Can Canada avoid the economic storm looming over Europe and the US?

On Cross Country Checkup: economic crisis?

The looming economic storm in Europe threatens to envelop the world and push it back into recession.

What do you think? Will Canada be able to ride this one out?

With host Rex Murphy.

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Today we want to talk about the economy. We want to hear your impression of the health of it and your prognosis. This week the stock market dropped dramatically ...along with the Loonie which sunk well below par with the US dollar ...and the midst of it, the visiting Prime Minister of Britain, David Cameron stood with Canada's Prime Minister Stephen Harper to say the economic future does not look bright. Now, normally leaders prefer to deliver optimistic messages regarding the economy to ensure they don't fuel lack of confidence. So, this message in that context was particularly strong.

What's shaking confidence is a weakness affecting the three major economic pillars of the globe. Europe is struggling with its sovereign debt problem ...too many countries with too much public debt ...and some such as Greece are in imminent danger of defaulting. China's powerhouse economy which seemed to chug right through all previous downturns is now slowing, perhaps because consumers in the rest of the world are buying less. Finally the U.S., which had shown signs of recovery, now appears to be sliding again, raising the spectre of what some are calling a double-dip recession.

Where does this leave Canada? This was supposed to be the country that escaped the worst of the last recession but how long can it avoid a malaise that is spreading around the globe?

We want to know how things look from your perspective. Does the situation in Europe worry you? Should something dramatic be done to try to avoid it? Should Canada takes specific steps to soften whatever effects come our way? Should we spend to keep the economy afloat ...or save to avoid piling up more debt?

On a more personal level, have you tightened your belt because of what looks like a darkening economic future? If you're in business, are you continuing to re-invest and grow ...or are you taking a wait-and-see attitude? What is your personal strategy ....and what do you want to see from your leaders?

Our question today: "Can Canada avoid the economic storm threatening Europe, the US and the world?"

I'm Rex Murphy ...on CBC Radio One ...and on Sirius satellite radio channel 159 ...this is Cross Country Checkup.


  • Ambrose Evans-Pritchard
    International Business Editor of the Daily Telegraph Newspaper in London, UK.

  • Patricia Croft
    Former Chief economist of RBC Global Asset Management.

  • Craig Alexander
    Chief economist TD Bank

  • Ian Lee
    Assistant Professor of Strategic Management and International Business at the Sprott School of Business, Carleton University.


      National Post

      Globe and Mail

      Washington Post



      I think we are seeing the end of the 2008/2009 recession's effects. I don't believe we are going into another recession. Overcoming the fear and negative thinking which has infected western thinking will pay dividends in problem solving capacity. Investment in the US dollar, which has occurred, will encourage capital liquidity and economic growth.

      Donald Fraser Miles
      Elliot Lake, Ontario


      Canada will not survive if the Harper government continues with its spending program, particularly with military and prison  agendas.

      Myna Lee
      Saltspring Island, British Columbia


      If you paint the world picture as black as you can to depress people, you can do such things which would normally they might be against, such as more deregulation as advocated by David Cameron in the hope that doing something is better than doing nothing ( a la Margaret Thatcher).  He and Stephen Harper are one of a kind - push your ideology while you can. Let Greece default, they can never repay the IMF and World Bank, both of which should be banned from existence and let the losses come home to roost.  Let the 'big boys' take their losses instead of the taxpayers bailing them out.
      Avis Seads
      Galiano Island, British Columbia


      I don't think Canada can avoid some fallout from the European and U.S. economic crisis.  The European countries have to adjust their spending. Obama is trying to do what he can.  The less the countries and people have to spend, the less products and services needed, to what extent is anybody's guess.  The euro could very well go the way of the dodo.  Also, come election time in these countries, the governments could very well change.  When the economy goes south, the politicians are first to be blamed, rightly or wrongly.  It's going to be a bit of a rollercoaster ride for the next while, to say the least

      Gary French
      St. John's, Newfoundland 

      How can we survive the economic storm if we do not take lessons from past mistakes, recent and not-so-recent? Rebuilding the same old economic house of cards will surely only repeat the crashes of 2008 and earlier.

      We face two great challenges, neither of which are yet fully recognized by our governments. First, to reduce the growing economic inequalities. The 1930s depression was prolonged by a poor distribution of wealth (although this fact has been obfuscated by recent economic schools of thought). We need to return to progressive tax structures like those of the 1950s in order to achieve a more equal society. Second, shift from fossil to sustainable energy supply. How can an economy based on a dwindling, planet-threatening fossil energy supply end in anything but disaster? Both these challenges are quite solvable. We need only the will do so.

      Chris Aikman
      Comox, British Columbia


      To me it is quite clear that the free market economy had failed. This has been a Friedman (University of Chicago) experiment which has slowly been driving the economy of US and now Europe, and to a lesser extent Canada, to a near halt. Canada and the Scandinavian Countries have fared relatively better than the US because of the presence of more regulation of the economy. In addition to more government regulation, the higher income earners must pay a proportionally higher rate of income tax, as they do in the Scandinavian countries. There is so much money in the US, that the holders of that wealth could pay off the country's dept in a day.
      Eigil Jensen
      Abbotsford, British Columbia


      Just to let you know that the well regulated banking system is not due to the recent Finance Ministers; Canada has always had a sound banking system. In fact, there was  even one bank failure during the Great Depression (1929-1939).

      Ronald A. McCallum
      Mississaua, Ontario


      In response to your glance at the economic picture: the other shoe dropped long ago and the picture is fake. When the US President says it is not the time to panic, it is the time to panic.

      The sheer numbers within urban settings are in excess of resources available to feed and house, and most urbanites lack all skills necessary  to support their day to day needs.

      The crisis is not 'over there'; it is also rampant in Canada with the governments selling anything left in the resource cupboard.

      More frightening is the rise of fascist governments, including Canada's. We live in the era of post democracy and post capitalism. National debts are funnels of money to private corporate pockets.

      Why are economists  still the pundits of choice in the media and why do we still believe in the corporate model? Why are we not all reading Naomi Klein's Shock Doctrine?

      At least, thanks to Harper, we will have ample prisons,  an armed military, and a growing body of misinformed and uneducated serfs.

      My solution over the last two decades has been to invest my time and income into self-sufficiency. And, yes, I realize that if the cities are starving, folks will consume that last bean set aside for the garden - by force if necessary.

      I have no more hope that the media will begin to report accurately and thoroughly, so that folks can make good decisions and possibly avoid the worst of what is coming our way. But, there are always sports and the lottery to distract the masses.

      Harlene Holm


      How do I evaluate the economy? Easy, you only get out of debt by not wasting money. I was a mean and selfish mother who never found it difficult to say no. I did not give my children what they wanted anymore than I gave myself what I wanted. We lived within our means, period. It is time that people face the music, suck it up buttercup, and tighten their belts. We do not owe money anymore because I stayed awake at night planning a way out of it. Not only mortgage, but car, credit card, or any other money.  As individuals we need to stop trying to impress our neighbors by purchasing things and only buy with the cash we have.  It is the same thing for a  country. Say it to drugs, say it to debt. Just say no.

      Geri Coe


      Here's a radical idea. Forgive all debt, personal, corporate and national and start with a clean slate. Maybe the banks would have to eat it but, ultimately, it would get us out of trouble.All the really smart economists can work out the details of how to mitigate the impact

      Charley Robertson
      Haida Gwaii, British Columbia 


      This discussion over what is called a failing economy seems only to be related to loans that cannot be repaid.  Why is responsibility  not on the shoulders of the lenders since it is clear that loans were made without knowing if they could be repaid.  That  mistakes can be made is easily acknowledged but what we presently have is mistakes of such proportion to doubt the validity of calling it an error.  This is all related to the fantasy of constant growth and never stability.

      Terry Smith
      Garibaldi Highlands, British Columbia


      The Harper government repeatedly refuses to disclose the cost of building new prisons, the estimated expense required to implement new prison reforms, or the true cost of the non-competitive procurement of fighter aircraft. On top of this is the current concern of extravagant military indulgence. Why should we then believe the Harper governments claim of sound fiscal management when they continuously avoid any scrutiny of their claims?

      Murray Hainer
      Vernon, British Columbia


      It's time for average people to wake up and realize that we have been sold a "bill of goods" over the last thirty years regarding the stock market and its ability to return investments to us. Markets today are a creature of speculators who chiffon off people's investments and leave so many of us sitting on devalued RRSPs, bonds or stock." Freedom 55" long ago turned into "Chained to job 70". We bought into the notion we could blindly invest with some broker and expect an automatic return waiting for us upon retirement.

      Gerry Lawlor
      Behchoko, North West Territories 

      I can't imagine such intelligent and well-meaning people across this country and the world who simply refuse to look facts in the face. Not the fact that are perpetually discussed, like the state of the world economy, of jobs, GDP, and how consumers will behave at Christmas time. These are merely the symptoms of the root cause and the root cause in our (Canada's) case is the Canadian Bank Act which allows so-called chartered banks to loan money with zero reserves in their coffers thereby creating currency, a good thing in principle, one that keeps our economy moving like the current of a great river - into a bad thing called debt. Moreover, the resulting loans create more fictitious money based on compound interest. If the Bank of Canada according to the Bank Act "Belongs to the People of Canada" why are our governments borrowing from banks at compound interest, creating pointless public debt, when we can borrow from the Bank of Canada (ourselves) and pay 0% interest, repay the loans to ourselves and stop paying compound interest - which amounts to 85% of every tax dollar collected - to chartered banks who make endless profits. It's the emperor's new clothes for god's sake. They want another recession which will push  the citizenry into final submission to world currency and easier widespread control. Wake up good people. We can change this with public pressure, the will of the people and truly honest and brave people in government office. Oh Canada indeed.

      Alexander Nichols
      Vancouver, British Columbia


      There is a massive overwhelming public sector and dependent class (welfare) living off the productive sector which didn't borrow the debt. This has been sustained by a fiat silly monetary system printing money. Noting will change unless the system changes to a monetary system which is backed by gold and silver. It is just a matter of time before hyperinflation takes over, unfortunately. A new paper money is likely to be brought in and the productive sector will see that the money they have is worthless once again. There will be years of pain, it's in the history.

      Philip McCormack
      North Vancouver, British Columbia


      While Canada may be in a position to weather the storm,( in the words of your guest from RBC ) a very big storm seems inevitable. In my view, the ones and zeros that are attributed to debt and dysfunction and that may seem overwhelming to most of us, are little more than a coercive stick to prime us into believing that options before us are not really options at all.  Sovereignty and the nation state or our current ideas as to what these mean may be on the precipice of being irrevocably changed.  If a farmer does not increase the size and yield of his field each and every year, is his food any less valuable? Why then do we look at the limited growth of GDP as a bad thing? Droughts are by definition are temporary.

      Del Vezeau


      Both Ireland and Spain had very low debt levels prior to 2008. Their current problems were not a result of government spending. Ireland's debt was lower than Canada's is today. The excessive focus on government spending is only relevant to selected countries, mainly Greece and Italy. If we fail to pay attention to this reality we fail to ask the questions relevant to Canada: namely, do we have substantial non-governmental risks which may eventually land in government's lap as in Ireland?

      Michael Mendelson
      Toronto, Ontario


      Twice today I have heard pundits on CBC saying that Ireland was being fiscally responsible.  I lived in Ireland between 2002 and 2007 and you would have to be blind to see that this was not the case.  The people, the banks and the governments were spending money as if it were going out of style.  Individuals thought that their days of poverty were over and they were on easy street forever.  The government was using tax policy to encourage investments that would make no sense otherwise.  The banks were lending as if growth would go on forever.  The government was spending money everywhere it could find someone willing to take it.  It was obvious that a crash was coming. When I left many people were beginning to see that they were on a treadmill to nowhere but did not know how to get off. 

      David Lorge Parnas
      Ottawa, Ontario


      Because everything is connected economically, Canada cannot avoid being impacted by what is going on in the world.  I picture the countries of the world as people tied to a railway track.  The train is going to hit everyone, it's just a question of when, but Canada is positioned as one of the last to be hit.  For some reason our leaders in politics and economics herald this as a reason to celebrate and congratulate ourselves.  The global economy has pretty much reached its breaking point but we will all crash together.

      A previous caller asked, "what is money?".Money is debt.  Governments borrow money into existence and the interest generated demands that more money than exists is to be repaid.  Where does the money come from to pay off the interest?  It is borrowed with interest - and so on and so forth.

      Jake Hunt
      Ottawa, Ontario


      The bottom line is the financial sector worldwide created this mess, then the G20 countries alone took over $17 trillion of taxpayer money to prop up the misdeeds and greed to take us slowly to the cliff we are about to go over. Now they want more of our money, to cut jobs and services, etc. to continue their ill gotten gains. Use us then blame us, then penalize us.

      While Canada has not been affected to this point as bad as others, we are merely the healthiest horse on the way to the glue factory. Even if the Harper regime meets their goal of slashing five percent in spending, they will still be spending nine percent more than when they took power. They have no business scolding anyone on fiscal matters as they have benefitted from previous foresight to protect us, yet they are referred to as good fiscal managers. A farce with serious consequences for the people, not the corporations or supposed financial wizards.

      Bruce Hughes
      Upper Keswick, New Brunswick


      What is interesting throughout the broader discussion on the current debt crisis is the subtext of predictive failure. It is accepted that there were structural flaws within the US housing bubble prior to 2008, and now with the European Union, that no one had the foresight to see, yet are now glaringly obvious. My question is simple: what are we ignoring now, here in Canada, that will come back to haunt us over the next two to five years? Is it a focus on commodity markets with the oil sands and boom in mineral exploration? Is it the gutting of public service intellectual capital in the name of domestic austerity? I am not doom and gloom, but we could probably be doing more here in the present day.

      Kent Crozier
      Atikokan, Ontario


      My pay was just cut 40%. I work for a small electronic component reseller and business has fallen way down.  Sales are half what they were a couple of years back.  Why does pay always have to go up? Business and the economy go up and down. Business has to react to the times. Governments need to as well.

      Toronto, Ontario


      I'm too late I know.  Why talk to economists, if they knew what they were doing we wouldn't be in this mess.  How often are their predictions correct? You can't argue (usually) about mathematics, the economists of the world, especially the first world, panics when the economy doesn't grow more than 2% or thereabouts; exponential growth like what we have or want will eventually run out of planet which some ( like Suzuki) say we have already.  It used to be simple, if you don't have the money don't spend it. 

      John Bernard


      On the topic of economic turmoil, how can we expect a system based on the madness of never-ending growth to continue forever? Sooner or later  we reach limits imposed by the carrying capacity of the Earth.Yes, I believe the coming storm will engulf Canada eventually, though it will probably take longer here. This is a blessed country.

      Meanwhile we have corporations worldwide sitting on billions of dollars that they are not investing. If a union goes on strike the media goes on about them holding certain groups, like students or patients, hostage. Where is the outcry when capital goes on strike?

      Ien van Houten
      Nakusp, British Columbia


      Has anyone delineated between small business and the self-employed? I am self employed as a musician in Ottawa who scrambles for a living between playing classical music for events like weddings and dinners and by teaching the flute.Both of these services become "optional" and "discretional" in the face of the widespread fear and panic of recession politics churned out by the media who are always making the story of the story (remember Y-2K frenzy/dud) and a government who really doesn't care.  A basic personal tax exemption of only ten thousand for any artist who also teaches is an insult, even when it comes from stupid and incompetent governments.

      Thomas Brawn
      Ottawa, Ontario


      A couple of your callers this Sunday tried to bring some reality to this endless discussion. The system which calls for endless growth, which is based on paper with nothing tangible behind it and which is endlessly discussed by those called ''economists'', is self destructing. The planet's resources are finite and therefore it cannot sustain endless growth.  Capitalistic consumerism has taught people that greed is good.  Greed has encouraged people to live beyond their means, they have forgotten that the economy is based ultimately on the environment. Fortunately there are many young organic farmers, craftspeople and others who are now attempting to re-invent the world economy. They are our best hope.

      Ingrid Style
      St Hilaire, Quebec


      Over the past couple of years, Canada has coped better fiscally than many other countries.  Although the current government likes to boast about its great management of the economy, we must not forget that the real architect of sound fiscal policy in this country was Paul Martin.  As finance minister under Jean Chr├ętien, Mr. Martin eliminated our federal deficit, reduced the national debt, and would not allow any de-regulation of the Canadian banks.

      Gord Payne
      London, Ontario


      The boom bust cycle just keeps happening.  When a new resource or industry appears, a population will move in and exploit it.  Demand increases until carrying capacity is reached. Then the dreadful truth that people have been living beyond their means becomes apparent.  People don't understand how limited their scope is especially economists. When economists see the words sustainable development,  why do they still act as if the words are unlimited growth, even after all these years.

      Gary Hayman
      Vernon, British Columbia

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