The global markets are punishing Canada

Il est intéressant de connaître la problématique économique canadienne, de l’extérieur.

Disons, que l’information est un peu plus neutre que nos médias traditionnels.

J’aime bien ce genre d’analyse, trop rare d’ailleurs, elle attaque le sujet avec plusieurs variables simultanément.

1.      Une corrélation avec les États-Unis,

2.      notre taux d’endettement,

3.      le coût de notre main-d’œuvre.


Extrait de: The coming deleveraging for Canada – Unit labor costs in manufacturing above US labor costs and household debt-to-income at 160 percent,  by mybudget360.

Our neighbors to the north in Canada are going to face a serious deleveraging shortly.  This isn’t hyperbole or some off the wall call but based on evidence of what happens when economies get into too much back breaking debt. 

If the largest trading blocs, the US and Europe had to have their day of reckoning how is it that Canada will be immune from the same economic forces of debt? 

·         Bubbles do not pop in perfect harmony. 

·         They pop in a disorderly and loud fashion and momentum picks up once the unraveling begins. 

Canada has one of the biggest ongoing housing bubbles and contrary to the rhetoric we see, they have households deeply in debt.  In other words, they are leveraging to the hilt just to keep this charade going.  Yet this can only go on for so far.  Obviously bubbles can last for a very long-time (i.e., US housing from 1997 to 2007) and can surprise many people.  Let us take a look at a couple of reasons why Canada is going to face a heavy deleveraging.

Canadian household debt

·         At the peak of the US housing and debt bubble, US households had something close to 120 percent debt-to-income ratios. 

·         Canada today is above 160 percent. 

·         So they are fully into uncharted territory.  Household debt is incredibly high largely because of the massive Canadian housing bubble. 

·         Housing is the biggest expense in both the US and Canada. 

Contrary to what we hear, it is not different this time.  In fact, given the massive debt we see, it is likely that the deleveraging event in Canada will be even more painful.

Canada’s labor costs are much more expensive
than US labor costs

Canada’s labor costs

This is problematic in a world driven by low wage labor. 

Households in Canada are maintaining their current spending via debt.  This was a common experience that was had in the US as households were trying to maintain a middle class lifestyle while wages were stagnant or even falling. 

Canada has massive household debt relative to income
and labor costs are also very high.

The global markets are punishing.

Look at places like Spain with high labor costs and big housing bubbles.  It will take years if not decades to get to a more balanced out economy.

Canada is also losing an edge when it comes to maintaining a lion share of exports to the US

CAnada Share US

Maintes fois, je vous l’ai mentionné, les Américains compétitionnent contre les Mexicains, car leurs coûts de main-d’œuvre sont rendus inférieurs aux Chinois, et nous ont compétitionnent contre les États-Unis et contre les Mexicains.

Évidemment pour rester dans le jeu, il faudrait réduire tous les avantages qu’on s’est octroyés au cours des dernières décennies.

Par contre, nos politiciens n’ayant pas de courage de vous le dire, ils vous font miroiter un Plan Nord, rapportant des peanuts en redevance, de plus, ce type d’économie est très volatile et peu payant en bout ligne.

Ou, un Plan Sud grâce à Legault, avec deux milliards de subventions, pauvre lui, les Américains en impriment plus de 87 milliards par mois, et ne sont même pas capable de relever leurs propres économies.

Du vrai mirage de politiciens.

Il faudrait, malheureusement dire la vérité au peuple, nous coûtons trop chers.

Une solution à court terme avant l’existence des QE aurait été de dévaluer notre monnaie, pour rester concurrentiel.

Malheureusement, peu envisageable actuellement, car nos voisins américains font tous pour dévaluer la leur à coût de 87 milliards par mois avec de l’argent fraîchement imprimé, le problème, ils ne sont plus les seuls.

Donc, nos politiciens comme d’habitude vont étirer l’élastique au maximum en vous mentant  que tous est sous contrôle.

Par contre, ne soyez pas surpris que les nouveaux emplois soient mal payés, mondialisation oblige.

En résumé:

·         Vous êtres surendettés.

·         Vos salaires vont stagner.

·         Nos gouvernements en déficit vont vous taxer et imposer de tous bords.

Une soupe qui va devenir de plus en plus indigeste, ce que l’article vous envoie malheureusement comme message.

Non, il n’y en aura pas de facile.

You can see that over the last 20 years, Mexican imports have narrowed the gap.  This is largely driven by the low wage nature of our current global economy and the aforementioned high wages in Canada.  Something will give and is giving.  But like any bubble, things get wilder at the very end:

Bloomberg: – Canadian housing starts unexpectedly increased for a second month in March and building permits rose in February, evidence that low borrowing costs are supporting construction.

Starts were 184,028 at a seasonally adjusted annual pace during the month, up from a revised 183,207 in February, the Ottawa-based Canada Mortgage & Housing Corp. said on its website today. In a separate report, Statistics Canada said building permits rose for a second month in February on a rebound in non- residential projects.

Construction has been supported by some of the lowest mortgage rates in decades, along with historically cheap borrowing for businesses, even as the government tries to tighten the mortgage market amid concern prices in some cities have become inflated.”

Low rates and cheap borrowing.  Of course it will be different this time around.  Right?


 

  1. gravatar

    # by Anonyme - 30 avril 2013 à 12 h 16

    100% d'accord avec vous, c'est ce qui s'en vient, salaire qui stagne, hausse de taxe et d'impôt, délocalisations...

    La solution serait sans doute de faire du protectionnisme, mais je doute que nos gouvernements aient les couilles pour le faire.