Let’s not pussyfoot around the issue. The US economic situation is awful, it’s terrible, it’s a goddamned catastrophe. Years of poor risk management and ridiculous decisions have led to the collapse of the largest and most venerable investment and insurance corporations in the world. The situation is lose-lose all around—let the remaining institutions fall, and you risk the immediate collapse of the debt-based global economy, bail them out and you risk dragging the same collapse over many agonizing years of slow and inevitable decay.
The outlook for the Americans is grim. But I’m not here to talk about the United States of America. I’m here to talk about our own country.
What does the American economic catastrophe have to do with the Maple Leaf?
The answer may surprise you: not much.
Take a look at the statistics. Canadian unemployment is at a significant low of 6.1%, the Canadian dollar has been flirting with record highs, and Canadian government debt has fallen by almost 70% (relative to GDP) since its peak in 1995. The Canadian economy, for all intents and purposes, is doing fine.
True, our home-grown financial institutions have taken a beating on Bay Street—but really they’re in pretty good shape. In fact, several Canadian institutions are expanding. The National Bank of Canada, for example, just bought a respectable stake in a $9.6 billion Winnipeg investment firm.
The collapse of American financial institutions could even be good for our local lads. Their lost business becomes our new customers, their bankruptcies become our opportunities. Canadian banks are already starting to take notice—TD Canada Trust reportedly considered buying chunks of the failed Washington Mutual, and Royal Bank is actively eying U.S. regional banks for potential acquisitions.
The bottom line? Canada is doing fine.
Don’t get me wrong—I’m not saying that Canada won’t feel the pain of an American crisis. We will. When the world’s largest economy takes a hit, the rest of the world reels with it. (To use the global village analogy, when the fattest people in the village can no longer afford to shower, it stinks for everyone.) But ultimately Canadians are in good financial shape. We will weather the worst of the storm, and recover from this mess.
