FROLITICKS

Satirical commentary on Canadian and American current political issues

Winter May Be Over, But Crazy Weather Isn’t

There are two things that most of us can’t avoid: taxes and the weather. In my neck of the woods in Canada, we have endured a long and hard winter from mid-November to mid-April. We seemed to be breaking a record almost every other day — be it for temperatures or different forms of precipitation such as snow, sleet and freezing rain. Meanwhile, extreme weather patterns were reported across the U.S. and in different parts of the world. The headline statement in a recent federal report, commissioned by Environment and Climate Change Canada, indicated that Canada has warmed “twice as fast” as the entire planet since 1948. Boy, it sounds like we’re in big trouble now!

Despite numerous international reports confirming some form of climate change, there are still nay-sayers running around with their heads in the sand. Anything that affects the climate affects us all.  Every sector of our economy is affected, be it agriculture, tourism, transportation, insurance, manufacturing, energy, etc., etc.  We have seen an increase in damaging floods, droughts, fires, tornadoes, cyclones, hurricanes, etc., etc.  You can’t turn on the evening news broadcasts without at least one story being about a severe weather event.

Already, many communities and industries are beginning to prepare and adjust for future climate change. From an economic and survival point of view, they have no choice.  This represents the greatest challenge to humans, and ignoring or denying it does no one any favours — while doing so is at one’s peril. Yet, here we have a leader of the world’s wealthiest nation and biggest contributor to greenhouse emissions, simply looking the other way.  Instead, blind policies are implemented that will even make the situation worst, all in the name of populism.

On top of which a new World Bank report concludes that climate change will transform more than 143 million people into “climate migrants” escaping crop failure, water scarcity, and sea-level rise.  For example, many of the migrants from Central America fleeing to the north are farmers who can no longer eek out a sustainable living because of the impact of climate change on their farmlands. So while I might complain in the comfort of my home about the miserable weather we’ve been having, my circumstances are nothing compared to the misery facing many populations around the world.  Think about it!

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Getting Closer to a World Economic Recession

One does not have to look too far or to be an economist to understand that there is the real danger among the world’s economies of a near future recession. On the one hand, you have the negative results of the U.S. tariffs on China, Europe and Canada. On the other hand, Brexit is already damaging the British economy, and the possibility of a no-deal with the European Union is a definite chaotic possibility.

Meanwhile, Japan’s economic growth is stumbling, particularly as trade with one of its biggest customers, China, is in trouble. China is the biggest driver of global growth, so its slowdown — or fear of it — is stoking concerns about the prospect of a worldwide recession. Japanese consumer electronics and automotive companies that depend on their fast-growing neighbour — China — are now slashing profit forecasts and considering idling factories.

Donald Trump’s administration, in the meantime, is all over the map. There appears to be no end in sight in the trade negotiations with China.  American and Canadian farmers — especially those with seed crops like canola — are already feeling the pinch as a result of losing the once profitable Chinese market.

While a global recession may not be as horrendous as that in 2005, the fact is that governments and central banks today have fewer tools to deal with it. Governments in North America and Europe have run up enormous debts in recent years.  Consumers also have run up huge debts over the last decade in light of extremely low borrowing interest rates.  Moreover, there is little wiggle room for governments to respond proactively.  The growth in Gross Domestic Product (GDP) is declining everywhere. National unemployment rates are still low, but for the wrong reasons.  While there are too few skilled workers for those trades and professions needed in our modern economies, people are being forced to take lower skilled and lower paying jobs in the retail and service industries.  Average wages for the middle class have not increased adequately when inflation is taken into account, while family debt loads continue to go up.  Given that they drive over 70 percent of annual GDP growth, don’t expect consumers to help get us out quickly of the next recession. As politicians like to say, people are going to have to tighten their belts!  The question is — for how long?

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