Economists’ Canada Problem

Despite everything that happened in July and August throughout the financial world, there remained a tendency to simply dismiss it as anomalous. That was curious in and of itself, but that the global liquidations then were not isolated but rather the latest in a continuing string of “odd” events strains such determined dimness. We have arrived at a point in time where even direct and widespread observations are no longer afforded much significance, to be shadowed and replaced instead by the musings of credentials. Janet Yellen and various international economic outfits declare the world in recovery, therefore anything that upsets the order is to be marginalized as “temporary” or “anomalous” since Yellen comes first.

China has moved to the frontlines in that struggle between understanding and raw ideology; to economists it just doesn’t make sense that growth would continue to decelerate month after month with no answer to all the “stimulus.” But so it goes on down the line, beyond China and into the vulnerability of the global supply chain. We see the direct line into Brazil, but it isn’t limited to emerging markets. Enter Canada.

Being an oil production giant, Canada is for a “developed” economy related directly to the same financial strains as those plaguing EM’s. The initial oil crash at the outset of 2015 “unexpectedly” plunged the Canadian economy into a technical recession (which is more myth than actual condition; it is only urban legend that claims two consecutive quarters of GDP contraction as that). Then, as oil prices rebounded, Yellen’s “transitory” declaration appeared to be holding on the outside. It didn’t matter that that initial downturn was rather sharp and severe, all that mattered was what economists believed about it – even though, curiously, they had no idea it was even coming (a persistent theme for far, far longer than the past year).

So the earlier weakness, severe as it may have been, was to be written off as a trivial historical artifact troubling only to economic historians: