At the risk of creating yet another financial doom-and-gloom thread, do we have any big brains here who have a good idea of what effect the US financial meltdown is going to have on Canada? I’m hearing two very different stories - we are too tied to the US to be consequence-free and will therefore have serious economic problems to come, and that we are in a much better, stabler place economically and we don’t have nearly as much to worry about.
These are the things I’m wondering about -
How is Ontario going to fare?
How are oil-based-economy provinces going to fare?
How is this going to affect my mortgage?
How is this going to affect my RRSPs?
How is this going to affect Canada’s CPP fund?
Do we need to keep the economic problems in mind when voting on October 14th? Is one party likely to steer the country better through tough economic times than the others? Is that the most important issue of this election?
Anything else we should be aware of with regard to this serious issue?
Oh, it’ll hurt Canada plenty. We’re tidally locked to the U.S. economy. They’re by far our largest importer and exporter. A ton of capital moves back and forth. As the old saying goes, if the U.S. sneezes, Canada catches a cold.
We’re not identical economically, so the results don’t track perfectly, but in broad strokes if the U.S. economy craters, ours is going along for the ride.
As an example, take oil prices. If the U.S. economy crashes, the world economy will be hurt as well. That in turn will lower demand growth for oil, which in turn will reduce the price of oil. Canada is an oil producing country, so we will be hurt by that.
In addition, Alberta relies heavily on foreign investment to help build Tar Sands development. Mostly American investment. If there’s a financial crisis and the capital doesn’t flow, we’re going to see a halt to a number of plans to build out the sands. That will hurt employment and economic growth in Alberta.
I could go on. Ontario auto factories will find less demand for cars, and will have to scale back. Our tourism industry will be hurt. The stock market will fall, along with the value of your investments. But it’s impossible to list all the ramifications, because our economies are so tightly wound together than there will be reverberations all over the place, in unpredictable ways.
It’s not just Canada. If the U.S. economy craters, the world will feel it. The U.S. provides 25% of the world’s goods and services. Any slowdown in the U.S. is felt globally.
It’s NOT good for Canada for the Canadian dollar to climb rapidly against the US dollars.
It’s hard to answer these questions without knowing precisely what’s going to happen to the United States. There’s also a housing crisis happening in Europe. Canada’s econony is, obviously, worse off if the rest of the industrialized world’s economy goes to shit, and it’s hard to say what will happen to credit here without knowing what happens to credit there.
Unless you need to retire in the next ten years, probably not at all. I don’t know where you have your RRSP money, but if it’s spread across lots of index funds you’ll be fine in the long run. A downturn is just a chance to invest more money at bargain rates.
See above.
To answer the second question yes. To answer the first, it’s sort of dependent on what your personal politics are, which determines how you want your tax dollars spent.
None of the four parties have any plan I can discern that is specific to dealing with a credit crisis.