So the bailout failed. What do we think, as Canadians? Is our economy still as closely tied with that of the US as it was in the 80s? Or can we weather this storm independently?
As closely? Not really. But we're still very close. We won't come out of the downturn unscathed, but in a lot of ways we're better off. Our banks for example are pretty strong, even CIBC (the one most exposed to this mess) isn't at much risk of collapsing. We have less bad mortages up here
( ... )
It's interesting that the Libs left a giant surplus behind and the cons have devastated it. I mean, I'm not naive enough to blame it all on politicians (tempting though it might be), but where the hell did that surplus go? Why wasn't it saved for just such an event?
I'm in Winnipeg, and there was a lot of talk that a good portion of the big jump in housing costs was simply adjustment - given that the city's houses have always been comparatively cheaper than anywhere else in the country. I certainly hope that's the case, because (on an entirely personal level) I'd hate to be saddled with a mortgage for a house that isn't remotely worth what is being paid for it.
Most of it disappeared when Harper passed his GST tax cut. Said GST cut was widely panned by economists as completely backward economic policy, but it was a central thing in his previous campaign, and Canadians generally like it (because Canadians have an irrational hatred for the GST).
So while at the moment I'm not much of a fan of Harper, I pin this one on Canadians. They got what they voted for on this subject, and thats more then you can say about politicians most of the time.
As for housing prices... prices were lower in Winnipeg then Vancouver due to location. More people want to live in Vancouver. :P I'm in New Brunswick, and its the same thing. Prices are lower then in Toronto due to the location. Shooting them way up is going to set things up for a fall later. Just how much of it actually will hold up like you say is something nobody can predict...
But I just bought a house in May, so I'm with you. :)
The federal government doesn't save up money when it is hundreds of billions of dollars in debt. The Conservative government has been making payments to the national debt throughout its term in office, just like the Liberals did. That where the money went.
As for the "devastated" surplus, it currently stands at $2.9B for the first four months of the fiscal year. That's not too shabby considering that the economic environment is far more challenging now than it was under the Liberals. Plus, we still have three quarters of the year left.
Well, perhaps I shouldn't have been so black and white about it. I'm thinking in comparative terms - if we weather it similarly to the EU, as opposed to being carbon copies of the US, that would be better.
The EU has a lot of problems of its own right now and they're getting worse. Banks are failing all over the place there, including some big ones like Fortis.
I'd love it if the USD tanks, great chance to dispose of a lot of USD-denominated liabilities very quickly... and my folks are buying a winter home in Arizona so it'll be sweet for them to get both a hobbled real estate market and a good currency deal. Problem is that if our dollar appreciates too much against the USD we'll have even bigger problems to deal with.
There is no question that tumbling American demand for virtually everything is going to make this an unpleasant experience for the world economy - but we do have that little bit of insulation - well - some provinces do. I just hope Ontario's hapless government can steady the ship through whatever comes.
Canada won't escape the consequences of the American meltdown. It might be tempting to think that we can shift our trade to other countries to make up for the drop in US demand, but look at how many countries are holding American debt and securities. The whole world is going to suffer.
Apart from that, a lot of the problems with the United States exist in Canada, though perhaps to a lesser degree. High levels of household debt is one example. An overvalue housing market is another.
The US economy has been built on a false premise of eternal credit and never having to pay back a loan, just keep borrowing against it. They were headed for catastrophe years ago, and now it's here and they are bitching about it like they couldn't see it coming. Only those devoted to Keynsian economics (Americans and Canadian Conservatives, mostly) deluded themselves into believing it could work.
Sadly, we'll suffer, but unlike the US, we have a current account surplus (good for our credit rating on the world market), a budget surplus, and a solvent social safety net, three things the US doesn't have.
We'll suffer, but not nearly as much as Americans. It's too bad that the world economy has to suffer for the egrerious greed and delusional profiteering of the US market barons.
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I'm in Winnipeg, and there was a lot of talk that a good portion of the big jump in housing costs was simply adjustment - given that the city's houses have always been comparatively cheaper than anywhere else in the country. I certainly hope that's the case, because (on an entirely personal level) I'd hate to be saddled with a mortgage for a house that isn't remotely worth what is being paid for it.
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So while at the moment I'm not much of a fan of Harper, I pin this one on Canadians. They got what they voted for on this subject, and thats more then you can say about politicians most of the time.
As for housing prices... prices were lower in Winnipeg then Vancouver due to location. More people want to live in Vancouver. :P I'm in New Brunswick, and its the same thing. Prices are lower then in Toronto due to the location. Shooting them way up is going to set things up for a fall later. Just how much of it actually will hold up like you say is something nobody can predict...
But I just bought a house in May, so I'm with you. :)
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As for the "devastated" surplus, it currently stands at $2.9B for the first four months of the fiscal year. That's not too shabby considering that the economic environment is far more challenging now than it was under the Liberals. Plus, we still have three quarters of the year left.
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No, you can't, Europe is also going into the tanker. Insanely, people are buying USDs now, go figure. The TSE dropped over 800 pts. this afternoon.
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Apart from that, a lot of the problems with the United States exist in Canada, though perhaps to a lesser degree. High levels of household debt is one example. An overvalue housing market is another.
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The US economy has been built on a false premise of eternal credit and never having to pay back a loan, just keep borrowing against it. They were headed for catastrophe years ago, and now it's here and they are bitching about it like they couldn't see it coming. Only those devoted to Keynsian economics (Americans and Canadian Conservatives, mostly) deluded themselves into believing it could work.
Sadly, we'll suffer, but unlike the US, we have a current account surplus (good for our credit rating on the world market), a budget surplus, and a solvent social safety net, three things the US doesn't have.
We'll suffer, but not nearly as much as Americans. It's too bad that the world economy has to suffer for the egrerious greed and delusional profiteering of the US market barons.
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