This weekend, my family and I went shopping for a few Christmas purchases and some necessities at Walmart, Best Buy, Toys R Us, and Costco.
You would never think there was a global economic crisis occurring judging by the size of the line-ups at the cash registers. I mean we're talking about people actually making big-ticket item purchases, such as big-screen plasma and LCD/ DLP TVs, pricey electronic devices such as XBoxes, Wii's, iPods and laptops, home furnishings, and other home decor and renovation items; not just browsing around the stores.
Yes, Albertans are coming off probably the greatest economic "Boom" in the history of the Province: people are truly "money-ed up" around this part of the world. The demand for workers was so incredible over the last five years, Albertans could literally quit their jobs and
In fact, signs are still up advertising everywhere, looking
for hired help: McDonald's is paying $11.50 an hour starting wages, Tim Horton's up to $18 per hour to sling coffee, and 7-11 Convenience Stores are handing out hiring bonuses up to $2000! And, Edmonton will surely be a ghost-town come this Christmas, as it seems most friends and family I have talked to plan on traveling abroad for the Yuletide holidays.
But I can't help thinking, with the collapse in commodity prices as of late, the financial turmoil transpiring down south, and Alberta being a primarily export Province, are we that
rich we can be apathetic to current affairs? Or, do we really feel that the Oil Boom will never end and that the crisis our neighbors to the south are enduring could never possibly happen here?
With the current Parliamentary crisis befalling upon us, slews of people all over Canada are in an uproar; including Albertans, who have passionately shown concern or at least acknowledgement that there is an economic circumstance at hand; hence, pure ignorance to the situation is out of the question.
Consumer confidence is at an all-time high here in Alberta. However, another Oilsands Project is being scrapped as of a Dec. 4/ 2008 press release: adding StatoilHydro's plans for a $12.6 billion upgrader to the long list, which includes Nexen Inc., Suncor Energy Inc., CNRL, Value Creation Group, Royal Dutch Shell PLC, and Petro-Canada/ UTS/ Teck Cominco, that have backed off or slowed expansions or new projects. Can Albertans be so presumptuous that their incomes will not be affected and the Boom will not go suddenly Bust? And, with oil prices dropping a staggering 70%+ in just a few months, it is not difficult to see why these Oilsand Company heavies may opt to postpone their projects and expansions indefinitely.
Perhaps it is just me, locked-in to my puny Steamfitter Trade-Union contract, happy in my starter Bungalow home, and content driving a beater to work, that is oblivious to the fact salaries in Alberta have gone up that much and Albertans have profited that much from their homes and real estate ventures in the last 5 years, they can ride out any economic storm ahead. But as I witness friends, colleagues, and acquaintances buy up 3/4 million dollar homes, buy brand new SUVs, ATVs, and out of province vacation homes, I am left thinking they must make that kind of money; I don't even have that kind of credit!
But consider this: is saving a net amount of $1000 per week a lot of money? That is, after all taxes, bills, and purchases is paid for; an unencumbered amount of $1000 can be put away, I think, is substantial savings for just about anyone regardless of salary unless of course, you are Warren Buffett or Carlos Slim Helu. But, in one year, that kind of savings only amounts to $50,000 given that you take a 2-week unpaid vacation each year. And, it's not a whole lot of cash considering home buyers around here have been upping their antes for houses of $100,000 or more like it was nothing for the past two years and Albertans are buying new SUVs starting at $30,000 to pull their new $18,000 quads or sleds.
It has been suggested by many of my peers that most of these purchases have been bought on credit: whether it be on their Visas, Mastercards, or lines-of credit. This is a very alarming notion considering the credit crisis of our American friends was started by those people who chose to live beyond their means via maxing out their easily obtained credit in the first place. Yes, we made more money but we spent more too. Research and studies have shown for every dollar an Albertan earns, he owes five: meaning, even with all those big wage increases we have seen in the last 5 years and the highest employment levels ever, we have only paid off our monthly minimum balance due on our Visas. Americans, last year at this time, have been paying their Visas' minimum balance with their Mastercards.
Surely then, to think the credit crunch will never happen to Albertans is indeed pure ignorance. It is coming; be wary. Even the slightest slowdown will have an impact on those who got a little too comfortable making those big overtime pay cheques; then figured they were getting ahead in life keeping up with the Jones'. Going back to a normal 40 hours a week or even 37 and a half hours per week may prove to be a drowning experience for those with their credit max-ed out.
As for now, as exemplified by our Prime Minister Stephen Harper proroguing Parliament, we'll defer our minimum payment to the next month, go home and enjoy our Holidays with our loved ones, lavishing them with posh electronic gifts. We'll deal with our finances and problems next month; and, hopefully by then, the credit card companies will forget what has transpired, or even disband as easily as Harper thinks the Coalition will.
the prorogation of Parliament by the Governor General on Harper's advice seems to be quite the astute strategy for his minority government to stay in power.
