This Tuesday, Canadians opened their Globe and Mail and were met with the newspaper’s headline take on historian Niall Ferguson’s current world view. “There will be blood,” we read, some distant echo of last year’s Oscars stirring in our minds. He sees “howling anguish” in the Euro zone, economies being “really slammed” in Asia, and several moderate governments being toppled in civil wars.
Ferguson sees Canada’s proximity to the US as a mixed blessing. “Canada is not finding the worst,” he said, but “America’s trading partners will get hit harder than the U.S.”
It was only towards the end of the interview that Ferguson admitted, “I’m trying to stay cheerful.” He went on to list the good-news elements of the economic situation. The China-America (or “Chimerica”) relationship would stay strong. The US would suffer less than many other economies around the world. The US would not succumb to protectionism “with Larry Summers in the White House.” After accounting for the mortgage bubble, the underlying rate of growth in the US was around one percent per annum (“a reasonable growth rate for 10 years.”) With Obama’s more equitable tax system, “there might actually be no discernible downside for middle America and lower-class Americans.”
Ferguson’s cheery conclusion applies just as easily to Canada as to the US. “People just have to get over the fact that their wealth wasn’t worth what they thought it was in 2006. Whether it’s their stock market portfolio or their housing. If we simply go back to where we were, in 2005, that’s surely not the worst thing that could happen to us.”
As a Realtor, I sense that this is the kind of question people want answered. “Is my house back to where it was two (or three, or four) years ago?” If we can establish some kind of baseline in these times, then we can say to ourselves, that’s surely not the worst thing that could happen to us.