RSSCanada's Jobs Number a Worrying Sign
By Paul Baiocchi | January 14, 2008 | 8:53 AM | 0 Comments
How amazing is it that a resource-based economy like Canada's could be weakening during a time in which commodities prices have continued to make new all time highs? Very.
And how can one it be that Canada's population is calling for interest rate cuts in an environment where 65% of the country's GDP is tied to natural resources, which experienced another banner year? It is logical to point to the fiscal and monetary mismanagement of an economy in this case.
It is appalling to this writer that Canada's ruling Conservatives still have jobs. After scrambling to cut some federal taxes in response to bipartisan pressure in the wake of late-2006 Tax Fairness plan debacle (which investors should remember best as the energy trust debacle), the latest failed strategy seems to be the lowering of the Federal sales tax, from 6% to 5%. Up here, any tax cut is news but this highly-regulated, heavily-taxed economy is going to require much stiffer medicine. This underwhelming tax cut will do little to stoke the fires of the Canadian economy.
It is plain to see that this conservative government, which has stooped to handing out aid packages to obscure provinces for political protection, should be running on fumes. With Oil prices flirting with $100 a barrel, Gold nearly $900, and Chinese import tariffs dissolving, a competent government with a true economic aptitude is clearly necessary. Now is the time in which Canada should be using massive twin surpluses to plug its economy into the 21st century world economy.
Instead, we're likely to see another interest rate cut from the Bank of Canada later this month, as though pursuing the course of a weaker currency is a wise course of action which will provide relief to Canada's exporters. Just ask America, which has seen the U.S. dollar index fall more than 30% over the last six years yet continues to witness record trade deficits.
Although Canada's economy lost jobs last month, it is not a signal of upcoming economic calamity; it does seem quite out of place, however, for an economy that should be as well positioned as any in the world. The job figure does signal a more disturbing reality, though: that this Harper-led government may be in the process of wasting a once-in-a-lifetime secular bull market in commodities.
| 
|
