No time to rejoice

This traditionally is a time for rejoicing, celebrating the Miracle of Christ’s birth.

Others too, teachers and students, enjoy themselves because of the long holiday. Perhaps also the investment community will reve1 in the unusual Christmas rally in financial markets. Some may be less delighted, such as postal workers who are deluged with mail in December.

Retail volume surges in December, with last year’s December retail sales reaching just over $35.5-billion. Department stores customarily have their profitable time in December, when profit margins seem to peak.

The Christmas season helps tens of thousands of persons to make a living. Some work – especially manufacturing ranging from gadgets, toys, ornaments and clothes to cards and coloured papers and ribbons for wrapping gifts – prospers every December.

What is disturbing nowadays is the likelihood that our community is at the threshold of a difficult era. The credit collapse occurring will mean a prolonged economic slump, ultimately leading to a rebuilding process, both at the government and household levels.

In the meantime, an enormous amount of sacrifice will be required. We, therefore, can expect less government handouts and higher taxes. Currently, the seeds are being sown for a radical change in government-sponsored “entitlements”.

There is a growing awareness among public-sector unions and civil servants that the way they spend is going to be radically changed.

Layoffs and less generous pension benefits are sure to follow. Pension trustees and legislatures will have to become aware of the new business climate.

At all levels of the social structure, starting with households and followed by governments and unions, there will be a new era of frugality. It will be imposed as the funds no longer will be available for us to continue our profligate ways.

The baby boomers will have to work longer and strive harder to retain their jobs in order to reduce their debt obligations and work towards a comfortable retirement. At the same time, the public sector too must move this way. This is necessary to restore solvency to a financial system that is broken.

What follows then will be a lengthy period of no-earnings growth, a flat GDP and an absence of new investment.

These hardly are a recipe for rejoicing nowadays.


Bruce Whitestone