Yes, yes, everything is all about me, blah, blah, blah.
However, I’m curious what will happen to the Canadian economy if the US doesn’t get their budget woes sorted, being that we’re your largest trading partner, etc.
There will be general panic, looting, and increased vigilantism. People will cower in alleyways as the streets run with poutine, maple syrup, and Crown Royal.
Depends what you mean by “not raising the debt ceiling”. If they flat-out don’t raise it at all at any point in august, then by September US government spending will have been nearly cut in half, rocking the economy and possibly pushing the US back into recession. If they didn’t raise it until October the US would almost certainly be in a severe recession. By that point their credit rating would probably have been slashed a number of times as well causing mayhem in global markets. Most of the world would seriously suffer, Canada especially. You’d probably be back in recession again as well.
But, of course, that’s not going to happen. Even the House Republicans wouldn’t be willing to actually watch the US economy burn rather than raise the debt ceiling. Aside from anything both parties are too heavily funded by Wall Street and the financial sector for that to happen. The only real question is how the markets will react as the political wrangling gets closer to the (unknown) date when things will actually start going wrong. If the market suddenly panics for some reason that the politicians weren’t anticipating, that could potentially cause some problems, which would ripple on into Canada.
But basically I wouldn’t be too worried about it.
Well, first off, any Canadian company that provides products or services to the US government will likely not get paid.
How much of the Canadian economy is really tied to the US economy?
On the National last night, they were saying that US trade accounts for about 15% of the Canadian economy (the rest being trade with other nations and various non-trade sectors). I wasn’t taking notes so I may have got it wrong, but I remember being surprised at how low that was. I think they said half of all international trade, and int’l trade was a third of the economy.
Straight from the Harper’s mouth: we’ll be alright.
Since this doesn’t have an answer (short of wait and see), it doesn’t belong in GQ. Personally, I think the US might go into a deep depression. Not back into recession, since financial markets notwithstanding, the recession has not ended and won’t while the official unemployment is nearly 10% and who knows what the unofficial one is. I have read that increasingly companies are unwilling to employ unemployed and will only look at people who are currently working.
As to Canada, well the unemployment is high, although not as high as the US and 200,000 jobs have been added during the seven months of this year. But if the US goes into deep depression, this cannot last. What is interesting is that the party that wants to bring this about is the one that will benefit.
No. We’ll be fucked. According to Statistics Canada 3/4 of our total exports are to the USA. (296,672/404,834 in billions of dollars)
Harper was talking about Canada’s economic fiscal situation versus the US, not what would happen in a default situation.
That article is worrying. It sounds like Harper (and the article writer in fact) don’t understand the situation at all:
The US’s ‘debt and fiscal situation’ is not the reason for the current crisis. The reason for the current crisis is the potential failure to raise an arbitrary debt limit. It’s been routinely raised over 100 times before but this year the House Republicans have decided to hold it hostage in exchange for spending cuts they wouldn’t be able to pass otherwise. The actual crisis - the threat of failing to raise the debt ceiling - has been deliberately engineered by the House Republicans, and it’s a crisis that could be solved instantly with a simple vote. It’s a political standoff, not a genuine economic problem.
The US’s actual fiscal situation, by contrast, is nowhere near crisis levels yet. Interest rates on US Treasuries are the lowest in the world; they’re under 3% and they’ve been going down because Treasuries are so heavily in demand. Credit rating agencies until recently said there was no danger of the US’s credit rating being downgraded until at least 2013. The budget deficit is scheduled to go down to about 8% next year, which is nowhere near catastrophic. The US only need to implement a set of moderate savings measures to kick in over the next 5-10 years.
The problem, which Republicans have cleverly and irresponsibly taken advantage of, is that most people don’t understand the difference between the debt ceiling and the debt situation as a whole. Failing to deal with the former would immediately precipitate a financial crisis; failing to deal with the latter would not, but they’ve been yoked together in the political debate.
On the other hand, the Loonie should appreciate vis-a-vis the greenback. Also, much of the Canadian economy is based on raw material/commodities. When the artificial debt zombie apocalypse occurs, then commodities should increase in value (although falling demand in the US may off set that).
Canada should come out better than the US if this all happens. At least, Canadians have healthcare and food to eat and an appreciating currency
Harper gets it. He’s an economist. His comments, taken out of context, aren’t specifically addressing the debt ceiling. The Globe and Mail is purposely misleading, IMHO. Left-wing biased shit
What makes you think an appreciating currency is good for Canada: it’s not. When you sell most of your goods to the US and now your prices have increased due to an inflated dollar, it’s not good.
The first question is… what’s going to happen n the USA?
If there is a general stand-off that goes past Aug. 2 and the government starts telling people it gives money to “sorry, not today” then things will go bad. No installments for contracts, most civil servants stay home, slows as thousands from civil servants to Boeing employees, to dock workers wonder if there will be a paycheque for them. (No border services, no imports… who is really essential? ) Presumably air traffic control stays on the job, it’s essential. Hospitals don’t get paid for their medicare patients and start to go into the red; do they respond by denying poor people care? Do they start laying off nurses and cleaning staff?
Basically, the US economy slows down big time. The only question, nobody can answer, is how fast and how bad? Depends on how petulant congress gets. If it goes a few days, probably no big deal. Both sides would realize the other side was serious and we hope they reach a compromise. If they dig in and hold their ground for weeks - yes, a recession is not impossible. Maybe a25% or 50% slide in the Dow will make them see sense.
(I saw a journalist talking on “The View” who said that some Republican tea-partiers actually want this, basically to crash government and reboot. I doubt the party is that radical…)
What happens to Canada?
Depends what business you are in. Oil flows to the US in pipelines (no customs inspection), and if they don’t want to pay for it, China and India will take it instead. Lumber, however, nees border inspection and needs people in the USA to be buying and building new houses. Ditto for Ford and GM. Worse yet, the car makers use just-in-time and any delays at the border will cause factory shutdowns here; assuming anyone in the US still has the confidence to buy a new car (2008 the bank crash meant nobody could get a car loan - look what that did to GM and Chrysler).
Most business in entwined with the USA. If things go for a dump so will we. Many things like pension funds and retirement plans include US stocks; a 25% decline in their value will have an impact here.
So Canada will feel the impact… not as bad as the USA, but not good.
Excuse me? The Globe and mail is left-wing?
Our dollar inflating, their dollar deflating, whatever. It’s the relative change that counts.
Sure. It’s not way out in foul territory with the Toronto Star, but it’s somewhere behind the shortstop, just as most Canadian media is.
Yeah. What’s your point?
Does that put the Post playing 2B, the Sun at 1B and various alt-weeklies somewhere in line at the concessions stand past left field?
I might modify it a bit. The Sun is more like a right field position when a right-handed batter is up.
Sun TV would be right field position when a left-handed batter is up.
Pretty sure the Globe & Mail thinks of itself as the Cy Young Award-winning and World Series MVP pitcher. 
Did nobody notice that it’s not a Globe and Mail piece? It’s actually off the Canadian Press wire.
Irrespective of where the G&M sits, Harper’s comments have been misrepresented. He absolutely did not say Canada would be just fine if the U.S. defaults.
The entire world is going to go right into the shitter if the U.S. defaults, make no mistake. On July 31 if they still have no solution I’m buying a lot of canned goods and you should too.