Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it's Canada. In 2008, the World Economic Forum ranked Canada's banking system the healthiest in the world. America's ranked 40th, Britain's 44th...
It's true. Our banking system is way more regulated, and there are fewer, but largeish banks. The gov't also stopped some mega-mergers about ten years ago, which may have actually prove to be a plus to the banks now. However, some Canadian banks have taken over smaller US banks (like whichever one Sam Waterson shills for, the TD is should for Toronto Dominion.) and have sunk a fair bit of money into those shoddy mortgages and ABCP, they have taken a hit, but not as devastating a hit.
Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada.
In some urban centres where prices rose high, they are now crashing pretty badly, mostly BC, Alberta and parts of Ontario. Where I live the rise has been less crazed, and the decline is only supposed to be a percentage or two before it starts moving upward again.
Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn't deductible up north... Ah, but you've heard American politicians wax eloquent on the need for these expensive programs—interest deductibility alone costs the federal government $100 billion a year—because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It's 68.4 percent.
Canada has been remarkably responsible over the past decade or so. It has had 12 years of budget surpluses, and can now spend money to fuel a recovery from a strong position. The government has restructured the national pension system, placing it on a firm fiscal footing, unlike our own insolvent Social Security. Its health-care system is cheaper than America's by far (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes. Life expectancy in Canada is 81 years, versus 78 in the United States; "healthy life expectancy" is 72 years, versus 69. American car companies have moved so many jobs to Canada to take advantage of lower health-care costs that since 2004, Ontario and not Michigan has been North America's largest car-producing region.
However, the US is our largest trading partner and the economic health of Canada is undeniably tied to the health of the US economy. Besides, the relative strength of the CDN dollar to the US Dollar makes investing here less attractive. We've just reported our first trade deficit in 33 years.
Also, this recession is global, so it's not just US firms that are cutting back, but it's all multinational firms, including all the oil companies working in Alberta, and the automotive industry is cutting thousands of jobs in Ontario. Canada is having negative growth too. I hear of new job losses and companies closing on a weekly basis. the downturn is hitting home. But it may just not be as extreme a recession here...yet.