Bank of Canada governor Mike Carney feels that Canada's "economy is in good shape to weather a global recession." Well, let's look at some of the facts!
- Canada's S&P/TSX composite has tumbled 22% since June, and in the U.S. the DOW has been falling for a year declining more than 25% so far.
- Ordinary Canadian's rely heavily on the spending of ordinary American's to prop up our economy, with 76% of Canada's exports flowing to the U.S. in 2007.
- Every 1% decline in cross-border trade with the U.S. pulls about $3.5 billion out of Canada's economy. Spending by Americans declined this summer - the first time that has happened since 1991.
- Already manufacturers in Ontario and Quebec are hurting from the slowdown.
- Forestry firms in the West are hurting from the slowdown.
- Economists Douglas Porter at BMO Nesbitt Burns and Benjamin Tal at CIBC World Markets have warned seperately that a deep U.S. recession will drag down Canadian real estate prices.
- Nouriel Roubini, a professor of economics at New York University, in a note to his clients this past Monday, stated that "we are in a generalized panic mode, and back to the risk of a systematic meltdown of the entire financial system."
- Already banks around the world have written off more than US$350 billion in bad loans and Roubini projects that number could rise as high as US$1.5 trillion.
- Peter Schiff, president of Euro Pacific Capital in Connecticut predicts that the current financial crisis will be worse than anything we've faced in our lifetimes. He describes a depression so severe that it would forge a "new economic order", with sharply higher interest rates, a weaker American dollar, surging prices and shortages of consumer basics.
- Canada's GDP will shrink at a 0.4% annualized pace this quarter compared to a July prediction of 1.8% growth. There is very little or absolutely no expansion predicted in the first quarter of 2009.
- In Toronto, at 10:42am on Oct 23/08 the Canadian dollar weakened to C$1.257U.S. Earlier the currency dropped as much as 1.6%.
- Falling prices for crude oil.
- Tighter consumer lending.
- The gap between the yield on 1 month commercial paper and BOC's key rate was 55 basis points on Oct 22/08 down from a peak of 78 basis points on Oct 03/08.
- BOC's projection for 2009 consumer spending growth has been revised from 2.3% (July/08 forecast) to 1.5%.
- Business investment will decline 0.2% next year instead of growing 0.5% as predicted in July/08.
- Total inflation increased 3.3% in Sept./08 from a year earlier.
- The inflation rate was 3.5% in August/08, the fastest in more than 5 years.
Don't automatically drink the Bank of Canada's and Ottawa's Kool-Aid! Become informed ...get the real story yourself and then take whatever action you can to protect yourselves and your families as best you can!
Pay particular attention to the so called "Quadrillion Dollar Derivatives Deathstar." There is a wealth of good information available on this impending financial Armageddon.