The Great White North shakes off its historical politesse and starts kicking ass, financial-style. Will the rest of the world listen?
What’s up with Canada? They’re strutting all over the global stage these days. Finance minister Jim Flaherty has telegraphed to this week’s G20 meeting that he thinks the rest of the Western world should get its act together and finish the package of global financial reforms laid out in Toronto in June. And Prime Minister Stephen Harper is on record supporting U.S. Treasury Secretary Tim Geithner’s proposal that G20 countries adopt limitations on the size of their trade surpluses or deficits, in effect arguing against currency devaluations that juice local economies at the expense of countries with stronger currencies. These guys mean business.
Given the dire state of the American economy, Geithner’s arguments for currency relief don’t exactly come across as genuine, but the Canadians’ rhetorical brickbats aren’t coming from a position of weakness. When Harper criticizes China’s currency policy, he’s talking as the head of state of one of the only Western countries to dodge the fallout from the credit bust. Go Canada!<!-- more -->
This all comes on the tail of last week’s surprise, when the Canadian government smacked down a bid by Aussie mining firm BHP Billiton (bhp) for the pride of the prairies, Potash Corp. of Saskatchewan (pot). Yep, you heard that right: the Canadians are playing hardball in the global financial markets.
David Rosenberg, economist for Gluskin Sheff, thinks it really is Canada’s moment. “I’ve been in the economic analysis and forecasting business for three decades and don’t recall a time, ever, where on the fiscal, economic, or political basis, relative to the United States, the downside risks were as limited and upside potential so compelling in Canada as is the case today,” he says. “No bank failed during the crisis, no bank went cap-in-hand to the government, and no bank even cut its dividend. The federal government is running a structural deficit that is a fraction of that of the U.S., the Conservative party in power is distinctly pro-business. And, oh, by the way: Canada is rich in natural resources that China wants to buy.”
It's true that the Canadian government is running a C$56 billion deficit, but from a global perspective, that's chickenfeed. If that’s the only deficit you’re running, you’re a global tightwad. And by the way, that C$56 billion translates into US$56.1 billion as of this morning, a major point of pride in the land that brought us both Will Arnett and The Tragically Hip.
So it is with a sense of patriotic pride that I watch Canadian banking CEOs stride across the detritus of the global collapse, offering to any and all comers a lecture on just how one runs a prudent mortgage industry. Toronto real estate is still on a tear, for God’s sake, while the U.S. is stuck in foreclosure hell.
It’s the century of commodities, you may have heard, when a country’s worth is really just a function of its natural resource base. On that front, Canada has few rivals: it’s got oil, forests, nickel, water (!), and even diamonds. (And also the world’s most attractive prospector, one Eira Thomas.)
Canada spent lavishly (relatively speaking) on the Vancouver Winter Olympics, and while they didn’t end up on top of the medal rankings—their stated goal—the games were deemed a success by most. They took 26 medals to the 37 of the United States, a country with ten times their population. These people are unstoppable.
I asked my brother Steve McDonald, an artist living in the boondocks of Ontario, what he thinks of my thesis that Canada has got new game. Alas, he’s no fan of the country’s current government. “The new Canadian government is constantly pretending to be what we are not, like a parking ticket cop trying to act like a member of a SWAT team,” says Steve. “There were rights abuses during the G20 in Toronto that make even Americans cringe. The population on the other hand, still kicks ass. We’ve had more Olympic success, more great writing and film than ever before, and our major cities are starting to embrace sustainable modern European-style projects to reclaim and reuse old industrial sites. Did you know that we have just been ranked as having the number one worldwide ‘brand?’ Whatever that means. All that said, we’re still cool in Japan. And we still have lots of funny people. And Neil Young.”
So why, if Canada is such a great place, do so many Canadians still head south, angling for jobs and even citizenship in the United States? I am guilty as charged of trading in my Canadian life for one in New York, although the fact that the love of my life happens to be an American certainly played a part in my decision. (So why don’t we move back to Toronto, a place of great living standards and high culture? Because it’s too cold, says my wife. And that’s where the discussion usually ends.) All I can say is that the U.S., no matter what its challenges, is still the land of opportunity.
At least for now. My daughter Marguerite, born in New York in November 2008, is a Yankee by birth. But she’s already got her Canadian citizenship. We’re going to need it when we make a run for the border when the rest of the world’s forests and water have run out.