Is the Canadian Situation Any Different?
I agree with your detailed assessment of the Canadian situation as of Nov 19. Since then a couple of major banks have announced large writedowns and have had to raise capital. Commodities, especially oil, have continued to fall drastically. Also we now have our "coalition" talk and possible political instability for a while.
Has your assessment changed due to recent developments in Canada?
To make it easy for search, the official name is "BMG Bullion Fund". http://www.bmsinc.ca/index.php
I am an American but, likewise, married a lovely Canadian. We do have one child, and currently live in the United States. We own a somewhat small dry-farm (4,700 acres), but are thinking of selling it and moving north.
I also trade foreign currencies full-time and have been trading for many years now. I enjoy the lifestyle but know that currencies may see a dramatic shift sooner than later.
CAD (Canada dollar) is currently weakening, as those above have stated, because of the lower priced commodities. CAD is heavily linked to commodities but not entirely. It does have its own movements from time to time, and I do believe it will outperform the USD (US dollar) over the longer period.
The USD is eventually doomed. We can all see it, but for now . . . the USD will reign supreme. How long? Could be a few months or it could be a couple more years. As a swing trader, I am only in the currency market for a few days (if not hours) at a time. Therefore, to quickly liquefy holdings of USD would not be difficult. However, the CAD, in the long run, is a better choice.
I also suggest purchasing Canadian Maple Leaf gold bullion versus heavily invested into American Eagles seeing there are tax implications in owning Eagles versus Maple Leafs.
All in all, I think this is great post. I understand these comments are bit later than those above, but I do believe the northern government will outperform us southerners . . . although some difficulties in the south may bleed into the north just a bit.
Wasn’t it during Christmas that Canada promised the auto-makers billions of dollars? Alberta’s surplus was absolutely INCREDIBLE . . . until they started pulling funds to begin giving it to the auto-makers.
Canada or United States? Canada.
GM has something like 17% in Canada and this was the percentage that the Canadian Gov’t was pledging to bail out GM – to commensurate with the US gov’t bailout. Canada’s Prime Minister (conservative party) is/was an economist. He was against these bailouts (which he should be). Right now the party in power is a minority party, meaning that the other parties are free to call an election anytime they want – or they can elect to overthrow the party in power with due cause. Because the Prime Minister (Steven Harper) wasn’t bailing anyone out (relying on sound economics to allow a proper correction to occur to allow the economy to rebuild on a sound footing) the other parties ganged up on him and tried to over throw him. Harper managed to shut down Parliaments just in time. Now Harper has to disgracefully bow to the other parties and print money / tax Canadians to keep a select few favoured unsustainable companies operating as zombies. This is bad economics, but what politicians do when their position becomes threatened.
News out yesterday that Canadians now have as much personal debt as what Americans did in 2006. Fortunately Canada doesn’t have subprime loans or a securitized mortgage scheme that enabled a tremendus housing bubble like the US. There will be a housing correction but nothing like here. I do forsee Canada coming out of this depression before the US. They are producers, Have oil & other commodities and the Chinese are hungry. News today is that they expect China to be the first to pull out of this recession/depression.
If you own a farm I would not sell it. That would be the last asset I would sell if I owned anything. Absolutely keep the farm. Jim Rogers claims that the next boom will be in farming. He claims that Wall Street bankers will be either driving cabs or should learn how to drive tractors. The Farmers are the ones who will be driving Lamborghinis.
I would like to disagree with the fact that Canada will fare much better than the States. I think our own government uses fuzzy numbers, just like our neighbours, to lull us back to our T.V. shows and video games.
Our banks are more stable, yes but our economies are quite linked like others have posted, and there is no disconnect switch at the border. I believe that the US has more money invested in our Oil patch than Canada does by a long shot and they are all shutting down to some extent. Last year at this time the Carpenters hall in Edmonton had calls for hundreds of journeymen, not to mention apprentices. Last I checked, there are calls for about a dozen combined JM and apprentices. Boom and Bust is the way of life in Alberta, and if we only had to worry about one "E" in the equation then just wait it out. I was working in Fort McMurray when they pulled a 2 mouthed fish from the river and of course it was down played as a normal mutation. I won’t even mention what plant I was working at where I met a person from their "enviromental" team. His job (and his crew), was to get rid of the bodies before real enviromentalists, or Enviroment Canada found them.
Like Woodsie, I lived and worked in Alberta for the last 12 years, and have travelled there on and off before that to work. During the last 12 years I owned a construction company in Edmonton for 7 of those years and shut it down when the housing market obviously began to flop. After that I worked on a variety of oil projects including Suncor Voyager, Opti-Nexen’s Longlake project, CNRL (that was scary), PetroCanada, Shell, Agrium, in Fort McMurray, Ft. Saskatchewan and Edmonton.
On my last job, Suncor Voyager had a lot of money invested in the secondary upgrading portion of the project, and just shut it down. Keep in mind, most of the projects were estimated and planned to make money at $45 a barrel. So something has got them scared.
If you take into account Peak Oil, climate change, and world economies sinking, I think that the only real safe investment is in a good practical education, having a garden that you can feed yourself, and have a trade or skill that others find of value.
This thread needs some resurrecting IMHO….
I second the notion that we are ANY better off than the USA…we are not…we are just delayed by 2-3 years…its standard.
I just saw a great graph on BNN (BUS NEWS NETWORK) that showed the deficit spending both above and below the border….the 2 countries are in complete lockstep……in many areas Canada is worse off
We have by FAR the biggest subprime housing bubble on the planet
We are an export based economy and right now the only game in town is oil and mining……but I do not believe any longer that oil prices will do what so many in the PO camp tend to think,….that is RISE.
If one does a bit of research on other “non-renewables” that have been exploited to commercial extinction (whale oil is a great example) one finds that following an initial price spike…prices flatline as the resource dissappears.
The world economy will NEVER tolerate oil prices above 100.00 per barrel for long enough to effect recovery….it is not possible now….
High cost deposits (Re: canadas Tar sands) will NEVER be the great economic driver that all had hoped for…..
thus I am very pessimisstic in the short to medium term for Canada….we will enter the abyss this summer with the rise in interest rates and the subseq collpas eof the housing bubble…..when this happens our “economic recovery” will be exposed for the sham that it is…….
Does anyone actually visit this site anymore? 🙂
I read this thread with great interest. I sold my house just as the market began to fall and now I’m sitting on the cash from it, hoping things will crash at such a rate that I can purchase some land with the money. It’s not enough money to purchase land with house just yet, and barely enough to purchase a substantial (i.e. >2 acres, which is what I need to support myself and family on) chunk of property, if I could find it, which I can’t in the area I want.
So I’m focused on the rest of it, honing skills, community outreach, etc. It’s a waiting game.
In the meantime, I worry a lot about the cash just disappearing if some kind of bank failure or hyperinflation begins here in Canada. I’m hoping that I’ll have some warning (a few weeks or months) by watching carefully what happens in the States. Meanwhile, I just worry and stay hypervigilant.
I wish the property/housing prices would crash faster here. I could just buy the land, plant the food forest, and get to work on community resilience projects like urban farming.
Can you recommend a good news source to pay attention to to be prepared for financial catastrophe in Canada?
I’m tuned in to this channel from Ottawa.
I’ve mentioned it a few other times on this site but a great Canadian perspective can be viewed at Garth Turner’s blog (focused laregely on real-estate). Just a few days ago he posted one of his clearest forecasts. Plenty of good commentary there and links.
check it out at http://www.greaterfool.ca/2010/01/27/the-disappointment/
I’ve recently started following The Automatic Earth at http://theautomaticearth.blogspot.com/ which is authored by 2 canadians.
If anyone here is in the Ottawa area there are a number of groups to look into many of which you might be able to connect through Transition Ottawa. I also co-host a monthly discussion group where we talk about everything regarding peak oil, the economy, food security and permaculture. Send me a PM if you’re interested.
I post a fair bit on the afterthecrash.ca site….some smart cookies over there but a lot of head in the sand types as well.
I am very interested in the Canadian situation as it relates to the USA and the world. I think that the USA is heading for hyperinflationary depression…indeed they are in a depression right now and the “type” is masked by confusing signals. The forces right now are deflationary….but there has been massive stimulus….and there will be much much more of the same.
The CDS market scare the cr.. out of me they are just so enormous that I have trepidation about the ability of even money printing to offset the effects of a failure of a market many times larger than the entire earths GDP….as the next wave of mortgage defaults hit the usa this summer we will see a concommitent failure of the underwritten CDS in that sector as well…..
Hostorically hyperinflation does not cross borders so theoretically Canada should go into a deflationary depression while the USA goes the opposite…but I cannot see the Canadian Govt sitting idly by watching our dollar appreciate say 10,000 % against the US dollar….so money printing seems to be logical….
the really wild thing is that it is now a worldwide phenomena……can one even have a worldwide hyperinflationary event???..it doesn’t make sense???
I am hedging these days big time. Homestead in Western Canada (in the process off trying to settle the deal), gold silver investments, tangible assets……no debt…….trying to find like minded folks to partner up with (thats the hard part honestly)