Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn’t grown in size; the others have all shrunk.
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Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn’t deductible up north. In addition, home loans in the United States are “non-recourse,” which basically means that if you go belly up on a bad mortgage, it’s mostly the bank’s problem. In Canada, it’s yours. Ah, but you’ve heard American politicians wax eloquent on the need for these expensive programs—interest deductibility alone costs the federal government $100 billion a year—because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It’s 68.4 percent.
Canada has been remarkably responsible over the past decade or so. It has had 12 years of budget surpluses, and can now spend money to fuel a recovery from a strong position. The government has restructured the national pension system, placing it on a firm fiscal footing, unlike our own insolvent Social Security. Its health-care system is cheaper than America’s by far (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes. Life expectancy in Canada is 81 years, versus 78 in the United States; “healthy life expectancy” is 72 years, versus 69. American car companies have moved so many jobs to Canada to take advantage of lower health-care costs that since 2004, Ontario and not Michigan has been North America’s largest car-producing region.
BUT I ALSO FOUND THIS
Canada lost 129,000 jobs in January. Extrapolate that to the US population, and it comes out to more than 1 million - the US figure for January was 589,000. Now yes there are methodical differences in birth/death model to produce these figures, but it shows job loss was at least at bad and probably worse than the US for January.
Also, Vancouver real estate is overpriced at California levels and just started to fall - there's a long way to go. The city is taking on a lot of debt for the 2010 Olympics, which won't bring so much revenue in the middle of a worldwide recession/depression.
But yes, the Canadian financial system and its banks are in a better shape, plus it is in a much better fiscal position. But the huge reliance on exports to the US and the strengthening of the loonie make Canadians job susceptible. If the US car companies continue at this pace, and with the global layoffs in the automotive industry, Canadian manufacturing will get hit hard too. With a worldwide manufacturing contraction, Canadian commodities will continue to be under pressure, the oilsands will be worthless at $35 oil showing another crack in the economy.
Yes, it might not be as bad as the US, but there will be pain, all the same.
