Listening to the US news lately I’m quite frightened by how fragile is the US economy, simply dependant on adversarial politicians with the ability to play chicken with the future of their country and ultimately the world.
Can the same thing happen to Canada ? Can opposition parties make the government refuse to honour debt and/or other financial obligations ?
In Canada if the Prime Minister failed to get something like this done my understanding is they’d have new elections, which presumably would break the dead lock.
No, can’t happen. The Conservatives have a majority, so if they want to pass a budget there is nothing to stop them.
The issues in the US are essentially centered around a division of power between Republicans and Democrats. As exemplified by Minnesota, where the governor is a Dem while the Republicans control the state legislature, yet both seem to have equal authority over the budget.
Thankfully neither the Canadian senate nor our head of state stop legislation.
Kind of makes me wonder what would happen right now if the US was forced to have a snap general election, all seats (including White House) up for grabs.
“Looming”? The axe fell four years ago.
Looming, as in the looming crisis if the US statutory debt ceiling isn’t raised within a couple weeks.
The situation is just impossible in a Westminster system government. A government that can’t get its way on a money issue in Parliament doesn’t have the confidence of Parliament. Time for an election.
Well, they can, though it’s absurdly rare. It was just such an unlikely chain of events that led to Canada’s current abortion laws, i.e. we don’t got none.
I figured the real key to stability was a well-regulated banking system. I kinda chuckle when I see Sam Waterston doing commercials for “TD Bank, the most trusted in America…”
On this side of the puddle we can knock it over in 4 weeks, from calling the election to calling the result. It’d be a ball-tearer to do that in the US!
Same here; the minimum is 35 days, the most recent one lasted 37, and the longest one in recent memory was 58 or so because it happened over Christmas.
Echo what other people said. This is pretty much the textbook example of denial of supply. Any Westminster government in this situation would have long since fallen.
(Actually, if the Congress were a Westminster system parliament, this wouldn’t have happened in the first place because the Democratic government would have fallen once the midterm elections had given the Republicans control of the House. This analogy is difficult to continue, though, since the President is elected and responsible, the Speaker is more akin to the leader of the majority party/Prime Minister than to the Speaker of the House of Commons, the Cabinet isn’t allowed to consist of Representatives, etc., etc.)
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It’s theoretically possible that the Canadian government could go back into a minority status so unstable that no government could function or pass a budget.
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Obviously, it’s unlikely to the point of impossibility, but you should still worry, because
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The catastrophic potential of a US meltdown will screw the entire industrialized world anyway.
I guess it depends how you define recent memory, but the 1984 general election was a 61-day campaign for some reason. I remember that and I ain’t that old.
Even then, the caretaker government leftover from the last functioning parliament would continue to honour the sovereign debt. The only way I can see Canada defaulting on its debt is if a government with the confidence of parliament did so intentionally, in some sort of Greece with no Germany to bail us out scenario. I can’t see any way that political impasse could result in a default in the over-the-cliff scenario our southern neighbours seem to be heading towards at full steam.
What I want to know is WTF is going to happen to Canada’s economy if the US does default.
I’m guessing “nothing good”. 
Canada has a strongly export based economy, and the primary customer for Canadian exports is the U.S. We’ll go down with the U.S. Because of our basically more healthy position with respect to public finance, I think we’re better able to weather the storm, but that’s like saying “don’t worry about the hurricane because we’ve got plenty of batteries stocked up.”
Trudeau once famously said that living next to the U.S. is like sleeping next to an elephant: Every move it makes affects you a lot.
The collapse of the United States and the US dollar becoming worhless will cause a world wide depression. Canada, especially, will be hurt since Canada relies so heavily upon the USA. Canada will go down with everyone else.
The good news, is that “if” Canada can untie itself from the USA AFTER the collapse, and if Canada can redirect its economy and its trade toward/with Asia then Canada will come back fast and strong and Canada will soon be wealthy, mostly because Canada has so much natural resources combined with an uncrowded small population.
Canadians are more likely to be “crowded” than Americans are. Canada only has a truly low population density if you fail to look at where most Canadians actually live.
We’re fucked if the US goes down. Totally fucked, but so is pretty much everyone else.
No, the US will reach a compromise and things will move along, albeit slowly. In 10 years economies will be booming again. That’s my prediction anyway.
I think you are doing a lot of wishing and hoping with no evidence at all to support your dream.
In 10 years the USA debt will double, another 20 Trillion dollars of federal spending debt, AND another 10 trillion dollars of balance of trade deficits, the US dollar 10 years from now will be worthless, there will not be any more jobs than we have now but the population(people on welfare) in America will have increased by another 15 million people ( to 320 million people) mostly from immigration , and Communist China by then will stop lending money to the USA.
There is no one in American government who is smart enough to understand what is wrong, and who is smart enough to bring back all of our manufacturing jobs, to stop immigration, and to stop borrowing and pay off the federal debt - therefore a very dismal future for the collapse of the US dollar and then a gigantic world-wide Depression caused by the destruction of the USA 10 years from now is certainly inevitable.
News item: U.S recession would broadside Canada.
Something else that often gets overlooked/forgotten is that Canada went through a very painful period of austerity during the 90s. Government spending was slashed across the board, all departments were simply told they’d get 15% less. Our medical system went to shit, military shrunk, a social services are reduced. Meanwhile taxes were kept extremely high: 15% sales tax in most areas, I believe income tax on the middle class was in the 35% range. Gas cost twice as much, food cost more, and our dollar was worth 67cents to the US dollar.
Take a look at gdp per capita growth
http://www.google.com/publicdata?ds=wb-wdi&met_y=ny_gdp_pcap_cd&idim=country:USA&dl=en&hl=en&q=gdp+per+capita#ctype=l&strail=false&nselm=h&met_y=ny_gdp_pcap_cd&scale_y=lin&ind_y=false&rdim=country&idim=country:USA:CAN&hl=en&dl=en
That long flat part is what I’m talking about. But the result was a balanced budget eventually leading to a surplus, allowing for tax reduction and increased spending. When the recession hit Canada decided to allow some deficit spending, with the goal of being balanced within (IIRC) 5 years.
Canada also collects about 5% more of their GDP in revenue than the US (it varies according to the reference source, but that seems to be the average - this is for provincial and federal revenue). If we managed to add 5% to our revenues the deficit would be basically gone.
Now if we could just get Canada’s health-care system down here we’d be sitting pretty.