Which Is it?

 

Did the OECD financial report looking fifty years into the future do Canada an undeserved kindness?

They did assert, in their collective wisdom and professional expertise, that Canada is outstanding in the G7 as the country most likely to succeed in continued growth in GDP, outstripping its neighbours, if only marginally.  And Canada does have that reputation as a careful fiscal manager.  In essence, then, the highest international economic authority has faith in Canadian fiscal management.

And Canada?  How do we see ourselves from our internal perspective?  Well, we're doing all right.  Yes, the country has lost manufacturing clout, but we've got so much potential in extraction resources from fertilizer to shale gas and those oil sands projects that are besmirching both our reputation and our environment.  Will we forever be hewers of wood and drawers of water?  Noble professions both, if somewhat outdated.

Good thing our high-tech sector is right up there with the best of the world's entrepreneurs, even if they are getting a good run for our money. Of course, much of what happens to Canada as far as economic well-being is concerned is courtesy of our hugely influential, large and powerful neighbour.  The slop-over of geographic contiguity has manifold rewards as well as headaches.  The reward is the colossal cross-border trade between our two country.

The headache is what Canada gets every time the United States gets recession-fever and becomes grumpily protectionist.  And that, beside the free trade deal.  That free trade deal has enhanced Canada's bottom line prodigiously; it's the proverbial gift that keeps on giving.  Minus the frustrations.  Fact is, though we're kissing cousins, the United States is more focused on its own financial health than Canada's.  How could it be otherwise?

Canada holds out huge hope every time there's a financial downturn in the U.S.  We hope and pray that whatever fiscal malaise has afflicted the country will soon be resolved.  And in the process not harm Canada's interests too severely.  And usually, after a long, deep breath, matters do iron out and relations continue along their fairly even keel.  After all, our industries are deeply intertwined; what profits the United States equally profits Canada.

So what's this we hear from our Finance Minister?  Canada's budget deficit under the deft and knowledgeable tutorship of Jim Flaherty has turned out a hefty $7-billion larger than what he himself projected in the March budget?  Not good news.  Oh yes, we're in good shape, but things could always be better.  What's the point of nagging the ordinary Canadian about acquired debt when the country's in the same fix?

The budget shortfall was forecasted at $18.1 (gulp) billion, but with these new figures, try a total deficit of $21.1-billion.  "I firmly believe that our government is striking the right balance between returning to balanced budgets over the medium term and continuing to invest in the key drivers of economic growth and job creation", said the man.

"So this is not significant" he said to reporters in Fredericton.  It's a fraction of a $280-billion budget.  "We're talking about relatively small amounts of money in the big picture."  That with a conservation-minded Conservative government at the helm.  And Mr. Flaherty chimed in with that familiar refrain so beloved of his predecessor Paul Martin who was far more successful at slashing and cutting the deficit: "Canada is not immune to the fragile global economy".

Reminding us that a failure by American politicians to compromise across party lines for a bi-partisan solution to the "fiscal cliff" facing them over the $600-billion worth of tax hikes and spending cuts has the potential to mire that country back into an even more severe recession.  One that would inevitably impact Canada. 

Thanksalot.