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One wonders (bit of a rant)

Today the economic news south of the border is mixed, it’s very important to Canadians, because America accounts for ¾ of all our exports (and imports).  Most non-Americans fail to realize that the North American relationships are North South, and not East West (physical barriers).  Canadians are more “to the left” than their American counterparts, and aside from a very small minority, Canadians are satisfied with their health care system.  However, few Canadians have patience with Bay street (Canada’s Wall Street), and a bank rescue as was organized in the US would probably not fly here. We have a few issues with our neighbors, aside from entertainment dominance, belief that Hockey is an American game, disbelief that basketball was invented in Canada! 

Of late it’s the economic news that has been troubling me.  Sure the Federal Reserve has been aggressively expanding the money supply (of sort) whereas last year the Bank of Canada has withdrawn all liquidity facilities – today’s Bank of Canada’s balance sheet is the same size it was in 2006.  Almost every economic indicator is better in Canada: employment, housing, indebtedness both personal and corporate.  Canadian productivity lags that of America (and always will it seems).  So aside from the colder weather on our steps – things are generally good in Canada.

In America the news, aside from corporate profitability, is poor or indolent at best. 

  • Home prices continue to fall (-1.6%)
  • New home sales at 283k p.a. is just 8,000 shy of the all time low of last August.
  • Durable orders are negative and substantially below expectation
  • The good stuff, unemployment is no longer getting worse
  • Personal income is rising (slowly)

Despite these terrible data points the market is on fire today.  Sure there is some good news, unemployment seems to have stopped worsening, although forward looking data is looking difficult, if the states, which account for 13% of America’s GDP have to cut expenses by, an average of 5%, then the impact on GDP will be to push America back into a recession.

Personally, I don’t really care that much about the daily market movements, its just the overall sense that our neighbors are kidding themselves, and that we Canadian will pay some measure of price for their foolishness.  On December 31st, 2010 the “Bush Tax cuts” expire, its impossible not to not seem these cuts as crucial to their continued well being of America’s economy, and yet because of political games it is increasingly likely that the opportunity to re-new the cuts will be passed up, because of game play.

Ok rant over, happy American Thanksgiving

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