Sunshine and Eclipse (1927-1934): a look at Canada

This short documentary is an overview of the events that marked Canada between 1927 and 1934. It shows a confident and prosperous Canada expanding in all directions until the stock market crash of 1929. Despite it all, Canada maintains an optimistic outlook. The period is witness to bargains by mail order, extremes in women’s fashions, political seesawing, hockey broadcasts by a very youthful Foster Hewitt, and the word “quintuplets” in every headline.

Here is the direct link.

As domestic debt levels in Canada continue to climb, and government budgets assume continued growth, this piece offers a cautionary reminder of how quickly economic optimism can turn down with global trade.

Here is some timely perspective from The Business Insider:

It is of far broader interest than Canada, however. It is fascinating to look at the insatiable optimism of the Twenties, the commodity boom, the expansion of trade and the sense that human beings had overcome adversity and created ever-lasting prosperity. In fact, the Roaring Twenties were simply a rediscovery of leverage, as are all credit bubbles.

Bubbles artificially boost demand, bringing it forward in an orgy of present day consumption and profit, at the expense of crashing it for a prolonged period thereafter. Over the very long term credit bubbles are neutral, but on the scale of a human lifetime, they most definitely are not. The impact is devastating as euphoria morphs into fear and then panic, and the real economy freezes over.

Watch in the video how quickly that psychological shift unfolds, how ephemeral prosperity can be and how quickly society can shift into long-lasting malaise. Exporting commodities into the teeth of a bubble is not a guarantee of eternal wealth, as modern commodity exporters are set to discover over the next few years.

Canada is vulnerable again, as is Australia, and other exporters into the current Chinese bubble. So are all those who are betting on continued rises in commodity prices. Just because resources will be scarce in the long term, does not mean that will be true in the short term. Prices can crash and fortunes wagered on mistimed bets can evaporate.

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