It Comes As No Surprise

Our sour cherry tree was a riot of blossoms only a few weeks ago and today there are maybe twenty very immature cherries in their place. As usual, wet and cold weather came on the heels of the great blossom outburst.

Today (Monday) the headlines read that Canada's deficit will be "significantly more" than fore casted. I am convinced that politicians do not yet 'get it'. The formula is so simple, why are the conclusions so difficult to grasp?
One has only to look at the causes of the recession/depression to understand why the deficits will continue to mount. Here is a brief review.
We all have heard of the 'bubble' and that it burst and that is why we are in trouble as a world economy. Two false assumptions caused the bubble in the first place. 1. You can build an economy on debt and spending. (You remember all the ads encouraging you to take a home equity loan so you could take that vacation and buy that new SUV, let alone the constant barrage of solicitations for new and better credit cards.) 2. The value of your assets will always go up.
So this is really simple and maybe that is why the eggheads in government do not get it. 1. The debt and spending has got us into trouble and the market is trying to correct the mistakes. i.e the sub-prime mortgages that all have to come to roost eventually. 2. The value of assets always fluctuates and when it is vastly inflated, it must come down sooner or later.
Now it gets really simple. 1. You cannot fix a problem that was caused by debt and spending with more debt and spending and yet that is what world governments are doing. It causes even more problems down the road and only delays the inevitable. 2. What do people do when they lose value in their assets? And here is the clue to when the recession/depression will be over. What do you do when your financial security is threatened? You pull back, right? You spend less, you pay down debt, you are more cautious, you save more, you invest more conservatively, and all of this results in lower government revenues because when you are not out spending recklessly, tax revenues drop and thus we have a headline like today.
So when is it over? When you and I have re-established our financial security by paying down debt and having a very healthy nest egg for our future, be it short or long term. And when we do again start spending, we will no longer throw caution to the wind but will be careful because we will remember '08 and '09 and not want them to be repeated. I predict this will take a long time and in the meanwhile, we are in for much harder times than what we have had until now.