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This Is Canada's Depression: Surging Crime, Soaring Suicides, Overwhelmed Food Banks "And The Worst Is Yet To Come"
Back in March, we brought you “Drugs, Prostitution, Violence Plague Oil Boom Towns Gone Bust,” in which we detailed the plight of towns like Sidney and Bainville, Montana, where the slump in oil revenue has made it all but impossible for local authorities to cope with surging crime rates that some attribute to the influx of oil workers the communities experienced in the good old days of high crude prices.
The problem, apparently, was that despite the dramatic slump in oil, companies hadn’t yet begun to cut jobs or slash capex and so, officials were left with less money to put towards policing their growing populations.
As dangerous as it may be for small towns to experience exponential growth in what The Washington Post described as “highly paid oil workers living in sprawling ‘man camps’ with limited spending opportunities,” what’s even more dangerous is the prospect that suddenly, the majority of those workers will be jobless. That is, if there’s anything that’s more conducive to raising the crime rate than legions of highly paid young men living in small towns with “limited spending opportunities,” it’s legions of formerly highly paid young men stuck in small towns with limited job opportunities.
With that in mind, America can look north to Calgary for a preview of what’s in store for America’s oil boom towns.
Although Alberta’s largest city bares little resemblance to Sidney and Bainville, the three do have one thing in common: oil. "Calgary boasted one of the lowest jobless rates in Canada as crude prices rose over $100 a barrel [but] it’s now reeling after a global glut pushed prices down by two-thirds,” Bloomberg notes.
For our part, we’ve spent quite a bit of time documenting the city’s trials and travails:
- "Canada Crude Contagion: Calgary Home Prices Drop Most In 2 Years"
- "Canada's Biggest Oil Casualty To Date: Calgary's Nexen Shutters Oil Trading Desk"
- "The Canadian Housing Bubble Has Begun To Burst"
- "Canada's Oil Patch Confidence Crashes"
- "Canada Mauled by Oil Bust, Job Losses Pile Up – Housing Bubble, Banks at Risk"
- "The Stage Is Set For A Massive Housing Market Correction in Canada's Oilpatch"
As we noted earlier this year, resource revenue makes up nearly a third of Alberta's annual revenue:
"Alberta’s real GDP is expected to expand in 2015, but at a much slower pace of 0.6%. This is down from the Second Quarter forecast of 2.8%," provincial authorities wrote in March, in their quarterly fiscal update. That underscores just how significant the swift decline in crude prices is for the province. Since then, the government's projection for 2015 GDP has fallen by a full percentage point, as the economy is now expected to contract by 0.6%. Here's more from the latest fiscal update:
The sharp decline in oil prices has substantially reduced capital spending in the energy sector. Oil and gas investment is expected to fall over 30% in 2015, with weakness carrying into 2016. Conventional investment has been hit especially hard. Rig activity has declined almost 50% through the first seven months of 2015.
Lower oil prices are weighing on production and exports. Although exports remain an important driver in Alberta’s economy, the forecast for oil production has been revised lower since March. This mainly reflects unplanned disruptions in oil sands production and the significant slowdown in conventional drilling. In addition, weakness in the oil and gas sector has spread to other sectors of the economy. Alberta machinery manufacturing has fallen 20% since January. This can be mainly traced to declining industrial machinery and equipment manufacturing, which primarily serves the oil industry.
Needless to say, this has had a dramatic impact on jobs. As we reported on Tuesday, Canada is expected to lose some 100,000 oil and gas sector jobs by the end of the year. Jobs like those Jillian Berling-MacKenzie, 25, and her boyfriend used to have. Here's Bloomberg:
Jillian was one of the lucky few of her graduating geology class to secure full-time work this year, at oil company ConocoPhillips. She bought a house with her boyfriend, also a newly graduated geologist with a job, before they both became victims of the cuts. A friend’s company has provided some contract work paying slightly more than employment insurance as Berling-MacKenzie tries to land positions just about anywhere, seeing no postings she qualifies for in her field.
And then there's Keely Eng, 27, who was fired from an engineering position in March at Nexen and is now so worried about her future in the field that she simply threw in the towel and decided to go to medical school:
The dearth of opportunities has Keely Eng, 27, seeking a career change. Eng was let go from an engineering position in March at Nexen, the Cnooc Ltd. subsidiary. Dreading an extended job hunt, Eng took medical school exams and has applied to several programs.
And don't forget about Kevin Mulligan, 61, who was let go by Stampede and now works with his wife making Christmas decorations:
Kevin Mulligan, 61, was among Stampede workers who “got the Tuesday boot,” he said. The former park maintenance manager, six years from retirement, is helping his wife with a Christmas wreath-making side business to supplement severance payments while job-hunting.
“My new job is finding a job,” Mulligan said.
As The Financial Post notes, Alberta's troubles go beyond falling crude prices. "Apart from the protracted price declines, Alberta’s oil and gas sector has also had to contend with a 20 per cent hike in corporate taxes, a carbon tax and new regulatory policies to limit rein in carbon emissions," the Post writes, adding that "a new provincial royalty regime is to be announced in January, leaving Alberta oil and gas producers under a cloud of uncertainty [while] the new federal government also plans to unveil new policies, including a review of the regulatory process, which the sector sees as more burden in an already difficult environment for the industry."
As we pointed out three weeks ago, the real casualties in Canada are no longer metaphorical economic objects, but the very people who until recently enjoyed comfortable lives only to succumb to an unprecedented collapse in the local economy. According to the chief medical examiner's office, 30% more Albertans took their lives in the first half of this year compared to the same period last year. Here are the numbers:
- From January to June 2014, there were 252 suicides in Alberta.
- During the same period this year, there were 327.
- If the trend continues, Alberta could be on track for 654 suicides this year.
- In an average year, there are 500, according to the Centre for Suicide Prevention.
Well, in the latest abysmal news out of Alberta, Bloomberg reports that food bank use and crime are now soaring amid the protracted slide in crude. "Calgary’s unemployment rate rose to 6.9 percent in November from 4.6 percent a year earlier, Statistics Canada data show, as 21,100 more were put out of work," Bloomberg writes. "Home sales have fallen 21 percent this year as the average price skidded 2.6 percent, according to the Calgary Real Estate Board." Here's more:
Crime is rising, home prices are falling and food banks are overwhelmed in Calgary as job losses spread. And the worst isn’t yet over in the heart of Canada’s oil patch.
Some of the city’s largest employers are poised to cut more jobs in 2016 as they reduce spending for a second straight year, adding to an estimated 40,000 oil and natural gas positions lost across the nation since the crude price rout began 18 months ago.
“We all know someone who has lost a job,” Naheed Nenshi, the city’s mayor, said in a speech this month, lamenting the “funeral"-like atmosphere in the business community.
Brown Bagging for Calgary’s Kids is providing 16 percent more school lunches than in September -- about 2,900 across 187 schools. The rise is unprecedented, said Tanya Koshowski, the group’s executive director. Food bank use jumped 23 percent in Alberta in the year ended March 2015, the country’s biggest increase, according to Food Banks Canada.
Police are pointing to economic decline and rising drug use to explain Calgary’s crime surge. In the first 10 months of 2015, commercial break-ins almost doubled from a year earlier, bank robberies were up 65 percent and home invasions increased 52 percent, Calgary Police Service data show.
Here are the graphs from CPS:


And here are the visuals from Food Banks Canada:

While it's not possible to definitively identify the proximate cause, it seems clear that the same mindset which is driving the suicide rate higher is also compelling Albertans to commit crimes. As Nancy Bergeron, who has answered distress centre phone lines for a few years, puts it, "people are just at wit's end."
Why? Because, as we put it previously, "simply because the price of a commodity has dropped to a third of what it was just over a year ago, and the shocking impact has been a paralysis of every aspect of financial, economic and social life, first in Alberta, and soon everywhere else across Canada, as the local recession (on its way to a depression) spreads across the country and eventually crosses the U.S. border."
One person who isn't concerned is Greg Cosma, a 58-year-old engineer was let go from Cenovus in October and now builds houses for Habitat For Humanity as a volunteer.
His message to new graduates hoping to find gainful employment in Canada's oil patch: “If you’re good at something, you have a future. Don’t sweat it.”
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Full Calgary Police Service report
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Here are some signs of a coming recession.
1. Investors in high-yield bonds are expecting to see their first negative return since the start of the credit crisis in 2008.
http://www.marketwatch.com/story/deteriorating-junk-bonds-flash-warning-signs-for-stocks-2015-12-07?dist=afterbell
2. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
3. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
4. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
5. Iron ore prices tumble
http://www.marketwatch.com/story/iron-ore-prices-keep-crashing-adding-to-global-growth-fears-2015-11-30
6. Baltic dry shipping index tumbles
http://www.marketwatch.com/story/shipping-index-falls-to-all-time-low-stoking-fears-about-global-growth-2015-11-19
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
"it’s legions of formerly highly paid young men stuck in small towns with limited job opportunities. "
Rewrite this to: 'It's legions of unemployed, low IQ Arabs stuck in small German towns with unlimited crime opportunities" and I think the results will be similar.
#muhDick
The clueless dingbats at Washington Post finally remember there is a whole world outside corrupt DC -- and notice what has been going on in shale oil areas for more than a year.
Wonder how much longer we'll have to wait for the WaPo wonders to figure out the US economic recovery is 110% debt, -10% recovery. Probably too much to expect from a bunch of communications majors.
CanadISIS Air force. What a f shame on canucks!
How to smell "Short Canada" bullshit:
Canada is in the headline, but article cites Alberta as proof.
Aussies should spend Christmas in these places for some realities.
I heard that an ex-neighbor of mine .... who moved down to LA from BC 45 years ago .... blew his brains out .... there is a socialist gene in the Canucks .... with the exception of Mark Steyn .... Rush Limbaugh's heir apparent .... I'm listening to him right now on Rush 24/7 .... he'll be guest hosting Dec 24, too .... a funny, smart guy .... can you handle it .... or do smart conservatives intimidate you ?
Steyn is very good but he steadfastly ignores the Man Behind The Curtain.
They'll pull through. Hopefully this brings back the hockey equipment manufacturing. Equipment has gone down hill since China started making everything. The exchange rate is prime for a vacation up there, I'm sure they have some snow.
US just made a severe brickbat againt the Anti-terrorist act promulgated by the Chinese, saying the act would curtail privacy, harm intellectual rights, blah...blah..
Jocular remarks from a chinese spokeperson:
But, the act was copied from the US......
Calagary's mayor, Naheed Nenshi...French-Canadian? lol
Increased corporate taxes combined with these new ridiculous carbon taxes/emission reductions when oil has dropped so low; sounds like a perfect storm.
seems to me people quote statistics such as GDP to prove that "everything is awesome", have they not read Orwell to understand the methods the govt use to keep the Ponzi afloat.
Least we forget, the central bank has greased the skids to come in with fire power!!! They'll do them all - mumblefucking, QE, NIRP and whatever it takes. These conditions are, as janet would say, "transitory".
http://www.bankofcanada.ca/wp-content/uploads/2015/12/remarks-081215.pdf
All I know is that Canadian Royal Mint is the best in the world hands down. No mint in the world produces what they do in .9999 I am .999 Merican but live close enough to the border that if I arc this model rocket over the border it will make it. I think their toques will be OK for while eh?.
Yeh, those milk spots though, how come this mint has a bigger problem with them than most.
The Saskatchewan Pirates will come this spring, and raise the jolly Rodger on Regina's shore...'
Check out this video on YouTube:
http://youtu.be/DuGGNsE3_8Y
AAAArrrrrrrggggghhhhhhh!
UN FUCKING REAL - I had a job years ago that was like an oil patch job. I was paid twice the normal rate and expected to work as hard and intelligently as possible. I was on call 24/7 in case of emergency. So what did I do with that extra money?
I bought rentals because I knew that a job paying twice normal scale WOULD NOT LAST. Rentals have problems of thier own but will provide a better retirement than a 401K stuffed with fiat.
So what happened with my job? Seven years after I started we were all laid off. The company started using dialers and lots of minimum wage employees. I have never made as much money since.
I still have my rentals and just paid one off :-) With the number of illegals streaming in, I will always have tenants. I do have one question tho : How is it that a dumb hillbilly like me can understand that good times never last and you need to plan for the future? A lot of smarter people do not get this concept.
Trudeau will fix it. His dad is a TV repairman and has a monster set of tools.
Funny, when I am travelling and I meet some Indian, Arab, Persian, Paki, Afghani, Ukrainian or other person from some shit hole who flashes a Canadian passport at me I say, "really? did your great, great, great grandfather shag an aborigine women too!"
I like Canadians. Sorry to see the people hurting so bad. Have been to visit to ski many times, and had a great time. With the exchange rate so low to the dollar, it's a great time to book a trip. IMHO
This is true for many currencies vs. the USD. The Peso is around 17.25, the Euro is around 1.10 and the Pound is around 1.50.
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His message to new graduates hoping to find gainful employment in Canada's oil patch: “If you’re good at something, you have a future. Don’t sweat it.”
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Sorry Greg, you're wrong.
Being good a something is no guarantee of a job, you fool.
You're espousing the feel-good ßµ££$?φ of someone who's outta the race, with enough wealth to ride off into the sunset.
You may have a job if you're 'the best' at it, but otherwise?
STFU.
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