Words of Encouragement

I tend to get over-wrought about the economy because my retirement depends completely on it, i.e. I have no private company pension and a very small government pension. The government pension is only sufficient to keep me in cat food and living in a tent for the rest of my life. So I watch my investments closely and my mood swings up and down (lately, far too often down) with the economy.

So it is nice to hear Canadian economists uttering reassuring words:

Are we—consumers, business leaders, investors, economists—going to collectively give up on this recovery because of a few sour months for the economy? What if Churchill had said: “We shall fight on the beaches, we shall fight on the landing grounds, we shall fight on the streets, but if we see some ugly home sales numbers and a downbeat durable goods orders release, we’re so gonna throw in the towel and run”? There is no doubt the U.S. economy is skidding through a very real soft patch, which is reverberating to undermine fragile business sentiment and to pose a risk of a renewed downturn. But let’s not talk ourselves into it. Yes, we could wallow in the mire of gloom and despair, and focus exclusively on the negative (of which there is no shortage in the wake of the worst post-war recession). But, let’s recall that policy remains exceptionally accommodative globally, corporate finances are in stellar shape, spending on big-ticket items (especially homes) is already at rock-bottom levels and has little place to go but up, and the emerging market economies are forging ahead with new growth opportunities.

That's Douglas Porter writing in the Bank of Montreal's Focus weekly publication. It is a salve to my ragged, worried nerves. The ups and too many downs of the market are wearing my nerves thin. I know I can't expect robust growth and a roaring stock market, but I would appreciate something that was more consistently up. Wait a second. The US market is down 6% this year and Toronto's is down about 1%. I want something positive, not negative.

In the meantime... I'll relish the generous words of Douglas Porter and fervently hope they point to better times.

But as Douglas Porter points out, the real world can be cynically cruel. While economists around the world are scaling back expectations about GDP for the US and Canada, the situation in Europe is different:

As a sidebar, it’s ironic that the European debt turmoil appears to have taken a big toll on the U.S. recovery (through the market upset and ensuing uncertainty), yet has barely touched the European growth outlook. The 2010 GDP forecast has actually been revised higher for the Eurozone since the crisis broke wide open in the spring (thanks to the solid Q2 results). In fact, it now appears that Germany may be the fastest growing G7 economy this year (yes, topping Canada). Clearly, the Europeans learned a thing or two from Churchill.

Ow! That's like a stick poked in my eye. The Europeans wrecked the stock markets in North America with their credit crisis, but their stock markets are surging? Where's the fairness in that?