Good day, eh?
Canada will be partially insulated from this crises simply because our banks did not issue nearly as many as these bad mortgages. Our banks have always been more conservative, and there’s only five of them. Some of them are heavily invested in mortgage back securities however, especially CIBC, and as a result they’re taking some major hits.
In addition, the Bank of Canada has had a more tight reign on monetary policy than the Federal Reserve and, unlike the Fed, is a Crown Corporation (Founded in '33 as a private entity and nationalized by Mackenzie King in '38), operating at arms-length from the Federal Gov’t. All that being said, Mark Carney has done a great job of following the US$ down for the past year, maintaining the exchange rates as about par since fall '07. This has only begin to change with the current USD rally.
The fact that most of Canada is a resource based economy will help us out as well. Ontario, which relies heavily on manufacturing, however is being hit hardest so far.
Bearing in mind that about 80% of our exports (Canada IS a net exporter) go to the US isn’t helping, but that’s down from 93% a decade ago. If you look at a map of the world and cover up the US, Canada is as alone as Australia only without a sea-based export network. Almost everything goes south on trucks.
I think the bottom line though it that is the USA is f**ked, Canada is at least screwed.
Hang in there, southern brothers. This may be the winter of our discontent, but with hard work and ingenuity we can have a nice spring…