far more diversified.
Its tough to know where to place the blame. On the financial analysts who sensationalize financial reports? On the financial system that makes such sensationalism possible? On the company who thinks that a shake up every now and then is a good thing? Or on consumers, the pawns who make the financial analysts sensational predictions come true?