Re: RE: Canadians Moving to t
Reverend Blair said:
And who has the better economy? Our dollar has been rising, yours has been dropping. You've been building up a massive debt by running massive deficits while we've been paying our debt off. You've got a trade deficit that leaves others as much in charge of your economy as your government is. We run a trade surplus.
My answer is it depends on what time frame you look at. Over the short and maybe intermediate term, I think the Canadian economy is going to be stronger. In the long-run, the US will be better.
You raise some interesting points.
The dollar - The true value of the dollar is somewhere between 75-80 cents. It was when it went to 62 cents and it will be when it gets to 90 cents. Part of the reason why I think it could go higher is because of
The debt - Fiscal debt has been rising in the US and falling in Canada. This means that, everything else being equal, the loonie should rise. But this debate is a little disingenuous because what matters is not the total amount of debt but the ratio of debt to GDP. According to the OECD (I don't feel like hunting for it so go to their web sit, its there), debt/GDP in the US was 64% and 66% in Canada at the end of 2004. Now those will pass either this year or next. But in 1996, the figures were something like 50% for the US and 100% for Canada. Canada really had no choice. Now full credit to Canada, but it has to be put into perspective. The US ranks 13th out of 27th in terms of indebtedness in the OECD. Japan is first at 150% and Italy second at 120%.
Trade deficits - Just reported Friday for May at $58 billion. The fiscal deficit will come in at 3.5% this year. (Same as Germany, France and Italy.) The trade deficit will come in at 6%. Either of them by themselves isn't a problem but together it is. This scares the crap out of me. Having said that, Canada has run a trade surplus for decades with the US. Trade surpluses can also mean a weak economy because it may be symptomatic of weak domestic demand like it is in Germany and Japan.
My own belief is that there are too many imbalances and too much money creating asset bubbles in the world. Much but not all of the fault can be laid at the feet of the US Federal Reserve and the US government. But if the US contracts, so will Canada.