As an economist by trade who worked on Bay Street for years, here’s how I view Canada’s economic reckoning: a thread

Due to the massive exodus of foreign investment capital in the O&G sector in recent years,the Canadian economy has been slowly losing, and will continue to do so.

Investment capital in Real Estate from China has kept the prices of Real Estate artificially inflated, and this has forced many ‘working class’ Canadians out of home ownership (or the ability to enter the like).

As wage capital has stopped flowing across the country from Alberta (where many people moved to work over the past 20 years) other parts of the country have begun to feel the impact.

And this was before the pandemic.

Jump ahead to 2020:

Millions of Canadians were put out of work due to the pandemic. Many of them qualified for the CERB program, which was a necessary stop gap to help people continue to afford a place to live and food. You know... The most basic and essential human necessities.

A large portion of those Canadians have gone back to work in some capacity, but many return to modified hours/salaries making it difficult to remain current on consumer debts once their food and rent have been paid for.

This is going to result over the coming months and years in a major credit downgrade on the whole for Canadian consumers.

This brings less access to capital, and the economy suffers as a result. Compounding an already dire situation.

But it gets worse.

As the government continues to borrow and spend money, the access to capital at the highest level becomes more constricted. Supply chains rely on this Government access to capital when it comes to the importing of goods.

As our government loses the ability to borrow money, they will solve the problem by simply making more of their own. Sounds easy enough, right?

Wrong. Hyper-inflation is the very predictable and devastating result. This is also how regimes in third world countries obtain power.

As prices in the grocery stores rise to account for this inflation (already happening across the country) consumers will have less and less ability to spend in the stores.

As a result, the stores will have less liquid capital to spend on bringing in the products.

Fewer products being shipped means less work in the logistics sector (one of the industries not affected by the pandemic thus far) which leads to more people out of work, and less potential for economic growth.

Less products in the stores lead to shortages, and as more people buy chunky soup and ramen rather than filet mignon, the issue becomes a self fulfilling prophecy for grocers and other distributors.

As grocers have less capital, they struggle to fulfill demand.

Now, while all of this will seemingly play out slowly (who really notices a 30% increase on the price of Kraft Dinner over 4 months anyways?!) I can assure you that it will come much quicker than many people are anticipating.

The CERB program is officially ending/ has ended and that will leave millions of Canadians to transition to Unemployment benefits (which many will not qualify for) further draining our Federal capital resources and perpetuating even further the issues outlined above.

As people lose or become worried about their ability to pay for shelter and food, violence and protests will erupt.Petty crime will skyrocket as good people do what is necessary to feed their loved ones,and those who ‘have’ will constantly be under attack by those who ‘have not’

This situation will take months (or potentially years) to play out, but it will.

As violence, rioting, looting, and theft rise, there will be division amongst the provinces. For example: Calgary.

Calgary is a city on the brink of devolving into civil unrest and should it, it would be a logical reaction for people in BC to want (even more) for Albertans to be kept in Alberta.

This will lead to even more tension between citizens of the provinces (as Albertans get sick of their vehicles being vandalized in B.C.) and will eventually inevitably spill over into more violence.

I write this thread understanding that as someone who should be contributing answers to help solve the problem, I have none. I am completely at a loss, and have no idea how Canadians can avoid what is to come in the next year or two.

I do know that Canadians need to band together now more than ever. Help your neighbour with food if they’re struggling (yes, even if they’re a staunch conservative and you vote for the liberal party).

Canada is a nation made up of the most caring and well respected people from a global perspective. We are incredibly peaceful (outside of the confines of a hockey arena) and people around the world view us as such.

We’ve always taken in others from around the world who require support, and will continue to do so. My hope is that we can find it within ourselves to do it for one another, too.

In 2010 Sydney Crosby scored a goal in a hockey game that was much more than what it was.

It capped off a tumultuous, but incredibly fruitful Olympic Games for our country, and galvanized our people from coast to coast. We need to remember those times, and how much we loved our nation and neighbours right now because we are in for one hell of a fight.

- A sad lover of all things Canadian. Liberals, and Consevatives included.