Psychologically it is no different than when a wealthy business man looses their job, their house, and will continue to dress in suits even though they live in a car. This is becoming commonplace amongst the U.S. population whose jobless outlook is bleaker by the day. It is indeed a psychological issue, and is quite prominent amongst our population too.
|No one believed the titanic could sink either...|
Of course, having provincial and federal governments that also are in denial are not helping matters. Alberta has announced that it's deficit is in better shape than first thought. Of course these numbers are all based on events before the U.S. downgrade during a period where oil was sky-rocketing. As I have reiterated over and over and over again; the oilsands can *ONLY* bring in a profit during large upward moves and it is unlikely with world-wide economic growth outlooks that we will see $120 oil again this year, and it will be rare that we see $100. I predict the price will remain between $80-$100 for the rest of the year. This of course means all of the profit predictions being made by the Alberta government are based on the Q1 run up in oil prices. again as I've explained many times though, input costs take longer to catch up to the price of oil than profits do and once the bar is set for $80-$100 input costs all of those market riding profits are going to dry up. We've already seen this happen once before, remember when $70 was "high and profitable"? Now the government dreads a $70 oil price. It's also a one way road, meaning that input costs don't come down. What happens instead? the projects shut down. The Alberta and Federal governments have been playing Russian roulette with the Albertan (and Canadian) economies with the full support of an uninformed population in economic denial. They are uninformed because an informed populace would have seen the direct connection between Alberta's "growth" in the last few years and the U.S. QE programs. An informed populace would have noticed how in 2008 we lost hundreds of thousands of jobs the moment injections of cash from the U.S. stopped flowing into American businesses in Canada.
As I often say to my friends "if Canada was any other country [without our vast natural resources], we'd be so broke we wouldn't know what to do with ourselves". We may quite possibly be the worst money managers in the first world. We simply don't realize it because theres always more "oil in the ground" or "fish in the sea" to replace the funds we squander and not to mention our number 1 trading partner can (for the moment) print all the money they need to pay us. If Canada properly managed it's resources, we'd all be living like kings. Instead we've opted to "sell the pond, instead of the fish" and at bargain basement rates at that. From the actual issuance of our currency, to the oilsands, to our nuclear industry it is safe to say that Canada is "For Sale" and it is through these bottom basement price sales that Canada has been able to lie about the amount of foreign business we are loosing due to global economic circumstances. At least up until now.
Canada, we are a country in economic denial. Time to face reality.