When you live in a big province like British Columbia, it's possible to fall under the illusion that we're pretty self-sufficient.
B.C. is 944,735 square kilometres, making it larger than the combined area of Germany, Italy, and the United Kingdom.
But Canada's westernmost province is still a relative pipsqueak economically, with a gross domestic product of $237.2 billion in 2014.
According to the province's 2015 Financial and Economic Review, 17.7 percent of that GDP came from the category known as "real estate, rental, and leasing". It was up 3.9 percent over the previous year.
Another 8.1 percent originated from construction and six percent was from finance and insurance.
The means more than a quarter of the provincial economy could feel some effects if the recent slowdown in Lower Mainland housing sales continues. If it morphs into a bursting real-estate bubble and a sharp drop in sales, it will likely cause significant job losses.
A housing crash would especially hit mortgage brokers, real-estate salespeople, banking and credit union staff, architects, engineers, and people in the home-furnishings and appliance businesses.
Short sellers target banks
The investment world appears to have already taken notice of these sectors' fragility. According to TSX statistics, three Canadian banks (Toronto-Dominion, Nova Scotia, and Royal Bank of Canada) made the first eight spots on its most recent list of the largest consolidated short positions.
Short sellers make money when a stock goes down in value. Toronto-Dominion is their favourite pick right now on Canada's largest stock exchange. It suggests there's a fair degree of pessimism about the banking sector, which is a major underwriter of mortgages.
The Huffington Post recently quoted money manager David LePoidevin saying he's holding short positions in Canadian Western Bank and Laurentian Bank. He's also shorting two companies in the mortgage sector, Home Capital Group and Equitable Bank.
Meanwhile, provincial economic statistics indicated that natural resources only accounted for 7.8 percent of the B.C.'s GDP in 2014.
This means the days of 50 cents of every B.C. dollar being generated from forestry are long over. However, the industry is enjoying sunnier days with the declining Canadian dollar.
One of the bright spots in 2014 was wholesale and retail trade, which was up 4.4 percent. That year, it equated to 10.4 percent of the provincial economy. Some of this is driven by net interprovincial and international migration, which increased sharply in the first quarter of 2016.
B.C. trade patterns change
The trade statistics were particularly intriguing.
The export of B.C. goods to the United States rose 15.7 percent in 2014. That followed a 10.6 percent rise in the previous year. Big increases were recorded in natural gas and softwood lumber.
But if Donald Trump is elected president, he plans on giving six months' notice that America is withdrawing from the North American Free Trade Agreement. This could have an effect on B.C.-based companies hoping to have access to the U.S. market.
Meanwhile, B.C. trade in goods to China decreased by 2.7 percent in 2014. This followed "eight consecutive years of double-digit growth", according to the document.
The major reason was a drop in coal exports as China moves to less environmentally harmful fuels. China has also signed a $400-billion, 30-year deal with Russia for natural gas. This more or less drove a stake into B.C.'s plans to sell liquefied natural gas to China.
Overall, 50.2 percent of B.C. exports of goods went to the United States in 2014, whereas 42.9 percent of goods went to Pacific Rim countries.
Japan's economy shrank by 0.1 percent in 2014 and growth in China's economy was reportedly down to 7.4 percent from 7.8 percent the previous year. Last year, the Shanghai stock market was plagued with problems, which may or may not have implications going forward.
Xi Jinping takes China on new path
Just as Trump is looking inward, the Chinese government has been pivoting its economic focus more toward Asia, Europe, and Africa. This is the cornerstone of President Xi Jinping's grandiose "Belt and Road Initiative".
It's an ambitious plan to reassert Chinese economic influence through a 21st-century version of the Silk Road. That was an ancient trade network linking China with the Indian subcontinent, Persia, Europe, and Africa. It made the Middle Kingdom one of the globe's major economic powers until the Chinese were humbled in the Opium Wars of the 1800s.
Xi is also a huge proponent of the Asian Infrastructure Investment Bank, which is emerging as a rival to the Washington, D.C.–based World Bank in providing development financing.
China is rich in foreign reserves. The Asian Infrastructure Investment Bank will undoubtedly bankroll many of Xi's Belt and Road Initiatives to bring countries in Asia, Europe, and Africa into China's sphere of influence. In recent years, China has had very few close friends, counting strife-ridden Pakistan as its closest ally.
To move forward on its Silk Road plans, China announced a $50-million contribution to launch a new AIIB Project Preparation Special Fund late last month.
The Americans didn't want its allies, including Great Britain and Germany, to sign on with the bank. But the British and Germans did anyway, as did the French.
The United States and Canada do not have membership.
The U.S. and China are also at odds over China's claim of hegemony over islands in the South China Sea. It's causing a strained relationship as America wants to remain supportive of China's regional rivals, including the Philippines, Vietnam, and Taiwan.
As secretary of state, Hillary Clinton alienated the Chinese government with her tough talk about the South China Sea issue. Her vaunted diplomatic "pivot to Asia" in 2012 also didn't sit well with the Chinese government.
Japan, a close U.S. ally, is bickering with China over ownership of another archipelago, the Diaoyu Islands (China's name), otherwise known as the Senkaku Islands (Japan's name).
This has prompted speculation in the U.S. that perhaps the Chinese government would prefer an isolationist Trump over Clinton as the next U.S. president.
Canada's Liberal government wants to remain friendly with both China and the United States. But if Justin Trudeau is forced to make a choice, he's invariably going to have to demonstrate a preference for the United States, given the longstanding trade and military ties.
The United States most certainly doesn't want Canada signing onto the Asian Infrastructure Investment Bank, which has the potential over the longer term to sideline the U.S.-dominated World Bank.
Arguably, it helps the United States diplomatically when the Vancouver media become China-obsessed in a negative way, given the strained relationship between the United States and China. In the same way, it can be argued that opposition to the Enbridge pipeline is in America's best interest because it enables the United States to continue buying oil from Canada at deeply discounted prices.
What does this mean for B.C. politics?
The B.C. Liberal government has tried to build its brand on balanced budgets and economic growth.
But there's evidence that B.C.'s largest trading partners are, to a certain extent, ready to turn their backs on this province and this country. This will be particularly so if Trump wins the presidency. But even if Clinton wins, she will face pressure to pull up the drawbridge, given the xenophobic currents south of the border.
B.C.'s collective narcissism, as manifested in the slogan "The Best Place on Earth", overlooks the possibility that the Chinese and Americans might not be nearly as interested in doing business with us in the future as they have been in the past.
This will be especially so if the Chinese government takes steps to try to repatriate assets in B.C. obtained with the proceeds of corruption.
At the same time, one of the key drivers of B.C.'s economic growth (and controversy), real estate, may already be due for a major reversal.
In fact, real estate may very well determine the outcome of the next provincial election in May 2017, particularly if the bubble bursts before then.
Economic contractions invariably have political implications. The global economic meltdown in October 2008 paved the way for Vision Vancouver to win the civic election the following month, catapulting Gregor Robertson into the mayor's chair. It also helped Barack Obama become U.S. president.
In the meantime, there are other significant economic clouds on B.C.'s horizon that have largely gone unnoticed in current public debates.
Over the medium to longer term, these issues could become even more problematic for whichever party forms a majority after the 2017 B.C. election.
When you throw in the effects of climate change (including more forest fires) and rising debt associated with the Site C dam, it's not a pretty picture.