Aztext Press

Life Off-the-Grid

Challenging Times in North America

By Cam Mather

I watched the NBC News a couple of weeks ago and was surprised to see a segment out of sync with the shiny happy spin one usually gets right now from the mainstream media. Los Angeles’ Mayor Antonio Villaraigosa said “we’re in a very challenging time right now, facing the worst budget crisis in a very long time.” Needless to say when I heard the phrase “challenging time” my ears perked up. He suggested that they would need to furlough non-essential workers 2 days a week. Obviously the opposition was ferocious and he backed off.

The story went on to highlight a number of cities across the U.S. that are facing a budget crisis. Ninety percent of cities say they are worse off than they were at this time last year and expect it to be even worse again in 2011. It’s rare to see a major mainstream U.S. network to air a report like this, since it flies in the face of their general “green shoots” cheerleading.

So not only are many states in trouble but so are cities. The states that were hit hardest by the housing collapse like California seem to be the ones that are now in the worst shape. There is a lot of discussion about whether or not California will default. But an excellent post by Mike Shedlock helped me put it in perspective.

I’ve been skeptical about the arrogance that has gripped the Canadian media when they tell us how superior our banks and economy are versus others in the world and how this has helped us to handle the great recession better than many other countries. After reading Mike Shedlock’s post I realize it’s an illusion. Per capita the Ontario budget deficit is three times worse than California’s. A $21 billion deficit on a population of 11 million, which has had its manufacturing base devastated, is nothing to brag about. In fact, given that the government doesn’t think the budget will be balanced until 2018, things do not look so good for Ontario. The Ontario deficit is $1,840 per capita in Ontario and $541 in California. Yet this doesn’t even seem to be registering with the Canadian media. “Don’t worry, be happy.”

An article in the London Free Press might provide a clue as to why we think we’re doing better. Of the 331,700 jobs created in the last six years, 219,000 of those were for the Ontario government.

Now don’t get me wrong, I’m happy to have more nurses and teachers and water inspectors, but only if we can afford it. I’ve always lived within my means and I think government should do so too. Governments need to behave like families. Sometimes you can go into debt, but sooner or later you have to get out of debt. It should be temporary. Spending like there’s no tomorrow just doesn’t work forever. Sooner or later you have to pay the piper. Governments in Canada now seem to be getting into the groove of structural deficits, meaning they are permanent and won’t go away. Does it sound silly of me to suggest that this simply can’t go on forever? We can’t all work for the government. That has been tried in other political structures and it didn’t work. Some people still need to work in private sector and create wealth. Governments do a fine job of spreading the wealth around, but they don’t create it.

In Mike’s column he makes the conclusion that the reason the Canadian economy has faired better than the U.S. is that our housing market hasn’t collapsed. I agree with him. He also suggests we’re due, and I agree with him on that front too. The average price of a detached home in Greater Vancouver is almost a million dollars.

Come on! That’s just stupid. This is going to end in tears.


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