Garth Turner says hard times have just begun for Canada
The Canadian Press
Published Saturday, December 20, 2008 3:52PM EST
OTTAWA - Garth Turner is finding that the scarier things get, the more people pay attention to his doomsday alerts.
One reason is that he's out of politics, he says, so his economic forecasts are no longer seen as possibly tainted by partisanship.
But more important may be that the former MP's alarmist book about collapsing housing prices in Canada -- "Greater Fool," which he began writing last December when the sky seemed to be the limit -- has turned out scarily bang-on.
If he turns out to be as prescient with his soon to be released new book -- After the Crash -- Canadians would be well advised to heed his warning and on how to survive the economic collapse.
Turner, who has worn a number of hats in his career including entrepreneur, journalist, broadcaster, author and combative politician, is predicting hard times for Canada over the next two years and he hasn't ruled out a good old fashioned depression.
"We've had a crash. America has crashed, stock markets crashed, Wall Street crash, real estate crashed and the global economy crashed," he says of the events of the fall.
"The world as we've known it is gone. You are not going to get credit cards in the mail, you are not going to get lines of credit easily. Those days are gone. The question now is are we going into a bad recession, are we going into a depression?"
Turner believes Canada's gross domestic product will plunge five to eight per cent from the beginning of the recession, which he believes began after Labour Day, to the end, which he says won't come until the spring of 2010.
As well, he expects housing prices will plunge another 30 per cent next year -- on top of the 11 per cent drop so far this year.
For the first time since the Dirty Thirties, Turner expects many Canadians will wind up owing more on their homes than what their home is worth, particularly those who purchased in the last two years with little down payment.
That's not a depression, as he sees it, but pretty darn close.
Most economists -- but not all -- would scoff at such doom and gloom, to which Turner replies: That's what they said when he predicted Canada's housing market was on the same disastrous path as America's.
"It's a relatively straight forward to weave some pretty ugly scenarios," says Douglas Porter. "He's probably not too far out of line to say things could be very ugly if policy makers make missteps or don't step in to support the economy."
Porter places greater faith in the massive economic stimulus packages being proposed around the world, and in Canada. Prime Minister Stephen Harper is pegging the deficit next year at up to $30 billion, mostly as a result of increased spending to help the economy.
The Bank of Canada and Ottawa have also injected over $110 billion in liquidity -- cash --to grease the money markets, and interests rates have been chopped.
Turner agrees those bold actions could stave off the worse, but they also may not, he adds.
"We've never had this amount of money thrown at an economic problem, so we're in uncharted territory," he says.
"But by the same token, they are blowing their wad all at once, so this better work because we are out of bullets."