It seems that regardless of all the rumours spread and balloons floated over the last few weeks surrounding possible Russian-Saudi deals or OPEC ministerial meetings, every time the oil price went up by a notch or two, it just fell back unceremoniously, underlining the current reality that the low price is here to stay for a considerable time to come.
But while the news on that front remained gloomy, both our federal and provincial governments have been demonstrating some good sense and have been taking steps to address the current situation in Alberta, which is marked by high unemployment, increasing desperation and mounting concerns over the freefall in economic statistics.
First Premier Rachel Notley announced steps aimed at creating new petrochemical plants in the province to process Alberta’s own natural resources to create added value instead of just marketing raw resources, thereby creating permanent jobs, something in short supply these days.
Following that, Mrs. Notley also announced a cabinet reshuffle modifying portfolios of some ministers and adding six new names to the executive council with an emphasis on delineation of functions with the stated aim of allowing each cabinet member to focus on more specific tasks for rendering outcomes to facilitate growth and add strength to the province’s economy.
Then came the visit of the Prime Minister Justin Trudeau, who announced $700 million in funding for infrastructure projects in addition to the availability of access to the $250 million federal stabilization fund.
When viewed through a certain angle, these steps do point to a concerted effort to push the wheels of the provincial economy to grindingly start to turn in the right direction with their full impact probably to be seen not earlier than at least 12 months from now. In the meantime, if the oil prices reverse the trend and start to creep up, it will probably come as a big bonus to the province.
All of this, however, may not make diehard advocates of free markets very happy: An economy being directly managed by two layers of government using fiscal stimulus is not something free market lovers can easily embrace.
But they should consider themselves as their notice being served: At this time and age, when finance has overtaken the management of supply side economy, and too-big-to-fail banks having been transformed into too-big-to-save ones and the inequalities in the distribution of wealth have reached epidemic proportions in the richest nations of the world, governments will have to play increasingly bigger roles at least to maintain the social order and the continuity of the established political system.
We don’t know at this point whether the turmoil in the global stock markets we have seen since the arrival of the new year is the beginning of the long predicted explosion of the global $200 trillion debt bubble or a just a harbinger of it. What we do need to know, however, is that we need to be prepared for a lot more government intervention in the economy, maybe even reaching as far as our bank accounts while we try to ride this wave of turbulence.