http://ca.finance.yahoo.com/news/Flaherty-tells-New-York-capress-601242121.html?x=0 "Flaherty pointed out that the Conservative government in Ottawa will be again be lowering corporate taxes come January, this time by 1.5 percentage points." "By 2012, Canada's combined federal-provincial corporate tax rate on new investment will have fallen to 25 per cent, which Flaherty says will be less than half that of the United States." "The finance minister also reminded his audience that Canada, not Saudi Arabia, is the single biggest supplier of oil to the United States at 1.9 million barrels a day." Lower corporate taxes = attract new business?
Canada seems like a pretty good balance..... they seem to have maintained fiscal discipline in their government and banking system, relative to most developed countries. If the US economy does well, so does Canada, however with their natural resources, there is some inflation protection built in. I have liked Canada as well as Australia (similar reasons) for a while now. I think both are good, long-term places to hold money.
I agree with bullishness on Australia as well. There are obvious risks involved due to the fact their economy is largely tied to China similar to Canada's situation with the USA, but right now it's working for them. It's all about natural resources.
Hey Kass can you comment on what Mark Carney said today about household debt in Canada? http://www.nationalpost.com/news/ca...+debt+rates+continue+mount/3971673/story.html I know its nothing new, but they have been reiterating this point for a few months. I wonder if there is some thing else underlying the issue?
Hey Frostie, The rising debt levels of Canadians is indeed a disturbing trend. Mark Carney has been warning Canadians for quite some time now, but only recently are people starting to listen. This is because for the first time in 12 years the debt-to-income ratio of Canadians has surpassed that of the USA (147% to 148%). It's strange how politicians have only now started to speak out against this trend since the USA level has been passed, but now Finance Minister Flaherty and even Prime Minister Harper have heeded their own warnings as well. Surely this will gain more and more attention in the coming weeks and months, which is likely a good thing because many Canadians need to wisen up with their debt. That being said, recent studies and surveys have suggested that Canadians will be able to handle a slight rise in interest rates, but will come under pressure if a significant move were to happen (anything over a 2% raise I suspect). I think this is what Carney is trying to prepare Canadians for in 2011. The first meeting is early January, and what comes out of that meeting will be a good indicator of how the rest of the year will play out in my opinion. Along with a rise in interest rates, obviously unemployment is also a threat given the high debt. Should unemployment increase we will likely see more defaults and cooling of the housing market. Couple this with higher interest rates and we've got a problem, Houston. The third major threat along with higher interest rates and higher unemployment is the high value of the CAD. I don't see this threat going away any time in the foreseable future given Canada's reluctance to manipulate their currency, as well as inevitable interest rate hikes. The mantra from the top right now is for businesses to invest (machinery, equipment, etc.) in order to increase productivity, which has historically lagged in Canada for whatever reason. ----------------------------------------------------------------------------------- And now the optimistic side. Oil and natural resources in general are in high demand as usual, and Canada has a high supply. The more we can tap into these resources, this industry is certainly capable of at least maintaining the economy at the status quo. Again, this speaks to the emphasis on business investment and higher productivity. Canada is also diversifying their economy away from the USA at a speedy rate. Exports to the USA are now only 72% of total exports, with emerging economies like China and India increasing their share. The low debt levels of the government is allowing them to lower taxes, especially for businesses. This will remain the trend for as long as the Conservative government is in power, making it attractive to open up shop in Canada. My response is sort of long-winded, but I think it's beneficial to take a step back and look at the big picture sometimes. My personal opinion on the Canadian economy as a whole for the near future is cautiously optimistic. Play close attention to the BOC meeting in early January, I think they'll give some significant clues. Any thoughts?
Yes, I've noticed. I live in Canada and love this country, so I am no doubt slightly biased in my analysis, but I do try to be as objective as possible. The simple fact of the matter is that from what I see, Canadians are doing alright. We are not growing gangbusters like the BRICs, but everybody is getting by and seems generally content with the way things are in this country. No ridiculous government debt (USA), no sharp "austerity measures" (Europe), and a stunnignly stable political system, unlike our friends in Asia. Couple that with the current Conservative government's insistance on tax decreases, and my overall satisfaction level is more than pleased.
The best of all possible worlds, a new era of eternal prosperity and great "fundamentals"! It must be time to sell!
Thanks for the reply, it is appreciated. What I am reading here then is that perhaps the BoC is going raise rates regardless of unemployment and economic indicators? As well they seem to be less focused on curtailing inflation than in the past? Personally I think this would be a good move, even though there will be some suffering in certain segments of the population we should clear the whole mess in a stronger position with less debt. And while the stimulus of the past couple of years was over all a good thing and seems to be quite successful I believe the government should go back to balanced budgets. If the conservatives believe in what they actually say, this shouldn't be difficult. What do you say for the risk vs reward of taking on more debt in anticipation of the event that rampant inflation rears its ugly head? I don't want to be the only sucker with no debt repayments with useless money.