The Rest of the Story…(Canada)

Canada is predicted to grow faster than any other G7 country in the first half of this year, or so says the Toronto Star, echoing a statement recently released by the Paris based OECD: here is the original article in The Star

Earlier this week, the Paris-based Organization of Economy Co-operation and Development, predicted Canada will lead other G7 countries in the recovery with a massive 6.2 per cent growth rate in the first quarter of 2010.

With a tip o’ the hat to the late Paul Harvey, I think it wise that The Star’s readers understand the ‘rest of the story’.

Canada is still reliant on the export of commodities, however hard we try to pretend otherwise.  We extract mineral and oil wealth from under our soil, and we harvest that which is upon it…and we sell it.  In the post WW2 period, Canada began to make great efforts to add value to those raw materials, and the manufacturing that the effort brought to our shores resulted in a growing middle class, better wages, and a more secure future for a large swath of the Canadian populace.

But Canada gave that away, bit by bit, in ‘free trade’ agreement after free trade agreement.  Politicians, elected by corporate money that had loyalty to no nation, shipped jobs overseas.  Corrupt unions, looking after ‘their own’ with no thought for any future generation of ‘their own’, mouthed only hollow words in protest…but gave their member’s money to the same politicians who were already bought-off by the bigger, more lucrative corporate donors anyway (and they were all bought-off, regardless of party affiliation).

Back to today’s news.  Yes, Canada has largely missed the first leg of the Global Financial Crisis, because nations around the globe, in a rush to Keynesian stupidity, enacted the largest global government spending spree in world history…beyond comprehension in scope, in the many trillions of dollars.  China’s government joined the crowd, spending record amounts for 2 years running, and giving Canada’s commodities an export market destination while it continued.

That ‘free lunch’ is about to end.  China is now in the process of drastically cutting back their spending, in a move intended to prick the Chinese property bubble before it becomes a bigger problem (and many economists think that it is already out of control), but in the process pricking Canada’s growth projections in the process.

And while Chinese stimulus has worked to the extent that it has hidden reality (Chinese factories continued to produce goods, and Canada continued to supply the Chinese the raw materials needed), the Chinese stimulus has run dry.  Once existing orders have been completed…there are no more.

So, yes, Canada may have a bit of time before the day of reckoning arrives.

But arrive it will, and this next short time of positive growth will be dwarfed by the reality about to set in.