c)  The market that has lately turned in favour of its buyers is going to continue and, if anything, may force sellers to lower prices or withdraw from the market altogether.

    2.    New home building is less active than it was and this provides evidence of how the Law of Supply and Demand operates:

        a)  If fewer people are showing interest in buying a new house (i.e. less demand), builders will hold back on development and construction plans (i.e. less supply).

        b)  The hope is that the purchase and sales rates will be in balance.

        c)  Price reductions and/or incentives are used to fine tune the inter-relationship, even though they seldom make a startling difference. 

    3.     Real estate can be seen as a major factor in the economy, much as the auto industry has a decided impact on the country's financial health.

        a)    Purchasing a house frequently means a need to buy appliances and furniture, as well as expenditure on a series of home repairs and improvements.

        b)   Ongoing changes in house ownership support a range of ancilliary businesses, just the way the car industry does.  These include, as in the case of auto sales, media and banking firms.

        c)   Although there's less of what can be called corporate concentration (i.e. resales far outnumber the volume of new home purchases), the total value of house sales in real estate brokerages of any size certainly exceeds the local dollar spending on cars.  Furthermore, the combined tax collection that results from a house purchase is invariably far greater than the amount that flows into government pockets when a car is sold.

 

Politics can be seen as a cousin of economics.  Its concern is with ownership of what the economists call the Means of Production and how wealth is distributed among the populace.  In oversimplified terms, it ranges from left wing thinking (which favours the poor) to right wing thinking (which prefers to take care of the rich).  Generally speaking, though, ruling parties in most modern democracies tend to operate in the centre, with a common interest in private enterprise as opposed to state ownership and control.  On the other hand, autocracies and dictatorships -- which exist in both left and right wing extremes of the spectrum -- have rules of their own.

Nevertheless, all countries need to give due recognition to the Profit Motive or its government equivalent, a Balanced Budget.

No one who's losing money can survive for any great length of time and this applies to any national economy as much as it does to every kind of business.

As the current financial meltdown began, however, the concept of deficit financing started to take a new turn.  Regardless of how this will affect my great grandchildren, there's been a growing acceptance that bail outs, stimulus programmes, and the use of government borrowing powers are needed to soften the blows that fall on the unsuspecting victims of financial wrong thinking.  Left, right, or centre, the consensus is that people shouldn't be left to struggle on their own.  Fall outs in the national economy are now considered to be too severe to be left alone without some form of government interference.  Simply relying on time for the damage to repair itself (even assuming that this will happen) is no longer seen as a practical solution to what's gone wrong.

Thus the news that GM is going to be helped out in the Niagara Region by significant federal and provincial investments.

And, in turn, rhere are the recent announcements of multi billion dollar grants to Brock University and Niagara College, quite apart from some stimulus payments for "shovel ready" projects in several of our communities.

In fact, as I see it, the erstwhile economic basis in our neighbourhoods is going to change alongside the alterations in the sources of both car sales and home purchases.

Things hereabouts are not going to be the same!

 

Despite all the forgeoing, I have to admit that my fears of a continuing downturn in the housing market may well be unfounded.  In fact, the loss of GM employment could, in statistical terms at least, be offset by job openings in constructon at first and then followed by a surge in hiring teaching and related professionals.

The two kinds of jobs are very different, of course, and a major rush of retraining to fill the stimulus generated vacancies will be required.

Nevertheless, our local employment levels may end up being quite similar to the present and past.  The differences may be in the make, price, and features of cars, and the home buyers may be people who are new arrivals in the region,  but I cannot see us becoming altogether hapless vicitims of the mistakes made in Detroit and Wall Street.

As I said to my great granddaughter last month:  Life DOES go on and IS worth living.