Opinion by Helge Nome
Last Thursday, September 3, my wife and I attended a big event in Calgary. It is the equivalent of the Olympics for up-and-coming trades people with some 900 young people from 51 countries competing in 45 skill categories during a six day event. The event was staged in Calgary's Stampede Park, home of the world famous Calgary Stampede, and some 50,000 school children were scheduled to attend over the period of the competition. In addition to the existing buildings in Stampede Park, huge tents were erected where landscaping, carpentry, autobody repair, information technology and a host of other competitions took place.
In the middle of the day, Stampede Park was literally a beehive, with every little space filled with children taking in the competitions and milling about.
In weird, and almost surreal contrast to this activity, two partly completed sky scrapers in the middle of Calgary's downtown, just to the north of the park, stood silently watching all this activity. With long necks, being huge construction cranes, they peered down at the busy anthill below.
The following day I phoned the City of Calgary's Planning Department and asked about the lack of activity on those construction sites and my belief was confirmed. They are the victims of the recession, as are "a dozen large residential condominium sites across the city".
There is no money, or credit, for the developers or the future owners of these projects. It is the same story right across the land, except in one place: The oilpatch where things are humming along again, at least in the controversial Alberta Tar Sands.( I just heard that Bill Gates has invested heavily in one of the companies set up to exploit this energy source)
The vast majority of economists, politicians,`ìnvestors, etc., now want to believe that the worst is behind us and that those big cranes will be moving again shortly, completing the sky scrapers and so make more office space available for expanding businesses.
But hang on a minute, ATB Financial (our home grown Alberta bank), in its 2008 Annual Report, points out that, as at March 31, 2008, it had lost $253.1 million on Asset Backed Commercial Paper which turned out to be trash, instead of cash. This meant that the regulatory capital base of ATB Financial was reduced from 12.4% to 11.2% of risk-weighted assets, putting the bank out of its comfort zone. Result? It is a lot harder to get loans than it used to be. And that is true right across the financial system. No credit, no activity. It's really that simple.
In effect, what has happened in the last number of years is that more and more money has been taken away from the productive economy (Main Street) and put into the speculative economy (Wall Street) where quick gains were thought to be available. People even put their retirement savings into the speculative economy in the hope of making quick gains. The gold rush mentality took hold, leaving the manipulators (who knew what they were doing all along) in control, leading all the suckers over the edge of the buffalo jump.
So what is going to happen to all those young people, admiring the skills of the young tradesmen at the Worldskills Calgary 2009 competition? Having gained valuable trade skills, will they have a job to go to? How can they be rewarded for their work if all the available money is tied up in gambling?
Look at it this way: At any given time there is a certain amount of "loose" money available to facilitate the exchange of goods and services within a society. If a sufficient percentage of this money gets "locked up" for fear of not being able to cover risky "investments", then the activity normally facilitated by this money will grind to a halt.
That's exactly where we are at right now.