In the early 1990s Canada went through an ugly property bust and recession. Growth was stagnant in 1990, contracted a full 2.1% year-over-year in 1991, and was stagnant again in 1992 as the economy faced a multitude of challenges. The Bank of Canada was waging a war on inflation and raising interest rates, the government had introduced the GST and, faced with a revolt by international creditors, took an axe to government spending.

The crucial point in this current economic contraction is whether the U.S. and Canadian consumer also goes to ground. Many young Canadians who have grown up in the glory days of the recent resource and real estate boom don't know how miserable it can be when consumer spending dries up.

Personal expenditures rose just 1.2% in 1990 year-over-year, fell a full 1.6% in 1991, were mediocre in 1992 and 1993 and did not get back to 3.0% until 1994.

By comparison, in 2006, spending rose a robust 4.2%.

The early 90's was a miserable time. Incomes were stagnant and Canadians quite simply felt whipped. But the economy began to recover by 1993.

It took a currency devaluation and a U.S. economic boom to get things back on track. The question remains whether Barack Obama and the U.S. congress will have the will to the get the U.S. fiscal ship in order.

The parallels to the early 1990s are compelling, but there are differences.

Benjamin Tal, Chief Economist at CIBC said the distinguishing characteristics of the economy then were economic recession, steep job losses and higher loan delinquencies - all of which he expects will characterize the current downturn as well. The big difference is interest rates, which remain at historically low levels. The resulting low mortgage rates should help homeowners, and moderate this downturn, Mr. Tal said.

Working against this cycle, however, is new home construction, which he said could decline more significantly on a year-to-year basis than it did in 1991, and that will likely spill over to hurt the economy.

In November, housing starts fell by 19 per cent, the slowest pace of residential construction since late 2001. At 2.72, the ratio of new listings to sales is much lower than it was in much of the early 1990s, according to data from CREA. At the peak of oversupply, in May of 1990, the ratio of listings to sales was 3.60.

But in light of declining sales, listings need to fall much further to see a return to balance and the hope of a settling out of prices. All of this, both in the U.S. and Canada underpins consumer confidence and ultimately spending.

In light of these experiences and current circumstances, the following are offered as guidelines to help any business, especially those involved in real estate, weather the current maelstrom.

1. Stay close to your bankers and keep them fully informed on your plans and progress.
2. Focus on your Balance Sheet. Cash and near cash is king. Lever down as quickly as you can BEFORE you are forced to do so in a buyers market.
3. Deal with reality, don't be overly pessimistic or optimistic.
4. Communicate frequently with employees, clients and suppliers. Keep you ear to the ground. Listen for how other's are seeing the situation. Keep employees informed about macro and micro economic issues and make them part of your "eyes and ears" approach.
5. Stay with your plan UNTIL you have to change it. Stay flexible and open minded. When you have to adjust, do it quickly and decisively.
6. Watch every penny of cost. Focus expenses on those areas where you know you will get a return in an acceptable timeframe.
7. Receivables tell you a lot about the state of your clients AND the overall market.
8. It usually takes twice as long and twice as much to see significant changes of direction and progress. Most of us are optimists at heart, a little bit of scepticism during periods of turmoil can serve us well.
9. Sweat the small stuff. Attention to detail can pay off. This should be part and parcel of everyone's day to day operating behaviour.
10. Increase attention and service to clients wherever and whenever possible. Take the time to show them you really care, especially now!