When my grandmother used to tell stories of the Second Great Depression of the 1930's, one comment always stood out. "At the time no one realized it was a Depression".
'Depression' was a term given to the period after the fact by historians who viewed events in panorama. Living events one day at a time, most people didn't realize the significance of the era that was unfolding around them.
Are we pedestrian witnesses to a similar situation?
Stats Can will not be releasing February 2009 job losses until Friday March 13th - a appropriate date because the numbers will be a horror show.
In January the Canadian economy lost a startling 129,000 jobs. That was a record single-month total. Unemployment stood at 7.2% and things have only gotten worse since then.
On March 3rd, Canada’s central bank cut its key lending rate to its lowest level ever. Lower than during the 1930s Depression. And Bank of Canada Governor Mark Carney stated it will probably be cut again to 0.25%.
It won't do any good.
In the United States, February's figures are out and the U.S. unemployment rate jumped in February to 8.1%, the highest level in more than a quarter century. It is a surge likely to send more Americans into bankruptcy and force further cutbacks in consumer spending.
The US jobless rate has now already reached the level the Obama administration projected as an average for the whole year and the magnitude of what is happening is overwhelming what steps the administration has already taken.
Many think that more big job losses are likely, with grim implications for the housing and banking crises.
It is clear we have definately entered the worst recession in the postwar era, but some experts are starting to suggest something far worse.
Harvard University professor Robert Barro has calculated a 30% chance the U.S. will slide into a depression, which he characterized as at least a 10 percent drop in gross domestic product.
The Intrade betting market pegs those chances at 38%.
Presumably that's why Bank of Canada deputy governor Pierre Duguay warned Canadians not to be spooked by "irrational fear" over the economy (this while telling the House of Commons finance committee that "there will be more bad economic news coming").
No worries Duggy... there's enough rational fear to suffice.