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Which direction are we heading?

The markets have come up from their March lows but there is still a wild ride ahead. Depending on who you believe, we’ve either moved through this recession and have “turned the corner” into a new bull market run or we’ve just experienced a larger than expected bear market rally that should crash down by the end of 2009.

Personally, I’m a little bit on the fence. On one side, I figure that the economy must turn around at some point but this recent rally has gone up so quickly that I see a lot of down side. We still have job losses each month in both Canada and the United States. GM is on the verge of bankruptcy, Chrysler is already there and regardless of the actual declaration, there are going to be thousands of fewer dealerships across North America.

What does that mean?

Think about each town that is made up of about 1000 people, a corner/video store, a grocery store, pet store, clothing shop and a GM auto dealership. I would bet that the dealership makes up a large portion of the corporate tax base for the town. How many jobs are lost? How much income is moved to larger centres followed by residents and their famillies? Can rural North America handle the loss of these businesses?

I’m not sure we’re out of the woods yet on this one. Call me naive but don’t economies and markets recove when people actually have money to invest and spend?

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