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Canada's Federal Government -- A balance budget in three years or less!

While our southern neighbors seems to find new ways to increase the Federal deficit, Canada's new majority conservative government plows ahead with plan to turn its current deficit into a surplus by 2014/15.

As I have often mentioned Canadian are well versed in the risk of ever rising deficit, and most Canadian remember how painful the correct was to Canada's economy (1996/00). We also know that we correct our budget deficit while the world economy was growing at a fast clip (no longer the case).

Jim Flaherty "re-introduced" his March budget (the one that caused the 2011 Federal elections) almost unchanged. Canada's economic position remains more or less unchanged -- although the Canadian dollar, unlike other resource based currencies has remained subdue in the face of rising commodity prices because of the fear that America's economy is heading back into a recession.

As usual the normal caveat must be assumed, should the U.S. really fall into a new recession (instead of a slow down) then all bets are off, since Canada is extremely dependent on the U.S. for its export market -- down from a peak of 85%, to around 75% -- a solid percentage of that are natural resources... still. On another note the market is 100% discounting (today at least) of any rise in interest rate by the Bank of Canada for the rest of 2011 (Q1/12 is starting to look iffy too).

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