The Great Canadian Mirage

As you know, one of my favorite topics of discussion here has been the Canada mirage. I refer to Canada as a mirage in that it would seem to have few of the attributes of a real country: growing economy, stable employment, opportunity, etc. It would seem to me that much of this is not part of the Canadian landscape.

Let’s just look at the recent rise in the Canadian dollar. The Canadian dollar took a nose dive during the last twelve months to around $0.78 US. Much of this was attributed to the drop in oil prices, the strong US dollar, the concern that US interest rates would rise and that Canadian interest rates might remain the same or lower. The federal Minister of Finance continues to talk up the Canadian dollar: Stephen Poloz’s economic optimism is built on a shaky foundation.

Readers should understand that we are in the middle of a Federal election campaign. I don’t think that it’s too cynical to think that no one in Ottawa benefits from trash talking the Canadian economy. Hence one may think that the worst is yet to come after the election. Let’s wait and see.

Doug Porter who is the Chief Economist for the Bank of Montreal was interviewed on BNN recently. He challenged the Canadian government on their assertion that the weak dollar and increase manufactured goods will offset the oil shock. His view was that this might have been the case a few years ago. But this was no longer true with the reduction of manufacturing resources in Canada that has occurred over the year. Well said Mr. Porter!

Please see an article in the Huffington Post a few years ago already alluding to what Mr. Porter is saying today in an other area, the loss of high value jobs: Hollowing Out Of Middle Class Jobs In Canada: TD Bank Sees Low-, Middle-Wage Jobs Shrinking. The savings grace in this article was the oil and gas sector, and we all know where that’s going!