The Economy: we have nothing to fear except fear itself

What to make of all the headlines:  debt crisis in Europe, US credit rating downgrade, stock markets plunging.  Here’s the thing about “markets”:  as well as being indicators of the state of the economy, they are increasingly collective expressions of emotion.  The herd mentality rules.  So when scary things happen, people run for the exits.

This is understandable and make no mistake, it’s not a good thing when this happens.  But the fears that can drive big market movements are often based on the prevailing sentiment of the day, and not so much the underlying fundamentals.  The biggest worry is the fear itself, because it becomes self-fulfilling.

There is clearly a big problem in Europe with governments living beyond their means.  And if we’ve ever wanted an indication of how damaging partisan politics is, just look at what has happened to the US government’s credit rating.  But it’s important to understand that even as markets fall, there have been few basic changes in the actual economic situation – what has changed is how the markets feel about the situation.

Here in Canada we can take some solace that we are in much better shape than most.  But we will not be insulated from what’s going on – turmoil in financial markets causes a crisis in confidence, which makes business slow down or stop their expansion plans, and that can hurt the pace of hiring.  And when the US economy suffers, Canadian businesses suffer too.  But despite all this, my sense is this is a storm that we will ride out, being more on the edges of it than in the midst of it.

About jefflehman
Jeff Lehman is the 46th Mayor of the City of Barrie. The Ward 2 Councillor for the City of Barrie from 2006 to 2010, he was the Chairman of the Finance Committee of Council, chaired the City’s Growth Management Working Group, and created the Historic Neighbourhoods project, a new initiative to protect and revitalize Barrie’s oldest neighbourhoods. Jeff has lived in Barrie for most of his life, having grown up in Allandale and attended Barrie Central Collegiate. Jeff holds a B.A. from Queen’s University, and a Master’s Degree with first class honours from the UK’s prestigious London School of Economics. He was hired to teach at the LSE following his graduation, and lived and worked in London for two years as an academic. Since that time, as an economist, he has worked with cities across Canada to manage redevelopment and invest in their urban infrastructure. In 2005, he established the Growing By Degrees Task Force to assist in expanding university education opportunities in Barrie, and has volunteered his time with many organizations in the City. Jeff lives near Downtown Barrie with his wife, Jennifer, a part-time professor of political science, and their young daughter Cassie, who is already smarter than her father.

Comments

One Response to “The Economy: we have nothing to fear except fear itself”
  1. Tim Elson says:

    Dear Jeff,

    I beg to differ with you about the global financial crisis. It is not and will not be over any time soon. We have on this continent leadership that is determined to offshore our industry. In the United States a business is taxed at 35%. If that business locates say in China, they pay next to nothing in taxes, have dirt cheap labor, and have no environmental restrictions.

    Add to that, there are no tariffs to protect our industry here from that same company exporting it’s products to us cheaply, undercutting whatever is left of our industry. This is deliberate US policy and has resulted in the decimation of the automotive industry in their country and ours. That is only one example. Financial services and computer technology are also doing this. It goes on and on. It is the deliberate attempt to ruin our economies and I have to say it’s working very well.

    Service jobs simply do not pay enough money to afford a home, much less a decent living standard. That’s about all we have left here in Canada. How can you say, things are getting better?. I operate a small business. I see ordinary people every day. Their pensions are reduced or wiped out due to their pension companies stock market investing. Now they have to compete with everyone else for a job at Walmart.

    No sir, things aren’t getting better. They are about to get much worse. Someone told me that you consider yourself an economist. If this is true, you had better for your own sake and ours, re-consider your sources of information. http://theinternationalforecaster.com is a good place to start. Bob Chapman has been a broker on Wall St. for 25 years and owned his own brokerage firm. He is now retired, but writes the news magazine called the International Forecaster.

    His predictions are about 95% accurate. He does not support Keynesian economics which is in the process of unraveling now. I have personally doubled in the past three years, my investments on his advice in this market which is due to go severely south again shortly.

    The market is totally rigged and if you are in it, you are going to lose everything. You won’t hear this on MSNBC or CTV news, because their owners are part of the cartel that owns Wall St.

    If you listen to Mr. Chapman, you can prepare Barrie for what is coming. We can begin to make cuts in spending now, just as Toronto is doing. In the US, there are cities that have laid off entire police and fire departments. It’s coming to Canada too. Globalism has a downside.

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