The best of times and the worst of times

The fear is palpable in Panama. Ex-pats from the States are worried that their pensions will be wiped out by the American recession, while Canadian ex-pats are ‘concerned’ (Canadian for scared) that the Canadian dollar has fallen in a few months from parity with the U. S. greenback to 78 cents, now. And, Panamanian consumers are up in arms over soaring food prices and outrageously high electricity bills.

Americans are counting on Obama. President-elect Barack Obama is working on an economic stimulus package that will highlight make-work projects renewing America’s infrastructure like bridges, roadways, electrical grids, etc. in a similar fashion as what President Franklin Roosevelt did to bring the United States out of the depression in the 1930’s. This is a much better plan than Bush’s throwing money away to bail out financial institutions.

Canadians are doing much better. Canadian banks are so tightly controlled by the Canadian government that most independent observers say the Canadian banking sector is more secure than most banks in the world. Yet, the decline of Canadian crude oil prices and the increased cost of the country’s social programs has made Canadians jittery and caused the Canadian dollar to plummet in value.

Remember, Canadian Conservatives are really closet Liberals. Late last week, Conservative Prime Minister Stephen Harper cast off his deficit-fighting garb and embraced deficits as a “necessary tool to fight deflation.” This flip-flop would have been greeted with howls of derision in the States. In Canada, it’s seen as smart leadership by a minority government that can fall anytime it gets too far out of line.

Panama tourism and Canal transit revenue will fall. As world trade slackens and tourists stay home, Panama’s trade revenue will fall just as the country’s legislative and presidential elections go into high gear early next year. This will undoubtedly give an advantage to Martinelli’s Cambio Democratico Party in its attempt to beat Balbina Herrera and the PRD.

So what’s so good about all of this turmoil? First, industry will slow down throughout the world leading to lower oil prices. Oil-rich countries will find that cutting production won’t increase crude prices if there’s a limited market for oil. Saudi Arabia and Venezuela’s President Hugo Chavez will spend much of their saved oil revenue to buy basic commodities as they try to put down internal revolt. And, China will distribute more of its wealth to rural areas where peasants want the same benefits as city dwellers.

Less ‘things’ will be produced. Unemployed workers from the manufacturing side will be retrained, or take early retirement. Fewer new cars will be bought, as more motorists repair, and recycle what they have. Car pooling and mass transit will become the norm rather than the exception (already, driving has been cut by a whopping five percent in North America). Less factory production will mean pollution will fall to levels never obtainable through legislative fiat. And, food prices will drop because crops will be grown to feed people, instead of cars (ethanol).

More free trade agreements in the offing. A global recession requires a global approach to resolution. This means more international trade agreements will be needed to assure the free flow of goods, services and labor between countries. Although Panama’s long-awaited Free Trade Agreement with the United States has been put on hold until next year, Canada’s FTA is moving ahead smoothly. Additional talks will be held next month in Panama and it is likely the legislative package will be presented to Canada’s House of Commons and Panama’s Legislative Assembly just prior to Panama’s May elections.

In the meantime, Panamanian families will continue to find many food prices still out of reach, and electricity a luxury they can barely afford.

EDITOR’S NOTE. Phil Edmonston is currently “on the road” in Canada on a 10-day marathon book signing and broadcasting stint for the latest of his lemonaid books. It is tour Number 40. Wow.