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Canada looking like Switzerland, economist says

Forget suffering from "Dutch disease." Canada is thriving with "Swiss syndrome," an economist said yesterday. Many analysts have warned Canada may be falling into the same trap that befell the Netherlands in the late 1950s when the discovery of North Sea gas sent the Dutch currency soaring and the manufacturing sector tumbling soon after. But Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said Canada's economic fundamentals may be more in line with those of Switzerland, which is typically viewed as the gold-standard economic model with a massive current account surplus, a super-strong currency, rock-bottom unemployment, miniscule inflation and consistently low interest rates. "Switzerland may have beaten Canada at its own game in the recent Olympic hockey tourney, but we are catching them at their game - now boasting some of the soundest economic fundamentals in the world," Porter wrote in a report. Canada can also point to some positives that Switzerland can't, including solid gross domestic product and a government budget surplus.

Raging commodity prices may have been a major factor driving the loonie to new peaks - it reached a 14-year high of US88.50 cents yesterday as oil rebounded - but Canada's dramatically improved fiscal and credit position should not be overlooked, he said. Canada's overall government sector was in surplus to the tune of 1.7% of GDP, according to recent 2005 figures, the second-best annual performance on record dating back to the 1960s, trailing only the boom year of 2000. While the government is set to loosen the purse strings this year, Canada should remain in surplus while Switzerland's deficit is expected to stay above 1% of GDP. Sliding government debt has combined with persistently low interest rates to chop Canada's foreign net liabilities to 12% of GDP from more than 44% in 1994 and brought net interest and dividend payments on that debt to their lowest share of GDP in at least 40 years. In addition to reaching new highs against the US dollar, the loonie also broke below $2 per British pound this week for the first time in more than a decade. Porter said it is likely only a matter of time before Canada's foreign net liabilities shrink to zero and Canada joins Switzerland, Japan, Germany and Norway as net creditor nations. Perhaps then, the loonie could join the Swiss franc in having "safe-haven" status, acting as a port of call in times of global distress, especially with Canada one of the few geopolitically stable countries exporting oil. Canada's manufacturing sector will likely continue suffering some element of Dutch disease, Porter said. "Beyond bragging rights and a triple-A credit rating, the real economic payoff from very healthy economic fundamentals is found in rising living standards flowing from a deservedly strong currency and low long-term borrowing costs," he added.
(National Post 060303)

Raw materials exports are rosy these days, however this can change in very short order. Canada still has big issues with diversification and productivity lags. We are still stuck in the 'drawers of water, hewers of wood' mentality in this country. Too many natural resources, not enough population to plunder it to unsustainability.

OPEC has sense market needs more crude oil: Bodman

US energy secretary Sam Bodman said on Friday he believes OPEC has a sense that with current high oil prices, markets need more, not less, crude oil from the cartel. Bodman said he did not know what OPEC ministers will do to their production levels when they meet next week. However, he said in his meeting this week with OPEC's president that "their sense was that with the prices that we're looking at it, that market is going to need more rather than less oil." Separately, Bodman said the Bush administration now sees problems with creating separate US gasoline and natural gas emergency stockpiles and that idea has become less of a priority with the administration. Bodman also said the Bush administration has no plans to raise taxes on gasoline or other forms of energy.
(Washington Post 060303)

*Urgh* Politicians. I just don't get it. Freakin' raise taxes already! What are you waiting for? It's so simple. You agree that North Americans are addicted to oil and a free-driving lifestyle, but you don't want to do anything about it for fear of losing power and prestige and upsetting your corporate cronies. How pathetic. Yeah, yeah, the economy suffers, until you realize there is still as much money in the system as before, just better appropriated. Use that extra tax money to stimulate alternate energy research and technologies and public transportation initiatives. Make car owners and drivers pay a more accurate reflective cost of their lifestyle choices. Car ownership should still be seen as a privilege, not a right. Everything will even out after the adjustment period. Europe has followed this model for decades. Fuck!

Spineless thieves, the whole lot of them. Government for the people, by the people was a concept lost long, long ago.