Readers increasingly are
e-mailing asking me to comment on specific matters of interest to them. One wrote recently requesting my views
on 'how the impending "collapse" or "whatever" could possibly impact Canada -
on the basis that by all accounts this is going to have an impact on all world
economies'.
Last week a second
reader, not knowing of the request by the first, send the following to me:
"There
are some interesting possibilities arising out of the concept that the U.S. will
continue to weaken at a rate appreciably faster than that in Canada.
None
of those possibilities seem positive for Canada:
1.
The U.S.$ is being
debased, but Canada's economy is so tied to that of the U.S. that we can't
afford to let our C$ get too far out of sync. Abandonment of our manufacturing capability is not
reasonable from a political or economic point of view.
2.
As the U.S. become
less capable of competing (paying) for resources for which there is global
demand, they will (not may) adopt other measures to assure they get
their hands on Canadian resources.
Some of those measures may look benign (political) and some may be
impossible to disguise (military), but they will be introduced.
3.
It is likely there
will be pressures on parts of Canada to adjust (withdraw from?) the current
political structure as the differences between resource-based and manufacturing
(or unemployment) based provinces or areas become more pronounced."
I
am indebted to the reader who forwarded the italicized
commentary. At a high level I have
had these same thoughts - however, see below with respect to point 2).
I assume, like me, you are
bombarded each day by newsletters and commentaries proclaiming the 'Four
Horsemen of the Apocalypse' are galloping toward us all at great speed, and are
so close that we can smell the horses and hear the noise of hoofs and clanking
armor. Frankly, I find this
rhetoric repetitive, tiresome and not productive. I don't believe the U.S. as a country is going to collapse
and become a non-functional economy, nor do I believe that will happen in
Canada either. That said, I do
believe U.S. residents are going to see deterioration in the standard of living
they have enjoyed over the past many years and I don't think that will make
them as a group happy.
To me it follows that Canada - a country whose
Federal politicians I believe to have been far more fiscally responsible over the past years
than their U.S. counterparts - is likely to face 'spillover adjustments'
and the probability (as contrasted with the possibility) of significant
economic based change going forward. With respect to point 2 above, whereas the British succeeded in repelling
in the Americans from Canadian soil in 1812 -14, for any number of reasons I don't see a U.S./Canada
military confrontation in the cards today. Accordingly, while I believe economic adjustments will occur in Canada (and in various parts of Canada differently) contra the U.S., they will be of a 'political and negotiated nature'. Over the past 40 years I have consulted
extensively to companies across Canada and so have views on the economic
differences among Canada's Provinces and Territories. Beginning later this week I plan to set out in my e-mails my views
with respect to what the ongoing economic changes I see the U.S. experiencing
will mean to each of them.