Don't be so smug, Canada (re Debt crisis) - Actually they do have reason for a little smugness.

[pampango]

http://www.ottawacitizen.com/business/smug+Canada/5122606/story.html

(I)t's tempting for Canadians' chronic superiority complex regarding the United States to make an appearance. Tempting but ill-advised. Being their much smaller but still organically joined economic Siamese twin, if they go off the cliff, we go, too.

True, there seems to have been an un-coupling of the two countries' economic performance in the three years since the Crash. Our banks didn't fail. Our bailouts weren't as big. Our debt levels were lower going into the crisis and so our books are in better shape coming out.

Despite these recent differences, if the Americans have another recession, we're bound to go down with them. Our trade is more diversified than in the first years following the Canada-U.S. free-trade agreement but the U.S. is still far and away our largest trading partner and our capital markets are still hardwired to New York.

There isn't that uniformity of opinion in the U.S. today. If there were, there'd be a deal already. ... One reason there isn't is misgivings over the blazingly rapid actions the American political system proved itself capable of just three years ago. In only days in the fall of 2008, the Troubled Assets Relief Program (TARP) authorized spending of almost a trillion dollars. The most bloody-minded opposition to an increase in the debt limit comes from people who, believing they were railroaded then, have made up their minds never to be railroaded again.

It's telling that the author advises Canadians against smugness, not because Canada hasn't done a much better job with its economy, but that, in spite of that, "if the Americans have another recession, we're bound to go down with them". No matter how well they regulate their financial industry and how solid their economy, if we go "off the cliff" they will, too.

[Kennah]

1. Ha! Let 'em try to be smug! Go build a 4,000 mile border to keep us out!