Another beauty from 2009 back when things were falling apart (again).
Now that the largest bankruptcy in history has occurred, it begs the question, is there a bottom here somewhere? I think there is for now, but it does point out that “sure things” should sometimes be questioned. If someone had told a trader or investor that GM and Nortel would be in bankruptcy protection, 10 years ago, that person would have been laughed off as a “nut” or “crack pot” or worse, and now we have seen this happen.
Thanks to all of this the Canadian Government is pouring money into GM, with little hope of recuperating this money or of it making a huge difference. We are in uncharted waters that is for sure, I have little understanding of where this all might lead, and I am pretty sure that I am not the only one with these thoughts.
Stay tuned this could be some very interesting times ahead.
GDP Down, down, down…
Canada’s GDP is down 1.4% in the first quarter of 2009 which is the worst drop since 1991, another bad omen for the economy.
Lower spending in Canada and the United States, particularly business investment in plant and equipment, led to a sharp decline in Canada’s exports and imports. Business investment in Canada fell at the fastest rate since 1982. Final domestic demand was down 1.5% as personal spending, particularly on durable goods, continued to decline. Corporate and personal income also fell in the quarter.
It is not a surprise that GDP is down, but the size of the drop is concerning, but if Canadians are dropping their spending that might be a good thing in some ways.
Companies and individuals in Canada also had the problem of their purchasing power dropping off steeply as well:
Real gross domestic income (GDI), a measure of Canada’s purchasing power, fell 3.0% in the first quarter (-6.2% year over year). Canada’s terms of trade, a measure of export prices relative to import prices, deteriorated for the third consecutive quarter as commodity prices fell and the Canadian dollar depreciated relative to its US counterpart. As a result, the decline in real GDI was much sharper than real GDP; the third consecutive quarter this has occurred.
Less money to spend, less money being spend, and less purchasing power, not a recipe for a way to spend our way out of this economic downturn (read apocalypse).