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Teck Mining Company's zinc and lead smelting and refining complex is pictured in Trail, B.C., on Monday November 26, 2012. If global commodity prices stay low, Canada’s economy could be in for dark days.DARRYL DYCK/The Canadian Press

Michael Bliss is a historian whose books include Northern Enterprise: Five Centuries of Canadian Business.

In 1929, the true sign of an impending problem for the Canadian economy was not the stock-market crash, but rather the collapsing price of wheat and other commodities on global markets. As primary producers' incomes shrivelled, the retrenchment rebounded to other sectors of the economy, unemployment grew and a decade of serious depression followed. It had begun on the Winnipeg Grain Exchange, not on Bay or Wall streets.

I hope I'm wrong in drawing attention to this, but the ongoing global slide in the price of oil and many other commodity prices is a very ominous sign for the short- and medium-term future of the Canadian economy. We have played down this partly because during the election campaign it was in all parties' interest to assume that we would be in fairly rosy shape no matter which of them held power. And now, of course, we are in full Liberal fiesta.

Don't count on the exuberance lasting. For almost two years, Canada's single most important industry, oil and gas production, has been devastated by the glut of petroleum products on world markets. Tens of thousands of jobs have gradually been lost, investments have been cancelled or postponed, government revenue in the oil-producing provinces has shrunk faster than almost anyone anticipated and there is no relief on the horizon. Canada's most important industry is uneconomic, imperilled.

With copper, corn and practically all other commodity prices tanking, and world trade shrinking, it looks as though much of our mining and perhaps agricultural sectors are on the brink of problems similar to those of the oil patch. All the skyscrapers in Toronto cannot hide the fact that Canada's is still a resource- and trade-based economy, highly vulnerable to the global depression in commodity prices that seems to be occurring. If it lasts, if there are deep structural problems in a global economy that had become too dependent on China's 20 years of miracle growth, we are going to find ourselves in a pickle far more serious than we faced after the financial crisis of 2008.

Forecasters usually make predictions based on extrapolations from previous trends, and thus tend to miss the effect of extreme events. So our predictors seem unaware of the seriousness of the problems ahead. Perhaps a few months from now, when we find that every single Canadian province is in financial deficit, we'll begin to wake up.

But first, we must see through our really serious illusion, which is that hard times and even economic crises can easily be beaten by enlightened fiscal and monetary policies. Central bankers and Keynesian economists assure us not to worry: With low interest rates, quantitative easing, infrastructure spending and manageable deficits, they can control the business cycle, neutralize crises – as they think they more or less did during 2008 and its aftermath – and keep the ball rolling, the house of cards intact.

The trouble is that real structural economic imbalances, such as we seem to be facing, are not amenable to attempts to manipulate demand. Certainly, public spending helps in hard times (and has always been an obvious resort; what we call infrastructure projects used to be called public works), but as we found in the 1930s and afterward, you ultimately have to either find new industries to sop up your surplus workers or you have to hope that old industries become profitable again. Something real has to come along to fill the hole; simply borrowing or printing money ultimately only makes it deeper.

Every Canadian of goodwill hopes for the best for prime-minister-designate Justin Trudeau, his talented caucus and our new sunny political climate. Won't it be grand if we stand on the brink of a new dawn in Canada? But neither the government nor the Bank of Canada has the slightest ability to raise the price of a barrel of oil, a ton of copper or a bushel of corn on world markets. We might be heading into a dark, stormy and long night.

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