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T The rules of economics are shifting Dollars & Sense Peter Watson Guest Contributor 15 | Thursday, May 23, 2013 | OAKVILLE BEAVER | www.insideHALTON.com he rules of economics might be shifting for many Canadians. No longer will increased economic activity necessarily be bene cial for those who are hoping for more prosperous times. One part of the economy`s normal ebb and ow occurs when business activity slows down, resulting in fewer jobs and lower wages. You cannot spend what you have not earned, so often economic recovery is slow. When the economy does recover, employment opportunities increase with more money and prosperity abounds. That is not necessarily going to be the case this time around. Our nagging problem is personal debt; we have historically high levels of it. This looming debt problem has received more press coverage than most other topics over the past year. At the beginning of the world's nancial challenges ve years ago, Canada's economy began slowing down. We received a lot of international praise for handing the issue better than most, including the U.S. and Europe. There are signs the recovery in the U.S. is underway. This will be a boost to our economic prosperity which is closely tied to the U.S. Our neighbours to the south will recover and that is why the U.S. stock market has come roaring back to recover losses of past years, now to set new highs. The stock market is a leading indicator and its strength is a positive sign that prosperity will return and with that, the world of business will regain strength globally. That pending prosperity, however, is the danger sign. Increased business activity will then cause governments to anticipate too much prosperity, and thereby try to prevent excessively high in ation. Coun- tries need to control in ation to protect their economic stability. One of the best ways to slow the economy, and therefore prevent in ation is to raise interest rates, which will be the beginning of the nancial hardship for those with too much debt. We have had repeated warnings by the Bank of Canada and the federal Minister of Finance. Both have done what they could to discourage high personal debt levels. Now there is concern from another national regulator, the Of ce of the Superintendent of Financial Institutions (OSFI), which is considering changes within its powers because of the high household debt levels and the current housing market. The national concern isn't that some people are in over their head but that these unprecedented debt levels could lead to too many individuals failing all at one time, thereby causing irreparable damage to the Canadian economy. OSFI wants to guard the banks from the fallout of individuals overwhelmed by personal debt. see Protecting on p.16 Oakville's State-of-the-Art Hearing Clinic May is HEARING MONTH! FREE hearing screening** Free iPad mini with every purc hase of 2 hearing a ids * Offer valid thru May 31st only 2387 Trafalgar Rd, Oakville ON (In the Winners' Plaza) www.pureaudiology.ca *iPad mini will be awarded at the end of the trial period **18 years and older 289.837.1137 All Change Begins With Leadership Thank you to our Board of Directors for helping to strengthen our community! Bill Stevens, Board Chair The Fulcrum Group John Armstrong Capco Limited (Canada) Peter Bailey Intertek Cantox Tim Johnston Bank of America Merrill Lynch David Millar Oakville & District Labour Council CAW Local 707 Peter McAdam Felix Global Corp. Sudha Dwivedi PHH Arval Max Khan Town of Oakville Ward 6 Councillor Gerry Popp Community Volunteer Martin Felsky Harrington LLP Mary Cator Oakville & District Labour Council Local 245 Donna Messer ConnectUS International Inc. Faisal Saab FieIding Chemical Technologies Inc. Linda White Scotiabank Find out how you can help www.uwoakville.org