Friday, February 10, 2012

Rose-colored glasses and rear view mirrors

Economist Eric Howe made a comment the other day that Saskatchewan's boom is resource based, to enjoy it, but not to expect it to last forever. Today he was somewhat mocked by Gormley and respected by Mandryk. I tend to agree with Howe.

Resources are commodities that fluctuate wildly. Not too many years ago Saskatchewan's economy was based on wheat sales. Every business held its breath annually to see whether or not the farmers were going to have a good year, which would mean they would have a good year. We are now diversified and not dependent on any one resource - but nonetheless dependant on the commodities market. You only have to look back a few years when the provincial budget went awry because potash revenues did not materialize. This year Premier Wall is cautious on spending because "potash prices have softened."

I took Howe's comments to mean enjoy this boom, but remember that every boom eventually flattens and plan your financial future accordingly.

1 comment:

  1. I like Gormley, but he tends to devolve into name calling whenever anyone contradicts his thesis that Saskatchewan is now a permanent have province. "Saskatchawhiner" and whatnot. Howe's comments make fiscal sense.

    I completely agree with you. We can't expect record potash royalties each year, and we need to invest those royalties wisely so that we don't incur massive deficits in years where commodity prices fall. Alberta has had tremendous financial success, but even it has had ups and downs as the prices of oil and other commodities have increased and decreased.


Note: Only a member of this blog may post a comment.