Recession Brings Opportunities!

First, question period was boring today so no video. Instead I venture into the realm of economics, boring stuff normally, but interesting when the world is in trouble and everyone is trying to second guess what is going to happen next.

We know our Canadian banks are the most stable in the world, although you will never hear the opposition mention that fact, they are all doom and gloom. The MSM is on survival mode, so anything negative is a good thing, it sells papers.

I prefer to look at the brighter side of this downturn, there are opportunities for business, especially in the west. I'm not the only one who thinks so, read this article...

Oil patch juniors team up to buy Talisman Bakken lands

CALGARY -- Crescent Point Energy Trust and TriStar Oil & Gas Ltd., two junior oil companies, shrugged off the global meltdown Wednesday and teamed up to buy for $720-million the Saskatchewan and Montana assets of senior producer Talisman Energy Inc......

"When we started the company, oil was at US$17.60 a barrel, and US$45 is a pretty good number," said Scott Saxberg, CEO of Crescent Point.

He said his company can generate substantial rates of return in the Bakken even at today's low oil prices.

Interesting, the juniors are investing while the big boys are stopping development.

Look at what every country is doing right now, stimulus packages. This is what the Keynesian model tells them to do in a recession, increase government spending and lower taxes. Normally the problem with this is that government borrowing crowds out business investment, leading to higher interest rates. With the unstable banking sector though, they are not lending to businesses, at a time when businesses could use the low borrowing rates to expand operations. Enter the governments from around the world, they borrow instead, not a bad thing if that money goes towards infrastructure.

The problem is that all countries are going to issue bonds to raise money, but what if no individuals or banks what to buy those bonds? They have to print money, a sure fire inflation measure. Staglation (high unemployment and high inflation) anyone?

Why might Canada do better than other countries? If you are an investor, and you have pulled your money out of the stock market, where do you put it? Well, you look around for the most stable economy, and invest there. That just happens to be Canada, why to you think PM Harper was in New York talking to world business leaders? Add to that our low corporate taxes, and Canada becomes even more attractive.

Those tax cuts, what if everyone saves that money? Where are they most likely to save it? How about in our stable banks, who can then lend it out to businesses for expansion. This is where the big oil companies are going wrong, by stopping projects, now is the time to get cheap credit and labour so they can expand their companies. Why expand when you are paying a premium for labour and materials?

As for buying stocks, isn't the rule; buy low, sell high? I just wouldn't be buying any media stock these days.

PM Harper got slammed by the opposition for mentioning that now is a good time to buy stocks, but now that Obama has said the same thing, the media is silent. The recession can bring opportunities for people and businesses to streamline their bottom lines, while expanding their operations.

Maybe if the Liberals/NDP/Bloc stall the budget long enough, we will not have to borrow as much from the banks, and businesses will take up the slack. Somehow I don't think that's what the opposition are hoping for, they want the economy to do bad, because politicians are all about getting elected into power.