Loading ...From the “I told you so” files
Far back enough for it to be annoying, I made a comment that the best thing that Candian businesses could do to stir the economy would be to seriously diversify away from our neighbours to the south. After watching in annoyance, as municipal and state governments committed acts of Hooveresque financial suicide in accordance with the “Buy America” legislation, those of us who have a vested interest in the Canadian economy were forced to admit a very ugly truth.
America, just isn’t that into us.
On the heels of that realisation, as well as knowing the futility of hoping for some rationality in the inter country commerce, I penned a few posts that outlined a very simple strategy for Canadian economic survival. Put simply, it was a case of just picking ourselves up and moving on.
I was accused of a number of ugly things as a debate surrounded my commentary with the most vile being a depiction of Canada as a blood sucking leech complaining that there was no more blood on the headshot victim that is the United States. But, it wouldn’t be the iBC, if there wasn’t some amount of over-the-top vitriol tossed into an otherwise sane debate on the future of the world’s economies from time to time.
In particular, I noted that Canada and the Eurozone have been in the second (or third) year of negotiations to form a new free trade zone between the True North and the member states of the EU. Since the Euro has a nice value vs the Canadian loonie, I find this very appealing and so, I have bided my time and waited.
This Morning, the news finally breaks
In this morning’s Financial post there comes the confirmation that I have been expected for the last six months or so:
The most significant shift in the September trade performance was a 34.1% jump in exports to Europe from the previous month, Stewart Hall, economist at HSBC Securities said.
….
Exports to countries other than the United States accounted for 88% of the rise in exports.
….
Exports to the U.S. did improve in the month, although by a paltry 0.5%, which is less than $100-million.
Let’s Review
- September was a net gain in exports for Canada, reducing it’s trading deficit to $927 million from $2 billion in August
- 88% of that increase in trading was from non American trades
- The United States accounted for less than $100 million of said increase in the trade, or .5%
- 34% of the export increase was to the Eurozone, which, unlike the UK, has exited the recession
I didn’t expect to be this right, this soon
But, the fact remains that the US is further pushing itself into economic irrelevance due to the lack of growth from the American consumer. But, there is every reason to understand that peculiarity – the American consumer is shell shocked from two years of layoffs, deeply in debt on average to a significant proportion more than the household ability to earn income, AND has lost much of it’s investment appetite as the last 18 months have damaged so many structures upon which the previous century’s business practices were predicated on.
That’s OK if the US is not that into US – certainly the Eurozone seems to be and that coupled with the fact that the more the FearTrade tm drives the commodities market, the less harm Canada is suffering.
Certainly the Loonie appears to beĀ riding impressively high against the US Peso until one realises that just about every currency in the world is gaining ground on the Dolla Bills but, the fact remains that this type of market realisation is one of those ‘once in a generation’ type moments.
While the China Bulls may have to wait 20 or 50 years to be right, there is some indication that the Canada Bulls have quite a few great things going for them as Canada is a net exporter, a holder of a large variety of natural resources that can be traded on the market, and has better respect from our European partners than our American ones – there seems to be only one resolution to make from this bit of market news:
It’s Time to Move On down the Line
Seriously. Had I the time and the money, (and more of the latter than the former) I would be tempted to take out advertising across Canada’s media outlets, and armed with this fact ensure that every business person in every corner of the this land was made aware of the need to diversify their business dealings so that the US represented half of the 75% of the trade today.
In retrospect however, enough articles in the Post like this and there won’t be any need for said advertising. Any business that is savvy enough to survive this crisis has probably figured out that a long time ago.
Theme Song
My thoughts eggxactly [sic]
the USA has become that filthy whore we like to call over on cold, lonely winter nights.
When she was younger she was something else, her blow jobs were ridiculously good but now all she gives are STD’s and fucked up messages on our answering machine.
Its time to forget all that and move on down the line
I’m always wary of call other countries toast as I remember in the 90s how Canada was compared to a banana republic and 15 years look at us now.
The US has one the highest productivity rates in the world and despite all the shit, one of the most open markets.I wouldn’t count them out but a little diversity is not a bad thing Rutger.
cuervos, what are your thoughts on the real estate situation in Canada?
people have been calling for “the bubble” to pop for too many years now
it’s always “odd” hearing or reading nationalistic commentary coming from a Canadian. I suppose it’s they way we were raised down here.
@Freddie, as far as I can tell the only folks that seem to be calling a ‘top’ in the Canadian real estate markets are those that wish they were Americans.
Seriously, anyone who feels that the inclusion of GMAC into the Canadian lending system represents the same sort of recklessness that was practiced in the US, has another thing coming. There are too many locks in the Canadian banking system which provide enough friction to prevent that kind of goofiness.
Commercial real estate, from what I’ve read has dropped in Toronto however landlocked spots like Vancouver will only go up due to the geographical nature – not an asset bubble.
@The Fly – after the insane debate several months back, this was sort of a follow up. But, as someone who lives within Canada, the Canadian economy is something I’m particularly aware of on a continual basis.
It also means, I try to pay attention to what’s going on down there as much as possible.
Additionally, the PM himself is trying to improve relations with India. Can we say BRIC yet?
http://www.nationalpost.com/news/story.html?id=2226051