Today's Coming Crisis Movie

Wednesday, August 10, 2011

Is Canada immune to economic collapse in U.S?

Canadians are rightfully asking themselves whether the Canadian economy is headed for a cliff if the United States falls to recession so soon after the last one. Do we hit the rocks together, or is our safety net still holding?

While Prime Minister Stephen Harper and Finance Minister Jim Flaherty warn of tough times ahead, they also point to the last recession a few years ago and how Canada walked away with a few bruises but no broken bones, like the Americans. Don't panic now, they say.

But the pain train is revving if the hobbled U.S. economy is heading to what is called a double-dip recession, Europe continues its nose-dive and other global markets struggle.

Will it be a Tylenol 3 or an Aspirin for the pain?

"It is true that we are in excellent financial and fiscal shape if you compare us with any of our trading partners, but that doesn't mean we are going to be exempt from any negative implications arising in the global economy," says Queen's University economics professor Tom Courchene.

What's in store? Experts say higher interest rates and job losses, many in the private sector, as U.S. demand for Canadian goods wanes. The U.S. is Canada's largest export market.

Fear also drives down the economy as consumers tighten their belts, hold off on purchases and, in some cases, unload their stocks to seek a safe haven - which many are doing by buying American greenbacks, and that is driving down the value of the high-flying loonie. (more)