A slice of life during the declining days.

For a general perspective of the WSHTF - RGP

Although there were numerous speed bumps on the road to the crash ( steadily increasing prices especially the cost of gasoline ) the big bang that no one could ignore was the China trade embargo. In response to the USA putting a ‘temporary’ halt to all payments of debts held by China ( which it did because China started an invasion of Taiwan ) the Chinese surprised the world by ‘temporarily’ cutting off all exports to North America.

This blanket embargo was necessary because of NAFTA. It was reasoned that Canada and Mexico would act as import gateways, so that America would only be slightly inconvenienced, rather than truly hurt by the trade sanctions.

In the news some people were saying it was crazy because it would hurt China just as much as it hurt America. Others were calling it an economic attack equal to a declaration of war. Some commentators assured the viewers that the USA would soon be in a shooting war, which could very well go nuclear.

Direct effects at home

From the local person’s point of view in Atlantic Canada, all this meant an economic collapse, because almost every business is connected to retail stores who sell things made in China. People lost their jobs, businesses closed their doors. Both the Employment Insurance and the Social Assistance departments were swamped. The speed of processing claims went from slow to a snail’s crawl. But on the bright side, there were some great ‘going out of business’ sales.

Tuesday- July 31

Shopping madness grips Canada and the USA. Already having to deal with prices inflated by the increase in fuel costs / transport cost, the consuming public now faces the sudden impending end to all cheep ‘made in China’ goods. Regardless of the media, many people rush off to buy a few things, before those things double in price or simply can not be found on the shelves. In the USA there were some full scale shopping riots.

Socialism at work

In Canada there was already a set of controls on wages and prices. There were quietly put in place after the first round of oil price increases in late June. In simple terms they fix the wages for all, for the next year, while they allow a moderate monthly increase in the price of goods. A lot of people soon became upset when the cost of nearly everything went up each month by the maximum allowed rate.

Free market at work

The problem with any price fixing is that it distorts the market value (what people are willing to pay for an object). Thus a great many items were increasingly ‘falling off trucks’ to be sold on the black market. These items were simply not found in stores anymore.

As a side effect of this increased black market activity, businesses who planned to stay in business (or who aimed to protect their assets while they temporarily closed) doubled their security measures; thus a mini boom in the security industry. Ironically it was not long before the best high tech alarm systems were only available through the black market.

In the news

Over the last week there were many news items on TV and in print that held the same idea; “This is no time to panic, protest or otherwise be disruptive.” Even stories that admitted things were tough and likely to get tougher, called for people to remain calm. The intellectuals saw this as good advice because panic would make a bad situation worse. But the activists saw it as another attempt to control the people. Do not protest as prices go up and your wages are frozen. Do not speak out as the government makes poor policy choices. Stay calm while the corporate executives give themselves fat pay outs before they close down business locations and fire thousands of people.

NAFTA friendship address

It is during these dark economic days that the US President assures his fellow Americans that North America has the resources and abilities to overcome any challenge. Canada can provide any raw materials, water and power, that we need. Mexico can provide cheap labor to replace that of China. If the NAFTA partners just pull together they will all come out ahead. Although difficult these days can be a great spring board for the country.  (etc)

Some Canadians took offence to the idea that we were an endless resource center for our American neighbors, especially now that they were in no position to pay for the supplies they expected us to continue providing. But our Prime Minister just smiled and said “Canada is open for business, we wont let down our American friends.”  

Saturday- August 11

The day the internet died – at 5am the satellites stopped working, as if someone has simply switched their network functions off. However, major TV networks were unaffected. Most people were puzzled by this and greatly inconvenienced.  It was not until the following day that rumors started to seriously circulate that the USA had descended into civil war.

Monday- August 13

The world wide reactions to the American Civil war start to be felt. Stock Markets already on shaky legs, crash. Confidence in the US dollar and the US ability to pay its debts is lost. Even the British distance themselves, saying “We are happy to help, if we can, but any payments must be arranged in solid goods; equipment or raw materials.”

Reports about the war are fragmented – Most stories are official propaganda claiming that it will all be over soon, because the rebels do not stand a chance. More accurate accounts talk about the confused fighting on military bases, which did not have a clear side in control before the fighting started on Saturday. Also there is the obvious battle for air superiority, which involves both sides launching strikes against high profile targets.

Direct effects at home

The start of the American civil war had little impact on the average Atlantic Canadian. Although there was some light shed on the recent increase in American ‘refugees’ who had been entering the area over the past few weeks. Most were officially here on summer visits, but a good number had entered illegally (Survivalists wanting to avoid HLS).

Of course the Canadian Military was put on a heightened state of alert. Although what its role would be was unclear. There was some speculation about having to deal with a flood of refugees. A tricky problem if they arrived in winter.

Federal vs Provincial

The concerns on the minds of local people were local issues. After Ottawa enacted several serious bills; including the sweeping Crime Omnibus bill and the Old Age Security Reorganization bill, they got down to some hard hitting budget cuts. The transfer payments, traditionally made to equalize situations and services among the Provinces, were deconstructed. Fend for yourselves as best you can – was the new policy.

This put huge pressure on the Provincial government. Just as at the Federal level, there was a call from experts to downside and cut back. The Provincial budget trimming of the past year would be mild compared to the serious cuts that must now be made.

Suggestions were soon raised, all of which upset one group or another. Among the first items to be cut were new projects, like schools, roads, bridges. Only those which were 75% completed would be finished, all others would be put on hold. ( no new high school for Moncton ) Road repair and snow removal would be reduced to a minimal level.  Education and Health departments would receive no new staff or equipment, unless by special order of the Finance Minister. The only department expected to expand was the police force.

As all this talk of downsizing was getting hot, the protest movements began a new rally; although public protests of any kind had been made illegal months ago. “Why all the cut backs in our valuable services? So the interest payments on the debt can be made. So the banks can suck up more tax money. So the poor can transfer wealth to the rich.” This was their main point, as it had often been in the past. But now the drastic cuts in social services were hurting even more people as the large number of unemployed were depending on them more than ever.

A typical case

A young couple with no kids, both working full time. She worked at a retail store. He worked at a call center. Both were making just above minimum wage. She had enough hours banked to qualify for Unemployment Insurance, he did not. They rented an apartment. She was making payments on a nice car. He owned a used older car.

Shortly after the China embargo she lost her job. She applied for UI and was told the normal waiting period of 4 to 6 weeks had been extended up to about 9 weeks. A few weeks after she lost her job, so did he. When he applied for Welfare he was told a similar thing; the waiting time was now 9 weeks. So they had to live off savings for over two months, but like most people they did not have any real cash savings, so they put everything on credit cards.    

Luckily she was granted her UI benefits, 55% of her average pay. Unfortunately his Welfare claim was set aside for review, in another 2 to 4 weeks. This of course caused a lot of stress on the relationship of the couple. Half of one regular income had to support two people, in a world where food (and other) prices had doubled since the start of the year.

The government was cutting back so it could keep paying its debt. People were cutting back so they could keep paying rent, utilities and food. People like this couple, very quickly stopped putting any money toward their debts.