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Is there any need for us to trouble ourselves about the financial problems of our country, isn't the most difficult part over and done with now? Regrettably, this is not the time to become confident with ourselves; the challenges facing the Canadian economy are more widespread that we comprehend. The Bank of Canada predicts that the decline in economic growth is going to be a short-term problem and that the second half will be characterized by more rapid growth. The bank assumes that energy prices should start dropping, or at least not rise any further. With the problems in Japan, it has been named as the source or reason behind the most recent depression we are having. This sounds appropriate but it is not really true, especially if we look deeper, as it is the consumer who represents the economy. There is no reason to deny that Japan is affecting both the Canadian economy and that of the rest of the world, but it not the predominant reason. We therefore have to look closer to home, with the employment situation being poor, the rising gas prices and all around prices increases, the future is uncertain. The Canadian debt to income ratio is currently approximately 1.5, a bit higher than the US pre-depression ratio. If there were issues with debt, what we can definitely say, is that the banking sector would be better able to deal with it. It is always a anxiety to home owners that house prices are going to fall especially during any recession; but at the end of the day the effect on bank profits are not going to be as bad as they were a few years ago. This means that the Canadian economy probably wouldn’t need to carry the burden of bailouts that assaulted the US economy and US politics as well. A point that you need to be aware of: in relation to the Canadian economy, in addition to bank stocks and BC real estate? is that Canada's economy is tied closely to that of the US. Thus, it doesn’t matter how robust and stable the situation on the domestic market presently is; US problems have the potential to hit us hard. The contagion could hit from Europe, which is currently having some serious problems concerning Portugal, Ireland, and Greece. The shocks faced by the decline of the European economy could affect commodity prices, shifts surrounding the equity market or tightening of credit which could affect the housing market.
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