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Bank of Canada bets on U.S. recovery

HEATHER SCOFFIELD

From Wednesday's Globe and Mail

Latest comment posted at 1:02 PM EDT 17/01/07

Interest rate remains unchanged at 4.25% on belief worst is over south of the border ...Read the full article

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  1. Luft Isanidiot from Canada writes: "betting the worst is over for the U.S. economy?!"

    Is this guy on Crack?? The US debt is higher than ever, there manufacturing base and good paying jobs are gone. There is talk of countries dropping the dollar! (thats the main reason to thretening Iran) ING bank is now warning if the US or Israel attack iran stocks could drop in value Gold and silver could skyrocket.
  2. Edward Smythe from Chicago, IL, Canada writes: "The worst is over?" Frankly, outside of Lou Dobbs' increasingly xenophobic rants, we did not really realize there was a problem. The economy grew at a prtty decent clip, record number of jobs were created, and unemployment is at a record low.... The other good thing is that a lot of the low-value-add manufacturing jobs are disappearing, and being replaced by knowledge/innovation jobs, which have a much larger ripple effect on the economy... for those who cry about "good paying manufacturing jobs" going away, it's about time!
  3. Matt Stiles from Vancouver, Canada writes: Wow, even our own central banker believes in the Goldilocks Soft Landing theory. Credit has expanded irrationally leading to overspeculation in the housing market. The housing market has led to equity withdrawals which have funded the biggest consumer spending spree the world has ever known. Debt is growing at an exponential level for the government and the consumer has had a negative savings rate for months now. Jobs have been shipped to India and China but temporary jobs have been created in the inflation of the housing bubble. The USD is at it's long term support level and interest rates are already historicall low. The population is aging and every year for the next 20, government liabilities increase and the knowledge gap shrinks. Subprime mortgagers have begun going bellyup (Ownit Mortgage, others...) as nobody will buy their worthless mortgage backed securities - even they know the homeowners will enter foreclosure. Corporate profits are still growing, but they have nowhere better to spend their money than on stock buybacks. Leading indicators like transports and building permits point towards recession. The yield curve is inverted. Energy prices have fallen, but are still historically very high. Rampant speculation in all markets has been leveraged on expectations of future growth. I'd be interested to see what "signs" Mr. Dodge sees.
  4. Some Dude from hamilton, Canada writes: If Dodge is betting the US will turn around he is for sure dreaming . China and Japan are not buying US treasuries any more. The US needs a Billion Bucks a day in foriegn investment just to stay afloat. They are already bankrupt and don't even know it. 300 Billion in consumer spending is now gone in the US due to the home equity bank machine is tapped out. Dodge better be increasing Canada's supply of Euros and get away from the US dollar or we too will sink like a stone. The US might be able to print up a bunch more US dollars from thin air to add some more liquidity to the system but it's going to be ugly really soon. Stick with gold and silver because the paper under your matress isin't going to buy a cup of coffee.
  5. T. Braithwaite from Canada writes: The US economy is still growing--it is continuing the fourth highest number of consecutive months of growth on record. The balance of payments for December was actually a surplus (due to corporate taxes). What the US is going through is a slowdown in the growth rate and in certain sectors (housing and automobiles) that affect Canada particularly. But overall the US economy is chugging along well. Their annual increase GDP is 3.3 percent right now, which is higher than Canada's.
  6. J Tittle from Canada writes: I have a couple of issues with this. First, we have public servants "betting" on things with our tax $$$??? Really? LOL They couldn't all be "roll the dice" types like Mulroney could they? Second, why is Canada, a country with all the "trump cards" even "betting" on the USA at all? We're the people paying down our debts, we're the people with a responsible fiscal policy, we're the people with a surplus of assets critical to the markets ( gold, silver, diamonds, OIL, nickel, etc... ). Why are we even bothering to use the US$ as a reference for our C$ ??? And finally, given what others have said about the US situation, shouldn't we be covering ourselves in the event of a catastrophic event down there??? Seems that what Gov't is supposed to do. Not "bet" with our money.
  7. Sam B from Cambridge, Canada writes: It's simply amazing to see the complete economic ignorance of those that are actually posting in the Business section. Are these people for real?
  8. martin ess from Edmonton, Canada writes: Firstly, "Sam B", your comment has no content - why did you post?

    Secondly, Mr. Dodge must believe that consumer debt in the US (which drives consumer spending--which drives the majority of the US economy--and our exports?) can expand without limit.

    This is a flaw of Keynesnian economics -- just lower interest rates and consumers will increase their debt (disregarding their existing debt!), thus expanding the economy. Inflation will continue if the Fed can get people to continue the credit boom. Look out below when the borrowing stops. Check out the US credit graphs at prudentbear (dot) com.

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