By Stephen Pate
NJN Network News
January 15, 2009
The Globe and Mail carries a Canadian Press story New vehicle sales dropped in November, Statscan reports “New motor vehicle sales fell 7 per cent in November to 129,044, the largest monthly decline since August, 2005.Statistics Canada attributes most of the decrease to lower sales of passenger cars. Prince Edward Island recorded a small increase in the number of new motor vehicles sold.”
In a recession or depression, cash is king.
PEI car sales have not dropped and that is lagging the rest of Canada and certainly North America in feeling the effects of the recession / depression. Our economy is, to a great extent, based on government spending and Federal largess. So much of PEI’s middle class incomes are related to government jobs both direct and indirect.
It’s not unusual for private sector employers on PEI to derive more than 50% of their revenue from direct and indirect government sources. We will see markets for our exports dry up in the near future. Lobster prices have already fallen drastically and a crisis looms with both last years unsold lobster and the coming fishing season.
That will spread throughout PEI’s export sector. Even governments will soon feel the impact and have to reduce spending. A deficit budget has to be funded from loans. Borrowing money even for governments will get somewhere between hard and impossible.Has Minister Sheridan tried to borrow $100 million lately and what response did he get?
We have seen severe drops in government spending in the past and they devastate private sector employment. Islanders are well advised to save cash because everything we buy today is worth ten cents on the dollar tomorrow when the cash runs out. Wes Sheridan’s rosy picture won’t be worth a tinker’s dam and he won’t rescue us.
Cash is king.
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